In an era characterised by profound technological disruption and intense global competition in new frontier industries, emerging markets are striving to improve and adapt their education systems to meet the demands of the modern economy and the needs of their citizens. As such, innovative solutions are increasingly being developed to address barriers within traditional education systems. Education technology (edtech) is gaining traction worldwide as an invaluable teaching and learning tool.
However, the global edtech movement has been somewhat uneven; its implementation was delayed in some developing countries due to infrastructure deficits and tight budgets. Nevertheless, the surge in investment in the last few years indicates the substantial potential for edtech to enhance the quality of education around the world in a variety of ways.
Appetite for Innovation
Edtech companies in developed countries came into prominence in the early 2000s. In the US, the subsector’s advent was made possible by the country’s well-developed ICT networks, large economy and successful centres of innovation, such as Silicon Valley. In 2018 the US edtech market was estimated to be worth more than $8.38bn, according to the Software and Information Industry Association. In Europe, the centre for edtech is the UK, home to at least 1000 edtech companies, 200 of which are based in London.
Although the US and the UK are the world’s edtech leaders, Asia has quickly become its fastest-growing laboratory. With the largest school-age population, Asia is home to over 600m K-12 students and is the emerging global centre for online education. Many Asian countries have placed a premium on education, and both governments and parents are willing to spend a substantial amount on education services, particularly in developed markets in the region. For instance, parents in Singapore spend more than an average of $70,000 each year to educate their children, while over 70% of secondary school students in Hong Kong, Taiwan and South Korea hire private tutors. While parents in the emerging markets of Asia have less discretionary spending power, these countries have a great deal of potential to utilise their burgeoning innovation ecosystems to develop new, cost-effective edtech solutions to improve learning outcomes. For example, Indonesian edtech company Ruangguru was tipped by the country’s Minister of Communications and Information to grow into a unicorn (valued over $1bn) in 2019, as it rolls out its onestop learning services app across South-east Asia.
In addition to the US, the UK and Asia, there is also a growing edtech sector in the Middle East. A 2016 education report by regional investment bank Alpen Capital suggests that more than 50,000 schools are needed across the Gulf to accommodate an expected 20% increase in the student population to around 15m by 2020.
Forbes estimates there are 270 edtech start-ups in the Middle East, some of which have tapped into gaming, machine learning and artificial intelligence (AI) to transform the learning environment. However, despite its great potential, there has been a relative lack of edtech investment in the region, compared to, for example, Asia. According to Forbes, less than 1% of global funding for tech start-ups in 2017 went to countries in the Middle East, while approximately 22% went collectively to China and India, highlighting a need for more diversified investment in the future.
The edtech movement is also steadily expanding in Latin America and Africa. E-learning revenue in Latin America grew by 14.6% each year between 2013 and 2016 to $2.2bn, so that by 2018 it was the world’s fourth-largest edtech market in terms of revenue, after North America, Western Europe and Asia. Markets in the region have particularly benefitted from their proximity to the US, as this has allowed them to speed up the development of learning solutions. Meanwhile, access to mobile internet has dramatically increased in Africa over the years. More than 60% of its population, which equates to approximately 700m people, are mobile subscribers – 300,000 of whom use mobile internet. As a result, mobile learning has started to gain momentum in Africa as a way for education to reach a broader audience.
Given the huge potential, it is therefore not surprising that there is an influx of investment in edtech. Looking forward, education stakeholders in less-developed markets are increasingly viewing technology as a means to bridge gaps in education infrastructure and teaching resources. “With increasing infrastructure development in Indonesia there will be plenty of opportunities for edtech to supplement the education system in the country,” Azhar Sunaryo, director of Primagama Tutoring Institution in Indonesia, told OBG. “However, the value of face-to-face teaching will remain irreplaceable.”
US-based research institute Metaari reports that global investment in learning technology companies reached a record $9.56bn in 2017, breaking the previous record of $7.3bn in 2016. In particular, there has been a significant increase in investments made in edtech companies that specialise in augmented reality, AI, neuroscience and cognitive science.
While the US and the UK still account for the majority of edtech investment in the world, there is also increasing investment activity in emerging regions such as Latin America. The International Finance Corporation has spearheaded over $450m in investment in online learning institutions in Brazil and the Pacific Alliance countries, namely Chile, Colombia, Mexico and Peru. Although Brazil is the region’s biggest market, investors are increasingly interested in Pacific Alliance members because of their common language, educational uniformity and higher GDP.
There has been widespread support for the adoption of new technology in education systems globally. In Asia, several governments have taken steps to adopt e-learning tools as part of wider efforts to transition into digital economies. For example, the authorities in Thailand are looking to improve the country’s English proficiency by using AI to assess students’ writing and speaking skills online. It also launched a free mobile app called Echo English to encourage its citizens to practice conversational English through games. Elsewhere, the Department of Education in the Philippines recently launched a new K-12 curriculum that stipulates the inclusion of media and information literacy as a core subject in public schools. The central objective of this move is to equip students with the skills needed to succeed in a modern, digital economy.
Governments in the Middle East also see education as a path to progress and economic development, allocating as much as 19% of their budgets to the sector – well above the global average. The UAE Ministry of Education has indicated its willingness to support e-learning initiatives as tools to improve education delivery in a market that is expected to expand by 60% to be worth $7.1bn in 2023, while the Ministry of Education in Egypt announced in October 2018 that 2500 secondary schools had been connected to fibre-optic internet or Wi-Fi, as part of its plans to give every student studying at that level a tablet computer.
In Latin America, governments are investing substantial resources in edtech to improve learning outcomes. To expand education access in rural areas, the Mexican government is implementing a distance learning programme called Telesecundaria, which will provide lectures to secondary students through a network of satellite televisions.“While only 50% of the population in Mexico has internet access, this figure is quickly increasing due to government reforms in telecommunications,” Jose Antonio Quesada, director of the Egade Business School, told OBG. “These initiatives make online programmes possible and can be used to complement existing learning techniques.” In fact, several US-based companies travelled to Latin America in 2018 to explore the possibility of establishing more edtech programmes in the region.
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