Pre-school educational institutions
Pre-school educational institutions
Business Model Description
Establish kindergartens as a commercial entity by a private investor or via a public-private partnership through one of the following models: 1. Privately owned and operated kindergarten, especially in Yerevan and urban areas; 2. State owned kindergarten, managed and operated by the community; or 3. Community owned kindergarten, privately managed and operated.
Expected Impact
Ensure access to quality and affordable care and education for children, also positively contributing to the livelihoods of families and their 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
- Armenia: Countrywide
Sector Classification
Education
Human capital is critical for Armenia's development. Overall, the enrolment rate in education in Armenia is high. The vast majority of population has at least secondary education. However, there is a high drop-out rate from high school and low enrolment in pre-school education. (22, 23).
The Government Programme 2019-2023 prioritizes the enhancement of the educational system (3). The Ministry of Education, Science and Culture adopted a set of strategies and action programs to enhance the educational system. This includes the national plan of action for making general education system inclusive by 2025 (4, 5, 7)․
There are regional and social disparities in relation to enrolment, especially in pre-school education. Poor children in rural areas have lower access to kindergarten. In addition, there is high drop out rate from high school among poor boys in rural areas. Poverty among children is higher than the overall national poverty rate (23.5% national vs 31.5% among children of 0-5 years of age, and 29.5% among children of 6-9 years of age). Child poverty is especially high in rural areas and towns other than Yerevan (23).
There is unmet demand for pre-school education and child care services in Armenia. Only 32.6% of children have access to kindergartens (22, 23).
The development of the education system is a high priority in the Government agenda, but allocation of money from the budget remains low. Education to GDP ratio is less than 2.5%. There is even lower allocation for expanding and maintaining kindergarten network. The amount and size of pre-school facilities is far from being sufficient (2, 8, 21).
Pipeline Opportunity
Pre-school educational institutions
Establish kindergartens as a commercial entity by a private investor or via a public-private partnership through one of the following models: 1. Privately owned and operated kindergarten, especially in Yerevan and urban areas; 2. State owned kindergarten, managed and operated by the community; or 3. Community owned kindergarten, privately managed and operated.
Business Case
Market Size and Environment
270,000 children of up to 6 years require pre-school education in Armenia.
In 2019, there were 198,300 children aged 0-4 years, and 210,700 children aged 5-9 years. Assuming that children of 5-6 years of age account for 30% of the number of children within 5-9 years of age, the potential market size for kindergartens in Armenia is 270,000 children (6).
Indicative Return
> 25%
A benchmark business, a medium-sized kindergarten operating in Yerevan, demonstrates a ROI of over 30% (21).
Investment Timeframe
Short Term (0–5 years)
Investments in pre-school education facilities have a short timeframe. In case of a newly constructed building, a kindergarten may take 1 year to generate returns, and this timeframe is expected to be shorter if the kindergarten uses existing facilities (21).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Business - Supply Chain Constraints
Market - Highly Regulated
Impact Case
Sustainable Development Need
Armenia suffers from a low enrolment rate of children (age of 0-6 years) in kindergarten. In 2018, the enrolment rate was 32.6%, varied depending on poverty level. The limited number of public kindergartens does not meet the demand. A limited number of private kindergartens were created, but a big gap remains, and many of the existing facilities are not affordable for the poor (22, 23).
Gender & Marginalisation
Disparities exist in relation to kindergarten enrolment. In urban areas the preschool enrolment rate is 38%, while it is 22.6% in rural areas. About 71% of children with disabilities do not attend preschools (80% in rural areas). Children in the poorest rural areas and with disabilities cannot effectively realize their right to education (6, 22, 23).
Expected Development Outcome
Improved access to quality and affordable preschool education for children in rural areas and small towns.
Application of high quality standards, such as seismic protection and energy efficiency, in the construction of kindergartens contributes to a safer and more comfortable environment for the children.
Gender & Marginalisation
Poor children and children with disabilities in rural areas and small towns gain access to preschool education.
Women are provided with greater productive opportunities to support their livelihoods.
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
4.a.1 Proportion of schools offering basic services, by type of service
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Outcome Risks
Stringent requirements for operating kindergartens, such as hygienic standards or the limited supply of qualified educational professional, may lead to an increase in the service fees overall.
Impact Risks
The fee required to join the kindergartens may exclude the societal groups most in need from accessing the pre-educational facilities.
Impact Classification
What
Kindergartens to provide access to quality and affordable care for children, allowing parents to pursue productive activities.
Risk
Pre-school education facilities are a proven model, but safety and environmental challenges may occur during the construction and maintenance of facilities.
Impact Thesis
Ensure access to quality and affordable care and education for children, also positively contributing to the livelihoods of families and their communities.
Enabling Environment
Policy Environment
The Government Program 2019-2023 outlines the enhancement of Armenia's educational system; it envisages to reach 70% enrolment rate in pre-school education of children above 3 years of age by 2023 (3).
The Government and the Ministry of Education adopted a set of strategies and action programs to enhance the education system, including the National Plan of Action for Making the General Education System Inclusive by 2025 (29, 30).
Financial Environment
Financial incentives: International partners support the establishment of pre-school educational facilities in Armenia (10, 11), but no direct Government incentives are in place (relying on bank loans with interest rates of 13-14% (9).
Regulatory Environment
The Law on Pre-School Education sets standards for quality, safety, accessibility and inclusiveness of pre-school institutions for children in urban as well as rural areas of Armenia (5)․
The Law on Pre-School Education and the Order of the Minister of Education and Science No 858-N of 18 September 2012 regulate the construction and operation of kindergartens (5, 28).
Requirements for kindergartens are set out in orders of the Ministry of Education and Science: No 857-N of 20 December 2002 (sanitary requirements) (24), No 42-N of 12 August 2013 (food safety) (25), 29-N of 26 January 2007 (staff requirements) (26), and No 257-N of 30 March 2011 (27).
Marketplace Participants
Private Sector
50 small- to medium-size private kindergartens in Yerevan (with 2,370 children), and 45 non-operational pre-school institutions in Armenia, such as Junior, Guliver, Artutik, Montessori City, Rainbow, Mary Poppins and Tatevik (21, 22, 23).
Government
Ministry of Education, Science and Culture; Ministry of Territorial Administration and Infrastructure.
Multilaterals
International and domestic partners support the establishment and development of pre-school facilities, such as the World Bank, the European Union (EU), UNICEF, United Nations Development Programme (UNDP), USAID and Save the Children (10, 11).
Target Locations
Armenia: Countrywide
References
- (1) Sustainable Development Report, 2019, https://www.sdgindex.org/reports/sustainable-development-report-2019.
- (2) Voluntary National Report (VNR) of Armenia, for the UN High-level Political Forum on Sustainable Development, 2018.
- (3) Government action program 2019-2023, https://www.gov.am/am/Five-Year-Action-Program.
- (4) Action plan of the government of the Republic of Armenia 2018 – 2022, https://www.gov.am/files/docs/2920.pdf.
- (5) Law on Pre-school Education, https://www.arlis.am/DocumentView.aspx?DocID=142616.
- (6) Statistical Committee Of Armenia, Annual Demographic Reports, https://www.armstat.am/am/?nid=82&id=2347.
- (7) Law on General Education and Government Protocol Decision No 6 of 18 February 2016, https://www.arlis.am/DocumentView.aspx?DocID=103910.
- (8) State Budget, Ministry of Finance, https://minfin.am/en/page/state_budge.
- (9) Central Bank of Armenia, Monetary and Financial Statistics, https://www.cba.am/en/SitePages/statmonetaryfinancial.aspx.
- (10) Assessment of Access of Children to Pre-school Education In Armenia, 2017, Save The Children, https://armenia.savethechildren.net/sites/armenia.savethechildren.net/files/library/Assessment%20on%20Access%20to%20Pre-school%20Education%20Services_ENG.pdf.
- (11) Early Childhood Education in rmenia, UNICEF, https://www.unicef.org/armenia/en/what-we-do/early-childhood-education.
- (21) UNDP interviews with stakeholders, 2019.
- (22) SCA, Social Situation in Armenia, 2018 / 2019, https://www.armstat.am/file/article/soc_vich_2018_1.pdf, https://www.armstat.am/am/?nid=82&id=2295.
- (23) SCA, Social Snapshot and Poverty in Armenia, 2019, https://www.armstat.am/am/?nid=82&id=2217.
- (24) Order of the Minister of Education and Science No 857-N of 20 December 2002 on sanitary requirements.
- (25) Order of the Minister of Education and Science No 42-N, of 12 August 2013 on food safety.
- (26) Order of the Minister of Education and Science No 29-N, of 26 January 2007 on staff requirements.
- (27) Order of the Minister of Education and Science No 257-N of 30 March 2011.
- (28) Order of the Minister of Education and Science No 858-N of 18 September 2012 on norms and requirements for pre-school facilities.
- (29) Government Protocol Decree No 6 of 18 February 2016 on Measures Towards Establishing a General Inclusive Education System.
- (30) Government Decree No 598-N of 15 April 2021 on Measures Towards Establishing a Inclusive Pre-School Education System.