UGANDA: Education Loans

We learned on this trip that fifty percent of Uganda’s population is fifteen years old or younger. That’s a lot of children to educate. Law requires that all children complete primary school, but the government has not been able to keep up with demand. The public schools typically have large class sizes, poor facilities and many ill-prepared teachers – that is, when they show up. Further, the schools are typically located where the population is most dense, requiring many children living in farm villages to walk one or even two hours to school.  

As a result the government has sanctioned and encouraged small private schools, run in the immediate communities where the children live. These are not at all what you and I envision when we think private education. However, though these schools can be pretty primitive, and staffed by teachers who may not have completed college themselves, the children often receive a far superior education than those attending public schools. By funding the expansion of these small private schools, we get a double whammy. Not only do we make business loans to proprietors who operate self-sustaining enterprises, but needy children receive an education. Because of this extra value, and because of the number of people schools employ, we have agreed to make relatively large loans to school proprietors.

Before going into the field to visit the schools, we visited the Opportunity Uganda Bank in the morning for orientation on “Edufinance.” The director of this initiative, Freda, explained that we made our first two edufinance loans in 2008, each for about $13,000. This year we have more than 100 schools, receiving a total of $2.2 million in loans.

Freda explained that private schools typically charge about $10 per three-month term. In many cases we’ve made arrangement with the schools that the families deposit their school fees in our bank and then we transfer the funds into the teachers’ accounts each month.

After the orientation we visited the “Rise and Shine” primary school and kindergarten. Dorothy met us at the front gate with a contagious smile and hugs for everyone. She is the proud director and co-founder. In 2000 when her mother died, Dorothy converted the family home into a school for seven children, using her life savings of $250 to get it started. Later that year she borrowed $150 from us. Successive loans have been for $200, $250 , $2,500 and most recently $4,000. With these funds she has partitioned and equipped classrooms, built a fence, and constructed toilets and running water. Today she has a team of nine teachers and 150 students, many of them refugees. She charges $25 per term, and for an additional $12 per term she feeds the children lunch.

For the next half hour the students entertained us by singing songs they had written for “the visitors.” We didn’t drill down on the numbers as we did with the agriculture loans, but let our right brain take over and learn from these young lives—and possibly future leaders.

—Mark Lutz, Sr. VP, Global Philanthropy