{"id":639597,"date":"2024-08-12T00:00:00","date_gmt":"2024-08-12T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/blackboards\/what-does-lower-expected-public-school-enrollment-mean-for-egypts-education-spending\/"},"modified":"2024-08-12T00:00:00","modified_gmt":"2024-08-12T00:00:00","slug":"what-does-lower-expected-public-school-enrollment-mean-for-egypts-education-spending","status":"publish","type":"blackboard","link":"https:\/\/enterpriseam.com\/egypt\/blackboards\/what-does-lower-expected-public-school-enrollment-mean-for-egypts-education-spending\/","title":{"rendered":"What does lower expected public school enrollment mean for Egypt\u2019s education spending?"},"content":{"rendered":"

Think a falling birth rate means less education spending<\/strong>? Think again. <\/strong>Lower birth rates are set to put the number of students enrolling at every level of public education on a declining trajectory by 2035. While the state has earmarked some EGP 294.6 bn<\/a> for education spending during the current fiscal year \u2014 a 28.2% y-o-y increase \u2014 with plans to hire 150k teachers and build 16k classrooms, the education sector faces a funding gap of USD 7 bn for FY 2024-25. <\/p>\n

(Tap or click the headline above to read this story with all of the links <\/strong>to our background as well as external sources.)<\/p>\n

Forecasts through 2035 suggest that public spending will not be sufficient to hit our<\/strong> targets<\/strong>, even in light of fewer births, a new Unicef report (pdf)<\/a> based on Education Ministry and Capmas data says. More investment \u2014 particularly from the private sector<\/a> \u2014 is needed to hit the Education Ministry\u2019s targets and equip students with the skills for a changing global economy. We break down the report for you below.<\/p>\n

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DEMOGRAPHIC CHANGES WILL SHIFT STAFFING AND CLASSROOM NEEDS-<\/p>\n

Declining birth rates by the numbers:<\/strong> Egypt\u2019s fertility rate has been on the decline<\/a> in recent years, from a recent high of 3.4 from 2013-2015 to 2.9 in 2022. We\u2019re already seeing the effect of this decline in public school enrollment \u2014 between 2018\/19 and 2022\/23, Egypt saw the number of children enrolled at pre-primary public institutions fall 10.7% from 1.04 mn to 927k. <\/p>\n

The size of pre-primary and primary cohorts have already peaked:<\/strong> As smaller cohorts move through the education system, Capmas projections cited by Unicef suggest that the number of students enrolled at each stage of education \u2014 pre-primary, primary, preparatory, and general secondary \u2014 will be in decline by 2035. Unicef estimates that pre-primary and primary enrollment have already peaked, with pre-primary enrollment expected to decline 16% to 3.8 mn and primary enrollment to decline approximately 29% to 11.7 mn between 2025 and 2035. <\/p>\n

Preparatory and general secondary enrollment to peak in 2027: <\/strong>For preparatory schools, the number of enrolled students is due to rise from an estimated 6.8 mn in 2025 to 7.3 mn in 2027, before falling to 6.8 mn in 2035. Meanwhile, the number of students enrolled in public general secondary schools is expected to rise from 6.1 mn in 2025 to 7.3 mn in 2027, before falling to 7 mn in 2030.<\/p>\n

The caveat:<\/strong> Unicef chose to use Capmas\u2019 low population growth rate model when estimating changes in enrollment, so it\u2019s possible that these numbers underestimate the size of incoming cohorts. If that\u2019s the case, we could reach peak enrollment later than these estimates suggest.<\/p>\n

Assessing our public education needs by our own metrics: <\/strong>The Unicef report attempts to estimate the number of teachers, classrooms, and schools needed to achieve different key performance indicators (KPIs) laid out in the Education Ministry\u2019s Education Sector Plan 2023-2027, notably the student-teacher ratio, class size, and gross enrollment rate KPIs set for 2027. These KPIs are quite maximalist, aiming for large decreases in all metrics across all levels of pre-tertiary public education. Because primary and preparatory education are the two education levels that the government is trying to achieve full enrollment in, we\u2019re going to focus on their needs in particular.<\/p>\n

We need nearly 60% more primary school teachers:<\/strong> In order to bring the currently projected student-teacher ratio of 41:1 to the ministry\u2019s goal of 26:1 by 2025, we would need to hire 197.7k teachers to add to the 357.7k registered with the Education Ministry in 2022\/23. Even with the decrease in enrollment by 2035, we would still need 136.2k teachers on top of the 281.9k expected to be employed at that time, given expected attrition rates.<\/p>\n

Meanwhile, higher enrollment means more classrooms:<\/strong> To reach full gross enrollment and the targeted primary school class size of 37.8 by 2025, the government would have to build 140.8k more classrooms, in addition to the 230.8k recorded in 2022\/23. This represents a roughly 62% increase in the number of public primary school classrooms available. While the number of needed classrooms will decrease as smaller cohorts move through this system, there will be an acute need for more classrooms through 2035 should the government aim to achieve its enrollment targets.<\/p>\n

It\u2019s a similar story for preparatory education: <\/strong>In order to reach the ministry\u2019s targeted 21:1 student-teacher, the state would need to hire 100.4k teachers in 2025, 169.5k in 2030, and 124.6k in 2035, taking into account expected teacher attrition. The pattern is similar for the number of classrooms, with an additional 58.8k classes needed \u2014 a 53% increase from the 110.1k classrooms registered in 2022\/23 \u2014 in 2025, with the number of classes needed peaking at 195.5k in 2030 and then declining.<\/p>\n

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THE PUBLIC SHORTFALL IS A PRIVATE SECTOR OPPORTUNITY-<\/p>\n

Unicef\u2019s numbers reflect likely unachievable KPIs and should thus be taken with a grain<\/strong> of salt. <\/strong>Yet these projections do point to an important tradeoff within our education sector \u2014 namely, that increasing the number of students in classrooms is only useful insofar as there are teachers and physical and educational resources available to help them learn.<\/p>\n

But with change, comes potential: <\/strong>The shift in our demographic profile also comes as the state aims to shift toward encouraging private sector investment \u2014 including in the education sector. The public shortfall offers an occasion for the private sector to get involved \u2014 to the benefit of all of Egypt\u2019s kids.<\/p>\n

Private sector investment desperately needs a shot in the arm. <\/strong>According to CIRA Education CEO Mohamed El Kalla speaking previously to Enterprise, the sector\u2019s share in educational investments has dropped to 9% from 10%<\/a> in recent years, with its inability to keep pace with demand for new schools and declining revenues from tuition fees playing a contributing role.<\/p>\n

Financing is also a big challenge,<\/strong> with the high interest rate environment making it difficult for private sector players to access funding<\/a> for capital expenditures on facilities and land purchases. According to industry players, bank funding needs to be more accessible for private and international schools, which are a long-term investment.<\/p>\n

The state is already on it:<\/strong> The government is already taking steps to attract private investment, including via preparations to offer 24 schools<\/a> to investors as part of the state\u2019s public-private partnership program<\/a>. It also recently announced that it had extended a set of 30-50% tax breaks<\/a> on education investments until 2029.<\/p>\n

More incentives need to be on offer: <\/strong>Closing the funding gap is going to require further incentives and facilitations. Policymakers need to get creative \u2014 and realistic \u2014 about how we fund public education in the years ahead.<\/p>\n

One possibility \u2014 encouraging private players to harness debt: <\/strong>Private and international schools can take advantage of debt tools<\/a> available in the market, such as future flow securitization \u2014 which our friends at CIRA Education became the first to tap last year with its EGP 800 mn issuance<\/a>. This debt instrument \u2014 a cheaper alternative to bank loans \u2014 could also give companies that struggled to secure growth capital access to immediate funds, noted CIB board member and former Financial Regulatory Authority head Sherif Samy at an education-focused investment conference back in June. New market entrants that are struggling with the high cost of entry could also tap into real estate investment funds to help move forward with their expansion plans, he added.<\/p>\n

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