Financial incentives for university students boost innovation in Gulf region

GCC countries have long appreciated the importance of education for their sustained development. However, the sector, and higher education in particular, has risen as a priority over the past decade with the launch of ambitious economic diversification plans across the region. These strategies seek to harness the potential of the GCC’s expanding population – which is projected to see its under-25 age demographic constitute one-third of 65m residents by 2030 – to drive an economic transition towards innovation, technology and knowledge, which could in turn provide sustainable employment opportunities to meet growing demand.

While the advantages of developing the region’s youth are widely recognised, unlocking that potential at a time of tightening budgets presents challenges: local education networks are in need of expansion; higher education institutions (HEIs) need to be more responsive to the demands of the local economy; and a social preference for public sector work and traditional academia needs to be overcome.

Meeting Demand

Despite growing numbers of graduates in the region, a gap between the skills that students graduate with and those that jobs require is often cited as an issue by employers. It is also the case that GCC students are more inclined towards the public sector, in which well-salaried positions form part of social contracts that ensure the region’s oil wealth trickles down to its citizens. However, with diversification plans across the region targeting higher rates of private sector employment among citizens, governments and HEIs alike are aiming to address these issues.

One measure under way has been a far greater emphasis on technical and vocational education and training (TVET). Saudi Arabia, which has targeted increasing the proportion of students enrolled in TVET from 7% in 2016 to 12.5% in 2020, has introduced financial incentives to encourage students to pursue such programmes. Students studying at the Saudi branch of the UK’s Lincoln College, for example, receive a monthly stipend of SR990 ($264) from the Saudi Arabia Human Resources Development Fund. Such support helped to drive a 47% rise in the number of technical colleges in the kingdom between 2013 and 2017.

In Oman, where citizens constitute just 14% of private sector employees, a series of awareness campaigns have been launched in coordination with TVET institutions aimed at increasing the attractiveness of these courses, which are tailored specifically for the private sector. Elsewhere, to overcome employer’s bias towards academic degrees, the country has been working with the Scottish Qualifications Authority to develop a 10-level qualifications framework that will allow vocational school graduates to stand toe-to-toe with conventional degree holders.

Private Collaboration

HEIs have also started to demonstrate a greater openness to private sector input when tailoring their programmes. For example, the Abu Dhabi-based Higher Colleges of Technology (HCT) has formed ongoing partnerships with leading employers to harmonise courses with market needs, creating technical training and collaborative learning opportunities for students. Dubai-based Mashreq Bank provides input on several financial programmes, and facilitates seminars and chances to gain professional experience, while Abu Dhabi National Oil Company (ADNOC) provides certified technical-readiness courses in the energy sector to those receiving sponsorship. In January 2018 the HCT also reached an agreement with digital technology firm Oracle to facilitate the training of 500 UAE nationals in artificial intelligence.

Attracting Investment

Another challenge facing GCC states is meeting growing student numbers. According to 2017 estimates from global professional services firm PwC, the region’s two largest markets – the UAE and Saudi Arabia – will have to add 42,000 and 125,000 HEI seats by 2020, respectively. With budgetary constraints on the rise in recent years due to the expanding populations and declining oil revenue, officials have introduced education-specific incentives to draw in private, and particularly foreign, investment. One example of this is the opportunity for foreign entities to own 100% of institutions in regions that mandate that at least a 51% stake is held by GCC nationals. Dubai established its first education free zone, Dubai Knowledge Village, in 2003.

Since then, 24 foreign HEI branches have been opened in the emirate’s free zones, which, along with the benefits of full ownership, are not required to receive accreditation from the UAE’s Commission for Academic Accreditation (CAA). This means branches can offer exactly the same programmes that their parent institutions provide. Abu Dhabi also allows HEIs to establish in free zones; however, institutions are required to acquire federal accreditation from the CAA. The emirate has sought to attract high-profile foreign HEIs through generous financial incentives and is now home to two of the region’s best-known branch institutions, namely New York University Abu Dhabi and Sorbonne University Abu Dhabi.

In mid-2017 the Saudi Arabian General Investment Authority announced that it would allow full foreign ownership in the education and health care sectors. Efforts to attract more investment are in line with the country’s plans to increase the private sector’s share of tertiary education from 6% in 2015 to 15% by 2020.

At the same time, in Oman land grants, Customs exemptions and 50% capital contributions – up to a maximum of OR3m ($7.8m) – have contributed to the establishment of 27 private HEIs in the sultanate.

International Partnerships

Although there had been a significant trend for GCC nationals to pursue tertiary education abroad, tightening budgets and a commitment to developing the sector domestically have led to cutbacks on international scholarship programmes, putting international study out of the reach of many. To capitalise on this demand, local HEIs are increasingly forming reputation- and expertise-raising partnerships with foreign institutions.

Muscat University, for example, has sought to attract local students through programmes offered in partnership with two UK HEIs, Aston University and Cranfield University, which allows students of the respective programmes to graduate with degrees from both Muscat and the foreign university, at a considerably lower cost than living and studying abroad.

Similarly, institutions such as the SP Jain School of Global Management, based in Dubai, and Zayed University, which has campuses in both Dubai and Abu Dhabi, have gained international accreditation from Australian and US authorities, respectively, for their MBA programmes. According to Christopher Abraham, CEO of SP Jain, local laws have been supportive of this model, allowing institutions to be more flexible in their approach and curricula. “Government regulations from the Knowledge and Human Development Authority (KHDA) are set up in a way for quality assurance through the University Quality Assurance International Board (UQAIB), which facilitates multiple accreditation for degree programmes from different countries,” he told OBG. The KHDA is a government body tasked with regulating private schools and universities located in the emirate’s free zones, while the UQAIB ensures such degrees are recognised by employers in the UAE.

Research Drive

With ambitious targets to bolster international rankings, research collaborations between GCC and foreign universities are also on the rise. Saudi Arabia’s King Abdullah University of Science and Technology signed an agreement with the US-based Massachusetts Institute of Technology (MIT) in March 2018, which was focused on environmental sciences and included provisions for joint research, student exchanges and entrepreneurship programmes.

MIT also has a long-standing environmental sciences research collaboration with Kuwaiti universities that is overseen by the Kuwait-MIT Centre for Natural Resources and the Environment. In 2015 the centre oversaw the joint award of a $5.5m grant to research advanced desalination processes.

Although research and doctoral studies are at an early stage in the region, a growing appreciation of the commercial value of original research, as well as the need to develop field-leading expertise for the knowledge economy, is driving increased activity in the area.

A significant development in this respect has been the February 2017 merger of three Abu Dhabi-based institutions: Khalifa University of Science, Technology and Research; Masdar Institute of Science and Technology; and the Petroleum Institute. The principal goal of the new composite entity, the Khalifa University of Science and Technology (KU), is to nurture local technical talent and research in line with local economic and social needs. The university offers 12 undergraduate, 16 master’s and 13 doctoral degrees focused on strategically important subjects. It is also home to 16 research centres, 228 laboratories and three field research projects, and has signed partnerships with public and private sector industry leaders, including Boeing, ADNOC and the UAE Space Agency. However, despite these advances in the sector, Arif Sultan Al Hammadi, executive vice-president of KU, told OBG that further research funding was needed in the UAE, and that the private sector should shoulder some of the responsibility. “The research funding industry is not mature enough yet within the country, and there is a higher need for companies to support research within their industries,” he said. Solving specific regional issues is a common aim for research institutions across the region. For example, the research strategy of Bahrain’s largest university, the University of Bahrain, is premised on finding solutions to challenges stemming from the country’s environment, with water security, food security and renewable energy at the top of the agenda. This plan has been bolstered by research partnerships signed with the University of Oxford and Aston University, which will see the three universities collaborate on research into desalination. Bahrain’s strategy also includes plans aimed at growing its postgraduate student population from 490 in 2016 to 1250 in 2021.