IFC Board Approves Response to CAO Investigation of Bridge International Academies Investment

The CAO’s investigation highlighted several concerns about Bridge’s compliance with local regulations and IFC’s oversight of its investment.

The International Finance Corporation (IFC) Board of Executive Directors has approved an action plan addressing the findings of the Compliance Advisor Ombudsman (CAO) investigation regarding IFC’s investment in Bridge International Academies. The investigation, launched in response to a complaint from the East Africa Centre for Human Rights (EACHRights), scrutinized Bridge’s operations in Kenya, focusing on concerns related to school registration, labor practices, student safety, and the treatment of students with disabilities.

In 2013 and 2016, IFC invested a total of $13.5 million in equity in Bridge International Academies, a for-profit company operating private schools in Kenya and providing educational services to government schools in several African countries. The goal of this investment was to promote access to affordable and quality education for children from low-income backgrounds. However, a range of issues raised by parents, teachers, and advocacy groups prompted an independent investigation by the CAO, which is IFC’s accountability mechanism.

Key Findings of the CAO Investigation

The CAO’s investigation highlighted several concerns about Bridge’s compliance with local regulations and IFC’s oversight of its investment. Key findings included:

• Non-compliance with Kenyan school registration requirements: Bridge’s operations did not always meet the regulatory standards set by the Kenyan government, raising concerns about its legal standing and operational legitimacy.

• Labor practices: Investigators found issues related to the working conditions of teachers and staff, including the treatment of workers under the company’s employment policies, which were not fully aligned with IFC’s environmental and social (E&S) standards, particularly those related to labor (Performance Standard 2).

• Student safety: The safety standards of the schools, including building design, water, sanitation, and hygiene (WASH) protocols, did not fully meet the IFC’s Performance Standards. This included gaps in school-ground safety and maintenance.

• Exclusion of students with disabilities: The company was accused of not accepting students with disabilities, which raised concerns about inclusivity and equal access to education for all children.

While the CAO found improvements over time in IFC’s supervision of the project, it concluded that the corporation had failed to ensure full compliance with its Performance Standards in key areas, including labor conditions, water and sanitation standards, and student safety.

IFC’s Response and Management Action Plan

In response to the CAO’s investigation, IFC developed a comprehensive Management Action Plan, which was approved by its Board. The plan focuses on addressing both the project-level deficiencies identified in the investigation and broader sector-level issues that could help avoid similar challenges in future projects.

1. Addressing Labor Issues: IFC will engage with qualified labor organizations and conduct a country-level workshop in Kenya to better understand the gaps between the Performance Standards, particularly PS2 (Labor and Working Conditions), and Kenyan labor laws. This workshop will explore how these gaps can be addressed in future IFC-funded projects, ensuring improved working conditions and better labor rights protections.

2. Improving School Safety Standards: IFC will also focus on improving school safety by supporting the development of a capacity-building program for schools. This program will help schools adhere to physical safety standards and protocols, with a special emphasis on ensuring that there are accessible grievance redress mechanisms for parents and students. This will empower communities to voice concerns about safety and quality in their schools.

Steps Taken Prior to Action Plan Approval

Before the approval of the Management Action Plan, IFC had already taken steps to address some of the systemic issues identified by the CAO’s investigation. These included:

• Clarifying Environmental and Social Review Procedures: IFC updated its Environmental and Social Review Procedures manual to provide clearer guidance on the review processes for projects prior to Board approval. This change aims to ensure that all future projects undergo thorough scrutiny to meet the IFC’s E&S requirements.

• Enhancing Supervision Activities: IFC took measures to strengthen its supervision of ongoing projects, ensuring more consistent oversight and better monitoring of client compliance with E&S standards.

Future Monitoring and Oversight

The CAO will continue to monitor the implementation of the Management Action Plan to ensure that IFC’s actions lead to meaningful improvements. The CAO will publish progress reports on its website and in an annual monitoring report, which will provide transparency on IFC’s efforts to address the issues raised by the investigation and improve its investment processes moving forward.

While IFC exited its investment in Bridge International Academies in March 2022, the corporation remains committed to ensuring that the lessons learned from this case inform future investments and strengthen its accountability mechanisms. The ongoing engagement with local labor organizations and schools is part of a broader commitment to upholding the highest standards in environmental and social responsibility. Through these efforts, IFC aims to make a lasting impact on the education sector in Kenya and other African countries, ensuring that children, regardless of background or ability, have access to safe, high-quality education.