While Bahrain’s education rankings are among the highest in the Middle East, given the kingdom’s demographics there is still room for private investment at school level and in higher education. Some 32% of the population is under 15 years of age, and another 29% is aged 15-29. Regionally, the GCC education market is worth $40bn, with the private sector accounting for 14% of that. By 2020, the Gulf Arab states will be home to 11.3m general education students, and 1.9m in higher education.
Private Equity Fund
Private equity firms have been slow to realise the potential of the sector, but investors in Bahrain may be leading the way. Al Baraka Banking Group is working with Bahrain-based D3 Consulting on the first private equity fund solely focused on education in the Middle East.
In November 2013 Itqan Capital, an investment firm based in Saudi Arabia and a subsidiary of Al Baraka, signed a memorandum of understanding with D3. The two will jointly provide capital for the new fund, which is seeking to acquire and operate schools, and eventually also invest in higher education. The $200m fund is the first of its kind, and will specifically target educational opportunities in the Middle East and the Gulf Arab states in particular.
The government is eager to attract more private sector investment in primary and secondary education. While there are currently 65 private schools in Bahrain and an additional 43 private institutions, the Ministry of Education’s Directorate of Private Education believes that this number is set to increase substantially. Private schools in the kingdom have the potential to rent out their premises to companies which need soft service facilities or run their own programmes, such as evening academies.
Another key need in the market is for academic bridge programmes to better prepare students in Bahrain to attend international universities, particularly those who want to study in the UK. Traditionally, the majority of such students have attended bridge courses in the UK, but more might consider such programmes if they were based in Bahrain. There is also a need for boarding schools that – given its proximity – could attract many students from Saudi Arabia’s Eastern Province. The number of non-Bahraini secondary school graduates doubled from 271 in 2007/08 to 571 in 2011/12.
Programmes that encourage secondary school students to start businesses could also be successful in Bahrain. Such schemes – which have worked in larger education markets such as the US and the UK – allow teenagers to develop small businesses and offer start-up capital. Tamkeen, a government programme that funds small and medium-sized enterprises, is one potential investor. Bahrain’s diverse student population means that these and other programmes could be readily accepted. According to a 2012 study, some 21% of Bahrain’s student population is foreign, compared to 15% in the UK and an OECD average of 7%.
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