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Building the pipeline for entrepreneurs who are 'wired to progress'

Pakistan is second only to Nigeria in terms of children out of school. For those in school, the standard of learning can vary immensely, although the vast majority of children leave with a poor education.

Five or six years ago, nobody was talking about social enterprise or impact investing around education. Now, it’s the big noise and we’re delighted to be leading the conversation.

Jawaad Vohra

Deputy team leader

The UK's Department for International Development (DFID) recognised the need to attract new players from the private sector into the education market in Pakistan, with a view to bringing fresh ideas and approaches.

Fast facts:

  • 87% of boys from Pakistan’s wealthiest families are enrolled in school, against just 46% of girls from the poorest backgrounds.
  • The learning outcomes for the richest boys are three times higher in Urdu, English and maths than for the poorest girls.

Challenge

Pakistan has some excellent public schools that compare favourably with the highest standards worldwide, but also a great many that are extremely low quality, under resourced, dilapidated and poorly managed. In the private sector – which accounts for 50% of education – there are schools that send young people to Oxford and Cambridge, but also a rapid proliferation of low-fee schools that open in cramped buildings in city slums or in someone’s living room.

Across Pakistan there are some gender inequalities, but the biggest disparity is between the richest and poorest children. Attendance rates and learning outcomes in Urdu, English and mathematics are considerably higher among students from the wealthiest families, which threatens to perpetuate and widen the ‘opportunity gap’ in society.

Market entry for education start-ups is hard because finance is difficult to get hold of, with high interest rates and high collateral requirements to secure loans. Investors are more likely to be interested in businesses that give them bigger and quicker financial returns. Government procurement rules are difficult to navigate and tend not to support market entry for business with new products and services.

That said, there are opportunities to add value to existing services, especially in the very competitive low fee private school market. How can entrepreneurs work around the edges of the market – for example by selling products directly to parents and children outside of schools? How can they identify and then fill in gaps, whether in early childhood or technical and vocational education?

Approach

The Pakistan Education Innovation Fund, known as Ilm Ideas 2, is building on and expanding these opportunities. For many years, Pakistan has grown accustomed to the traditional model of donor-led development, so this market-led approach is a new departure. Likewise, for donors and their implementation partners, this is an opportunity to blaze a new trail. The four-year programme is funded by UK aid and managed by Cambridge Education. Our aim is to engage players from inside and outside the education sector, but primarily the private sector, to develop innovative approaches that will improve the quality of education or increase access to education in Pakistan.

The programme has three strands:

  1. Partnership with business incubators in Pakistan to help education start-ups develop their ideas into successful, sustainable enterprises.
  2. Provide grant funding and advice to established businesses and other organisations to test and begin scaling up education innovations.
  3. Mobilise support and interest for education innovation in the private and public sector to ensure that support for education innovation continues after the programme closes.

This is a complementary approach to DFID’s broader education sector support programmes in Pakistan and builds on the initial successes of the first Ilm Ideas programme.

As project managers, we work with grantees on everything from the product development and testing to the business plan and marketing, providing a pastoral role as coach and mentor.

This is a relatively new approach for education, more similar to a venture capital fund, in that we invest and need to see a return. The programme helps to re-risk market entry and also stimulate market interest. That’s why we also work closely with incubators, incentivising them to support businesses in a sector that wouldn’t usually attract them.

The financial return is that the education innovation becomes financially sustainable. But grantees must also demonstrate a tangible social return in terms of increased enrolment and improved learning outcomes.

Ilm Ideas 2 uses grants as an instrument for change, except the dividend is ‘banked’ by the businesses and also Pakistani society at large. Success will be termed in the number of beneficial enterprises on a strong trajectory to becoming financially sustainable and on their impact on education outcomes.

Progress

Currently, ten grantees are developing their enterprises in areas that range from comic book creators and early childhood centres, to digital content for secondary school students and a ‘catch up’ programme for out of school children.

In total, 34 start-ups have been incubated at Ilm 2 partner incubators. Ideas here range from an online marketplace for old books and a virtual platform to link female students and teachers, to an augmented reality mobile application that brings educational concepts to life in 3D.

“There’s definitely a new mindset needed for a programme like this,” explained Helen Kamal, team leader for Ilm Ideas 2 and a senior education advisor at Cambridge Education. “We’re used to having theories of change, baseline studies and fixed targets, but here we’ve starting out without knowing what the finishing line looks like. A lot of the grantees are ‘pivoting’ their way forward. Try and fail, retreat, and try something new. As a soft skill, we need to become permanently optimistic. One of the grantees told me: ‘I’m wired to move forward.’ We have to be too. That permanent optimism is at the heart of programme.

“Of course, there is a tension here. We’re using taxpayer money to boost businesses that – by their very nature – may need to fail before they can succeed. So, it’s a case of holding our nerve and backing businesses that we truly believe will make it in the end.”

Jawaad Vohra, education economist and deputy team leader, added: “One innovation I’m especially excited about is the scalable ‘blended learning’ programme developed by a company called Knowledge Platform. It uses simple technology to deliver digital content that supplements everyday learning in the classroom – and so fits well with what teachers and children are doing already. The content, including interactive assessments, has the potential to improve learning in maths, science and English. Ilm 2 is supporting Knowledge Platform to introduce their product in low fee private schools – but given that it doesn’t require internet access and is relatively inexpensive, we hope that it will be scaled up in public schools too.”

“Our role is to build the pipeline. For Cambridge Education too, the learnings are incredibly important, as this is the direction that donor-led development is heading at the moment. Five or six years ago, nobody was talking about social enterprise or impact investing around education. Now, it’s the big noise and we’re delighted to be leading the conversation.”

Find out more about the programme at the Ilm Ideas 2 website.

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