CATALYZE EduFinance Launches New Activity to Stimulate $5M Investment into Kenyan Low-Fee, Non-State Primary Schools

USAID CATALYZE
3 min readFeb 27, 2024
USAID CATALYZE EduFinance Kenya Kick-Off / Photo: EduFinance Kenya

CATALYZE EduFinance, implemented by Palladium, has launched a new Activity aimed at increasing equitable access to education and improvement in learning outcomes for primary-level learners attending non-state schools in urban informal settlements and the rural Northeastern regions of Kenya. EduFinance Kenya (February 2024 — November 2025), implemented in partnership with Jackfruit Finance, Instill Education, and Dalberg Global Development Advisors, will utilize a pay-for-results (PR4) model that improves access to capital for schools through specialized, affordable loan products, while simultaneously enhancing education quality through teacher capacity building.

Investment in low-fee, non-state education is a central area of focus for the USAID CATALYZE Education portfolio, and a critical step toward narrowing the nearly $100 billion global education gap. The development and use of affordable loan packages designed to help non-state school-owners invest in quality improvements is a valuable tool to improving both education quality and access across Kenya, but historically, low-fee, private schools across the country have been financially excluded. Loan packages are often misaligned with the unique business cycle of schools, and lenders require documentation — such as cash flow projections and business plans — that schools don’t typically have. Furthermore, an approximate 2.2 million teachers in Kenya are not qualified, compounding pre-existing education quality challenges and highlighting the need for upskilling and capacity building.

“Local community-based private schools provide an education for millions of children in Kenya every year yet are frequently financially excluded and receive little third-party support. Jackfruit aims to change this by providing affordable, accessible financing to these schools while simultaneously improving education quality by partnering with Instill Education to offer teacher training programs. We believe that supporting non-state education through financing and technical assistance is critical to ensuring all children in Kenya have access to high-quality education.” — Robert Alhadeff, CEO, Jackfruit Finance

Through this approach, EduFinance Kenya will:

  • Mobilize and sustain private finance for the non-state education sector, through the strategic use of USAID funds to attract private capital funding and investment.
  • Create a measurable increase in equitable access to education and improvement in learning outcomes for disadvantaged learners attending non-state schools.

Through the life of the Activity, CATALYZE will leverage new sources of private finance to the education sector at a ratio of at least 5:1 private capital mobilized to USAID capital contributed, resulting in a measurable increase in the number of private schools receiving USG-assistance, an increase in learners attending these schools, and an overall improvement in education quality and learning outcomes.

As an additional incentive to improve educational quality, the activity plans to use impact-linked loans, whereby improvements in quality and learning will be rewarded with financial and non-financial incentives. The CATALYZE EduFinance Kenya Activity builds on successful CATALYZE pay-for-results initiatives implemented in Rwanda and South Africa.

“Throughout the CATALYZE portfolio we are using a variety of pay-for-results (P4R) models to tie funding to what we care about most, namely improvements in educational access, quality, and learning. In the CATALYZE EduFinance Kenya activity, the consortium will pilot an impact-linked loan model that will provide rewards to school owners that are able make measurable improvements in quality and learning over the course of the activity, incentivizing continual improvements in learning outcomes and providing important recognition to school owners who invest in improving educational quality.” — Joe Di Silvio, USAID CATALYZE

About USAID CATALYZE EduFinance

The USAID CATALYZE EduFinance Activity develops private sector partnerships to facilitate innovations in financing and service delivery that increase access to low-cost, quality education. CATALYZE EduFinance uses a blended finance approach — the strategic use of USAID funds and private capital — to improve and sustain learning outcomes for children and youth across sub-Saharan Africa, particularly those most vulnerable. Through the unique models piloted across South Africa, Rwanda, the Democratic Republic of Congo (DRC), Zambia, Tanzania, and Kenya, the Activity mobilizes private capital for the non-state education sector, increase equitable access to education, improve and sustain learning outcomes, and build a community of practice to communicate an evidence base around private sector engagement in education.

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