Private schools as social businesess

Discussions are going on amending the Education Act-1972 and there is controversy, for some even an outcry in a provision of the bill that wants to make it mandatory for any private citizen willing to start operating a new school only by registering it as a cooperative instead of incorporating it at the Company Registrar’s Office as per existing norms.

Is the debate simply so heated because existing owners of private schools are afraid to make less money than what they have been able to do so far?

Is the issue only about money making and financial returns or is it, instead, of a more philosophical, if we can put it in these terms, nature?

If some might consider the proposed bill as too progressive in the sense that it implies a sort of expropriation of existing private assets, the bill is actually quite conservative in the sense that the new provisions will apply only to schools to be established after the bill is turned into law.

This means that the thousands of owners of private schools spread across the nation are literally saved by any” socially” re-distributive takeover.

To be honest I believe that the fuss is only about preserving a very and possibly overly lucrative sector of the national economy.

Instead of ensuring quality education at affordable prices, owners and shareholders of private learning institutions literally consider these as gold mines in a country known for scarcity of commodities with, perhaps, the exception of hydropower, yet to benefit the population.

Naïve me as I thought cooperatives were a very lucrative sector too as I was trying to explain to myself the reasons why the Rastra Bank, the national central bank, is pushing for a drastic overhaul with the aim of bringing more transparency and better regulations to the thousands of financial cooperatives that have been mushrooming all over the country.

Is it possible then that I am not the only naïve guy in town, with a bunch of officers working at the central bank who misunderstood the way cooperatives work?

Perhaps there is too much ignorance and high dose of suspicions among the owners (note I am saying here “owners” and not shareholders or members) on the social value of  cooperatives.

No doubt that in Nepal cooperatives are considered as mere financial entities, sort of mini banks that offer simple but effective saving options to their clients. In short a bank minus the complexities of the financial sector. Few financial products are offered with the promise of few though solid and assured returns.

What it is missing here is the social value of the cooperatives. In  western countries when we talk of cooperatives, we refer to economic agents that aim at wider goals than simply producing profits.

They should be seen as engine of economic and social prosperity that reinvest the savings of their members for the creation of new services and facilities available to the members of the community.

Cooperatives create economic value for their shareholders but are also very much present on the ground, very attentive to the needs of  society. In short they are economic but also social agents of change.

In this way cooperatives can be considered as social businesses which, while competing in the market and pursuing financial returns for their members, are aimed at keeping a firm eye on the bigger picture, sensitively paying attention to new arising and pressing needs faced by  society, often playing a very important role in matching the gaps experienced by disadvantaged and vulnerable members of  local communities.

Certainly this is not the case in Nepal and the actions being undertaken by the officers at the Ministry of Education and at the Central Bank are not at all naïve.  

The truth is that cooperatives in the country are simply profit making institutions whose only concerns are bringing a financial return for their owners. In this sense they seem not too dissimilar from  private schools.

But then I am getting more confused: if this is the case, if financial cooperatives are quite similar if not identical to private schools in the sense that the cooperatives of the country are institutions created only to maximize the shares value of their owners, then what is the fuss on the part of the owners of the private school all about?

Are they so afraid that the reforms being pushed by the Central Bank are going to be so radical and revolutionary to make them much less attractive financially?

Or maybe are they afraid that the new legislative framework being proposed to better govern the cooperatives will put an end to the “wild west” of a so far existed scarcely regulated sector that allowed disproportionate and unethical financial gains?

After all the new Education Act has the same aims of the legislation proposed to regulate and provide better oversight to the cooperatives sector.

What the education entrepreneurs are missing here is that education is an asset of national interest where the state has no monopoly.

In this sense, it is extremely positive that the ingenuity and creativity of private citizens had the opportunity to shape the future of the nation by imparting new and different forms of learning to the future generations.

At the same time, do they know that by having broken that monopoly, they have a duty and responsibility to do their utmost to serve the nation in such a strategic task called education?

Running financially sustainable and viable social businesses, as private schools should be considered, implies standards not only in the way the learning is administered but also an ethical framework on legitimate and proportionate ways financial returns are assured for the shareholders of these schools.

Even more importantly we need to agree on which percentage of these financial returns should be reinvested in the school’s core business through, for example,  more scholarships, more affordable fees and improvement in the infrastructure and teaching conditions.

No one wants private schools owners to lose money in financially broken learning institutions but we need to ensure a better and stronger level playing field where profiteering from education comes as a far second from the primary goal of offering a fundamental “social” service to the nation.

With an urgent need of demystifying the real meaning of the role of a social economy within a broader capitalistic society and with so few knowing the vast potential of the so called public interest companies, still a novelty in Nepal, we certainly wish the best to those who are now resisting unscrupulous lobbying to maintain the status quo in the education and cooperative sectors.