Private Education in Abu Dhabi School Space for Innovative Solutions

01 Jun 09:10 AM

Sector : Education Country : UAE

 By Booz & Company

 Abu Dhabi has one of the most vibrant private school sectors in the world. The sector is growing rapidly, and is essential for enabling the Emirate’s ambition to transition to a knowledge-based economy.

 

Education can help the shift away from natural resource dependence in two ways. First, a successful education sector nurtures the human capital necessary for tomorrow’s economy, particularly in technology and digitally-enabled industries. Second, topnotch schools are part of the package that attracts highly-skilled expatriates, whose skills can cultivate knowledge-based activities. To play this role, however, Abu Dhabi’s private schools have to acquire new capabilities, in particular to offer innovative approaches to education in an increasingly competitive market.

As a business sector, Abu Dhabi’s private schools are approaching these challenges from a position of strength. Largely due to Abu Dhabi’s unique demographics, the private education sector’s involvement in K-12 education exceeds that of education systems outside the GCC. Abu Dhabi’s 180 or so private schools were educating some 186,000 K-12 students in 2012—around 60 percent of all K-12 students (compared to just seven percent in Britain’s fee-paying sector). The sector is also successfully attracting UAE nationals, educating 33 percent of the UAE national K-12 population. There are now close to 11,000 teachers in private schools alone. Private education has direct tuition fee revenues of roughly $500 million. The indirect economic contribution is also substantial because of related revenues from other goods and services, such as uniforms, equipment supplies, technology, and transportation.

Growing Demand

The demand for private education in Abu Dhabi is also growing rapidly, driven by a rising population and UAE parents’ appetite for better quality education. The school age population is projected to increase by two-thirds in the decade to 2020. A similarly important demand factor is that UAE nationals are looking for different ways to educate their children than in the past. Many are choosing top-tier private schools because they are seen to give students thorough academic instruction and strong English-language skills, and preparation for higher education. At the same time, the Abu Dhabi Education Council (ADEC), the regulator, is driving a significant reform of the public school system, which is raising the bar for private schools, and increasing education quality awareness among parents.

The way in which the private school sector is meeting this growing demand provides an indication of how it needs to change and what capabilities it has to develop. Most new private education supply tends to be aimed at the high tuition fee bracket, with fees ranging from $8,100 to over $26,000 per year, particularly at schools that offer American, British, or International Baccalaureate curricula—such as Repton and Cranleigh. Serving these needs is straightforward for most school operators using now widespread international school models.

Yet 90 percent of the demand in Abu Dhabi comes from those seeking mid-range or low fees. For example, the Abu Dhabi Indian School, and a few others, offer high-quality education in the low-fee segment where demand far outstrips supply. The annual cost is around, or below, $2,700 per student. Similarly, there is significant demand for English-based schools serving the growing mid-range fee segment, which is priced at $2,700-$8,100 per student. Many successful schools, such as Cambridge High School, already operate in this segment. However, many schools in these segments do not meet the quality expectations of the government and the parents. As a result, there is a significant market opportunity for new business models to meet the needs driven by population growth and of parents for higher quality education at affordable prices.

New Capabilities

School operators have to leave their “comfort zone” if they are to grasp these market opportunities and promote the larger, national education agenda. They need three capabilities to build on their advantageous position. First, they have to customize offerings to answer specifically the needs of students and parents. Second, the sector must restructure. It has to change from unconnected small, often idiosyncratically-managed, schools to become a connected, cohesive web of professionally-run, education enterprises—both for-profit and non-profit. Third, private sector education providers need to offer cutting edge, innovative solutions that incorporate the latest, successful advances to improve teaching and learning.

The first capability is to be more centered on customers’ needs. At present, most private schools are doing what parents want in terms of providing skilled teachers, modern curricula, and academic credibility. There is, however, a lack of customized education offerings that fill distinctive gaps in the market. According to surveys, most UAE nationals and many Arab expatriates would like significantly more stress on Arabic and Islamic studies, along with single-gender classes or schools. These parents want a quality private education for their children that is consistent with their values and local academic requirements. Yet there are few such opportunities available. Similarly, Western expatriates, many of whom want their children to learn practical Arabic, cannot find many private schools that provide high-quality modern Arabic language instruction, with the exception of Aldar Academies.

The second capability involves becoming a more coherent, efficiently-run sector that is able to serve a range of fee segments. Much of the private school sector developed organically, with individual schools started in response to local needs. For example, business leaders founded schools to serve specific communities, educating expatriate children after the authorities capped how many could attend local staterun schools. Many of these private schools are now struggling to cope with their own growth, in particular staff development, support functions, expansion of physical facilities, and the capabilities needed to take advantage of technology in the classroom. Another challenge is that as independent organizations their operating costs per pupil tend to be elevated. These expenses are rising as the government demands higher standards for education and school infrastructure, through, for instance, ADEC’s recently published new private school regulations.

Private schools can overcome these constraints on expansion by pooling costs and skills. They can achieve this through collaborative networks or consolidation. Good examples of how consolidation and coherence lead to economies of scale, efficiency, and investment in skills are SABIS Educational Services (which began in Lebanon and now has 125 schools around the world) and Dubai-based GEMS Education (which is probably the largest K-12 private education company globally).

Such sector restructuring will allow private schools to take advantage of the growth opportunity available in the mid-range to low-fee segments. Improved cost management means that private schools can offer children a quality education at reasonable tuition rates. To reduce the cost of delivery, which underlies such a high quality/low cost education product, schools need inventive approaches for operations, capital expenditure, and funding. Teaching methods also have to embrace the most effective digital technologies.

Sector consolidation leads to the third capability: innovation. Abu Dhabi offers ample space for innovative education. ADEC is open to such approaches, especially if they involve new pedagogical and technological approaches. In particular, the authorities are willing to offer support in the form of buildings and plots of land. Private schools can pilot new kinds of education solutions aimed at the mid-range fee segments for English and Arabic-based education. Or they can aim for cost effective mid-range to lowfee offerings for South Asian expatriates. Some of the key areas for innovation are affordable but pedagogically designed school spaces, new solutions for teacher training and continuous professional development, and technology-blended approaches to education delivery.

By developing these capabilities, and successfully offering new approaches to education for underserved segments, innovative private school operators will further Abu Dhabi’s ambitious education agenda. As importantly, they will be set for growth in Abu Dhabi and the wider, multi-billion dollar GCC education market.

 
 
Dr Leila Hoteit
Principal, Booz & Company
 
 
Dr. Leila Hoteit is a Principal with Booz & Company and a member of the firm’s public sector practice. Dr. Hoteit has over 11 years of strategy and business experience. Her current work focuses on human capital development and encompasses education and culture. Dr. Hoteit holds a Ph.D. in electrical engineering from the Imperial College of London and an MBA from INSEAD.
 
 
 
Jussi Hiltunen
Principal, Booz & Company
 
 
Jussi Hiltunen is a Principal with Booz & Company and a member of the firm’s Public Sector practice. He focuses on public policy and strategy as well as performance management. He co-leads our Education practice. Mr. Hiltunen holds a Master’s and Bachelor’s degree in Political Sciences and a Bachelor’s degree in Arabic and Islamic Studies from the University of Helsinki.

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