Discussion Paper No. 76 of 2007 on Private Sector Investment in Primary and Secondary Education in Kenya: Issues, Challenges and Recommendations

Abstract

Although many governments are committed to implementing education goals, including Education for All (EFA) and Universal Primary Education (UPE), they are constrained by availability of resources. Private sector involvement in education has been justified on the grounds that public provision of education is inadequate compared to demand. Also, public expenditure on education has stagnated or shrunk in real terms due to fiscal constraints. This study utilized both primary and secondary data sources to analyze the critical policy issues and challenges facing private investors in the education sector in Kenya. The owners of schools were the main sources of primary data. Analysis from the data shows that private investors had invested more in primary schools compared to secondary schools, despite the unmet demand for secondary education. The investors indicated that it was relatively cheaper to establish and operate a primary school than a secondary school. The investors also cited the inability to meet the high initial capital to start a secondary school. This problem is compounded by the fact that majority of private schools mainly depend on proprietor’s savings to construct a school. Their ability to access bank credit is hampered by the fact that banks charge very high interest rates. Also, potential investors lack necessary collateral to secure a loan. Further, the current legal framework that regulates education provision in Kenya is limited to private school registration and examinations.