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Bring on Tomorrow

August 2016

At a time when oil prices are low, what are the key growth drivers for the education sector in the UAE and the GCC region? In the current economic conditions is it challenging to receive sufficient funding for school or college projects from regional banks in the GCC? Three education experts discuss the road ahead

The GCC education sector is moving ahead with several growth drivers facilitating its growth such as high spending power, young demography, demand for quality education, high disposable income, and government support. As per research reports, Saudi Arabia is expected to be the largest education market in the GCC by 2020. From an estimated 9.2 million in 2015, the total number of students in Saudi Arabia is projected to grow at an annualized rate of 3.5% to 11.0 million in 2020. In terms of annualized growth during 2015 to 2020, the number of students in Oman, Qatar, and the UAE are projected to grow faster than the other member nations. As several new schools are opening up and under development in the region, competition among the private players is increasing. This is also leading to an oversupply in the education market especially in Dubai thereby intensifying competition and impacting profitability of newer players.

As several new schools are opening up and under development in the region, competition among the private players is increasing. So will it lead to an oversupply in the education market especially in Dubai and impact profitability of newer players? Wealth Monitor asked education providers what makes them optimistic regarding education sector in Dubai, UAE and the GCC region. The questions asked included: how difficult it is for schools to hire and retain skilled teachers? Is the rising cost of education in the GCC impacting investment opportunities in the sector? The teacher turnover rate in the region is high, marked by a short tenure of about two years at an institution. How it is impacting the bottom-line of schools, and does the GCC education system yet to align itself with the needs of the globalized industry and become competitive in the fields of science and research?
And here’s what they had to say….

Sulaf Al Zu’bi, CEO, INJAZ UAE

Sulaf Al Zu’biMajor investments in education
Global economies, not just the GCC, are demanding a better equipped workforce able to tackle the ever changing needs of the marketplace. While educators carry the bulk of this mission, this colossal global challenge cannot be the sole responsibility of educators alone. Since the UAE was established, major transformations and investments in education have taken place to address the country’s fast developing economic needs, and as we’ve seen in recent years, investments in start-ups and entrepreneurial education have also increased. Entrepreneurship centers have sprung up in campuses and in the last ten years, academic internship programs have been expanded and enhanced allowing graduates to gain credit through temporary ‘work-placement’ programs prior to graduation. Such developments and investments are bound to pay off, but are still not enough. Public-private partnerships and educational initiatives that engage the private sector are proven effective strategies in enhancing business education as well. We have directly witnessed this shift as we grew our partnerships over the years.

Vocational and general education equally critical
We believe that skill-based training is the golden ticket into the corporate world, whether through job-oriented academic streams or vocational education. Both tracks contribute to the 21st Century Skills framework and we’re positioned to offer such skills and training through our international business programs. Such focus can hasten the transformation to a diversified economy based on knowledge and professional competencies.

Annually, we put students through a track of business training programs, that often lead to Job Shadow Days, which we’ve found is an impactful experience for our students, as it exposes youth to the corporate environment and job needs. There is a need for more programs such as this, to expand students’ horizons in various sectors.

Nrupaditya Singhdeo, CEO, Al Najah Education

Nrupaditya _SinghdeoKey growth drivers
There’re several growth drivers for private education in GCC: 1.8% annual increase in the population in the GCC will take the total population to 53.5 million by 2020; inclination towards private education by both local and expatriate families over public schooling; focus on quality assurance in education provision by the GCC countries are driving quality institutions into the region; increase in institutions providing teaching qualification both at the Under Graduate and Graduate level. There is a lot of support from the local regulatory bodies for introducing more teacher training programs in the region to increase the supply of teaching staff.

Challenging to get funding
In general, financing for such projects are difficult to secure as banks usually would require personal guarantees, corporate guarantees, hard asset pledges and collaterals which might not always be available to the banks. However, operators with track record of operations should still be able to raise financing, either from regional banks, international banks or through other funding mechanisms such as sukuks for example instead of a direct bank financing.

Pressure on financials
Some institutions in the GCC region are feeling pressure with their financial performance and some of the reasons being: austerity measures adopted by the government and semi-government organisations which has an impact on schooling allowances for their staff; adding to the above mentioned measures is the loss of jobs mainly for the expatriate staff resulting in children leaving the schools and going back to their home countries.

Christophe Savard, Chief Advancement Officer, Canadian University Dubai

Christophe SavardEducation is recession-proof
Subdued business activity drives a demand from employees seeking to make themselves stand out in the labor market, hence education is effectively recession-proof. During these times, education providers will look to tailor their provision to meet the challenges of the local and regional marketplace. As employees turn to professional development opportunities, there is an increasing demand for graduate degrees and corporate education and training, which drives growth for higher education providers in particular. Institutions will also take the lead to help build an appropriately skilled workforce for new and developing growth sectors, by designing innovative programs that will meet an emerging demand.

Harmonization a challenge
One of the biggest challenges for institutions is to harmonize the varied learning styles and backgrounds of an enormously diverse student population to assure their success and recognition, both in the UAE and internationally. For the sector as a whole, the challenge for the coming years is to firmly establish the UAE as an important nation in the regional higher education arena, with long-standing institutions that help to attract and retain a skilled population to drive the future knowledge economy.

Ways to improve
For any institution in any part of the world there are always ways to improve on how they prepare their students for the workforce. The key is to engage with employers to align students’ learning with the emerging needs of the labor market.

Wrapping Up

More than 500 educational projects collectively worth above US$ 50 billion are under various stages of development across the member nations. With several noteworthy projects underway, the GCC education is set to witness significant capacity addition. However, the GCC education system is yet to align itself with the needs of the globalized industry and become competitive in the fields of science and research.

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