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As the for-profit education industry continues to show record growth in the West, the World Bank has launched a programme to encourage similar investments in developing countries.

The bank’s private-sector arm, the International Finance Corporation, has begun to make loans and venture capital available for commercial education projects in developing nations. Its new Education Investment Exchange this week in Washington began the first in a series of conferences about investment opportunities in private education in such nations.

The global education market amounts to an estimated $2,000 billion (pound;1,250 bn) opportunity, according to the international investment services company Merrill Lynch. At the same time, traditional World Bank efforts to encourage developing nations to spend more on education have been frustrated by government spending cuts.

Jack Moss, an IFC education specialist, said: “Although the bank has tried very hard to provide capital for educational expenditures, we have learned the limits of productive investment opportunities in the public sector,” “Over time we were forced to look around at what else could be done, because the unmet need for education is tremendous.”

Four years ago, the bank got its first trickle of enquiries from people who had proposals for private higher and vocational education, student lending, textbook or software distribution, testing, teacher training and school management.

Two years ago, one such proposal was approved. Last year, seven were. So far this year, three more have gained approval. Countries involved included Senegal, Gambia, Mauritania, Pakistan, Uzbekistan, Uganda, Kenya and the Ivory Coast.

To date, all the proposals have come from non-profit organisations in developing countries themselves. Many of the loans have been used to expand or improve existing private schools - most of them in urban areas - in several cases by adding secondary levels to primary schools. A few have gone to private universities to add departments or upgrade facilities.

Mr Moss said the IFC is focusing on helping low-income people without access to schools, and not only those who can afford fees. “We are staying away from education just for the rich who can take care of themselves,” he said. “We look at a whole range of facets here, including the affordability of the fees and the use of scholarships to make sure that bright kids from poor families can get into the schools we’re helping.”

Several international banks have now also expressed an interest in educational investments, and western for-profit education companies are also expected to eventually become involved.

The reason: while the school-age population in wealthy countries will plateau over the next few years, the growth in Third-World countries is projected to be huge.

The bank plans conferences next year in Africa, Asia and Latin America about such opportunities. The Education Investment Exchange website address is wwwwbweb5.worldbank.orghdnededinvestindex.htm.