Business Case and Intervention Summary

crookedabidingΚινητά – Ασύρματες Τεχνολογίες

12 Νοε 2013 (πριν από 3 χρόνια και 11 μήνες)

316 εμφανίσεις

1


Business Case and Intervention Summary


Title:
Developing Effective Private Education

-

Nigeria (
DEEPEN
)


What support will the UK provide?

This Business Case is for a new education
programme in Nigeria
:

Developi
ng Effective
Private Education
-

Nigeria

(
DEEPEN
).
The tot
al
commitment

will be
£18
.5

million
for
implementation of a five year programme from October 2013 to October 2018

(£15.8
million)
;

evaluation of the programme over a seven year period from October 2013 to
October 2020

(£2.2 million); and the current commitment £0.5 million for

design and pilot
projects from January 2013 to October 2013
.


The UK Government will support improved lear
ning outcomes for girls and boys in Lagos by
facilitating change and supporting innovation in the private education
market

to improve the
quality of education it provides to children
.

This support will
deliver the
D
FI
D 2012
-
2015
Business Plan commitment to


e
xpand access to and educational outcomes for poor
children, including through low
-
cost private schools, in at least four countries’, by March
2014.

The programme will complement other D
FI
D Nigeria education programmes delivering
the D
FI
D Nigeria Operati
onal Plan target for directly supporting
public
schools, teachers and
girls to improve the quality of education and reduce barriers to girls attending school.


The programme will have two components:

1.
Facilitating Change: This will be the major component. It will be highly innovative
and experimental,
applying a
market systems approach to
improving education
quality for the first time.
This approach

emphasise
s

sustainable,
systemic
change
at
a large
-
sca
le
and
is
more commonly used in economic development initiatives
.
A
portfolio of interventions will tackle the major constraints to schools investing in better
learning conditions and teaching practices.

2.
Supporting Innovation:
This will be the minor com
ponent, providing financial
support for developing and deploying of innovative business models for low cost
private education.


The Facilitating Change component will be implemented by
the

service provider
competitively procured
in January 2013
to ‘
design

and implement’

the programme subject to
Business Case approval, satisfactory performance during the design phase, and agreement
to acceptable terms for the implementation stage.
A contract amendment will be required.


It is proposed
that
the Supporting
Innovation component

is

contract
ed

through negotiated
procedures. These would be single source contacts
with
for
-
profit companies interested in
developing and introducing an innovative business model for low cost private education to
the Lagos market. We h
ave agreed this with Procurement Group, who helped elaborate this
approach.

Single source contracts would be justified because the innovative business
models proposed would use and develop the companies


own intellectual property
-

we
couldn’t go to the ma
rket to source that intellectual

property
.


Why is UK support required?

Lagos has a growing population, a vibrant economy and aspirations to be a mega city. But
its education system is failing to serve its economic development requirements or the
learning
needs of its children.


An estimated 1.5 million children go to private primary and junior secondary schools in
Lagos.
This means that t
he private sector now educates two thirds of children.

Recent
research shows that
the private sector is
now
the
main
provider of education

e
ven for
children from poor households
,
more than
half of whom attend
one of around
1
8
,000 private
2


schools and pre
-
schools.
This is a growing trend with private schools absorbing much of the
growth in
school

age children
, estimated to

be eight per cent a year
.


Less than
two

percent of the school age population is out
-
of
-
school

and the rate is the same
for
boys and girls. Access to education is not a significant problem in Lagos.


The quality of e
ducation is a significant problem in

Lagos, both in the public sector and in
much of the private sector.
Only

39% of candidates earn a minimum of five credits including
general mathematics and English language
i
n the West African Senior Secondary Certificate
in Education.

After
four

years of primary education
,

only 17% of children have attained the
core literacy and numeracy competencies expected of children at that age.


Average learning outcomes
are

higher in private schools

than public schools,
but
are still
low. Parents perceiv
e private schools to be better than public schools, but

‘less bad’ is a
more accurate description
. Poor quality education and learning outcomes impede

children’s
life prospects
and

the economy’s potential for growth.


DFID Nigeria is
improving

public secto
r education
in Lagos
through the Education Sector
Support Programme in Nigeria (ESSPIN). Failings in the private education sector are not
being addressed

by government or donors
.

Without intervention
the
private
education

market will continue
to grow, educating a growing number and a higher proportion of
children.
Learning outcomes may improve marginally, but the underlying constraints to
investment

in better learning conditions and teaching practices will remain.


There is currently a window o
f opportunity for DFID to intervene
. The

current
Lagos State
Commissioner for Education
, in sharp contrast to her predecessor, has recognised the
contribution of the private sector and asked DFID
to
support the
Ministry

to

improve the
rules and regulations

for private schools. She is using data and evidence commissioned by
ESSPIN and DFID Nigeria to change the attitudes of the Governor and other
Commissioners to
wards low cost

private schools.
Elections in 2015 will bring a new
Governor and Commissioners. It

will be critical for the programme’s success that it has time
to build momentum and traction before then.


What are the expected results?

DFID support will facilitate change
and support innovation
in the private education
system

in
Lagos to improve the quality of education delivered by private schools, particularly schools
which serve poor children.


A
lmost
1.5 million
girls and boys

will benefit from improved learning outcomes

by
2020
as a result of intervention
s

to
tackle
the major
constraints to school
s

invest
ing

in
better
learning conditions and teaching practices.
Girls will benefit at least as much as boys and 30
percent of the children with improved learning outcomes will be from households below the
poverty line.


DE
EPEN

will deliver these results at an estimated cost per child of £12.50. The compares
very favourably with the estimated cost of £65 per child benefiting from school improvement
projects under Phase 1 of the ESSPIN programme

and the DFID Business Plan inp
ut
indicator for the cost per child supported in primary education of $140
1
.


E
xcellent

value for money (
VFM
)

is driven by the scale of
the
impact and
the economies

inherent in facilitating change and stimulating other’s investment.




1

www.gov.uk/government/uploads/system/uploads/attachment_data/file/137470/Business
-
Plan
-
Input
-
Impact
-
Indicators.pdf.p
df


3


1.

Strategic Case



Context and need for a DFID Intervention

Lagos’ aspiration to become a mega
-
city of choice is built on its fast growing population and
vibrant economy. The Lagos State Development Plan
2

recognises human capital as an
essential building block for this futur
e vision. Currently the education system
in Lagos
is

both

performing and
failing: whilst all but a very small minority
of girls and boys
now go to school
3
,
the quality of schooling and the learning outcomes of children remain very low.

The problem
for
girl
s
and
boys
is quality, not access.



State policy deems basic education to be both free and compulsor
y, but years of failure by
the S
tate to provide enough schools for Lagos’ rapidly expanding population, coupled with
the failure to ensure
that
its schools

provide a decent quality of education, has prompted the
steady and rapid development of p
rivate schools. These

now account for
1.5m children (at
primary and junior secondary
levels),
two thirds of total enrolment in Lagos, and this
proportion will contin
ue to grow in coming years. Current estimates suggest
that
there are
now around 18,000 private schools in Lagos, which is expected to rise to 22,000 by 2017.

In
contrast, t
here are a little over 1,600
g
overnmen
t s
chools and this number is not expected to
rise significantly in the coming years.


Private schools serve the poor. Recent data show that
at every income level the majority of
households
send thei
r children to private schools
4
.
Almost o
ne
-
third of children at private
schools are from below the
abso
lute
poverty line
5
.
Although this programme has used the
recent data to define low
-
cost private schools as those which are affordable to the poor, that
is cost less than eleven per cent of household income for a family on the poverty line,
the

research als
o shows that

poor
children
do not always
got

to the cheapest schools. Th
is may
be an indication

that
demand for
a
good

quality

education is strong

amongst the poor as well
as the rich
.


Lagos thus now has one of the world’s largest private education market
s, comparable to
those in Lahore and Karachi. Credible e
fforts to improve the human capital of Lagos clearly
need
to include private education; i
nvesting in improving low fee charging schools will benefit
the poor.


One of the

key reason

for the growth in private schools is that they
are perceived to deliver
better quality education when compared to government schools. The limited evidence from
test scores supports this view, as does a comparison of junior secondary public examination
res
ults. Much of the advantage held by private schools comes not from better teaching but
from higher level
s

of accountability and greater time
that
teachers spend on task. Teaching
is much the same

in government and low
-
cost private schools
, it

is

just that
private schools
do more of it. In reality, priva
te schools are on the whole

‘less bad’

than government schools.
A
verage performance

mask
s

the extremes, and private school performance includes Lagos’
high cost, highest performing schools. We do not have dat
a disaggregated by income
quintile or by school fee level, but it is very plausible to assume that poorer children
attending

the cheaper
schools will make up
the
bulk of the below
-
average scores
.



So what is the problem we will address?

Private schools
are part of a large, informal and
essentially weak education market. It is
poorly organised
, poorly supported

and
frequently
undermined by g
overnment rules and regulations
, all of which hinders its
develop
ment.



2

Lagos State Development Plan 2012
-
2025. Lagos State Government, Office of Transformation. Dec 2012

3

The
School Choice in Lagos

Report finds that 1.0% of primary
and 2.6% of junior secondary

children are not
enrolled.
There is no difference between g
irls and boys.

4

School Choice in Lagos
ibid.

5

Defined by the Harmonised

National Li
ving Standards Survey (2009
-
10)
National Bureau of Statistics

using a
per capita methodology, 40.3% of the population in Lagos are below the absolute poverty line.

4


Consequently it f
ails to maximise its potenti
al to deliver better learning outcomes to the
children it serves.
This market is diverse, ranging from the high end, high fee charging
schools that serve Lagos’ elite and middle classes, to a ma
ss of low
-
fee schools that serve
Lagos’ poor.
M
arket failures

are felt hardest at this lower end, and
contribute
to the

problem
of under
-
achievement

and low learning outcomes. The most significant of these failures are:




Poor and uneven information for parents about school quality



‘Soft’ competition among schools
due to growing population that allows poor schools to
survive



Missing support functions including access to finance and professional services, such as
teacher training
, and



A heavy
-
handed and non
-
supportive regulatory regime that forces
the majority of
sch
ools
to operate ‘beneath the radar’ of
G
overnment
.


This difficulties and complexities of this operating environment are even greater than in other
urban contexts such as Nairobi and Accra. This stifles foreign investment in the low cost
private sector which could bring innovation and competitive pressure t
o the market.


Lagos
State Government policy towards private schools is changing.
Reluctance to
acknowledge

both the scale and importance of the private sector, which characterised
G
overnment’s attitude until
last year
,

has
started to give w
ay to a recogn
ition that the State’s
aspirations for education will only be served through greater partnership. To a large extent
this has
been driven by greater evidence, in particular the first private school census
6

in
2011 which presented the undeniable reality of
t
he magnitude of
private schooling

in Lagos
.


Earlier
G
overnment antagonism
by government

towards low
-
cost
private schools
,

often


unapproved


and

unapprovable


under the governments’ regulations,
is
now
giving way to
an emerging desire to create a more e
nabling environment for private schools. Exactly what
this means is both vague and varied: there remains ample evidence of the continued
imposition of both formal and informal taxes and levies by different arms of state and local
G
overnment on private scho
ols. Many schools remain in daily fear of being closed down.
This co
-
exists alongside encouraging initiatives to
change to a more inclusive and flexible
r
egulatory system in order for all schools to become formally recognised.


What is clear


and evidence
d in frequent statements by
G
overnment


is that the school
system in Lagos is a pluralist one, and i
ts success will depend on both ‘sides’

working in
partnership.

What is less clear is how to do it. This is the space that this programme will
seek to enter
. It aims to address the constraints in the education market, building on the
opportunity afforded by a more positive government stance, to develop a better functioning,
pluralist education market system.


Why should DFID intervene?

The case for intervening centres on the need to address the educational needs of the poor,
the
majority of whom go to
private schools and receive a poor quality education. Reaching
these children cannot be assured through investment in public education; th
e current and
future reality of education in Lagos is that the private sector will educate an increasing
majority of Lagos’ children


including the poorest. Improving the quality of education these
children receive will improve their life chances of movin
g out of poverty.


If DFID
Nigeria does

not intervene
,

the private education market would continue to function
in
an informal way. The sector would

undoubtedly continue to grow
but
along its current path
of under
-
performance, without addressing the problem
s of poor learning outcomes.
Private



6

ESSPIN 2011 (data from school year 2010/11), reported in the Annual School Census Report 2011

5


investor will continue to be put off by the level of risk.
Government policy

would

likely remain
ambivalent.
Lagos’ poorest children

would

continue to be ill
-
served, by both low quality
public and private schools.


Ther
e is a real opportunity to put substance on the cu
rrent policy rhetoric around a ‘pluralist’
system and
an
‘enabling environment’
. There is high level political interest that is not
currently backed by a comparable depth of technical understanding. Relativ
e to the more
mature public
-
private partnership models that exist elsewhere, Punjab province in Pakistan
being one good example where DFID provides support, Lagos is some years behind.
However, wide ranging discussions with key stakeholders during design,
including the
private schools associations and financial institutions, poi
nt to the readiness and window of
opportunity for change.


The programme is
in line

with DFID policies
.
It fits with the focus of

the DFID Nigeria

Operational Plan

on
Lagos
as a mode
l for reform of public: private engagement

with respect
to governance and economic development
.

Corporately
, i
t is aligned

with
emphasis placed
on
exploring new arrangements between public and private sectors for
the delivery of basic
services
, for example

in the DFID Nigeria Operational Plan and the DFID 2012
-
2015
Business Plan commitment to “expand access to and educational outcomes for poor
children, including through low
-
cost private schools, in at least four countries”.
The
programme also responds to t
he recent increase in the priority attached to
education quality
and learning outcomes in DFID’s education policy (position paper forthcoming) and in recent
Public Accounts Committee and ICAI reports.


The programme is

complementary to existing
DFID
educat
ion programmes aimed at
improvi
ng access and quality
.

Two major education projects are already under
implementation supporting public education and a third wil
l begin later in 2013. ESSPIN
works
in six states,
including Lagos, and focuses on public primary

education and
G
overnment as a provider of education rather than enabler of the wider education market.
The Girls Education Programme managed by UNICEF works in a further four states. The
new Teachers’ Development Programme will provide in
-
service training

for teachers in six
northern

states. In addition, the World Bank supports
government secondary schools

in
Lagos

through the EKO project. No donors are currently supporting private education,
despite its majority stake in educating two
-
thirds of Lagos’ chi
ldren.


The issue is not so much
whether

to intervene: clearly to impact on the educational
opportunities of an increasing majority of
Lagos’ children requires engaging

with
the
private
schools

market
. The bigger issue is
how

to intervene in this large, albeit under
-
performing,
market in ways that are sustainable without damaging the systems and processes on which
it has evolved.


Why a market systems approach
?

In 2011, DFID

Nigeria

identified the need to intervene in the Lagos private education
context
and commissioned a scoping study which recommended
that any intervention should follow

a m
arket systems


or ‘making markets work for the poor’ (M4P)
-

approach. The central
features
of

a market systems approach are
b
uilt around analysis and action:




Understanding the structures
, rules

and incentives around which
the central

‘supply and
demand’ core of a
market works



and the main reasons (constraints) preventing it
from
work
ing

bett
er for the poor



U
nblocking the constraints through improving
wider systems (such as information, rules,
access to services)
that influence the core,
so that the market works better
,
matching
increased demand and improved supply
, and



Placing emphasis on lea
rning, monitoring and evaluation, to inform further change.

6




A market systems approac
h is grounded on principles of ‘do no harm’

and sustainability.
Every proposed intervention considers what impacts
-

negative and positive
-

it will likely
have and ensu
res sustainability by asking the key questions of “who does?” and “who
pays?” What a market systems approach does
not

do is provide
short term fixes in the form
of funds, goods and services that may undermine market systems and do long term
damage. For example, addressing the problem of excessive and arbitrary government levies
and encouraging new financial services aimed at better fee

collection from parents are better
solutions to the problem of school financing than simply offering grants.


A

market systems approach

was selected

on the basis of two sets of

fa
ctors. First,
recognition that DFID’s support for the market systems approa
ch, totalling £300m in 15
different projects in 2011, was generating significant evidence of success. For example,


(1)


In Nigeria, the
PrOpCom

programme, after an initial period following a different course,
changed to a market systems approach, reaching

1.
26m poor people
, generating

additional net income of £41m, and creating over 17,000 jobs
.

The PCR
for the project
found that


only once PrOpCom started to adopt a rigorous M4P methodology
did

its
effectiveness start

to increase

.

(2)


In South Africa
,

the FinM
ark Trust (initiated by DFID) co
ntributed to a 7.1m increase
(doubling)
in the banked population, working with banks, government, and specialised
service providers.

(3)


In Bangladesh,
the
DFID
-
supported Katalyst
project

has work
ed

with more than fifty
different companies, government and other organisations that have been ‘crowded
-
in
’ to
different markets. It has

generated 183,000 jobs
and $115m in additional income and
impacted positively on

1.6m
small and medium
-
sized enterprises
(
SMEs
)

and farm
ers
.


The second reason for favouring a market systems approach is recognition that the
emergence of such a large private sector

in Lagos, 18,000 schools,

means that the ‘rules of
the game’


the development challenge


have fundamentally ch
anged. Educa
tion can no
longer be seen
as a public good that is a matter of public sector delivery, but
rather
as a
more complex pluralist system.
In this context, s
tandard
development
responses will not be
appropriate
. Indeed, this realisation of a new re
ality is evident in other public spheres such
as health and water (as well as education) and is reflected in DFID’s (and other agencies’)

more innovative approaches in these fields
. In this context, a market systems approach is a
lo
gical choice


it makes
sense
for the Lagos education market.


Overall, DFID’s
combined
experience
with the market systems approach
provides a sound
basis for developing a new private
education programme, and an

opportunity to pioneer an
i
nnovative
approach in an area of educatio
n that is ga
ining global attention
. There is already
interest from other DFID offices working
in different ways
with private education in Pakistan,
Kenya and Bangladesh. With Lagos regarded as leading the way in reform, there is good
potential for wider application of a successful model across Nigeria.


Impact and Outcome that we expect to achieve

The programme’s
impact

will be
improve
d
learning outcomes for
almost 1.5 million
children

attending private schools

as a result of interventions to tackle the major constraints to
schools investing in better learning conditions and teaching practices. Girls will benefit a
t
least as much as boys and 30 percent of the children with improved learning outcomes will
be from households below the poverty line.
The depth of this improvement will be seen in a
6 per cent increase in the average scores on literacy and numeracy tests
by 2020. These
impacts will be measured through sample testing of children, supported by household
surveys.


7


The programme’s
outcome

will be

better learning conditions and teaching practices in
private schools
, especially among

schools serving

poor

child
ren
, as a result of

more
investment, better management
,

better pedagogy

and

innovation
. This will be brought about
through the creation of a more enabling environment in which schools operate, building both
the incentives as well as the
capacity

to improve.
The programme will prioritise interventions
that are especially relevant to schools with a higher proportion of children from low
-
income
backgrounds to ensure that these benefit as much as other children.

Change will be
measured through an ann
ual survey of private schools, assessing performance against a
number of core indicators of education quality.



The programme will address both levels of compulsory education
-

primary and junior
secondary. Primary is necessary but not sufficient in the c
ontext of Lagos’ mega
-
city
aspirations and the emergence of the knowledge economy where real opportunities for
children open up beyond basic literacy and numeracy with the acquisition of wider skills,
knowledge and competencies.


2.

Appraisal Case


A.

Feasible
Options

The Strategic Case sets out
(1)
the need for intervention
by
DFID
in the Lagos private
education system and
(2)
why
this intervention should be consistent with a market

systems
approach.
We now
appraise the

feasible
options
for facilitating change in the system
by
setting out the key feasibility criteria, describing each option, analysing the evidence
associated with each

option

and then
subjecting each to an economic appraisa
l. On the
basis of this
,
the

preferred option is i
dentified
.


Figure 1 sets out the overall th
eory of change
:

system change leads to better schools leads
to better learning.
Detailed theories of change for each
option

are included
with

the
description of the option.



























Draws from incentives of
stakeholders


G
overnment,
banks, parents


and builds
capacity

to change

Aligns learning objectives with
schools’ commercial
incentives
and creates opportunities to
develop capacity


Children




Schools




System




Interventions




Improved learning

outcomes



Systemic intervention



Improved

schools



Improved market

system


Option 1

Option 2

Option 3


Do nothing



Voucher programme



Multiple
interventions


Figure 1: DEEPEN generic theory of c
hange

and options

8


Three options are considered:



Option 1: a

do

nothing


or counterfactual option



Option 2: a vouchers
-
based programme



Op
tion 3: a multiple
-
intervention

option


Feasibility criteria

F
easibility is concerned with the overarching
question

of ‘will it work?’ W
ill the theory of
change
be realised in practice?

Within this,
the key criteria
in
viewing the relative strengths

and weaknesses

of each option are as follows:



Feasibility

Criteria

Description

The extent to which the option
is likely to…….


1.

Sustainability

Identify and address underlying causes of weak learning achievement in private
schools
-

and the dri
vers of long
-
term, sustainable improvement in

performance


2.

Inclusiveness

Identify and address underlying causes of weak
learning outcomes of children
from low
-
income households and other priority excluded groups


3.

Scal
ability

Identify and act on opportunities to stimulate
and sustain

change that impacts
positively on large numbers of children


4.

‘Do no harm’



Not

undermine the existing performance of the private education system,
most

notably the informal rules/
relationships that allow it to function at its current level.



Option 1: Do n
othing

(counterfactual)

In the absence of the
DEEPEN

programme, the current trends in Lagos private schools are
likely to continue. In a context of high population growth (estimated at 8% per annum) and
relatively fixed public school capacity, the

number of private schools is likely to
grow at more
than 8%
annu
ally and the proportion of the S
tate’s children attendin
g private schools
(currently around two
-
thirds
)
will
also grow.


The growth in the sector is likely to lead to further

interest from
providers of various

services
for schools
. Finance organisation
s, already aware of the sector and sensing an opportunity,
are likely to devote more attention to it, resulting in some improved products and services.
Training organisations and

specialists


offering services re
lated to pedagogy may
become
more active


but these are of mixed quality and sometimes questionable efficacy. More
widely, the growth in free downloadable pedagogy resources will also
continue. These
factors
, particularly if a
competitive need for schools to differentiate
their ‘offer’
emerges,
ma
y lead to
some improvement in quality and learning outcomes, especially among high
-
fee
schools


but this is likely to be rather marginal in its impact.

Key constraints to the
development of better quality and improved learning are unlikely to be addressed
.


Lagos ha
s the largest concentration of private schools in Africa and, as donor
and
philanthropic
awareness of the low
-
cost private school phenomenon grows, is likely to attract
donor funds. However, most of

this is likely
be direct funds for specific sc
hools


and not to
touch the fundamental systemic constraints that impede development.


The most likely prognosis for private schools in Lagos under the ‘do

nothing’ option is
therefore for the sector to grow in size but remain substan
tially stuck at its current level;
growing and relevant for most of the city’s children but still with relatively low levels of
learning outcome
, especially for the poor
.


9


Option 2: a voucher
-
based programme

Under this option, vouchers are given to target
ed households which are then exchanged in
return for all or part of a child’s education in a school of the parents’ choice.

A pilot
scheme
catalyses commitment from
G
overnment for scale
-
up
,

leading to broader systemic change.


Theory of change:

T
he
theory

of change

(Figure

2) outlines the flow of logic behind

this option.


Vouchers targeted at low
-
income households
in a pilot area
empower parents and allow
them to choose better schools for their children. The main immediate benefit will be children
who are

reci
pients of vouchers ‘trading up’

(including parents choosing private rather than
public)
,

attending better schools and, because of this, achieving higher learning outcomes.
The households of children staying at their same school may benefit from higher

incomes
(a
nd nutrition) but the
impact on lea
rning is less

clear.


































On the supply
-
side
:
schools may benefit from greater certainty in cash flow
;

better
performing schools may gain children and income
;

weaker

schools may lose children, and
some may close
;

and new schools may open and
/or

international ‘chains’ of private schools
may enter the market
.


Beyond these immediate benefit
s, however, the potential of this

demand
-
side stimulus to
generate greater learning outcomes requires that it incentivises systemic change at two main
levels:


Improved learning

outcomes



Pilot provides basis for
transition to
G
overnment




Conditions for learning
improve



Voucher recipients go
to new, better schools



Voucher recipients in
existing schools



Parents receive vouchers



Pilot programme activities



set
-
up and delivery




Scale
-
up


support to
Government




Govt implements and
finances programme




More interest from stakeholders


banks, regulator,
service
providers etc
.




Improved regulations,
finance, teaching services


Figure 2: Option 2 theory of c
hange


Children



Schools



System



Interventions


?

10





Government takes over and commits to organising, financing and expanding the vouche
r
programme throughout Lagos
.




This commitment and investment by
G
overnment stimulates wider change in relation to
other functions


such as regulations, finance, and teachi
ng innovation


and among
other players such as banks, the mass media, and specialist service providers.


This systemic change, in turn, stimulates more investment and innovation among schools,
who have more certainty of income and who can take advantage o
f a better environment t
o
deliver
better services.


The programme will

not seek to address directly other barriers to educational quality but
assumes that this major injection of demand
-
side resources catalyses wider change in
incentives and capacity.


Ope
ration

T
he focus of the op
tion

would be on developing a careful
ly designed and monitored pilot
programme which is of sufficient size
and intensity
to offer a basis for learning and
to

influence

G
overnment.


The general

features of the pilot would be:




Focus

on three

local government areas (LGAs), selected on the basis of their size,
diversity, scope for efficiency and

level of

interest from
G
overnment.




Target

the bottom quintile (20%) of the population
7

-

which corresponds to the bottom

half
of those l
iving under the poverty line
. S
ome voucher schemes are universal but this is
deemed to be unfeasible (politically and financially) in Lagos
.




Fix

the face value of the voucher at N7,500 (approx £30) per annum


which equates with
the lowest level of school

fee. Parents would be able to
exchange this for the total cost of
the
ir child’s education or to part
-
pay at more expensive schools. Vouchers would be
distributed on a termly basis.




Redeem vouchers
at any registered school
(approved or unapproved)



there

would be
no attempt to pre
-
qualify schools by facili
ties or services,
thus putting decision
-
making
entirely in the hands of parents.


O
verall set
-
up

-

including
household
surveying

(necessary to identify the target group)
system design, and the developmen
t of financial controls and logistics
-

would
effectively
take the first year of the programme. On
ce started, the programme would t
arget pupils in
Primary 1 (P1)
and in Junior Secondary 1 (JS1). F
rom the outset, the programme would thus
be relevant to chil
dren at both
junior secondary (
JS
)

and p
rimary
levels,
sending the signal
that both levels of the basic education system are important.

In year 2,
vouchers would be
available to the same pupils as they enter P2 and JS2 respectively as well as for the next
year of pupils entering P1 and JS1. This would continue for the remaining two years of the
programme.


By the end of the programme, a total 108,000 children would have received vouchers for one
or more years of their education.
The annual cohort of
children s
upported in each year is




7

Approx N3
,
750 per month according to the recently
-
completed report
funded

by DFID,

Household poverty and
school choice in low
-
income areas of Lagos: a case stud
y approach

(Ingrid Yngstrom
)
.

11


13,500
.
On

the basis of current trends,
40% of voucher
-
recipient children could be expected
to be attending (or going to attend) public

schools and the remaining 60
%
at
private school
s
.


Throughout the programme there wou
ld be close engagement with
G
overnment to build their
ownership and commitment to
eventually assume

responsibility for
the scheme
. In the final
phase and especially in the final year, transition activities to
G
overnment would increase.
Importantly,
G
overnm
ent commitment would be required not only in the targeted LGAs but
for the
S
tate as a whole


since
it is considered
unfeasible to scale up in a partial manner.


For this option

to be successful, a number of assumptions at two levels


operational and
stra
tegic


need to apply.

Operationally


it is assumed that
8
:



Targeting is feasible



Potential distortions for example

from incorrect information on household incomes and
tensions from the perceived divisiveness of targeting can be managed



Systems can be
developed to reduce the potential for fraud and misuse
, and



Eligible households will choose private over public schools
9
.

Strategically, i
t is assumed that
G
overnment will have

the political, organisational and
financial will and capacity to take over and
expand the voucher programme
.


Option 3:
multiple
-
interventions option

Under this option, a
programme of
complementary intervention
s address
es

directly
the major
underlying constraints
affecting
the education market system
.
Change
in the system in which
schools operate
lead to better

learning

conditions and
teaching
practices in schools.
Programme activities
are led by
analysis of constraints
,

and have the flexibility to respond to
changed circumstances and new opportunities.


Theory of change


The theory of change (Figure 3) outlines the flow of logic behind this option.

Interventions will
facilitate

change
s

that:



a
lign

commercial

incentives with better learning (market players want to change)
,

and



build capacity

to deliver b
etter

(market

players

are able to change).


Interventions

will

focus

on four main
areas of
constraint identified as
most significant
,

but
feasible
,

for the programme to tackle
10
. The dynamic and fluid nature of the market

necessitates flexibility
in how
activities are planned
. The programme
will
therefore evol
ve as
the market develops.


The key focus areas will be
:

the
rules and standards

in the regulatory environment;
information

for parents, schools and other stakeholder; managing and accessing school
finance
;

and

services for improving

pedagogy.
An additional area of intervention


supporting innovation


is also considered.


This dual character of effective market system development


incentives and capacity
-

is at
the heart of the theory of change.
Change in the system leads to raised awareness and
understanding among schools of the benefits of change and to improvements in learning
conditions. This in turn leads to better learning outcomes. Each strand of the theory of



8

More specific assumptions are given in the economic appraisal section.

9

Trend data on the growth of private schools and their better performance than public schools
supports this view
.

10

Limited access to land is a
lso a sig
nificant

constraint
to

the survival and growth of private schools. Most
schools rent land/property and a large proportion of them are subject to short term rental terms and ever
-
increasing rents (especially when they have invested in the property). Those t
hat hope to own, or take long term
leases, face multiple obstacles.
C
redible solutions can only be long
-
term. A separate DFID funded programme,
GEMS 3, is working on land reform issues and
DEEPEN

could cooperate with them to ensure that
any

opportunities f
or land reform interventions impact schools.


12


change can be broken into ‘min
i
-
theories’ of change but connecting these there are a
number of key assumptions:




Better information from
a
grading system

provides a
transparent way


for schools and
parents in particular
-

of assessing schools’ ‘
quality
level’, and therefore becomes a
lever
for improvement
.






































More and better information communicated by a variety of means raises
stakeholders


awareness and understanding
of

quality and learning issues
.




Schools


commercial in
centives (to make money) become

aligned with the objective of
improving standards and conditions for learning
. Improving quality is seen to be
important
.




In that context, schools

are incentivised to seek better services to raise their capacity and
performance
.




Finance providers
, bette
r informed about the market and supported to trial new services,
improve their ‘offer’ and reach to schools
. Improved finance and cash flow allows schools
to invest and plan for improvement.


Figure 3: Option 3 theory of c
hange


Rules and

standards




Information




Finance




Pedagogy



Children




Schools




System




Interventions



e.g.
technical
assistance,
information, grants,
networking, pilot
projects



Stakeholders include
Government, mass
media, banks, parents,
mobile providers, other
service providers


Improved learning
outcomes



Conditions for learning improve



Behaviour in schools changes
-
i
nvestme
nt, pedagogy, cash flow
management



Behaviour among stakeholders
changes



Stakeholders’ understanding
of
key

issues

and
the
relevance of
these to
incentives

improves



Capacity
-

financial,
organisational and technical
-

of
stakeholders improves



Schools’ understanding of key
issues

and
the
relevance of these
to incentives

improves



Capacity


pedagogical,
financial, organisational
-

of
school
s improves



Innovation


Direct effects

Demonstration and
Competition

effects
?

13




New interest from schools offer
s

a more conducive environment fo
r innovation
and supply
of

services related to pedago
gy.




This combination
-

recognition of the importance of learning outcomes and capacity to
improve


results in changed conditions for learning and higher outcomes.


I
n summary, the theory of change resu
lts in conditions for learning improving because

constraints to change are addressed
:


Schools have an incentive to improve:

changing the rules and standards impacting on
schools, making them
part
of ‘the system’, means that they are
assessed (by themselve
s
and by others) on a more transparent basis. Changing the rules of the game refocuses
schools


energies on how to improve.


Parents are more informed and demanding:

better information (and rule

changes
) empower

parents, allowing them to become more
knowledgeable and assertive consumers of
education
, seeking better accountability from schools and increasingly prepared to exercise
choice. In order
to keep
and

attract new parents/pupils,
schools
have to become m
ore
responsive
to these demands
.


Schools
want, and know how, to improve teaching practice:

with schools recognising the
need to change, they are able to tap into a range of sources


such as training
, networks,
peer

groups, web
-
based facilities


to enhance their classroom practice.


Schools want
, and are able
, to develop better capacity
:

recognising the need to improve their
‘offer’ to parents/pupils, schools can access a range of appropriate financia
l services,
resulting in more
financial stability and more investment in better infrastructure

an
d people
.


Innovative business models can be deployed in Lagos:

Schools or service providers with
highly innovative business models are supported to mitigate the additional risks posed by the
operating environment in Lagos. This has a direct benefit to chi
ldren in these schools and
may have indirect demonstration and competitive pressure effects on other schools.


Two different examples illustrate the theory of change in practice.



Example 1:
School grading system

Example 2:
New mobile services and cash
flow management


Constraint

The current regulations around schools do not
provide useful information


to key actors such as
schools, parents, the
G
overnment and banks
-

on
the level of facilities, practices and conditions of
schools. And they provide no

incentive to improve

Poor cash flow management undermines school
performance, leaving them with no financial
or
planning platform for develop
ment. Mobile money
providers are not aware of the potential
opportunity for a product to address this problem.


A
ctivit
ies

With partners


the
Ministry of Education (
MoE
)

and associations


develop
a
shared view of
benefits
and features
of a new grading system,
design
and test
school grading instrument and
system for initial pilot (300 schools) and then roll
out.

Wi
th one partner initially, develop
a
pilot
mechanism to trial

a new service with
a
small
number

of schools (and parents).

Monitor project
closely. S
upplementary activities to encourage
scale
-
up and crowding in of new providers.


System change

Partners see

benefits of grading

(and the risks of
not

being involved)
, have ownership over it and
commit resources to further development. High
Once benefits of new service are clear,
commercial incentives drive partners to in
vest in
growth and development.

14


level of school participation in system.


Schools change

Schools see benefits of grading for them


a test
of ‘where they are’ and a ladder for self
-
improvement. Wider media exposure and
parents


influence supports

this

pressure for
change. Schools make changes


investments,
practices


to develop better learning conditions.

Parents have a more convenient method of
payment. Fee payment is more reliable. Schools
experience smoother cash flow
and revenue
certainty
and have the confidence to invest in
better facilit
ies and practices



and need to do so
to meet the demands of more informed parents
with better information to guide decision
-
making.


Learning change

Better lea
r
n
ing conditions in schools leads to higher learning outcomes
.


Operation

Overall direction and priorities will be set at the outset of the programme and an opening
portfolio


activities which will commence at the start or near the start of the programme
-

identified, but specific activities beyond this will not be.
Across the
programme, at any one
time, a range of activities will take place. The opening portfolio is likely to include six

to
eight
interventions
.


Focus area

Opening portfolio of i
ntervention
s (indicative)


Rules and
standards

School grading system development


working with MoE and associations to
develop a sustainable system, building on
the
pilot to
expand to one
-
third of
schools

initially


Taxation and

levies


expanding and enriching the school diaries research
(recording

school interactions with
Government

officials) to generate better
evidence and advocacy material


Information

Mass media development


mentor one partner media house
(initially)
to develop
better radio programming on education

-


Finance

Mobile money
pilot initiative


support one mobile money operator to develop and
test

a

new service for private schools


Access to finance


undertake
a
detailed ‘FinScope’ for schools study (use of
service
s and finance needs)
to address supply
-
side knowledge weaknes
s


Pedagogy

Cluster
-
based peer teacher support


pilot

an

initiative to introduce and test

a

new mentoring and network approach to teaching development



Testing the TTA (Teacher Training Australia) model


pilot

an

initiative to adapt

a
generic training approach for the Lagos context


Interventions beyond this initial portfolio are, in part
, shaped

by the results that emerge from
the first experiences. These are likely to include:



Advocacy capacity development with associations



Scalin
g
-
up support to pilot initiatives in finance, pedagogy and information
, and



Government capacity development

around new strategic priorities in education
.


Underpinning all of this will be a significant on
-
going research and results measurement
effort to
inform the evolution of the programme’s activities. Analytical studies may include:



Taxation and private schools


the approach in Lagos
and

other cities



The economic contribution of private schools in Lagos



The educational benefits of school chains



The
i
nstitutional and
capacity implications for Government of playing a
n

‘enabling’ role.

15



Interventions supporting innovation are likely to
be
significantly different. The barriers and
constraints to innovation in low cost private education in Lagos come from within and outside
Lagos.
Low financial returns on investment in low cost private education make it unattractive
for private investment, pa
rticularly where there is high risk associated with a new or
innovative venture. The nascent
i
mpact investment market is demonstrating an appetite for
the risks, private returns and social returns to investment in low cost private education in
some countri
es, but not in Lagos, where the

complexity and difficulties in the

operating
environment

add to the risk. The interventions facilitating change in the operating
environment will reduce this risk in the medium and long term. In the short term, financial
sup
port for innovative business models is needed to attract investment.
In the rest of the
business case we differentiate between a ‘facilitating change’ component and a ‘supporting
innovation’ component of a multiple interventions options.


For all activitie
s, c
lose knowle
dge of incentives
-

commerc
ial, organisational, political
-

is
therefore central to the intervention process
.

Importantly

also,

although interventions are
different they are all are guided by the same ‘good practice’ considerations
(
related
to
ownership, sustainability and use of resources
)
.


How will this option ensure that children from low
-
income households


especially the 40%
below the poverty line


benefit? First, one
-
third of the children at private schools are from
this category and
are attending schools at different fee
-
levels; improvements to private
schools generally will benefit them. Second, interventions will be identified that are especially
meaningful to lower
-
fee schools where the proportion of poorer children is higher


for

example
,

school grading and taxation advocacy. Others are designed to stimulate
new
supporting services
and
will be taken up by more resourced/les
s

risk
-
averse

schools

first
before others follow, which is the normal pattern for innovations. Third, rigorou
s monitoring
will ensure that the programme is abiding by the ‘do no harm’ principle while a range of
research activities will continue to improve understanding of the poor and the private sector.

Overall, under this option, it is expected that children fr
om low
-
income households benefit
at
least
as much as others.


By the end of
the programme

is it estimated that the learning outcomes of
1.
5

m
illion

children (4
50
,000 from low
-
income backgrounds) will have been improved.


For this option to be successful, a number of assumptions need to
hold.
Operationally, it is
assumed that:



The programme is able to identify and understand the range of incentives of key
stakeholders
-

commercial, social, political and organisational



Interventions can be developed that provide a com
pelling ‘offer’ to stakeholders, and



Existing weaknesses in pedagogy

can be addressed

through

affordable but meaningful
change
.

Strategically,
it is
assumed that
Government’s current and growing interest in
playing an
enabling ro
le will be maintained

and will manifest itself in appropriate policy, organisational
and resource commitments.


B.

Assessing the strength of the e
vidence
base
on the feasibility of options

Option 2


vouchers

Evidence to support our assessment of Option 2 is
limited
.


Voucher schemes have been exte
nsively studied in recent years.

This includes studies that
are methodologically robust, hav
e been peer
-
reviewed and

DFID’s systematic review of the
impact of educati
onal vouchers for poor people across the developing world
. The evidence
related to vo
uchers can be divided into two

areas:

will it deliver the desired

impact
,

and
16


institutional requirements

for implementation
.

W
e
can
draw the following conclusions

from
the

available evidence
.


I
n relation to educational access and learning outcomes
:


Schemes can target disadvantaged groups to increase access and enrolment effectively
.
The PACES voucher programme in Colombia successfully supported 125,000 children in the
lowest social strata to attend secondary school in large cities between 1991 and 1997.
Through the Education Voucher Scheme, the Punjab Education Foundation now provi
des
free quality education to 31,053 students. Likewise, the Quetta Urban Fellowship
Programme increased female participation by 33 percent while a Bangladesh project saw
girls’ enrolment rise by nearly 65 percent during its voucher programme pilot study
.

However, wider experience with vouchers als
o highlights that, when they

are used to ‘top
-
up’
fees, more expensive schools may use this
as an
opport
unity to increase their fees,
effectively maintaining o
r even increasing the exclusion of poorer students
11
.


Schemes may offer benefits in terms of educational
attainment
. Results from the PACES
programme provide the strongest evidence that such schemes may yield positive results in
terms of improved learning quality. With vouchers allocated within targeted gr
oups by
lottery, and including a control group, records indicate that the scheme increased secondary
school completion rates by 15
-
20 percent and test score results by 0.2 of a standard
deviation. Seven years later, voucher winners had typically completed

more years of
education and enjoyed improved working conditions after leaving school
12
.

It is the case
however that most voucher programmes are aimed at access to education rather than
enhancing quality and the body of evidence reflects this.


Parental cho
ice may play a role in improving learning outcomes in voucher schemes
.
Through vouchers, poor parents have greater choice between schools and increased
leverage to move their children if they are not satisfied with their initial selection. Schools
become

more accountable to parents who may withdraw the funding supplied through their
voucher
13
. Parental bargaining power provides an incentive for schools to raise and
maintain their standards of educational quality. Overall, children who enter low
-
cost priva
te
schools with a voucher can be expected to receive a better education than in public schools.


International evidence on learning outcomes is inconclusive
. Studies on Chile’s universal
voucher system suggest that rather than increasing educational quality and efficiency, the
scheme led to increased sorting between social strata and a widening learning gap as
‘better’ students migrated to the private sector.

With targeted schemes, any improvements
could be due to declining quality in public schools. The learning gains in Colombia might
have been attributable to the academic conditions for continuing eligibility which incentivised
students to work harder, rat
her than any benefit of vouchers
per se
14
.




11

Angrist, J., Bettinger, E., Bloom, E.,

King, E. and Kremer, M. (2002);
Vouchers for Private Schooling in
Colombia: Evidence from a Randomized Natural Experiment
;

The American Economic Review
, 1535
-
1558;
Angrist, J., Bettinger, E. and Kremer, M. (2005)
Long
-
Term Educational Consequences of Secondary School
Vouchers: Evidence from Administrative Records in Colombia
; Malik (2010)
Public
-
Private Partnerships in
Education


Lessons Learned from the Punjab Educ
ation Foundation
, The Asian Development Bank; Morgan, C.,
Petrosino, A. and Fronius, T. (2013)
A systematic review of the evidence of the impact of school voucher
programmes in developing countries
, London: EPPI
-
Centre, Social Science Research Unit, Instit
ute of
Education,
University of London; Ladd, H.F. (2002);
School vouchers: a critical view
; Journal of Economic Perspectives; Vol
16, No 4

12

Angrist
et al.

(2002); Angrist
et al.

(2005)

13

World Bank (2004)
World Development Report 2004


Making Services W
ork for Poor People
, Chapter 7


Basic Education Services; The World Bank

14

Hsieh, C. and Urquiola, M. (2006) The effects of generalized school choice on achievement and stratification:
Evidence from Chile’s voucher program,
Journal of Public Economics
, 90
, 1477
-
1503; Patrinos, H., Barrera
-
17



No studies have focused on sustainability.

Studies on voucher schemes in developing
countries have focused on issues of access and quality to date. None addresses the
challenge of long
-
term financial and instituti
onal sustainability. Some studies have explored
cost comparisons


a study on the Colombia voucher programme for example
15

found that it
delivered quality education at a lower cost that public schools. However, there is no
evidence in relation to the
potential for pilot voucher schemes to translate into longer
-
term
sustainability and greater scale.


In relation to institutional issues influencing voucher schemes


potential for success
, a
number of factors stand out from the evidence
16
:




Prevailing a
ttit
udes:

opinions on

public schooling and whether private education presents
a preferable option and/or i
s viewed as a
threat to the public system;




Clear, manageable and supportive regula
tions:

the difficulties caused by vague and
confused regulations
have been researched
in Colombia and Brazil;




The degree and strength of wider institutional infrastructure and government capacity
(including monitoring p
rocedures, staff capacity

and the national curriculum)
;




The relative status and stability of the pri
vate education sector, and whether private
schools have sufficient surplus places and teacher capacity
;




Access to accurate information for participating schools and households, st
rong parental
preferences

and the freedom to
‘vote

with o
ne’s feet

;




A
functioning and strong system to identify and access the intend
ed beneficiaries
with
effective mechanisms to dis
tribute and collect vouchers;

and




Sufficient quality in the participating schools to ensure children’s continuing att
endance.


Finally, seve
ral

studies
warn that ill
-
conceived schemes can encourage increased rent
-
seeking rather than improved value and quality in education.


The vouchers evidence and
private schools in
Lagos

In relation to the situation in Lagos, international evide
nce therefore
presents a mixed

picture. Most evidence
cited
is in contexts which are very different from Lagos
with

programmes
which
are (1) concerned with access


in Lagos the main issue is learning
outcomes
, and

(2)

not concerned with stimulating wider systemic chang
e through vouchers


which is a central consideration in Lagos. Indeed, the evidence base se
rves to highlight the
necessarily experimental nature of any intervention
in Lagos.







Osorio, F. and Guaqueta, J. (2009)
The Role and Impact of Public
-
Private Partnerships in Education
, The World
Bank; Angrist
et al.

(2005).

15

Patrinos
et al.

(2009)

16

Angrist et al (2005); Gauri et al (2003); Hsieh et al (
2006);
Fronius, T., Petrosino, A. and Morgan, C. (2012)
What is the evidence of the impact of vouchers (or other similar subsidies for private education) on access to
education for poor people?


Protocol
, EPPI
-
Centre, Social Science Research Centre, Insti
tute of Education,
University of London; Rose, P. (2007)
Supporting Non
-
state Providers in Basic Education Service Delivery
,
Falmer: CREATE;
Shafiq, M. N. (2010) Designing Targeted Educational Voucher Schemes for the Poor in
Developing Countries,
International Review of Education
, 56(1), 33
;
Gauri, V. and Vawda, A. (2003)
Vouchers for
Basic Education in Developing Countries


A Principal
-
Agent Perspective
, The World Bank Research
Development Group Public Services and Human Development Network Educa
tion Team
.



18


From this,
there

is
some
(limited)
evidence to suggest that outcomes can impro
ve through
vouchers schemes.

However, c
lear
er conclusions emerge

in relation to the evidence on the
pre
-
conditions for
the
successful implementation of

voucher schemes. The evidenc
e
highlights

the importance of:




P
ositive sentiment

and attitudes
to
private schools.

In Lagos
,

the importance of private

schools is
increasingly
recognised
and
G
overnment
views are becoming more positive.




C
apacity, quality and good information flows in the private sector.

While private schools
in Lagos
represent a
dynamic and mix
ed sector, currently it is
generally weak
with respect to these characteristics
.





G
overnment commitment, policies, regulations, capacity and finance.

These are

currently

weak in Lagos
.
The Governor of Lagos sees the

role remaining for
government schools to be ‘educating the poor’ who cannot afford private schools.
T
here
is no indication

of

any interest in

vouchers


let alone organisational capability to manage
a voucher programme. This currently represent
s a major r
isk for this option
.


O
ption 3


multiple interventions

E
vidence to support our assessment of
Option 3
is
limited
.


The multiple

intervention option is new and experimental. While there is gro
wing experience
of

the m
arket systems approach in other sectors
,

it has not been applied consciously

to
education previously. Evidence with respect
to this option therefore draws
on

education
experience

where appropriate

(especially for pedagogy and rules and standards) and more

generally from

private
sector
developmen
t
(especially for finance and information).


Evidence for this option is divided into the four main intervention areas of rules and
standards, information, pedagogy and finance.



The importance of c
reating a positive
regulatory environment for private sch
ools is widely
recognised, though examples of this happening are limited
.

The IFC
17

highlight
s the
impor
tance of an enabling
environment in promoting quality and sustainability, and that
regulation should be open,
based on objective output
-
focus
ed criteria
and accepted and
observed across the range of

government bodies and levels. The

consequence
s

of a poor
regulatory environment (poor school performance) has been more widely docu
mented, most
recently in India,
Nigeria and Pakistan
18
. In addition to specific
evidence on the private
education sector, there is gr
owing recognition

within education
as a whole
of the importance
of benchmarked standards and good, accessibl
e transparent data as essential
building
blocks of effective systems
19
.


T
he evidence that prov
iding parents with information on school performance leads to
im
proved learning outcomes is

limited.

A meta
-
analysis
20

of 22 high quality impact
evaluations found some evidence in higher developed countries. A major factor in this weak
evidence base is that

most ‘evaluations’ report on the behaviour change (the outcome) of the
accountability reform and not the impact of that on learning. Evidence of effectiveness in



17

J Fielden and N LaRocque (2008):
The Evolving Regulatory Context for Private Education in Emerging
Economies.

IFC Education Working Series No. 14, Washington

18

See Y Ohara; J Harma and F Adefisayo; and S Humayun, R Shahzad and R Cunningha
m in P Srivastava,
ed (2013)
Low Fee Private Schooling: Aggravating Equity or Mitigating Disadvantage?

Symposium
, Oxford.

19

M Barber and M Mourshed (2009):
Shaping the Future: How Good Education Systems Can Become Great in
the Decade Ahead.

McKinsey, Rep
ort to the Inte
rnational Roundtable. Singapore

20

B Bruns, D Filmer and H Patrinos (2011):
Making Schools Work: New Evidence on Accountability Reforms.
The World Bank, Washington

19


improving basic inputs,
such as teacher presence
,

is reasonably strong
, but there is

poor
evi
dence of these

converting into improved learning outcomes. In the UK
,

the disclosure of
school performance information following the esta
blishment of Ofsted has
been linked to
school improvement
21
, though attribution to improved test scores is weak. In the
US school
performance information is shown to influence parental choice and raise test scores
22
.


In developing countries the evidence is weaker. Some positive evidence is emerging on the
use of school report cards to measure and report performance
23

with g
rowing evidence of
their effect in improving accountability and performance. Recent multi
-
country research
24

points to some success in Namibia and Uganda, with the example of Paraná State Brazil
providing a leading example of focus

on learning outcomes
. Em
erging lessons from
Pak
istan through DFID’s pioneering

Road Map
approach
25

is showing
the power of regular
and reliable me
asures of school performance in

driving change. In randomised trials in
Madagascar, providing parents with a report card of their school’s performance was shown
to have
a
marked effect on teacher beh
aviour and pupil attendance but

some small,
statistically insignificant impact on test s
cores
26
.


T
he strongest evidence linking information to improved learning comes from Pakistan where
experimental evidence from the Learning and Educational Achievements in Punjab Schools
(LEAPS) research
27

found that schools and pupil reports increased test

scores in poorer
performing schools,
reduced
fee
s
in better pe
rforming schools and closed the
worst
performing schools.


Reducing the taxation burden
can enhance

small business performance
.
W
hile there is no
specific evidence on taxation and

private schools, there is
general evidence with regard to
small business and taxation.
IFC studies
28

have found higher revenues and employment
resulting from streamlined tax regimes. The damaging impact of informal payments has also
been recorded.

In Ugand
a research indicates
that
a 1% increase in bribery rate i
s a
ssociated
with a reduction in fi
rm growth of 3%
29
.
This evidence is
relevant to the

context of a
debilitating tax environment in Nigeria;
in the World Bank’s
Doing Business

analysis,
the
country

is ranked 155 out of 185 economies on ease of paying taxes (having slipped from
139 in 2012)
30
.

Mass media development can support small business advocacy:

case study evidence fr
om
Uganda highlights the
influence that mass media development can play in
re
forming the
small business environment. Documented cases illustrate the tangible income gains from
media exposure of corruption, harassment, poor regulation and weak information. The
sustainability of change processes is assured because of the commercial i
ncentives radio
stations have to explore these issues, with more than 30 radio stations in Uganda changing



21

www.educatio
n.gov.uk/schools/performance


22

Hastings, J and Weinstein, J (2007):
Information, School Choice and Academic Achievement: Evidence from
Two Experiments.

National Bureau of E
conomic Research, Cambridge MA

23

DFID Human Development Resource Centre (2010)
School Report Cards
provides international exam
ples
from nine countries/states

24

Cameron l, Moses K and

Gillies J (2006)
School Report Cards: Some Recent Experiences

25

M Barber (2013)
The Good News from Pakistan: How a revolutionary new approach to educati
on reform in
Punjab shows the way forward for Pakistan and development aid everywhere.
Reform

26

P Glewwe and E Maiga E (2011)
The Impacts of School Management Reforms in Madagascar: Do the Impacts
Vary by Teacher Type?

27

T Andrabi, J Das and A Khwaja

(2009):
Report Cards: The Impact of Providing School and Child Test
-
scores
on Educational Markets
. Unpublished manuscript

28

IFC (1996)

Assessing private sector contributions to job creation and poverty reduction

29

Fisman, R and Svensson, J (2007);
Are cor
ruption and taxation really harmful to growth?”;

J
ournal of
Development Economics

30

World Bank (2013);
Doing Business 2013; Smarter regulations for SMEs
; World Bank

20


their pr
ogramming approach accordingly
31
. There are now some incipient signs

of similar
dynamics in the mass media in Nigeria
32

but no specific evidenc
e on schools and advocacy.


There is strong evidence
on the
l
earning outcome benefits from improved

teaching.

P
rivate
schools display many basic conditions commonly associated with ‘quality’ schooling. Using
USAID’s
Opportunity to Learn Framework
33
, adopted

by

the Independent Commission for
Aid Impact in its assessment of DFID’s Education programmes in three East African
Countries
34
, private schools
generally have many of these desired characteristics. The net
effect of private schools is largely the effect o
f better incentives and accountability
35
:
teachers attend more frequently, and so teach more


not necessarily better.



In this context, t
here is strong evidence showing teacher knowledge and practice being the
single most important

characteristic

in dete
rmining school performance
36
. Good teachers
strongly determine learning outcomes
37
. Explanations for why, despite increased access and
completion, children fail to learn identify teaching to the curriculum rather than the child
38

as
a key
factor;

children

sim
ply fall behind and

never

make up the gap.

Recent research in
India
39

found significant difference in performance between higher cost and lower cost
private schools on standardised test scores, and attributed this to differences in pedagogy.


There is wea
k evidence on how to support improved pedagogy.

Where the evidence is
relativel
y strong on the importance of

improving pedagogy, the
re is limited

evidence on
how

to do this. There is weak

evidence on the effectiveness of traditional cascade approaches,
whi
ch frequently fail to result in changed classroom practice
40
.
There is more positive
evidence that school
-
based coaching, peer
-
support and training is effective
41
.
ESSPIN’s

experience in Nigeria of developing a school
-
based approach to supporting serving teachers
is sho
wing promise
.


Access to finance is a critical factor in SME development:

the importance of finance with
respect to
broader
small business performance is wel
l
-
documented. Lack

of finance is

“.....
one of the most important and robust underlying factors that constrain firm
growth

42

but,
when addressed, can be a

powerful aid to growth and innovation
43
. The impact of access to
finance is felt especially in small businesses (rather than large) and in
sectors

that
are
“naturally composed of more small firms”
44



such as education.


Information
can change the behaviour of financial service providers:

although there are
many determinants of bank practices, the power of
market
information is now better



31

An
derson, G and Elliott, D (2008)

The role and impact of radio in reforming the rural
business environment in
Africa
; SDC

32

A
nderson, G and Bassey, H (2013)

Working with mass media to expand policy advocacy in Nigeria
; ENABLE

33
USAID, EQUP Working Paper (2008)
Opportunity to Learn: A High Impact Strategy for Improving Education
O
utcomes in D
eveloping Countries

34

ICAI Report 10 (May 2012)
DFID’s Education programmes in Three East African Countries

35

A Banerjee and E Duflo (2011)
Why aren’t children learning?

Poverty Action Lab

36

T Bold
et al
.

ibid

37

M Barber and M Mourshed (2009)

How

the world’s best performing systems come out on top.
McKinsey,
London


38

L Pritchett and A Beatty (2012)

The Negative Consequences of Overambitious Curricula in Developing
Countries.
Centre for Global Development, Working paper 293

39

Gray Matters Capital
(
2012)

Affordable Private Schools Sector Analysis Report.

40

Y Ono and J Ferreira (2010)

A Case Study of Continuous Professional Development through Lesson Study in
South Africa.
South Africa Journal of Educat
ion Vol.30. Unisa, Johannesburg

41

M Dembélé (20
05)
Breaking the Mould: teacher development for pedagogical renewal

in A Verspoor (ed)
The
Challenge of Learning: Improving the Quality of Basic Education in Sub
-
Saharan Africa.
ADEA, Paris

42

Ayyagari, Meghana, Asli Demirguc
-
Kunt and Vojislav Maksimovic

(2
008)

How Important Are Financing
Constraints? The Role of Finance in the Business Environment
.
World Bank Economic Review

22, 483
-
516

43

Kla
pper, L., Laeven, and R. Rajan

(2006)

Entry Regulation as a Barrier to Entrepreneurship
,

Journal of
F
inancial
Economics, 82, 591

629

44

Beck, T, Demirguc
-
Kunt and Levine, R (2008)
Finance, firm size and growth
; World Bank

21


understood. In particular,
addressing

market players

gaps in their understanding of
particular market segments (for example, low
-
income groups)


such a
s scale, potential
value and characteristics
-

can have huge value. Much of this evidence comes from the
growth of ‘FinScope’ studies across Africa and Asia


which are seen to have been
important in improving financial access
45
.


Ca
sh flow management is i
mportant

for small firms:

the general
significance of good working
capital management for SME performance has been shown in different contexts
46
. With
reg
ard to education, increasing
evidence

points to the critical role of systems to ensure
efficient cash f
low management. Bridge
International Academies
, for example, cite the
benefits of
systems that
offer ‘real time accounting’, are

acc
essible to poor parents, reduce

the s
cope for corruption and achieve

high fee (100%) payment rates. Indeed, this type of
cas
h flow system is seen, by them,
as
central to a functioning business model
47
.


Multiple intervention

evidence and
private schools in
Lagos

International e
vidence in relation to this option draws on a broad range of sources, reflecting
the broad ‘systemic’ nature of interventions and the novelty of applying this approach to
education.
Overall, the evidenc
e highlights the
significance

of the wider market envi
ronment
in shaping the performance of schools as organisations promoting learning among children
and as small enterprises that operate in a competitive environment.
However,

there is very
limited evidence to guide ‘how to’ intervene to develop this conduci
ve environment.
In

relation to Lagos, t
he evidence shows the importance of:




R
egulations and information in shaping school behaviour and learning outcomes.

In Lagos, it is increasingly
recognis
ed

that the school guidelines are not simply about
regulation but drive incentives
-

and the development of a school grading process is a
critical step in reforming this.
However, the commitment and
the incentives of both
G
overnment and associations
,
critica
l players in t
he

process
, are

mixed.

Regarding
taxation,
the
pilot research conducted during the design phase confirms the severity of
the burden


money and time


imposed on schools by the regulatory regime.




I
nformation
to improve parents


and schools


decision
-
making.

In Lagos, i
nformation sources, for bot
h schools and parents
are informal,
are
partial and
weak. The ma
ss media has a large audience, especially among poorer groups, is
interested in education as a subject area but has no programming focus

on it currently.

Beyond informal channels, parents have no external source of information on school
standards, let alone performance.




Better pedagogy in improving learning outcomes
.

In Lagos, pedagogy is generally traditional and didactic and most school
s currently see
little need to change. Parents are
currently
not forceful advocates for better pedagogy
and there are no developed services

or
initiatives

promoting change. Pedagogy is
important but will be a challenging area for engagement.

Innovative app
roaches and
business models will be required.




S
ervices related to finance and financial managemen
t for small businesses
.

In Lagos, there is growing interest and a clear commercial incentive

for
banks and mobile
money providers to improve and expand t
heir

services aimed at schools and parents as
consumers of schools.




45

Gibson, A (2006)

Developing financial services markets for the poor
; Swiss Agency for Development and
Cooperation

46

Padachi, K (2006)

Trends in

working capital management and its impact on firms’ performance: an analysis of
Mauritian small manufacturing firms
; International Review of Business Research Papers; vol 2, no. 2, pp 45
-
58

47

BFA (2012)

The journey toward cash lite
; Better than Cash Allia
nce, Boston

22


C.
L
ikely impact (positive and negative) on climate change and environment for each
feasible option


Option

Climate change and environment
risks and impacts, Category (A, B,
C, D)

Climate
change and environment
opportunities, Category (A, B, C, D)


1



Do

nothing


C

C

2



Vouchers


C

C

3



Multiple
interventions

C

C


A, high potential risk / opportunity; B, medium / manageable potential
risk
/

opportunity; C, low / no
risk /
opportunity; or D, core contribution to a multilateral organisation.


The
impact of th
e programme

on climate change and environment is classified as
C, low risk
and low opportunity for all options.



D.

Costs and Benefits of Options

Based on
the
evidence
presented above, the appraisal considers the anticipated costs and
benefits of each of the three options
. A standard cost
-
benefit approach is taken

(presented in
detail

in Annex A
)
, with a discount rate of 10%


DFID Nigeria’s discoun
t rate for project
app
raisals


used in the calculation of net present value (NPV). The internal rate of return
(IRR)


the break
-
even discount rate


is also calculated.


The cost
-
benefit analysis

(CBA)

is based on the
projected
private
benefits, and all

costs
incurred, includ
ing government investments leveraged by the programme.
For the purposes
of the CBA, we have divided the vouchers option into two scenarios. As the theory of change
for vouchers shows, the critical assumption here is that
G
overnment will assume
responsibili
ty for the vouchers programme and expand it throughout the
s
tate. If this
assumption does not hold, then many children will be ‘left’, embarking on an educational
option with no means of support. In such a scenario
,

DFID would have a responsibility to
fina
nce them until the completion of their school studies (either primary or JS). There is
therefore a contingent liability for DFID associated with this option
48
. As a prudent response
to this situation, in the following analysis, vouchers has been divided int
o,
de facto
, two sub
-
options: vouchers (
G
overnment taking over) and vouchers (DFID paying).


The cos
t
-
benefit analysis covers a ten
-
year time period,
that is
five years beyond the end of
the programme period. This covers the minimum period of DFID funding
,

if the Government
does not take over the voucher scheme, and DFID commits contingent funding. It also
enables lon
ger term impact, and sustainability
, to be considered for all options
.



Costs

The total costs (and their primary drivers) for all three

options are outlined in Table 2







48

DFID’s Education Fund for Sindh Programme, one of DFID’s larges
t voucher
-
based interventions,
has
recognised and budgeted for this liability.

23


Table 2
: Breakdown of Option Costs


Option

DFID Costs
(
£)

Partners’

Costs (
£)

Total Costs (
£)

1:

Do nothing


counterfactual

0.5m

zero

0.5m

2. Vouchers:


a)

Government takes over programme


b)

DFID uses contingent liability



a) 11.7m


b) 19.9m



a) 75.7



b) zero





a) 87.4m


b) 19.9m


3.
Multiple Intervention


c)

Facilitating Change


d)

Supporting Innovation




9.
6
m


4.6m



Zero


13.1m



9.
6
m


17.7
m


Benefits

The principal benefits from the programme will be realised by the
participants who complete
Junior Secondary 3 (JS3). These beneficiaries will generate increased earnings throughout
their working lives as a result of achieving improved learning outcomes.

This is calculated by
applying an estimate
49

of the increase in annual income from an improved education
,

to
incomes ear
ned by the poorest 20% in Lagos

over their working lifetime (assumed to be 30
years
50
). On this basis, p
rivate returns from an improved
education are

estimated at N5,274
per year


approximately £21
51
.

In addition, for voucher recipients who do not change
school, the voucher value acts as a cash transfer to their households, and is captured as
such in the appraisal.


The earnings of
better
educated individuals

do not reflect the external benefits
likely to be
realised by society as a whole

as a result of the programme
.
For all options there are likely
to be
:

a) social benefits to society from a better educated population, resulting in improved
health, greater s
ocial cohesion, and improved security; and b) macroeconomic benefits from
a better educated workforce leading to increased employment and improved economic
growth.
These exte
rnalities are

hard to identify and even harder to measure
.

Consequently,
only priv
ate benefits

are assessed in this appraisal, with an acknow
ledgement that these
very likely
underestimate the overall benefits of the programme.







49

In
The Economics of Education
, Brewer and McEwan (2010) reviewed the impact of education on future

earnings across various African nations, along with Pakistan and Chile. Based on their findings, along with those
of Hanushek and Ludger (2007), the increase in income each year for JS3 graduates in Lagos is estimated at
5.7% to 7.3%.

50

30 years may be at

the lower end of the working life of most people, yet the use of discounting in the economic
appraisal


at a rate of 10%


means that income earned beyond a period of 30 years is negligible.

51

Comparisons with other programmes

are difficult because these typically assess the value of an education for
a previously out
-
of
-
school child. The Education Fund for Sindh project business case however, includes an
estimate of a quality premium (for a better educated child) of
£2
0 a year.

This suggests that the similar estimate
for
DEEPEN

is conservative, as wages and the cost of living are higher in Lagos than in Karachi.

24


Table 3
: Summary of Benefits over 10 year period


Option

Beneficiaries

Number of
Beneficiaries

Monetary
Value (
£
)
52


1: Do nothing

JS 3 graduates


26,654

15.7m

2: Vouchers (Govt


responsibility)

a)

JS3 graduates at improved schools


b)

pupils staying at same school (using
voucher as cash transfer to the
household)

a)

139,953


b)

29,793

a) 93.3m


b) 22.2m

2:
Vouchers (DFID
liability)

a)

JS3 graduates at improved schools


b) JS3 graduates at same school (using
voucher as cash transfer to household)

a) 98,786


b) 12,150

a) 58m


b) 4.6m

3: Multiple
interventions


Facilitating Change


Supporting
Innovation





JS3
graduates

at improved schools


Children g
o on to
graduate from an

improved
JS
school




533,074


280,928





313.6m


118.1
m



There are minimal negative benefits anticipated with this programme, under any of the
options. One likely consequence, applicable to options 2 and 3, is that the programme
accelerates the current movement of pupils from public to
private

schools. While thi
s may
initially appear to be undesirable, it wou
ld have some positive aspects;
it would mean more
children in private schools, where education standards are better, and it would reduce the
pressure on public schools, which are struggling to deal with rapid

population growth (from
local births and in
-
migration).
It would also reduce costs for
G
overnment. Either way, this is
an existing trend, with or without the programme. It should also be noted that the overall
numbers in public schools are still increasin
g


but not
at the same pace as

the private
sector.


Assumptions

Several assumptions apply to the programme in general and to each of the options. These
are detailed in Annex
A
, with the most significant listed below:


In general:



It is assumed that the
programme will have a marginal impact on the 1.4% of children
who are estimated to be out of school.
In addition, the opportunity cost of children
attending school is zero because the target group is children already attending school.




A
ll projections for
each option are conservative


having already been adjusted for
optimism bias.

Assumptions specifically for Option 1

-

Do nothing
:



It is assumed that t
he private education market will continue to expand with no decline in
standards; demand for private edu
cation wil
l drive the expansion as overall pupil

numbers
increase
.




The benefits of improved education
will reach 5% of the pupils

that might be achieved
under the multiple intervention option reported above.




52

Monetary value (not discounted) either as (a)
the increase in earnings received from improved education (
£2
1)
by all

beneficiaries,

over their working life (30 years); or (b) voucher as cash transfer to the household.

25


Assumpt
ions specifically for Option 2
-

V
ouche
rs:



A conservative assumption is that 25% of vouchers will either not reach the intended
targets or will be misused in some way
53
.





It is assumed that
voucher recip
ients will benefit as follows: 40%

will move from the public
sector to the private sector
54
;
30
% will move from their current private schools to a better
private schools (using the voucher to sup
plement higher fees); and 30
% will stay at their
present school. For the latter group, there will be no improvement in learning outcomes


but the value o
f the voucher will be a cash transfer to the household and this is included
a
s a benefit in the calculations.




The most critical assumption for this option is that the Government of Lagos will take over
and continue the voucher scheme at the completion of
the 4 year pilot. It is assumed that
DFID supports the pilot project and programme design in years 1
-
5, and that the
Government of Lagos then takes over the funding of vouchers for the poorest children in
Lagos in years 6
-
10. It is further assumed that the

Government will roll
-
out the voucher
scheme right across Lagos, also focusing on the poorest 20%
.




In case this assumption is proved false, and Government is not able or willing to take on
the voucher scheme, DFID will have a responsibility to continue fu
nding existing voucher
recipients through their existing level of schooling. The contingent liability is for a further 5
years.

Assump
tions specifically for Option 3
-

M
ultiple intervention
s
:



The costs and benefits of two separate components, one
‘facilitating change’ and one
‘supporting innovation’, have been appraised
.




Facilitating Change:
Mutually supportive interventions are likely to impact large
proportions of the same schools and, therefore, the same children. To deal with this
issue,

all t
he costs
of this option
are included but

the
benefits

ha
ve

been based on only
one, illustrative
, intervention


school grading where a gradual rollout of the grading
system is envisaged with conservative assumptions applied regarding take
-
up and impact
on
schools and children.
On this basis, the estimated impact of this interventi
on,
is
conservative
.




Supporting Innovation: Here again, one illustrative project has been appraised but as
the
same
children are unlikely to benefit from multiple ‘supporting inno
vation’ interventions
both the costs and benefits of illustrative example only have been included.



A number of ‘heroic assumptions’ have been required to apply the cost benefit appraisal
model based on the benefits accruing to nine years of basic educatio
n in primary and
junior secondary schools to an innovative business model for primary and pre primary
education. The analysis assumes that 2/3
rd

of children go on to graduate from three years
education in an improved junior secondary school and that 6/9
th

of the benefit is
attributable to the six years of improved primary education.

Balance of costs and benefits

Key results of the cost benefit analysis, over a ten year period, and discounted by 10%
(
DFID Nigeria’s discount rate for project appraisals
) are
presented in Table 4

below
.





53

Based on learning from other voucher programmes.

54

The assumption that a move from a public school to a private school will result in improved learning
outcomes
is based on findings from the ESSPIN Annual Education Sector Performance Report, 2011. This found that
private school primary pupils significantly outperform their public counterparts in measures of literacy and
numeracy at primary grades 2 and 4.

26


Positive returns are indicated for each option with t
he highest cost benefit ratios
indicated for
the multiple intervention
‘facilitating change’
option
.
The NPV of the counterfactual, as
reported above, is
£
2.3
m. In c
omparison
, the NPVs for Option 2
, the voucher programme,
are
£
22.7
m when the Government takes over the programme in years 6
-
10, and
£
11.8
m
when the Government does not take over and DFID commits contingent funding


significantly above the

do nothing


results.

For Option 3a facilitating change

the NPV is
£
47m, and for 3b supporting innovation the NPV is £9 million, again substantially

above the
result for the

do nothing


option.
DEEPEN

provides considerable

incremental benefits as a
result of DFID’s
activities

under both options 2 and 3
.


Assessing the options by IRR would give different ranking
s
, with both voucher options
ranked highest. This is because the voucher options present a net benefit from the third year
of the programme
; the cash flow profile of the multiple option intervention is different with a
net benefit only expected in year 6, delivering a lower IRR. Given the different nature (in
cash flow terms) of the options, IRR is a less realistic measure than the NPVs, whic
h use the
effective cost of capital (10%) to discount cash flows.
The other analyses which

take

into
account the substantial difference in costs

of the options are preferred
.


Table 4
: Cost Benefit Assessment of options



Option 1:

Do nothing

Option 2
a
:
Vouchers (Govt
.

assumes
responsibility
)

Option 2
b
:

Vouchers (DFID
accepts contingent
liabilities)

Option 3
a
:
Facilitating
Change


Option 3b:
Supporting
Innovation

Total costs (
£)

0.5m

87.4m

19.9m

9.6m

17.7m

DFID costs (£)

0.5m

11.7m

19.9m


9.6m


4.6m

IRR

28%

86%

45%

35%

16%


NPV

(
£)

2.3m

22.7m

11.8m

47m

9.0m


B:C ratio

7.23:1

1.66:1

1.95:1

9.83:1

1.73:1


VFM

7.23

8.44

1.95

9.83

5.62


VFM Rank


3

2

5

1

4


Cost Benefit Analysis (CBA
) of the benefit to cost ratios shows that multiple interventions
facilitating change delivers the highest benefit per £1 of total costs.
Unlike the
CBA
, VFM
does

not include costs incurred by other participants such as the
G
overnment; VFM is
therefore
a m
easure of the value of DFID’s inputs only.

The best VFM

is achieved under the
m
ultiple
i
ntervention
s
facilitating change

option, followed by the
v
oucher option with
Government taking responsibility for funding in years 6 onwards. The multipl
e intervention
option facilitates the spread of benefits

across a greater number of beneficiaries than occurs
under the other options, which is why it achieves the best VF
M. The result for the
vouchers/
G
overnment funding option indicates that DFID ‘seed funding’, if foll
owed up by the
G
overnment, serves to catalyse a strong return on limited DFID funding.

CBA and VFM

will
only vary in the voucher o
ption under the scenario of the Government taking over the
voucher programme; in this instance, the calculation of VFM exclude
s the costs
to
Government will incur.


On CBA and VFM measures, Option 3b, ‘supporting innovation’ alone would not appear to
offer good value for money. However, this is not proposed
as an

option, but
given as
an
illustrative example. The realistic option
s within a multiple interventions approach are: 3a
‘facilitating change’ or 3a and 3b ‘facilitating change and supporting innovation’. Supporting
innovation is likely to deliver greater benefits

(or incur less costs)

in the context of an
27


improved operating

environment.

Taking both components together, VFM for Option 3 is
8.47, that is £8.47 of benefit per £1 of cost to DFID. This makes Option 3 marginally better
value for money than Option 2a vouchers with Government taking on responsibility.


Risks and unc
ertainty

There are a numb
er of risks and uncertainties, detailed in the management case
. These
include what can be termed ‘normal project risks’. They have been accounted for in the
economic appraisal by reducing the forecast benefits

and outreach figures
and by
incorporating

optimism bias adjustments. Even pragmatic targets may not be achieved if
key
assumptions are undermined
, and as such sensitivity analysis is needed to assess the likely
impact.


Sensitivity Analysis

In or
der to understand how the risk
s, and a change in the main assumptions underpinning
the programme,
could affect the targets, the figures were subject to sensitivity analysis.
Cost
-
benefit calculations were recalculated with the following
major
variations

(Table 5
)
:





A red
uction in the
projected

number of children that will be impacted by the market
intervention option (as a result of overestimating the market size and/or its growth)




Greater
degree of
misappropriation of vouchers than expected

under the voucher option




An increase in sc
hool fees as a result of the programme
.


Table 5:

Sensitivity Analysis


Option

NPV

IRR

VFM

Multiple intervention
s


c慣楬楴慴楮i⁃ 慮ae

††
Original a
nalysis: no sensitivity changes


25% reduction in number of beneficiaries


£47 m

£33.4 m


35
%

30%


9.83

7.37

Voucher


Gov敲n浥mt⁴a步猠潶敲



Original a
nalysis: no sensitivity changes


35% vouchers do not reach beneficiaries


School fees increase 20%


£27.7

m

£26.5 m

£20.7 m


86
%

85%

60%


8.44

8.30

7.60

Voucher


䑆f䐠捯Dt楮ient楡b楬楴y


Original a
nalysis: no sensitivity changes


35% vouchers do not reach beneficiaries


School fees increase 20%


£11.8 m

£11.4 m

£10 m


64%

63%

43%


1.95

1.92

1.80



E.

Comparison of options

The matrix below

(Table
6)
brings toget
her
the economic

analysis of each option
(beyond
the counterfactual)
and the evidence related to each,
again
st the key feasibility criteria, a
nd
does so in the context of what is known about Lagos.

From this, several points are clear:




The critical concerns for the vouche
r option relate to the related issues of scalability and
sustainability. There is no

wider evidence to give strong credence to the
assumption
s
underpinning this

regarding
State

support
. There is
no indication tha
t vouchers (or any
kind of public

financing
of private schools) is, as yet, on the agenda of
G
overnment let
alone that is has the capacity to finance, target and manage a scheme effectively.


28




V
oucher
s
are
, inherently,

a
high risk

option
.




The multiple in
tervention option builds on
more substantial

experience from other sectors,
although

evidence
for education
is
still
very limited
.

Any i
ntervention here is inevitably
experimental in nature.




The multiple intervention
option
is also inherently lower risk. Its diversity of activities and
of partners
means that it is not
reliant on one ‘thing’ or one ‘player’ and is able to tap into
a range of drivers of change.




If all assumptions hold, the multiple intervention option o
ffers marginally better VFM than

vouchers. However, in practice, the weight of evi
dence and assessment of risk make this
a considerably more promising option.


Option 3


multiple intervention
s



is the preferred option.


Table
6
: Options against feasibility criteria


Criteria


Assessment


Option 2

-

vouchers

Option 3



multiple intervention


Sustainability

No wider evidence
-

voucher programmes
are generally not conceived or assessed in
relation to sustainability.


C
ritical assumption

here
i
s that
the State
G
overnment has the will and capacity to take
over



but there is no indication that this on
their agenda.


P
ositive experien
ce
from other sectors


such as

finance

and business

environment
reform. None on
pedagogy
. Most success
when commercial incentives are utilised.


Les
s dependent on one player


but still
reliant on
better rules from

G
overnment



whose

interest and capacity is
incipient
.

Inclusiveness

Allows specific targeting of priority low
-
income children



but no existing capacity to
target in Lagos
.


Interventions

can be tailored to constraints
affecting
particular
groups
.


Scalability


Low
-

most targeted schemes stay rela
tively
small
. No evidence of scale
-
up starting from
a small, donor
-
funded programme
. Same
assumption as for sustainability.


More general exper
ien
ce in relation to
commercial markets when information and
capacity constraints are addressed.



In Lagos, the non
-
commercial incentives of
G
overnment and associations are more
uncertain and variable.

Do no harm

Limited evidence



but most implementation
is focused on access


not on improving
quality with existing schools and children
.

Theoretical danger of favouring ‘winners’


in
practice, few examples
.


Risk that fee levels rise pushing the poor out
of the market need to

be

m
onitored.



F.

Measures to be used or developed to assess value for money

(VFM)

V
FM will be
monitored and assessed
throughout the programme period through
the
a
nnual
r
eviews

and impact evaluations
.
VFM indicators will be developed to correspond to the
impact
, outcome and output indicators in the log frame,
(
as well as the economy and
efficiency of the inputs

discussed
later
)
. Where possible these will be benchmarked against
similar programmes.


The ‘headline’ VFM

indicator will be the cost effectiveness of the impacts delivered. That is
the cost per child benefiting from improved learning outcomes

as a result of the programme
.


29


Summary value for money statement

Considering the value of improved learning outcomes,

the programme will deliver £8.47 of
benefit per £1 cost to DFID. This is significantly higher than other

recent

DFID Nigeria
Business Cases
.


On the optimistic scenario that almost 1.5 million children benefit

from improved learning
outcomes as a result
of the programme, this will be achieved
at a cost of £12.50 per child.

Even on the most pessimistic scenario of
only 300,000 children benefitting as a result of
DFID support for innovation (and none through intervention facilitating change), this will be
a
chieved
at a cost of £62.75 per child.

This compares very favourably to
the estimated

£65
per child
benefiting from school improvements of
under
phase 1 of the ESSPIN programme
.



Comparisons with other education programmes are difficult as they

have

tend
ed

to estimate
the cost of getting out
-
of
-
school
children into school
.

The DFID Business Plan’s
education
input indicator for the cost per child supported in primary education is $140
55
.


The programme’s excellent VFM is driven by the scale of its impact on

almost 1.5 million
children and efficiency inherent in its approach of
facilitat
ing

change

and
stimulating

other’s
investment
.



3.

Commercial
C
ase



Te
chnical assistance was procured during 2012
to manage
the major component

of the
programme
including inputs
to the business case, design of the programme, pilot projects,
and, subject to satisfactory performance during the design phase, programme
implementation in accordance with the business case, an agreed implementation plan, and
negotiating
acceptable
terms
.

Contract amendment

for the service provider, Mott
MacDonald,

will then be

required.

A separate contract will be let to Crown Agents for the procurement of project equipment or
vehicles. This will be a call down contract from the core coun
try procurement framework.

VFM savings will be sought and reported using standard arrangements.

Independent evaluation of the programme will be conducted by an existing service provider
for
the Education Operational Research and Evaluation Nigeria (EDOREN)

provider which
was competitively procured in 2012 with provision for evaluation of this programme subject
to Business Case approval.

Separate procurement will be required for the minor component, supporting innovation. This
is discussed at the end of the
commercial case.

Direct procurement through a contracted supplier


Procurement of
technical assistance
was conducted through a very successful
restricted

competitive tender
, deploying
strategies and processes that observed the E
uropean Union
Public
Procurement Directives, and achieved excellent results through smart commercial
management. Bidders were invited to tender for the opportunity to help to write
part of
the
business case, design the project and i
mplement it. Each stage proceeded

only with
positive
prior approval from DFID.

This was an appropriate procurement route at that time because
:




55

DFID Business Plan;
www.gov.uk/government/uploads/system/uploads/attachment_data/file/137470/Business
-
Plan
-
Inpu
t
-
Impact
-
Indicators.pdf.pdf


30




The breadth of skills and experiences required to design the programme militated in
favour of seeking external support.



The necessary expertise was likely o
nly to be found through a consortium of international
and
national

service providers
.



DFID Nigeria judged that there would be an acceptable level of market interest in
supplying these services from a technical strong market base.



Fiduciary risks preclude

funding through Nigerian Government systems.



The case for indirect procurement
by

seeking to deliver the programme through a
multilateral organisation
was rejected, having analysed the potential advantages and
risks that are set out in
Table 11 at the end

of this document
. This was because this
route was judged to be likely to achieve

lower benefits than direct procurement of a
service provider by DFID.



Any g
oods and vehicles
that are required
are
normally
sourced

through DFID’s core
contrac
t with Crown
Agents.


A.
What procurement process
was used
to support contract award?

Procurement of technical assistance took place through a competitive process using a
shortlist of bidders selected
after

evaluation of
Pre
-
Qualification Questionnaires
. The
adjudica
tion of submissions was performed by

a team of three Advisers (Private Sector
Development, Education, and Social Development)
. Evaluation criteria for the selection of
the preferred suppliers included:




how the bidder would facilitate systematic change
and

improve quality
in the market
for low cost private education



p
roposed poverty strategies and plans




experience in monitoring and operational research and use of evidence




innovation, risk management and cost effectiveness




a strong team
with

an excellent

team leader, good local consultants and team
balance, and capacity to improve access to finance and learning outcomes in a
pluralist education system



good commercial terms represented by a tender that offered competitive fee rates
and overall costs in rel
ation to the market, explaining how it benchmarked costs, an
effective financial plan and methodology to deliver output
-
based deliverables and link
them to payments, and

management of financial risks



the proposal would explain how the bidder would achieve
best value for money in
economy of purchases, efficiency in use of inputs, and effectiveness in turning these
into outputs

B. How did the intervention design use competition to drive commercial advantage

T
endering for the procurement of technical
assistance ensured that commercial advantage
was achieved for DFID through competition. The adjudication of bids and proposals was
primarily on the basis of ability to deliver a specified set of services to an adequate standard
at a reduced budget. However
, adjudication was not on the basis of cost alone; quality,
relevant experience, past performance and proposed approaches to delivering the outputs
were also considered to ensure that optimal value for money is obtained.

The bidders were
aware of the resul
t
-
focused nature of this intervention; therefore the emphasis was on
delivering “results
” and ensuring Value for Money, and payment mechanisms which
supported these priorities

The contract

amendment will be
for a period of
five

years with an option for extension. VFM
reviews of supplier performance by DFID Nigeria
will

be conducted annually using criteria
that will be elaborated by DFID Nigeria in consultation with the lead service provider. DFID
Nigeria’s
C
ommercial
A
dviser wil
l aim to ensure close management of contractor
31


performance, including quality in delivery of outputs, cost control, innovative solutions to
problems, etc.

C.
How did the market place respond to this opportunity?

As we embarked on this competition, we accep
ted that, although the market was not entirely
unknown to us, the focal
of

the programme would require innovative responses and links
between organisations not necessarily traditional consortia members. The

response was
likely to come from a consortium of
bidders
as it was unlikely that a

single suppler would
have all the required

skills in
-
house.

We
also
recognised that we might
have a

sourcing difficulty, in terms of finding the right
people, trying to attract them to Nigeria, and trying to widen the net
generally. We were
already trying to address the situation that 80% of DFID business in Nigeria is with about
eight

suppliers.

In all these circumstances we had a

very good

result.
Five bidders were invited to submit
formal tenders
.
These were Adam Smith
International, Bridge International

Academies
,
Cardno Emerging Markets, Coffey International, and Mott MacDonald.
Our benchmarking
demonstrated
that, the most economically advantageous proposal offered:



High quality staff at rates that compared
fairly

with

competitors;



Economies of scale;



Control of costs;



Commitment to payment by results;



A culture of seeking and monitoring VFM throughout the life of the project.



In addition to satisfaction over technical understanding and methodology, quality
assurance, a
nd availability of suitable staff.

Mott MacDonald’s proposal scored the highest marks in both the separate technical and
commercial assessments, and was the clear winner.

D. What were the key u
nderlying cost drivers? How was

value added, and how
did we mea
sure and improve this?

The key underlying cost drivers in this intervention was the cost of
technical assistance
services. By this we mean the consultancy fee rates of the international specialist skills
required for the delivery of the various aspects in

the project. We ensured that we were able
to negotiate
down
consultancy fee rates and endeavour to get VFM.
High
l
iving costs
and
the perception of Nigeria as a difficult environment to operate
in are

major driver
s

of
consultancy costs
.

Our ability to inf
luence these factors was, and remains, quite limited.

N
egotiation obtained a highly satisfactory outcome for DFID, with declared
and reported
savings of £2 million. Fees are fixed for the duration of implementation, and linked to
deliverables.

Management
cost
s
are spread between salaries, direct overhead costs relating to the
provision of staff and brought
-
in consultancy (e.g. medical insurance, visas, etc.), indirect
overhead costs to contribute to the costs of being in business, such as corporate operati
ons,
managed costs, recruitment, back office administration, headquarters, etc.
, and the profit
margin of 6% (which we judged reasonable.) Value was also added by designing a realistic
risk matrix

with the supplier
, and the avoidance of expansive contingen
cies.

Many of the results expected involve significant policy
and attitudinal
change
.

In this context
the experience and effectiveness of key consultants was paramount. Best practice is that
value for money is not driven simply by least cost, but by the be
st ratio of effectiveness to
cost, and this had to be assessed on a case by case basis. If interventions do not deliver the
expected results, and we assess that this is due to the limited effectiveness of individual
consultants, we will either agree person
nel changes or discontinue the intervention.

32


Additional value to the programme was ensured by the use of accredited contractors with
sufficient capacity to perform the tasks required to a high standard. Terms of Reference
defined the framework (including

key performance indicators suc
h as
meeting the milestones
detailed in agreed work plans, timeliness in reporting and success in testing innovatory
approaches, ability to form professional and delivery
-
focussed links with a range of
stakeholders in difficu
lt operating environments, and budget control)
. These
provide the
benchmark against which satisfactory performance is measured, and payment will be made
upon their fulfilment. Regular work plans will detail the expected levels of input required to
deliver
agreed results.

Annual revi
ews and audits of the contractors’ performance

in delivering
results
a
nd in
achieving value for money

will be
undertaken

and will inform the evolution of the programme
.

F:
How will contract and supplier performance be managed thr
ough the life of
the intervention?

Contract and supplier performance will be
closely
managed through the life of the
intervention
, supported by an intensive programme of monitoring and results measurement,
impact evaluation and annual reviews
.
The log fram
e will be

the primary instrument

used to
measure

and assess

performance.

This is discussed in more detail in the Management
Case.

Quarterly financial and
delivery

progress

reports

will be monitored against work plans
and financial forecasts.

Quarterly milestone payments will be paid upon satisfactory progress
against the work plan. The payments will comprise amounts withheld from monthly fees, at
an agreed rate of 30 percent.


The contract terms
give us

discretion to reduce funding if we feel that the programme is not
delivering the anticipated results, whether this is due to poor performance or to factors
external to the programme.
The
mid
-
term

review, carried out towards the end of Year 3,
combined wit
h the overall assessment of progress with programme implementation, will
determine whether a contract extension will be awarded.


G:
Proposed procurement route for the supporting innovation component

In this Business Case we
propose
to contract our support

for innovation through negotiated
procedures. These would be single source contacts with for
-
profit companies
, such as
Bridge International Academies and Omega School,

interested in developing and introducing
an innovative business model for low cost priv
ate education to the Lagos market. We have
agreed this with Procurement Group (PrG), who helped elaborate this approach. It will be
important to make support available to two or more for
-
profit or not
-
for
-
profit organisations to
support competition in the
market and competitive pressures to drive up the quality of low
cost private education.


Single source contracts would be justified because the innovative business models proposed
would use and develop the companies own intellectual property
-

we couldn’t
go to the
market to source that intellectual property because it lies
exclusively with the companies.

For
example,

Omega Schools
Ghana
will

adapt their lesson plans, workbooks

and assessment
exercises for the Nigerian curriculum and to licence these resour
ces plus with their teacher
training and management tools as a complete “learning system” to existing
low cost
schools
in Lagos. Bridge International Academies

are underpinned by proprietary technologies

developed by Bridge to

support teaching, attendance
and attainment

monitoring, billing and
payments.
We consider it unlikely that anybody else would challenge our right to buy
proprietary goods or offer unsuitable substitutes.


We will
ask HM

Treasury for agreement to us
making exceptional

provision of an e
arly
pipeline of project funding
to for
-
profit companies.




33


An alternative but less attractive procurement route would be to contract a service provider
to set up and manage an innovation funding mechanism. This will incur high transaction
costs, particul
arly considering the limited number of proposals anticipated, as well as the
management costs and costs of capital required by the service provider to pre
-
finance the
projects.




4.

Financial Case


What are the costs, how are they profiled and how will you
ensure accurate
forecasting?

DEEPEN

will cost

£
18.5 million
, comprising £
500,000 for design and pilot projects, £
15.8

million
for implementation
, (of which, £9.2 million for Facilitating Systemic Change and £6.6
million for Supporting Innovation

56
)
, and
£2.2 million for evaluation
.
Table 7 gives a more
detailed breakdown of the programme components. Tables 8, 9 and 10 give the breakdowns
over different time periods
.


Table 7



Programme Component Breakdown
, £


Component

Total

Percentage

0

Design and
Pilot Projects

500,000

3%

1

Facilitating Change
:



1a

Technical Staff and

Long
-
term

Consultants Costs

2,539,000

14%

1b

Research, Learning and Results Measurement

2,071,000

11%

1c

Intervention Projects Fund

1,007,670

5%

1d

Short
-
term Specialist
Consultant
s

Costs

1,219,315

7%

1e

Project Management and Operations Costs

2,321,790

13%

2

Project Set
-
Up
C
osts (through DfID procurement agent)

6,742

0%

3

Supporting
Innovation Fund

6,623,495

36%

4

Evaluation Costs

(through EDOREN)

2,138,439

12%






Total

18,427,451

100%

The
se

allocations are indicative
and should be

seen as

flexible within the overall
programme

envelope to respond to
needs and opportunities that arise and the performance over time of
different components
.
Proposed adjustments to these components and sub
-
components will
be informed by on
-
going results measurement, evaluations, and annual reviews and will be
approved by the lead Adviser.


The nature of the programme


facilitating change, supporting innovati
on, and
a significant
ev
aluation effort


mean that technical staff, consultancy support and other specialist
expertise are the primary costs. Rates for
Technical Staff and Long
-
term Consultants
providing on
-
going input over the life of the programme
will
be ‘fixed’ for the duration of the
implementation contracts

(and not subject to inflation)
.
The costs of s
hort
-
term inputs from
consultants
with
specialist expertise which needs to be ‘bought
-
in’ to support particular
project interventions
will be more var
iable, and will be forecasted in the annual work plans
and budgets.





56

These figures are more up to date and accurate than those used in the Economic Appraisal. This is
because the design and pilot project costs have now been fully utilised.

34


Project
Management costs are expected to represent
13
% of the overall budget and will
cover
support
staff, direct overheads

such as office rental,

and
logistics
expenses such as
internati
onal flights.


R
esearch
,
evidence collection and dissemination,
analytical studies,

and monitoring
and
results measurement

will be used
variously
as ‘intervention tool
s
’ to influence stakeholders,
as ‘management tool
s’

to inform the programme’s
direction

and
adaption

over time, and as
‘evaluation tool
s
’ to inform the independent impact assessment. The programme will also
share its research and learning with development policy makers and researcher beyond
Lagos
, helping to fill the gaps in evidence on the
potential contribution
of
low cost private
education to education policy objectives
.

The allocated
budget covers all of the above

but is

driven significantly by
the cost of
rigorous monitoring of outcomes and impact through
periodic surveys

required for ro
bust impact evaluation.


The intervention projects fund

will be used flexibly to support the

direct non
-
staff

non
-
research
cost of particular interventions

projects
, for example workshops to build

advocacy

capacity among local partners and stakeholders.



The
budget
for s
upporting
i
nnovation
is based on two fully
-
costed

(but commercial
ly

c
onfidential
)

proposals

to two DFID departments / programmes requesting
financial
support
for developing innovative business models
to serve

the Lagos market.

The budget
forecast
makes provision to support one similar proposal or several smaller proposals in the future.
Alternatively, if these projects prove to be unviable or unsuccessful, and / or other feasible
proposal do not come forward
,

this innovation funding may be used
to respond to emerging
needs and opportunities. For example,
it may be used
to develop an education voucher
programme for Lagos State Government

if this becomes less risky
, or
to expand

successful
activities to other Ni
gerian States
.


Supporting Innovation
Example 1
:

Bridge International Academies

‘proof of concept’

S
eed

funding for market research, curriculum development, materials and software adaption for
Nigerian requirements and contribute to the start
-
up costs of 25 academies


the scale needed to test
and demonstrate whether the Bridge model can operate successfull
y in Lagos.
Bridge has

134
academies providing a superior education to 45,000 children living on less than $2 a day in Kenya.
The Bridge ‘Academy
-
in
-
a
-
Box’ business model is underpinned by systems and technology which can
rapidly be deployed and replicate
d in hundreds of locations. Economies of scale allow the company to
re
-
coup the initial investment in developing systems for: teaching and instruction; selecting and
training staff; monitoring pupil attendance and attainment; accountability to parents; and

managing
school business and finance.



Supporting Innovation Example
2:
Omega Nigeria Learning Systems product development

Seed funding
to develop, test and introduce a new teaching
product

for low cost private schools. The
Omega chain of 25 schools in
Ghana, will adapt their lesson plans, workbooks and assessment
exercises for the Nigerian curriculum. Together with the Omega schools management tools and
systems, and a training and support service, these materials will be licensed or franchised to existi
ng
schools as a complete and off
-
the
-
shelf “learning system”. A DFID grant will contribute to the costs of
developing and testing the “learning system” product and the licensing arrangements.



Budget estimates for impact evaluation support up to September

2017 have been provided
by the current EDOREN service provider. These costs are primarily Long
-
term consultancy
costs and rates are fixed to September 2017. Beyond this point, costs have been estimated
based on: the
Research, Learning and Results Measurem
ent component budget

for data
collection costs; the budgets for impact evaluation support in the mid term review year for
data analysis and reporting; uprated to allow for some pass through of inflation in Nigeria,
currently approximately 10 per cent a yea
r.

35


Table 8



Programme Breakdown by
Component for
remainder of 2013/14, £



Table
9



Programme Breakdown by
Component for
Financial Year 2014/15, £



Table
10



Programme Breakdown by
Component for
Duration of
Programme, £


NB These are not financial years. Year 1 is the first twelve months of
implementation

spanning 2013/14 and 2014/15

Month
1

Oct 2013
Month
2

Nov 2013
Month
3

Dec 2013
Month
4

Jan 2014
Month
5

Feb 2014
Month
6

Mar 2014
2013/14
Total
0
Design and Pilot Projects
500,000
1
Faciltating Change:
1a
Technical Staff and Long-term
Consultants Costs
10,200
19,380
26,720
41,400
47,272
47,272
192,244
1b
Research, Learning and Results
Measurement
0
5,100
14,890
20,895
27,720
58,950
127,555
1c
Intervention Projects Fund
68,502
215,175
63,323
24,640
49,389
28,578
449,607
1d
Short-term Specialist
Consultants Costs
4,044
4,691
4,691
7,936
7,936
10,181
39,479
1e
Project Management and
Operations Costs
0
0
0
0
1,000
1,000
2,000
2
Project Set-Up Costs (through
DfID procurement agent)
1,144
4,454
312
831
-
-
6,742
3
Supporting Innovation Fund
74,920
74,920
74,920
74,920
74,920
74,920
449,521
4
Evaluation Costs (through
EDOREN)
86,707
39,209
15,846
15,846
15,846
15,846
189,298
Total
235,317
343,549
173,982
145,068
176,811
236,747
1,956,446
Component
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 7
Total
0
Design and Pilot Projects
500,000
-
-
-
-
-
500,000
3%
1
Facilitating Change:
1a
Technical Staff and Consultants Costs
475,876
567,264
567,264
567,264
361,332
-
2,539,000
14%
1b
Research, Learning and Results Measurement
520,555
280,950
548,325
278,325
442,845
-
2,071,000
11%
1c
Intervention Fund
14,500
301,230
335,570
260,000
96,370
-
1,007,670
5%
1d
Short-term Specialist Consultant Costs
109,354
396,548
359,758
271,846
81,809
-
1,219,315
7%
1e
Project Management and Operations
611,762
454,741
504,632
470,627
280,028
-
2,321,790
13%
2
Project Set-Up costs (through DfID
procurement agent)
6,742
-
-
-
-
-
6,742
0%
3
Supporting Innovation Fund
899,042
2,501,279
1,977,419
745,756
500,000
6,623,495
36%
4
Evaluation Costs
341,789
523,401
328,346
135,939
195,819
613,145
2,138,439
12%
Total
2,979,620
5,025,413
4,621,313
2,729,758
1,958,203
613,145
18,427,451
100%
Percentage of Total
16%
27%
25%
15%
11%
3%
100%
Component
Quarter

2



Apr
-
Jun

2014

Quarter

3



Jul
-
Sep

2014

Quarter

4



Oct
-
Dec

2014

Quarter

1



Jan
-
Mar

2015

2014/15

Total

0

Design and Pilot Projects

1

Faciltating Change:

1a

Technical Staff and Long
-
term

Consultants Costs

141,816

141,816

141,816

141,816

567,264

1b

Research, Learning and Results

Measurement

279,000

114,000

64,950

72,000

529,950

1c

Intervention Projects Fund

79,785

82,369

110,461

113,300

385,915

1d

Short
-
term Specialist

Consultants Costs

33,739

36,136

94,870

97,228

261,973

1e

Project Management and

Operations Costs

5,000

7,500

69,650

81,050

163,200

2

Project Set
-
Up Costs (through

DfID procurement agent)

-

-

-

-

0

3

Supporting Innovation Fund

224,760

224,760

625,320

625,320

1,700,160

4

Evaluation Costs (through

EDOREN)

47,537

104,954

117,626

127,048

397,165

Total

811,638

711,536

1,224,692

1,257,761

4,005,627

Component

36


How will it be funded: capital/programme/admin?

The programme will be funded from
DFID Nigeria Programme resource allocation and has
been budgeted for in the country operational plan. The opening portfolio of interventions
currently
contains no contingent or actual liabilities but such liabilities could arise if any
demand
-
side finance
interventions (such as vouchers) are piloted

or the programme is
expanded to other states or cities.


How will funds be paid out?

Payment
for the main component of the programme, the Facilitating Change component,

will
be made through
monthly invoices, a p
roportion of which will be held back and reconciled
against the achievement of quarterly milestones. Payment
will
be
subject to satisfactory
performance and the Lead Adviser’s approval of progress against quarterly plans and
corresponding budgets. Payment
s will be governed by the terms of reference and conditions
of a contract to be negotiated with
the service provider
.
Payments

by the service provider

to
local researchers and consultants will
be

subject to satisfactory performance of their
obligations.


P
ayments to

Df
I
D Nigeria’s procurement agents and
EDOREN
service provider will be as set
out

in their existing contracts. Separate component codes will be set up and funds
transferred between programmes following the Lead Adviser’s and Programme Officer’s
a
pproval.


Disbursal of the innovation funding will be
according to
agreed timetable
s

of
payment and
progress

milestones and ‘critical decision’ points for proceeding
.



What is the assessment of financial risk and fraud?

Generally
, the level of financial and
fraud risk is expected to be low. However, the following
could affect the
overall
cost

of delivering
DEEPEN
:




excessive rises in inflation and abnormal currency fluctuation
, which could increase the
programme’s day
-
to
-
day oper
ating costs, overheads and the payment of local salaries.
To mitigate these risks, the programme has been priced to include the effects of standard
inflation rises and exchange fluctuations within certain limits so that the cost to DFID will
be unaffected

by normal inflation and reasonable currency changes;




deteriorating security in Nigeria and Lagos specifically
, which could raise the costs of
security procedures and the challenge of engaging high
-
calibre consultants. The
programme will benefit from the

robust safety measures and processes of ESSPIN, which
is already managed by Cambridge Education, to monitor the security situation and adapt
to any changes that may be necessary. The budget has also been calculated to offer
competitive consultant rates t
hat ensure top quality but also value for money (VFM);




increased presence of global development partners
, which could drive up the demand
and subsequently the competition for experienced consultants (both national and
international) with knowledge of Nig
eria. As indicated above, the
DEEPEN

budget has
been designed with fixed and competitive daily fees to continue to attract and recruit the
best consultants at cost
-
effective rates.

To avoid fraud, t
he programme will draw on
the
internal
financial
systems and established
accounting processes of ESSPIN, which already has a strong existing relationship with
DFID
. Milestone payments will be checked against quarterly work plans and budgets and all
large items will be procured through
Crown Agents as
DF
ID’s appointed agents where their
value exceeds the specified amount
. The programme will be responsible for the custody
and maintenance of such items, which will be marked as DFID property and
added to the
37


programme’s asset register. These efforts will n
ot only mitigate financial risks and safeguard
the investments of DFID but also help maximise
VFM

across the programme.



How will expenditure be monitored, reported, and accounted for?

The programme will provide a quarterly unaudited financial statement f
or DFID, outlining the
activities carried out since the previous report
, reconciling payments against expenditure

and
containing a work plan for the next quarter. Programme performance will be monitored
through annual reviews
, which will be used to foreca
st amounts for the next year
.
The
service provider

will

also produce annual financial audits to demonstrate the programme’s
compliance with accounting
standards and practices and liaise regularly with DFID to
discuss all aspects of
DEEPEN
.


Value for mone
y will be monitored and assessed

with
reference to the
four

Es

of economy,
efficiency, effectiveness and equity
.

A

framework of indicators
will be develop
to measure
them for each progress report. Economy indicators could include the average distance per

litre for programme vehicles, the price of international flights or the cost per workshop
participant.
Key efficiency indicators will be developed in relation to the costs of achieving
the outputs and outcomes in the log frame
. The effectiveness indicato
rs will evaluate the
overall costs of programme impact over time, as tracked through its annual surveys on
learning outcomes. Finally, results will be disaggregated by gender and income level to
monitor the programme’s effect on equity within Lagos educat
ion.



5.

Management
C
ase


Management arrangements for implementing the intervention

If approved, the main component of
DEEPEN

will be implemented by
service providers
Cambridge Education, a trading name of the

Mott

MacDonald Limited,
who were appointed
through a commercial tender process, under a design
-
and
-
implement contract.


DEEPEN

will be established as a separate project entity. It will have its own name, identity
and organisational structure but will, where appropriate, draw on the facilities and s
ystems of
the ESSPIN project, also with an office in Lagos, and managed by Cambridge Education.


DFID’s

interface with the operational
contractor will be through regular

quarterly, and ad hoc

meetings between the DFID Lead Advis
e
r and Programme Officer res
ponsible for
DEEPEN
,
and the programme’s Team Leader. These meetings will be complemented by
quarterly
reports and by

informal communication, as and when required. On
-
going VFM analysis
combined with regular

reviews by

Education Operational Research and Ev
aluation Nigeria
programme

(
EDOREN
)

will enable DFID to a
s
certain whether the programme is achieving its
objectives.

In addition, the DFID Nigeria Education Adviser will provide inputs at key points
during programme implementation.


While the programme will not have a formal management/steering committee involving other
stakeholders, it will have regular consultations with both
ESSPIN and

EDOREN. It may als
o
engage with other DFID s
tate level
programmes in Lagos
through their quarterl
y
coordination
meetings.


Two competing concerns shape the approach to
the
involvement of ‘beneficiaries’ in
DEEPEN
’s governance
:

o
n the one hand, critical in a market systems approach, the need to
engage closely with stakeholders, gathering their input a
nd building their ownership
over the
programme’s objectives;

o
n the other, the need to avoid creating unwieldy governance
structures
and giving undue influence to narrow or vested interests
. For these reasons, the
programme will
initially try
hold
ing

regul
ar
, probably
six
-
monthly
,

forum meetings for key
38


stakeholders


G
overnment, associations, civil society groups, banks, and other service
providers. These will offer an opportunity to exchange over relevant activities and issues,
and may also be combined wi
th presentations around specific issues

or research findings

as
part of the programme’s wid
er communication
s

and

role
57
.


Risks and how these will be managed

Two levels of risk are considered


overarching issues and specific risks around each of the
four
main intervention areas.


Risk Description

Impact/

Probability

Risk Mitigation

Overall risks


Political economy


Lagos State Government
does not adopt a genuinely
enabling approach to the
private sector education
market.







A change in Government
leadership results in reduced
commitment to an enabling
role, and at worst leads to
policy reversals
.



Medium/
Medium






Medium/
Low

Two factors underpin this risk: (a)
G
overnment doesn’t want
to change (incentives)
;

(b) it doesn’t know how to (capacity).
On the first,
G
overnment is receptive to rigorous evidence
and argument. Regular studies will genera
te a range of
analyses on

the importance of private schools and the
implications for
G
overnment. On the second, the
flexible
programme format will allow it to respond by providing
appropriate support for capacity
-
building
.


Overall, the programme’s multiple intervention character
spreads risk, reducing reliance on any one partner
.


State elections are not scheduled unti
l 2015 by which time
the proposed changes in
G
overnment’s appro
ach to the
education market should
be reasonably established.
Research on the programme will be used to provide a new
leadership with evidence of impact and a rationale to stay
the course.

Pov
erty

Desired impact of
programme does not reach
the poorest.


Medium/

Low


Robust measurement


with results disaggregated by
poverty level


will

be used to guide activities and re
-
focus
the programme approach if required.


Reputational (DFID)

Informal (illegal) nature of
many schools, combined
with poor conditions for
children.


Low/Low

The approach to grading is a
imed at overcoming the current
exclusion

(and illegality) of schools


and allow
ing

a path to
improvement for low
-
cost schools.


Programme area risks


Rules and standards

Government (and
associations) do not show
increased responsibility to
play an effective role in the
schools grading system.


Government does not
change its approach to tax
and levy collection.


A large proportion
of private
schools continue to distrust

Medium/

Medium




Medium/

High



Medium/
Low

The pilot process during the design phase has engaged
G
overnment and associations fully. This facilitati
ve approach
will continue during the implementat
ion phase


understanding that process

and capacity building is critical in
determining how sustainable the grading system is.


A multi
-
strand approach to taxation advocacy


on
-
the
-
ground diaries evidence,
analytical studies, media scrutiny


to raise the likelihood of success.


Early response to the grading scheme pilot suggests strong
interest
from

schools, in all categories, to engage with the



57

The standard
process o
f intervention design will involve
formalised agreements with relevant stakeholders.

39


G
overnment and are
unwilling to stop operating
‘below the radar’
.

programme and, more importantly, with
G
overnment.
Information
on the benefits for schools from this engagement
will be used to incentivise other schools to join in.


Information

Media firm
s show little
interest in education and in
changing their approach to
programming.


Medium
/

Low


Mass media companies are known.
DEEPEN
’s work in
media builds on existing relationships and a successful
approach (through the ENABLE programme)
.



Pedagogy

Schools remain resistant to
different and more effective
approaches to teaching
.


Medium/

High

The approach

will

be comprehensive (demand and supply

sides) and recognise that innovation is required to
address
this key issue. Evidence

on current practice will be used to
influence schools and pilots instigated to promote change.

Finance

Finance prov
iders are slow
to take up new opportunities
related to schools
.

Medium/

Medium

DEEPEN
’s work will be complementary to EFInA and build
on experience from elsewhere.


How will progress and results be monitored, measured and evaluated?

The purpose
s

of the monitoring
,
measuring
and evaluating the
results
of this programme are

to
:

(
i) improve the accounta
bility of the programme to DFID;

(
ii)
contribute to learning and
improvement in the implementation of
DEEPEN
;

and
(
iii)
fill in gaps in evidence
on

p
rivate
sector contribu
tions to education for DFID and
othe
r development agencies
. The key users
of the outputs from these activities will be DFID, the
DEEPEN

team, stakeholders in Lagos
(
G
overnment and private sector) and stakeholders beyond Lagos, includi
ng other
development agencies, State governments an
d researchers.

Dissemination and
communication will be targeted to the relevant purpose and audience. The log frame
includes a specific output to ensure there is an incentive for disseminating learning.

Monitoring and evaluation activities will be on
-
going, but with an interim evaluation report in
November 2016 and a final evaluation report in November 2018, as well as annual rev
iews
in November 2014, 2015, 2016 and
2017.


Monitoring
Data will be collecte
d
using a number of methods
:




Minimum Learning Achievement (MLA) tests


undertaken in Years 1, 3 and 5, measuring
change at

the impact level
. This will be coordinated with ESSPIN
.




Annual Lagos Private Schools Survey (ALPSS)


assessing change in schools
(outcome
level) with respect to investment, pedagogy, cash flow, attitudes and use of services.




Survey of Parents of Children that Attend Private School
s

(SPoCAP
S
)


a household
survey measuring parents


attitudes, knowledge and use of services (also unde
rtaken
every two years)
.


In each case, data will be
collected

which can be subject to

statistical analysis to allow
general
isation

of results.
Where

possible, results will be disaggregated by income level to
allow the programme to identify impacts on children from low
-
income households.
In
addition, qualitative assessment of change will be assessed through methods including
longitudinal repeat observa
tions/interviews tracking schools and children.


At an operational level, more
frequent

monitoring of
DEEPEN

interventions


activities to
outputs


will

be undertak
en using results chains as
a management and measurement tool.
The approach here will comply

with the
Results Measurement Standard
of the
Donor
Committee for Enterprise Development. This is a process standard, comparable to those
40


approved by the International Standards Organisation (ISO), which DFID private sector
development interventions are
ge
nerally
urged to comply with.


We have considered the case for evaluating
DEEPEN

against the prioritisation criteria in the
DFID Nigeria evaluation strategy.
DEEPEN

is an innovative programme, working with
market systems to improve the quality of private
sector education. There is little prior
evidence in this area. This programme is strategically important area for DFID, particularly
as private education is an area where DFID and other development agencies have less
experience, but has the potential to
reach many. Given the nature of this programme, which
will work in adaptive way to deliver its objectives, real time evaluation has the potential to
improve impact. Taken together, this is a strong case for the evaluation.

The purposes of the evaluati
on flow from the reasons to evaluate. The first is to provide
real time learning to improve implementation. The second is to contribute to filling in gaps in
evidence around private sector contributions to education for DFID and other development
agenci
es, particularly providing objective, impartial evidence of whether this approach can
work.

The key users of the evaluation will differ for each purpose. DFID Nigeria,
DEEPEN
, and
Lagos education stakeholders are the primary users of the real time learni
ng parts. The
audience for improving the evidence base around working with private sector education is
wider including DFID, other development agencies and the Government of Nigeria.

The key evaluation questions will be developed in detail, but will see
k to test the Theory of
Change using a theory
-
based approach. It will assess whether
DEEPEN

makes positive
contributions to learning outcomes for boys and girls from low income households, and will
test the logical chain between
DEEPEN

activities, outputs and outcomes in the four key
areas (rules and standards, information, pedagogy and finance), and the overall desired
impact (improved learning outcome). Key casual links to test include: Are school incentives
to make money becoming mo
re aligned with improving standards and capacity for learning?
Are schools able to make changes to improve quality? Are parents more able and willing to
choose schools based on quality? What evidence is there of
DEEPEN

and their direct
partners contribu
ting to these changes? What other factors are causing changes in the
market system? Have the programme activities caused any harm, particularly to children
from low income households inside or outside the private sector?

Evaluating these types of programm
es is methodologically challenging. Current thinking
emphasises the need to test the theories of change frequently, use a mix of quantitative and
qualitative data, and collect data beyond the length of the programme to aid understanding
of impact and susta
inability
58
. On the quantitative side, the monitoring data (Monitoring of
Learning Achievement, Survey of Parents of Children that Attend, and the Lagos Private
School Survey) will be important data sources. Consideration is being given on how to
include
comparison groups: the most promising is looking at the private schools in nearest
comparator city in Nigeria, Ibadan and Lagos government schools. Qualitative data and
specific studies collected by both the evaluation service provider and
DEEPEN

will also

be
important.

Current thinking on evaluation approaches for M4P also stress the need for institutional
arrangements that ensure both objectivity of the evaluations and an in
-
depth understanding
of the interventions and context
59
. Combined with objective
of real time learning, we have
opted for an integrated strategy for the evaluations, operational research and annual
reviews. The intention is that the evaluation service provider, will do a thorough review of



58

Review of M4P evaluation methods and approaches. April 2013; Ruffer, T and Wach, E.

59

Review of M4P evaluation methods and approaches. April 2013; Ruffer, T and Wach, E

41


the theory of change as part of the evaluatio
n design in the first year, conduct an interim
evaluation in 2016, and final project review in 2018, and final evaluation in 2020 based on
data collected in that year. The evaluation service provider will also be responsible for
providing an annual review

in each interim project year, covering a narrower set of
questions.

DFID Nigeria has already contracted an evaluation and research service provider to cover
it’s education sector


the EDOREN programme implemented by Oxford Policy Management
--

with the

option of this covering
DEEPEN

if approved. The contractor is contracted for 4
years, and it is planned to re
-
tender this evaluation service provider for an additional 4 years.
EDOREN’s outputs include provision for dissemination.


Table 11 Commercial Case, Consideration of Potential Advantages and Disadvantages


DESCRIPTION

ADVANTAGES

RISKS

FULL MANAGEMENT BY ONE OR MORE TWO UN AGENCIES (e.g. UNICEF and ILO)



An MOU

with UN
agencies fully
responsible to DFID for
the programme’s
獵捣c獳fu氠de汩ve特Ⱐ
and u獩湧⁩瑳 own
p牯捥du牥猠and
p牡捴楳攮⁆und楮i
瑨牯rgh⁲ gu污爠
advan捥⁴牡n捨e献

+乯k捬敡爠rdvantage猬
ex捥p琠瑨a琠楴⁣an be
a獳smed 瑨a琠a p牯橥捴f
瑨楳⁳楺e⁩猠捯m
景牴rb汹
w楴i楮i瑨e f楮in捩慬⁲c獫s
捡pa捩瑹f a⁕丠 gen捹

+乯k⁥v楤in琠tha琠瑨ese⁡gen捩敳cwou汤lwo牫⁷e汬⁴oge瑨e爮

+啮r獵a氠fo爠r义䍅䘠瑯⁷o牫⁷楴i⁡no瑨e爠r丠kgen捹

+乯k啎⁡gen捹⁨a猠sxpe物en捥f ma牫e琠晡捩c楴i瑩tn爠獣hoo汳l⁡nd
pa牴r捵污牬y⁳捨ool
猠s猠獭a汬⁢u獩湥獳e献

+UNICEF’s usual approach of direct delivery goes against the concept
of ma牫整 晡捩c楴i瑩tn.

+乯k⁡⁲ 獫⁡猠獵chⰠbu琠瑨e⁤楳idvan瑡ge⁴hat⁡汬⁰aymen琠wou汤lbe
捬慩ced⁩ ⁡dvan捥Ⱐ牥du捩湧u爠rnfluence⁴obta楮i牥r牥獳 fo爠poo爠

牫r

+乯k⁣汥a爠rnough⁴hat⁴h楳⁡pp牯rch⁷ou汤lde汩ve爠噆䴠瑨牯rgh⁴業e汹
and⁣o獴
-
e晦e捴楶eⁱua汩瑹⁡獳s牡r捥⸠

jA乁kbjb乔 Bv⁉乔b剎Aq䥏乁i⁆䥎 乃䥁i⁃佒 佒lq䥏丠⡉䙃F


An⁍何⁷楴i⁡ tB
agen捹⸠

+剥汥van琠f楮an捩慬c
expe物en捥.

+䍯C汤la捣c獳⁲e汥lan琠
ban歳k瑨a琠may⁳ ppo牴r
p牯r牡rme⁢enef楣ia物e献

+乯k⁣汥a爠瑨a琠䥆䌠ha猠sxpe物en捥 of⁳ma汬⁰牯橥捴猠w楴ia牫整
晡捩c楴i瑩tn㬠楴猠io牴fo汩o 楳⁴牡d楴楯ia汬y⁦a爠ra牧e爠roan猠snd⁳uppo牴r
晡捩c楴楥献

+p業楬a牬yⰠ䥆䌠fa猠s牥v楯i猠sxper
楥i捥⁷o牫rng⁷楴i⁳捨oo汳n
瑲t楮楮g⁳ ppo牴Ⱐru琠on⁡ fa爠ra牧e爠獣r汥.

+乯k瑥捨n楣慬iedu捡瑩tn⁳ e捩a汩獭.




43


MANAGEMENT BY A PRIVATE SECTOR CONSORTIA



+Similar to the
description
immediately above

+Can be selected though processes that
places risks
firmly with the consortia,
through contract terms that mandate
them to deliver specific outputs.

+Payment by performance.

+Clear accountability to DFID.

+.Sourcing intelligence gathering
suggests that there is a market of
potentially suitable providers, an
d the
basis for keen competition with benefits in
quality, VFM, and cost control.

+Costs may be higher than the route through a UN
agency (although not necessarily.)

+Challenge of working in Lagos may be a disincentive to
the market.

. +Relatively expensiv
e, due to high UN operating costs.

+Risk that markets might not respond, due to perception
that DFID wants to use only suppliers already active for
us in the Nigeria education sector

+Lead time for a new contractor to set up and establish
links in Nigeria.

MANAGEMENT BY A CSO OR CSO CONSORTIA



+Likely to involve a
number of accountable
grant agreements with
CSOs for project
components.

+
SCF has some experience of research
on private schools in Lagos.

+SCF

may be a candidate to work with
the project in due course.

+Speed of start
-
up and delivery:

CSOs in
Nigeria have a proven track record in
designing and managing VFM strategies
and plans

+
Likely to get more for our money.

+No previous recent history of CS
O
market facilitation
experience.

+
Research capacity may not be tested on the necessary
scale.


+Issue

of front loaded funding vs. payment by
performance

+Issues of sharing risk, and
consequential
management
burden for DFID.