Private education plays expanding role across Sub-Saharan Africa

07 November 2017 Authored by Consultancy.co.za

A report on the educational landscape in Sub-Saharan Africa suggests that privatisation has an expanding role to play over the next few years. This is primarily to help eliminate some of the major issues that remain in the education system, despite the major expansion of education on the continent over the last decade.

The 280-page report, which focuses on Sub-Saharan Africa (SSA), is based on extensive research conducted amongst various groups ranging from investors to government officials. Following literature and desktop research, the authors – Caerus Capital (an investment firm with a focus on healthcare and education), Parthenon-EY (a global strategy consulting firm) and Oxford Analytica (an analysis firm) – held nearly 260 interviews and consultations with education sector leaders representing donors, private providers, investors, and government officials.

The analysis found that while SSA has recorded the highest rate of improvement across any region since the Millennium Development Goals were established, there are still major challenges that remain to be addressed. The three broad areas for improvement identified are: access to, quality of and the relevance of education in the region.

Enrolment growth in 15 key countries in SSA

Nearly 30 million children in the SSA region lack access to any form of education. Sector-wise, while primary education is growing, the tertiary sector currently lacks the capacity to meet the education demands in the region. Within the primary sector, nearly 40% of students fall short of basic learning outcomes of literacy and numeracy, representing the worst figures globally.

The report also states that Sub-Saharan Africa is set to have a larger workforce than the rest of the world combined by 2035, a situation for which the current education system lacks the capacity to prepare, especially in light of the fact that currently over 60% of the employed youth in SSA are mismatched with the skills required for their jobs.

ILO analysis - employment to skills mismatch

In numerical terms, the population in the region is set to increase by 1 billion over the next three decades, leaving the same number to be educated in the same period. While the economies in the region are projected to grow over the next few years, the study suggests that the needs of the education system are too substantial for the public sector to handle on its own, recommending complementary solutions from the private sector.

Private investment will supposedly provide improvements to the sector such as: managing the struggling aspects, creating fiscal room for the government, as well as innovation due to the greater flexibility available to private agents.

Required investment

Trends of privatisation have already appeared in SSA's education system. Students being educated in the private sector today comprise 21% of the total student population in Africa and 13% of those in SSA. According to the authors, this number is set to grow to approximately 25% or 66 million students by 2021. On the other hand, the estimated amount of investment required from the private sector over the next five years, according to the report, lies between $16 and $18 billion, which represents a major opportunity for investors in the coming years. Of this, $14 billion - $15 billion represents the investment required in core delivery, i.e. the student life cycle from primary to higher education. The remaining $2 billion - $3 billion would be of use in the ancillary activities of the sector, i.e. teacher training, supplementary education, technologyand other supporting functions.

Within the core delivery category, low-cost K-12 education appears to require the most investment, around the range of $8 billion to $8.5 billion.

Five year investment opportunity in SSA

Conducive factors

Despite the challenges of access, quality and education, the report portrays a positive scenario in the near future, provided that the desired investment levels are reached. As per the report, there are four factors that are capable of driving growth in the education sector. Firstly, the median age of SSA is 20, and over 50% of the population is aged less than 25, which makes it the youngest region in the world. The birth rate is also falling in the region as a result of economic development, which means that the working population is set to become much larger than the dependent population. This demographic transition, as per the report, could be solely responsible for a 25% increase in the per capita income of the region by 2050.

Secondly, in line with a recent study conducted by McKinsey & Company on the future of the African content, the authors highlight that more than 6 million households are projected to move from subsisting on less than $5,000 per year to making between $5,000 and $20,000 per year. Parents within this newly emerging “middle-class” are increasingly demanding quality and accountability within education.

The four factors shaping education

Speaking about the importance of education, Ellen Johnson Sirleaf, the President of Liberia, stated in the report, “As per Sustainable Development Goal (SDG) 4, governments have and must continue to commit to access to a free, quality education for our children, but the reality is there are still many obstacles to overcome to achieve this. It is not a question of either a role for the public sector or the private sector, but how governments across Africa can use a variety of means to deliver the best education outcomes for our children and our people.”

Closely related to the expanding middle class is the rapid urbanisation in the region. According to the report, the contribution of urban areas to the economic output is set to grow from 40% to 64%, which brings with it large-scale infrastructural investment in all sectors including education. Lastly, the portion of the population with internet access is projected to increase from 20% in 2015 to 60 % in 2020, which, combined with other technological advancements, would go a long way in improving access, quality as well as relevance.

Recommendations

The authors conclude the report with a number of recommendations for policy makers. Against a backdrop of what they call strong fundamentals ("the outlook for investors is very strong"), it will be key for SSA to put a solid political legal foundation in place, driving investment into education and cooperation among stakeholders. There is a "window of opportunity" to attract and work with global education providers, however, policy makers should monitor implementation to ensure that approaches are contextualised to the specifics of Africa.

Growing Middle class, growing urban population

At the other end of the chain, the authors stipulate that there is significant potential for local conglomerates to become education providers, a trend of diversification already observed in other emerging markets. On the matter, the government is advised to keep an eye on developments, with PPP (public private partnerships) models regarded as a best practice suitable for adoption in SSA. 

Further, setting national learning goals within SSA's diverse country landscape, which spans all countries fully or partially located south of the Sahara, including South Africa, would be beneficial for performance, both at a national and local level. 

The authors conclude, "Harnessing the continent’s enormous potential, while addressing some of the key issues that are hindering its growth and development, is the greatest challenge ahead for the governments, investors, companies, donors, not-forprofits, and individuals engaged [with education] in the region. The potential for investment and the potential for impact have rarely been greater."

Commenting on the report by Caerus Capital and Parthenon-EY, Sirleaf said “I welcome this report and its detailed, practical, and actionable recommendations. If you care about the future of education in Africa, please read it.”

News

More news on