The rise of quality affordable education

Taking stock of the PALF journey

The Pearson Affordable Learning Fund (PALF) started in 2012, but the seeds were sown years earlier. Before joining Pearson as the Chief Education Advisor, I worked at McKinsey as the Head of the Education Practice. While there, supported by DFID and a small but tireless team, I worked with the Chief Minister of Punjab, Shehbaz Sharif, on transformational reform of their education system. During those years, my colleague Katelyn Donnelly and I were struck by the role the private sector played in education. Where government systems had failed to provide an adequate education, affordable private schools had emerged to fill the gap.

As I describe in The good news from Pakistan,

By 2012, around 40 per cent of all children in Punjab were in private schools, the vast majority of them low-cost; in Lahore it was an astonishing 70 per cent. In effect, what had happened was that millions of poor parents, who understood viscerally that a good education was the only route out of poverty for their children, had looked at the government sector, seen how dire its performance was, seen too that its problems appeared intractable and voted with their feet. The data supported their instincts. The evidence suggests that generally in Pakistan, low-cost private sector schools outperform government schools, although this does not mean they are good.

Parents have voted with their feet — millions of poor families around the world have chosen to invest hard earned money in affordable private schools that they feel offer better life prospects. PALF could be a vehicle to increase the return on their investment, helping the right affordable private schools improve and expand.

When Katelyn and I joined Pearson we saw an opportunity to put the capital and knowledge of the private sector to work — we knew there was billions of dollars going into improving education through the public sector while a tiny sliver went to catalyzing education in the private sector. With a small amount of capital, we could demonstrate the potential of the private sector to make a major contribution — alongside hopefully improved government systems — to solving the world’s massive educational problems. We worked on two efforts simultaneously:

  • The creation of PALF, which was launched with a mandate to invest in market-based solutions that will improve access to high quality education for low income families across the world
  • The focus of PALF and Pearson on efficacy, which we defined as a measurable impact on improving someone’s life through learning

PALF was an experiment to improve the lives of millions of students by investing in promising entrepreneurs and partnering with them to measure, analyze and improve student outcomes. Almost four years later, PALF manages ten investments across Africa and Asia. These investments support low-cost school chains and affordable education companies, serving over 200,000 children. Our 2015 annual letter goes into great depth on the progress our portfolio companies have made and our plans to continue investing in the affordable education ecosystem going forward.

Many of our early investments in the fund were in affordable private school chains. PALF currently manages investments in four low-cost school chains in diverse geographies and with different models: Omega Schools in Ghana, APEC Schools in the Philippines, SPARK Schools in South Africa, and Lekki Peninsula Schools in Nigeria.

A Spark teacher engages with the ‘Spark Scholars’ as they actively participate

The underlying goal across all our school chain investments: for each chain to become a world-class professional company with efficacy at the heart of their operations and reach a scale to meaningfully impact the lives of tens of thousands of learners. Over the last four years, we have learned a great deal about the challenges facing affordable private school chains and some of the successful strategies employed to overcome them.

My colleague Arvind Nagarajan, along with Ralph Tabberer of BBD Education and with support from the entire PALF team, has taken the experiences of PALF and our portfolio companies to offer practical lessons for operating and evaluating affordable private schools. Their paper, The Inner Workings of Affordable Private Schools, is an important contribution that brings to life the complexities of running an affordable school chain while offering a path to effectively navigating the complexity.

This isn’t the 30,000-foot view — the paper’s insights were hard-earned through the tremendous effort of the wonderful entrepreneurs and teams working at our portfolio companies and the PALF team supporting them. For entrepreneurs, school operators, and investors targeting the affordable education space, the paper offers invaluable perspectives that can help move the entire sector forward.

At APEC, the teacher facilitates the discussion as the student shares-out following an activity

We would welcome feedback, as we know there’s still a long road to success for PALF, our portfolio companies, and the entire affordable education sector. Our vision at PALF is for every child to have access to an affordable, high-quality education. We know it will take more than just our work to make this vision a reality; our success depends on talented minds devoting their time, energy and resources to improving the quality of education across emerging markets.

In the six years since I started working in Pakistan, we’ve seen tremendous progress in seeing the positive role the private sector can play in ensuring every child can access a high quality education. The journey is hard and long, but also extremely rewarding, especially when we reflect on the journey through the contributions I’ve highlighted. I hope you’ll join us in this movement and contribute to the dialogue.