Affordable Day Care Centers
Affordable Day Care Centers
Business Model Description
Establish or acquire and operate day care centers providing quality and affordable childhood education to low- to mid-income communities unable to afford high-end day care facilities currently available. The centers either run as commercial entities where a private actor owns and operates the entity or via a public-private partnerships where the entity is government-owned but managed and operated by the private sector. For the latter case, the government provides the necessary infrastructure, such as repurposing abandoned and / or underutilized buildings and renting them to users.
Expected Impact
Enhance accessibility and affordability to quality pre-primary education and care for low- and middle-income communities.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Tanzania: Central Zone
- Tanzania: Eastern Zone
- Tanzania: Southern Highlands Zone
- Tanzania: Lake Zone
- Tanzania: Northern Zone
Sector Classification
Education
Development need
Significant progress has been made in expanding free primary education in Tanzania, raising primary and secondary enrolment rates and increasing investment in higher education. However, Tanzania’s Human Capital Index (HCI) remains well below the average of low and low middle income countries. Access to education is highly unequal, and a lack of qualified teachers undermines learning outcomes (1).
Policy priority
Tanzania's government is committed to develop and maintain a skilled and competitive workforce through increasing enrolment of age-appropriate children; construction of classrooms and teacher allocation to keep pace with the rapid increase, and the incorporation of digital learning and teaching (2, 8, 34).
Gender inequalities and marginalization issues
The ratio in primary and lower secondary schools for girls to boys is about 1:1, while in upper secondary and higher education it is 1:2. This shows a decreasing trend for the progression of girls from one level to the other. Although drop out affects both boys and girls, girls have a greater possibility for leaving school prematurely (3).
Investment opportunities introduction
Tanzania has one of the world’s fastest growing young people’s population. Of the estimated 60 million people, more than 50% are under 18 and over 70% are under 30. Tanzania requires means of educating these large numbers of young people, which offers engagement opportunities (6, 7).
Key bottlenecks introduction
Despite important gains in primary enrolment, learning outcomes remain broadly unchanged. The distribution of educational opportunities is highly unequal, and a lack of qualified teachers undermines education quality (5).
Formal Education
Development need
Tanzania is among the countries in Sub-Saharan Africa in which the quality of early child education is very low due to under-resourcing and inadequate infrastructure. Specific challenges revolve around low government budget, availability of qualified teachers and classrooms for basic education (3, 15).
Policy priority
The Government recognizes the importance of pre-primary education, as evidenced by the 1995 and 2014 education policies that require each primary school to have a pre-primary class admitting 5-6-year-olds. Attending pre-primary classes is one of Tanzania's requirements for admission to class one (4).
Gender inequalities and marginalization issues
Early childhood education and care in Tanzania is unsatisfactory. Many children have no access to early childhood settings for various reasons, including low socio-economic status of parents, gender discrimination, and traditional norms and cultural values (9).
Investment opportunities introduction
The expanding middle class, representing 10% of the population and growing at a steady rate, offers significant demand for quality education in line with international standards, life skill development, education infrastructure and learning tools, including digital technology and education IT solutions (8, 35).
Key bottlenecks introduction
Children in Tanzania graduate from primary school without having acquired basic literacy and numeracy skills because the publicly managed pre-primary schools are not able to lay the required foundation for personal and educational developments (4).
Pipeline Opportunity
Affordable Day Care Centers
Establish or acquire and operate day care centers providing quality and affordable childhood education to low- to mid-income communities unable to afford high-end day care facilities currently available. The centers either run as commercial entities where a private actor owns and operates the entity or via a public-private partnerships where the entity is government-owned but managed and operated by the private sector. For the latter case, the government provides the necessary infrastructure, such as repurposing abandoned and / or underutilized buildings and renting them to users.
Business Case
Market Size and Environment
< USD 50 million
As of 2021, Tanzania had 1,738,843 students enrolled in pre-primary schools. About 5% of these (86,942 students) are enrolled in private schools. The actual per unit cost for financing pre-primary education is around USD 25 per month, which is equivalent to USD 300 per year and approximates to a market opportunity of USD 26 million per year (4, 15).
Pre-primary enrolment has increased in absolute terms from 1,034,729 pupils in 2012 to 1,562,770 in 2016 and was projected to grow to 1,738,843 students by 2021 (15). The country’s rapid urbanization and growing middle class offers increased demand for day care services (18).
Indicative Return
> 25%
Experience from investors in “low- to mid-fee private schooling” in South Africa shows that profit margins of 30-40% are achievable for monthly fees above ZAR 3,000 (USD 189). For medium-fee (below ZAR 3,000 (USD 189) per month) schools, returns of up to 30% are common (36).
A cost-benefit analysis of the education expenditures using the human capital approach shows that education enrolments have positive net-benefits with a benefit-cost ratio of 1.3-2.9 irrespective of the timing of the benefits and costs, and the discount rate alternatives considered (37).
The returns on investments for a year of schooling by world region are highest in Sub-Saharan Africa, standing at 12.4%, which is significantly above the global average of 9.7%. Returns for Tanzania are estimated at 19.2%, which are among the highest within Sub-Saharan Africa (38, 39).
Investment Timeframe
Medium Term (5–10 years)
Based on South African benchmarks, private school investments are likely to produce a cash-flow in the short to medium term depending on the quality and the speed of the marketing process to attract pupils (36).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Business Model Unproven
Business - Supply Chain Constraints
Market - High Level of Competition
Impact Case
Sustainable Development Need
The net enrolment for pre-primary education is estimated to have reached 44.6% in Tanzania, which is one of the highest in Sub-Saharan Africa. With 95% of pre-primary students enrolled in public school, the public system faces capacity pressures, and low enrolment of age-appropriate children, leading to some children entering Standard I without having passed through pre-primary (9, 21).
Pre-primary enrolment has grown from 1,562,770 in 2016 to 1,738,843 in 2021 at an estimated growth rate of 2% annually, resulting in an increase of the average number of students per teacher from 112 to 135, which compromises quality education delivery and results in a lack of appropriate learning infrastructure (21).
Gender & Marginalisation
Women are in need of a high quality early-childhood care system to equip their children with the requisite cognitive skills needed at their early age. Their daily duties limit the time they have available to spend with their children to provide such care (21).
Expected Development Outcome
Affordable day care centers reduce the pressure on available pre-school institutions and increase the enrolment rate for pre-primary schools. They offer quality care and education through specialized teachers, which meets and exceeds the recommendations of the National Pre-Primary Curriculum (22).
Early child education lays the foundation for promoting a well educated and learning society. The early childhood period plays a critical role in a child’s life, since any developmental and growth domain gaps at this time can have a lifelong impact, restricting children’s ability to realise their full potential later on in their lives (15, 16).
Gender & Marginalisation
Affordable day care centres offer female students, particularly from low to middle income families, basic knowledge and skills which prepares them to provide services needed in the competitive job market and in return receive higher incomes to improve their livelihoods (23, 40, 41).
Affordable day care centers offers women and single households with the opportunity to pursue income generating opportunities while their children are in the pre-primary education institutions, contributing to greater independence and stronger livelihoods (21).
Primary SDGs addressed
4.2.1 Proportion of children aged 24-59 months who are developmentally on track in health, learning and psychosocial well-being, by sex
4.2.2 Participation rate in organized learning (one year before the official primary entry age), by sex
Gross enrolment ratio and net enrolment ratio (% of eligible) of 78% and 35.9%, respectively for 24-59 months age group in 2020/21 (8).
In 2018, 55.3% of children participated in pre-primary or primary education in the year prior to the official entrance age for primary school (33).
Gross enrolment ratio and net enrolment ratio (% of eligible) of 100% and 80%, respectively, for 24-59 months age group in 2025/26 (8).
N/A
5.4.1 Proportion of time spent on unpaid domestic and care work, by sex, age and location
16% of time spent on unpaid domestic and care work (44).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
If the pre-primary schools target primarily higher performing students and / or focus on students from higher-income households, leaving disadvantaged youths in the public system, they may exacerbate existing inequalities and draw away public education funds (11).
A limited pool of qualified pre-primary school teaching staff locally may necessitate outsourcing, which increases operation costs and result in unaffordable service provision (11).
Impact Risks
If the day care centers are unaffordable to students from low-income communities or inaccessible to those outside of the urban hotspots, only those already served by public institutions may benefit and the expected impact may be limited (21).
If affordable day care centers are not complemented with other essential services, such as school transportation programme, to address accessibility issues for children living in hard-to-reach areas, the impact may be limited especially for marginalised communities (15).
A limited pool of qualified teaching staff may limit the resultant job opportunities for Tanzanians, and the lack of physical infrastructure available may not allow to serve communities at scale, which may reduce the expected impact (15).
Impact Classification
What
Affordable day care centers provide quality pre-primary education and care to low- and middle-income communities.
Risk
While the affordable day care center model is proven, affordability and accessibility as well as education staff and infrastructure availability require consideration.
Impact Thesis
Enhance accessibility and affordability to quality pre-primary education and care for low- and middle-income communities.
Enabling Environment
Policy Environment
Tanzania Development Vision, 2025: Seeks to transform the education system starting from the pre-primary school level so that it can develop the country’s human capital in tandem with socio-economic changes (24).
Education and Training Policy, 2014: Stresses the importance of pre-primary and primary school education. It emphasises that pre-primary education is compulsory for a period of not less than one year in order to meet children’s needs (25).
Child Development Policy, 2008: Provides guidelines to the fulfilment of children's rights, welfare and development in Tanzania in terms of physical, mental and spiritual growth. The policy was compiled in accordance with the International Convention on the Rights of the Child (CRC) (26).
Education Policy, 1978: Describes the role of the private sector in primary and secondary education. It also sets out a 14-point criteria upon which a school can be granted or denied registration (41, 42).
Financial Environment
Financial incentives: The Global Partnership for Education (GPE) offers grants totalling USD 112 million to build on Tanzania’s efforts to get more children in school. Investors can benefit from a special package for girls and children from disadvantaged backgrounds (31).
Fiscal incentives: Tanzania offers import duty and VAT exemption on deemed capital goods, including building materials, utility vehicles and equipment. Private day care centers are among the potential beneficiaries of the scheme (32).
Regulatory Environment
Education Act, 1978: Allows private sector to operate schools in Tanzania, and affords private schools’ moderate levels of autonomy. They can set teacher salaries, deploy and dismiss teachers (subject only to labor laws) and they have to adhere to centralized requirements on teacher qualifications, class sizes and pedagogy (41, 42).
Law of the Child Act, 2009: Guarantees the child’s right to education, and stipulates that parents, legal guardians and those having custody of children have the duty to provide the child with the right to education and guidance (29).
Education Fund Act, 2001: Seeks to establish an Education Fund to improve access to and equality of education at all educational levels in Tanzania and Zanzibar (30).
Marketplace Participants
Private Sector
Aga Khan Nursery School (run by the Aga Khan Foundation), Haki Elimu, My World Preschool & Day Care Msasani, Alnegar Day Care & Nursery School, Happy Kids Puzzles, Chameleons Pre-School, Active Tots Zone - Pre School & Day Care.
Government
Ministry of Education, Science and Technology (MoEST), Tanzania Institute of Education (TIE), Tanzania Teachers’ Union (TTU).
Multilaterals
United Nations International Children's Emergency Fund (UNICEF), Global Partners for Education (GPE).
Non-Profit
Swedish International Development Cooperation Agency (SIDA), Tanzania Early Childhood Development Network (TECDEN), Children in Crossfire (CiC).
Target Locations
Tanzania: Central Zone
Tanzania: Eastern Zone
Tanzania: Southern Highlands Zone
Tanzania: Lake Zone
Tanzania: Northern Zone
References
- (1) World Bank, 2021. Tanzania Economic Update - Raising the Bar for Achieving Tanzania’s Development Vision.
- (2) United Republic of Tanzania, 2016. National Skills Development Strategy.
- (3) University of Dodoma, 2020. Early childhood education in Tanzania: Views and beliefs of stakeholders on its status and development.
- (4) University of Dar es Salaam, School of Education, 2014. Analysis of the Unit Costs of the Government’s Provision of Pre-Primary Education in Tanzania.
- (5) The World Bank, 2021. Tanzania Economic Update.
- (6) United Nations Children Fund, 2018. Young People Engagement: A priority for Tanzania.
- (7) The British Council, 2016. Tanzania’s Next Generation Youth Voices.
- (8) United Republic of Tanzania, 2021. Third National Five-Year Plan (FYDP 3).
- (9) Ignasia Mligo, 2018. Enhancing Young Children’s Access to Early Childhood Education and Care in Tanzania.
- (10) Aga Khan Schools, 2022. https://www.agakhanschools.org/Tanzania/AKNPSD/Index.
- (11) My World Pre Schools, 2022. http://myworldtz.com.
- (12) Julia Faria, 2020. Number of Primary Schools in Tanzania.
- (13) World Bank Group, 2014. Comparable Estimates of Returns to Schooling Around the World.
- (14) Fursa Kwa Watoto, 2008. Financing Pre-Primary Education in Tanzania.
- (15) United Nations Children Fund, 2020. Education Budget Brief, Mainland Tanzania.
- (16) Education International (IE) and Tanzanian Teachers’ Union (TTU), 2017. Situation analysis and baseline study on early childhood education in Tanzania mainland, Final Report.
- (17) World Bank’s Systems Approach for Better Education Results (SABER), 2015. Engaging the Private Sector in Education, Country Report.
- (18) Statista, 2022. https://www.statista.com/statistics/455940/urbanization-in-tanzania.
- (19) Open University of Tanzania, 2013. Delivery of Early Childhood Education in Urban Areas of Tanzania: A Case of Ilala Municipality in Dar es Salaam. https://www.ajol.info/index.php/huria/article/view/110836.
- (20) World Bank, 2016. Trends in returns to schooling: why governments should invest more in people’s skills.
- (21) Bernard van Leer Foundation, 2001. Early Childhood Care and Development in Tanzania.
- (22) The Open University of Tanzania, 2013. Delivery of Early Childhood Education in Urban Areas of Tanzania: A Case of Ilala Municipality in Dar es Salaam.
- (23) World Bank Group, 2020. Low-Cost Private Schools in Tanzania. A Descriptive Analysis.
- (24) United Republic of Tanzania. 2020. Tanzania Development Vision 2025. https://unitedrepublicoftanzania.com.
- (25) United Republic of Tanzania, 2014. Education and Training Policy.
- (26) United Republic of Tanzania, 2008. Child Development Policy.
- (27) Sustainable Development Goals Centre for Africa, 2020. Africa SDG Index and Dashboards Report.
- (28) United Republic of Tanzania, 1977. The Constitution.
- (29) United Republic of Tanzania, 2009. Law of the Child Act.
- (30) United Republic of Tanzania, 2001. Education Fund Act.
- (31) Global Partnership for Education, 2020.
- (32) United Republic of Tanzania, 2022. Standard Incentives for Investors. https://investment-guide.eac.in.
- (33) UNSTAT Hub, 2022. https://country-profiles.unstatshub.org/tza#goal-4.
- (34) United Republic of Tanzania, 2016. Education Sector Development Plan.
- (35) The Borgen Project, 2018. Everything to Know About Tanzania’s Improving Economy.