This article is part 2 of a 3 part series. Click here for Part 1.
My research started with a Google search for “Remittance transfers and Education”. I was not surprised to find multiple articles on the subject from Ivory Tower academics but I was shocked at the few practical options. The idea of transferring money directly to a school for individual students fees is moderately complex, it requires international finance, a network of participating schools and global marketing. Although this seems rather daunting as companies develop franchises with over 300 schools like Bridge International Academies the possibility of a payment platform becomes feasible.
In Part 1 I briefly mentioned cashless business models, the system works by having a parent load their phone with money and texting the school fees to a specific account. Most citizens have M-Pesa accounts, they visit shops and provide cash in exchange for the shopkeeper taking a small transaction fee and texting them the balance, essentially their bank account is on their phone. The unique factor is that when parents text the headquarters with their traceable payment administrators can easily see who has paid and who hasn’t on electronic tablets. This facilitates following up with unpaid accounts. Transferring small sums of cash across a broad national or multi national network would have prevented many of the high volume low cost low margin business models that are gripping East Africa. To reach a low price point requires and eliminating corruption in the supply chain.
Education-as-a-service follows the ‘service’ phenomenon that will shift economies in the both developing and developed nations during the next 20 years; citizens are shifting their preference to services on demand rather than goods. As items become more expensive or people put a premium on space Canadians will shift towards a rent vs buy mentality. The reasons for the shift will be different between Canada and Kenya but the trend will be similar overall. In Kenya-Tanzania with rented solar systems and North America with Car2Go. Mobile money simplifies the transitions and facilitates scaling. Education at the Bottom of the Pyramid is only recently adopting as most schools in East Africa are run by sole proprietors with limited knowledge of technology. As the market place become more competitive all schools will accept payments as hundreds of students at hundreds of school is the perfect model for a cashless business model.
So now that you are aware private educational franchises are going cashless using mobile money how do the diaspora communities affect educational attainment?
To my surprise money transfers from Diaspora communities outweigh international aid! Over the past 10 years the remittances have increased from 93 Billion in 2003 to over 500 Billion in 2013. Our increasingly global population means more people are living in new countries, there are fewer immigration barriers and more money is flowing back to their birth nations.
While researching I read several articles on the Philippines, a nation that receives a substantial portion of its GDP from remittances. Small businesses are springing up including internet cafes, and funds are improving the community which now includes brightly coloured homes. Although there are difficulties when parental figures move abroad to work and significant inflows cause inflation making it more difficult for non-recipients as a whole it appears many countries are benefiting from international citizens.
Here are a few other Diaspora facts:
“Canada sends more money, per capita, overseas than other developed countries. (The U.S. is the largest remitter by far, sending nearly a quarter of that global $500 billion: Mexico is their top recipient country, with $22.8 billion, followed by China, which receives about half that.)” – Source: Toronto Star
Click here for Part 3 which examines if money transfers will have a positive effect on education. Furthermore all references and links will be provided.