The need for education is well entrenched in the minds of parents, thereby making education a service that has tremendous demand in India. Despite such large demand, the education sector suffers for poor quality of infrastructure and poor learning outcomes.The rationale driving Shiksha Finance’s business thrust is:
Large, young population
India’s student-aged population is more than 400 million strong, of which only 260 million is enrolled in schools.
- Belief in the importance of education
Indian parents, across all income levels, view education as the key to unlocking new opportunities for their children. This is all the more so in the case of low-income families
- Most are not served by the public system
Only a fraction of the population can afford high-end private schools. Vast majority of children attend Government schools. In recent years, a new trend is the mergence of affordable private schools, which is fast becoming an preferred option for low income parents.
- Dynamic, local entrepreneurs across India have responded
Recognizing the demand for affordable quality education, local entrepreneurs across towns and villages in India are creating neighborhood private schools that seek to deliver affordable quality education. Often, these school owners, are former teachers or husband and wife teams, who have launched local schools using their own resources and are able to generate 20% -30% margins at price points that low-income families can afford. This segment, grows bigger every day.
- Affordable private schools lack access to capital
Schools rarely comply with the banking system’s traditional requirements for lending. Loans offered by micro-finance institutions are not large enough for school infrastructure projects. The other alternative in the form of informal money lenders leads to high interest rates. Overall, this leads to lack of financing alternatives thereby constraining the growth and innovation of such schools.