New Report: The business of education in Africa
“Whether or not we live in Africa, all of our futures will be affected by the success or failure of education on the continent.” As markets become more globalised and economies more intertwined, the future, with its myriad of challenges, will very likely be influenced by the next generation. More specifically, many of the solutions to our challenges will likely come from the next generation in sub-Saharan African nations. In fact, by 2035 the total number of Africans joining the workforce will be more than the rest of the world combined. Earlier this month, Caerus Capital, Parthenon-EY, and Oxford Analytica released a very interesting report on the systems that will educate this future African generation.
The report describes that although progress has been made in improving education access and quality, there remains much work to be done. SSA has performed tremendously in making progress on the Millennium Development Goals pertaining to education, but the region still has 30 million children without access to education, and among those who do receive education, they perform poorly on basic learning milestones in literacy and numeracy.
One of the key insights of the report is that the private sector and private capital will be crucial to achieving improvements in the region. The report calls for support in both “core delivery” education initiatives (educational programs for students) and “ancillary services” education initiatives (programs that play a supporting role in education, such as teacher training, supplementary education, and student finance). Brighter Investment is specifically mentioned as an example of emerging student finance models.
The report highlights several key reasons investments in education businesses can outperform standard investment opportunities, which we fully agree with here at Brighter Investment. For example, the report cites that demand for services is usually greater than supply. In our second year without marketing Brighter Investment received 1,000 applications for 50 spots in our program. Keeping in mind this is only in Ghana - we have plans to scale up to other countries! Another reason cited by the report is that prices grow faster than inflation as a result of salaries growing faster than inflation rates. In our 2016 salary research, we found that salary levels for college graduates grew 17.2% while inflation rates across the same time period was at 16.7%.
The dual trends of increasing innovation, creativity, and productivity of African economies spearheaded by its youth, and the need for private capital from individual and institutional investors points to the ripe investment opportunity in sub-Saharan education systems. Private capital will undoubtedly play a key role in the development of this region. Here at Brighter Investment, we see ourselves as a piece of the puzzle in connecting private investment capital to higher education. If our students are any indication of the future of Africa, then it’s absolutely clear to us that the potential is huge, and the future looks Bright.