{"id":738065,"date":"2023-12-12T17:18:16","date_gmt":"2023-12-12T15:18:16","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=738065"},"modified":"2023-12-12T17:18:16","modified_gmt":"2023-12-12T15:18:16","slug":"big-win-for-private-schools-in-south-africa-as-failed-state-deepens","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/738065\/big-win-for-private-schools-in-south-africa-as-failed-state-deepens\/","title":{"rendered":"Big win for private schools in South Africa as ‘failed state’ deepens"},"content":{"rendered":"\n

North of Johannesburg, in the slum district of Diepsloot, children play in the garbage-strewn grounds of a local school before spilling out across a busy road unsupervised to return home.<\/p>\n\n\n\n

It\u2019s a common sight in many impoverished communities in South Africa and symptomatic of an education system that ranks among the worst in the world.<\/p>\n\n\n\n

Aluwani Mantsho, who works as an administrator, is one of thousands of parents who\u2019ve turned their backs on the state system, choosing instead to send her two children to a private school run by Curro Holdings Ltd., which charges annual fees of as much as R54,000. <\/p>\n\n\n\n

\u201cWe don\u2019t mind making the sacrifice so that the kids are getting the best education,\u201d said Mantsho, overlooking the clean, fenced-in grounds complete with jungle gym play equipment.<\/p>\n\n\n\n

This sentiment has seen business boom for the nation\u2019s listed education companies as the public system buckles. Shares in Curro, an independent basic education provider that runs over 180 schools in southern Africa, have risen 23% this year. <\/p>\n\n\n\n

Competitor Advtech Ltd. has fared even better, rallying 38% and near a record high as the stocks outperform a 0.3% gain in the benchmark FTSE\/JSE Africa All Share Index.<\/p>\n\n\n\n

A lack of resources, crumbling infrastructure, overcrowded classrooms and corruption are all weighing on educational outcomes, with a 2021 international study of reading literacy standards among fourth graders placing South Africa last out of 43 countries. <\/p>\n\n\n

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The nation is also beset by widespread power cuts, a flailing rail and ports network, unemployment at more than 30% and gaping inequality that have all curbed growth in Africa\u2019s most industrialised economy.<\/p>\n\n\n\n

\u201cAs the state fails \u2014 as it (has) in many industries in the last 20 to 30 years \u2014 the private sector picks up where the government falls away,\u201d said Anthony Clark, an analyst at Small Talk Daily Research. He forecasts continued growth in the private education sector.<\/p>\n\n\n\n

Department of Basic Education spokesperson Elijah Mhlanga didn\u2019t respond to Bloomberg\u2019s phone calls and emails requesting comment.<\/p>\n\n\n\n

Advtech runs 110 school campuses across nine different brands. They include Crawford International North Coast College in KwaZulu-Natal province, one of the most expensive in the country, where annual fees for tuition and boarding can be as much as R279,000. <\/p>\n\n\n\n

That\u2019s about the same cost as an MBA at one of South Africa\u2019s top universities. For their money, fee payers get an average pupil-to-teacher ratio of about 25 per class, well-maintained facilities and a variety of extra-curricular activities and sports.<\/p>\n\n\n\n

\u201cDue to the growth in demand, we continue to grow our offering to ensure we can increase access to quality education to as many young students as possible,\u201d Advtech Chief Executive Officer Roy Douglas said in an emailed response to questions.<\/p>\n\n\n\n

Things aren\u2019t going as well for South Africa\u2019s sole tertiary education stock, Stadio Holdings Ltd. Shares in the company, which runs nine tertiary institutions, are up just 0.4% this year.<\/p>\n\n\n

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Clark noted that the tough economy and higher interest rates may have affected demand for post-school study. As of 2019, only 7% of South African adults had a tertiary education, according to the Organization for Economic Cooperation and Development.<\/p>\n\n\n\n

An October report by South Africa\u2019s Office of the Auditor-General paints a bleak picture of the state education sector. It found that early childhood development infrastructure was inadequately maintained, with some sites posing health risks. <\/p>\n\n\n\n

The average pupil-to-teacher ratio was 40. In one school, 215 pupils were enrolled across two classes with some having to sit on the floor \u201cas the furniture was not enough to accommodate all of them.\u201d<\/p>\n\n\n\n

After debt-service costs, education is the government\u2019s biggest expense. It accounts for 14% of the R2.2 trillion consolidated state expenditure, according to the country\u2019s 2023 budget review. That\u2019s more than the OECD\u2019s 2020 4.4% average.<\/p>\n\n\n\n

Nevertheless, South Africa\u2019s population with a tertiary education is the lowest across all OECD and partner countries, according to the latest Education with a Glance report.<\/p>\n\n\n\n

That\u2019s a problem for the economy.<\/p>\n\n\n\n

\u201cPoor education outcomes exacerbate South Africa\u2019s skills mismatch,\u201d said Bloomberg Economist Yvonne Mhango. \u201cIt implies the children matriculating from our schools are not employable, and a dent cannot be made in the country\u2019s persistently high unemployment rate.\u201d<\/p>\n\n\n\n

Clark is optimistic about the outlook for the three education stocks over the next 12 to 24 months. <\/p>\n\n\n\n

Curro, Advtech and Stadio reported growth in the number of pupils ranging from 3% to 9%, with fee increases of up to 14%. \u201cIt is clear from results seen in the 2022 full-year and 2023 first-half that the private education sector has become to many parents a necessity, rather than a luxury,\u201d he said.<\/p>\n\n\n\n

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Read: Billions in bailouts for failing SOEs in South Africa \u2013 Government\u2019s latest spin<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Analysts expect private schools in South Africa to continue to blossom and thrive as state failure spreads in the education sector.<\/p>\n","protected":false},"author":59,"featured_media":676119,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872,23],"tags":[26],"class_list":["post-738065","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-government","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/738065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=738065"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/738065\/revisions"}],"predecessor-version":[{"id":738071,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/738065\/revisions\/738071"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/676119"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=738065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=738065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=738065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}