12 Jul 2018

“At the beginning of my university days, I was drowning in work and I had a lot of frustrations. Luckily, I am now well on my way to making the transition from a school learner to a university student; a change from a shaky to a solid, confident and excellent student is emerging,” said Karabo Phenya in May 2017.

Karabo is studying towards a Bachelor of Science (B.Sc) degree in Construction Studies at the University of the Witwatersrand. And though his transition to university student has been rocky, he may have never reached that milestone without the opportunity to access quality education at school level. Karabo matriculated from Princess Park College in Pretoria in 2015.  

Built on partnerships

Princess Park College is an independent school managed by the Royals Group, one of eight school operators that have partnered with the Schools and Education Investment Impact Fund of South Africa (Schools Fund) to create additional quality schooling opportunities for learners at affordable independent schools. The R1.4 billion Schools Fund, managed by Old Mutual Alternative Investments, is the first significant impact fund in the country’s education sector and was launched in 2012 by the Government Employees Pension Fund and its asset manager, the Public Investment Corporation (PIC), along with Old Mutual.

The Fund is headed by Lala Steyn and makes use of pension finance to invest in independent schools that provide quality education while capping the school fees to increase affordability for parents. The Schools Fund provides a loan/equity to a ring-fenced non-profit or for-profit company (i.e. school operator) that owns the school property. The school operator employs the teaching staff and a management company provides services such as financial management. In cases of under performance, these companies are held accountable.  

The state also plays an important role as the regulator and its consent is required for a myriad of matters that impact a school, from the approval of building plans, to the approval of a registration application and the allocation of a subsidy.

The Schools Fund has partnered the following school operators: BASA, Royals, Meridian (managed by Curro), Prestige, EdInvest, Two Oceans, Blue Hills and St Christopher’s. These school operators, who provide quality education and exhibit sound financial management and good governance practices, have shown the ability and desire to expand the scale of their operations in order to increase their impact on a greater number of learners.

In 2018, the fund’s investment has enabled the enrolment of 16 500 learners and employment of 1 250 staff in 34 schools across the country. Working side-by-side with its partners, the Schools Fund ultimately hopes to reach 50 000 learners by 2027.

The impact so far

Impact investing in the education sector is presently changing the face of the independent schooling landscape in South Africa in the following ways:

  • New independent schools being provided decreases the burden on the state.​
  • Existing small-scale black school operators are scaling up from one school to many – for example, the BASA schools in Soweto and Prestige in Gauteng.​
  • Young, skilled entrepreneurs seeking to tap into private-sector efficiencies while delivering a social return have opened quality schools with affordable fees in the past few years.
  • Private equity investment has grown significantly, albeit mainly in the middle to upper-end of the market – for example, the expansion of Curro, AdvTech and Reddam.
  • ​Many school operators have a fresh approach to how quality education should be provided and their innovations may result in technology-based breakthroughs that can be used throughout the schooling sector.

If impact investing, corporate social investment spend and public sector resourcing become aligned, this could make a really significant contribution to addressing the crisis in South African education.

How can you measure success?

The measure of success for this kind of investing is both the quality of education provided and the commercial return.

While there are various standard measures that the private sector uses to assess commercial value, assessing education quality is a learning curve. At present the Schools Fund has adopted an approach that compares annual test results against agreed targets, with the process guided by independent education experts such as JET Education Services.

On a yearly basis improvement in the final National Senior Certificate (matric) exams is measured. For example, in 2017 the schools across the Schools Fund’s portfolio delivered an average 92% matric pass rate and a 42.8% Bachelor pass rate, which allows access to universities. Compared to the national results (75.1% matric pass rate and 28.7% Bachelor pass rate), these outcomes are very good. However, if these average results decline or increase next year, it does not necessarily mean that the quality has declined or increased across all schools, or explain why this has happened. A deeper analysis is needed where results across grades, over a number of years (children go to school for 12 years) are compared, combined with a detailed understanding of each school and its context.

An annual measurement of the improvement or decline in numeracy and literacy at Grade 3, 6 and 9 levels, based on results from a standardised test, is being implemented. There are, however, challenges in this type of assessment: for example, the fairness of the test and its comparability across years; unhappy teachers who find the process intrusive and stressful; and the affordability of the tests. The best results emerge when teacher-training, mentorship and support accompany the discussions on how to improve results.

We are only at the beginning of our “rocky” road, but we believe – that like Karabo – a “solid, confident and excellent” set of results can be expected from the affordable independent school sector in the future.

Article published in JET bulletin May 2018



  • Lala Steyn
  • Schools Investment Fund
  • Old Mutual Alternative Investments
  • Impact Funds
  • Impact Investments