Diversifying Saudi Arabia's education and training sector to achieve development goals

For the first time in recent years the budget for education fell year-on-year in 2016, leaving ministers and officials with some stark choices about how best to spend their allocation. On December 28, 2015, the day the government’s spending plans were announced, crude oil was trading at $37 a barrel, having fallen from the most recent peak of $115 in June 2014 and, as a result, Saudi government revenues had tumbled. Oil revenues were expected to reach SR444.5bn ($118.5bn) in 2015, representing 73% of total government revenues, 23% less than oil revenue for 2014, according to the Ministry of Finance. The overall 2016 budget of SR840bn ($223.9bn) was 2% lower than the SR860bn ($229.3bn) of planned expenditure in the previous year and 14% less than the SR975bn ($259.9bn) the government actually spent in 2015. Education’s budget allocation for 2016 was SR191.7bn ($51.1bn), 11.5% below the SR217bn ($57.8bn) of expenditure planned for 2015, and lower than in any year since 2012, when SR168.6bn ($44.9bn) was set aside for the development and running of schools and universities.

Lion’s Share

In spending plans for the years 2011-16, education has received a quarter of all planned expenditure, SR1.1trn ($293.3bn) from budgets totalling SR4.6trn ($1.2trn). In 2011 it received a slightly higher proportion of 26%, but 2016 was the lowest proportion for any year, at 23% of total planned spending. Defence and security, which generally receives a larger slice of the pie each year, was allocated SR201.3bn ($53.6bn) in 2016. However, if military expenditure is set aside, education received the largest allocation of any sector between 2011 and 2016. Although in nominal terms the education budget has increased by 28% from the SR150bn ($40bn) the sector was granted in 2011, the capital expenditure on new educational facilities since then has also created a larger current expenditure bill each year, with the Ministry of Finance calculating that SR450bn ($120bn) of total government expenditure be spent on wages and salaries, representing 54% of all outgoings. Although the policies outlined in the budget included “reviewing the growth” of recurring expenditures, there was no explicit mention of public sector job cuts. However, the budget also talked about “optimising” both expenditure on capital projects and the use of IT to deliver government services. Education had not been singled out for special treatment; indeed, it even fared better than some sectors. The health and social services budget was cut by almost 35%, from SR160bn ($42.7bn) in 2015 to SR105bn ($28bn) in 2016, down from 18.6% of the total in 2015 to 12.5% of the budget a year later.

Scholarships

For ministers considering savings that would not jeopardise jobs, the government’s scholarship programme enabling students to study abroad would appear to be an obvious target. The King Abdullah Scholarship Programme, renamed the Custodian of the Two Holy Mosques Scholarship Programme under King Salman bin Abdulaziz Al Saud, has grown significantly in scale and expense in recent years. In the 2012 budget statement, and again a year later, 120,000 Saudi students were reported to be studying abroad at the country’s expense and, by 2014, this number had grown to 185,000. In the 2015 budget the Ministry of Finance announced that SR22.5bn ($6bn) had been set aside to support the 207,000 students studying abroad under the programme. However, the total number of Saudis benefitting was much higher than this figure, as the living expenses of students, spouses, children and chaperones are also covered.

New Rules

With some students part of the way through degree courses, reforms to the system could not be introduced overnight. During 2015 a number of announcements were made about the range of students and types of courses that would be paid for in the future. In September 2015 the Saudi Gazette reported that the Ministry of Education (MoE) was coming under pressure from the Ministry of Labour to limit the scholarship programme to students applying to study medicine or engineering to address shortages of nationals working in those professions. In November the same newspaper carried interviews with several students who had taken up places at foreign universities at their own expense in the hope that they would be accepted into the scholarship programme later. In early December the newspaper reported that the MoE had announced that the next phase of the scholarship programme would run under the slogan, “Your scholarship is your job”, and that ministries and government departments sending students abroad on the programme would guarantee jobs for the students on their return. The report said the scholarships were being awarded based on academic and vocational testing, as well as on the rating of the university the student was applying to, and that special attention was being given to disciplines that were most in demand in the labour market.

In February 2016 local media reported that the Council of Ministers had introduced new rules for self-funding students studying at overseas institutions and applying for scholarship places. Under the new rules, only students taking approved courses at universities that were deemed to be among some of the world’s leading academic institutions would be supported. The MoE would decide which were the top-50 universities in the world for their specialisations and which were the top-100 universities, overall. Applications to universities falling outside these parameters would be turned down. The new rules also stipulated minimum levels of performance for Saudi students enrolled on these courses. In January 2016 some Saudi students at foreign universities were reporting that their names had been removed from scholarship lists part of the way through courses despite achieving high grade point averages. Media reports suggested they were required to pay up to SR45,000 ($11,997) in remaining fees to the university they were attending. Abdulmohsen Aloqaili, professor of reading and language education at King Saud University, received his own doctorate abroad. He believes the scholarship programme plays a vital role, but that it could be reformed. “We have to pick the most brilliant students and send them abroad,” Aloqaili told OBG. “We need to make it an attractive option for them, but we also need to make it harder for them to qualify for funding and to ensure we are funding studies that meet our national goals and job market needs.”

Colleges Of Excellence

Vocational skills training is another way of meeting the needs of the job market and, in recent budgets, significant sums have been spent on developing this segment of learning provision. In 2013 SR3.5bn ($933.1m) of the education budget was allocated to the construction of new technical colleges, and in 2014 this amount was increased to SR5.2bn ($1.4bn). In the 2015 budget, SR2.4bn ($639.8m) was allocated to construction of colleges for the Colleges of Excellence programme. These colleges were built by the government and designed to be run by foreign learning providers, with companies from the UK, Germany, Holland, Spain, Australia, Canada and the US awarded contracts in 2014. However, the publication Education Investor reported in December 2015 that many of the foreign companies running the programmes were struggling to break even, because student numbers were too low to make money from performance-related criteria in the contracts they had signed with the Colleges of Excellence company. In January 2016 local media reports indicated that two colleges operated by British provider Lincoln College would be closing at the end of the month due to challenges in recruiting students in rural areas.

Private Enterprise

Ahmed Al Eissa, the new minister of education, has signalled that he would like to see more public-private partnerships in education, even going so far as to say that he sees the private sector as key to driving growth in Saudi Arabia’s schools and colleges. However, private education providers are cautious about new investments at a time when there is uncertainty about government spending and the longer-term impact the price of oil will have. “For obvious reasons, 2016 has put pressure on all government agencies to cut their spending,” Alwaleed Aldryaan, CEO of Al Khaleej Training and Education, told OBG. “The sense of caution is echoed through individuals, retailers and travel companies. People will adjust their spending habits to the cautious side. Commercially, we expect private companies to decrease their spending on training in 2016.” The ongoing challenge for the government’s education department and agencies will be to find cuts from their own spending while trying to encourage private enterprise to invest further.