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Kuwait Financial Centre “Markaz” recently published the executive summary of its report on GCC Education Sector. In this research note, Markaz analyzes status of GCC Education Sector. The report highlights current and expected enrollment trends and market size of GCC Education Sector. The report also discusses challenges and investment opportunities in the GCC Education sector.
Based on the report’s estimates, in 2012, the education market in the GCC was worth USD 60 bn. The bulk of spending (84%) is accounted by the government and the private sector accounted for a meagre USD 9.6 bn.
The report notes that demographic structure of Gulf Co-operation Council countries is tilted towards young age population, making education an imperative. Even though the GCC region is blessed with oil resources and wealth, paradoxically it also suffers from a high level of unemployment, mainly due to disconnect between skill sets and market needs. The GCC countries have realized this gap and have effected reforms and established various governing bodies to improve overall education structure. The GCC governments, on average, spend about 3.3% of their GDP on education lesser than 4.4% of the world average. Saudi Arabia in particular – spending 5.6% of GDP on education – is leading the way by giving a plenty of emphasis to improvements in the education sector.
Generally, all the GCC countries have divided their education system into four broad levels: pre-primary, primary, secondary and tertiary. Additionally, there are vocational training institutes designed specifically to provide job-oriented skills to students.
Except for the UAE, the majority of students in all other GCC countries are enrolled in the public institutions – primarily due to free education provided by the government to nationals. The expatriates enroll in private schools. In the GCC countries, mainly four types of private schools exists: Arabic, Bilingual, Western and Asian. Of all, Western schools are most expensive distantly followed by Bilingual schools. Arabic and Asians schools have more or less the same tuition fee structure.
The gross enrollment ratio in the GCC at primary and secondary level is comparable to the ratio in the developed nations. However, at tertiary level the gross enrollment ratio in the GCC is way lower than the developed countries, indicating a scope of improvement and work required at this level of education which is key to preparing students for future workforce.
The total number of school students (from pre-primary to secondary level) enrolled in the GCC have increased from 8.4 mn in 2008 to 9.1 mn in 2011 and expected to reach 12.5 mn by 2020. Qatar has recorded the highest CAGR of 5.8% between 2008-2011.
The report expects the enrollments at pre-primary level in the GCC to grow from 521,005 students in 2011 to 606,480 students by 2015 and 751,030 students by 2020. As per our forecast, the number of enrolled students at primary level (grade 1-6) is likely to grow to about 5 mn by 2015 and reach 5.8 mn by 2020 at an estimated annual growth rate of 3.2%. In 2011, there were over 4.1 mn secondary students enrolled in all the GCC countries. Based on our estimates, the enrollments at secondary level in the GCC is expected to grow at a CAGR of 4.8% between 2012 and 2020, reaching almost 5 mn by 2015 and just over 6 mn students by 2020. There was a total of 1.3 mn students enrolled at tertiary level in 2011 in the GCC countries.
The GCC education sector benefits from some natural growth drivers like young demographics: increasing government support and initiatives; rising disposable income and demand/supply gaps. In 2009, there was a total of 27,518 public and 5,358 private schools in the GCC countries. With increasing population, the demand for more and better schools is certainly to rise.
Additionally, there will be worthwhile investment opportunities in this sector as demand for better higher education institutes increases, governement extends its support to private players and growing preferences of students to enroll in private education institutes. However, there remains certain challenges in the form of teachers quality, low enrollments at higher education level, imbalance in enrollment among specializations and questionable quality of existing curricula. In addition, the bureaucratic hurdles to establishing and running a school further adds to the woes. Despite challenges, the overall education sector in the GCC is likely to witness growth and progress.
About Kuwait Financial Centre “Markaz”
Kuwait Financial Centre S.A.K. 'Markaz', established in 1974 with total assets under management of over KD 888 million as of March 31st, 2013, is the leading and award winning asset management and investment banking institution in the Arabian Gulf Region. Markaz is listed on the Kuwait Stock Exchange (KSE) since 1997 under ticker Markaz.