Filling a gap
The primary and secondary education sector in India, also called K12, faces two significant challenges:
- Increasing dropout rates and out-of-school children. Many of these out-of-school children come from a disadvantaged position: being poor, being a girl or being part of a minority group or lower caste. Many children drop out from school because of lack of financing, lack of schools in rural areas or poverty and malnutrition.
- Poor quality of education. Many schools have inadequate infrastructure and facilities; think of classrooms, playgrounds and labs, clean drinking water and separate toilets for girls. Furthermore, high teacher vacancies, lack of teacher trainings and high pupil-teacher ratio affect the quality of education offered.
Shiksha seeks to address these challenges by providing loans to affordable private schools for primary and secondary education to improve their infrastructure or expand capacity. Many schools in India simply do not have access to finance. Large banks and other lenders require extensive documentation, stable cash flow and proof of income for granting loans. Most schools do not meet these requirements and are unable to borrow from traditional financial institutions. Shiksha aims to fill this gap.
Impacting the lives of 1.1 million children
The loans provided by Shiksha vary from USD 500,000 tot USD 10 million, and are being used to, for example, build an extra classroom, a new lab, or better facilities for the children. Since inception, the institution has financed over 2,200 affordable private schools in the southern part of the country, thereby impacting the lives of 1.1 million children.
Also, Shiksha increasingly provides small loans to middle and lower-income families to pay for the school fees, books, uniforms etcetera of their children. These loans allow children to attend better schools and to lower drop-out rates from primary to secondary education. Up till now, Shiksha has provided loans to close to 45,000 students.
Senior Investment Officer Sagar Thakar: “Many parents want their children to study at better schools as they see good education as a pathway out of poverty. It gives children the right tools to create opportunities for themselves and for their families. Shiksha is well-positioned for further growth and our debt financing enables them to expand their operations to the semi-urban areas.”