Saudi Arabia: Making the grade

Saudi Arabia is stepping up its commitment to education and providing increasing opportunities for private investors in an effort to reduce the Kingdom’s unemployment rates and its reliance on imported workers.

Approximately 25% of the country’s annual budget is dedicated to education and training, which in 2011 translated into $36bn, an 8% increase on the 2010 allocation. This does not include the increasing role played by private education, which is more and more seen as an alternative to state services.

A study issued in mid-October by the Parthenon Group, a global consultancy firm, suggested investment opportunities in the private primary and secondary education sector in the region could be $3.5bn next year, with the Kingdom among those markets with the best openings.

Karan Khemka, a partner and head of the Parthenon’s Mumbai office, said there was a clear trend toward private education and a preference for international and mixed curriculum schools. This seems to be because rising numbers of students prefer education in English at both the secondary and tertiary levels.

“For example, the private higher education segment in Saudi Arabia – albeit still small in size – is growing at an annual rate above 35%, compared to the public sector, which is growing at only 10%,” Khemka said in a press release. “This shows that students and their families increasingly choose the private sector, where a larger proportion of teaching is done in English.”

Another study, conducted by management consultancy Booz & Company, said combined public and private spending in the region on education from kindergarten to year 12 will rise from an estimated $36bn last year to $60bn in 2020. With by far the Gulf region’s largest population, and its deepest pool of students, Saudi Arabia is a prime market for private education institutions.

The government’s increasing investment in education is clearly paying off: in the recently released Arab Competitiveness Report for 2011-12, prepared by the World Economic Forum (WEF), Saudi Arabia ranked highly in most key categories, placing second only to Qatar in the region and 17th globally.

The report, issued in late October, described the Kingdom as having an economy in transition from being factor-driven (with great emphasis placed on basic factors such as institutions, infrastructure, health and primary education) to being efficiency-driven, with priority placed on higher education, training, financial market development and technological readiness.

However, the WEF also said Saudi Arabia has a considerable way to go before standards for its higher education and training met those of other countries at similar income levels.

“Boosting these areas, in addition to fostering a more efficient labour market, is of particular importance to Saudi Arabia given the high level of unemployment in the country and the growing numbers of young people who will enter the labour market in the coming years,” the report said.

The government is already tackling the country’s unemployment challenge. One measure to open career paths for citizens is a plan to reduce the number of expatriate workers in the economy. In mid-October the Ministry of Labour announced it plans to put a ceiling on the number of foreign workers employed locally, with the limit set at 20% of the national population.

This, along with a recent massive government economic stimulus and investment programme, would create a number of employment opportunities. Clearly though, there need to be trained Saudis to fill the positions freed up as and when they become available. Education is key for this, according to management consultant Hesham Rowaihy.

“We need a national succession plan driven by the private sector with the support of the Labour Ministry and other government entities,” Rowaihy said in an interview with Arab News in October. “We should strengthen our education and training system in order to supplant the guest workers. Elevation of the education system is essential to produce qualified Saudis capable of taking up important positions.”

The opening of a SR20bn ($5.3bn) women’s only campus of Princess Nora Bint Abdulrahman University (PNU) in November is another way the state is aiming to provide high-quality education that will prepare the school’s 50,000 students for the workforce. The campus, considered the largest women-only university in the world, will offer academic programmes that have been designed to meet job market requirements, Munira Al Abdan, PNU’s vice-president for studies and development, told local media.

As long as state and private enterprise can maintain the drive to provide appropriate jobs for the ever growing pool of educated Saudis, while at the same time ensuring the provided education is tailored to meet the economy’s needs, the Kingdom will be able to achieve premium returns on educational investments in the years to come.

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