The Business of Education in Africa Authored By
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THE BUSINESS OF EDUCATION IN AFRICA AUTHORED BY CAERUS CAPITAL Caerus Capital LLC is an investment and advisory firm focused on healthcare and education in emerging markets. Scott Featherston and David Ferreira are partners in Caerus Capital and have a long history of involvement in the education sector. Scott’s experience includes having headed up the IFC’s health and education investing in Africa and he is currently a non-executive director of the Luminus Group in Jordan and George Health Enterprises in Australia. David was a partner in a South African private equity firm that invested in health and education businesses, was for 10 years a non-executive director of listed education company ADvTECH, and is currently an advisor to the IFC on investments in health and education. www.caeruscapital.co WITH SUPPORT FROM OXFORD ANALYTICA PARTHENON-EY Oxford Analytica is a global analysis and advisory firm Parthenon-EY is a strategy consultancy, committed to which draws on a worldwide network of experts to advise bringing unconventional yet pragmatic thinking together its clients on their strategy and performance. Oxford with our clients’ smarts to deliver actionable strategies Analytica’s insights and judgments on global issues enable for real impact in today’s complex business landscape. its clients to succeed in complex markets where the nexus The Parthenon-EY Education practice — the first of its of politics and economics, state, and business is critical. kind across management consulting firms — has an The firm monitors developments across geographies explicit mission and vision to be the leading strategy and sectors to help clients identify and leverage advisor to the global education industry. To achieve this, political risks and opportunities, provide evidence- we invest significantly in dedicated management and based thought leadership, and enable best practices team resources so that our global experience extends in the relationship between business and society. across public sector and not-for-profit education providers, foundations, for-profit companies and service www.oxan.com providers, and investors. Parthenon-EY has delivered more than 1,000 education sector engagements across over 95 countries in the last 10 years. Parthenon-EY is a member of the global network of EY Firms. www.parthenon.ey.com THE BUSINESS OF EDUCATION IN AFRICA 2 The Business of Education in Africa CONTENTS FOREWORD 4 REPORT SCOPE AND APPROACH 5 IN APPRECIATION 8 EXECUTIVE SUMMARY 10 INTRODUCTION 18 – Tremendous progress since 2000 21 – However, daunting challenges remain 22 – Positive forces are set to shape education systems 25 – Meeting the challenge: leveraging all resources 28 SECTION I – CURRENT ROLE AND OUTLOOK OF PRIVATE EDUCATION IN SUB-SAHARAN AFRICA 30 – The private sector plays a complementary role in the core delivery of education 34 – The private sector is a key participant in ancillary services 38 – The private sector brings strengths 40 – Recognizing the realities of engaging the private sector 42 – Private provision of education is likely to see significant growth in the medium term 44 – Conclusion 47 SECTION II – MAXIMIZING THE CONTRIBUTION OF PRIVATE EDUCATION 48 – The roles of governments in private education 51 – Policy challenges and recommendations 52 – Conclusion 69 SECTION III – OPPORTUNITIES FOR INVESTING IN PRIVATE EDUCATION IN SUB-SAHARAN AFRICA 70 – Education investment in emerging markets: attributes and challenges 74 – Scalability of business models within emerging markets education segments 77 – Different investment opportunities are suited for different kinds of investors 79 – The investment opportunity in education in sub-Saharan Africa 80 – Investment opportunities in core delivery 82 – Investment opportunities in ancillary services 100 – Conclusion 121 3 LOOKING AHEAD 122 ANNEX I – DETAILED CASE STUDIES 126 ANNEX II – COUNTRY REPORTS 154 – Republic of South Africa 156 – Nigeria 168 – Kenya 180 – Ethiopia 192 – Senegal 202 – Liberia 212 ANNEX III – METHODOLOGY FOR MARKET SIZING 224 ANNEX IV – NOTABLE RECENT EXAMPLES OF INVESTMENT IN SSA EDUCATION OPERATORS 230 ANNEX V – GLOSSARY AND ABBREVIATIONS 236 ANNEX VI – FULL LIST OF CASE STUDIES CITED 241 ACKNOWLEDGMENTS 246 WORKS CITED 252 NOTES 262 4 The Business of Education in Africa FOREWORD Ellen Johnson Sirleaf, President of Liberia My first teacher was my mother. This Our Government recognizes that we is not just because my mother taught need to be creative and pragmatic me how to make my way in the world, about tapping into the private sector but because she started the school I to contribute to the education of our attended throughout my childhood. children. One of our most important pilot initiatives in this vein, the The school was a simple but tidy public-private Partnership Schools place, about a mile from my childhood for Liberia program, is among the case home and steeped in my mother’s studies profiled in this new report. Ellen Johnson Sirleaf Christian values. Later, I attended President of Liberia College of West Africa, Liberia’s oldest “The Business of Education in and most prestigious high school. Africa” focuses on the contribution of the private sector and on how My schools, and then my first government can act as the steward university and later my graduate of the whole education system. school, were private institutions We know that the private sector rather than public ones. Of course, is already making a significant this distinction between public contribution on the continent and private shouldn’t matter; a and believe there is potential to school’s outcomes should. do even more in partnership. My Government in Liberia is seized by As per Sustainable Development Goal a sense of urgency. Our country and (SDG) 4, governments have and must people have been deeply scarred by continue to commit to access to a free, crises and wars that all but ruined our quality education for our children, most important institutions, including but the reality is there are still many crippling our education system. obstacles to overcome to achieve this. It is not a question of either a role for We know we need to act fast to keep the public sector or the private sector, hope alive, and education is the but how governments across Africa single most important tool we have can use a variety of means to deliver in rebuilding our nation. We cannot the best education outcomes for our afford to wait. We need to act now children and our people. I welcome so that we do not fail our children. this report and its detailed, practical, and actionable recommendations. If you care about the future of education in Africa, please read it. 5 REPORT SCOPE AND APPROACH This report was developed in two This report builds from this first phases. Phase 1, completed in phase. It involved detailed, on-the- August 2016, entailed a literature ground research in six countries review, desktop research, a limited between July 2016 and February number of expert interviews, and 2017: Kenya, Nigeria, and South analysis. This phase drew on available Africa (larger and relatively more research, primarily from the 15 largest established Anglophone markets), countries in sub-Saharan Africa (SSA) Ethiopia (a fast-emerging economy by population, to build a picture of to watch), Senegal (a promising the current landscape for private Francophone market), and education in SSA. The Phase 1 report Liberia (a post-conflict, resource- (which was limited in circulation) was constrained smaller country). completed, in most part, to provide input into “The Learning Generation” The research has involved nearly 260 report published by the International interviews and consultations with Commission on Financing Global SSA and global education sector Education Opportunity. leaders representing donors, private providers, investors, and government officials; covered more than 135 private not-for-profit and for-profit education case studies; and assessed the regulatory context for education. 6 The Business of Education in Africa REPORT SCOPE AND APPROACH 1. STRUCTURE OF REPORT 2. TYPOLOGY 3. GENERAL NOTES The report is in eight parts: In this report “education” includes: Currencies have been converted to US dollars (denoted as $) in – An Introduction, which – Core delivery – comprising the February 2017 figures unless data identifies the challenges and student life cycle, including is historic. Revenue scale for private potential solutions to the pre-primary, K-12 (primary and providers has either been vetted with education crisis in SSA secondary), higher education, and organizations or, where not available, technical and vocational education estimated from publicly available – Section I, which details the and training (TVET) fees and enrollment data. Where current role and outlook for possible, substantial case studies the private sector in SSA – Ancillary services – including (of ~50 words or more) have been teacher training, education reviewed by the profiled organization. – Section II, which explores the technology, publishing, In the event that organizations did ways in which policy-makers could supplementary education (after- not respond to queries, such data better engage private providers to school tutoring; language learning; has been collected from the most generate their greater contribution test preparation), student finance, recent publicly available information. to education outcomes and institutional finance. – Section III, which highlights Figure 1 illustrates these segments. the investment opportunity