Role and Outlook for Education Sector in Africa

By Atlanta Mahanta

Africa, a complex mesh of energetic colourful cultures, is today facing the daunting task of vamping up its education sector. And while private participation is being welcomed, both investors and policymakers are gearing up to ease up the rules of investment. According to latest research approx. 21% of African children and the same proportion of young people employed in the private sector are educated, the figure likely to rise to 1 in 4, i.e. by 25% by 2021. An investment need of around $ 16-18 billion has been identified as a requirement from private participation in the sector. While the emerging economies further afield would require mixed public-private investment models driven by consumer demand, competition for supply innovation and the fiscal realities of the governments due to the growing populations. The study aimed at shedding light on the educational opportunities in Sub-Saharan Africa (SSA) for entrepreneurs and policymakers. Formidable obstacles have been observed in access to education, performance and relevance. Thirty million children in SSA still have no form of education. The study further revealed that by 2035 the number of Africans joining the workforce, i.e. within the age group of 15–64 years, would surpass that of the rest of the world combined, which makes SSA’s existing education system fall considerably short to meet the continent’s future workforce needs since up to 40% of the children are illiterate not even exposed to computerisation.

In the context of private investment in the African education sector “private” means services and support received from outside of the provisions of the public sector including services for benefit, charity, NGO, trustees and society. Service provisioning span includes pre-primary, intermediate, primary and secondary school teaching, technical training, teachers’ training, after-school teaching, language learning, preparatory testing, education technology, student finance, college education and professional training. Around 13 per cent of the students are already enrolled in schools and colleges run by private entities, which also take the credits offering a large proportion of employment vis-a-vis the public sector. Which would go up to about 66 million, i.e. 25% of the total employment in the region by the private sector by 2021. In particular, the private sector could fill up the gaps left by the public sector in providing the latest in education to all. The private sector could also easily evaluate and scale new approaches, frameworks and methods of training with respect to technology innovations. While the Governments would play effectively in the three main areas of providing stewardship, assistant and associate services.

The governments, on the other hand, in order to increase private participation should look forward to easing up their business environment, improve the governance of education including reduction and enhancement of data collection and transparency, set and enforce standards, in particular, quality standards, and develop mechanisms to accommodate and promote educational actors such as low-cost schools and social enterprise. As facilitators, governments shape regulations on licensing, operations and investment, which create the right environment for socially advantageous private provisioning. While, in the field of licensing, policymakers should consider amending network standards for private providers. Rationalising, speeding up, depersonalising and promoting the extension of transaction costs across borders and within the political boundaries should be taken up to reduce the transaction costs. Removing private supply restrictions, allowing FDIs, repatriation of profits, and improved banking should be earnestly taken up.

The education sector throughout the world is usually marked by the following five key characteristics: 

1) demand usually exceeds supply; 

2) prices are increasing faster than inflation;

3) long-term revenue visibility;

4) negative work capital access is available, and

5) entry barriers are high. 

While the specific challenges that are faced by investors in the sector are regulatory complexities and uncertainties, long gestations, high fragmentation levels, lack of business corporations and manpower shortages (in skilled teachers, for instance). Various investment opportunities are available to various types of investors and the SSA is poised to offer the best in the sector to its investors. Potential business investors, industry and strategic shareholders, donors and foundations are welcome to play a vital role.