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Schools Create Jobs

By Simona Haiduc

One of the most surprising and important benefits of Opportunity's Education Finance program is the way schools serve as economic engines in their communities. Schools educate children, but they also create jobs and stimulate the surrounding economy. 

When I think about an article originally written by former Head of Education Finance, Nathan Byrd, The research he and his team conducted in Uganda demonstrates the power of EduFinance as a driver of the local economy and a force for job creation. 

In the article, he wrote: 

"Together with our research partner in Uganda, Friends Consult, we recently set out to discover the direct impact on employment as a result of client schools receiving loans from Opportunity EduFinance partners.

The results of this study of 94 schools funded between 2014 and 2016 confirm previous anecdotal reports relating to the impact of School Improvement Loans on job creation in their communities. The study found that school growth funded by School Improvement Loans contributed to an average of 3.9 extra jobs within the school, ranging from teachers to dormitory supervisors, drivers, and classroom support staff. This number jumped to 4.5 when counting loans used wholly for infrastructure development.

93.6% of schools also hired temporary construction labor as a result of the loan, resulting in an average of 7.9 new, temporary construction jobs lasting an average of 2.2 months each.  Again, this number jumps to 8.9 jobs when counting infrastructure-only financing.

In addition, the study highlighted the spillover effects that School Improvement Loans are having in their communities.  More than 90% of schools participating in the study reported that new shops or people are now employed in order to directly meet the educational needs of, or sell to, the school, their students, or their students’ families.  From new food stalls to new internet cafes across from the school, new third-party transport routes, or new general shops popping up, the results were direct, immediate, and powerful.  Across all 94 schools, loan-fuelled school growth resulted in an average of 6.79 new jobs in the immediate community during the course of lending.

Loans also supported the development of new local industries.  Many of the shops that opened around the growing school were the first of their kind in the community, servicing new and rising demand.  In the case of internet cafes, for many students, teachers and community members this would be their first local access to the internet.  The result is a growing local economy with the school itself as the engine and, with several community members now accessing work that is closer to home, in some cases providing businesses access to new markets.

We know that schools are powerful engines of development.  The idea of the school as simply an educational institution, however, may oversimplify the fact.  Growth in schools as a socially-positive enterprise that helps low-income families seems more to the point, not least for the economic opportunities these schools create for parents via employment, for students through longer and better schooling, and for the community as a whole with falling rates of unemployment and a better-educated population.

While this research is not conclusive across all markets, it provides a reliable, data-driven benchmark and a pathway forward in placing education at the heart of a community’s short- and long-term economic and social development."

I invite you to read the full article on the Opportunity blog. 

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