Network of Hybrid Academic Institutions for Inclusive Education
Network of Hybrid Academic Institutions for Inclusive Education
Business Model Description
Institutions with high-quality academic programs and an innovative hybrid model, allowing students to receive real-time classes and interact with teachers and peers, targeting economically disadvantaged sectors.
Expected Impact
Reducing inequality in access to quality basic education in both rural and urban areas through the establishment of private educational institutions
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
- Macroregion Selva
- Macroregion Centro
- Macroregion Norte
- Region Lima y Callao
Sector Classification
Education
Development need
Peru ranks 64th out of 77 countries in the Pisa Test (1). In 2021, the illiteracy rate for the population aged 15 and older was 5.2% (2). The highlands show a higher illiteracy rate at 8.8% (2). Peru has a school dropout rate of 6.3%, according to figures from the Ministry of Education (Minedu) (8). Peru has regressed by 10.9 points in educational infrastructure (22).
Policy priority
Strategic National Development Plan for 2050, with the goal of ensuring quality and inclusive educational formation. National Policy on Education and Well-being of Adolescents, to guarantee the rights of children and adolescents. National Policy on Higher and Technical-Productive Education, to expand access and improve the quality of higher education (13).
Gender inequalities and marginalization issues
0.7% of women aged 15 to 19 are illiterate, 1.4% of women aged 20 to 29 are illiterate, higher compared to men of the same age at 1.2%. 3.7% of women aged 30 to 39 are illiterate, a higher figure than that of men with a percentage of 2%. The completion rate for primary education is lower for women compared to men (2).
Investment opportunities introduction
The National Plan's Priority Objective #2 states: 'Increase access and quality of higher education for the young population.' Peru has invested S/2,000 million in Bicentennial Schools, S/217 million in the assessment of teachers and students, and S/1,980 million in expanding, improving, and maintaining infrastructure and equipment, among other initiatives (3)
Key bottlenecks introduction
The enrollment rate in the private sector has decreased by 4.94%, while in early education, it decreased by 4.7% between 2021 and 2022 (2). 57.4% of Peruvian households have an internet connection. Primary education students have the lowest percentage of internet access, with only 43.3% (5).
Education Infrastructure
Development need
Public education in Peru is considered to be deficient.The state offers education at various levels through numerous public institutions with a substantial student enrollment. Notably, a significant percentage of students in private institutions hail from lower socio-economic backgrounds, emphasizing the need for improving the quality and accessibility of public education.
Policy priority
The Plan Nacional de Infraestructura Educativa al 2025 aims to enhance Peru's education quality by improving the condition, capacity, management, and sustainability of public educational infrastructure. Moreover, the Programa Multianual de Inversiones en el Sector Educación 2023-2025 identifies gaps in the education sector and prioritizes investment criteria to address them (34).
Gender inequalities and marginalization issues
Children living in marginalized urban and rural areas face more obstacles to completing their school studies compared to those in urban areas. When you add gender-based violence to the mix, it's clear that girls and adolescents in rural areas are the most affected.
Investment opportunities introduction
The National Fund for the Development of Peruvian Education (FONDEP) The Ministry of Education (MINEDU) encourages private sector participation in financing educational infrastructure projects through mechanisms like Tax-for-Infrastructure (OxI) and Public-Private Partnerships (APP). (9)
Key bottlenecks introduction
Only 17.4% of the Peruvian population aged 6 and older accessed educational services using a laptop, 14.7% used a computer, 2.4% used a tablet, and 8.3% used another type of device such as a Smart TV (5). The deficit in educational infrastructure in Peru has been a longstanding issue, and the Ministry of Education (Minedu) estimates it to be around S/ 111 billion (4)
Pipeline Opportunity
Network of Hybrid Academic Institutions for Inclusive Education
Institutions with high-quality academic programs and an innovative hybrid model, allowing students to receive real-time classes and interact with teachers and peers, targeting economically disadvantaged sectors.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
< 5%
Approximately 2,157,149 people study in private educational institutions (primary and higher education) (9). A middle-class parent invests approximately US$52,823 in the initial, primary, secondary, and university education of their children, while a lower-middle-class parent invests around US$30,810 (33).
In 2019, private education in Peru contributed to the GDP with US$3,540.95 million (32).
Indicative Return
5% - 10%
According to the National Association of Investment Companies (NAIC), the target rate of return for investors in educational infrastructure typically ranges from 8% to 12% (23).
SUMMA SAFI provided a secured loan to UCAL for the amount of US$ 1,987,808 at an annual interest rate of 9.25% (30).
According to interviews with potential investors, the expected return on investment ranges from 8% to 10%.
Investment Timeframe
Medium Term (5–10 years)
According to interviews with Peruvian investors, the estimated investment period ranges from 5 to 10 years. This investment typically involves debt (loans secured by assets, future receivables, or real estate) or equity investment in the project.
Summa SAFI disbursed loans to UCAL in 2011 with maturity dates in 2019 and 2020.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Capital - CapEx Intensive
Political risk
Risk of underutilization of educational infrastructure
Impact Case
Sustainable Development Need
More than 50% of Peruvian public schools (both urban and rural) are in poor condition. These infrastructure problems in the schools could affect the well-being and health of the educational community and the teaching and learning process (10).
The low percentage of primary education (7.1%) and higher education (37.7%) in the population aged 15 to 29 is a concern for the country's development, limiting employment opportunities and personal advancement (12).
Gender & Marginalisation
In 2020, approximately 25% of the national enrollment was in rural areas (11). As of 2020, only 29.1% of public school buildings had access to all three basic services. This situation is even more challenging in Loreto and Ucayali, with 7.2% and 8.5%, respectively (24).
The satisfactory achievement of reading for second-grade rural primary students is less than half of what urban students attain (17% vs. 40%). The difference in mathematics is also concerning: 18% vs. 11%. (11)
47.8% of individuals with disabilities aged 3 to 18 do not attend an educational service. (16)
Expected Development Outcome
Increasing the number of high-quality educational institutions accessible to the middle and lower classes is a crucial goal.
Democratizing education in Peru, ensuring that the entire population receives quality education, regardless of their economic status, is an important objective.
Gender & Marginalisation
Improve physical infrastructure and educational quality for the middle and lower classes, especially in the Peruvian jungle, which records the worst conditions in educational infrastructure.
Enhance the quality of educational offerings for the middle and lower classes.
Primary SDGs addressed
4.1.1 Proportion of children and young people (a) in grades 2/3; (b) at the end of primary; and (c) at the end of lower secondary achieving at least a minimum proficiency level in (i) reading and (ii) mathematics, by sex
In Peru, there has been a sustained increase in the coverage of basic education, reaching an average of 95% over the last three years (15).
One of Peru's goals is to increase access to education. The Peruvian government aims to raise the net enrollment rate in early, primary, and secondary education by 10% by the year 2030. (24)
8.6.1 Proportion of youth (aged 15–24 years) not in education, employment or training
The percentage of graduates who obtained a bachelor's degree or title in 2020 was 20.41% in the case of Technological Higher Education (15).
The Peruvian government aims to ensure that all students, regardless of their socioeconomic or geographical background, have access to quality education.
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Public sector
Corporates
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Outcome Risks
Excessive exposure to computers can harm one's vision.
Excessive screen use without the necessary occupational health guidelines can lead to issues in the hands, wrists, and the upper body in general.
If educational technology is not designed to foster relevant skills and competencies, it can create skill gaps between those who use technology and those who do not.
Impact Risks
If equitable access to technology is not ensured, it can further widen the gap between students who have access to technology and those who do not.
Privacy and security are another set of risks that the education sector faces. Adequate regulation is needed to protect the privacy and security of students.
If educational technology comes at a high cost, it can lead to greater economic inequality in education, benefiting only those who have the financial resources to invest in educational technology.
Impact Classification
What
A significant and positive outcome is an improvement in salaries and economic well-being due to having a better-educated workforce.
Who
Stakeholders who benefit include students, as they become more competitive with improved educational quality, businesses in need of a skilled workforce, and families with increased incomes, etc.
Risk
Lack of internet coverage and access to necessary tools, often due to economic or geographical reasons.
Impact Thesis
Reducing inequality in access to quality basic education in both rural and urban areas through the establishment of private educational institutions
Enabling Environment
Policy Environment
National Plan by 2050: Aims to increase access and quality of higher education, facilitate access to quality public services for the school-age population, and consolidate the Teacher Reform and the revaluation of teaching to enhance its quality.
National Education Plan: Its objective is to achieve the comprehensive development of the young population that hinders their participation in society, addressing the public problem of inequality.
National Education Infrastructure Plan by 2025 aims to enhance the quality of education in the country through the construction, improvement, and equipping of schools and other educational facilities.
Financial Environment
Financial incentives :In 2022, the public budget allocated to the education sector was US$2,306 million. It is estimated that 17% of this will be allocated for investment in educational infrastructure. Furthermore, it is expected that the education market in Peru will grow at a compound annual rate of 4.1% between 2021 and 2025.
Fiscal incentives: In Peru, companies can deduct up to 10% for donations made to the education sector. Private educational institutions can request a 50% discount on property tax and may be exempt from income tax (IR) and value-added tax (IGV).
Other incentives: There is a growing number of purpose-driven investors who prioritize social impact over financial returns.
Regulatory Environment
The Education Infrastructure Law establishes the framework for the planning, construction, maintenance, equipment, and management of educational infrastructure. It also outlines the responsibilities of local, regional governments, and the Ministry of Education (MINEDU) in the execution of educational infrastructure projects.
Technical Standards for Educational Infrastructure: These standards establish the criteria and minimum requirements for the design, construction, equipment, maintenance, and management of educational infrastructure.
The National Education Infrastructure Program of the Ministry of Education (MINEDU) is responsible for the planning, construction, equipment, and maintenance of educational infrastructure. Its objective is to enhance the quality and reduce the infrastructure gap in rural and low-resource areas.
The General Education Law (Law 28044) establishes the general guidelines for education and the Peruvian Education System, as well as the roles and responsibilities of the State, and the rights and duties of individuals and society in their role as educators.
Marketplace Participants
Private Sector
Private sector initiatives like Innovate School (part of Grupo Intercorp), which has expanded to Mexico, are providing a model that enables people with fewer resources to access quality education. Additionally, Marhnos (a Mexican group) has entered into the construction of COAR schools in Peru, which are specifically directed at students with limited resources and high academic performance.
Government
The Ministry of Education and the National Fund for Peruvian Education Development had a budget of S/. 1,462 million for projects in teacher training, educational innovation, infrastructure improvement, technical education, and education for people with disabilities.
Multilaterals
UNICEF, with the project "Promoting Inclusive Education with Equal Opportunities for migrant and refugee girls, boys, and adolescents in host communities in Peru," aims to influence the education of 30,000 girls, boys, adolescents, and their families.(20).
Non-Profit
The MAPFRE Foundation's project aims to enhance school capacities and skills. It utilizes so-called "Playful Libraries" as spaces to promote reading and the development of cognitive abilities that benefit reading comprehension.
Public-Private Partnership
Currently, the state has the Public-Private Partnerships (PPP) modality for investment in infrastructure projects. In 2022, it invested approximately US$91 million using this approach. (25)
Target Locations
Macroregion Selva
Macroregion Centro
Macroregion Norte
Region Lima y Callao
References
- (1) MINEDU (2022) Peru in PISA 2018: National Results Report, 2022.
- (2) Instituto Nacional de Estadística e Informática (2022) - National Household Survey.
- (3) Peru's Investment Plan 2021-2023.
- (4) UNICEF (2022), UNICEF warns that Peru is experiencing an unprecedented educational crisis and calls for prioritizing our girls, boys, and adolescents - press release.
- (5) Instituto Nacional de Estadística e Informática (2022), Increase in households with internet connection in the second quarter of 2022.
- (6) MINEDU (2022), Diagnosis of infrastructure gaps or access to services in the education sector for the PMI 2023-2025.
- (7) UNICEF (2020), School dropout and gender gap: girls are the most affected by educational inequality.
- (8) CARE (2023),5 alarming education statistics in Peru.
- (9) Apoyo Consultoria (2021), Estudio de contribución económica de la educación privada en el Perú.
- (10) UNICEF, 2020, RURALIDAD Y EDUCACIÓN EN EL PERÚ
- (11) El Comercio (2022), La educación rural como oportunidad.
- (12) Instituto Nacional de Estadística e Informática (2019), Educational Characteristics of the Population Aged 15 to 29 Years.
- (13) Perú, Plan Estratégico de Desarrollo al 2050
- (14) MINEDU (2021), Análisis de la Política Nacional de Educación Superior y Técnico-Productiva - PNESTP
- (15) MINEDU (2020), Proyecto Educativo Nacional PEN 2036.
- (16) Instituto Nacional de Estadística e Informática, (2022), Perú Estado de la Población en el año del Bicentenario
- (17) (CREER (2021), Educación Rural en el Perú, CIFRAS SOBRE LA EDUCACIÓN RURAL EN EL PERU
- (18) Ministry of Education (2020), Educational Statistics and Indicators.
- (19) Instituto Nacional de Estadística e Informática, 2018, Población Joven que ni Estudia ni Trabaja
- (20) UNICEF (2021), Education Can't Wait.
- (21) TV.Perú (2020), Huancavelica: niños caminan una hora para llegar a colegio
- (22) CENTRUM e IMD (2022), Resultados del Ranking de Competitividad Mundial 2022
- (23) National Association of Investment Companies, NAIC, (2018), Informe de inversiones en infraestructura Educativa.
- (24) CEPAL, (2022), Plan Nacional al 2050.
- (25) Semana Económica (2023), Asociaciones Público Privadas: un mecanismo en cuidados intensivos
- (26) MINEDU (2022), Oficina de Prensa, 124,533 estudiantes interrumpieron su educación en el 2021 debido a la pandemia
- (27) INEI (2022), Informe Técnico: Evolución de la Pobreza Monetaria 2010-2021
- (28) INEI (2022), Estadísticas de las tecnologías de información y comunicación de los hogares
- (29) Expanción (2021), Perú - Gasto público Educación
- (30) Equilibrium Clasificadora de Riesgos S.A. (2015), Summa SAFI Mezzanine
- (31) IDEELE Revista (2013) - La agonía de la escuela pública
- (32) Diario Gestión (2020) - Balance de la contribución económica de la educación privada en el Perú
- (33) Grupo Educación para el Futruro (2022), COSTOS Y SEGMENTACIÓN DE LA EDUCACIÓN PRIVADA
- (34) MINEDU (2017) Plan Nacional de Infraestructura Educativa al 2025