Transcript Venture Capital Investment in the Education Industry

Stimulating Investment in Global Education
February 2003
Overview
The Story To Date
Why EdInvest?
Pressures for Change
- Global Education Market
- Education Reform
- New Roles
Some Lessons Learnt from West Africa
The Story going Forward
Products and Services
Outcomes and findings
Accomplishments in 2002
Plans for 2003
Room for Partnership?
The Story To Date
Why EdInvest?
Pressures for Change
- Global Education Market
- Education Reform
- New Roles
Some Lessons Learnt from West Africa
Why EdInvest?
 Global education industry
 IFC receiving education proposals
 Education reform
Global Education Market
 113 million children worldwide have no access to primary
education. (World Education Forum, Dakar)
 Global demand for higher education will reach 160 million by
2025, up from 84 million today. (Merrill Lynch)
 Education expenditure in developing countries is inadequate to
cover rising enrollments: (UNESCO World Education Report)
– Over the past 50 years, K-12 enrollment in developing countries has
increased by a factor of 8, and higher education enrollment has
increased by a factor of 14.
– Public expenditure per student has remained generally flat in
relation to GNP, particularly for the least developed countries.
Household Spending
(% of total ed. spending) all levels
Uganda
57
Chile
45
Korea
41
Indonesia
37
United States
26
Mali
25
Japan
23
Germany
22
France
9
Denmark
7
Netherlands
3
Sweden
2
0
10
20
30
40
50
60
Private Enrolment in Tertiary Education
P hi l i ppi ne s
K or e a
I n d o n e si a
C ol ombi a
I ndi a
Br az il
N i c a r a gua
Peru
C hi l e
N e pa l
Gu a t e m a l a
Tha i l a nd
Mexico
A r ge nt i na
M a l a y si a
K e ny a
Z i m b a b we
P a k i st a n
0
10
20
30
40
50
60
70
80
90
Education Reform
Growing private provision:
 Vietnam’s “semi-public” schools
 Deregulation: eg, Senegal, Tanzania
Percent
Tanzania: Public & Private
Secondary Schools
70
60
50
40
30
20
10
0
1960
1965
1970
1975
1980
1985
1990
1995
Competition
Scholarships and vouchers:
 Chile, Colombia, Côte d’Ivoire
Contracts
Private management and subsidies:
 Kenya, West Africa
Public Role in Education

Income distribution

Capital market imperfections

Information asymmetries

Externalities
Private Role in Education

Reduce fiscal burden

Improve efficiency

Enhance choice and diversity

Increase accountability
Financing and Provision
Provision
Financing
Private
Public
Private
Private schools
Home schooling
User fees
Public
Vouchers
Charter schools
Contracting out
Traditional public
schools
Regulatory Framework: West Africa
Entry/Exit
Regulations
Fees
Direct
Subsidies
The Gambia
Limited
Senegal
Relatively liberal
No waiting period
“Authorized” or
“recognized” schools
No limits for
fully private;
Grant-aided
limited
No for private
fee-paying
Yes for Grantaided
No limits
“Recognized”
private schools
subsidized
Côte d’Ivoire
“Authorized” or
“chartered” schools
Take account of
impact on existing
schools
Ministry of
Commerce
ratifies fees
Subsidies to primary
schools
Public sponsorship
of students in private
schools
Regulatory Framework: West Africa
Subsidized
land/
buildings
Tax/Customs
Exemptions
Curriculum
The Gambia
Yes
Senegal
No
Côte d’Ivoire
No
Exempt from
duties, income
& sales taxes,
training/ex-pat
levies
Free
No education
specific
exemptions.
Non-profit
exemptions
Centrally
prescribed but
variations allowed
Free
Free
No education
specific tax
Exemptions
-only for non-profit
School Hours Free
School Year
Free
Centralized, but
variations allowed
for French schools
Free
Set centrally after
discussion
Private Education in West Africa, late 1990s
Market Share (Percent)
25
21
19
20
15
15
10
5
0
The Gambia
Senegal
Côte d'Ivoire
Growth in Enrollments (private institutions, %)
66
Tertiary
8
Secondary/Senior
Secondary
72
20
32
Middle/Junior
Secondary
123
6
Primary
123
40
0
20
40
60
80
100
120
Côte d’Ivoire(Average annual growth from 1991/92 - 1995/96)
Senegal (1987/88 - 1997/98)
The Gambia (1993 - 1996)
140
Percent
Distribution of Public Subsidies by
Quintile in Cote d'Ivoire: Public Schools
40
35
30
25
20
15
10
5
0
37.9
24
18.1
8.7
Q1
11.3
Q2
Q3
Quintile
Q4
Q5
Distribution of Public Subsidies by
Quintile in Cote d'Ivoire: Private Schools
30
Percent
25
20
15
22.9
22.9
23.9
Q3
Quintile
Q4
Q5
19.4
10.9
10
5
0
Q1
Q2
The Story Going Forward
Products and Services
EdInvest Outcomes
Accomplishments in 2002
Plans for 2003
Room for Partnership?
Products and Services
 Engages in four major activities:
– conducts research into market-based solutions in education
markets, with a particular emphasis on developing countries;
– undertakes consultancies that enable the discovery of underlying
patterns and processes that are at work in the burgeoning global
education industry;
– offers training modules with a particular focus on the institutional
requirements for public-private partnership; and
– markets and promotes conferences.
EdInvest Outcomes
 Internal: IFC-World Bank dialogue, strategy,
new department, investments
 External: demand for consulting
 News/reviews of global industry
 Assistance to education entrepreneurs
EdInvest Outcomes
 Internal: IFC-World Bank dialogue, strategy,
new department, investments
 External: on-line resources
 News/reviews of global industry
 Market studies (Africa, Eastern Europe)
 Conferences
EdInvest Outcomes
 Market surveys (W. Africa)
 Regulatory framework is key
 Education entrepreneurs worldwide
 Research program
Accomplishments in 2002
 EdInvest has achieved a lot during its first year of operation:
– EdInvest website of global investment opportunities;
– monthly newsletter about global education market activity –
distribution has doubled within the past year to more than 7,000
individuals worldwide;
– global education conferences – in Athens, Lisbon, Phoenix and
London;
– market analyses on Saudi Arabia and Ethiopia and, in the
Balkans, Albania, Bulgaria, Croatia, FYR of Macedonia, Romania;
– training – through the United Nations Training Institute, the World
Bank Institute and the Institute of Economic Affairs, and
– leveraged additional resources – from multi and bilateral
contracts and commissions from the private sector.
Activities for 2003 (through June) - Actual
 Consultancies
Global Study: Private Education for the Poor (Templeton
Foundation)
India: Study of Demand and Supply for SME in Education (IFC)
Saudi Arabia: Partners in Progress (GKSA)
Rwanda: Private Education Sector Study (DfID)
Africa (pending): Secondary Education in Africa Study Financing
and Costs (WB)
 Conferences
India: Education India (April)
Portugal: World Education Market (May)
Activities for 2003 - Planned
 Development and rollout of an Education
Development Finance Facility for Private Education.
 Establishment of a virtual “Community of Practice” in
which public and private education stakeholders
share their reflections and findings; and
 Hosting of global e-discussions.
The Education Development Finance Facility
 Objective:
To create a vehicle that can enable disbursement of small amounts (eg.
$200,000 to $1.5 million) to education enterprises in a secure manner.
 Required:
Information:
-
access for enterprises to existing sources of commercial finance;
-
demand from enterprises for commercial finance products;
-
potential partners among commercial providers of finance;
-
parameters and possible structures for an IFC sponsored facility.
Infrastructure:
-
to disburse the funds;
-
to ensure quality.