EDINVEST NEWS BULLETIN: JANUARY, 2009
Online Resources
The IFC Health and Education Department hosted an online discussion on “The Evolving Regulatory Context for Private Education in Emerging Economies” from November 3-15, 2008. The discussion focused on two main questions: (1) What are the major challenges in regulating private education and how might they be overcome? and (2) Should government involve private providers in policy and decision making relating to the role of the private sector? If so, what are the most effective mechanisms for doing this? If not, why not? To refer to the discussion, including videotapes of guest commentators from around the world, please see the Private Sector Development blog below:
http://psdblog.worldbank.org/psdblog/search_results.html?cx=003426078449255130328%3Af1hrdemh9wm&q=private+education&cof=FORID%3A10#1277
Events
The World Conference on Higher Education organized by UNESCO, will take stock of the changes in higher education and research since the first conference held in 1998. It will address the dynamics shaping the development of higher education and identify concrete actions to meet national development objectives and individual aspirations. This includes a publication on developments in private sector education and a conference session which will be chaired by Svava Bjarnason, Senior Education Specialist from IFC. The conference will be held in Paris from July 6-8, 2009. For more information, please see the website:
http://www.icde.org/oslo/icde.nsf/id/F2D37FA377DC75A3C12574C2002B7B0B?OpenDocument
The 53rd Annual Conference organized by the Comparative and International Education Society will be held in Charleston, South Carolina March 22-26, 2008. The theme will be “The Politics of Comparison”. The Presidential Address will be made by Henry M. Levin, Professor of Economics & Education, Teachers College, Columbia University, New York. For further information, see the website: http://www.tc.edu/cies2009/
The International Association of Universities will hold its third global meeting in Guadalajara, Mexico from April 20-22, 2009. A discussion paper on the theme of the conference, namely Associations, Networks, Alliances etc.: Making Sense of the Emerging Global Higher Education Landscape is being prepared by Prof. Kris Olds, University of Wisconsin-Madison. Participants will have the opportunity to remain in Guadalajara and attend the Hemispheric Conference on An Inter-American Higher Education Collaboration: Working together to Shape the Future of our Communities. For more details see the website: http://www.unesco.org/iau/
The Observatory on Borderless Higher Education is hosting a Global Forum in Malaysia October 21 – 23, which will bring together global leaders from higher education, government and business to engage in strategic policy discussions about the major issues, policies and practices facing cross-border higher education. It will address the various dimensions of cross-border higher education impacts on the host country and region, specifically including political, cultural, social, economic and educational perspectives. For more details see: http://www.obhe.ac.uk/events/the_2009_obhe_global_forum__malaysia
Education Financing and Investment
In India, The Business Standard online writes that a recent report by FICCI Ernst & Young entitled Leveraging Partnerships in India’s Education Sector concluded that public-private partnership (PPP) models are imperative for the expansion and accessibility of higher education infrastructure in India. The report states that without adequate funding from the government, public institutions find it difficult to develop infrastructure to enhance student intake and expand enrollment. The November 26, 2008 article can be found online at:
http://www.business-standard.com/india/news/ppp-model-will-boost-education-infra-report/23/56/341399/
In Canada, Paul Axelrod with York University examines how universities fared during the depression of the 1930s and whether there is anything instructive today’s academics can learn from those years about what may lie ahead. Canadian universities survived the Depression diminished but intact, with no institutions closing and enrolment increasing by 10 percent. See the entire article online in Academic Matters:
http://www.academicmatters.ca/GreenKite.aspx?page_name=current_issue.article&restricted=no&catalog_item_id=1812&category=featured_articles
A November 30, 2008 article in the Boston Globe examines human capital contracts as a way of financing university tuition costs. The idea is that investors agree to cover the costs of college or graduate school in return for a percentage of the students' future earnings over a fixed period of time. Since payments are scaled to wages, the odds of default - and of financial hardship for the graduate - are greatly reduced. This scheme transfers much of the risk from students to investors. But if the students earn handsomely, the investors stand to gain more than they would under a traditional loan. Read the entire story online:
http://www.boston.com/bostonglobe/ideas/articles/2008/11/30/betting_on_bob/
British universities could be in serious financial trouble if foreign students can no longer afford to study in Britain. British universities rely on funds brought in by overseas students. But the British Council, which promotes education overseas, fears the economic downturn may deter international students from coming to the UK. This year for the first time hardship funding is on offer to foreign as well as British students.
http://news.bbc.co.uk/2/hi/uk_news/education/7764143.stm
American venture capital fund Revolution Ventures plans to open a Beijing office soon to boost Asian deals, with a focus on the education and learning sectors in China and India, a partner of the fund announced. In October, 2008, British private equity firm Actis led a consortium investing $103 million in China's Ambow Education, which targets middle-school students who aspire to a coveted place at a Chinese university. Private capital investors, betting that Asia's obsession with childhood education is recession-proof, are increasingly investing in the fast-growing private learning sector. See the November 11, 2008 story online at:
http://www.reuters.com/article/Finance08/idUSTRE4AA2OJ20081111
The Wall Street Journal reports that Harvard University is preparing a $600 million bond issue to partly repay existing debt and also to cancel certain interest rate swap agreements. The university announced its endowment has lost 22 percent or roughly $8 billion in the last four months, leaving the world's richest university on track to deliver its worst returns in 40 years. Despite the recent loss, Harvard University bonds are expected to carry a full investment-grade rating, the paper reported. See the December 5, 2008 Wall Street Journal article online at:
http://www.reuters.com/article/ousiv/idUSTRE4B41KN20081205
In America, The Washington Post recently reviewed the financing and management of Washington, DC’s charter schools and found conflicts of interest involving almost $200 million worth of business deals, typically real estate transactions, at more than a third of the District's 60 charter schools. Since charter schools were authorized by Congress 12 years ago, attendance has grown significantly. The independent seven-member charter board now oversees about 26,000 students, more than one-third of the city's public school population.
See the entire article in the December 14, 2008 Washington Post online:
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/13/AR2008121302079.html?sid=ST2008121302293&s_pos=
In America, the for-profit college industry is enjoying growth that is only likely to improve in the next couple of years, benefiting from higher unemployment, state budget cuts and declining support for nonprofit institutions. For example, changes in federal student aid policies have made grants and subsidized loans more available. In addition, for-profits have improved their efficiency on use of space and they have honed their growing online-education programs to be more profitable. Also, the costs associated with student recruitment have recently declined.
See the entire story in the Chronicle of Higher Education, December 19, 2008:
http://chronicle.com/cgi2-bin/texis/chronicle/search
School Choice
In America, the number of students in Milwaukee, Wisconsin attending private schools using publicly funded vouchers exceeds 20,000 for the first time, according to data released by the Wisconsin Department of Public Instruction. At the same time, the number of students in the main roster of Milwaukee Public Schools (MPS) elementary, middle and high schools has fallen below 80,000 for the first time in well over a decade and declined for at least the 10th year in a row. In addition to the 20,244 students using vouchers worth up to $6,607 to attend 127 private schools, there are 5,015 students in schools chartered through the University of Wisconsin-Milwaukee and Milwaukee city government; 2,629 students attending alternative and partnership schools that contract with MPS; 3,190 students enrolled in charter schools given permission to operate by MPS but not staffed by Milwaukee public school employees; and 6,892 going to public schools in the suburbs. See the November 9, 2008 article online at:
http://www.jsonline.com/news/education/34184444.html
In America, students in Washington, DC’s charter schools have opened a solid academic lead over those in its traditional public schools, according to the Washington Post. District children in both traditional public schools and charter schools systems still fall short of national averages on standardized tests. But students in charter schools have been more successful at closing the gap. According to a Washington Post analysis of recent national test results for economically disadvantaged students, D.C. middle-school charters scored 19 points higher than the regular public schools in reading and 20 points higher in math. See the entire December 15, 2008 article online in the Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/14/AR2008121402654_pf.html
Legislation
In Greece, tough new measures are being imposed by the Education Ministry on universities and technology institutes. Although the institutions are supposed to be autonomous and self-administering, the government intends to exercise greater control over their operations, restrict academic freedom and trade union activity, and curtail student mobilization. The regulations interpret and expand the provisions of the legislation in assessment, the four-year rolling financial program, duration of studies, credit units, appointment of a secretary-general, plant and building management, and security. Education Secretary Evripidis Stylianidis has threatened to withdraw much-needed funds from the institutions if they do not comply. See the entire story online in the University World News:
http://www.universityworldnews.com/article.php?story=20081205091617465
In Bangladesh, the country’s caretaker government passed a law on November 24, 2008 that allows private individuals and institutions to establish campuses in the name of foreign universities, but only with prior permission from the government. Last November, the Universities Grants Commission (UGC), banned 56 foreign-university campuses in Dhaka, and in four other cities, for selling degrees and for not meeting quality standards. The new law states the universities can run campuses only in places that the government has certified. See the November 25, 2008 story online at:
http://chronicle.com/news/article/5560/bangladesh-will-allow-foreign-universities-to-set-up-shop
In Nepal, Maoist rebels to end private investment in schools. The massive election win last April by Nepal's former rebel Maoists has put them in the position to set the government agenda, and bring about drastic changes. On November 2, 2008 Finance Minister Baburam Bhattarai declared the government would end private investment in education by 2010. Private investors, he added, should limit themselves to investing in universities. Private schools account for nearly one-third of the country's 41,000 schools. See the entire story online in the Christian Science Monitor:
http://www.csmonitor.com/2008/1115/p90s04-woap.html
Access and Quality
The Washington Post reports that despite being one of the world's most populous countries, Brazil does not have the skilled, well-educated workforce to support its industries. Of its college graduates, only five percent are engineers, far below the rates of countries such as China and South Korea. While Brazilian GDP has more than doubled, to $1.3 trillion, in the five years ending in 2007, recent studies have shown that workers in Latin America have less education than those in East Asia and Eastern Europe and that the percentage of students enrolled in high school is far lower than in developed countries. See the entire story online in the Washington Post on December 9, 2008:
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/08/AR2008120803747.html?wprss=rss_world
In Botswana, Dr Patrick Molutsi, Executive Secretary of the Tertiary Education Council recently stated that sponsoring students at local private institutions has made an impact by increasing access to tertiary institutions from 25,000 to 40,000 in 2008. He added that while Botswana is moving in the right direction in terms of access, quality is still a concern. Students from GIPS (Gaborone Institute of Professional Studies), NIIT and Limkokwing University have complained about the quality of education in those institutions because of the poor quality of lecturers, course content and lack of infrastructure. Molutsi concurs that quality is a problem when it comes to private institutions. Admissions guidelines are in place but private institutions admitted more students than their facilities could teach effectively. He adds that monitoring mechanisms will be put in place. See the December 4, 2008 article online:
http://allafrica.com/stories/200812040994.html
In South Africa, a study conducted by the Human Sciences Research Council has found that forty percent of South African students drop-out of university in their first year, due largely to financial difficulties. ‘First generation’ students from low-income, less educated families are the most likely to drop out. While South Africa has a highly successful National Student Financial Aid Scheme, which supports about 120,000 of 735,000 university students, loans and bursaries do not cover the full costs of study, leaving poor students struggling to meet living and other expenses. They study also discovered that on average only fifteen percent of students finish their degrees in the allotted time. See the October 28, 2008 story online:
http://www.universityworldnews.com/article.php?story=20071025102245380
Suzanne Roddis (send comments to edinvest@ifc.org )
