Ipsa scientia potestas est
23 April 2014 17:00 (South Africa)
Opinionista Maximilian Pichulik

Low-cost private education, revisited

  • Maximilian Pichulik
Contrary to an increasingly popular notion, recent history shows handing education over to the private sector will not result in an even greater failure in the schools. Parents, students, teachers and, yes, business, will benefit.

I was immensely disappointed reading Sean Muller’s Euthanasing the public sector is not the answer in the Daily Maverick. In the article, Muller built a case for rejecting private education as a mechanism for solving our education crisis in South Africa. As I read further, it seemed to me to resemble the all-too-common opinion story written by an academic tucked away in an office on a safe state/donor salary, flaunting his intellect and pumping up his CV and profile. And we, the public, are in turn seduced by these “qualified academic views” of our pressing societal needs. Admittedly, this is a gross generalisation. But these and images Muller paints of the private sector resembling Darth Vader create polarised pictures and never allow us to arrive at a balanced opinion.

Muller’s article not only provided a naive generalization about the woes of capitalism, but his viewpoint is completely disconnected from the global trend towards private education and the growing importance of market-based approaches to society’s pressing issues. Instead, what we were left to read was three pages (if you were on an iPad) of intellectual mumbo jumbo, concluding that the private sector will rape and pillage society in the pursuit of “profit maximization”. Furthermore, Muller believes education is best left to government and civil society, while claiming a lack of “overwhelming” evidence to support market-based approaches.

My response to Muller is not a personal criticism, but rather an opportunity to provide a balanced proposition to our education woes. He is correct that our public education system needs a shakeup and restructuring. But he is sorely mistaken when he writes that entrepreneurs cannot balance their profit-making objectives without destroying society at the same time.

The Dinokeng Scenarios remind us that as active citizens, we will need to “walk together” in a shared value construct to solve systemic issues. I am also hugely encouraged by the global social entrepreneurship movement, where bright entrepreneurs are starting to apply innovative, business-driven solutions to societal and environmental issues. As a society trying to build shared value and seeking long-term, sustainable solutions we cannot begin with the premise that businesses are evil. Bridge International is a great example of a quality, private, sustainable, replicable and scalable low-cost education model, having an impact on Kenya’s poorest people. My heart lightens at its deep sense of integrity and dual purpose of creating a positive social impact while ensuring economic sustainability and growth.

Before we look at “support” for market-based education, I’d like to tackle some of the trends toward private education. According to Unesco statistics (1991 - 2003), the average international growth in private primary education grew 58% in comparison to a 10% growth in public primary education. In Africa, we saw 113% private school growth, in comparison to 52% growth in public schools. According to a recent CDE paper titled Promoting school choice for the poor, most of the expansion in developing countries has been in private schools for the poor.

According to Dalberg Global Development Advisors, in Pakistan between 1999 and 2009, low-cost private schools nearly tripled, to 90,000 from 36,000. These schools are financially accessible to low-income populations, with monthly tuition fees ranging from $2 to $20. This global trend must not be ignored, as these typically small businesses in developing countries are providing an incredibly important service.

So when Muller states that market solutions are a “case of ideological wishful thinking”, one need only read the statistics to find overwhelming evidence to the contrary. With symmetries found in failed global public health systems and our own recent introduction to a National Health Insurance (NHI), there is a business case to enable and regulate the private education market. With clear frameworks and quality assurance, an entire new small business sector could emerge alongside public education.

What also came through for me in Muller’s article was an “unconscious” attitude of disempowerment, commonly observed by NGOs and government. By stating, “it is hard to see … the discernment of parents as the driving force holding schools accountable”, he shows his belief that people from low-income groups cannot discern value or demand quality for goods and services they purchase with their hard-earned money. In my experience this is actually the opposite. Most of our low-income citizens do value education, and if given choice and opportunity to pay for education with the little disposable income they have, they are prudent with their money and demand quality. When our government and NGOs treat low-income people like beneficiaries, with shoddy free services, accountability inevitably erodes and frustration sets in. Markets create choice, but they are left with none.

From Ann Bernstein’s CDE report, it’s clear that of the 117 private schools surveyed, parents are accountable, teachers are dedicated and absenteeism is lower (on average) than public school comparisons. These schools provide important services with an average monthly tuition fee of R680. Furthermore, these schools continue to succeed in very challenging environments, such as car parks and abandoned buildings, while teachers and principals often earn less than in public schools.

From my perspective, market-based solutions provide a number of advantages over public education:

  • They empower parents with choice and as small businesses serve the needs of their clients.
  • Staff and teachers are forced to be efficient with the resources at their disposal.
  • Principals of private schools do not expend valuable energy begging government to solve their issues. They are often empowered and innovative in arriving at their own solutions.

The risks are still numerous if this sector is not capacitated properly and regulated. And unfortunately for the private sector, it can be the dodgy 1% that ruin it for the rest of us hard-working citizens.

It’s not that I believe public education doesn’t have a place in our country, but government must acknowledge the role market-based solutions can have and take a holistic approach to education. Gone is the old thinking that the private sector’s role is purely to make profit, with government and non-profits left to solve society’s problems. The amount of money available in the fiscus and grant capital from donors is a drop in the ocean compared to the actual need and the amount of money in financial markets. Isn’t time we leveraged the financial markets for social gain? Isn’t it exciting when we see private education financing solutions like (a local education investment manager)?

If South Africa could provide a wide choice of quality education at a monthly rate of R500 - R700, with part of that fee subsidized by the fiscus, where private schools leveraged off existing serviced public property, we’d put a huge dent in the education problem. And if we saw a few millionaires created out of solving the education problem, I would still sleep very happily at night. DM

  • Maximilian Pichulik
Maximilian Pichulik

Max co-founded Africa’s first social enterprise incubator and set up an innovation hub for small businesses. In 2010, Max was selected as one of Mail & Guardian’s Top 200 Young South Africans. Max is the Co-founder of Impact Amplifier, an incubator and consulting firm and leads the SA Regional Chapter for the Aspen Network of Development Entrepreneurs (ANDE), part of the Aspen Institute in Washington DC. For kicks, Max spends a lot of his time on a surfboard, yoga mat, playing Ultimate Frisbee or reading Africa’s history.


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