NextBillion Editor

Weekly Roundup – 8/21/15 : Private Education, Brought to You By Social Entrepreneurs:

A weekly collection of events, news, opinions and social media chatter in the development through enterprise world.


The News: The Economist recently took a long look at the burgeoning private school education industry across emerging markets, and its relative benefits/weaknesses, as well as some government efforts to regulate it out of existence. Given the choice between under-resourced schools, which result in anything from high teacher absenteeism to antiquated curricula, and a generally more reliable and higher quality private school education, more parents (even those with very low incomes) are opting for the market approach than ever before.

The piece has a heavy focus on Chile, with its long history of bolstering private schools, and the Pakistani province of Punjab, which has emerged as something of a private education laboratory. With a nearly 25-year school voucher program first instituted by dictator General Augusto Pinochet to help poorer students to catch up to the more affluent, more than half of all schools in Chile are now private, and test scores have steadily grown overall. In Punjab, the Punjab Education Foundation (PEF), an independent body with a focus on extremely poor families, is now pouring money into private education – with some amount of controversy.

But as the article points out, there’s little debate between which side has the edge when it comes to cost efficiency.

“A recent study in the Indian state of Andhra Pradesh gave vouchers for low-cost private schools to around 6,000 randomly chosen pupils. Four years later they were compared with applicants who did not receive the vouchers. Both groups did equally well in mathematics and Telugu, the local language. But private schools had spent less time on these subjects in order to make space in the curriculum for English and Hindi, in which their pupils did better. And spending on each pupil was only around a third that in the state sector. Lagos state spent at least $230 on each child it put through primary school between 2011 and 2013, public data suggest, around twice as much as a typical private school charges.”

Our Take: There is no one answer as to whether for-profit private education offers better outcomes in emerging economies than public schools, not only for the students, but for whole societies. The same questions that roil developed market communities around public vs. private education are even more acute in developing ones. Does private education incentivize state-run education to compete? And how can public education actually improve when the more affluent and/or motivated students are lured away? Different countries and economic contexts will answer those fundamental questions differently.

Many of the enterprises striving to provide quality affordable education that were mentioned in The Economist article, including Bridge Academies in Kenya, have been the subject of dozens of posts on NextBillion over the years. For social enterprises and their investors, impact assessment for businesses in agriculture, energy, financial inclusion and consumer products is a requirement to ensure societal benefit as well as economic benefit. We (not to mention the students and their dues-paying parents) should expect the same scrutiny when it comes to market-based education in impoverished countries.

The birth of 'India’s biggest bank for the poor'

The News: After many months of speculation, this week the Indian government made what some are calling a “game changing” move to advance financial inclusion. It gave tentative approval to 11 (of a total of 41) applicants to launch “payments banks” aimed at serving the country’s poor and unbanked population, particularly in rural areas.

These banks will be licensed to perform all the functions of a normal bank except lending – including accepting deposits, offering payments and remittance services, facilitating money transfers, selling insurance and mutual funds, and issuing ATM/debit cards. They will also be allowed to function as business correspondents of other banks, potentially helping some of the country’s biggest financial institutions extend their reach.

The 11 lucky winners included two telecoms (Airtel and Vodafone), three large corporations (Reliance Industries Ltd (RIL), Aditya Birla Nuvo and Tech Mahindra), two financial services firms (Fino Paytech and Cholamandalam), two individual entrepreneurs (Dilip Sahnghvi and Vijay Sharma), the National Securities Depository Ltd, and India’s Postal Department. They will have 18 months to comply with government requirements before they’ll officially be granted licenses. And according to the Reserve Bank of India, the entities that didn’t qualify this time (and many others) may be accepted in future licensing rounds, as it plans to grant more licenses "virtually on tap."

Our Take: This long-awaited move marks a fitting end to the first year of India’s historic Jan Dhan Yojana financial inclusion campaign, which has already opened bank accounts for over 170 million people since it was launched in August of 2014. It could be among the most crucial factors in the campaign’s ultimate success, as payments banks will focus on the country’s hard-to-serve, last-mile banking customers. We’ll leave it to others to discuss the ramifications for India’s telcos, insurers and fund houses, and other financial players – and for its customers. Brace yourself for many months of speculation and prediction on those issues.

Meanwhile, we’ll be particularly interested in seeing what transpires with the India Post. It has been moving toward greater involvement in banking for years, offering limited insurance and savings schemes, setting up ATMs at its offices, and making an unsuccessful bid for a full service banking license in 2014. Its savings balances already equal almost half the deposits of the public State Bank of India, the country's largest commercial bank – and double that of its largest private lender, ICICI Bank Ltd. And with over 150,000 branches across India – including almost 140,000 in rural areas, and a broadly trusted brand, it looks to become a major player – and competitor – in the country’s vibrant financial scene. It’s fitting that some are already calling it “India’s biggest bank for the poor” – a term that could plausibly be applied to the emerging payments bank sub-sector as a whole.


Still seeking the real 'holy grail'

The News: Based on numbers tested and clinical studies, it was “the largest application for a woman’s health drug ever.” Its approval this week was trumpeted as “a breakthrough moment” – even “a holy grail” – for the pharmaceutical industry.

Which killer disease was the industry taking aim at? Malaria? Tuberculosis? Cancer? AIDS? How many millions of lives could this remarkable wonder drug save?

Turns out, this new drug, “which was pursued and later abandoned by Pfizer, Bayer and Procter & Gamble” over the years, is designed to help women who lack sexual desire or fantasy. Yep, we’re talking about “Viagra for women.”

And it’s seemingly not very good at even the distinctly first-world task of sexual fantasy enhancement. The U.S. Food and Drug Administration approved the new drug, Addyi, despite the fact that those who took it “had 0.5 to 1 additional sexually satisfying events per month (from a 2 to 3 ‘event’ baseline) compared to those on a placebo. Only 10 percent to 12 percent responded at all.”

Our Take: From a global health perspective, it was especially disappointing to read the details surrounding  Addyi: there's already been a billion-dollar buyout of the company that won approval for the drug; the marketing will be superb, since a doctor-focused salesforce of 200 has been on standby awaiting approval; and 60,000 people signed an online petition urging the FDA to grant approval. Thus, it’s not too early to predict, based on all the money and marketing behind a product with grass-roots support, that doctors will be under big pressure to prescribe this drug. Lots of folks will be taking it, whether they need it or not. This, while millions around the world go without drugs that could save their lives.

We picture, for instance, the 9.4 million people who will come down this year with tuberculosis, “the curable disease that continues to kill.” (To be exact, about 1.7 million die annually with TB.) The drugs they take – if they’re lucky enough to take any drugs at all – require a long and complicated regimen that’s been basically unchanged for decades. They would love a new “holy grail” type drug to help them on their quest for their next breath. Too bad they didn’t complain about a lack of sexual fantasies.


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