Africa’s $50bln Private Higher Education sector set for accelerated growth

Africa Business

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The world is hurtling headlong into a digital future, and one crucial resource is in short supply: tech talent. Projections paint a stark picture. By 2030, the global tech talent shortage could soar to 85 million, translating to $8.5 trillion in potential lost annual revenue, and there’s no viable solution at scale to fill this looming deficit.

Yet, amidst this intensifying scramble for tech talent, a paradox unfolds. Africa, a continent brimming with potential, stands as a vast, untapped, and overlooked goldmine of tech talent that will be home to over 200 million digital natives by 2030. While the reasons for Africa’s underrepresentation in global tech are complex and multifaceted, innovative solutions are emerging, countless initiatives are underway, and the potential for further progress is enormous.

Navigating critical challenges in Africa’s higher education

Quality of education

African universities face challenges in delivering high-quality education, impeding the development of tech talent. Outdated curricula often fall short of meeting the dynamic demands of the tech industry, leaving graduates with skills misaligned with practical job requirements and the latest technologies. In addition, inadequate infrastructure and resources hinder hands-on training, limiting students’ ability to acquire necessary expertise.

Access to education

Ensuring broader access to higher education is imperative. Doing so involves tackling challenges related to affordability, enhancing infrastructure, and facilitating access to online education, which has gained heightened significance in light of the COVID-19 pandemic.

Despite notable strides in extending education across all age groups and internet access and smartphone penetration exceeding 80% in most developed African countries, many individuals struggle to access education. Over 20% of primary-age children and nearly 60% of youth aged 15 to 17 remain excluded from education, whether in the digital realm or the physical world.

Affordability is a primary barrier. Soaring tuition costs, coupled with constrained financial resources, often prevent talented individuals from pursuing advanced studies. This burden disproportionately affects students from low-income households, who struggle to afford basic tuition fees, let alone additional expenses like accommodation, textbooks, and transportation. The scarcity of financial aid and scholarships exacerbates the problem, leaving many deserving individuals without the means to pursue their educational goals.

Inadequate infrastructure, particularly in rural areas, poses another significant obstacle to educational access. Shortages of classrooms and libraries hinder the learning process, limiting opportunities for higher education. Furthermore, insufficient technology resources, such as computers, internet connectivity, and educational software, contribute to a widening digital divide that intensifies educational disparities and prevents individuals from meeting the demands of the 21st-century tech workforce.

Economic, political stability, and industry engagement

A robust and stable economic and political environment is the cornerstone for fostering a thriving tech talent ecosystem. It provides a fertile ground for businesses to invest in R&D, creating opportunities for tech professionals to learn, innovate, and refine their skills. This fuels technological advancements, propelling the sector forward and attracting further investment.

Development Finance Institutions (DFIs) like the World Bank, IFC, BII, Unicaf, DEG, SwedFund, Norfund, IDC, and OPIC, in collaboration with governments, universities, and businesses, have a vital role to play in fostering a more prosperous business environment, which directly and indirectly benefits the education sector. These organisations can identify skills gaps, develop training programs, and catalyse new partnerships to generate employment opportunities for graduates.

Governments and DFIs have already made notable achievements by implementing sound policies. Seychelles now ranks among the top 50 education systems globally, surpassing countries like Ukraine, Hungary, Russia, and the United Arab Emirates. The country has achieved an impressive 99% literacy rate among its 15-24-year-old population by implementing free, mandatory education and partnering with DFIs to help fund infrastructure expansions, enhance teacher training, and develop innovative programs.

Tunisia is another success story. Despite grappling with political and economic instability, the country has positioned itself as an educational leader in Africa, boasting the second-best education system on the continent. This achievement can be attributed to the Tunisian government’s allocation of 12-20% of GDP to education.

These examples, drawn from two small countries with a combined population exceeding 12 million, provide compelling evidence of the transformative potential inherent in effective policymaking and collaboration. Implementing similar policies in larger countries like Nigeria, Egypt, or South Africa would amplify the impact, potentially addressing a significant portion of the global shortage of skilled tech workers.

The time to make a strategic bet on African edtech

Africa is home to the world’s largest untapped pool of potential talents capable of addressing the growing global shortage of tech workers. Given the rapidly evolving nature of technology and the continent’s complex operating landscape, realising this potential will require a concerted effort from governments, DFIs, and the private sector.

Despite its considerable size, the market for specialised tech higher education is primarily controlled by entities in developed countries, creating an artificial barrier for tech talent in developing nations. However, forward-thinking companies are beginning to break through these barriers, garnering support from reputable private equity investors.

As global markets rebound, we expect Africa’s $50bn private higher education sector to accelerate. Industry leaders are poised to emerge, capitalising on the continent’s affordable supply of teachers and real estate and advancing AI-driven tools to speed up content generation and performance assessments. These factors will create a virtuous cycle of growth whereby lower costs fuel innovation, which attracts more students and investors, leading to further expansion and cost reduction. This will give rise to “high-risk, high-reward” opportunities that offer above-market returns in an environment constrained by demographic challenges in developed countries.

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