Kuwait Times
Education budget equals 17.5 percent of total GCC fiscal budget
.
KUWAIT: Significant advancements have been made in the GCC education sector in recent years. Literacy rates and school enrollment have risen and are now at high levels. The average youth and adult literacy rates are above 97 percent and 90 percent, respectively. The gross enrollment rate (GER) across various education levels has improved in GCC in the past few years. Over the previous decade, the education sector has gained prominence across the GCC nations. The sector has witnessed continual improvement and high investments (majorly from the government). Growth in the education sector became a key priority after the Arab Spring in 2011.
Preference for private schools, increasing use of technology and popularity of international curriculum schools are the emerging trends in GCC education sector. The demand for private schools in the GCC region has increased over the last decade from both expat and locals. It is perceived that private schools, particularly those with international curriculum offer better quality of education. The sector is observing growth opportunities in the way of the pipeline of new education projects (schools and colleges), e-learning market attracting investors and PPP in the education sector. Favorable demographics, private sector participation, rising income levels, and inclination toward better quality of education are the growth drivers providing the much needed impetus to the sector. However, the sector faces challenges in the form of shortage of skilled teachers, relatively low tertiary enrollment rate, high cost of construction and education quality not being at par with the global standards. Such challenges have led to an imbalance between the skills imparted and the job market. This demand supply mismatch is being bridged by the government initiatives and increased focus through various reforms and investments in the sector.
Educational expenditure driven by government
The GCC governments have been allocating a huge share of their budgets to the education sector. Although falling oil prices have impacted their major revenue stream, Oman, Saudi Arabia, and the UAE have allocated more than 20 percent of their total 2016 budget to develop the education sector. A high budget apportion to the education sector indicates that the government is concentrated on the overall development of the education system. This is expected to yield a skilled workforce better suited to the employment requisites and address the issue of unemployment. The proportion is much higher in the GCC countries than in developed countries such as Germany, the UK and the US. In 2016, Saudi Arabia (22.7 percent), the UAE (21.2 percent), and Oman (21.0 percent) made the highest allocation to the education sector as a percent of their GDP, while Kuwait (15 percent), Qatar (10.1 percent) and Bahrain (9.2 percent) made the lowest. When compared to the developed countries such as the US (15.2 percent), the UK (11 percent) and Germany (5.2 percent), the top three GCC countries spent much higher on education. However, rationalizing the information in terms of expenditure per student, it seems that GCC spends less than many of the developed countries but higher than the OECD average; approximately $11,000 per student against an average of $9,000 for OECD countries but below the expenditure of $12,000 for Australia and around the same for the US.
GCC quality of education not at par with developed countries
The quality of education in the GCC countries is not at par with developed nations, majorly in terms of qualification of staff and curriculum drafting. In terms of quality of education, only Qatar and the UAE are at par with developed nations. The World Economic Forum’s Global Competitiveness Report 2016-17 ranked Qatar, the UAE and Bahrain high in terms of quality of educational system as compared to other GCC nations. The primary education enrollment rate was high in all GCC countries, whereas the secondary education enrollment rate was high in Saudi Arabia, Qatar, and Oman but relatively lower in Bahrain, Kuwait, and the UAE. The region is witnessing an increase in students enrolling in universities for higher education abroad. The students and their parents seek higher education quality as well as the campus experience that universities in the Middle East do not provide. All GCC countries ranked low in terms of the tertiary education enrollment rate. Qatar, Bahrain and the UAE were among the top countries in terms of quality of management schools, while the rest relatively lower. The UAE, Qatar, and Bahrain ranked high in terms of Internet access in schools, whereas the rest of the countries ranked relatively lower. In terms of the pupil-teacher ratio (for primary education) however, the GCC average stands better than other economies; for GCC the ratio stands very low at 12.3 as against 23.8 for the world, 25.7 for developing countries and 14.3 for the developed world.
Increased private sector participation is the need of the hour
The demand for private schools in the GCC region has increased over the last decade from both expats and locals. Public schools provide free basic education in GCC only to nationals and commonly do not admit expats. Hence, there has been a gradual increase in demand for private schools with the growing number of expats in the region. Qatar and the UAE have led in alluring private investors to the education sector, mainly because they are home to a relatively large expat community. Both Qatar and the UAE are emerging as the centers for higher education as they have a large number of international schools/universities and educational institutes as well recognized for their encouraging investment climate. About 1mn students pursued education in the UAE in 2015 (4 percent CAGR during 2010-15). Private schools dominate the country’s education sector, accounting for about 71 percent of the total students enrolled in the system. The number of students attending private schools expanded at a CAGR of 5.5 percent during 2010-15. Despite the public schools offering free education, nationals as well as expats prefer private schools, mainly because of better quality of education they provide. Private schools are also perceived to be imparting better quality of English among students. The governments are increasingly supporting the private sector through investor-friendly policies and resolution of challenges faced. Their aim is to raise private sector involvement to improve the education system. Gradual growth in the expat community majorly contributed to an increase in private schools in Saudi Arabia.
Favorable demographics are key to demand growth
The GCC region has among the world’s highest population growth rates. GCC’s population grew at an average rate of 3.1 percent during 2010-15; it is anticipated to expand at a CAGR of 2.4 percent over 2015-2020 to reach 60mn. According to the United Nations Population Division (UNPD), around 40 percent of the estimated population in GCC was under 25 years in 2015. An improvement in birth rate and life expectancy of the nationals, along with increasing number of expats, has led to rapid growth in the population base in the region. A rapidly expanding school-and-college-going population base is expected to increase student enrollments, thus driving the education demand in the region. This augurs well for growth in the education sector in GCC. In addition, the region is attracting many international schools and universities to cater to the demands of the expats for the requirement of international curricula.
Rising income levels are keeping the demand buoyant
The GCC countries rank among the wealthiest in the world. In 2015, four of the six GCC nations (namely, Qatar, Kuwait, the UAE, and Saudi Arabia) ranked among the world’s top 10 richest countries, with Qatar standing at the top. This is majorly due to huge oil reserves and an expanding non-oil sector. Even though the recent slump in oil prices has impacted the revenues of the member nations, it is improbable to turn into a long-term phenomenon. Government spending would mostly be supported by diversification to non-oil sectors, large foreign exchange reserves, and fiscal measures such as the VAT implementation plan. A high level of personal disposable income, coupled with a strong inclination to spend on quality education, will be the greatest driver for growth in the education sector. According to IMF, GCC’s average per capita GDP (at current prices) forecasted at $26,458 in 2015 is estimated to expand at a CAGR of ~3 percent to $30,434 in 2020. The citizens enjoy several benefits such as free public education, free healthcare, and tax-free environment, among others; leading to a high personal income level among the population. A rising income level coupled with a strong preference towards quality education is most likely to boost the sector.
Strong government support and involvement has continued
Governments across GCC have been taking several initiatives to develop the education sector, in form of budget allocations, long term reforms, and development strategies. In its 2017 budget, Saudi Arabia allocated $53.3bn (the highest share, i.e., 22.5 percent, of the total expenditure) on education and training. To reform the Saudi education system, the King Abdullah bin Abdul-Aziz Project for Public Education Development (Tatweer) was established in 2007. The $2.4bn program, Tatweer intends to improve the quality of graduates in the kingdom. Saudi Arabia’s King Abdullah Scholarship Program (KASP), established in 2005, provided full funding support to thousands of Saudi national students to study abroad. KASP is projected to fund about 55,000 students up to 2020. In May 2014, King Abdullah approved a five-year plan valued more than SAR80bn ($21.3bn) for education sector development. As part of this plan, 1,500 nurseries would be built, 25,000 teachers would be provided training and educational centers would be established. As part of the government’s efforts to diversify income and cut public spending, the country also plans to privatize a few government schools and institutions. The kingdom anticipates increasing the number of students going to private schools from 15 percent to 25 percent. Government-owned Tatweer Buildings Company plans to form a PPP to construct and finance educational institutions at a cost of SAR45bn over the next five years.
The Kuwaiti government’s approach is to transform its education sector by developing the curriculum, encouraging efficient teaching, constructing distinguished universities, and stimulating higher education bodes well for the sector. The government has launched its second phase of the school education quality improvement project at the end of March 2015. Kuwait’s Ministry of Education and National Center for Education Development, along with the World Bank, brought into effect its five-year technical cooperation agreement concentrating on education reforms. The main agenda of the program was providing support to building capacity, improving the quality of learning and teaching, and supervising impact on schools and students. Besides this, the University City project is projected to enhance tertiary enrollments.
To build a top-class education system, the UAE government aims to invest significantly in improving the quality of education and schools, equipping schools and colleges with smart devices, and recruiting internationally accredited teachers. The MoE’s 10-year development strategy 2010-20 is aimed at providing students a high-quality curriculum and excellent teaching, improved student life, affordable and high-quality education, as well as promoting the national identity and confirming administrative effectiveness. The government’s AED1bn Mohammed Bin Rashid Smart Learning Program aims to deliver each student a smart tablet and provide superior 4G network connectivity by 2019. In June 2009, ADEC introduced a 10-year strategic plan to address the challenges in offering P-12 education.
Growth in tertiary segment indicates investment opportunities
There has been a significant improvement in the enrollment rates across different education levels in the last couple of years. Bahrain’s primary net enrollment rate (NER) is the highest at 96.9 percent, compared with the GCC average of 93.3 percent. Qatar’s secondary GER is 109.4 percent vis-à-vis GCC’s average of 100.8 percent (ratio is above 100 percent since it includes students whose age exceeds the pre-defined elementary age bracket such as repeaters). Saudi Arabia’s tertiary level GER is the highest at 61.1 percent against the GCC average of 31.9 percent. The region’s tertiary GER has been growing steadily over the years. This growth was primarily driven by the opening of internationals universities/ colleges and increased government initiatives. This indicates that the efforts by the government and its citizens to pursue higher education and develop skills in order to diversify their economy and fit in the global picture have been fruitful.
The E-learning market is a definite area to look into
Out of 143 countries in the world, the GCC countries were among the top 50 with the exception of Kuwait’s odd performance (72nd). Despite economic challenges, the GCC countries are increasingly investing toward modernizing their education system. To facilitate effective e-learning, the countries are gradually adopting information and communications technology. The Middle East’s e-learning market is expected to expand at an annual rate of 8.2 percent to $560.7mn over 2014-16. This bodes well for regional and global education suppliers. The highest growth is projected in Oman, Kuwait and Qatar. The share of the education sector in tablet shipments to the Middle East increased to 10.3 percent in the first half of 2014. Kuwait initiated the e-education program in 2011, which aimed at digitizing textbooks and rolling out e-learning products across schools. Dawrat.org, founded by Mohammad Alsuraye in Kuwait in 2011, has become a hub for GCC training courses and has launched short Arabic Moocs (massive open online courses) in marketing, business and photography.
Several innovative e-learning programs have been introduced in the GCC region. For example, the UAE’s Mohammed Bin Rashid Smart Learning Program is an integrated e-learning program aimed at shaping the new learning environment in schools. This five-year program worth AED1bn covers all government schools. In 2012, Saudi Arabia’s Ministry of Education (MoE) launched the Smart Schools Project worth SAR800mn wherein the classrooms would be equipped with modern techniques that would make learning easier, flexible and more enjoyable. Qatar’s Supreme Education Council launched an e-learning program to modernize its education system by integrating digital technology.
Ample opportunities for public-private partnerships (PPPs)
The fiscal position of GCC countries has weakened due to a drastic plunge in crude oil prices, leading to delays in several infrastructure projects. In addition, payment periods for many projects under construction have been extended. This scenario holds ample opportunities for PPPs in terms of operation, delivery, and financing of public infrastructure assets. The GCC governments are expected to turn to the private sector for financing the infrastructure projects. Social infrastructure sectors such as education provide innovation opportunities in the PPP domain. In fact the governments have already started encouraging enhanced private-sector contribution to the economy and also in diversification attempts. In February 2016, Saudi Arabia’s MoE launched a new initiative to encourage private sector participation in the education sector. It aims to increase the number of students in private schools from 15 percent to 25 percent over the next few years. The Director General of Abu Dhabi Education Council (ADEC) had acknowledged that PPPs were necessary to take the country’s education sector to the next level. He stated that partnering with private players to reform the education system was the most proficient way forward and was also part of the Abu Dhabi Vision 2030.
Shortage of skilled teachers is the chief drawback
With the expanding student base and a small pool of teachers, it is becoming difficult for GCC to attract qualified teachers. The shortage of qualified teachers is attributable to factors such as low teacher wages and insufficient school management. The private sector offers more economic benefits for teachers than the public sector. Teachers do not have the same social status and respect that they used to have in earlier times. This makes it harder to find and sustain quality teachers. A high percentage of the teachers in the GCC region are recruited from foreign countries. Most of these teachers are hired on a contract for 2-3 years. The schools incur more costs for visa fees, travel expenses, and housing. The costs have increased due to the rising cost of living in the GCC region.
Owing to the small pool of local teachers and a minor percentage of locals being interested in teaching, the GCC region primarily depends on expats to meet the shortage of teachers. The GEMS Group has launched initiatives such as Global Teacher Price, worth $1mn to inspire the young generation to join the teaching industry. Teach for Qatar is a program being run by the Qatari government that provides training and development to the graduates and professionals to teach in high-need classrooms and schools and to take up teaching as a round-the-clock career option. In spite of the measures being taken to address the shortage, the competitors offering higher incentives poach the skilled teachers. In the UAE demand exceeding the supply is a major challenge. A minimum of 14,000 teachers need to be hired over the next 4-5 years. Both the government and private players are implementing teacher-training programs to boost the workforce. Incompetently skilled teachers could negatively impact students’ academic performance, mainly due to unproductively delivered curricula.
High construction costs for schools is another barrier to entry
The cost of construction in the GCC region has risen due to an increase in the wages of contractors and workers as well as in the prices of building and construction materials, such as steel and cement. The high cost of setting up of a school and university/college is a major obstacle. The cost of construction in Qatar is the highest across GCC. The Doha Port in Qatar has a restriction on the volume of imports, which has further driven up costs and made the construction costs in Qatar the highest in the world. The government has established a committee to prioritize major projects in Qatar, review costs and propose alternative financing and contracting methods. A few economists believe that the drop in oil prices may be a silver lining for the construction industry in the Gulf region. Since the governments now have to prioritize their major projects, the demand for labor and raw materials may decrease, affecting their prices.
Enrollment rate in higher education
Enrollment in tertiary education remains low in the GCC countries as compared to developed nations (GER for tertiary education in the US is 86.7 percent and Germany is 65.5 percent), reflecting a disparity between skills imparted to graduates and labor market requirements. The education sector in GCC is yet to align itself with the requirements of the private sector. The skill gap is a reason for the increasing unemployment among the youth of this region. This, in turn, demotivates students for enrolling for higher education. Having recognized this gap, the GCC governments are pursuing for the enhancement of higher education. All the GCC countries have quadrupled their investments in higher education in the last ten years.
New projects in the pipeline
The GCC region has a number of major projects in the pipeline. Government investments along with private sector support, have led to a rise of projects in the region’s education sector. Saudi Arabia accounts for the highest number of projects, followed by Qatar, the UAE, and Kuwait. In addition, a number of new schools and colleges are constructed across the region as a part of the Governments strategic plans to increase student capacity. According to the Director-general of the Knowledge and Human Development Authority (KHDA), Dr Abdullah Al Karam, around 15-20 new private schools will open in Dubai during the academic year 2016-17. Under its Future Schools Project, the ADEC is set to open 100 public schools by 2020. To address the education quality issue, the Kuwaiti government, in partnership with the private sector launched the Kuwait Schools Development program to develop high-quality schools. In the first phase, it would develop nine schools (one middle school, three elementary, and five kindergartens), including accommodation for school faculty and an Olympic-size swimming pool. To boost Qatar’s educational infrastructure, the Public Works Authority (Ashghal) awarded contracts valued more than $343mn for constructing 17 new schools and six kindergartens. Work is already in progress for 38 kindergartens and schools a cost of $474mn. Lusail City Real Estate Development Company signed an agreement with four private schools to expand their branches in the new city in Qatar. A total plot of 75,000 square meters has been allocated to set up these schools. In the long run, the city plans to build 26 schools with a capacity of 26,000 students. Bahrain University’s satellite campus is being planned on land near King Hamad University Hospital in Muharraq and is likely to open as early as 2018.
The post Private sector to play bigger role to cope with growing demand for private schools – Global report appeared first on Kuwait Times.