Time: May 17, 2018
Saudi Arabia’s private K-12 education market valued at $5 billion in 2017 is poised to grow to $12 billion by 2023, according to new research.
The Boston Consulting Group (BCG) said that across the GCC, the private education market is becoming a magnet for investors as it is expected to double over the next five years.
It said Saudi Arabia’s private schools will account for the lion’s share of growth in the GCC region, fueled by several factors including a shift towards private schools, expatriate population growth, enrollment growth and tuition increases.
In line with Vision 2030, Saudi Arabia’s Ministry of Education launched an ambitious strategy to raise the quality of education, transform youth mindsets, and strengthen the economy.
The report said the number of students in Saudi private schools is estimated to increase from 18 percent in 2017 to 30 percent by 2023.
Additionally, Saudi nationals are now allowed to enroll in private international schools and the country is allowing 100 percent foreign ownership of companies in the education sector.
BCG said enrollment growth in Saudi Arabia is around 20 percent at kindergarten level, which is relatively low when compared to the rest of the region.
However it added that as the expatriate population in the kingdom continues to grow, families are more likely to enroll their children in quality private schools.
The report noted that private school fees are also likely to rise faster than inflation as school offering become more sophisticated in terms of curriculum, learning resources, teacher qualifications, and extra-curricular and ancillary services.
Challenges to growth include red tape as processes to obtain permits and licences in Saudi Arabia can be “inefficient and time-consuming”, the report added.
It also highlight a shortage of qualified teachers due to strict Saudization laws, while public schools offer favourable salaries, benefits, and hours compared to private schools.
“The government is making an effort to address these challenges, but change takes time,” BCG said.
It added: “Saudi Arabia is still a relatively immature market, with few international schools, limited exposure to international curricula, and limited experience with international investors. Greater competition and consolidation in the private education market is expected. There are also significant opportunities for growth in Saudi Arabia given the announcement of recent mega-projects, such as NEOM.”
Maya El Hachem, principal at BCG, said: “The dearth of private schools available in Saudi Arabia, coupled with government intervention that positively affects the private education market, will amplify the bullish growth expected in the sector.
“There is a strong need for high-quality private schools that offer a variety of curricula and fee ranges. We also expect to see greater consolidation in the private education market, increasingly sophisticated educational offering, and additional emphasis on educational support.”
The report said average school fees are around $11,000 per student per annum in the Gulf region but added that parents are becoming increasingly willing to pay for “differentiated offerings and improved outcomes”.
Across the GCC region, tuition fees for private education will continue to rise 2-4 percent per year, a slower rate than in recent years.