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Affordable private schools in Kenya typically begin in very humble conditions in the middle of informal settlements, often referred to as slums. These schools are the only opportunity that most residents in these communities have to educate their children and give them hope of a better life. The vital role they play has enabled them to generate good will and support from local authorities and well-wishers.
 Two huts where Starehe was born. As these Kenyan affordable private schools develop, they increasingly have caught the attention of international donors and more recently companies that are searching for corporate social responsibility initiatives. Many of the schools have become beneficiaries of these institutions through scholarship support for their most needy students, donated food for their nutrition programs, learning materials and occasional assistance for infrastructural developments. This support has increased the enrollment of children at the schools and their capacity to care for the physical and psychological needs of the children.
However, many challenges persist, such as their ability to offer quality education without financial resources to pay trained teachers and having to operate on sporadic cash flows while trying to plan for strategic developments. In an effort to achieve self-sustainability, many of the school operators are striving to increase the collection of school fees by attracting families that can afford to pay.
 Starehe today The rapid urbanization of cities in Kenya has brought commercial and residential developments in close proximity to the informal settlements. This has provided a large market for the schools to attract students from across a diverse economic spectrum. Yet those parents in the community, who can easily afford to pay for their children to attend the school of their choice, have come to expect the guarantee of high quality education (as demonstrated by a competitive academic program), before they consider enrollment at any location. In most cases, they end up sending their children to the more established private schools in neighboring, more affluent communities. To that point, one of the affordable private school proprietors School Ventures visited lamented that up to ten buses pass right in front of his school every morning to ferry local children (who could be attending his school) from their nearby apartments to more established schools a few miles away.
Affordable private school operators in Kenya find themselves at a crossroad of how to attract children whose parents can afford the school fees, without neglecting their original mission of serving the informal communities in which their schools were founded. As they search for answers, many have looked to Starehe Boys’ Center and School (www.stareheboys.ac.ke) as a model of excellence and sustainable development.
Starehe began as a shelter for street boys in the late 1950’s during the height of the independence struggle in Kenya and emerged to become a leading secondary school in the region. Besides exemplary academic performance, the school has also gained international prestige for discipline and student leadership, both driven by an elaborate prefectorial force. 
Staying true to mission, seventy percent of the students enrolled at Starehe come from disadvantaged backgrounds. These students are covered by an endowment fund that is actively supported by the school’s alumni association and donations from a number of multinational institutions.
The remaining thirty percent of admitted students come from more affluent backgrounds, their parents being willing to pay a premium rate for the high quality of education provided by the school. Starehe has recently launched a girl’s school and hopes to achieve similar success in providing quality education and opportunities for disadvantaged girls.
There is a lot to be desired in the Starehe model, known as the Starahe Way, but the model has come a long way. Most school operators from affordable private schools have not studied the evolution of the Starehe Way well enough to understand how to institutionalize some of the fundamental operational pillars of this approach. It is a major challenge to replicate the Starehe model and it remains just a dream to many affordable private schools. Nevertheless, if those pillars of Starehe can be broken down and simplified for these schools to adopt, they could very well make significant progress towards self-sustainability without neglecting the marginalized communities they were intended to serve.
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 Mukuru Kwa-Njega Patrick Mwanzia is concerned about the low levels of concentration amongst the students at his school. He attributes it to the fact that River of Life Primary School is situated in a slum in the Nairobi ward of Mukuru Kwa-Njega in Kenya - where there are many distractions to challenge even the most dedicated of students. Founded in 2003, River of Life provides education in semi-permanent structures made mostly of corrugated iron. Mwanzia understands that parents living in the difficult slum conditions care as much about the quality of their children’s education as their wealthier counterparts elsewhere. He believes that they will pay more than the US$49 to US$74 per year he currently charges, if improvements are made to the school.
Determined to meet the needs of these parents, Mwanzia has written a business plan and is currently seeking a loan of approximately US$54,000 to replace the semi-permanent structures with more permanent facilities.
Despite Patrick Mwanzia’s eagerness to get funded, commercial loans are notoriously difficult to secure for affordable private schools (non-public schools serving families in low-income urban and peri-urban locations) in Kenya and across Africa. Affordable private schools, like many other schools higher up the economic spectrum, remain fundamentally weak in their financial, managerial and education delivery capacities. So, many financial institutions do not take them seriously at all as investment destinations.
In 2006, Professor James Tooley won the inaugural International Finance Corporation/ Financial Times Essay Competition. His thesis was that “budget private schools”, as he calls them, represent an exciting new frontier for domestic and international investors. Professor Tooley argues that these schools, which are run by local entrepreneurs, with teaching staff from the local community, generally produce superior learning outcomes to their public school counterparts - despite the fact that they have much fewer resources. Professor Tooley observed that the majority of these affordable private schools are run as viable businesses. That many are able to generate surpluses for proprietors indicates to Professor Tooley that these schools can indeed absorb investment capital to support improvements and also produce a return for investors.
This research is good news for school operators like Patrick Mwanzia. Many affordable private schools operate in structures made of corrigated iron. The classrooms are cramped with little ventilation, no soundproofing, no lighting and minimal learning materials for students. Some schools have limited or no running water and inadequate bathroom facilities, especially for girls.
 A River of Life Classroom Despite the conditions, school operators, teachers, parents and students persevere because the alternative is unthinkable - that young Kenyan children would be denied an education solely due to their socioeconomic background. That’s why schools like River of Life exist.
And that’s also why School Ventures began working with the Kenyan Independent Schools Association earlier in 2008. With the help of a small grant from the Rockefeller Foundation, School Ventures embarked upon an exercise to test Professor Tooley’s hypothesis about affordable private schools.
This blog is the first in a 15 blog series we will share with you between now and December 1, 2008, charting our experience and discoveries as we’ve explored affordable private schools in Kenya. We want you to join us in assessing this micro-segment of the African education markets. As you spend time with us, please tell us what you think about affordable private schools as an investment opportunity.
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