Education funds create a knowledge economy

Nelson Mandela considers education the most powerful weapon that can be used to change the world while US President Lyndon B. Johnson believed that the classroom, and not trenches, was the true frontier of freedom.

"Education has a high percentage of return on investment, even if it is not immediately visible. One invests in education in the hope that the youth will go out into society and contribute towards the future development of the local economy," says Amina Taher, Executive Director – Corporate Communications, Zabeel Investments, which has acquired a stake in the National Bonds Corporation's (NBC) Madaares initiative. The initiative plans to open several primary and secondary schools in the UAE and other areas in the region.

"The Madaares initiative is focused on the development of quality education facilities; something every child is entitled to. Madaares' aim is to make quality education available across the UAE, ensuring that the country's youth have the chance of the best learning facilities at their doorstep," says Taher.

Addax Education Holding [AEH] WLL, a Bahraini company established by Addax Investment Bank in partnership with a team of education and private equity professionals, is another company that's investing in private schools and education-related businesses in the GCC, Levant, North Africa and other regions.

Hugh MacPherson, Chief Executive Officer and one of the founders of AEH, feels that education is a secure, socially beneficial investment vehicle.

MacPherson also says that parental expectations are rising with regard to the standards and outcome of the education they buy, so they are making more informed decisions about choosing an educational provider for their child.

"They want an 'educational passport' for their children, which will give them access to broader and potentially more appropriate opportunities for study and competitiveness in the global job market," he says.

MacPherson also adds that many governments cannot meet the needs of a diverse population, nor can they afford the high costs of starting new schools. This, he says, will continue to provide opportunity for private investment to enter sector through private/state partnerships or build, operate and transfer projects.

Taher also says that the Madaares initiative could bring higher efficiency in the system. "Corporate leaders are charged with watching where investments are made, and how they are being spent. They are responsible for making sure funds are used as efficiently and profitably as possible."

The involvement of private investors and companies in the field shows no sign of stopping in the near future. According to Macpherson, "Widely publicised reports have estimated the size of the global education industry to be in excess of $2.2 trillion (about Dh8.07 trillion). Estimates for the Mena region's part in it show figures in excess of US$150 billion, also indicating the possibility of a further increase."

MacPherson says that population and economic indicators suggest more growth. "According to statistics from the World Education Report by Unesco, the enrollment rate for K-12 in developing countries has increased eight times since 50 years ago — such increases in total numbers entering the system cannot all be assimilated into government provision.

"The private sector through private schooling has covered and will continue covering a big part of it," he says."

A positive step by the Dubai government, however, is aiming to do that and more in the form of the recently launched 'Knowledge Fund' aimed at improving education and ensuring that all Emiratis have access to quality educational opportunities. It will also assist government projects including scholarships, scientific research, training of teaching staff and development in educational infrastructure.

Dr Ayoub Kazim, Executive Director, Dubai Knowledge Village, welcomes the initiative. According to him, the fund underlines the importance of investing in human capital for sustained long-term development of the UAE and the creation of a knowledge economy.

This effort backed by initiatives by private investors herald a positive future for the education sector and all who enter the education system. "It goes without saying that investment in this sector will continue to increase. Funding education can never be a waste of money. Investing in a good education is as good as money in the bank," says Taher.