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  1. Private Higher Education in Developing Countries: Private Interest… Public GoodPresentation to NZAPEP Cooperative Change in Tertiary Education Conference13 September 2000 Norman LaRocque

  2. Norman LaRocque Consultant, The World Bank 87 Chelmsford Street Ngaio, Wellington New Zealand Tel: 64 4 973 4637 Fax: 64 4 972 4638 E Mail:

  3. “It doesn’t matter if a cat is black or white, as long as it catches mice.”Deng Xiaoping’s signature phrase, first uttered in the early 1960s

  4. The Global Education Market

  5. The Global Education Market • Education market in many developed and developing countries is significant and growing: • global education marketplace equal to $2 trillion (Merrill Lynch) • 15% of global education market is in developing countries • significant private sectors in several developing countries - Argentina, Colombia, Cameroon, Indonesia, India, Cote d’Ivoire, Peru, etc • increased use of innovative finance and delivery mechanisms in both developed and developing countries.

  6. Private Higher Education Market

  7. Higher education in many developing countries is dominated by the public sector - provision and funding But, this is not true everywhere - some countries have significant private higher education sectors when measured in terms of share of enrolments. Private Sector Share of Higher Education Enrolments Korea 75% Indonesia 65% Philippines 80% Colombia 60% Brazil 60% Source: The World Bank (1994) Private Higher Education in Developing Countries

  8. Private Higher Education in Developing Countries • Further evidence on size of private higher education sector comes from a series of World Bank/International Finance Corporation studies of private education markets in developing countries • Detailed studies of private education sector in Ghana, Cameroon, The Gambia, India, Senegal, Cote d’Ivoire, Oman, Mauritania, China, India, Uganda, Zimbabwe and Bahrain • Country overviews in James Tooley’s IFC book.

  9. Private Higher Education in Developing Countries • Studies show that size of private higher education sector varies greatly - significant in some countries and sectors, but small in others: • 100% of professional training market in Cote d’Ivoire • 44% of skills training market in The Gambia • almost non-existent in Mauritania • 75% of tertiary colleges in India • 9 private colleges and 200 private training institutes with 8,200 students - 21% of higher education sector - in Oman • 1,274 private institutions, with 4 million students in China • 37 tertiary institutions in Ghana (11 accredited).

  10. Private Higher Education in Developing Countries • Common characteristics of private higher education sector: • fees are main source of revenue • private institutions serve both rich and poor - generally “second chance” students who could not get admission to public universities • sector is generally “younger” than private school sector (e.g., 1980s in post-reform China, 1990s in West and Central Africa) • complete range of institutions - from full-fledged universities to institutions that prepare students for national exams • range of institutional types - franchises, chains, sole proprietorships, for-profit companies, not-for-profits, religious-based organisations • institutions generally offer a limited range of professional/practically oriented courses (e.g., accounting, management, English) • often use part-time staff (practitioners, professors from public institutions) • regulatory framework less developed than in school sector.

  11. Institution Profile: Groupe Pigier, Abidjan, Cote d’Ivoire • Established 1956. Focus on professional training - accounting, management, etc • Franchise of 150 yr old Paris-based firm • Fees range from $US750 to $US1,166 per year • 2,000 students - 50% Government sponsored • Strong emphasis on quality assurance - staff training, inspection of teachers, assessment of student progress, curriculum advisory panel • Exam results above national average in all areas.

  12. Private Higher Education in Developing Countries: Significant Growth • Private higher education is growing strongly in many countries: • at least 3 new university colleges currently being set up in Ghana • a new private university is being created in Bahrain • 3 private universities approved in Oman. Nine private colleges created since mid-1990s • 500 new tertiary institutions created in China between 1995 and 1999 • 7 applications for private universities and 25 for private training colleges in Cameroon • recent UNESCO report called growth of the private sector the “most significant development in Arab higher-education systems in the 1990s”.

  13. Why Private Higher Education is Growing • Demand for qualifications is high - significant excess demand for tertiary places • Demand for job-oriented skills is high - IT, Engineering, Management • International orientation (e.g., 2+2, English language, alliances with foreign institutions, etc) • Policy changes to encourage private sector growth • Macro factors - currency devaluations, economic growth.

  14. Lessons for Private Education

  15. The Demand for Private Education • Government affects the demand for private education • Developing countries face many challenges in common • budgetary constraints • high population growth rates • increasing urbanisation • low per capita incomes • globalisation • high demand for education • Public education is under pressure • disparities in access to education (e.g., girls, rural, poor) • low enrolment ratios • poor quality of public education • poor quality of public spending • education already a high proportion of the budget.

  16. The Supply of Private Education • The private sector is growing in response • primary, secondary and tertiary education • for-profit and non-profit • high and low quality • Government affects the efficiency of private education • funding (supply vs demand side) • entry provisions (direct and indirect barriers to entry) • regulation (eg non-profit) • indirect barriers to entry (eg red tape) • Government affects the equity of private provision • funding (supply vs demand).

  17. Private aided Catholic college Established 1972 Affiliated with Barkatullah University 1,200 students Generally middle class Excess demand for most courses Initial infrastructure funded by diocese Some teacher salaries paid by government (decreasing by 20% pa over 5 years) Tuition fees Rs 3,000/yr Quality constrained by Barkatullah University - syllabus not challenging enough and fees capped Plan to become autonomous college Institution Profile: Bhopal School of Social Sciences, Bhopal

  18. What Government can do to Facilitate the Contribution of the Private Sector • Design framework based on assessment of appropriate role of the state in education. Employ the right regulatory mix: • ownership • funding • regulation • Adopt a light-handed and neutral regulatory framework: • no controls on fee setting by private institutions • no unnecessary barriers to entry • focus on information provision and ongoing review, rather than tight regulation and input controls to protect quality • clear, objective and efficient processes for accreditation • allow range of providers to operate - for-profits, not-for-profits • neutral and targeted funding and student assistance arrangements.

  19. What Government can do to Facilitate the Contribution of the Private Sector • Allow foreign institutions to operate domestically and allow mutual recognition of degrees with foreign institutions • Make use of innovative instruments such as contracting, demand-side financing, private regulation and methods of disseminating information • Set up appropriate legal frameworks for private sector, including recognition of private sector role in legislation • Provide a strong macro regulatory framework to support private sector (including employment law, company law, judicial system, etc).

  20. Institution Profile: Sichuan Normal University Film and Television Art Promotion College, Chengdu, Sichuan • Private boarding college, affiliated to a public university. Offers 2 and 3 diplomas and 4 year Bachelor’s Degrees • Established 1992, affiliated 1995 • 450 students from Sichuan Province pay fees of RMB10,000/year • Affiliation allowed film school to more easily obtain degree-granting status, which would have been diffi- cult as a private provider (only 37 degree-granting providers in China) • Students graduate with SNU degree.

  21. Quality Assurance: Examples of Light Handed Regulation • Quality assurance is key issue in private education debate. Many ways to help maintain/lift quality: • promote competition and keep barriers to entry low • ensure consumers are provided with information • importance of developing brand name - whether institution-based or groups of providers (e.g., NZAPEP, Catholic education, etc) • allow foreign institutions to operate and mutual recognition of degrees to ensure international quality benchmarks apply • use of franchises and chains of institutions (e.g., NIIT, South Ocean Schools in China, Sabis Schools in Middle East) that bring a strong curriculum, culture of quality assurance and brand name • ongoing quality review/audit with focus on outputs/outcomes, not inputs.

  22. Quality Assurance: Examples of Light Handed Regulation • Many examples of light-handed quality assurance mechanisms: • requirement that private colleges in Oman be affiliated to foreign institutions in order to receive accreditation • use of private sector in carrying out school reviews (e.g., CfBT undertakes reviews of public schools in Oman) • private sector provides information for consumers - “Good Universities Guide” in Australia • the Bahrain government provides info on private schools on the internet • private sector provision of school and university accreditation services (e.g., Seventh Day Adventist run their own accreditation services) • ERO review of New Zealand schools • Ghana’s requirement that institutions begin as university colleges affiliated to domestic universities before moving to university status. • Private sector can play big role in regulating quality.

  23. Private Education and the World Bank/IFC

  24. Private Education and the World Bank/IFC • World Bank/IFC have recently begun an initiative to promote private education in developing countries. This work includes: • Promoting policies to client governments that encourage growth of the private education sector • Carrying out surveys of private education market and legal/regulatory framework in client countries • Publishing profiles of private education market in developing countries • Development of EdInvest ( for private education investors and those seeking investments) • Increased IFC involvement in financing of private education including loan guarantees, equity investments, financing student loan schemes. First investments in Pakistan, Uzbekistan and West Africa. Examining other possibilities in Vietnam, India, China, etc.

  25. • EdInvest is a joint World Bank/IFC/private sector initiative that provides: • Country Market Reports for investors • Database on potential investments • Exchange of ideas and market information • Regional Conferences.