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Wednesday, 16 October 2019

Egypt: Excellent opportunities for investing in education

A recent study by the multinational professional services network of PricewaterhouseCoopers (PwC) concluded that Egypt offers excellent opportunities for investors and education providers seeking a foothold in the MENA region.

Sherine Abdel-Razek , Friday 3 May 2019
Technology
File photo: Technology is crucial to the future of Egyptian education.( AFP)
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The Ministry of Education and Technical Education (METE) is embarking on a 12-year overhaul of the education system at an expected cost of $2 billion.

Though Egypt has 20.6 million students enrolled between kindergarten and grade 12 and 2.4 million students in higher education, it lacks the resources to finance the ministry’s ambitious plans and the percentage of total expenditure on education has declined in recent years from 12 to nine per cent of the budget.

Understanding Middle East Education, a recent study by the multinational professional services network PricewaterhouseCoopers (PwC), concluded that Egypt offers excellent opportunities for investors and education providers seeking a foothold in the MENA region.

The report highlights the main features of the local education scene, stressing the fact that 90 per cent of pre-university students attended public schools and 94 per cent of higher education students were enrolled in public universities during the academic year 2016-2017.

Enrolment rates are above the global average, in a system where the government is the largest education provider by far. Over the last decade enrolment for school age children grew by 32 per cent. Enrolment rates in primary and secondary stages reached 97 per cent and 81 per cent respectively, well above the global average of 89 per cent and 66 per cent.

While the statistics appear positive, the rapid growth in enrolment has negatively affected learning outcomes. “It placed increasing pressures on school facilities and on some occasions necessitated the hiring of insufficiently qualified teachers,” says the report.

The average class size in Egypt is nearly double global benchmarks, particularly at the primary stage. Such high densities burden infrastructure, limit the students’ chances of obtaining individualised learning experiences and contribute to poor learning outcomes.

While Egypt has one of the highest enrolment rates at primary level it consistently ranks amongs the poorest performing countries in education quality. The World Economic Forum’s Global Competitiveness Report 2017/18 ranked Egypt 130th and 133rd in the quality of primary education and of overall education system among 137 countries surveyed. It was ranked one before last among 61 countries when the PIRLS measure was used to assess reading skills among grade 4 students.

So will the private sector step in?

The report says Egypt offers great potential for investors in the education system and cited several reasons for this: a sustainable demand for education due to steady population growth; a need for investment to bridge skills gaps through vocational training; and, most importantly, government willingness to accept greater private sector involvement so as to relieve budgetary strains.

Egypt has a highly subsidised education system. Constitutionally, the government is obliged to provide state-funded compulsory education until the end of the secondary stage or its equivalent. This has resulted in an increase in annual public expenditure on education from LE81 billion in 2013/2014 to LE107 billion in 2017/18.

In 2017, 51 per cent of Egyptians were under 25 and according to UN forecasts, the growth in the numbers eligible for G1-12 and higher education will accelerate over the next decade placing further pressure on already struggling budgets.

While the government’s economic reform programme is beginning to show yields it has had an adverse impact on real income and inflation remains high.

“To avoid overburdening the fiscal budget and the potential long-term negative repercussions of inflation on education provision, it is anticipated that the [government of Egypt] will take the necessary actions to support an increase in private provision in the education sector,” says the report.

Perhaps more pressing is the need to invest in bridging existing skill gaps. Whereas the average unemployment rate in 2017 was 12 per cent, among 15 to 29 years it reached 33 per cent.

education

In 2017, 34 per cent of the unemployed had undergraduate or postgraduate degrees, the vast majority in subjects that prepared them for white-collar jobs. Yet employment opportunities are increasingly blue collar, revealing a disconnect between the education system and the skills needed to find a job.

Students included in the Population Council’s Survey of Young People in Egypt (SYPE) in 2009, and again in 2014, referenced apprenticeships and on the job training rather than formal education as their main source of skills acquisition.

The report says “social and cultural pressures emphasising the importance of obtaining a university degree have been present since the 1950s… primarily due to a longstanding public sector employment guarantee for university graduates which was introduced in the 1960s and abolished in the late 1990s.”

Public universities get the lion share, 94 per cent, of higher education students. Public universities in Egypt are the largest in the region and free of charge but increased demand has left them severely cash-strapped.

“The majority of universities’ resources are allocated to current expenditure, rather than capital, which suggests that internal efficiency in higher education spending could be improved.”

High enrolment rates combined with budgetary limitations suggest the government will be happy to facilitate more private sector involvement in higher education. 

Public universities, which currently receive between 85 and 90 per cent of their budget from the government, need to introduce new ways to finance their operations. The report suggests establishing relatively high fee producing programmes within the credit hour system, partnerships with industry and selected research projects.

Greater private sector investment in higher education has been facilitated by a 2018 law regulating the setting up of International Branch Campuses (IBCs) of foreign universities in Egypt. The law came into force in August and streamlines the licensing requirements for establishing a branch of a foreign university or entering into partnership with an Egyptian university to grant a joint degree. IBCs enjoy all investment guarantees stipulated in the 2017 Investment Law.

The report also reviewed technical and vocational education, noting that “it is perceived by many Egyptians as a ‘last resort’ for academically low-performing students who are denied access to the general education, a pre-requisite for university enrolment” despite the fact that the labour market shows a clear need for a greater focus on vocational and technical education.

Formal Technical and Vocational Education and Training (TVET) is provided through preparatory, secondary technical and vocational and higher education in technical colleges and Institutes of Industrial Education (IECs). The system is hopelessly fragmented, with 17 ministries involved in vocational training.

A closer look at the TVET education in Egypt reveals that in most specifications enrolment in public schools is much higher than in private schools. The only area in which the private sector is the lead provider is tourism and hospitality.

The report concludes that “while private sector providers enhance parent choice in terms of quality, and relieve governments of capacity pressures, it is essential for the government to maintain a balance between public and private education to ensure equitable access to education for all.”

*A version of this article appears in print in the 2 May, 2019 edition of Al-Ahram Weekly under the headline: Investing in education

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