Beyond the bureaucracy, what are the challenges of setting up a new school in Egypt? Last month, we broke down the process of how to open a new private or international school in Egypt with a step-by-step guide, as outlined by the Education Ministry. While the process is relatively straightforward, it can be somewhat tedious and bureaucratic at times. Today, we look into the challenges that investors face when setting up a new private or international school, beyond the procedural issues.

REFRESHER- Setting up a school starts with determining the type of school and which curriculum it will follow, which will determine the next steps and the organization that will provide accreditation for the school. Investors need to find a plot of land that works for the school, and get clearances from various ministries to certify that there are no ownership conflicts or other issues standing in the way of the land being used to build a school. The next steps include getting a license from the Education Ministry, approving blueprints with the General Authority for Educational Buildings, constructing the actual school, and getting curriculum approval and accreditation.

Challenge #1- The financial aspect: The main challenge investors face when setting up a new school is the cost — particularly when factoring in the current high-inflation environment, our sources agree. “A new small school could cost anywhere between EGP 180-200 mn just for the basics — the building, all the furniture, playgrounds, and resources,” Emerald Education CEO Eman Korani told Enterprise. The establishment of a new school requires spending on land — which, in Greater Cairo, can range anywhere between EGP 1,735 per sqm to EGP 14,780 per sqm. Licensing a school is an additional cost, with private schools required to pay EGP 15k for a new license, in addition to EGP 5k each year for renewal, while international schools pay EGP 30k for a new license and EGP 25k for the annual renewal.

Costs are difficult to budget, thanks to inflation: “Unfortunately, in this economy, you can’t accurately predict the building costs, because they can change drastically between when you start conducting feasibility plans and setting your budget, to when you actually start building, and then to something else by the time you’re finalizing construction,” said international school consultant Walid Askar. These price increases — which affect everything from building materials to the daily wages of construction workers — are difficult to anticipate and can significantly skew a financial plan, Askar noted.

The inflexibility of tuition fees is also a thorn in investors’ side: Government regulations set a limit on annual tuition fee increases for international schools at 7% and for private national schools at 10%. “But inflation is much higher than that, which puts us as investors at risk,” Korani said. “Schools set their tuition fees from the outset and then they’re constrained by how much they can increase them each year to keep up with rising costs,” she said.

Challenge #2- The staffing: Government schools have been faced with a teacher shortage — exacerbated by low pay and a lack of necessary qualifications — for the past few years, which former education minister Tarek Shawki previously put at as many as 250k. Private and international schools face their own set of challenges when it comes to staffing, particularly securing and retaining foreign teachers. Teacher salaries typically account for around two-thirds of a school’s annual expenses, CIRA Education CEO Mohamed El Kalla previously told Enterprise. Many schools are looking to lean into more local hires for its teaching staff, as opposed to foreign teachers — whose salaries are paid out in foreign currency — to keep costs low, but this also makes Egypt a less attractive destination for international teachers, El Alsson Executive Director Karim Rogers previously said.

Challenge #3- Some regulatory + legislative limitations: The current law governing private and international school fees mandates that schools must notify the Education Ministry of their tuition fees at the beginning of each academic year, which Korani said is a “big challenge” for investors because it limits schools’ freedom in setting their own fees. “The government should trust educators and investors who chose to invest in education, which is a service to society. These investors should get encouragement and incentives, rather than limitations from the government,” she said. Korani suggested that new investors should get incentives, such as tax exemptions for the first several years of operation, to encourage more investments in the sector.

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