Private sector in education Unprecedented growth in last two decades

  • Despite education being a service-oriented sector, it has become vibrant from a business point of view

Mar 21, 2017-

If there is one sector that has witnessed a constant growth in the past two decades, it has to be the education sector. The sector has grown by leaps and bounds, particularly in the past decade, following growing realisation about the need for quality education. And this has changed the dynamics of the education sector altogether. 

According to the Advertising Association of Nepal (AAN), the education sector commands around 10 percent of Nepal’s advertising market. It is estimated that the country’s annual advertising market is worth Rs 6 billion. Data indicate the education sector alone contributes around Rs 60 million annually in the advertisement business. Given education is considered as the service-oriented sector unlike other commercial enterprises, the amount is huge. And this shows how vibrant the sector has become from a business point of view. 

According to Bijay Sambahamphe, president of Private and Boarding Schools’ Organisation Nepal (Pabson), there are around 8,500 private schools (running classes from grades 1 to 12) across the country at present. Of the total, Kathmandu district alone has around 1,100 schools, followed by Lalitpur (300) and Bhaktapur (215).

“It is true that the education sector has evolved in recent years. And with this, the business dynamics too have changed,” Sambahamphe said, adding that the major reason behind the proliferation of private schools is government apathy towards the education sector. 

The increasing investment in the private sector education indicates that the government has failed to make government and community education institutions competent. And this is where the private sector has cashes in on. Business conglomerates like Chaudhary Group and Kedia Organisation among others have made their foray into the education sector. 

The entry of such big corporate houses has made the sector competitive, so much so that the school segment (grades 1 to 12) today is estimated to have investment worth above Rs 200 billion. The sector has provided employment opportunities to millions of people across the country. 

Apart from direct investment, a number of industries and businesses like stationary, book shops and uniform stores among others have benefitted. 

Private schools today are not just limited to teaching and learning. They have made huge investment in infrastructure development as well. 

Big playgrounds, laboratories and library are some of the features of private schools which have left no stone unturned to meet the expectation of modern day approach for ensuring holistic development of children. Classrooms are being turned into multimedia platforms for enhancing the learning capabilities. 

School operators believe it is important to enhance facilities for making students dynamic and competent in all the fields.

“Given that our education system does not have a clear cut policy on the kind of education base we want; the private sector has no other option than to make students all-rounders,” Sambahamphe said, explaining the force behind such huge investment made by private schools in infrastructure. 

The other factor that has played a crucial role in prompting the private sector to boost investment is the increasing demand from the general public. 

With an increase in remittance inflow, even people in the remote parts of the country do not shy away from spending on quality education. 

In the fiscal year 2015-16, Nepal received remittance worth Rs 665 billion. Remittance accounts for 30 percent of country’s Gross Domestic Product (GDP) as of last fiscal year, according to the Nepal Rastra Bank. 

Following better earnings fuelled by remittance, people in remote villages tend to move to the district headquarters, those from district headquarters tend to move to major cities and capital cities and those receiving education in major cities and capital cities look forward to going overseas for better education. This tendency not just shows growth in income, but also people’s will to spend education. 

“This shows people want quality more than anything,” Sambahamphe said. 

Industry insiders say it costs at least Rs 5 million to establish a school. The figure can reach any amount based on the kind of facilities and ambience one wants to offer. Salaries of teachers and instructors too have increased in recent years. 

Likewise, the concept of branding too has become the catalyst of rising education cost. 

Industry insiders say while there was no concept of branding almost a decade ago, the scenario has changed today. 

Branding has become one of the essential components to increase enrolment. Brand value of a school today plays a crucial role. 

Santosh Shrestha, president of AAN, told the Post that the contribution of education sector in the advertisement sector has toned down in recent years, but the sector still is among major contributors. “Given advertisements generated from the education sector is seasonal, contribution of around 10 percent in the total pie is huge,” Shrestha said, The contribution of the education sector might have gone down in terms of advertisement volume but that does not indicate sluggish performance of the education sector. 

The government in recent years has banned educational institutions from spending hefty amounts on advertisement with a motive of ending unhealthy market competition. This however hasn’t stopped education institutions from spending, as they tend to promote through the medium of education fairs and social media among others.  Experts say the proliferation of private schools has not just contributed in quality education, but has also played a crucial role in increasing education cost.  Renowned schools have started reaching beyond the capacity of middle-class income capacity. 

The private sector, however, is of the view that education cost has gone up due to rise in inflation.  “We are supposed to adjust our operational cost based on the market price. And we do not have control over it,” Sambahamphe said, adding that the government should work on controlling inflation and market price to maintain affordability. Even though the investment in country’s education sector seems to be heavy, those involved in the sector say it isn’t enough to compete with international standards.

Published: 21-03-2017 10:07

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