Digital Financial Services can reduce worries on how to pay school fees

UNCDF is working with PEAS schools to explore ways on how digital financial services can make it easier to pay school fees and increase school attendance.

Godson Kayiza, a farmer in Kira, Uganda has four school-going children, two of whom are in secondary school. One of these, his daughter, goes to the Kira View secondary school, which is run by PEAS (Promoting Equality in African Schools), an NGO that runs 28 secondary schools in Uganda. Kira View secondary school is about one kilometer from their home. The other child studies in Entebbe, which is about a four-hour drive from home.

Godson explains that he chose a PEAS school, because it provides quality education at an affordable cost and most of all is very flexible on fee payments. As we chat, Godson clarifies that the education of his children is a priority on his expenditure list. Nevertheless, he also mentions that the beginning of the school year is financially strenuous, as it does not coincide with the harvest period when he has enough money to pay for the fees. What is more, his financial planning is often distorted by illness in the family, creating additional financial strains.

Paying School fees

For his daughter at the PEAS school, Godson pays the fees in cash. For his other child, enrolled in Entebbe, he mainly uses mobile money to pay for fees, as it is cheaper than travelling there to pay with cash in person. For both kids, he pays in three to four installments in the school term (quarter).

Before the children have their exams, he must clear all fees so that his children are allowed to take their exams. “When I’m short on cash, I am able to negotiate with the school director at PEAS for patience. They will ask me to pay even as little as UGX 5,000 (USD 1.37). In this case they give my child an admission card that allows her to attend school until the date specified on the card. Beyond this date, I need to pay again. Otherwise my child will not be allowed back in to school.”

Collecting School fees

“We receive our school fees mostly in cash from the parents or the students themselves. Some parents, mainly those who live far from the school send it via mobile money to my personal phone or that of the bursar. Sometimes we also accept a part of the payments in kind, like food items”, Richard Ayaga, School Director, PEAS Kira View. “Paying and collecting fees is a major pain-point for both parents and the school respectively. We have to be firm in gathering fees, while being very considerate towards the parents’ financial capacity.”

Even though most parents pay the fees in cash, handling this cash has its challenges. The bursar receives cash in the school office and must in turn bank this money. Handling all this cash comes with significant risks, such as:

•  Human mistakes made when counting the money
•  Receiving counterfeit notes
•  Keeping large sums of cash in the school’s office
•  Staff safety when travelling to bank with cash

Mobile money payments are convenient for some parents, but it too has risks. When the director or bursar receives money on their phone, they call that number to confirm who has made the payment and for which student. Most senders do not add the withdrawal fee, so the school has to pay for these withdrawal fees, making a loss. Payments to personal numbers also put the director or bursar into temptation to use the money for personal needs.

Payment behavior for Education

Valuable insights can be drawn from mapping the parent’s payment behaviour of concerning school fees as well as the way schools process these payments. Insight that helps understand how digital finance can solve some of the major pain points around payments in the education sector.

This baseline study is part of a partnership between UNCDF and PEAS, which seeks to provide answers to some pertinent questions: What are the advantages of moving from cash to digital payments for different stakeholders? How does that impact access, affordability, quality and sustainability of secondary education? One of the potential solutions could be a system where parents can pay school fees based on their cash flow linked to the seasonality of the different crops they grow.

All of this is set against the background that in Sub-Saharan Africa, only one in four children are able to continue their education beyond primary school, as secondary education is still largely underfunded and under-provisioned (PEAS, 2015). In Uganda, the Africa – America Institute reports that in 2015¹, 72 percent of secondary school-aged children were still not in school.

In the months to come UNCDF together with PEAS will prototype and pilot some of the potential digital finance solutions aimed to increase the attendance rates. Which in turn, would allow more and more children in Uganda to finish secondary school.

• ¹State of education in Africa report 2015, The Africa America Institute