Entrepreneurship Zone: 11 September 2023 :: Kenya: How this entrepreneur built a private schools business

Mon Sep 11 10:27:49 CAT 2023

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Entrepreneurship Zone:  11 September 2023 ::  Kenya: How this entrepreneur built a private schools business

St. Bakhita currently operates two kindergartens, two primary schools, and a junior school.

Private education is big business in Kenya. We speak to the founder of St. Bakhita School about how she started and grew the company.

Private education in Kenya has witnessed rapid expansion. Between 2014 and 2020 alone, the number of private schools increased from 7,742 to 16,594. St. Bakhita School, a private education institution founded by Felista Muthoki Mutinda in 2003, is one example of this growth.

She started with one kindergarten, in a repurposed residential home in South B, a suburb in Nairobi. Today, across the two kindergartens, two primary schools (Grade 1 – 6) and a junior school (Grade 7 – 9), the total number of learners stands at over 2,700. The staff at St. Bakhita numbers 327.

Most of the 32 students who enrolled at St. Bakhita in its first year came from a neighbouring kindergarten that had closed, leaving parents in urgent need of an alternative. By the fifth year, enrolment had risen to 172 students, leading to expansion into adjacent properties

Muthoki attributes the rise in private school popularity to a pivotal policy shift in January 2003. That’s when the newly elected National Rainbow Coalition (NARC) government ushered in free primary education throughout Kenya. As anticipated, this initiative boosted enrolment in public schools by over 30% within a year. Yet, an unintended ripple effect of this educational reform was the pronounced rise in the pupil-teacher ratio. From a rate of 42 students per teacher in 1998, it jumped to 53 in 2003, and by 2006, the ratio had climbed to 60.

Faced with ballooning class sizes in public schools, parents began to seek out affordable, quality educational alternatives that offered more individualised attention for their children, notes Muthoki. Data suggests that over half of all primary school students in Nairobi are enrolled in private institutions.

Starting a school

Muthoki left a secure position in the banking industry to follow her passion for education. In the beginning, she only wanted to concentrate on the preschool years, believing that children needed a good multi-disciplinary and holistic foundation, which would then make them more successful later on, no matter what the curriculum.

She disliked the prevalent over-emphasis on academic work at the time, basing her kindergarten approach on developing both cognitive and social competencies in young children.

For her business idea to work, she needed to convince parents that this was the right route for their children. While the school might have been a convenient solution for the parents of those first 32 learners, a year of experiencing St. Bakhita’s approach turned them into advocates and word of mouth helped the company achieve early growth.

Starting an education institution comes with a list of administration and regulatory hurdles, but Muthoki says support from the local government made this easier. For example, the South B premises had to be rezoned by the county authorities, the ministry of education had to approve the site, and residents had to be convinced that a school in their midst wouldn’t be a noise and traffic nuisance.

Organic growth and a shift in focus

Within the first five years, the kindergarten in South B had a waiting list of two years. Muthoki also noticed that parents were driving their children from as far as Machakos County, 40km away.

“This was very disheartening for me; the children had to wake up so early,” says Muthoki. The decision was made to open a franchise, duplicating the success of the South B kindergarten. In its first year of operation, 2011, the Machakos kindergarten already had 53 children enrolled.

In 2017 a decision by the Kenyan government convinced Muthoki it was time to expand into primary school education. The government launched a new competency-based curriculum to replace the previous, 32-year-old curriculum and schooling system. It fit perfectly with the culture and approach of St. Bakhita’s and two primary schools were opened.

Financing the business

To launch the business, Muthoki drew from personal savings, as well as financial support from her parents and husband. She also tapped into her pension fund. As the school expanded, it began to benefit from internal cash flows, and by its third year, the kindergarten reached its break-even point.

Over the subsequent years, growth was financed through operational income and a series of bank loans. Drawing on her banking background, Muthoki approached commercial banks for funding. Leveraging her expertise, she portrayed both herself and the school’s potential as a sound investment. These loans facilitated the acquisition of new sites, such as for the primary schools, and funded the significant infrastructure development needed for school buildings and sports grounds.

Then in 2020, Muthoki sold shares in the company to Fanisi Capital, a Kenyan private equity fund, for KSh 250 million (US$1.7million).

Competitive landscape

For Muthoki, the foremost challenge St. Bakhita has encountered over the past two decades is maintaining a competitive advantage in a saturated market.

“If you are thriving and … doing well, there are a lot of people who want to copy you, thinking it’s an easy thing to do,” she says. Through the years, St. Bakhita has honed its focus on unique aspects that can’t be easily replicated, such as the calibre of its educators and the soft skills imparted to the students.

In an environment brimming with alternative private education choices, Muthoki underscores the importance of cultivating trust with parents. She believes that trust is built when parents are assured of consistent, high-quality results that justify every shilling spent.

At the heart of St. Bakhita’s strategy is a relentless focus on educator development. Both in-house and external training keep the teachers abreast of contemporary teaching methods. This approach not only keeps teachers updated on the latest teaching methods but also help establish a clear institutional culture, Muthoki points out.

Adapting to the evolving requirements of today’s students, the schools offer various extra-curricular activities, at an extra cost, such as music, chess, swimming, soccer, fine arts, ballet, and coding and robotics.

Future plans

For the foreseeable future, St. Bakhita’s intends to solidify its offerings from kindergarten through to Grade 9. Muthoki currently has no aspirations to branch out into higher grades or tertiary education.

“If you bite off too much, you might not be able to swallow it,” she says. “We are giving ourselves time to lay a good foundation and ensure our offering is stable.”- Howwemadeitinafrica

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