Market grows in strength as states run out of cash

Conference speakers say private solutions needed to cope with demand. Phil Baty reports from Doha

November 26, 2009

Governments across the world must embrace the private sector if they are to meet growing demand for higher education, an international conference has heard.

Speaking at the World Innovation Summit for Education in Qatar last week, Svava Bjarnason, senior education specialist at the International Finance Corporation, said the model of universities being fully funded by the state was "unsustainable".

"If governments and society want further expansion of participation rates, alternative methods and mechanisms must be pursued," she said.

Figures from the Organisation for Economic Co-operation and Development show that the number of students pursuing tertiary education globally has grown more than fivefold - from 29 million to 153 million - in the past 35 years.

However, participation rates still "lag tremendously" in some nations, Ms Bjarnason added. She said that about 5 per cent of secondary-school leavers in sub-Saharan Africa attend university; in South Asia, the figure is about 10 per cent, in Arab states it is under 20 per cent, while "North America and Western Europe enjoy rates of more than 50 per cent".

As traditional funding models come under pressure, "a multitude of different players" have entered the education "market space", including religious and charitable foundations, Ms Bjarnason added.

"In particular, private-sector providers ... are establishing themselves as the dominant model in a growing number of emerging economies and increasingly in developed economies."

She said that in "a small but growing number of countries", private spending on higher education outstripped public expenditure.

For example, the Chilean state spends 0.3 per cent of the country's gross domestic product on tertiary education - less than one fifth of private contributions, which stand at 1.4 per cent, she said.

In South Korea, private spending is almost four times as high as public expenditure (2.2 per cent of GDP and 0.6 per cent, respectively).

Need for diversity

Ms Bjarnason said it was significant that the role of private providers - which now make up 30 per cent of worldwide provision - was quietly acknowledged by the United Nations Educational, Scientific and Cultural Organisation's 2009 World Conference on Higher Education in July.

The Unesco event's final communique states that "the knowledge society needs diversity in higher education systems ... In addition to public institutions, private higher education pursuing public objectives has an important role to play."

Ms Bjarnason said that "myriad organisations" were active in the sector, including corporations, individuals with high net worth, venture capitalists, private equity firms, education-holding companies, multilaterals, other cross-border education institutions and faith-based organisations.

She said that in Brazil, the private sector, which now makes up 70 per cent of all higher education provision, had transformed opportunities.

In 1999, the law was changed to allow for-profit providers to operate in the sector, and in 2005 financial incentives such as tax breaks were introduced to encourage the private sector to enrol more disadvantaged students on scholarships.

"The number of students attending post-secondary education from lower-income households was quite low - about 5 per cent. Now this group represents the fastest-growing demographic entering post-secondary education," Ms Bjarnason said.

The notion of a future for education "built on multi-stakeholder partnerships" was adopted as a "strategic priority" at the close of the summit.

In a separate panel session at the conference, Alex Wong, senior director of the World Economic Forum, explained that its Global Education Initiative had been set up to support greater collaboration between the public and private sectors.

"We cannot continue with current systems. There is an opportunity to integrate this new energy and these new stakeholders to move us forward," he said. But he warned that their success depended on high-level government support.

Speaking from the conference floor, Peter Cowley, director of school performance studies at the Fraser Institute, Canada, said he was excited by the prospect of what may happen if the "free market is left to do the work" in education.

He suggested that governments should set only basic ground rules, and "let the market get it all done everywhere".

But panel member Tidu Maini, executive chairman of the Qatar Science and Technology Park, was applauded when he said that the free market left to its own devices had "no vision and no values", since it was only "about making money".

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