The Ministry of Education now plans subsidised loans and education bonds for entrepreneurs to build schools and plug the capacity shortfalls coming from reduced State funding.
The ministry says it will give priority to the creation of a revolving capital fund for lending to education entrepreneurs at subsidised interest rate, and other innovative funding initiatives, including the introduction of an Education Bond.
It is also proposing floating of sovereign bonds to support the funding of the sector.
The proposals are contained in the sessional paper of December 2018 on Reforming Education and Training for Sustainable Development, which is before the National Assembly.
The sessional paper states that Kenya currently invests 6.4 per cent of GDP annually on education and this heavy investment is borne largely by the government.
The bulk of the billions goes to teachers' pay, leaving little for building classrooms, laboratories and dormitories.
“One important policy option is partnership between the government and non-public providers of education and training that can help reduce levels of public financing. Public-Private Partnership (PPP) has been adopted globally to enable governments obtain greater value for their investment in education,” states the document.
It adds that the government recognises that without a working partnership on financing education, it will be hard to address the problems of access, equity, quality and the current heavy household financial burden in education.
“The PPP can take various forms from direct investment by the private sector either for the establishment of an institution or in support of one or more. It can also involve government and private institutions partnering to provide investment for specific educational purposes, such as support for ICT,” says the document.