Kuwait redoubles its efforts to develop its education sector

Kuwait and the wider Gulf have some of the youngest populations in the world, with one-third of the GCC’s population expected to be under the age of 25 by 2030. As such, ensuring that Kuwaiti youth are equipped with the skills to compete in the global marketplace has become one of the government’s main priorities. This is laid out in New Kuwait 2035, a bold government development plan prioritising education reform and investment, among other policy pillars.

The downturn in global oil prices, following the commodity’s high of $111.48 per barrel in June 2014, prompted GCC governments to cut or freeze spending, intensifying pressure for private sector involvement in sectors dominated by public actors. Recognising this, the Kuwaiti government has taken concerted steps to facilitate private investment in schooling, developing build-operate-transfer (BOT) agreements, public-private partnerships (PPPs) and technical cooperation programmes aimed at improving school curricula, teaching and management.

Government Priority

The government has named the revitalisation of the education sector as one of the key pillars of New Kuwait 2035. It intends to advance this priority through a two-pronged approach: first, by introducing public sector reforms aimed at improving national standards of teaching, management and student assessment; and, second, by opening the sector to greater privatisation in order to meet growing demand for high-calibre education and to reduce the government’s fiscal burden amid decreased oil revenues.

For FY 2018/19 the Ministry of Education (MoE) received a budget of KD2.2bn ($7.3bn), up 22% from the KD1.8bn ($6bn) allocated for FY 2017/18 and accounting for 11% of the total KD20bn approved by the Parliament. Projected spending on education as a share of total public outlays will continue to come up short of various benchmarks, including the 2016 average across the GCC (15.6%), the target range adopted in 2015 by the World Education Forum ( 15-20%) and industrialised states like the US (14.9%), the UK (11.8%). That said, the 11% figure does compare favourably to the share of the budgets invested in education in Qatar (10.1%) and Bahrain (8.8%), while Kuwait’s state expenditure as a percentage of GDP, which is projected to approximate 6% in FY2018/19, hovers near equivalent figures in the US (6.1%), France (5.2%) and the UK (6.2%).

Education Indicators

Among both adults and youths, Kuwait’s literacy rate stacks up well next to that of nationals of its MENA peers, where reading acquisition is growing rapidly. According to 2017 data from UNESCO, the literacy rate stood at 96.3% for Kuwaitis aged 25-64, compared to 80% across the region. Meanwhile, marking a widely positive trend, reading fluency is even higher among youths. In 2017 99.3% of Kuwaitis aged 15-24 were literate, up from 79% in 1980, while the MENA average was 89.6% in 2016. Moreover, according to World Bank statistics from 2015, among Kuwaitis 15 and older, females have caught up to and surpassed their male peers on this metric of educational attainment, which stand, for the respective sexes, at 99.4% and 96.4%. According to UNESCO, the gross enrolment rate (GER) in Kuwaiti primary schools was high in 2016, standing at 100.6%. In 2015 the equivalent figure for secondary education was only slightly lower, at 97.5%. In the meantime, tertiary GER stood at 32.6% in 2013, with the enrolment rate among females (42.7%) nearly double that of males (23%). Though that figure leaves room for improvement, Kuwait’s GER at the pre-primary level – a key stage of education focused on developing soft skills and academic capabilities in preparation for more formal education – is also relatively high in relation to that of its neighbours. GER at the pre-primary level was 67.9% in 2016, higher than Bahrain (55.3%), Oman (57%) and Saudi Arabia (25%), and above the global average of 53.8%.

According to a report by the global management firm Boston Consulting Group (BCG), there were 633,900 K-12 students in Kuwait as of 2015, 41% of whom were attending private schools. According to the local press, the total number of schools in Kuwait increased from 1450 in 2014/15 to 1483 in 2016/17, while the number of teachers increased by 5.6% over the same period to 85,949 in 2016/17.

Decade-long efforts to hire staff have improved pupil-to-teacher ratios (PTRs), or the number of students per teacher, across all stages of education. The pre-primary PTR fell from 11.4 in 2008 to 9.2 in 2016, against a 2009 OECD average of 14.3. In primary schools, Kuwait’s PTR decreased slightly over the same period, from 9.1 to 8.9, while the 2009 average among OECD states stood at 16. Lastly, at the secondary level, PTR in Kuwait fell from 9.1 to 7.6 between 2008 and 2015, a significant improvement on the 2009 OECD average of 13.5.

Kuwait has 16 special education schools, which provided for 1815 pupils in the 2016/17 academic year, almost half the number of such institutions in 2014/15, when there were 1739 pupils in 31 special education schools. Still, with 1201 teachers employed at these schools, the 1.5 PTR was relatively low. There were also 11 religious schools in 2016/17, with 2631 students and 704 teachers, which has a PTR of 3.7.

Despite recent improvements on these already positive metrics, the performance of students at tertiary institutions remains a cause for concern. According to Salwa Al Jassar, professor of curricula and education methodology at Kuwait University’s (KU), public education has fallen behind private providers, as evidenced by the fact that even public high school graduates who attain marks of around 90% in their school exams still fail university aptitude tests. “Curriculum suffers heavily from political influences; more students have an obligation to study Islam or Arabic studies, and there is less emphasis on maths or science,” Winfred Thompson, former president of the American University of Kuwait (AUK), told OBG. Meanwhile, a January 2018 study published by the General Secretariat of the Supreme Council for Planning and Development found that student attrition – or degree non-completion – and remedial support for poor academic performance cost the institution 12.9% of its budget in the 2012/13 academic year.

Key Players

Public and private education alike are overseen and regulated by the MoE, working in conjunction with the National Centre for Educational Development (NCED). The NCED inspects schools, administers international tests and works on reform programmes with partners such as the World Bank, among other charges. The MoE supports public and private institutions primarily by formulating development policies and issuing tenders for private investment. Private schools are regulated by the ministry’s Private Education Department, while tertiary education is overseen by the Ministry of Higher Education (MoHE) and the Private Universities Council (PUC). The PUC is responsible for all accreditation and facility reviews for private universities and vocational colleges.

Sector Breakdown

Kuwaitis enjoy access to free education at the primary and secondary levels, whereas foreign residents are served only by private schools. Of the 1483 schools in Kuwait in the 2016/17 academic year, 557 were private, up from 537 in 2014/15. Of the existing 30 international schools, eight offer US curricular, and the remainder follow curricula from Canada, the UK, France and India.

With a 2017 graduating class of 4000 students, KU, the country’s sole public university, is operating a full capacity. The country’s 12 other tertiary schools are private, and include the likes of AUK, the American University of the Middle East (AUM), the Arab Open University, the Australian College of Kuwait and the Kuwait Maastricht Business School, as well as technical and vocational institutes. Some schools have partnered with foreign institutions, as AUK has done with the US’ Dartmouth University. Meanwhile, the MoHE provides funding for 6000 scholarships, 2600 of which are reserved for study in the US.

Private Sector

According to BCG, Kuwait’s private education market is expected to grow from $1.3bn in 2017 to $2bn by 2023, presenting plentiful opportunities for investors. There is a steady trend in Kuwait and the GCC towards private education alternatives as the local population, as well as GNI per capita, continues to grow. According to World Bank data, Kuwait’s GNI per capita is one of the highest in the world, at over $83,000 in 2017. Willingness to pay for high-quality private education in Kuwait is already strong, as reflected in international school fees, the mean of which was $8069 in 2017, higher than in the UAE ($7747) and Saudi Arabia ($6325).

Kuwait’s private education sector is a highly fragmented market, comprising numerous standalone private schools, unlike in the UAE, Saudi Arabia and Qatar, where large-scale education providers such as Global Education Management Systems dominate the private side of the market. As such, Kuwait presents ample room for multinational education operators to enter and consolidate.

There are already several local firms invested in education, including the Kuwait Education Fund, National Offset Company, Nafais Holding, HUMANSOFT and Educational Holding Group (EDU). These companies often control in full or retain significant stakes in several education-focused subsidiaries active in other sectors, such as health care. With a market capitalisation of approximately $254m, EDU – which counts investments in private, Arabic-language schools, school construction companies, US-curriculum institutions and special education facilities, among others – is one of the largest players in the GCC. For its part, HUMANSOFT, the only local investment company focused solely on education, has invested in large-scale projects such as the construction and development of private university AUM, which was founded in 2008 and now has a full-time matriculated body of around 9500 students.

Reforms

State efforts to improve schooling have forged ahead under the first phase of the MoE’s Integrated Education Reform Programme 2011-19. This was followed in 2015 by the launch of the School Education Quality Improvement Project, in cooperation with the World Bank. Both initiatives are aimed at improving education by focusing on curriculum development, teaching skills and management, and student performance. ICT skills have featured heavily in these initiatives through partnerships with tech giants such as Microsoft and HP. In 2011 the MoE worked with HP to improve students’ critical thinking skills, while in 2016 the MoE partnered with Microsoft to train 650 teachers on classroom technology.

Streamlining costs has also been central to these reforms. In early 2017 the government signalled that it would terminate the contracts of expatriate teachers in oversupplied disciplines and reduce the number of supervisory posts in the MoE. The IMF has expressed its support for these measures, arguing that Kuwait should reduce its teaching and non-teaching staff further to free up funding for programmes aimed at improving teacher performance and the quality of teaching materials.

The overhaul agenda has, moreover, been anchored in the acceleration of privatisation. In 2016 the Supreme Privatisation Council’s advisory committee invited domestic and foreign firms to help draft the Kuwait Schools Development Programme, a formal system that would create investment opportunities to invest in Kuwaiti education through PPPs and BOT agreements. In a development that bodes well for such investment, the MoE issued the first tender for PPPs to develop five private boarding schools in the Wafra residential area in March 2018.

Foreign Investment Potential 

As parents increasingly turn to private primary and secondary education for their children, there is significant room for growth and foreign investment. According to industry statistics, the GCC’s K-12 education market was valued at $67bn at the end of 2017, with the share of private schools accounting for just $8.1bn.

In terms of growth in established, English-medium international schools, Kuwait ranked fifth in the wider Middle East after the UAE, Saudi Arabia, Qatar and Turkey, but ahead of Oman, Bahrain and Jordan, according to a 2017 study by ISC Research, a UK-based institute conducting studies on international schools. From 2010 to 2015 the number of private schools rose from 460 to 507, and enrolment therein grew at a compound annual growth rate (CAGR) of 5.4%, compared to a CAGR of 0.9% in public schools over the same period.

Meanwhile, Global Investment House, a regional asset management and investment banking firm, expects the private sector to expand by 4% annually through 2021-23, translating to an additional 10,000-11,000 students per year. In order to satisfy new demand, therefore, six to seven schools with 1500-student capacity would need to open annually, according to local media estimates.

Although Kuwait’s tertiary GER is lower than those of some other GCC markets, KU is almost operating at full capacity, and on the back of rapid demographic growth, demand for universities and other vocational and technical colleges is expected to surge. Although many Kuwaiti nationals and expatriates frequently look overseas to continue their education, this could change if local private institutions establish or deepen partnerships with globally recognised institutions. There is also considerable potential for international universities to build local campuses, as has been done in the UAE and Qatar, among others.

With vocational training in the wider GCC region expected to grow at a CAGR of 13.3% between 2016 and 2020, there is also room for this sector to grow in Kuwait. For example, the College of Aviation Technology (CAT), which offers technical diplomas in aircraft mechanics and maintenance engineering, has been looking to partner with a foreign institution in order to start offering a complete degree programme from 2019. Abdulrahman Buhumaid, assistant vice-dean for strategy and compliance at CAT, told OBG that the student body had grown from 50 when it opened in 2015 to 670 in 2018. “We have great demand, not only from airlines, but also from the military, coast guard and national guard,” Buhumaid told OBG. “We are trying to go into airport handling and marshalling for the airports and civil aviation to meet this demand.”

The state is a key partner in driving expansion of the private tertiary sector, having already put forward several large-scale tenders to build universities. For instance, in June 2016 the government awarded a $580m contract to China State Construction Engineering to build Sabah Al Salem University City, which is set to become one of the largest university campuses in the world, on a built-up area of 3.7m sq metres. Furthermore, efforts by the MoE to incorporate the latest technology into education present numerous contracting opportunities for educational providers of online content, tools and platforms.

Competitiveness

Despite the clear progress the state has made in overhauling the education system and attracting foreign investment, some deterrents to private sector growth endure. Attracting enough qualified teachers to match demographic growth will remain a challenge, while high tuition costs may make the country less competitive when it comes to drawing international university students. Stringent government regulations remain another challenge facing the private sector, though this has its benefits.

“The accreditation process is a labour-intensive process that requires the involvement of all institutional stakeholders,” Amal Al Binali, vice-president for admissions and public affairs at AUK, told OBG. “Unlike private institutions in the US, private universities in Kuwait are subject to the legislative governance of the PUC, which can sometimes result in delays, specifically in areas of programme development and implementation.” Nevertheless, Al Binali sees the PUC’s oversight as constructive because “it standardises the growth and expansion of private universities and avoids the creation of diploma mills”.

Outlook

Although several institutional and regulatory hurdles to the growth of private investment must still be overcome, Kuwait has so far demonstrated the resolute political will necessary to address these obstacles. With a private market that has significant room to develop, the shortage of multinational providers, relative to their presences in the wider region, presents an enticing long-term investment opportunity for such investment. Further serving to underscore the market’s untapped potential, Kuwait’s burgeoning youth and growing disposable incomes are expected to continue accelerating the growth of demand for private education, tertiary schooling and vocational training of the calibre availed to citizens and similarly developed states.