Making childcare finance work: How Jackfruit Finance used data to build a viable lending model for early childhood development providers
The DVF Framework—which stands for Desirability, Viability, and Feasibility—is a strategic model that helps organisations assess and refine their initiatives as they scale. It can help organisations reflect on how well innovations align with user needs (desirability), are financially and operationally sustainable (viability), and can be realistically implemented with available resources (feasibility). By balancing these three elements, education organisations can scale effectively while maintaining quality, impact, and long-term success. GSF has integrated the DVF framework into its Impact at Scale Labs – Early Years in Kenya programme, which helps education organisations scale their innovations effectively.
This case study focuses on how Labs participant Jackfruit Finance improved the viability of their innovation. They achieved this by conducting market research and leveraging AI-powered credit scoring to refine lending criteria. By adapting to the unique payment structures of early childhood development (ECD) centres, transitioning schools to mobile and bank transactions, and adjusting enrolment-based eligibility requirements, Jackfruit mitigated lending risks while expanding financial inclusion.
About Jackfruit Finance
Jackfruit Finance, a Kenyan education finance company, enhances children's access to quality education by providing affordable loans to private schools. Recognising that many schools struggle to secure financing from traditional lenders, Jackfruit offers rapid working capital and infrastructure loans with flexible terms. This empowers schools to invest in infrastructure, educational materials, and staff development, improving learning environments and educational outcomes. Jackfruit collaborates with partners to provide additional educational resources, contributing to overall education quality. Through GSF’s Impact at Scale Labs- Early Years programme, Jackfruit systematically explored the viability of lending to ECD providers in Kenya through a data-driven approach. This involved on-the-ground surveys, stakeholder engagement, and AI-powered credit scoring models to identify financially viable ECD providers while minimising risks. This rigorous evidence-gathering process is Jackfruit’s first step toward developing a viable lending model for ECD providers.
Understanding the market: Initial research and challenges
Jackfruit aimed to expand lending services to ECD providers, believing it could improve infrastructure and operational capabilities, leading to better outcomes for young children. Before adjusting their lending model, Jackfruit conducted a ground survey to assess whether existing ECD providers were viable borrowers under their current credit criteria.
The survey revealed three provider categories: informal home-based daycares, ECD centres connected to primary schools, and stand-alone ECD centres. Mamapreneurs, running informal home-based daycares, were deemed unsuitable due to Jackfruit’s interest rate structure. ECD centres attached to primary schools already qualified for loans. This left stand-alone ECD centres, for which Jackfruit identified specific lending challenges:
- Low enrolment numbers impacting revenue.
- Payment structures differing from primary and secondary schools.
- Heavy reliance on cash payments with limited financial tracking.
To address these challenges, Jackfruit worked with school support leads and ECD providers to refine its credit assessment model.
Refining credit scoring and lending criteria
Jackfruit leveraged AI-powered credit scoring to assess ECD financial viability. However, traditional assessment metrics were inadequate. The organisation made key modifications:
- Payment structure adaptation: ECD providers were required to transition to mobile money or bank transactions for reliable comparison.
- Experience and longevity consideration: The optimal operational experience threshold was set at one year, balancing sustainability and growth support.
- Enrolment-based eligibility requirements: The enrolment cutoff was adjusted to 50 students, reflecting ECD realities.
Leveraging data to improve programme effectiveness
Jackfruit’s data-driven strategy included:
- Baseline and endline data collection: Measuring learning outcomes and school growth required ongoing support for centres without consistent records.
- School management software integration: Exploring applications for revenue tracking and financial forecasting.
- Incentive-based rewards for borrowers: Offering benefits for good repayment histories, rather than free services.
Conclusion: A model for sustainable growth
Jackfruit Finance’s approach highlights the importance of stakeholder engagement and adaptive financial modelling. They refined credit assessment criteria, aligned loan structures with real-world operations, and integrated data-driven decision-making.
To ensure inclusive scaling, Jackfruit is exploring blended financing models, mobilising resources from public and private stakeholders. They also plan to source philanthropic funds to subsidise credit costs for under-resourced daycare centres.
Continuous data collection and analysis will be crucial for impactful and financially viable lending solutions, enabling Jackfruit to support high-quality early education.
Laterite, a data, research and analytics firm specialising in social impact, was engaged by GSF to provide monitoring and evaluation (M&E) technical support to Lab grantees. Laterite’s expertise includes quantitative and qualitative data collection, research and evaluation design, and capacity building throughout the M&E cycle.
Find out more about the DVF framework here.