(MENAFN - Khaleej Times) Public expenditure on education in the MENA region has risen exponentially and today stands at 18.6 per cent of all government spending compared to the world average of 14.2 per cent.
Given regional demographics and job creation necessity, this disparity in regional vs. global spending is expected to grow much larger, making this region's education sector one of the most lucrative in the world.
The size of the actual market in the region is also expanding and could be anywhere in the vicinity of 75.3 billion, according to a comprehensive report issued by Al Masah Capital on the potential for investment in the educational sector. The eye catching report illustrates key indicators that clearly show that Education is now a burgeoning, major sector for investors seeking good returns, in well diversified, recession proof economies
"Much of the spur for this tangible upward movement is the recognition by various governments for the need to improve employability of the local population and provide them with the widest possible range of skill sets so that they can be productive," said Shailesh Dash, Founder and CEO of Al Masah Capital. "Good education and skills are crucial to improving a person's economic and social prospects. Investment in education is not just about spending money. It's about investing in the future."
The in-depth report elaborates on the healthy trend with a World Bank assessment showing the GCC with a 3.6 per cent spending rate on education and the wider MENA region rising as high as 4.2 per cent. To further illustrate the recent spike, Saudi Arabia, the largest education market in MENA spends 5.6 per cent of its GDP, while other countries such as Tunisia and Morocco spend 6.9 per cent and 5.6 per cent of their GDP, respectively.
Adult literacy in the region, however, is still hovering at the 80 per cent mark compared to an average of 97 per cent in developed countries. Another area of concern is the shortfall in the time spent by an individual in studies which, for MENA, is just 9.3 years as against the average of 12 years in the UK and US. These issues need urgent policy initiative and the next round of spending is designed to target such specific concerns.
According to the Al Masah findings, private equity firms have invested a total of 275.1 million (disclosed value) through 13 educational tie ups and initiatives in the MENA education sector since 2005. Over the past six years the scenario has evolved dramatically and private equity players now have a key role to play in the development of the education sector.
Investors are also starting to see it as a long-term and very safe investment with strong government backing. The cumulative unique feature of an education investment is its recession-proof nature, the collaborative potential that exists with governments and their solid, deep pocketed support as well as the diverse demographic breakdown of the target market.
With as many as 52 million boys and girls fitting the bill in 2009 the number has now increased exponentially and with an annual expenditure of 1,450 per student this can only intensify as governments in general take a long term view of the education sector. It has to be remembered that 15 per cent percent of the total is for private schooling and that underscores a major growth opportunity in itself.
