BANKING ON EDUCATION UPDATE: Spring 2013

Opportunity International is changing the face of education in the developing world. Cumulatively, we have provided School Improvement loans and training to 1,112 school proprietors and 13,096 School Fee loans to families.

As of December 31, 2012, 634 school proprietors are currently using Opportunity International School Improvement loans and customized training to scale up their schools in Ghana, Uganda, Malawi and now Rwanda. This growth represents a 91% increase, nearly double from 332 at December 31, 2011. Additionally, 6,491 families are accessing School Fee loans to enroll or keep their kids in school, a growth of 145% since the end of 2011.

So many parents find it impossible to overcome the obstacles standing between their children and a classroom. While free public schools are sometimes available, the reality for most families is quite different - the cost of a uniform or supplies propels education beyond reach. However, this is changing. We are profoundly impacting thousands by helping students alter a course that was seemingly a certain path to a poverty-filled future, to begin a journey toward benefits that will last a lifetime.

Education Finance Initiative: Performance Overview

December 2012 Kenya Rwanda Ghana/SAT Ghana/OISL Malawi Uganda India Total SCHOOL IMPROVEMENT LOANS

Active Loans - 2 376 139 18 99 - 634

Portfolio Value - $35,249 $1,244,548 $973,255 $202,885 $1,589,807 - $4,045,744

$ Disbursed YTD - $39,911 $803,536 $1,006,008 $257,172 $603,096 - $2,709,723

SCHOOL FEE LOANS

Active Loans 67 9 648 247 - 4,358 1,162 6,491

Portfolio Value $32,305 $3,960 $799,550 $175,954 - $565,990 $102,199 $1,679,958

# Disbursed YTD - 19 738 247 - 8,537 1,170 10,711

$ Disbursed YTD - $10,738 $304,030 $175,954 - $2,574,405 $151,000 $3,216,127

Executive Summary

School Improvement loans have increased from $3.578 million in July to $4.045 million in December.

Opportunity launched EduSave, a savings-plus-insurance product, in Ghana in 2012 and Malawi in early 2013. It is also poised to launch EduSave in Uganda in 2013. (See Nathan’s Message for more on EduSave)

In 2013, Dominican Republic and Philippines plan to join the Education Finance initiative, with portfolios focused on School Improvement loans and School Fee loans, respectively.

Opportunity Kenya recently launched School Fee loans in response to client feedback.

We will launch secondary education School Fee loans in Malawi and Rwanda for the first time in 2013.

The combination of primary/secondary and tertiary School Fee loans at OISL in Ghana doubled in 2012.

We partner with Vittana to provide tuition loans for college and technical training where low-income students have no other financing options. In 2012, we partnered with Vittana in Ghana, Rwanda and the Philippines, and plan to partner with them in Uganda in 2013.

We are scaling up the Education Finance initiative in Uganda and Rwanda, including School Fee and School Improvement loans, plus targeted youth products and EduSave.

Plans are being drawn up to publish Opportunity's first industry findings paper on Education Financing in sub-Saharan Africa in 2013, focused on program impact in Uganda and Ghana.

A Message from Nathan Byrd, Head of Education Finance

Opportunity’s Education Finance program aims to address five key challenges to education in poor communities: (1) high cost, (2) low proximity of schools to students, (3) low quality of education, (4) low applicability of education to employability, and (5) high risk of death of parents.

All five of these have a poverty-driven cause that is extremely difficult to confront on a large scale. None has been more confounding to the development community, however, than the high risk of death of African parents. The prevalence of HIV/AIDS and inability to control illnesses such as malaria, tuberculosis, engaging in high-risk employment, having little access to quality medical care and living hand-to-mouth for an entire lifetime – all of these are at the core of “high risk of death”.

Opportunity’s EduSave product, designed with MicroEnsure, directly addresses this gap by enabling parents to earn an extra safety net. EduSave works when a parent saves enough money to qualify for free insurance. For example, when a parent saves $25 they qualify for $125 in school fees insurance – if they die or become permanently disabled, a trusted individual receives a payout of 5x the savings balance to keep the child in school.

The product launched in Malawi in March, with 170,000 parents qualified for coverage on the first day. Our average savings account holder has 3.8 children – therefore, on its first day, EduSave covered 646,000 Malawian children. On March 11th, EduSave went live on a national scale in Ghana, automatically covering 35,000 savers, or 133,000 children. EduSave goes live in Uganda in early April, and on the first day of coverage will see the inclusion of an estimated 22,000 families, or approximately 83,600 children.

It’s exciting to have a product in our Education Finance portfolio impacting nearly 1 million children at its launch, and with the tremendous potential to impact countless more children and families as savings balances – and the number of savers – grows over time. We are grateful to have the opportunity to make lifelines like EduSave possible for the families we serve!

Best, Nathan

Country Updates – (Kenya, SAT and Rwanda updates coming in next report!)

Ghana

Ghana achieved new growth of 13% in the fourth quarter of 2012. Overall, the program has improved 984 schools since inception.

The bank successfully concluded its 2012 pilot launch of EduSave at two branches. Minor modifications were made, followed by a full launch in March 2013.

Opportunity Ghana conducted a training seminar for current and prospective school proprietors in the third quarter of 2012. Twenty participants from community schools have come forward since the training to request additional information, five of whom have since accessed School Improvement loans.

Meet Edna Da Silva of Zigna Higher Height School

Everyone who knows Edna Da Silva knows about her passion to help the children in her community. Edna remembers the day in 2008 when she could no longer bear to watch the children in her village roaming the streets. By the end of the day, she had convinced the parents of 12 children, who wandered aimlessly day after day, to allow her to teach them from her living room. Good news travelled fast and before long, it became impossible to fit the growing number of children in her home. That’s when a neighbor told her about Opportunity.

Edna had considered and dismissed the idea of approaching a bank for capital to build a small school after her family told her she would be laughed out of any financial institution. Armed with her natural entrepreneurial spirit and her vision, Edna walked into the Opportunity Ghana banking hall. What she encountered was a warm welcome from a staff person who shared her desire to achieve her dreams. Edna invested her first loan valuing $773 to construct a classroom to officially launch her school at a cost the parents

could afford. She later accessed four more loans to construct a larger building, indoor plumbing and a safety wall around her property.

Today, Edna says she still can’t believe all she has achieved with Opportunity as her business partner. She has grown to nine classrooms, 12 staff including certified teachers and an enrollment of 475 students. Edna says she is the only school around who charges an affordable daily fee, including meals, because the families she serves cannot afford to save for school fees when charged by the semester.

Educating most of the children in her village, Edna could be satisfied with her achievements. Fortunately for her community, she is not. She is formulating a plan to purchase the rental property across the street and add a second floor to her school.

Ghana (OISL, SAT & IDP Rising Schools) progress metrics as of December 31, 2012 School Improvement loans Total

Value of Funds Disbursed YTD $1,809,544

Total Portfolio Outstanding $2,217,803

Number of Active Schools 515

Total Number Schools Served 984

Malawi

Malawi is cautiously returning to lending after the intentional slow-down associated with the 2011-2012 macroeconomic issues in the country. The School Improvement loan was re-launched in December alongside the launch of School Fee loans. As a result, the active outstanding School Improvement loans rose from 15 to 18, a growth of 20% since the third quarter of 2012. This return to growth is a positive sign that we will achieve new growth in 2013 as projected. Clients are expected to begin taking advantage of the School Fee loans in the first half of 2013.

With the 2012 launch of its youth financial services program (ages 18-24), Opportunity Malawi now has 5,214 youth savers. The bank also distributed $92,314 microloans and training to 166 youth in groups and $1,510 to six youth on an individual lending basis. The bank launched the EduSave product in March 2013.

Uganda

Opportunity Uganda more than doubled the number of schools it added to its Banking on Education portfolio in the fourth quarter, up 114% from the seven it added in the third quarter. During this period, two of the schools successfully repaid their loans in full, bringing the total with outstanding balances to 99. Overall, Opportunity Uganda has transformed 126 schools since the program onset.

As of December 31, 2012, 4,358 families were sending their kids to school thanks to Opportunity Uganda’s School Fee program, representing a 33% growth from the prior quarter. Since the start of the program, Opportunity Uganda has distributed 10,714 school fee loans, mainly through the Trust Group model, making a substantial impact on the number of clients who can now send their children to school.

Malawi progress metrics as of December 31, 2012

School Improvement loans Total

Value of Funds Disbursed YTD $257,172

Total Portfolio Outstanding $202,885

Number of Active Schools 18

Number of Schools Served 49

Uganda progress metrics as of December 31, 2012

School Improvement loans Total

Value of Funds Disbursed YTD $603,096

Total Portfolio Outstanding $1,589,807

Number of Active Schools 99

Number of Schools Served 122