Jackfruit Finance

Jackfruit Finance is dedicated to revolutionizing financial accessibility in education, with a mission to bridge the educational financial divide and make quality education accessible for every child in Sub-Saharan Africa. We strive to provide sustainable financial solutions to low-fee private schools, enhancing educational outcomes and fostering economic mobility in underserved communities.

Our core values are:

1. Inclusivity: Ensuring that financial solutions are accessible to schools in underserved communities.
2. Empowerment: Empowering schools to improve infrastructure and educational quality through financial autonomy.
3. Innovation: Leveraging technology to develop and deliver innovative financial products tailored for low-fee private schools.
4. Sustainability: Promoting sustainable financial practices within schools to ensure long-term stability and growth.
5. Community Focus: Working closely with local communities to understand and address their unique educational needs.

Jackfruit Finance aims to fill the significant gap in affordable debt for low-fee private schools to address the critical issues of underfunding and resource scarcity that many of these schools face. This empowerment enables schools to improve their infrastructure, hire and maintain qualified staff and procure necessary educational materials, ultimately enhancing the quality of education offered to students from low-income families. These improvements will in turn contribute to better learning outcomes for children in these communities, creating pathways for economic empowerment, as better educational outcomes lead to better employment opportunities in the long term. This will help break cycles of poverty and advance gender parity, as girls are often disproportionately affected by educational disadvantages.

Our approach to financing is directly informed by the needs of low-fee private schools in Kenya, such as their seasonal cash flows. We currently offer 4 main types of financial products:

1. Fully Secured Project and Asset Loans to support the development of school infrastructure and procurement of learning materials, school buses/vans and other essential assets. 
2. Unsecured Working Capital Loans to support day-to-day operational expenses and address immediate financial needs. 
3. Flexi Loans for unique situations and borrowers with limited collateral options to cover the loan amount, but needs exceeding our Working Capital limit. 
4. Impact-Linked Loans that reward schools who demonstrate improved literacy and numeracy rates among their students. This is our latest product and it is in the early pilot phase.

A portion of our profits from loan products is reinvested in delivering complementary services, including clean water, nutritious meals, subsidized textbooks, after-school programs, professional development for teachers and fuel vouchers. To date, we have reached over 78,805 children across 200 schools in Kenya, including one specialized school for children with disabilities and several other schools that have integrated teaching models to accommodate children with disabilities. Over 51.2% of the students we have reached are girls.

Additionally, we are in the process of launching a new financial initiative that will support informal daycares run by young women knowns as "mamapreneurs" who provide essential child care to children aged 0-3 years.

As CEO and Co-founder of Jackfruit Finance, Robert Alhadeff, our Team Lead, plays a pivotal role in steering the organization towards achieving its mission of improving educational outcomes through innovative financial solutions. Tasked with overseeing strategic planning and execution, Rob ensures that all of Jackfruit's initiatives align with our core values and objectives. This includes managing key partnerships, coordinating with department heads, fundraising and ensuring that team efforts are synergistic and effective.

Crucially, Rob also acts as the key liaison between Jackfruit Finance and it's main investors. This role involves strong advocacy, representation and negotiation of terms that benefit both Jackfruit and the communities we serve. 

Since founding Jackfruit Finance in 2021, Rob's leadership has been instrumental in fostering a culture of innovation, accountability and continuous improvement within the organization, ensuring that we remain at the forefront of educational finance in Sub-Saharan Africa.

Hailing from Zimbabwe, Rob's journey to co-founding JF took him from working in credit in London for 9 years, to restructuring an educational NGO in rural Uganda in 2019. It was there in Uganda that he first witnessed the critical role low-fee private schools play in providing education to children, despite facing numerous financial challenges. 

The Jackfruit Finance senior team is exceptionally well-suited and committed to supporting the LEAP Project. Rob brings a wealth of experience in leadership, strategic planning and financial innovation, having successfully led several large-scale educational finance projects across Uganda and Kenya. His deep understanding of the challenges and opportunities in educational financing in Sub-Saharan Africa ensures that the LEAP Project will be guided by informed and strategic leadership.

Supporting Rob, our senior-level staff includes experts in finance, digital innovation, operations and impact measurement, each with a track record of managing complex projects while balancing organizational priorities. 

Key team members involved in this project include:

• Max Weiner, CTO and Co-Founder: Max has 6 years of experience scaling distribution and managing product development at tech start-ups in East Africa. He leads Jackfruit's tech and product development.
• Daniel Duman, CFO: Daniel has over 35 years of experience as a strategist and financier. He specializes in impact investment and development finance and has deep knowledge of financial markets and international development. Founded and managed a merchant bank for 30 years he has since worked at Total Impact Capital, USAID and Tony Blair Foundation.
• Fatma Yusuf, Head of Finance: Fatma has 16 years of experience in audit and accounting, both in practice and in industry. She has a strong background in compliance, internal controls, and financial reporting.
• Assumpta Nantume, Head of Grants and Impact: She has 10 years experience in the impact and grant sector having managed multiple grants, designed and implemented studies across six countries. Her expertise extends to developing comprehensive long-term monitoring, evaluation, and learning strategies, showcasing the value of innovative solutions and tying this to future grant funding.
• Benson Riri, Head of Operations: 23 years of micro finance experience, having started as a Loan Officer and progressed up to MD of a 3,000 employee MFI. Benson works across the business ensuring we hit our growth and repayment targets.
• Rushmi Matete, Head of Legal: Rushmi is an Advocate of the High Court of Kenya, with 6 years of legal expertise in corporate advisory and governance in Kenya. She is responsible for legal risk management, regulatory compliance, and overall legal support.
• Bosco Otiato, Head of Nairobi: Bosco has 9 years of experience in school lending, managing large teams responsible for new account development, credit risk appraisal, and portfolio management.
• Josephine Musyoka, Head of Credit: Josephine has 10 years of experience in regional internal and external finance reporting. 
• Arthur Owuor, Head of Collections: Arthur has over 10 years experience in lending across both mainstream banks and microfinances, having managed collections across large portfolios, conducted risk analysis, and opened new markets. 

Our team is adept at project management and efficiently allocating time and resources to ensure that our different initiatives, like the LEAP Project, are integrated smoothly into our operations. The time commitment of 3-4 hours per week from Jackfruit's senior staff is feasible within our operational framework. 

Jackfruit Finance's Impact-Linked Loans enhance educational outcomes by incentivizing primary schools with favorable loan terms tied to student performance metrics.

Education is a key driver of economic mobility and a tool for breaking the cycle of poverty. While free universal primary education exists in Kenya, the public education system often struggles with overcrowding, underfunding and under performance. This inadequacy forces a significant portion of the population to turn to private institutions as a viable alternative to ensure their children receive a quality education.

Low-fee private schools make up an important share of schools in Kenya, especially for children in marginalized communities and informal settlements. In 2019, there were 18,147 private schools out of the 46,530 schools at the pre-primary level, representing 39.0% of the market share. At the primary level, 9,058 private schools out of a total of 32,344 primary schools (UNESCO, 2020). Official statistics estimate that of the 15 million children enrolled in school in Kenya, 33.0% of pre-primary school enrolments and 16.0% of primary school enrolments are in the private sector, and Opportunity International estimates that private school enrollment at the primary level is growing at a CAGR of 8.23%. 

Despite the critical role that private education plays in serving the needs of the Kenyan population, the industry faces enormous financial exclusion. Factors contributing to this problem include limited access to traditional banking services due to perceptions of the sector as a high credit risk, high interest rates from local lenders and a lack of tailored financial products that take into account the unique revenue cycles of private education institutions. Consequently, there is a $436M gap in affordable debt for low-cost private schools in Kenya (Opportunity International, 2023). 

A lack of definitive investment in private education contributes to underdeveloped school infrastructure, staff shortages and inadequate educational tools, negatively impacting learning outcomes. When schools lack the resources they require to offer quality education, it perpetuates a system where children from low-income families are unable to access the opportunities necessary for improving their lives and escaping poverty. The problem also exacerbates gender disparities, as girls are disproportionately affected by the lack of educational opportunities, often leading to early dropouts and limiting their future prospects.

There is a strong demand for sustainable financing options and innovative solutions to support the private education sector, especially considering that despite the existence of free public primary education, a significant number of parents in Kenya opt for low-fee private schools, which are perceived to offer better quality education (Zuilkowski et al., 2018). This is supported by the superior academic performance of private schools on national exams like the Kenya Certificate of Primary Examination (Bold et al., 2013; Catherine 2015). Additionally, research comparing learning gains in low-fee private schools against those in public schools, using a longitudinal sample of students that benefitted from an instructional improvement intervention, showed increased performance in English, Kiswahili and mathematics (Zuilkowski et al., 2020). These findings indicate that, with the right support, low-fee private schools have the potential to offer superior learning outcomes.

Jackfruit Finance's Impact-Linked Loans (ILLs) are designed to directly improve educational outcomes by connecting financial incentives to measurable student performance improvements. This innovative financial product is tailored specifically for low-fee private schools in Sub-Saharan Africa, particularly those serving marginalized communities.

We have only just launched this solution in Kenya, but have plans to scale it to neighboring countries after demonstrating successful proof points. Our pilot project consists of 40 schools benefiting from this solution.

How it works:

1. Loan Issuance: Schools apply for loans through Jackfruit Finance, which are intended for various purposes such as infrastructure improvement, procurement of learning materials, school buses or vans, or operational expenses. Unlike traditional loans, our ILLs offer terms that are directly tied to educational outcomes.
2. Setting Performance Targets: Upon receiving a loan, a school agrees to meet predefined educational benchmarks that are aligned with improving student learning outcomes. These targets might include improvement in literacy rates, numeracy skills or other educational indicators relevant to the school's educational context and the age group they serve. 
3. Performance Monitoring:  A third-party research and evidence partner is contracted to ensure that there is a clear and transparent process for measuring and reporting progress. Baseline and endline performance metrics are rigorously measured using established educational assessment tools. 
4. Incentive Structure: If a school meets or exceeds the set targets, the terms of their loan are adjusted favorably. This could mean a reduction in interest rates, extension of the loan repayment period or other financial rewards. Conversely, failure to meet these targets may result in standard loan terms without these benefits.
5. Feedback and Support: Throughout the loan period, Jackfruit Finance provides continuous support and feedback to the schools. This includes capacity building like free teacher upskilling programs, access to educational resources like subsidized textbooks and other support services to ensure that schools have the best possible chance to succeed. 
6. Impact Assessment and Adjustment: At the end of each assessment period (typically 12 months), the impact of the interventions is analyzed. This assessment helps in understanding the effectiveness of the educational strategies employed by the schools and informs necessary adjustments to both the educational approaches and the loan terms.

While we are still at the early implementation stage of this new product, we anticipate the following benefits to this approach over traditional loan products: 

1. Motivation to Improve: By tying financial incentives to educational outcomes, schools have a tangible financial reason to focus on and invest in the quality of their education.
2. Resource Allocation: Schools are encouraged to allocate resources more efficiently and effectively, focusing on interventions that have the greatest impact on student learning.
3. Sustainability: As schools improve their educational outcomes, they attract more students, increasing their revenue and improving their overall financial health. This creates a positive feedback loop, where improved educational quality leads to greater school sustainability.
4. Accountability: The requirement to meet specific benchmarks introduces a higher level of accountability into the management of schools, ensuring that they are focused on delivering tangible educational results.

Foundational Research

To establish a theoretical basis for the design of our ILL program, Jackfruit Finance has conducted a comprehensive literature review to explore existing models of impact-linked financing and their outcomes in educational settings. The main blueprint for our solution comes from a similar program in India.

The Michael & Susan Dell Foundation initiated a novel approach in India, targeting the improvement of educational outcomes through impact-linked loans (ILLs). This pilot program involved 96 schools and partnered with two leading school finance companies, offering variable interest loans structured with financial incentives. These incentives were designed to motivate school leaders to enhance student learning, tying the rate of return on the loans to measurable improvements (5-15%) in student learning outcomes (Rangwal, 2018). 

Our program draws heavily on these successful outcomes. The India pilot demonstrated that when schools have a financial stake in their students' performance, there is a notable increase in the adoption of effective educational practices and resources. This not only helped in improving the quality of education but also established a scalable model for financing educational improvements through outcome-based financial incentives.

Citations:

• Rangwal, S. (2018). Impact-Linked Loans in Education. Michael & Susan Dell Foundation. 
• Social Success Note Playbook. Performance Linked Financing to Improve Learning Outcomes in Affordable Private Schools (2020). Varthana and Michael & Susan Dell Foundation.
• Michael & Susan Dell Foundation Impact-Linked Debt Program. Discussion on Social Success Note for Varthana (2019). 

Formative Research

Building on these insights, Jackfruit Finance has tailored its pilot ILL program specifically to the needs of low-fee private schools serving pre-primary and primary level students in Kenya, ensuring that financial tools are not just mechanisms for capital distribution but catalysts for educational transformation.

To establish the feasibility and efficacy of ILLs within the Kenyan context, our pilot initiative targets 40 schools that will receive loans in 2024. The incentive structures we've implemented are designed to motivate substantial educational improvements through cash rewards, discounted interest rates and vouchers for critical services such as feeding programs, subsidized rent for school facilities and pre-paid fuel cards for school buses/vans. These incentives are aligned with specific performance targets aimed at boosting foundational literacy rates among Grade 2 students. We are conducting rigorous pre- and post-assessments of student literacy rates using the Early Grade Reading Assessment (EGRA) tool, with initial assessments at baseline and follow-ups at the 12-month mark.

For this pilot project, our research and evidence gathering are supported by Dalberg, a leading global consultancy that specializes in analytical research. 

Summative Research

Recognizing the critical importance of robust evidence to validate the effectiveness of our initiatives, Jackfruit Finance is actively seeking to develop this component of our evidence base. Our objective in applying to host a LEAP project is specifically to gain support in designing and implementing comprehensive summative research studies.

Depending on the outcomes of our formative research/pilot program and the additional insights needed to refine, validate and scale our efforts, we anticipate a combination of impact evaluations, correlational studies and quasi-experimental studies. 

Key Insights from the Michael & Susan Dell Foundation ILL Pilot Program in India included: 

• Enhanced Learning Outcomes: Schools involved in the pilot saw significant improvements (5-15%) in standardized test scores, showcasing the direct impact of incentivizing educational achievements.
• Increased Financial Viability: The financial structure allowed schools to invest more in quality resources and infrastructure, proving that financial health and educational quality can improve hand in hand.
• Scalability and Replicability: The success of the pilot in a diverse educational landscape like India provides a robust blueprint for Jackfruit Finance's programs, highlighting the potential for similar success in other regions with careful adaptation to local contexts.

Early Insights generated from Jackfruit Finance's ongoing ILLs program include:

• Uptake of the Program: The initial response from target schools indicates a strong interest in financial products that are directly linked to educational outcomes. Schools, particularly those struggling to access traditional forms of credit, view ILLs as an innovative solution that not only addresses their immediate financial needs but also supports their long-term educational goals.
• Desired Incentive Structures: Feedback from eligible schools during the pilot phase has provided valuable insights into the types of incentives that are most effective and desirable. While discounted interest rates have been universally appealing, other incentives such as cash rewards or vouchers for essential services have been equally attractive based on the specific needs and circumstances of each school.
• Feasibility: Some of our key questions regarding feasibility include data management infrastructure and the choice of measurement tools. We have received extensive feedback from key stakeholders, including funders and domain experts. Currently, we have chosen the EGRA as the most appropriate assessment tool for its cost-effectiveness and scalability. We are actively investing in more robust data management and analysis systems to handle the complex metrics required to assess the program’s impact at scale.
• Broadening Impact Metrics: Beyond the core focus on student learning outcomes, Jackfruit has recognized the importance of measuring improvements in school infrastructure and resources, which significantly impact the overall learning environment. Metrics such as teacher-to-student ratios, computer-to-student ratios, textbook-to-student ratios, the construction of new classrooms, the addition of school buses and vans, and the availability of adequate feeding programs and WASH services directly contribute to the quality of education and the well-being of students, making them important indicators of program success.
• Support from Funders/Investors: Even though Jackfruit's ILLs program is still in its nascent stage, it has generated strong interest from potential funders and investors willing to support program expansion. Positive outcomes and clear evidence of impact will bolster confidence in the program’s scalability and effectiveness, which will allow us to secure additional funding for expansion.

Jackfruit Finance is at a pivotal juncture where strengthening the evidence base of our Impact-Linked Loans (ILLs) solution is crucial for several reasons. 

Scaling and Expansion Plans: As Jackfruit Finance plans to expand the ILLs program beyond the initial pilot phase of 40 schools to all the schools across our Kenyan portfolio and potentially other countries in Sub-Saharan Africa, it is critical to have concrete evidence demonstrating the program's effectiveness on educational outcomes, which are central to our mission. This evidence will not only inform our scaling strategies but also ensure that the expansion is grounded in proven methods that can be adapted and replicated effectively in the African context.

Funding Requirements: As Jackfruit Finance is currently seeking to secure additional funding to support its growth, a robust evidence base will be pivotal. Funders and investors increasingly demand rigorous data demonstrating impact before committing resources. With high competition for impact investments across different development sectors, data-driven decisions and impact reporting are prerequisites for securing both philanthropic and commercial funding. Having a strong evidence base will therefore significantly enhance our credibility and attractiveness to potential funders and stakeholders.

Program Refinement: Feedback and data from the initial implementations have highlighted areas for improvement and adaptation. A LEAP project will enable us to test our refined approach and further enhance the design of our financial products to better meet the needs of our target schools and their students.

Industry Leadership: Jackfruit Finance is a pioneer in ILLs for the private education sector in Africa. Establishing a strong evidence base will position us as a thought leader and model in the educational finance sector, particularly within the niche of impact-linked financial solutions. This leadership will be crucial for business growth and for influencing policy and practices in educational financing.

Timing of the LEAP Project

The LEAP Project's structure, including the LEAPathon and the subsequent 12-week sprint, offers a timely feedback loop that aligns perfectly with Jackfruit's ongoing pilot program and strategic planning cycle. The timing will be optimal for us to integrate key learnings and adapt our impact measurement approaches in real-time.

As we synthesize and disseminate findings from our ILLs pilot program, participation in the LEAP Project will also help answer the inevitable "what next?" from our partners and funders. The LEAP project will increase our visibility among influential networks in the international development and education sectors, potentially opening up further opportunities for collaboration and funding.

1. Do impact-linked loans enhance the quality of education in low-fee private schools in an African setting? What specific types of financial incentives are most effective at improving educational outcomes in low-fee private schools?
2. What is the effect of capacity-building programs on teaching quality and student learning outcomes? Do capacity-building programs have an effect on their own or is there a synergistic effect alongside financial incentives?
3. How do Impact-Linked Loans influence the financial sustainability and growth of low-fee private schools? Do improvements in school infrastructure influence student enrollment, attendance, academic performance and gender parity?

Our desired outputs from collaboration with LEAP Fellows are:

• Detailed Study Designs: We expect the LEAP Fellows to help us develop comprehensive study designs tailored to our specific research questions. For the question on the effectiveness of financial incentives, a detailed quasi-experimental study design should be provided. This would include defining control and treatment groups, selecting appropriate metrics for measuring educational outcomes and outlining data collection methods and timelines. For the question on the impact of loans on school sustainability, a longitudinal study design would be crucial, detailing how data will be collected, processed and analyzed over multiple years to track changes in school financial health and student enrolment.

• Evaluation Frameworks: The Fellows would create robust frameworks for ongoing evaluation of the ILL program. These frameworks should include indicators for both immediate outcomes (such as improvements in student performance) and long-term impacts (such as school growth and financial stability). The frameworks need to be adaptable to different school contexts within Kenya, for instance, schools in rural, peri-urban and urban informal settlements, allowing for scalable and flexible application as the program expands.

• Data Collection Strategies: Given the importance of accurate and comprehensive data, we require advanced data collection strategies that leverage both quantitative and qualitative methods. The LEAP Fellows would help develop these strategies, ensuring they are feasible within the schools’ operational capacities and sensitive to the local contexts. This might involve innovative approaches such as digital data capture tools or mobile data collection methods that reduce the burden on school staff. Jackfruit Finance has the digital infrastructure in place to support such strategies.

• Monitoring and Evaluation (M&E) Tools: A critical output would be the development of user-friendly M&E tools that can be integrated into our existing digital platforms. These tools should help in the real-time monitoring of key indicators and facilitate regular reporting from schools. They should be designed to provide actionable insights, allowing Jackfruit Finance and school administrators to make informed decisions quickly.

• Recommendations for Scalability and Replicability: We anticipate recommendations that focus on the scalability and replicability of our ILLs program. This includes identifying key factors that have influenced the success or challenges in the pilot phase and providing strategic advice on how to address these factors as the program scales to other regions or countries.

We anticipate that each LEAP fellow assigned to Jackfruit Finance will focus on developing one of the first four outputs during the initial 10 weeks of the project. The final two weeks will then be dedicated to collaborative efforts by the entire team to develop the fifth output. This sequence of work will optimize the use of our limited time and resources, allowing for both detailed individual contributions and holistic team collaboration to synthesize and integrate insights across all areas for the final recommendations.

The outputs of LEAP Project sprint are expected to provide Jackfruit Finance with a clear roadmap to refine our ILLs program and expand its impact effectively. 

We intend to put each output into action as follows:

• Detailed Study Designs: We will implement the quasi-experimental and longitudinal study designs as structured blueprints for our upcoming research initiatives. We will refine the study designs, as needed, to better fit the operational realities and educational environments of the schools.
• Evaluation Frameworks: These frameworks will be integrated into our current monitoring and evaluation processes to facilitate continuous improvement in program implementation. Insights derived from ongoing evaluations will inform program enhancements to better meet the needs of the schools and students.
• Data Collection Strategies: Innovative data collection strategies will be deployed across participating schools, utilizing digital tools to streamline the process and ensure high-quality data. Jackfruit Finance will continue to build its internal capacity for data handling and analysis, based on recommendations from the LEAP Fellows.
• Monitoring and Evaluation (M&E) Tools: The M&E tools developed will be integrated into our existing digital platforms, making it easier for schools to report data and for Jackfruit Finance to monitor progress in real-time. The tools will facilitate a dynamic feedback loop where data from schools can be quickly analyzed and used to inform immediate adjustments in program delivery or financial products.
• Recommendations for Scalability and Replicability: The recommendations from the LEAP fellows will form the basis of our strategy for scaling the ILLs program to new regions and adapting it to different educational settings. This will involve detailed planning on how to replicate the program’s success while considering local variations. We also leverage these recommendations to engage with potential funders and partners, demonstrating the program’s effectiveness and potential for impact at scale. This engagement will be crucial for securing the support needed for expansion.
• Continuous Improvement: We will review and refine each output periodically to ensure it remains relevant and effective as our program evolves. 

Our desired long-term outcomes for our organization are:

• Institutional Strengthening: By the end of the LEAP Project sprint, Jackfruit Finance aims to have a more robust institutional framework for conducting and utilizing research. This includes improved capacity for data management, analysis and application of research findings in operational and strategic decisions. The organization hopes to establish a culture of continuous improvement and innovation, leveraging research and data to drive policy and practice in educational finance.
• Enhanced Credibility and Trust: With rigorously developed and tested research outputs, Jackfruit Finance anticipates enhancing its credibility among stakeholders, including schools, funders and partners. This credibility will be crucial for expanding our network of collaborators and attracting new funding opportunities, thereby ensuring sustainable growth.
• Thought Leadership: As a result of our pioneering research and innovative financing solutions validated by the LEAP project, Jackfruit aims to be recognized as a thought leader in educational finance. This recognition would facilitate greater influence in shaping policies and practices that affect educational outcomes and financial inclusivity at a regional and potentially global level.

Our desired long-term outcomes for our solution are:

• Refined ILLs Program: The direct application of the research outputs is expected to significantly refine Jackfruit's ILLs program design and implementation. This refinement will focus on tailoring financial incentives more closely to the needs of the schools, thereby maximizing educational outcomes and financial sustainability for educational institutions.
• Scalability: One of the key long-term outcomes for the ILLs program is enhanced scalability. Insights from the LEAP project will help us identify the most effective and efficient ways to scale the program to new regions and different educational contexts, maintaining or even enhancing its effectiveness as it grows.
• Demonstrable Impact: Ultimately, our goal is to conclusively demonstrate the positive impact of ILLs on educational outcomes. The LEAP project will directly contribute to the various strategies we adopt to validate the effectiveness of our ILLs program. 
• Sustainable Educational Improvements: Long-term, our learnings from the LEAP project will help foster sustainable improvements in education quality across schools that participate in Jackfruit's ILLs program. These improvements should lead to better educational and socio-economic outcomes for students, contributing to broader societal benefits.