The education sector has been blowing hot for a while now. The latest announcement was around the acquisition of Hillcrest School. Media reported a transaction value of Sh2.6b (my information confirms it was considerably shy of that figure) from Fanisi Capital a PE Fund, who in turn had bought HIL out of receivership, nurtured it and now placing it under GEMS Education, one of the largest and oldest education providers in the world. The transaction Is subject to approval from the Competition Authority of Kenya.
GEMS Education is a family-owned education provider, headquartered in Dubai, with a track record in the education field spanning 60 years with global operations encompassing 300,000 pupils in 80 schools in Africa, Europe, North America, Asia and the Middle East. Through the organisation's philanthropic arm, The Varkey Foundation, they work to improve education standards and raise the status and capacity of teachers around the world. Varkey Foundation awards the Global Teacher Prize a US $1million dollar award, presented annually to an exceptional teacher who has made an outstanding contribution. Having known Hillcrest since my days at Kenton College, it is a good result to see the school find a stable and expert platform. In education, stand alone Institutions are inherently at a disadvantage versus specialist school networks, where bench strength, and opportunities for deep collaboration exist, and what works in one jurisdiction can be rapidly rolled out in others.
Macro trends are driving interest in education sector. First, the demographic dividend. Africa is the youngest continent. In Kenya, the net population add is above 1m a year. This represents the pipe-line of students. There is no demographic dividend without education. Charles Robertson, the global chief economist at Renaissance Capital pronounced that, in trying to answer the question “where will the jobs come from in demographically booming Africa?”.
A 54-year-old theory to test, which has relevance for India, Egypt and many frontier markets says countries cannot grow sustainably unless there is 40% literacy and cannot industrialise unless there is 70-80% literacy. In East Africa, Kenya (78%) is ripe for industrialisation, Ethiopia lags at 49%, far less than China even in 1990. The East Africa Community has the high investment rates needed to industrialise within five to 10 years. Our parents are correctly determined to invest in their children's education. Education is a need, not a want. The Gross Enrolment Ratio has doubled in the last 10-years to 8.5% in 2016 from 4.5% in 2006 according to “The Business of Education in Africa” report.
Other significant education announcements confirm the sector is attracting a lot of interest. Fanisi Capital is investing Sh400M in Kitengela International School for an undisclosed stake. Makini School was acquired through a joint venture between Schole (Mauritius) Limited, a London-based education provider, Caerus Capital and Advtech Group for Sh1.5B. Advtech Group also launched Crawford Kenya International College. Dubai Investments joined a consortium including Centum, Investbridge Capital and Sabis Education Network and are set to roll out a chain of Sabis-branded private schools in Africa. There are plenty of other examples. New schools are popping up, like Nova Pioneer. We must not forget strong indigenous brands like Braeburn, Starehe, Peponi, Visa Oshwal and others.
Competition and investment are required to equip our children, the most valuable equity in Kenya for the new 21st century, which is so fluid, so fast moving, simply nothing like what has gone on before.