Private Sector Drives Change In Egypt’s Education Reform

January 22, 2025

 

As Egypt embarks on a journey to transform its education system, the road ahead is marked by significant hurdles—overcrowded classrooms, aging infrastructure, and an outdated curriculum. Yet, amid these challenges, a new wave of innovation is emerging.

The private sector, traditionally a bystander, is now stepping up to fill the gaps, offering solutions that could redefine the future of education in the country. With a growing appetite for change, Egypt’s education revolution is not just a government-led initiative; it’s becoming a collaborative effort where private players are seeking to rewrite the rulebook for quality education, accessibility, and sustainability.

Egypt has the largest student population in the Middle East and North Africa (MENA) region, with 23 million K-12 students in 2020, according to the 2020 Colliers Egypt K-12 Education Sector Market Overview report.

“There is an urgent need for new schools in Egypt. The education sector grows at a rate of 5% annually, with approximately 25 million students currently enrolled. Each year, around one million new students enter the system, requiring at least 5,000 new classrooms, which translates to a minimum of 1,000 new schools needed annually,” Mohamed Khalifa, Managing Director at EFG Hermes Private Equity, told Business Monthly.

Bridging gaps

As Egypt continues to face challenges in modernizing its education system, the private sector has become an essential partner in driving change.

“We need to bridge the gap between the workplace and educational providers,” said Mohamed El Kalla, Chief Executive Officer (CEO) of CIRA Education, during the American Chamber of Commerce in Egypt’s (AmCham Egypt) Education Committee meeting, titled “Building Capacities for the Future: Sustainable Return on Investment (ROI) in Education,” on January 13.

This can be achieved by investing in infrastructure, developing innovative curricula, and expanding access through public-private partnerships (PPPs).

A successful example of PPP in education, a coalition of Egyptian entities and banks, has launched the Lighthouse Education platform with a capital of EGP 1.75 billion in 2021. The partnership includes the Sovereign Fund of Egypt (TSFE), Banque Misr, Misr Insurance Holding Company, and Suez Canal Bank (SCB). The platform targets the middle class, expands into governorates, and leverages state assets, including acquiring and improving existing schools. Hossam Kabbani, founder of Orman Schools and Ironwood Investments, will oversee the platform. Former Minister Hala El-Said announced an investment of over EGP 500 million in the first phase.

Another successful PPP initiative in education is the Cosmic Village school complex, inaugurated in 2023. Egypt’s Prime Minister Moustafa Madbouly and key officials opened four schools in the first phase of the project at the 6th of October City, aiming to provide quality, affordable education to middle-income families. Ayman Soliman, former TSFE CEO, highlighted the successful investment model that balances economic returns and social development.

Egypt, with over 60,000 schools, including 7,000 private institutions, faces a growing demand for educational services. Private school enrollment has surged at a compound annual growth rate (CAGR) of 6.3% in the past five years, nearly double the 3.6% growth in the public sector, according to the Colliers report. By 2030, Egypt will need an additional 11 million school seats, 2.1 million of which must be in private schools.

Khalifa emphasized the opportunity, noting that EFG Hermes invested $150 million into the region’s largest specialized K-12 education fund from 2018 to 2023, signaling confidence in the market.

Growing influence

Egypt’s expanding education sector offers substantial opportunities for investors. El Kalla highlighted this growth, noting, “Private school enrollment has increased by 20% over the past five years,” signaling the private sector’s growing opportunities.

Khalifa proposed that refurbishing underutilized state-owned schools could offer investment opportunities. By consolidating schools into larger institutions, the government could make them available for private developers to renovate and adapt to local or international curricula.

“Over time, these reforms could produce skilled graduates who contribute to Egypt’s economic growth and enhance its global competitiveness,” he added.

Calls for regulatory reforms

While private sector involvement can enhance quality, spur innovation, and improve resource allocation, Doaa Abdou, Head of the Economics Department and Vice Dean for Graduate Studies and Scientific Research at MSA University, highlighted ongoing challenges and called for regulatory reforms to promote transparency and reduce bureaucratic obstacles.

Further, Khalifa pointed out that the private sector is facing burdening challenges in developing new schools due to inflation and currency devaluation, which have led to rising costs for land and construction materials.

Egypt’s inflation rate reached 23.4% in December, down from 25% in the previous month and 33.1% in March 2024, state statistics agency CAMPAS noted.

Construction materials prices rose by 502% year-on-year in March 2023, according to the latest data from Gleeds Egypt Market Report.

From November 2023 to November 2024 the Egyptian Pound depreciated by 37.46% relative to the US dollar, and the US dollar appreciated by 59.89% relative to the Egyptian Pound, based on the official exchange rate, according to UN estimates.

Khalifa explained, “The cost of school development has become difficult to manage due to these fluctuations, and we are seeing an increase in costs of up to 40%.”

To overcome this challenge, he stressed the need for flexibility in adjusting tuition fees due to rising costs. At the Third Annual Education Investment Summit, ElKalla reported that private sector investments have dropped to 9%, despite a 30% increase in tuition fees, due to declining profitability and rising demand.

Finally, as Egypt’s education sector increasingly relies on private investment, concerns about access for all social classes arise. Abdou highlighted the challenge of limited access for marginalized groups, especially in a system where private investment may prioritize profit. She advocated for diversified educational options, such as vocational training and online learning, and for scholarships to support deserving students.

Khalifa concluded, “We must move in the right direction by encouraging the private sector to invest and start developing new schools.”