Education investment as a future focus

Whether we live in Africa or not, all of our futures will be affected by the success or failure of education on the continent. Africa has the fastest-growing and youngest population globally — nearly 800 million Africans are under the age of 25, with 677 million between ages three and 24 — so accelerating investment in education is vital for countries to take full advantage of their human capital.

This young population can be a powerful source of growth and progress in Africa and the world if the children and adolescents receive the right opportunities to thrive and develop their full potential. However, there are access, quality, and relevance challenges within the education sector.

Since 2000, millions of African children have benefited from better access to education with limited learning because the teaching can be poor African countries have made efforts to improve access to education. The proportion of primary-school-age children who are not in school has halved — from 35 percent in 2000 to 17 percent in 2019.

In September 2021, in collaboration with UNICEF, the African Union released the report entitled “Transforming Education in Africa,” an evidence-based overview of education in the region.

According to the report, in 2019, approximately 105 million children of primary and secondary school age were out of school in Africa – this represents 41 percent of the global number. Regionally, West Africa accounts for the highest number of out-of-school children: two out of five out-of-school children in sub-Saharan Africa live in West Africa.

East Africa follows with 34 percent of Africa’s out-of-school children. This is an enormous challenge because, without a good education, Africa’s economy and its people will continue to struggle to compete in a rapidly globalizing world. The private sector is an essential piece in meeting this challenge. Despite these astounding figures, the upside is that one-in-five children in Africa (more than 41 million children) are currently enrolled in private schools.

Most importantly, many of the known private schools serve parts of the population that cannot afford much else. In the next decade, an additional 25-million-plus children are expected to enroll in private institutions, so that one in four children from all sorts of backgrounds will be enrolled in private schools by 2021. This creates an enormous opportunity for investors: $16-18 billion over the next five years.

The private sector already contributes significantly to education in Sub-Saharan Africa, educating an estimated 21 to 25 percent of pupils. Reaching a bigger target will require billions in private education investment. Most of this investment is out of reach for traditional ventures.

Capital and private equity investors because it is in less formalized or consolidated sectors and requires more risk-tolerant capital. As we have seen in a few countries, there are opportunities for impact investors, philanthropists, and entrepreneurs to drive innovation and generate impact.

An article written for Stanford Social Innovation Review unpacks the question: “Is Private Education in Africa the Solution to Failing Education Aid?” It outlined the available opportunities within the traditional core education delivery (such as education delivered to students from early years to higher education, typically in a classroom setting) and the ancillary services that support and complement core delivery, such as teacher training and tutoring. Some examples of these segments and leading innovations highlighted in the article by Faruqui, Laad, Abdo, and Thapar include:

• Low-Cost Primary Education (more than $8 billion to $8.2 billion in investment is still required): This segment has social and economic potential for investors. For example, in South Africa, LEAP science and maths schools provide free education to 1,500 qualifying students across six schools.

• Spark Schools has brought a low-cost model that has seen the venture create an opportunity for more students to access education, especially in urban centers. SPARK Schools is a chain of affordable private schools in South Africa that uses a blended learning strategy for elementary school students. SPARK Schools was created in 2012 in Johannesburg, South Africa, as a group of independent and private schools committed to providing students with an internationally competitive education. Its most recent round of funding is an unknown sum in 2021 from Creadev, Finnfund, and Imaginable Futures. SPARK Schools has obtained $11.7 million in investment to renovate and expand its structures.
• Omega Schools enrolls about 20,000 students across 38 schools in Ghana and Liberia with a “pay-as-you-learn” model, which meets the cash flow needs of very low-income families. The non-profit, Promoting Equality in African Schools, is a low-cost school network in Uganda and Zambia that raises funds to build schools and then uses a mix of government subsidies (provided through a public-private partnership), lunch fees, and boarding fees to run 30 secondary schools.
• In Francophone Africa, Cameroonian businessman and investor Cyrille Nkontchou is the founder and chairman of Enko Education, an African private school business. Enko presently operates 14 schools across nine countries.
• In Zimbabwe, the set-up of Montessori education through an African Montessori school, Mutendi Montessori, encourages the Montessori education model at a lower cost than its international counterparts. The school also offers a teacher’s training program, collaborating with Montessori Center International and creating both student and teacher development capacities.
• Equally so, the Indaba Foundation in South Africa is a non-profit geared at growing more Montessori educational facilities in more locations in South Africa for low-income households. Indaba Foundation heavily invests in the teachers as much as it invests in the children.
• Bridge International Academies educate students from disadvantaged backgrounds using the national curriculum. This is a network of nursery and primary schools funded to the tune of $27.8 million. The Academies provide extensive teacher training and cutting-edge wireless technology and are completely free for children. The startup has expanded its reach with other schools to serve more disadvantaged children around Africa as a result of the funding.

• Higher Education: Nearly 30 percent of African higher education enrollments are in the private sector. Contact Higher Education’s (over $2 billion to 2.2 billion) demand-driven high-growth, high-margin, and revenue potential make this in-person education segment attractive for commercial and strategic investors and impact investors. Education providers are leveraging this opportunity. For example, the African Leadership University aims to graduate three million leaders across 25 campuses by 2060. Distance higher education ($0.5 billion to 0.7 billion) presents opportunities to expand access through online offerings. For example, the Management College of South Africa is the region’s largest distance education provider and enrolls more than 10,000 students, focusing on the mid-priced segment.
  • Valenture Institute is a virtual private high school dedicated to equipping students with the information, skills, and courage necessary to influence quality improvement in the quest for a more stable future. It was created in 2019 and is headquartered in the United Kingdom but operates out of South Africa at the moment. The startup wants to capitalize on the present climate’s increased demand for online education. The institute got $7 million in Series-A funding from GSV Ventures in 2020. The funds will assist in the establishment of additional campuses in South Africa that incorporate online education, learning coaches, and peer involvement.
  • Founded in 2013, iXperience works alongside high schools, universities, and businesses to create progressive educational programs and empower students with industry-specific skills. In May 2021, Kalon Venture Partners and Caleo Private Equity invested $2.5 million in the firm. The cash will be used to grow the company’s personnel and develop an innovative technology platform.

• Technical and Vocational Education and Training (more than $0.5 billion-$0.7 billion): This kind of training can play an essential role in addressing the high youth unemployment and the skills gap in sub-Saharan Africa. And as a nascent sector, it is more suitable for impact investors who seek a longer-term return on investment. Innovative models that target education for employment, such as demand-driven models like Andela (which supplants a traditional degree with on-the-job training in the tech sector in Kenya, Nigeria, and Uganda), hold promise for the sector.
  • Zedny is Egypt’s Arabic e-learning website, featuring more than 200 courses online, 400 animated video presentations, and over 5000 hours of study. The company provides services throughout the Middle East and aims to help individuals improve their overall business skills. It strives to enhance Arab human capital by offering its services at a quarter of the price of offline equivalents. The firm was founded in 2018 and secured $1.2 million in pre-seed funding in June 2020.

• Teacher Training (more than $0.3 billion-$0.4 billion): Sub-Saharan Africa needs to recruit and train 4.6 million new teachers while addressing serious quality concerns about existing ones. Programs like Partners for Possibility are helping strengthen leadership and management capacity by uniting under-resourced school principals with seasoned business leaders.

• Education Technology (more than $1 billion-$1.2 billion): Private models change the landscape for distribution and student engagement, and they are evolving. In principle, technology can reduce the need for capital investment in core and ancillary services and widen access at a lower cost. However, developing new platforms, populating them with content, and building infrastructure requires investment. Education technology (edtech) models are fundamentally innovation-driven, and, as such, they hold potential for more risk-seeking capital from early-stage investors and impact investors. Innovative distance-learning programs like MGCubed are leveraging technology (in their case, solar-powered equipment) to enable math and English learning in rural communities in Ghana. Kepler in Rwanda is a new university model that leverages massive open online courses to offer U.S.-accredited degrees for a fraction of their typical cost. Initiatives such as Eneza Education, a subscription-based, short message service platform that provides learning resources based on the national curriculum, are reaching more than one million students across Kenya, Ghana, and Tanzania.

1. uLesson A Nigerian edTech startup was founded in 2019 to reach secondary school children in Anglophone Africa. uLesson leverages mobile phones as an educational platform by utilizing a diverse set of courses and a community of tutors. Since its inception, the startup has amassed over one million app downloads and garnered more than $10 million in funding, making it one of Africa’s best-funded education technology startups. uLesson today serves learners in Nigeria, Ghana, Sierra Leone, Liberia, and The Gambia, although its advancement aims to center on East and Southern Africa.

Education is a vibrant private sector, particularly when operating in an engaged, flexible, and concordant relationship with the government, which can help drive access, quality, relevance, and innovation in the education sector.

There are many arguments against private education in Africa. Some of these are that engaging with the private sector brings limitations and consequences, including risks of variable quality and inequities in the provision of services, competition with governments for resources such as available teachers, and certain kinds of financial risks for the player that are not present in the public sector.

Ultimately, collaboration creates a significant opportunity for governments to harness the skills and resources of the private sector to improve access to and the quality of education in their countries through policies and regulations that support such collaborations.

The World Bank presented the “Human Capital Index (HCI),” which captures the productivity and economic potential of a country’s population. It combines measures of child survival rates, access to education and its quality, and health outcomes. Studies have shown a solid relationship between the values of this index and growth outcomes. Those results are quite intuitive.

Without a healthy, educated, and resilient population, countries cannot compete effectively in the world economy. This will become increasingly true in the coming years as technology is changing the nature of work, and the frontier of skills is moving rapidly, bringing both opportunities and risks.

The HCI results for Africa caused concern. Twenty-five of the bottom 30 countries in the world are in Africa. Africa’s education system is in crisis, with children out of school, low completion rates, and weak learning outcomes.

Africa’s greatest resource is its young people, with their energy, creativity, and resilience. The 21st century could produce an African renaissance if governments and their development partners prioritize investing in people, especially the youth.

Ensuring that Africa’s youthful population is healthy, educated, and well-equipped for the future is the best way to eradicate poverty in Africa and contribute to the world’s stability and prosperity.

Ultimately, as we see the growth in other industries, it becomes a critical issue that investment in education starts increasing because unless Africa has a healthy and educated population, it will not succeed in attracting enough quality investment to close the infrastructure gap and institutional and governance reforms will continue to yield disappointing results.

Tsitsi Mutendi is a co-founder of African Family Firms, an organization that aims to facilitate the continuity of African family businesses across generations. She is also the lead consultant at Nhaka Legacy Planning and the host of the Enterprising Families Podcast.