SAUDI ARABIAN GENERAL EDUCATION:

SAUDI ARABIAN GENERAL EDUCATION:
THE PRIVATE SECTOR CASE Partners in Growth

Outline Market Overview Competitive Considerations Main Players
“Saudi Education Sector” Market Overview Competitive Considerations Main Players Market Drivers 2 2 Partners in Growth

Market Overview 3 3 Partners in Growth

Saudi Arabia Has The Largest Market For Educational Services In The GCC Region
“Saudi Education Sector” Education is considered as the basis of future socio-economic developments and has the continuous support of GCC governments either through developing public schools or encouraging private initiatives This has led during the past years to an increase in the “Education population” Based on the latest available Official figures, total number of students in the GCC general education (K-12) are estimated at more than 6 million Saudi Arabia is estimated to account for circa 75% of total students, compared to UAE and Oman 9% and Kuwait 7% Saudi Arabia has the largest number of K-12 schools with some 24,881 establishments Bottom line: Saudi Arabia is an attractive market as it represents the largest education base in the GCC region NUMBER OF STUDENTS* IN THE GCC GENERAL EDUCATION NUMBER OF SCHOOLS* IN THE GCC GENERAL EDUCATION million 000s 4 *Exclude kindergarten *Exclude kindergarten 4 Sources: Local Ministries Of Education, Local Ministries Of Planning, GC Research Sources: Local Ministries Of Education, Local Ministries Of Planning, GC Research 4 Partners in Growth

Post-Secondary Education for Men non-University technical
Outline Of The Education System In Saudi Arabia “Saudi Education Sector” Age Grade Post-Secondary Education for Men University level Post-Secondary Education for Women University level Post-Secondary non-University technical education Doctorate 3 years Propagation Doctorate Field of Education only Higher institute Diploma 1 year Higher institute for finl and coml sciences, 1 year General diploma in education 1 year Master degree 2 years Master degree 3 years Doctor of Medicine 8 years Masters 2 years Technical college certificate 3 years Certificate of completion 2-3 years Baccaloreus 4 years of study Baccaloreus in Engineering and Veterinary medicine 5 years of study Baccaloreus in engineering and veterinary medicine 4 years of study 18+ 13+ Baccaloreus 4 years Postsecondary teacher education (Primary, 4 years) General education Secondary Education - General Track General Secondary Education Certificate Secondary Education – Religious Religious Institute of Secondary Education Certificate Secondary Education - Technical Track Diploma Al Madaaris Vocational Technical Training Secondary vocational certificate 15-17 10-12 12-14 7-9 Intermediate School Intermediate School Certificate 6-11 1-6 Primary School General Elementary School Certificate Kindergarten 5 5 Partners in Growth

General Education Has The Largest Share In The Sector
“Saudi Education Sector” Bottom line: General education in KSA represents a major investment opportunity with 83% of total students BREAKDOWN OF STUDENTS BY EDUCATION LEVEL IN SAUDI ARABIA Figures for the year 2005 Total Share Kindergarten 97,137 1.8% Elementary 2,417,811 45.3% General Education Intermediate 1,071,747 20.1% Secondary 954,141 17.9% Technical education 26,814 0.5% Special education 18,958 0.4% Adult education 87,978 1.6% Other education 57,481 1.1% Higher education 603,767 11.3% Total 5,335,834 100.0% 6 Sources: Ministry Of Education, Ministry Of Higher Education, General Organization For Technical Education, GC Research 6 Partners in Growth

General Education Has Progressed At Mixed Rates During Past Years
“Saudi Education Sector” The number of students enrolled in the general education has increased during the last 5 years at an average rate of 1.7% The elementary level progressed at 1.1% and the secondary level increased at a solid rate of 5.6%, against only 0.1% for the intermediate level These rates reflect a mixed evolution of enrolled students in the general education The latter is mainly due to the effort of the government to reach the 100% enrollment rate at the elementary level in particular, which translates in lower growth at the intermediate level; this is also accompanied with relatively high drop outs and repetition rates Bottom line: Despite the mixed performance, general education has historically registered prolonged growth EVOLUTION OF NUMBER OF STUDENTS IN THE ELEMENTARY, INTERMEDIATE AND SECONDARY EDUCATION Elementary Education Intermediate Education Secondary Education 000s 000s 000s CAGR 5.6% CAGR 0.1% CAGR 1.1% 7 Sources: Ministry Of Planning, Ministry Of Education, GC Research 7 7 Partners in Growth

Strong Government Budgets Have Accompanied The Development Of General Education
“Saudi Education Sector” The total government appropriations for education reached for the year 2005 around US$ 17.8 billion, with US$ 13.9 billion or 78% for the general education This education budget represents a share of 19% of the annual governmental expenditures estimated at US$ 92 billion and around 5.7% of the gross domestic product Public budget for education progressed during the past 5 years at an annual rate of 6.9% These size indicators, high by international standards, reflect the priority given by KSA to the education sector However, this is accompanied by a relatively high level of drop outs and repetition at all education grades, which reflects a relatively serious internal inefficiency Bottom line: The constant government attention to education is a clear indicator of its support for future growth PUBLIC SPENDING ON EDUCATION Public Expenditures On Education / Total Government Expenditure Public Expenditures On Education / Gross Domestic Product Saudi Public Expenditures On Education By Agency 8 Sources: UNDP, Ministry Of Planning, GC Research 8 Partners in Growth

The Public Sector Remains The Major Player In The Education Sector
“Saudi Education Sector” Out of the 24,881 schools in the general education for the year 2006, the public sector represented 91.6% against 8.4% for the private sector Similarly, the public sector accounted for the majority of the 4.5 million students in 2006 with a share of 92.1%, against 7.9% for the private sector However, the government is willing to increase the private sector participation at all level of the general education as indicated in its actual strategic policies and, in particular, as elaborated in its 10-year plan In fact, the historical evolution of education reflects a rising role of the private sector in delivering educational services Bottom line: The public sector hegemony should progressively, but in limited amplitude, regress in the favor of private sector BREAKDOWN OF PUBLIC-PRIVATE SCHOOLS IN GENERAL EDUCATION BREAKDOWN OF PUBLIC-PRIVATE STUDENTS IN GENERAL EDUCATION 9 Sources: Ministry Of Planning, Ministry Of Education, GC Research 9 Partners in Growth

But The Private Sector Is Expanding At Pronounced Rates
“Saudi Education Sector” The total number of students in the private sector reached 356,733 at end-2006, rising at a 5-year CAGR of 6.6% Similarly, the number of private schools reached 2,099 at end-2006 with a 5-year CAGR of 5.1% At these growth levels, the private sector has outpaced the market averages, which were respectively 1.7% and 2.3% The highest growth rates in the number of private schools were registered in the secondary grade with a CAGR of 9.0%, followed by the intermediate grade 4.5% and the elementary grade 3.8% Similarly, the number of students in the secondary grade rose by 15.1%, followed by the elementary 4.0% and the intermediate 3.1% Bottom line: The private sector witnessed relatively high solid growth rates at all educational grades EVOLUTION OF SCHOOLS IN THE PRIVATE SECTOR EVOLUTION OF STUDENTS IN THE PRIVATE SECTOR CAGR 5.1% CAGR 6.6% 1,634 2,099 259,676 356,733 10 10 Sources: Ministry Of Planning, GC Research 10 Partners in Growth

Pronounced Growth In The Private Sector Is Present At All Educational Levels
“Saudi Education Sector” EVOLUTION OF SCHOOLS IN THE PRIVATE SECTOR Elementary Intermediate Secondary CAGR 5.1% CAGR 4.5% CAGR 9.0% EVOLUTION OF STUDENTS IN THE PRIVATE SECTOR Elementary Intermediate Secondary CAGR 4.0% CAGR 3.1% CAGR 15.1% 000s 000s 000s 11 Sources: Ministry Of Planning, GC Research Partners in Growth

Pronounced Growth In The Private Sector Is Present At The Male And Female Levels
“Saudi Education Sector” EVOLUTION OF SCHOOLS IN THE PRIVATE SECTOR Elementary Male Female Intermediate Male Female Secondary Male Female CAGR 2.6% CAGR 3.6% CAGR 3.9% CAGR 7.1% CAGR 5.8% CAGR 13.8% EVOLUTION OF STUDENTS IN THE PRIVATE SECTOR (000s) Elementary Male Female Intermediate Male Female Secondary Male Female CAGR 4.3% CAGR 3.6% CAGR 1.6% CAGR 6.4% CAGR 12.9% CAGR 19.6% 12 Sources: Ministry Of Planning, Ministry Of Education, GC Research Partners in Growth

Projected Steady Growth In Demand For General Education
“Saudi Education Sector” The cumulative number of new entrants to the general education during is estimated at 4.5 million students The elementary level will account for around 38.2% of the total, the intermediate 34.2% and the secondary 27.6% New entrants to the general education should progress at an annual rate of 2.2%, during the considered period with the secondary level averaging 2.6% and the elementary and intermediate levels 2.0% These future growth levels remain greater than historical rates which averaged 2.0% for the period These projections are mainly based (1) on the full application of 100% enrollment rate at the elementary level and 95% at the intermediate, (2) on an enhancement of the success rates (repetition rates at 5% for elementary, 7% intermediate and 8% at secondary), (3) on a reduction of drop outs to 1%, (4) on the population growth rate Bottom line: Growth for the overall sector will remain greater than in the past, suggesting further opportunities for the private sector EVOLUTION OF THE NUMBER OF NEW ENTRANTS TO THE GENERAL EDUCATION CAGR 2.2% 1,173 CAGR 2.0% 1,148 000s 1,090 1,099 1,125 1,025 969 13 Sources: Ministry Of Planning, GC Research Partners in Growth

Market Size Estimates “Saudi Education Sector” Partners in Growth
We will approximately assess the market size of private schools in Saudi Arabia by estimating the total collected fees The available industry data assume the average private school fees between SAR 4,500 to SAR 20,000 per student In order to narrow our estimate range, we will (1) assume that the highest fees are charged by the largest schools and (2) calculate accordingly the fees for the smaller schools by a relative approach These estimates do not take into account the fact that many schools in Saudi Arabia do not collect their fees properly Our calculations will take into consideration, for the primary, intermediate and secondary, the following: - Industry reports estimate that around 70% of schools have an average fee of SAR 7,000-SAR 20,000 per student - We consider that these 70% of schools correspond to the largest schools and the 30% for the smallest - For the first group we will process to the relative approach with fees of SAR 7,000-20,000 and for the second group with fees of SAR 4,500-7,000 Based on the above, we estimate the annual private school fees at around US$ 1.4 billion and reaches US$ 1.6 billion when including estimates for transportation fees In order to check the accuracy of such calculations we will proceed with an other calculation: - Based on the Ministry Of Education budget for the general education, public spending is at circa US$ 13.9 and, taking into consideration private schools have a share of circa 7.9% of total students, we will have by iteration a market size of US$ 1.2 billion It is worth noting that the latter calculation omits the cost difference considerations of operating public and private schools MARKET SIZE ESTIMATES Based On Fee Calculations MARKET SIZE ESTIMATES Based On Public Spending US$ 1.4 billion US$ 1.2 billion US$ million US$ billion 14 Sources: GC Research Sources: GC Research Partners in Growth

Competitive Considerations
15 Partners in Growth

4 Main Areas To Assess Saudi Private Schools’ Competitiveness
“Saudi Education Sector” Differentiation is a key competitive advantage in the education market that could explain the actual overall picture of the public-private and private-private competition In the following slides, we shall examine the main domains that reflects lacks of private schools, in particular when compared to public schools Private education in the Kingdom has evolved, in the past, to provide qualitative services, with many private schools having developed and renewed their programs to meet student needs via adopting qualitative educational skills as: IT and enhancing and optimizing the human and financial resources These developments were mainly driven by the government support and by the intensified competition among private schools which increased in number and size However, Saudi private schools present in many cases several dilemmas which are decisive for their sustained competition in the market Bottom line: There are 4 main domains to assess the overall attractiveness of the Saudi private schools: - quality of school infrastructure - qualitative and quantitative selection of the teaching staff - school management evaluation - curriculum and student activities 16 Partners in Growth

Quality Of Saudi Private School Infrastructure: Need To Build New School Infrastructure (1)
“Saudi Education Sector” The quality of school buildings are an essential tool for differentiation as they represent the basic environment for learning Based on several industry surveys, it is estimated that a large part of private schools in KSA, on average between 55%-65% are not built for education purposes, with some differences across the different regions of the Kingdom Such situation occurred as many private education institutions acquired residential buildings and relatively modified them to meet minimal practical educational requirements These buildings remain below the prerequisites of an ordinary school infrastructure and cause many inconveniences for students, teachers and administrative staff among which we mention: (1) the incapability of principals to control the school as a result of the numerous entries/exits and of the disparate classroom locations, (2) the inconvenient aeration, conditioning, lighting of classrooms Within this context, the Ministry Of Education regularly controls and classifies the schools’ infrastructure and entail the concerned institutions to meet requirements in a given period of time In fact, many school owners can not afford the minimum required enhancements either via maintaining and improving the building quality or via moving to a new building and, in consequence, are left operating without a license In order to facilitate the building of new infrastructure, the Ministry Of Education provides the private schools with different loans covering up to 50% of the total cost with a 2-year grace period from the start of operations Bottom line: The status of the Saudi private schools points to a relatively high proportion of non-school building requiring on a one hand continuous maintenance funding and on the other the building of new infrastructure BREAKDOWN OF PRIVATE SCHOOLS BY BUILDING TYPE* BREAKDOWN OF PRIVATE SCHOOLS BY LICENCE AVAILABILITY* *Above estimated figures are for secondary private schools *Above estimated figures are for secondary private schools 17 Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Partners in Growth

Quality Of Saudi Private School Infrastructure: Relatively Significant Student Concentration (2)
“Saudi Education Sector” Availability of space for students are a complementary basic tool to ensure an adequate educative environment The evaluation of student concentration in private schools reflects some major characteristics combining a relatively low number of pupils per classroom and a relatively low availability of classroom and playground spaces per pupil In fact, for the year 2006, the average number of students per classroom in the private sector is estimated at 19 against an average of 23 in the public sector, with 17.9 for the elementary level, 18.4 for the intermediate and 21.7 for the secondary In parallel, the private establishments in KSA reflect lacks in the availability of spaces where estimates point to a majority of schools having less than 2 sqm of classroom spaces per pupil and less than 5 sqm of playgrounds and recreational areas per pupil These low levels of available spaces per student are mainly related to the Ministry Of Education regulations which, instead of linking between the available areas and the number of students, specify the minimum required overall classroom space and the minimum required overall outdoor space Within such a context, a private school should combine between the both absolute and relative availability of space Bottom line: Despite a low number of pupils per classroom, Saudi private schools are widely lacking indoor and outdoor space for students which will need further expansions with the increased competition NUMBER OF STUDENTS PER CLASSROOM PRIVATE SCHOOLS BY CLASSROOM AREA PRIVATE SCHOOLS BY OUTDOOR AREA Sources: Ministry Of Education, GC Research *Above estimated figures are for secondary private schools *Above estimated figures are for secondary private schools 18 Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Partners in Growth

Quality Of Saudi Private School Infrastructure: Selected Inefficiencies In The Usage Of Education Equipments And Tools (3) “Saudi Education Sector” The qualitative and quantitative usage of educational equipments and tools in private schools are essential as they are considered as a major practical mean for the overall education program At the level of the KSA, libraries are widely present in private schools with estimates pointing to an average close to 100% However, some inefficiencies in managing these libraries are present: a number of schools especially in Riyadh have a student age-book mismatch along with a low quality in the library infrastructure and full-time personnel At the level of the laboratory availability, based on several Industry estimates and on our visits to schools, it is widely agreed that more than 90% of private schools have a laboratory However, when differentiating between different types of laboratories, the availability of laboratories with adequate equipments vary and an efficient usage of these tools relatively lacks in many cases In fact, when we consider separately the physics, chemistry and biology laboratories, the overall availability ratio reached on average less than two third of the schools along with some lacks at the level of full-time personnel Bottom line: Education equipments and tools, which are considered a source of differentiation for any competing private school, present some efficiency and quantitative lacks in a number of private schools LIBRARY QUALITY IN PRIVATE SCHOOLS PHYSICS, CHEMISTRY AND BIOLOGY LABORATORIES CIVIL DEFENSE APPROVAL *Above estimated figures are for secondary private schools *Above estimated figures are for secondary private schools *Above estimated figures are for secondary private schools 19 Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Partners in Growth

Quality-Quantity Issue Of The Teaching Staff: Existence Of A Relatively Low-Waged Non-Saudi Teacher Base (1) “Saudi Education Sector” The qualitative and quantitative availability of the teaching staff plays an essential role in a private school competitiveness Based on the 2006 statistics we gathered from the Ministry Of Education, it appears that private schools have in relative terms slightly more teachers than the public sector The student-to-teacher coverage ratio averaged 10.8 in the private sector compared to 11.2 in the public sector Furthermore, a breakdown of teachers by nationality show that private schools have on average of 52% non-Saudis compared to only 2.8% in the public sector In fact, as the private schools are profit-driven, they tend to: - hire more non-Saudis which have relatively lower wage requirements - hire less Saudis because of the higher wage they can have in the public sector Bottom line: Regarding the quantitative issue, private schools tend to hire relatively more teachers, with emphasis on non-Saudis which have in general relatively lower wage requirements than the Saudis SUDENT-TO-TEACHER COVERAGE RATIO BREAKDOWN OF TEACHERS BY NATIONALITY IN PRIVATE SCHOOLS Sources: Ministry Of Planning, Ministry Of Education, GC Research Sources: Ministry Of Planning, Ministry Of Education, GC Research 20 Partners in Growth

Quality-Quantity Issue Of The Teaching Staff: Need For Better Teacher Evaluation And Selection (2)
“Saudi Education Sector” Regarding the qualitative issue, private schools present a dilemma: (1) the non-Saudis are constantly looking for better prospects elsewhere (2) hiring in return Saudis has its own inconveniences as they have less competencies and tend ultimately to go to the public sector In consequence, this leads to higher teacher turnover and negatively impacts the accumulation of experience and homogeneity within the considered private school with all its spillover effects on output Also, it is worth noting that private schools have flexibility in choosing and hiring teachers and releasing the non performing ones According to estimates, private schools did not profit from this flexibility and have not hired the best teachers In fact, industry surveys do not reflect pronounced difference between teacher performance in private and public schools This is mainly due (1) to the lack of specialized staff, within the school, capable of evaluating the teachers and (2) to the lack of care on the behalf of the school owner Bottom line: The private schools in Saudi Arabia do not relatively hire the better performing teachers, which can negatively affect the overall school competitiveness TEACHER PERFORMANCE IN PRIVATE AND PUBLIC SCHOOLS Based On Test Results For Teachers (Grades 0 to 100) 21 Sources: Industry estimates, GC Research Partners in Growth

School Management Evaluation: Selected Conflicts Are Current Between Principal And School Owners (1)
“Saudi Education Sector” The principal’s status and the school owner’s status are decisive in the private sector The school principal plays an essential role in the education process and it is crucial to retain him the longest period of time It is widely believed that such permanent status (1) guarantees the stability of the ongoing school educational policy, (2) better assess the pros and cons of the school, (3) better understand the needs of the students, (4) better evaluate the teachers In parallel, it is highly important to assess the relationship between the principal and the school owner, as the former represents the link between the latter and the school management team It is commonly recognized that school owners oppose selected principal recommendations, in particular as these decisions are frequently against the owners’ personal interests For example, despite that school owners do not interfere in the principal’s function, the appointment of teachers by the principal is opposed in 45% of cases because: - the principal chooses the teachers based on competency, skills and experience - the school owners prefer to hire non resident teachers as they require lower wages than residents Bottom line: The principal-school owner relationships reflect, in many cases, fundamental conflicts in interest PRINCIPAL DECISIONS IN CONFLICT WITH OWNERS INTERESTS SCHOOL OWNERS DO PROVIDE ESSENTIAL EQUIPMENTS OWNERS OBJECT THE RECOMMENDED TEACHER APPOINTMENTS 22 Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Partners in Growth

School Management Evaluation: Educational Supervision Reflects Some Lacks And Inefficiencies (2)
“Saudi Education Sector” A pronounced number of private schools in KSA, estimated to a 1/3, are believed to lack a specialized educational supervision team In fact, regulations do not stipulate the existence of such supervision but the Ministry Of Education, as part of its continuous evaluation and supervision of schools, affects a budget in this respect In the remaining 2/3 schools, it is widely believed that, in more than 80% of the cases, the available education supervisors (1) meet weekly with the school management, (2) attend teacher courses, (3) present reports on the school operations, (4) supervise the application of their own remarks However, the supervision efficiency remains mixed with only 60% of the considered schools find that the educational supervisor (1) supplies schools with new educational developments, (2) supplies schools with selected furniture, (3) generalizes the inter-teacher visits in the school, (4) increase the teacher qualifications via conferences and researches, (5) sets criteria for educational supervision Furthermore, a large number of schools, estimated at a 1/3, consider the educational supervisor visits insufficient to solve the assessed difficulties and to evaluate the available specializations, with some 2/3 of schools recognizing that the visits supply the education establishments with knowledge and know-how Bottom line: The educational supervision, which is an integral part of assessing and controlling school performance, lacks in a non-negligible number of private schools in KSA and remains inefficient in many cases EXISTENCE OF AN EDUCATIONAL SUPERVISION TEAM BREAKDOWN OF SUPERVISION TEAM BY STATUS BREAKDOWN OF SUPERVISION TEAM BY EFFICIENCY 23 Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Partners in Growth

School Management Evaluation: Teacher Wages Are Key In The Cost- Performance Tradeoff For Private Schools (3) “Saudi Education Sector” The level of teacher wages has a crucial impact on the quality of the delivered educational services In Saudi Arabia, the majority of teachers in private schools are non nationals and have wages relatively low when compared to the public sector Such situation constrain teachers to considerably resort to private lessons or accept additional jobs Based on a industry estimates, the majority of principals recognize that teachers consider their wages as insufficient and clearly appear unsatisfied by the situation Therefore, it is believed these low revenues highly impact the teacher performances Bottom line: The teacher wages in Saudi private schools are in most cases relatively low which impacts negatively the school overall output and competitiveness TEACHERS HAVE LOW AGES (Principals View) TEACHERS ARE UNSATISFIED (Principals View) WAGES AFFECT PERFORMANCE (Principals View) 24 Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Partners in Growth

School Management Evaluation: Lack Of Selected Student Discipline (4)
“Saudi Education Sector” Private schools in Saudi Arabia present a lack of student discipline in particular at the secondary level when compared to the public sector In fact, it is considered that on average 45% of secondary schools present a problem with (1) irregular presence at school, (2) high student disturbance, which (3) affect the teacher performance Such situations are present despite that the majority of the principals (1) do not accept repeating exams, (2) seek to ensure equal student opportunities, (3) go through parent complaints Furthermore, secondary education in private schools reflect some lenience in exams and tests In fact, despite the availability of competent staff for supervising tests, more than 50% of considered schools have cases where teachers overlook cheatings and deliberately give additional grades Also, it is worth mentioning that, in general, students tend to remain in the same school for the longer possible period of time Bottom line: As the reputation of any private school goes along with its own discipline, it is essential to consider enhancements at this level LACK OF STUDENT DISCIPLINE (Principals View) PRINCIPAL SEVERITY (Principals View) TEACHERS SEVERITY IN EXAMS (Principals View) 25 Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Sources: Industry estimates, GC Research Partners in Growth

in delivering education Availability and better
Curriculum And Students Activities: A Needed Differentiation For Private Schools “Saudi Education Sector” The private schools have historically been considered as the duplicates of the public schools as they delivered the same core curriculum This has been a main obstacle for the attractiveness of private schools, especially that they impose fees for supplying the same services than the public sector However, private schools used to differentiate by providing some additional services for students as sportive activities, arts, scouts, theatre, science and some supplementary courses These services are in many cases inefficiently provided and are a burden on the student’s already intense curriculum courses But, if private schools aim to further compete with the public sector, more improvements must be made at the level of the curriculum taught In fact, the Ministry of Education has allowed, during the past 2-3 years, private schools to adopt the international curriculum and began, in this respect, to grant the related licenses This initiative is expected to trigger investments in the private education as the quality of delivered services will be enhanced Bottom line: The Ministry of Education licenses for international curriculum should build on actual competitive advantages to further the private education role MAIN QUALITY DRIVERS FOR FUTURE PRIVATE EDUCATION ATTRACTIVENESS International curriculum Better quality-fee ratio Special care given to students Better education level in many schools Some better teaching staff Bigger potential in delivering education Additional services and activities Availability and better hiring of teachers 26 Partners in Growth

Main Considerations For Evaluating A Private School
“Saudi Education Sector” Bottom line: In the majority of the below items, private schools do not offer relatively better services to clearly boost a migration from public to private sector School building Classrooms, libraries and laboratories Other infrastructure School management Teaching staff Students Available space to number of students School seats and age/quality requirements Rooms for various activities Info on school ownership relative number Absolute and of teachers Number of students and school absorptive capacity Available classroom spaces Theatre Info on school BOD or management team Overall course burden per teacher Basic teaching tools in classrooms Student concentration indoor and outdoor Available security tools Rooms for different teaching and technical activities Management-staff interaction Aeration, conditioning, lighting Adequate laboratories at education levels School owner functions and roles Nationality, experience, qualifications of teachers Repetition and success rates Available stocks for teaching tools supervisory, teaching Available rooms for and admin. staff Responsibility and function sharing system Adequate laboratory tools and equipments Average years of students in school Cafeterias and health requirements Supervisor availability, qualifications and role Toilets Teachers’ activities beside teaching Principal’s nationality, competency and experience Overall performance of the school students Indoor and outdoor spaces Safety tools in labs Sport infrastructure with adequate equipments Performance of teachers Staff’s nationality, competency and experience laboratories, libraries, Available space for sports, various act. Basic books in libraries Remuneration of teachers Overall performance of students relative to other schools Available health infrastructure Performance reports on the administrative staff Absorptive library capacity Simple and adequate design of the buildings laboratory, library Availability of and IT specialists Parking for buses and cars qualitative aspect of Quantitative and admin. staff Availability of communication tools IT equipments Scholarships Qualification, experience and performance of these specialists Student treatment and progress reports Efficiency in using the school infrastructure as buildings, laboratories, libraries and others Overall wage and remuneration status 27 Partners in Growth

Main Players 28 Partners in Growth

Principals for 2,099 schools
Organizational Summary Of Education In Saudi Arabia “Saudi Education Sector” Education Bodies supervises Ministry of Education Ministry of Higher Education General Establishment of Technical Education and Vocational Training Ministry of Civil Service Ministry of Health and Saudi Commission for Health Specialties Ministry of Defense and Aviation Ministry of Interior Royal Commission for Jubail and Yanbu General education Type Of Private Schools Supported by The Ministry Day schools with the 3 educational levels: Primary, intermediate and secondary Night schools Quran memorization schools Arabic language education schools for non-Arabic speakers English language schools and institutes Calligraphy institutes Schools Students General education 1,933 59 107 333,109 9,398 14,226 Administrative cadre Librarian Laboratory technicians Management School principal School deputy Clerk Typist Technical cadre Teachers Student advisor Educational supervisor Principals for 2,099 schools 33,146 teachers 4,047 administrative staff 29 Partners in Growth

Overview Of Private School Statistics In General Education
“Saudi Education Sector” Education Aggregates 2006 figures Education Ratios 2006 figures 30 Partners in Growth

The Geographic Concentration Of Private Schools Is In Big Regions
“Saudi Education Sector” At the mirror image of the overall population, the private schools and students are relatively concentrated in the highest populated regions The regions of Riyadh, Makkah, Eastern Province and Madinah account for 87.2% and 90.4% of private schools and students respectively, compared to a population concentration of 71% This suggests that some regions are highly supplied with educational services relatively to other low populated regions Furthermore, we estimate the number of schools per 100,000 inhabitants in KSA is at around 6.0 with the largest 4 regions averaging 10.3 Bottom line: The degree of student and school concentration is in line with our perception that peripheral regions aren’t attractive for private investments given the low level of population PRIVATE SCHOOL AND POPULATION DISTRIBUTION NUMBER OF PRIVATE SCHOOLS PER 100,000 INHABITANTS Private school distribution Population distribution Difference Riyadh 36.7% 24.1% 12.6% Makkah 30.3% 25.6% 4.8% Eastern 15.5% 14.8% 0.7% Madinah 4.8% 6.7% -1.9% Tabuk 2.1% 3.0% -1.0% Qassim 4.1% 4.5% -0.3% Average 6.0 schools per 100,000 inhabitants Asseer 3.0% 7.4% -4.4% Hail 0.9% 2.3% -1.4% Jouf 1.3% 1.6% -0.3% Northern 0.5% 1.2% -0.7% Jizan 0.3% 5.2% -4.9% Najran 0.4% 1.8% -1.5% Baha 0.1% 1.7% -1.6% 31 Sources: GC Research Sources: GC Research Partners in Growth

Degree Of Market Concentration And Fragmentation In The General Education (1)
“Saudi Education Sector” In order to assess the degree of concentration/fragmentation of the general education market, we will proceed to: - a calculation of the top schools’ market shares in the corresponding segments - a calculation of the “Herfindahl-Hirschman Index” which sums (1) the sum of the squared differential between the individual school market shares and the average school market share (2) the average market share of the schools In fact, the latter indicator takes into consideration the absolute and relative size of schools to determine the degree of concentration of the market with: - a ratio of 100% for the monopoly status - a ratio of 0% for the infinite competition status The explanation of the above indicators is: - the higher value of the largest schools’ market shares is an indicator of higher concentration of students in top schools - the higher value of the HH index is an indicator of the lower degree of fragmentation of the general education market Bottom line: The combination of the concentration and the fragmentation indicators will reflect the potential of consolidation in the Saudi general education market via school merging and/or school expansions 32 Partners in Growth

Degree Of Market Concentration And Fragmentation In The Private General Education (2)
“Saudi Education Sector” Conclusions Day schools - Fragmentation is very high Low grades are the most fragmented Male schools are the most fragmented - Student concentration in top schools is high - Concentration is higher in female schools Quran memorization schools Relatively low fragmentation, in particular in female schools High concentration at different levels, except intermediate male Night schools - Low fragmentation compared to day schools - Mixed concentration rates Bottom line: Day schools represent a potential for consolidation as indicators show a relatively high number of schools with low market shares 33 Partners in Growth

Major Male Day Schools At The Primary Level
“Saudi Education Sector” School City Students % share students Class- rooms Teach. Admin. School City Students % share students Class- rooms Teach. Admin. 34 Partners in Growth

Male Quran Memorization Schools At The Primary Level
“Saudi Education Sector” School City Students % share students Class- rooms Teach. Admin. School City Students % share students Class- rooms Teach. 35 Partners in Growth

Major Male Day Schools At The Intermediate Level
“Saudi Education Sector” School City Students % share students Class- rooms Teach. School City Students % share students Class- rooms Teach. 36 36 Partners in Growth

Male Night Schools At The Intermediate Level
“Saudi Education Sector” School City Students % share students Class- rooms Teach. School City Students % share students Class- rooms Teach. 37 Partners in Growth

Male Quran Memorization Schools At The Intermediate Level

Major Male Day Schools At The Secondary Level
“Saudi Education Sector” School City Students % share students Class- rooms Teach. Admin. School City Students % share students Class- rooms Teach. 39 39 Partners in Growth

Male Night Schools At The Secondary Level

Major Female Day Schools At The Primary Level

Female Quran Memorization Schools At The Primary Level
“Saudi Education Sector” School City Students % share students Class- rooms Teach. School City Students % share students Class- rooms Teach. 42 Partners in Growth

Major Female Day Schools At The Intermediate Level

Female Quran Memorization Day Schools At The Intermediate Level

Major Female Day Schools At The Secondary Level

Female Quran Memorization Day Schools At The Secondary Level
“Saudi Education Sector” School City Students % share students Class- rooms Teach. 46 Partners in Growth

Valuation For Regional And Global Companies In The Education Sector
“Saudi Education Sector” Sources: Reuters, GC Research 47 47 Partners in Growth

Market Drivers 48 Partners in Growth

Forecasted CAGR Of Young Population
Demand Drivers: Population Growth “Saudi Education Sector” Demographics, via changes in population volume and structure, are a major determinant of demand for education Saudi population will be growing during the coming 10 years at an average rate of around 2.5% and over the next 30 years at an average of circa 2.1% In absolute terms, the age segment of 5-19 will be growing at 2.0% and 1.5% over the next 10 and 30 years respectively In relative terms, the share of the 5-19 year-segment in total population will decline from an actual 35.4% to 33.7% in 2010 and 29.6% in 2035 Bottom line: Demographics reflect a sustained growth opportunities for the private sector as there will be more demand for education and in particular for the most skilled and productive labor areas DEMOGRAPHIC STATISTICS 30-y Population Forecasted Growth Forecasted CAGR Of Young Population (5-15 years) Dependency Ratios (5-15y/0-5 and 15+) 49 Sources: World bank, GC Research Sources: World bank, GC Research Sources: World bank, GC Research Partners in Growth

Nominal GDP Per Capita Growth Rates
Demand Drivers: Income Levels “Saudi Education Sector” Saudi citizens are present in a burgeoning economy, with strong growth and increased wealth Everything being equal, such trend results in an increased demand for education in quantity and quality During the last 4 years, the Saudi economy averaged a real GDP growth rate of 6.0% and a cumulative nominal GDP growth rate of 85% As a result, the average GDP per capita in Saudi Arabia have grown at a 4-y CAGR of 13.8% Bottom line: Saudi citizens can increasingly spend on education and afford more costly and qualitative services, which translate in a prolonged demand for private sector GDP AND INCOME STATISTICS Real GDP Growth Rates Nominal GDP Cumulative Growth Rates Nominal GDP Per Capita Growth Rates 50 Sources: IMF, GC Research Sources: IMF, GC Research Sources: IMF, GC Research Partners in Growth

Eighth Development Plan Targets (2004-2009)
Supply Drivers: Internal Efficiency “Saudi Education Sector” The Saudi general education reflects an internal inefficiency marked by an inadequacy between the inputs and the outputs At the level of inputs, as reflected in a previous slide, the government has a relatively high budget for education, in particular when compared to developing and developed countries Such inputs are not met with satisfactory outputs which reflect high drop out rates and repetition in the schools along with a relative weakness of graduates’ academic standards Bottom line: The need for more efficiency can benefit from the private sector capability to ensure the most qualitative services in an optimized way GOVERNMENT TARGETS IN SUCCESS RATES Eighth Development Plan Targets ( ) drop out to Reducing 1% at all stages repetition rate to Reducing 5% at the elementary stage repetition rate to Reducing 7% at the intermediate stage repetition rate to Reducing 8% at the intermediate stage Sources: Ministry Of Planning, GC Research 51 Partners in Growth

Supply Drivers: External Efficiency
“Saudi Education Sector” The Saudi general education reflects an external inefficiency marked by an inadequacy between its outputs and the needs of the economy and the society for various skills At the level of the society, an effective education system should prepare students to create and achieve comprehensive social development for the community via forming highly skilled workforce At the level of the economy, the Kingdom actually requires a considerable number of skills and scientific specializations This entails proper preparation of students in the different fields of maths, sciences, languages and information technology Bottom line: The private sector can play an increased role in delivering the best services with the most developed techniques to meet the economy and, ultimately, labor market needs 52 Partners in Growth

Supply Drivers: Government Vision
“Saudi Education Sector” The Ministry Of Education has developed a 10-year plan for the period with clear goals and objectives aiming at enhancing the education with the most practical and scientific means In particular, it has set a list 16 goals which we break down below by the number of objectives affected for each goal: Sources: Ministry of Education 10-year plan, GC Research 53 Partners in Growth

Partners in Growth

SAUDI ARABIAN GENERAL EDUCATION:

Similar presentations

Presentation on theme: "SAUDI ARABIAN GENERAL EDUCATION:"— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

SAUDI ARABIAN GENERAL EDUCATION:

Similar presentations

Presentation on theme: "SAUDI ARABIAN GENERAL EDUCATION:"— Presentation transcript:

Similar presentations

About project

Feedback