Private Higher Education in Developing Countries: Private Interest Public Good Presentation to NZAPE

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Private Higher Education in Developing Countries
Private Interest Public Good Presentation to
NZAPEP Cooperative Change in Tertiary Education
Conference13 September 2000

• Norman LaRocque

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• Norman LaRocque
• Consultant, The World Bank
• 87 Chelmsford Street
• Ngaio, Wellington
• New Zealand
• Tel [phone]
• Fax [phone]
• E Mail minban_at_paradise.net.nz

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It doesnt matter if a cat is black or white,
as long as it catches mice.
Deng Xiaopings signature phrase,
first uttered in the early 1960s
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The Global Education Market
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The Global Education Market

• Education market in many developed and developing
  countries is significant and growing
• global education marketplace equal to 2 trillion
  (Merrill Lynch)
• 15 of global education market is in developing
  countries
• significant private sectors in several developing
  countries - Argentina, Colombia, Cameroon,
  Indonesia, India, Cote dIvoire, Peru, etc
• increased use of innovative finance and delivery
  mechanisms in both developed and developing
  countries.

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Private Higher Education Market
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Private Higher Education in Developing Countries

• Private Sector Share of Higher Education
  Enrolments
• Korea 75
• Indonesia 65
• Philippines 80
• Colombia 60
• Brazil 60
• Source The World Bank (1994)

• Higher education in many developing countries is
  dominated by the public sector - provision and
  funding
• But, this is not true everywhere - some
  countries have significant private higher
  education sectors when measured in terms of share
  of enrolments.

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Private Higher Education in Developing Countries

• Further evidence on size of private higher
  education sector comes from a series of World
  Bank/International Finance Corporation studies of
  private education markets in developing countries
  
• Detailed studies of private education sector in
  Ghana, Cameroon, The Gambia, India, Senegal, Cote
  dIvoire, Oman, Mauritania, China, India, Uganda,
  Zimbabwe and Bahrain
• Country overviews in James Tooleys IFC book.

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Private Higher Education in Developing Countries

• Studies show that size of private higher
  education sector varies greatly - significant in
  some countries and sectors, but small in others
  
• 100 of professional training market in Cote
  dIvoire
• 44 of skills training market in The Gambia
• almost non-existent in Mauritania
• 75 of tertiary colleges in India
• 9 private colleges and 200 private training
  institutes with 8,200 students - 21 of higher
  education sector - in Oman
• 1,274 private institutions, with 4 million
  students in China
• 37 tertiary institutions in Ghana (11
  accredited).

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Private Higher Education in Developing Countries

• Common characteristics of private higher
  education sector
• fees are main source of revenue
• private institutions serve both rich and poor -
  generally second chance students who could not
  get admission to public universities
• sector is generally younger than private school
  sector (e.g., 1980s in post-reform China, 1990s
  in West and Central Africa)
• complete range of institutions - from
  full-fledged universities to institutions that
  prepare students for national exams
• range of institutional types - franchises,
  chains, sole proprietorships, for-profit
  companies, not-for-profits, religious-based
  organisations
• institutions generally offer a limited range of
  professional/practically oriented courses (e.g.,
  accounting, management, English)
• often use part-time staff (practitioners,
  professors from public institutions)
• regulatory framework less developed than in
  school sector.

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Institution Profile Groupe Pigier, Abidjan, Cote
dIvoire

• Established 1956. Focus on professional training
  - accounting, management, etc
• Franchise of 150 yr old Paris-based firm
• Fees range from US750 to US1,166 per year
• 2,000 students - 50 Government sponsored
• Strong emphasis on quality assurance - staff
  training, inspection of teachers, assessment of
  student progress, curriculum advisory panel
• Exam results above national average in all areas.
  

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Private Higher Education in Developing Countries
Significant Growth

• Private higher education is growing strongly in
  many countries
• at least 3 new university colleges currently
  being set up in Ghana
• a new private university is being created in
  Bahrain
• 3 private universities approved in Oman. Nine
  private colleges created since mid-1990s
• 500 new tertiary institutions created in China
  between 1995 and 1999
• 7 applications for private universities and 25
  for private training colleges in Cameroon
• recent UNESCO report called growth of the private
  sector the most significant development in Arab
  higher-education systems in the 1990s.

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Why Private Higher Education is Growing

• Demand for qualifications is high - significant
  excess demand for tertiary places
• Demand for job-oriented skills is high - IT,
  Engineering, Management
• International orientation (e.g., 22, English
  language, alliances with foreign institutions,
  etc)
• Policy changes to encourage private sector growth
• Macro factors - currency devaluations, economic
  growth.

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Lessons for Private Education
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The Demand for Private Education

• Government affects the demand for private
  education
• Developing countries face many challenges in
  common
• budgetary constraints
• high population growth rates
• increasing urbanisation
• low per capita incomes
• globalisation
• high demand for education
• Public education is under pressure
• disparities in access to education (e.g., girls,
  rural, poor)
• low enrolment ratios
• poor quality of public education
• poor quality of public spending
• education already a high proportion of the budget.

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The Supply of Private Education

• The private sector is growing in response
• primary, secondary and tertiary education
• for-profit and non-profit
• high and low quality
• Government affects the efficiency of private
  education
• funding (supply vs demand side)
• entry provisions (direct and indirect barriers to
  entry)
• regulation (eg non-profit)
• indirect barriers to entry (eg red tape)
• Government affects the equity of private
  provision
• funding (supply vs demand).

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Institution Profile Bhopal School of Social
Sciences, Bhopal

• Private aided Catholic college
• Established 1972
• Affiliated with Barkatullah University
• 1,200 students
• Generally middle class
• Excess demand for most courses

• Initial infrastructure funded by diocese
• Some teacher salaries paid by government
  (decreasing by 20 pa over 5 years)
• Tuition fees Rs 3,000/yr
• Quality constrained by Barkatullah University -
  syllabus not challenging enough and fees capped
• Plan to become autonomous college

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What Government can do to Facilitate the
Contribution of the Private Sector

• Design framework based on assessment of
  appropriate role of the state in education.
  Employ the right regulatory mix
• ownership
• funding
• regulation
• Adopt a light-handed and neutral regulatory
  framework
• no controls on fee setting by private
  institutions
• no unnecessary barriers to entry
• focus on information provision and ongoing
  review, rather than tight regulation and input
  controls to protect quality
• clear, objective and efficient processes for
  accreditation
• allow range of providers to operate -
  for-profits, not-for-profits
• neutral and targeted funding and student
  assistance arrangements.

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What Government can do to Facilitate the
Contribution of the Private Sector

• Allow foreign institutions to operate
  domestically and allow mutual recognition of
  degrees with foreign institutions
• Make use of innovative instruments such as
  contracting, demand-side financing, private
  regulation and methods of disseminating
  information
• Set up appropriate legal frameworks for private
  sector, including recognition of private sector
  role in legislation
• Provide a strong macro regulatory framework to
  support private sector (including employment law,
  company law, judicial system, etc).

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Institution Profile Sichuan Normal University
Film and Television Art Promotion College,
Chengdu, Sichuan

• Private boarding college, affiliated to a public
  university. Offers 2 and 3 diplomas and 4 year
  Bachelors Degrees
• Established 1992, affiliated 1995
• 450 students from Sichuan Province pay fees of
  RMB10,000/year
• Affiliation allowed film school to more easily
  obtain degree-granting status, which would have
  been diffi- cult as a private provider (only 37
  degree-granting providers in China)
• Students graduate with SNU degree.

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Quality Assurance Examples of Light Handed
Regulation

• Quality assurance is key issue in private
  education debate. Many ways to help
  maintain/lift quality
• promote competition and keep barriers to entry
  low
• ensure consumers are provided with information
• importance of developing brand name - whether
  institution-based or groups of providers (e.g.,
  NZAPEP, Catholic education, etc)
• allow foreign institutions to operate and mutual
  recognition of degrees to ensure international
  quality benchmarks apply
• use of franchises and chains of institutions
  (e.g., NIIT, South Ocean Schools in China, Sabis
  Schools in Middle East) that bring a strong
  curriculum, culture of quality assurance and
  brand name
• ongoing quality review/audit with focus on
  outputs/outcomes, not inputs.

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Quality Assurance Examples of Light Handed
Regulation

• Many examples of light-handed quality assurance
  mechanisms
• requirement that private colleges in Oman be
  affiliated to foreign institutions in order to
  receive accreditation
• use of private sector in carrying out school
  reviews (e.g., CfBT undertakes reviews of public
  schools in Oman)
• private sector provides information for consumers
  - Good Universities Guide in Australia
• the Bahrain government provides info on private
  schools on the internet
• private sector provision of school and university
  accreditation services (e.g., Seventh Day
  Adventist run their own accreditation services)
• ERO review of New Zealand schools
• Ghanas requirement that institutions begin as
  university colleges affiliated to domestic
  universities before moving to university status.
  
• Private sector can play big role in regulating
  quality.

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Private Education and the World Bank/IFC
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Private Education and the World Bank/IFC

• World Bank/IFC have recently begun an initiative
  to promote private education in developing
  countries. This work includes
• Promoting policies to client governments that
  encourage growth of the private education sector
• Carrying out surveys of private education market
  and legal/regulatory framework in client
  countries
• Publishing profiles of private education market
  in developing countries
• Development of EdInvest (Match.com for private
  education investors and those seeking
  investments)
• Increased IFC involvement in financing of private
  education including loan guarantees, equity
  investments, financing student loan schemes.
  First investments in Pakistan, Uzbekistan and
  West Africa. Examining other possibilities in
  Vietnam, India, China, etc.

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• http//www.worldbank.org/edinvest
• EdInvest is a joint World Bank/IFC/private sector
  initiative that provides
• Country Market Reports for investors
• Database on potential investments
• Exchange of ideas and market information
• Regional Conferences.