The report identified four drivers of growth in private education, affecting markets across the GCC:
Shift towards Private Schools: At $11,000 per student per annum, private school spending is higher in the GCC region than in OECD counterparts. Parents across the region are becoming increasingly willing to pay for private schools that provide differentiated offerings and improved outcomes—and this trend will likely grow now that governments are beginning to publish performance ratings for all schools.
Tuition Fees: Across the GCC region, tuition fees for private education will continue to rise 2 per cent to 4 per cent per year. However, tuition fees are rising at a slower rate than in recent years owing to tighter regulations and an economic environment that limits consumer spending. Expatriates are also facing increased financial pressure as employers have begun to scale back their tuition-reimbursement packages. Some governments have placed caps on tuition hikes: in recent years, Kuwait has limited tuition hikes by 0 per cent to 3 per cent, and the UAE and Bahrain recently set a limit of 5 per cent, linked to the education inflation index and schools’ performance.
Population Growth: The student-aged population (age 3 to 17) is expected to grow at a Compound Annual Growth Rate (CAGR) of 1 per cent to 3 per cent. The expatriate population is expected to grow even faster than national populations, and expatriates attend private schools.
Enrolment Growth: Private school enrolment at the primary level and above is high throughout the GCC and expected to remain steady. Enrolment rates at the preschool level (ages 3 to 6) are growing, most notably in Saudi Arabia, which has the largest overall population in the GCC region and the lowest kindergarten enrolment rate (less than 20 per cent kindergarten enrolment in Saudi Arabia versus 60 per cent to 90 per cent in the rest of the GCC).
“New developments, such as evolving demographics, government interventions, and regulatory issues, are reshaping the complex private education market within each country in the GCC. As the potential for growth in the private education market varies significantly from country to country, it is important for investors to understand the size of each market and its potential for growth in the coming years,” said Dr Leila Hoteit, partner and managing director at The Boston Consulting Group.
Saudi Arabia’s private schools will account for the lion’s share of growth in the GCC region. The private K-12 education market is poised to more than double over the next five years. This growth will be fuelled by several factors including a shift towards private schools, expatriate population growth, enrolment growth and tuition increases. In line with Vision 2030, Saudi Arabia’s Ministry of Education launched an ambitious strategy to raise the quality of education, transform youth mindsets, and strengthen the economy.
The number of students in private schools is estimated to increase from 18 per cent in 2017 to 30 per cent by 2023. Ahlia schools, which are private schools delivering the national curriculum, will start to differentiate and complement their offering with international curricula, new learning resources, and extra-curricular activities. Additionally, Saudi nationals are now allowed to enrol in private international schools and the country is allowing 100 per cent foreign ownership of companies in the education sector.
Enrolment growth in Saudi Arabia is around 20 per cent at kindergarten level, which is relatively low when compared to the rest of the region; however, Vision 2030 and the Ministry of Education has set ambitious targets for kindergarten enrolment. Moreover, as the expatriate population in the Kingdom continues to grow, families are more likely to enrol their children in quality private schools. Private school fees are also likely to rise faster than inflation as school offering become more sophisticated in terms of curriculum, learning resources, teacher qualifications, and extra-curricular and ancillary services.
Red tape and bureaucracy are not uncommon across GCC markets, and processes to obtain permits and licenses in Saudi Arabia can be inefficient and time-consuming. There is also a shortage of qualified teachers due to strict Saudiazation laws, and public schools offer favourable salaries, benefits, and hours compared to private schools. The government is making an effort to address these challenges, but change takes time. The Education Evaluation Commission (EEC), Saudi Arabia’s quality assurance agency, has already begun inspections of schools, and we expect that the commission will eventually make their outcomes available to the public. This information will likely motivate more families to enrol their children in private schools.
Saudi Arabia is still a relatively immature market, with few international schools, limited exposure to international curricula, and limited experience with international investors. Greater competition and consolidation in the private education market is expected. There are also significant opportunities for growth in Saudi Arabia given the announcement of recent mega-projects, such as NEOM.
“The private education market has become increasingly complex and competitive in recent years, particularly in mature markets such as the UAE—and these shifts have implications for investors. The dearth of private schools available in Saudi Arabia, coupled with government intervention that positively affects the private education market, will amplify the bullish growth expected in the sector,” said Maya El Hachem, Principal at The Boston Consulting Group.
“There is a strong need for high-quality private schools that offer a variety of curricula and fee ranges. We also expect to see greater consolidation in the private education market, increasingly sophisticated educational offering, and additional emphasis on educational support.” – TradeArabia News Service
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