Investing in the future: Substantial financial resources will support sector development

Over the past five years, a spotlight has been cast on the Saudi education system as the government has renewed its efforts to improve a sector that is crucial to the Kingdom’s long-term social and economic development plans. Education accounted for approximately 24% of the government’s entire planned budget for 2012 and 26% the previous year. The benefactor of SR169bn ($45.04bn) in government spending in 2012 (a 13% increase over the SR150bn, or $39.98bn, in 2011), general education, higher education and technical training have stepped out of the shadows to become the second-largest area of national expenditure after defence and national security.

Applying Resources

These resources have been applied to a broad range of projects ranging from building new primary schools to expanding the private education system and boosting the number of students studying abroad. And while many of these institutions and programmes draw their student bodies from the same pool, the goal of the sector’s development has not been to put these different schools in competition with each other but to offer greater choices to students through complementary offerings based on different strengths. Many private institutions, for instance, provide an emphasis on English and soft skills as well as opportunities to study abroad, while public universities and colleges may offer greater opportunities for traditional studies and research closer to home. In this vein, a good deal of the government’s efforts in the public sector are focused on bringing their standards and skill sets in line with private institutions in both Saudi Arabia as well as further afield.

Capacity Building

The 2012 budget allocated funds for 742 new schools and 2900 existing school-construction projects. There was also a SR25bn ($6.66bn) earmark for an electronics university, and another SR20bn ($5.33bn) in scholarships for more than 120,000 Saudi nationals studying abroad.

This comes on top of 2011 investments which included 610 new schools (general, university and specialised colleges) for both male and female students. Some of the larger stand-out projects for the 2011 budget include the King Abdullah bin Abdulaziz Project for Education Development (Tatweer), with SR9bn ($2.4bn) earmarked for general education work through the Education Development Holding Company – a wholly owned subsidiary of the Public Investment Fund. Additional housing units for university faculty and other staff are also set to be built at a cost of SR8.9bn ($2.4bn). The 2011 expansion comes on top of the 3200 educational institutions already under construction prior to 2011, excluding the 600 schools completed in 2010.

Furthermore, these finances do not include funds set aside for additional science and technology development projects as the continued implementation of the National Plan for Sciences and Technologies was awarded SR8.3bn ($2.2bn) in 2011 to support scientific research, technological development, and the transfer and Saudiisation of technology.

With a record budget surplus of SR386bn ($102.87bn) announced in December 2012, the windfall will continue for the education sector in the coming year. Out of total expected expenditures of SR820bn ($218.5bn), education will receive one of the largest slices, amounting to SR204bn ($54.37bn) or 21% of government outlays. This includes an earmark of SR3.9bn ($1.04bn) to build 539 new schools.

The Kingdom’s spending on the sector places it highly both within the region and the world at large. According to the World Bank’s World Development Indicators 2011, Saudi Arabia ranked 40 out of 165 countries included in terms of education expenditure as a percentage of GDP. At 5.6% of GDP, it ranked above other developed economies such as the UK and the US (which both came in at around 5.5%), and it is the highest-ranked of the GCC member states.

Five-Year Plan

This recent surge in investment is part of the government’s long-term plan as formally spelled out in the country’s ninth five-year plan (NFYP) which runs through 2014. Comprising the second of the plan’s five major themes, “development of national manpower and increasing their employment” is intended to realise objectives including increasing national labour force participation rates, continuous upgrading of skills and capabilities, and ensuring access to job opportunities. To these ends, the NFYP has committed more than half of its total budget of SR1.4tn ($385bn) to human resources development. The 50.3% share, good for some SR731.7bn ($195bn), dwarfs other sectors such as social and health services, accounting for 19% of allocations, economic resources for 15.7%, transportation and communication for 7.7%, and municipal and housing services for 7%.

Budget Breakdown

This represents a hefty 52.4% increase in funding over that set aside in the previous NFYP, which allocated SR479.98bn ($127.9bn) for educational and manpower development. Accounting for more than the entire eighth five-year plan educational budget with an earmark of SR498.4bn ($132.8bn), general education is the largest single recipient category of funding under the plan, with higher education coming up next at SR200.18bn ($53.34bn). These are rounded out by SR23.14bn ($6.17bn) for technical and vocational training, SR6.52bn ($1.73bn) allocated for science, technology and innovation, and SR3.23bn ($86.8m) for the Institute of Public Administration.

Among other targets, the current NFYP calls for boosting the capacity of primary, intermediate and secondary schools to 5.3m-plus students and universities to 1.7m students. This will require the construction of 25 new technology colleges, 28 technical institutes and 50 industrial training institutes, as well as expanding and diversifying post-graduate programmes. As part of the country’s push towards a knowledge economy, a special emphasis is also given to science and research areas through the allocation of SR900m ($239.9m) in annual research grants as well as the creation of 10 new research centres, 15 university technological innovation centres in association with King Abdullah City for Science and Technology (KACST), and at least eight technology incubators based at KACST and other local universities.

Higher Learning

A hefty amount of funding is being channelled towards tertiary education as well, with the Saudi education minister, Khalid bin Mohammed Al Anqari, announcing in May 2012 a SR81.5bn ($21.72bn) raft of investments for the sector. Some of the more significant projects within this plan include: 18 university cities and academy complexes for male and female students in Jazan, Hail, Taif and Kharj, among others; the King Abdullah bin Abdulaziz City for Female Students at Imam Muhammad bin Saud Islamic University; female student buildings at King Saud University; and female student areas at Umm Al Qura University. The plan also calls for investments in 161 infrastructure and support projects, 167 colleges for male students and 161 colleges for female students. Another 100 housing units accommodating 50,000 students and 11,000 housing units for faculty members are expected, in addition to 12 university hospitals in Jazan, Jouf, Hail, Baha, Taif, Taibah, Tabuk, Northern Borders, Najran, Rabigh, Kharj and Qassim.

A number of new work contracts for these projects were announced in October 2012 worth some SR2.8bn ($746.2m). Some of the larger individual contracts include SR536.5m ($143m) for Taibah University in Medina to construct a men's and women's medical college, a college of arts and humanities, a new building to be used as a higher institute for imams and the completion of the second phase of its distance education programme as well as a separate SR474.5m ($126.5m) for a new student hall at the university. Other contracts were awarded for infrastructure works at Jazan University for its College of General Health, phase II construction works at Taif University’s College of Engineering as well as to outfit the university’s colleges of computers and medicine, and various new buildings for different faculties at King Abdulaziz University.

Other major prestige projects include the SR18.76bn ($5bn), 8m-sq-metre new campus for Princess Noura University, which will include 13 faculties, a 700-bed student hospital, laboratories, research centres and residential area to accommodate the school’s 50,000 students. Another large-scale investment was made for the construction for the King Abdullah University of Science and Technology (KAUST), an international graduate research university that opened outside of Jeddah in 2009 and is unique for being the country’s first coeducational university. The school opened with an endowment of SR266bn ($10bn) and financial commitments from most of the country’s corporations, and it will have an annual research budget of around SR11.25m-18.76m ($3m-5m).

In addition to the substantial government outlays, private education institutions from around the globe have also been increasing their offerings. Offering services to students from kindergarten through to the university level, hundreds of millions of dollars in private sector investments have been serving to complement the public education system by offering a wide variety of specialised classes to nationals and expats alike.