Education export to Nigeria and questions related to financing
Written By Timo Juntunen
In 2021, Nigeria was Africa's largest economy in terms of GDP (442 billion USD). Nigeria is also the most populous country in Africa and its GDP per capita is just over 2000 USD. Based on this, Nigeria is classified as a lower-middle-income country in the OECD Development Cooperation Committee's listing, which includes countries that receive official development assistance. For many understandable reasons, Nigeria is of interest to Finnish education export organizations as a target market.
In this article, we briefly examine issues related to financing in the context of education exports. "Education export" is understood here as a business based on the Finnish education system or related skills transfer, for which a foreign entity pays. Education export covers products, services, and solutions for the education sector from early childhood education to higher education and continuous learning as well as personnel training, also outside the education sector.¹
"Financing" here means obtaining funds to implement a project. Funding is needed, simplified, for two purposes: improving the conditions for commercial operations or customer financing. The former means applying for development funding for e.g., market research, acquiring partners, productization or other development activities that precede the start of commercial projects. "Customer financing" here refers to solving the question of how the customer or beneficiary finances the project, i.e., the purchase of services, products, or solutions from a Finnish education export organization. In Nigeria, as in many lower-middleincome countries or in any country eligible for ODA support ², the "customer" may not be able to purchase the service themselves, so the customer - or the training exporter - must find financing to purchase the service.
Regarding development financing, the options depend very much on whether the training export organization is private or public. In terms of the availability of development funding for organizations that are by legal status joint stock companies, it is also important whether the owner is a large public organization. In the case of private organizations, the size of the company influences both the availability of financing and the conditions of financing.³
In principle, a wide range of different Business Finland instruments are available to private education export companies, such as the innovation voucher, Market Explorer, Tempo, Finland's sustainable growth program, R&D funding, Into and the program for innovative young companies. In addition, ELY centers offer development assistance to companies. Funding opportunities under administration of the Ministry of Foreign Affairs include, for example, Finnpartnership, Finnvera products and the Development Market Platform. In some provinces, such as North Ostrobothnia, private companies has also been involved in structural fund projects applied by public organizations.
At public vocational schools, universities any other type of educational institutions, there are quantitatively fewer options for development financing. However, they too have the need to get financing for networking, testing products and productization. Examples of development financing instruments typical for these organizations are EU’s structural funds, funding and grants administered by the National Board of Education, Erasmus + and Horizon Europa, and HEI-ICI (from 2023 onwards HEP). Applying for development funding from the aforementioned Finnpartnership program is also possible for public organizations.
When applying for development funding, you should find out, in addition to the self-financing share, e.g., what are the acceptable costs, what are the costs of applying (also considering the use of working time) and the probability of getting funding. Networks should think about the conditions under which a member of the network would be persuaded to apply for funding that would benefit all members.
The potential customer segments of education exports in Nigeria – or any ODA-eligible country - can be divided according to the table below. This helps to illustrate one central point of this paper: in Nigeria and other ODA-eligible countries, the expertise of the education exporter, its partner or client includes knowledge of financial instruments, as often the project funding comes in whole or in part from the donor rather than the "client" or the direct beneficiary of the project.
The table does not include nearly all clients/donor. In the article, it is also not possible to explain in detail what different financial instruments each client/donor has, what is the buying or selling logic for each instrument, whether it is about preparing applications or offers, etc. The purpose is to share a few examples of possible funding sources for projects and thus help the development of an understanding of how education export projects can be financed in ODA-eligible countries such as Nigeria.
It should also be noted that the customer can have financing for the purchase of a product, service or solution of a Finnish education export organization. B2B customers, for example, educational authorities may have budget funding collected from national tax funds, which is also used to make purchases from abroad. Also, some national companies, the education sector or other sectors, or foreign companies in the country may have opportunities to make purchases with their own funding.
Examples of international financiers operating in Nigeria are United Nations sub-organizations, DevCo (EU),the so-called bilateral financiers, i.e. some OECD countries from their development aid budget, as well as the World Bank Group and the African Development Bank. From these donors, the public sector in Nigeria can receive, for example, so-called direct budget support, grants or loans. Funding from IFI financiers (International Financing Institutions) can also be channeled into various funds or grant programs, from which funding for projects can be applied for.
In this article, it is not possible to deal in detail with different financial instruments from the point of view of the Finnish education export organization's project sales process. One form of utilizing IFI funding is participation in international public procurement. For example, the following comprehensive guidebooks are available on these and more generally on the utilization of IFI financiers: Guide to procurement of international development financiers (FORMIN 2019) and Snapshot of International Financing Institutions (Business Finland 2021). These guides clearly highlight the fact that success in public procurement requires a long-term effective strategy, building one's own capacity and networks, and systematically collecting references. It is also important to understand that there are possible roles in projects, and it is possible to become a subcontractor or partner in a relatively short period of time by acting sensibly and systematically. In addition, it is useful to understand that, in addition to so-called two-stage tenders, procurement takes place also through one-stage tenders or direct procurement.
As far as I understand, IFI financing is not well known among Finnish education exporters. Through building knowledge, cooperation, and partnerships both within Finland, internationally and in target countries, there would certainly be a positive impact on the success of education exports in lower-middle-income countries like Nigeria. They already have some national sources of funding to purchase services and solutions from high-income countries like Finland, but alongside national financing, IFI financing is also needed.
There is also IFI financing for the private sector projects in Nigeria. Of course, availability of customer financing creates opportunities for purchases from Finland as well. Examples of private sector financiers are the European Investment Bank and Finnvera.
In the latest official definitions of “education export”, education export always has a foreign customer, payer. Despite this, it is useful to know that there are instruments financed by the Finnish development aid budget, which are intended for the customer to acquire Finnish know-how. These include the Public
Investment Facility (PIF) and Finnpartnership, which can also be used to support a pilot and/or demonstration project related to a commercial/productized technology or solution implemented as a part of the operations of an ODA-eligible international organization.
How education export is defined in Finland⁴ leads to thinking that the offering of education exporters always applies to the education sector and its development. Based on intuition, a clear majority of education export organizations also limit their business activities to the development of the education sector in practice, although according to the official definitions of education export used in Finland, this is not necessarily the case.
Thinking that education export only concerns the development of the education sector⁵ hinders seeing all the business opportunities that Finnish education export organizations have. In ODA-eligible countries, such as Nigeria, a very large part of the IFI funding is directed outside the education sector, and competence development is also needed in other sectors. Secondly, a lot of IFI funding is directed to actions that prevent global warming and mitigate its effects. These and the sustainable development agenda, where education is only one theme, steers funding.
By seeing the value of education and the opportunities opened up by rapidly developing educational technologies within other sectors for education exports, new business and financing opportunities can be found in Nigeria as well as in other ODA countries. An example of rapidly developing technologies that can be used in other sectors as means of capacity building are the various XR technologies.
As in Germany, educational organizations in Finland could also explore cooperation opportunities with other export sectors, such as Cleantech companies, more intensively. It may be that the education export sector could, by training customers or potential customers of the Cleantech sector, increase the
competitiveness of the fast-growing Cleantech sector companies in the market and meanwhile also grow themselves and get access to new financial instruments in ODA-eligible countries.
Examples of IFI financiers and IFI financiers' instruments that offer financing for Cleantech companies' solutions are Nordic financiers Nordic Development Fund (NDF) and Nordic Environment Finance
Corporation (NEFCO) and the Environment and Energy Partnership Program EEP managed by NDF. In the projects of these as well as other IFI financiers, education and educational solutions are also needed, either separately from technological solutions or in connection with them.
References
Ministry of Education and Culture (2016). Roadmap for education export 2016–2019. Helsinki: Ministry of Education and Culture, publications 2016:9.
Finnish National Agency for Education (2020). Roadmap for education export 2020–2023. Reports and publications 2020:8.
Finnish National Agency for Education (2022). Report on economic value of education export. Reports and publications 2022:5.
Cf. Definition of ”education export” Finnish National Agency for Education (2020).
ODA-eligible (Official Development Aid) countries are countries, that receive official development aid.
There are also some education export organizations in Finland, which are by legal status “non-governmental organisations” or “co-operatives”. Regarding them, financial issues are not considered in this article.
Ministry of Education and Culture (2016) and Finnish National Agency for Education (2020).
Cr. Finnish National Agency for Education (2022, 8)