BRIDGE ACADEMIES: Legal/regulatory pitfalls and lessons for impact investors in Uganda
By Stephen Tumwesigye
In November 2016, the High Court in Uganda made an order closing the Bridge International Academies schools following an order by the Ministry of Education. The Bridge International Academies are set up under a relatively new financing model known as impact finance. Under this model, investors come together with the intention to create positive impact beyond financial returns. The model is seen as an economically efficient way to complement government efforts; especially in key sectors of the economy.
The investors in the Bridge Academies are a mix of private and public investors including DFID, IFC, Bill Gates, the Zuckerberg Education Ventures and the Omidyar Network. The Bridge schools operate under a low cost data driven technology enabled smartphone and tablet system that is monitored and operated. This has translated into a cheaper but effective model of education different from the one provided in the Ugandan Universal Primary Education (UPE).
A UNESCO report indicates that Uganda has a drop-out rate at an alarming 71 percent. The system is riddled with absentee teachers, poor or no structures, and pupils travelling long distances to access school.
One would, therefore, think that the government of Uganda should have welcomed the operations of the schools and nurtured them to reach the over three million Ugandan children who are not served by the current education system.
Instead the Government of Uganda, represented by the Ministry of Education, closed the schools. It indicated that the schools had failed to follow the country’s education curriculum, had poor structures, failing to recruit “qualified teachers” etc.
Whereas these reasons may be convincing, a deeper look at the documents submitted to court, representations and statements by several ministers will reveal that the closure was motivated by deeper reasons beyond the surface representations.
These range from the mundane ones; including lobbying and fear of competition by Ugandan education entrepreneurs, to the deeper cultural/religious concerns and more broadly those that are inextricably linked to the political economy of the Ugandan state. We explore them further below;
a) A fluid legal/standards regime.
The education licensing system in Uganda is governed by The Uganda (Pre-Primary, Primary and Post Primary) Act, 2008. In 2013, the Ministry of Education also passed guidelines for the licensing, registering, and classification of private schools. Under the two laws, the Permanent Secretary has the power to approve schools for them to acquire licenses. This process is preceded by reports from the area health and school inspectors where the schools are located.
The law requires that no school shall operate without a license. The practice though is that schools establish, set up structures, attract students and then start applying for a provisional license.
Within the strict confines of the law, the 63 schools operating under the Bridge International Academies in Kampala were not licensed. Nonetheless, the conduct of the Ministry of Education and the past practice in the licensing of private schools, point to the fact that indeed the schools were by conduct regulated by the Ministry of Education. The Ministry of Education invited the schools’ proprietors to the Basic Education Working Group, there were several meetings between the Ministry and the proprietors and on June 6, 2016, five months before the closure by court, the Permanent Secretary wrote a letter halting the closure of the schools to allow the pupils complete their exams.
Relatedly, the report from the Ministry of Education that preceded the closing of the schools indicated that the schools were not meeting basic requirements and minimum standards. The report raised questions centering on sanitation standards.
All the 63 schools were inspected by the District Health/Education Inspectors. All the 63 reports recommended the schools for registration and licensing. The reports tackle classroom size, water supply, size of pit latrines etc.
However, the report by the Ministry of Education which was supposed to be drawn from the reports of the health inspectors presents a different story from that of the inspectors who went on the ground. These inconsistencies would baffle anyone trying to license their school in Uganda. Although this was a matter that was touched upon in the court hearing, it is my considered opinion that the judge handling the case did not delve into the details above to uncover the inconsistencies.
This lack of a proper and standardised system for licensing of schools in Uganda is a fact that every impact investor must be conscious of before setting up. Whereas one may follow the process, it is important that the law is followed to the letter to avoid scenarios such as closure and costly litigation. This applies to other impact finance investments including health, agriculture, etc.
b) Political economy and other macro- factors
Following the closure of the Bridge Academies, the Minister of Finance, Matia Kasaija said the schools were “teaching pornography” and “conveying the gospel of homosexuality”. It is important to note that large sections of Ugandan society are very religious and Parliament has in the past passed laws to outlaw both pornography and homosexuality. Kasaija’s statement, therefore, cannot be taken lightly. They could be the reason behind the schools closure.
Closely related is the fact that many investments in Uganda, especially large scale investments, are often times protected and or ‘shielded’ by powerful government officials. It is common to see many potential investors have their first meeting with the President before they embark on their projects in the country. The World Bank and Transparency International have severally identified that rent seeking and corruption are one of the bottlenecks to the ease of doing business in Uganda. There were reports that proprietors of other private schools wrote to the Minister of Education complaining about the ‘influx’ of the Bridge Academies.
An understanding of the political economy terrain, reaching out to the would be decision makers, explaining the intent of the project, allying fears related to cultural/religious concerns are important steps to take before set up.