Demand may prove irresistible

No let-up in SA’s burgeoning number of independent schools

THE growth in independent basic education is being driven by two powerful factors — the potential of a substantial profit and the demand created by the inadequacy of public schooling — and the resultant force is virtually irresistible, education insiders say.

Since 2000, the number of independent schools has increased more than 44%, while the number of public schools has dropped by 9%. The number of pupils enrolled at independent schools has risen by more than 50% in that period, the South African Institute of Race Relations has reported.

Large corporations, such as the JSE-listed Advtech and Curro Holdings, a subsidiary of the JSElisted PSG Group, may be said to represent the profit motive.

Advtech owns a slew of schools, including the nursery and pre-primary group, Junior Colleges, the Crawford Schools, Abbotts College and Trinity House. It also owns tertiary education institutions and further education and training colleges.

Curro Holdings, which opened its doors with 28 pupils in 1998 and listed on the JSE two years ago, enrolled 21,908 pupils this year. It has a market capitalisation of R5bn. For the six months to June this year, the group reported a 91% increase in revenue and a headline profit of R14m from a headline loss of R3m from the previous half year. A doubling of that number over the next six month was possible, CEO Chris van der Merwe said when he announced the numbers. He attributed the performance to both acquisitive and organic growth in student numbers.

Curro plans to open nine new schools this year and to increase that number by 100 schools in the next decade, and now has a market capitalisation of more than R5bn. It has recently bought a privately run teacher-training college producing 1,000 teachers a year to serve the needs of its schools.

Not everyone in the independent schooling sector is enthusiastic about growth prospects. Allan Zulberg, CEO of Eden Schools, says the “hype” being created by some in opening huge numbers of private schools and promising shareholders large returns is questionable.

“Eden is aware of the sacrifice made by parents and we try to keep fees as affordable as possible while maintaining high standards. We therefore do not maximise profit, and claims of returns of 40% to 50% are, to put it mildly, doubtful.”

However, most of the schools surveyed see the prospect of profit and the poor performance of public schools as synergistic. Anastasia Krystallidis, executive head of independent school Saheti, says the growth is likely to continue “unless urgent steps are taken to improve the quality of education offered by state schools”.

Tim Nuttall, rector of St Stithians College in Randburg, agrees: “Over the past 30 years there has been a burgeoning of independent schools in our country, particularly in the middle fee and low fee range. This is partly a response to either the poor quality of public schooling or to the lack of provision of public schooling.”

Umalusi, the government’s quality assurance body which is charged with accreditation, estimates there are 3,500 registered independent schools in SA, which is about 1,000 more than the number registered with the Independent School Association of Southern Africa.

Business Day reported last month the Public Investment Corporation and financial services group Old Mutual have established an education fund and invested in the independent schooling groups Curro and Basa. The Basa Educational Institute Trust is a black-owned group which operates four schools in Soweto, Johannesburg CBD and Diepsloot. It employs 160 teachers and educates 5,000 pupils a year.

Another low-fee non-profit group, Spark Schools, was launched earlier this year. It plans to increase its number of schools by 64 per year. Next year, Nova Schools is set to open its doors in the Western Cape with funding from the Commonwealth Education Trust. It hopes to enrol 3,600 pupils within two years.

In a report by the Centre for Development and Enterprise (CDE), its executive director Ann Bernstein writes that by international standards, SA’s low-fee schools are expensive. “Fees range from R750 a month to R1,200 and even R2,000 a month. In India, budget private schools charge fees of R2,000 and less. In Kenya, a chain of low-fee schools charges R360 a year.

“The affordability issue raises the question of government subsidies. Registered, non-profit independent schools in SA are the only ones that can receive a state subsidy, but not all qualify — and their level of state subsidy is determined by their fees (the more school fees charged, the less the subsidy). This subsidy is never more than 60% of the equivalent cost of government schooling, even when the parents of children are poor.”

Bernstein has also proposed yet another approach that is intended to benefit poor students. A new research project by the CDE will investigate the possibility of introducing contract schools in SA’s public schooling system.

Contract schools are so named because they involve a contract between private sector service providers and the government. The idea is that private operators manage schools that are subsidised and supported by the state, while the service providers are contractually obliged to meet certain objectives.

In her report, Bernstein writes that in poor communities, where the government has admitted that public schooling is dysfunctional, there should be no reason why parents who choose to enrol their children at a private school in their community should receive substantially less support from the state than pupils enrolled in public schools.

“Why not have a system in which an agreed amount is allocated to each pupil, irrespective of the school they attend (public or independent), and then leave it to the parents to decide where to spend that money?”