Mobile Money Goes to School


Parents worldwide, no matter where they live or what they earn, want their children to have greater opportunities than they did. Education can be a ticket to reach those goals, but the burden of paying for education can be acute, particularly in low-income families. In at least 12 African countries, many families spend more than half of their household income on education, from tuition fees and uniforms to books and other costs associated with keeping their children in the classroom. CGAP is exploring financial solutions that can help parents plan for and cover those expenses.

Aside from the basic problem of insufficient income, what other challenges do low-income families face when it comes to paying for education? One problem is that the traditional school-fee payment schedule, which requires full tuition at the beginning of each term, is out of sync with when many families have money available. Being poor often means your income arrives at erratic intervals. Other priorities, such as expenses for food, health care and housing, compete for scarce funds. During major income slumps, or when a crisis such as death or illness hits, parents are often forced to keep one or all of their children home from school because they simply cannot pay the fees. Globally, an estimated 58 million children are not in school—many of those probably because their parents just cannot afford it.

Developing countries struggle to provide enough school facilities for youth, and even countries like Kenya that have made elementary public school tuition-free cannot guarantee there will be enough places in public school to meet demand. As a result, even low-income families turn to private schools. In Kenya, an estimated 40 percent of children living in slums attend private schools. Interestingly, researchers say this number has actually increased since public primary schools became free in 2003.

Take Hawa M, a mother of four living near Nairobi whom CGAP interviewed in April 2016. Her eldest son is at a public secondary school; tuition there is free, but Hawa is still responsible for his books and other expenses. Two of her children attend a private school that caters to low-income families. That school is unique in that it runs on a totally cashless model. Parents pay with mobile money, which means they don’t have to travel miles to get to the bank, potentially wasting time that could be used on income-producing activities. The school’s tuition structure also permits Hawa, a street vendor who sells ice cream when it’s hot and homemade pastries during the colder months, to pay her children’s fees in very small increments rather than in big chunks.

Photos courtesy of Sue Pleming provided by CGAP

At the end of every work day, Hawa uploads her earnings into a mobile money account, putting funds aside when she can into a mobile wallet that she has earmarked for school fees. Immediately after she pays the fees, Hawa gets an SMS message informing her that the money has gone through to her child’s educational account at the school. The same system also tracks her children’s attendance at school.

Making ends meet is a daily struggle, but Hawa says her children’s education is a major priority when she plans the family budget. That value for education is instilled in her young children, too. Khaled, her nine-year-old son, wants to be an airplane pilot. “If I go to school, my dream will be real—I will be a pilot. If I don’t go to school, I will be someone collecting bottles on the ground,” Khaled told CGAP when we visited the family recently.

The cashless system being used at schools like the one Khaled and his sister attend also benefits teachers. Their salaries get paid into their mobile accounts, eliminating for them, too, the need to waste time traveling to and conducting transactions at the bank. That in turn has reduced teacher absenteeism—a good thing for the pupils and the school system overall. The digital economy has other benefits for education. For example, the same platform being used for payments and to track attendance could potentially be linked to merit scholarships.

There is also research into crowdfunding for education using social media. The old saying “It takes a village” is often the case when it comes to paying for school fees. Neighbors, aunts, uncles, grandparents, godparents and others often contribute to getting a child through school. By paying digitally, benefactors can immediately see that the money is going where they intended and that the child is maintaining a good attendance record—an important source of inspiration for them to continue providing support.

How far and fast digital finance can help improve access to education remains to be seen. It’s not a silver bullet, but it could be a contributing factor in a broader range of interventions to keep children in school and lift their family’s next generation out of poverty.