Strengthening the Private Basic Education Sector: A Case for USAID Support and Financing Through the Development Credit Authority

This report develops a case for private sector involvement in the provision of basic education and explores the financing needs of schools and related service providers towards expanding the supply and quality of basic education. It offers guidelines for the United States Agency for International Development (USAID) to invest in the private basic education sector using the Development Credit Authority (DCA), a financial guarantee mechanism through the Office of Development Credit (ODC). This report provides an overview of historical trends in the provision of private education, describes the characteristics of this sector, and presents the main rationale for investing in it.

Privately managed and financed schools are becoming more prominent globally in education, even at the level of basic education. Private schools increase efficiency, access, and quality of services, and have the potential to play a more significant role in relation to the public sector. Drawing from literature and past donor experiences in financing for social services, this paper offers recommendations for USAID to use its loan-guarantee mechanism to fill a financing gap and stimulate growth of the basic education sector.