Revenue diversification as a driver of financial sustainability in private schools in Lusaka Province, Zambia

Abstract

Private schools in Zambia supplement the capacity of the public education system and contribute substantially to educational access at the primary and secondary levels. However, a significant proportion of these institutions face severe financial fragility driven by overdependence on tuition fees as a single and precarious revenue stream. This study examines the effect of revenue diversification on the financial sustainability of private schools in Lusaka Province, Zambia. Grounded in the Tuckman and Chang financial vulnerability model and Bowman's financial capacity framework, the study employed an explanatory sequential mixed-methods design (QUAN→qual). The target population comprised school owners, principals, bursars, and accountants employed at 594 registered private primary and secondary schools across the six districts of Lusaka Province. Using two-stage stratified random sampling guided by Yamane's formula at a 5% margin of error and 95% confidence level, 300 questionnaires were distributed, yielding 272 valid responses representing a response rate of 90.7%. Qualitative data were gathered through 15 purposively sampled semi-structured telephone interviews conducted until theoretical saturation was achieved. A Financial Sustainability Index (FSI) was computed using Principal Component Analysis (PCA), with the Kaiser-Meyer-Olkin statistic of 0.922 and Bartlett's Test of Sphericity confirming data suitability for factor analysis. The mean FSI of 0.53 (SD = 0.202) indicated moderate but fragile financial sustainability. Classification of sampled schools by FSI level revealed that 39% experienced normal financial sustainability, 39% unstable, 15.4% absolute, and 6.6% critical financial sustainability. Pearson correlation analysis, supported by bootstrap estimation with 5,000 resamples, revealed a strong, statistically significant positive relationship between revenue diversification and financial sustainability (r = 0.799, p < .001; BCa 95% CI: 0.753–0.850). Multiple regression analysis confirmed revenue diversification as the dominant predictor of financial sustainability (R² = 0.67; F(7,264) = 75.15; p < .001), with market competition significantly moderating the relationship between revenue diversification and financial sustainability. Qualitative findings strongly triangulated these results, with all participants consistently reporting that schools with diversified income streams beyond tuition fees achieved significantly greater financial stability. The study concludes that revenue diversification is not a peripheral financial strategy but a structural imperative for private schools in Zambia's volatile educational and economic environment. Immediate policy and institutional interventions are required to support its systematic development across the sector. This study recommends that private school administrators should develop and implement formal, resourced revenue diversification strategies that identify multiple income streams appropriate to their institutional context, resource base, and community environment.