growth potential of عﺎﻄﻘﻟا ﻲﻓ مﺎﺴﻳﻹا private education
TRANSCRIPT
الإيسام في القطاع الحكومي بالمملكة
العربية السعوديةقيــــاس فعــاليــــة وكفــــــاءة
الممـــارســــــات الحــــــــالــيـــــة
Growth Potential of Private Education in Saudi Arabia
SEP. 2018
By Strategic Gears Management Consultancy
22 2
المقدمةوالملخص التنفيذي
العودة إلى قائمة المحتويات3
Table of Content
Executive Summary ...........................................................................3
Introduction ......................................................................................... 6
Regional comparison of private education market ............... 8
Challenges facing Saudi Education Market ...............................11
Private education potential in Saudi Arabia ............................15
Conclusion ...........................................................................................18
32 3 3
المقدمةوالملخص التنفيذي
العودة إلى قائمة المحتويات3
Executive summary
44 4
Saudi Arabia’s private education market is set to more than double in value over the coming few years. The growth in the market is being fueled by an increase in population, the government’s Vision 2030 education initiatives, and changing consumer (parents) mindsets. Below are the key conclusions and highlights of the report:
Executive summary
2020
2018 2025
2018 2025
2021 2022 2023 2024 2025
13%
3.5%
2025 980
2.1 Millionnew school seats will be neededwill be for private schools
Current private school enrollment
new private schools will be needed
over
534,000
15%
4.3
5.7
Expected private school enrollment
Gulf benchmark
Saudi Arabia scores comparatively low on the global Quality of Education Index
Annual increase in the total number of students in Saudi Arabia
By the year
Major challenges
facing Saudi education
market
Quality of Curriculums
Quality and Recruitment of
Teachers
Involvement in Extracurricular
Activities
Kindergarten Enrollment Rates
1 2 3 4 5 6 7
Out of which
54 5 5
The government has set a goal to raise
to
Saudi Arabia's international test scores in mathematics and science are low and decreasing. In order to reverse this trend, national curricula must be drastically improved or more international curriculums must be adopted.
The quality of teachers in schools is still low
in 2016 10 hours18 hours
15%
14.9%
55%2016
The average number of annual professional development hours completed by teachers
The government has set a target involvement by the year 2020
by the year 2020
Only
of Saudi students were involved in extra curricular activities
Kindergarten enrollment rates remain the lowest in the GCC at
Kindergarten enrollment rates are expected to reach
13%SR
2013 2017
in the year
to reach
17% by the year 2020, far from the governments
27.2%target of
Consumer spending on education increased by 13% over the past 5 years in Saudi Arabia, indicating the growing preference given to a quality education.
66 6
Introduction
76 7 7
The Kingdom of Saudi Arabia is undergoing rapid changes in many different Industries due to its Vison 2030 initiatives. One such industry is the education sector, specifically the Private K-12 market which is set to more than double in value from $5 Billion currently to over $12 Billion by 2023.
Education plays a key role in achieving Saudi Arabia’s Vision 2030 targets. Improving the access and quality of education would create a thriving economy by enabling the population to meet growing labor market demands. Furthermore, it would create a vibrant & ambitious society who are socially responsible and able to lead a fulfilling life.
In 2016, the Saudi government developed the National Transformation Program 2020 to fulfill some of the objectives of Vision 2030. As part of the plan, the ministry of education was tasked with 8 key objectives to transform the education industry in Saudi Arabia, which in turn would strengthen the economy and provide the Saudi citizens with the key skills to become more competitive in the local and global labor market.
As it stands, there are approximately 7.7 million students in Saudi Arabia, out of which 6.7 million (87%) attend public schools and 1 million (13%) attend private schools. There are a total of 30,625 schools in Saudi Arabia, out of which 26,248 (86%) are public and 4,377 (14%) are private. Between the years 2013 and 2017, the number of private schools grew by 13%, while the number of public schools grew by 1%.
Certain factors are affecting the education landscape including the governments push for privatization, the need for overall improvement in the quality of education, and consumers growing preference for private schools that offer value for money.
In this report we focus on private education in Saudi Arabia by looking at the overall GCC private education market and Saudi Arabia’s position in it, challenges facing the Saudi education market that need to be addressed, and the size of the opportunity for the private education market.
Introduction:
88 8
Regional Comparison of Private Education Market
98 9 9
Saudi Arabia’s current private education market is valued at $5 Billion, only slightly greater than the UAE’s which is at $4.3 Billion. Given that Saudi Arabia’s population is more than 3 times larger than the UAE’s indicates the huge potential for growth. Kuwait’s market stands at $1.2 Billion followed by Oman at $1 Billion respectively. Given its small population, Bahrain’s private education market size is the smallest in the GCC at $0.4 Billion.
The UAE has the highest private school enrollment in the GCC at 74%, while in Saudi Arabia public schools dominate, leaving only 13% enrollment for private schools. The government of Saudi Arabia is aiming to push private school enrollment up to 25% by the year 2020.
When it comes to private international schools, Saudi Arabia only has 7 international schools per 1 million people, while the GCC average is 31 international schools per 1 million people. This indicates the huge potential that the Saudi private education market has, particularly for high quality schools that offer international curriculums.
Dubai and Abu Dhabi are the top two cities in the GCC with the highest number of international schools. Riyadh and Jeddah on the other hand, have a significantly lower amount of International Schools.
Source: Saudi MoE; UAE MoE; Kuwait Central Statistical Bureau; Bahrain MoE; World Bank
Source: International Schools ConsultancySource: SG Analysis; International Schools Consultancy; World bank
Regional Comparison of Private Education Market:
74
26
UAE
35
65
Kuwait
32
68
Bahrain
23
77
Oman
13
87
KSA
Figure 1: Private vs. Public School Enrollment (%)
Private Public
120
100
80
60
40
20
0
!
!
!
!
!
!
!
!
!
7
31
35
30
25
20
15
10
5
0
Saudi Arabia GCC Average
Figure 2: Number of International Schools (Per 1 Million People)
281
Dubai
151
Abu Dhabi
83
Riyadh
82
Jeddah
Figure 3: Number of International Schools in various cities
1010 10
It is important to note that while the GDP per capita for both Saudi And UAE has dropped over the past 5 years, consumer expenditure on education for Saudi Arabia has risen by 13% over the same period and has decreased for the UAE by 18%.
Case Study: United Arab Emirates vs. Saudi Arabia
9.3 Million
UAE Saudi Arabia
8.1 Million (88% of total)
$4.3 Billion
$7 Billion
$4,600
-British-IB
32.3 Million12 Million (37% of total)
$5 Billion
$12 Billion
$4,400
-Saudi-American
Expat PopulationTotal Population
Current Private education market value
Expected 2023 market value
Prevalent Education Systems
Average tuition fee per year (Private schools)
Figure 4: Consumer Expenditure on Education (USD Per Household)
5,000
4,000
3,000
2,000
1,000
02013 2014 2015 2016 2017
UAE Saudi ARabia
Source: Euromonitor
UAE and Saudi Arabia have completely opposite education markets. Due to its high expatriate population and higher income levels, the UAE has an oversupply of International Schools that offer premium level quality. Because of this, the major challenge facing the UAE education market is student retention, as tuition prices have reached an unsustainable level. As a result, the UAE government has recently halted an increase in tuition prices.
Saudi Arabia on the other hand has a low amount international schools, since much of the expatriate population is of a low income level and Saudi citizens weren’t allowed to attend international schools until a few years back. When compared to the UAE, Saudi Arabia’s education market faces more fundamental challenges such as the quality of curriculums and teachers which needs to be addressed first if the country aims to build a thriving knowledge based economy.
1110 11 11
Challenges facing Saudi Education market
1212 12
Challenges Facing Saudi Education Market:
Saudi Arabia’s education sector faces challenges on many fronts including quality of education, quality and recruitment of teachers, involvement in extra curricular activities and kindergarten enrollment. These challenges must be addressed in order to reach the ambitious targets set by the government to reach high international standards in education. Below are the highlights of each challenge:
1.Quality of Education
One of the aims of Saudi Arabia’s Vision 2030 program is to build a thriving economy and a fundamental part of that is to improve the access and quality of education.
Due to outdated curriculums and low quality of teachers, Saudi Arabia generally ranks low on global education rankings. According to the World Economic Forum, Saudi Arabia’s overall quality of education scores 4.3 (Out of 7) on the global index scale, significantly lower than the GCC benchmark of 5.7 and even farther away from the International benchmark of 6.1.
*TIMMS = Trends in International Math and Science Study TIMMS is conducted by the International Association for the Evaluation of Educational Achievement
International test scores for Saudi Arabia in math and science (TIMMS)* dropped significantly between 2011 and 2015. 4th grade and 8th grade math scores dropped by 7%, while 4th and 8th grade science scores dropped by 10%. In order to improve the scores, significant efforts must be made in either upgrading the national curriculum or adopting more international curricula.
4,3
5,76,1
7
6
5
4
3
2
1
0
Saudi Arabia GCC Benchmark Int. Benchmark
Figure 5: Quality of Education Scores (World Economic Forum-2017)
Scale of 1-7 (With 7 being best)
Figure 6: 4th Grade Math Figure 7: 8th Grade Math
0 200 400 600 800 0 200 400 600 800
Int. Benchmark
Regional Benchmark
Saudi Arabia(2015)
Saudi Arabia(2011)
Int. Benchmark
Regional Benchmark
Saudi Arabia(2015)
Saudi Arabia(2011)&
&!"#$٪&"#'()
Figure 8: 4th Grade Science Figure 9: 8th Grade Science
0 200 400 600 800 0 200 400 600 800
Int. Benchmark
Regional Benchmark
Saudi Arabia(2015)
Saudi Arabia(2011)
Int. Benchmark
Regional Benchmark
Saudi Arabia(2015)
Saudi Arabia(2011)&
& *('٪+(٪
Mathematics
Science
1312 13 13
2.Training and development of teachers
Teacher quality remains one of the biggest challenges for Saudi Arabia. In 2016, the average number of professional development hours completed by teachers annually was 10. Teacher quality is directly related to student outcomes and countries such as Singapore and Finland that are ranked among the best in terms of education quality place great emphasis on the quality and recruitment of teachers.
Teacher quality is also the number one selection driver among Saudi Parents, adding to its importance as a key component of education.
An estimated 183,600 teachers will be needed by the year 2030 and this presents a huge opportunity to train and develop local teachers who can enter the job market and reduce overall unemployment of the country.
Source: MoE; SG Analysis
10
25
100120
100
80
60
40
20
0Saudi Arabia (2016) Regional Benchmark Regional Benchmark
Figure 10: Average number of professional development hours completed by teachers
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2017 2030
2017
2030
Figure 11: Overall Needed Number of School Teachers
462,000
645,600
&
&
&
&
&
&
&
&
&
&0
10
20
30
40
50
60
70
80
Teachers'Quality
Arabic andIslamic Studies
Curriculum SchoolReputation and
StudentsSocio-economic
Class
Location andTransportation
School Price Safetyenvironment
ParentEvolvement
ExtracurricularActivities
TechnologyUsage
SchoolFacilities
Number one Selection Driver
Figure 12: School Selection Drivers for parents in Saudi Arabia
Source: MoE
Source: SG Research
1414 14
100
80
60
40
20
02016 2017
79 81
13 13.9 14.9 15.9 17
2018 2019 2020
Figure 14: % of Kindergarten Enrollment among Saudi Population Aged 3-6
Regional Benchmark Int. Benchmark Saudi Arabia
3.Extra-Curriculars Involvement
4. Kindergarten enrollment rates
Only 15% of Saudi students were involved in extracurricular activities in 2016. Extracurricular activities are one of the key selection drivers for parents and schools that offer strong programs can quickly differentiate themselves in the market.
Kindergarten enrollment in KSA is currently among the lowest in the GCC with only 13.9 % of the Saudi population enrolled in KG. Current estimates indicate that by the year 2020 about 17% of the Saudi population aged 3-6 will be attending KG, still significantly lower than the regional benchmark which is at 79%.
15
60 57
Saudi Arabia (2016) Regional Benchmark Int. Benchmark
80
60
40
20
0
Figure 13: Percentage of Saudi students involved in Extra Curriculars
Source: MoE
Source: Gastat; MoE; SG Analysis
To improve current education levels and tackle various challenges, the Saudi Ministry of Education has laid out an ambitious plan, as part of the National Transformation Program 2020, to reform the quality of education in Saudi Arabia with the help of the private sector. Some of the objectives of the plan include:
1) Improve the quality of education by upgrading curricula and teaching methods to improve math & science scores by 21% and reading scores by 7% by 2020.
2) Improve recruitment, training, and development of teachers by increasing the number of annual professional development hours from 10 in 2016 to 18 in 2020.
3) Improve students’ values and core skills by increasing involvement in extra curricular activities from 15% in 2016 to 55% by 2020
4) Provide education services to all student levels by increasing kindergarten enrollment from 13% in 2016 to 27.2% by 2020
Government Interventions:
1514 15 15
Private Education Potential in Saudi Arabia
1616 16
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Private
Public
Figure 16: Private vs Public Enrollment in Saudi Arabia
Target
11
89 88 88 87 87 86 86 85 85 8575
12 12 13 13
2020
87
13 14 14 15 15 1525
The past few years have seen an increase in the number of private schools as well as private school enrollment and it is expected to increase much further. This growth is being caused by 2 major factors including an increase in student population and an increasingly greater preference for private education.
Based on the public and private enrollment growth rate over the past 3 years, private enrollment is expected to reach 15% by the year 2025. Out of the 2.1 Million new seats that will be needed by 2025, over 534,000 should be provided by private schools. Given that the average private school size is 540 students, over 980 new private schools will be needed by the year 2025.
Reaching 15% private enrollment however is much lower than the governments target of 25% private enrollment by the year 2020. In order to reach the government’s target of 25% private enrollment, over 2,000 new private schools will be needed by the year 2020 to accommodate for over 1 million new private school students.
Private Education Potential in Saudi Arabia:
Enrollment Growth and Shift Toward Private Schools:
Student Population Growth:
Based on the average growth rate over the past three years, the total number of students in Saudi Arabia is expected to increase by 3.5% annually during the period 2018 to 2025. This indicates an additional 2.1 million seats (Public + Private) will be needed in the next 7 years to accommodate for new students.
12,000
10,000
8,000
6,000
4,000
2,000
02015 2016 2017 2018 2019 2020 2021 2022
3.5%
2023 2024 2025
Figure 15: : Student Population Growth in Saudi Arabia
7,450 7,277 7,530 7,792 8,064 8,347 8,641 8,946 9,263 9,592 9934
Source: MoE; SG Analysis
Source: MoE; SG Analysis
1716 17 17
The number of public schools in Saudi Arabia has increased by 1% over the previous 5 years. However, the number of private schools has increased by 13% in the same period, indicating a much greater demand for private schools.
Also, class sizes in private national schools have remained mostly steady at around 23-25 students per class while those in private international schools have more than doubled in a period of 4 years between 2012 – 2016 showcasing the increasing demand for such services.
Source: MoE; SG Analysis
Source: MoE; SG Analysis
!
!
!
!
!
!
!
!
!2+'.&%N!=#2F!+>!@8(8/6-1!
0
5,000
10,000
15,000
20,000
25,000
30,000
2013 2014 2015 2016 2017
Public Private
1%
13%
Figure 17: Increase in Public and Private Schools in Saudi Arabia
0
5
10
15
20
25
30
2012 2013 2014 2015 2016
Private National Schools Private International Schools
Figure 18: Increase in Class Sizes
Num
ber O
f Stu
dent
s Pe
r Cla
ssro
om
1818 18
Conclusion
1918 19 19
Conclusion:
Saudi Arabia’s private education market is set to more than double in value over the coming few years. The growth in the market is being fueled by an increase in population, government education initiatives, and changing consumer mindsets.
There are many fundamental challenges facing the education sector in Saudi Arabia, including quality of curriculums, teacher recruitment, and kindergarten enrollment to name a few. Such challenges, coupled with the governments vision and serious initiatives all indicate the big potential for current and new private schools, especially ones that can address the most important selection drivers and pass the nationalization requirements.
With the right entry strategy and school offerings, private education investors will be welcomed by a growing demand all while contributing to the governments Vision 2030 initiatives.
2020 20 132
About Strategic Gears:
Strategic Gears is a Management Consultancy based in Saudi Arabia, with presence in Riyadh and Jeddah, serving clients across the country. Strategic Gears' clients include the biggest public and private sector organizations, includ-ing a number of ministries, authorities, financial
institutions, and companies.
The company utilizes its top notch local consul-tants, and global network of experts to offer strategic solutions in the fields of public policy, analytics, product development, and strategic marketing, and have a proven track record with
multiple clients in each.
Disclaimer of Liability:Unless otherwise stated, all information contained in this document (the “Publication”) shall not be reproduced, in whole or in part, without the specific written permission of Strategic Gears. Strategic Gears makes its best effort to ensure that the content in the Publication is accurate and up to date at all times. Strategic Gears makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that is contained in the Publication. It is not the intention of the Publication to be used or deemed as recommendation, option or advice for any action (s) that may take place in future.
www.strategicgears.com
2120 21 21132
About Strategic Gears:
Strategic Gears is a Management Consultancy based in Saudi Arabia, with presence in Riyadh and Jeddah, serving clients across the country. Strategic Gears' clients include the biggest public and private sector organizations, includ-ing a number of ministries, authorities, financial
institutions, and companies.
The company utilizes its top notch local consul-tants, and global network of experts to offer strategic solutions in the fields of public policy, analytics, product development, and strategic marketing, and have a proven track record with
multiple clients in each.
Disclaimer of Liability:Unless otherwise stated, all information contained in this document (the “Publication”) shall not be reproduced, in whole or in part, without the specific written permission of Strategic Gears. Strategic Gears makes its best effort to ensure that the content in the Publication is accurate and up to date at all times. Strategic Gears makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that is contained in the Publication. It is not the intention of the Publication to be used or deemed as recommendation, option or advice for any action (s) that may take place in future.
www.strategicgears.comwww.strategicgears.com