AdvTech promises schools for Africa
Private education in demand by young population, says CEO
● JSE-listed private education group AdvTech is exploring the expansion of its private schools offering on the rest of the continent, saying it is evaluating opportunities in West, East and even North Africa.
“We are investigating and exploring markets constantly. I don’t want to say too much at this time,” says CEO Roy Douglas.
“We are in discussions. East Africa is an opportunity for us. We are there and we have a presence and we will continue to grow and expand. In West Africa there are some interesting markets, and of course North Africa too.”
Douglas says it has always been AdvTech’s strategy to expand in the rest of Africa as the continent has a young population with high levels of urbanisation and a growing demand for education, which is seen as a way out of the poverty trap.
Although the group’s education presence in the rest of Africa is a fraction of its overall business in terms of revenue, the growth from AdvTech’s portfolio there has been strong.
In its latest set of results, for the six months ended June, the group said its revenue from its schools portfolio in Botswana and Kenya increased 18% to R108m, even with the Kenyan government cancelling the 2020 school year.
AdvTech’s overall revenue increased 13% to R2.8bn from R2.5bn, while operating profit grew 4% to R444m.
“We have some 5,000 students now in the rest of Africa, which, although smaller than our South African footprint, is growing and becoming more and more significant and we certainly have ambitions to continue to grow this,” says Douglas.
The group already has a presence in Botswana and Kenya. In Botswana, it has three schools, while in Kenya it has seven. In Kenya it built a greenfield school called Crawford International and also acquired Makini School, a well-established brand in that country. In Nairobi, Makini has four schools, while in Kisumu, in the west of the country, it has two campuses.
As far as AdvTech’s rest-of-Africa expansion strategy is concerned, Douglas says the group does not want to set a target for a particular number of schools on the continent and would “rather evaluate the opportunities for their commercial sustainability and their appropriateness”.
“We can say we are exploring, we are finding some interesting opportunities, we are evaluating, and it will always be very considered. We understand and appreciate that operating in different geographies brings with it new challenges, and we don’t want to be seen to be simply pursuing a strategy because it was written down on a document somewhere.”
Small Talk Daily analyst Anthony Clark says AdvTech is the only South African education group that has branched off into the rest of Africa and that there is opportunity in particular in Anglophone Africa, in countries such as Uganda, Kenya and Ghana.
Clark says the Kenyan market has been a target for many education companies around the world.
“It [Kenya] has a very well-established network of private schooling. The trouble is, because the market is quite well developed and it is seen as one of the fastest-growing nodes in East Africa, you pay a premium to actually enter that market. The cost of building in that part of the world is significantly higher than building in this country. Having said that, the demand and the potential are there.”
However, Clark says the more that other companies start looking to enter the Kenyan market, “you start to reach a point of cannibalisation where there are so many upmarket private schools that you have to then start differentiating”.
“The same thing is happening in SA, especially around Waterfall Estate [in Gauteng] and parts of Durban around Ballito; there are so many high-end, upmarket private schools that they are now beginning to feed off each other.”
We are investigating and exploring markets constantly. I don’t want to say too much at this time
Roy Douglas
AdvTech CEO