Final Ghana Country Report: Market Research Project on Low Income Private Schools
Enrolment in the 136 schools surveyed is 29,718 representing 4.5% of total private school enrolment in the two regions and translating into an average of 218 pupils per school. Female enrolment for the low income schools surveyed constitutes 55% compared to the national average of 49.5%, returning a significant statistical difference between female and male enrolment in private low income schools. 44% of respondent parents with children in low income schools earn below GHC150 (US$107) per month and those in this income bracket could spend as high as 48% of their declared wages and salaries on the education of one child. More than 50% of the parents are self‐employed in the informal sector including artisans, cooked food sellers and petty traders. An estimated 87% of the low income schools earn below GHC20,000 (US$14,285) per annum, 44% of which comes from tuition fees, 34% from extra classes, 20% from feeding cost and the remaining 2% from other sources. The cost structure is mainly driven by staff cost which is estimated at 42% of revenue and profit before interest and taxes could be as high as 40% of revenue generated for some of the schools.
Highlights of financial management indicators of low income private schools: • 44% of low income school revenue comes from tuition fees, 34% from extra classes and 20% from feeding; • Staff cost represent about 42% of revenue generated; • 99 out of 136 schools representing 73% have bank accounts; • Profit before interest and taxes could be as high as 40% of revenue; • Accounts are held with universal banks, savings and loans companies and rural & community banks ; • 50 out of 136 schools have taken loans averaging GHC4,963 (US$3,471) at average interest rate of 36% with repayment term of 17months.
Need for Financing; Aggregate Financing Needs and Borrowing Capacity 119 out of the 136 schools, representing 87% expressed interest in obtaining financing. Out of this number, 80% require the funds to support infrastructure expansion; repairs and maintenance to building and equipment (48% of respondents); acquisition of school bus (42% of respondents) and teaching and learning materials (16% of respondents).
The aggregate financing needs of the surveyed low income schools is estimated at GH¢3,980,032 (US$2,842,880). The borrowing capacity of the schools, based on their estimated free cash flow is projected at GH¢707,395 (US$505,282) for one year loan; GH¢1,208,260 (US$863,042) for a two year loan and GH¢1,563,151 (US$1,116,536) for a three year loan. When estimated revenue was enhanced by 30%, the borrowing capacity increased to GH¢919,518 (US$656,798) for one year facility and GH¢2,032,053 (US$1,451,466) for a three year facility. The results indicate a gap of about 60% between the aggregate financing need and borrowing capacity of the surveyed schools.
Prepared for IFC by CDC Consult Limited 10 October,2010