After two decades of stable economic development, Peru increasingly finds itself in a position to focus more resources on education. This is a welcome opportunity, as the country has some way to go to catch up to its regional peers in terms of educational access and outcomes. There are encouraging signs that the necessary changes are under way to improve these metrics, including more public investment via a centralised spending framework, revised regulations and take up of technology and other innovations.
Furthermore, a dynamic and growing private sector, underpinned by innovative teaching programmes, looks set to capitalise on an increasing demand for high-quality education among the burgeoning middle class. Nevertheless, the country faces a number of challenges to the long-term sustainability of the sector. These include a divide between rural and urban education provision, opposition to some reforms from educators and a significant infrastructure gap.
Government Priorities
Since his inauguration on March 23, 2018 the administration of President Martín Vizcarra Cornejo has set about building on the commitments of former President Pedro Pablo Kuczynski. The former president pledged to invest 6% of GDP in education by 2021, and President Vizcarra appears set to continue to pursue this goal. The 2018 budget allocated $8.5bn to the sector, or roughly 4.4% of GDP, a significant increase from a low of 2.7% in 2011 and up from 3.7% in 2017.
The incumbent’s experience bodes well for Peru’s education outlook, given his strong track record as governor of the Moquegua region between 2011 and 2014. Through improved investment in infrastructure and teacher training, education quality rose dramatically, with students in the region scoring the highest marks in the country in standardised tests.
Strong Indicators
This increased level of public investment can be expected to improve education standards, which have historically lagged behind regional peers. Indeed, progress has already been made in recent years. The adult literacy rate stood at 94.2% in 2016, the most recent year for which data is available, up from 89.6% in 2007, according to the World Bank. The country also improved its position in the latest OECD Programme for International Student Assessment table for Latin America from 2015, in which Peru moved up one spot from its last-place ranking 2012. Furthermore, Peru showed the fastest rate of improvement in student learning outcomes in the region in the 2015 report.
Net primary school enrolment remains steady at around 95% between 2008 and 2016, while net secondary school enrolment increased slightly from 77% in 2008 to 79.6% in 2016, according to UNESCO. Meanwhile, university attendance has risen dramatically over the past decade, particularly in the private sector, rising from 364,000 students in 2007 to just over 1.08m in 2016. This far exceeds enrolment at public institutes, which stood at 388,000 in 2016.
Rural Gaps
Despite these overall improvements, literacy rates in rural parts of the north, south and centre of the country remain lower than the national average. Compared with the national figure, and a high of 97.9% in Lima, literacy rates in rural areas such as Apurímac (83.7%), Cajamarca (86%), Huánuco (86.6%) and Ayacucho (88.4%) were far lower in 2016, according to the National Statistics Institute. Similarly, whereas the average literacy rate for women in urban areas was 94.5% in 2016, the average rate for the same metric in rural areas was 76.6%. These geographic differences are further reflected in student exam performance. Among seven to eight year old students, 55.1% in urban areas had satisfactory reading scores in 2016, compared to only 18.5% of rural students, according to the Ministry of Education (Ministerio de Educación, MINEDU).
Public-private Divide
Driven by a competitive market for private education, the share of primary and secondary students in private education rose from 27% in 2016 to 35% in 2017. This rate of private school attendance varies across the country, however, with 59% of students attending private institutions in Lima in 2017, compared with 31% in the north of the country and 29% in the south of Peru. While public primary and secondary education is free of charge, the cost of private education varies dramatically, from around $60 per month to $1500.
Although statistics at a national level are incomplete, there were more than three times the number of private schools in metropolitan Lima than public institutions, at 5680 compared to 1795, at the start of 2016. However, according to a Lima Regional Education Department report published in 2017, more than 70% of these private institutions did not have adequate infrastructure to operate, with many being located in buildings designed as housing.
Despite inconsistencies in the regulation and monitoring of educational provision in the private sector, available indicators suggest that educational outcomes on average exceed those of the public school system. According to the latest examination results from 2016, 29.3% of private school students scored satisfactorily on reading tests compared to 9.7% of public school students, while 19.2% of students gained satisfactory grades in mathematics as opposed to 6.2% in public schools.
Tertiary Education
The rise in university attendance has been supported by a concurrent increase in the number of tertiary institutions. The figure has grown substantially over the past two decades, rising from 72 universities in 2000 to 145 as of April 2018. This process began in 1996 when a series of legislative reforms aimed at promoting investment in the education sector was passed offering tax incentives to private tertiary institutions. Private universities now dominate tertiary provision, accounting for 92 of the 145 institutions in the country, and approximately 74% of all university enrolment as of 2016.
Yet, despite this rapid expansion, the quality of education at universities remains a topic of national concern. Due to administrative delays and quality assurance issues, only 35 of the existing 145 universities are accredited while the rest are currently under review. Symptomatic of this issue, only three Peruvian universities appeared in the QS World University Rankings 2018, with only one, Pontificia Universidad Católica del Perú (PUCP), ranking in the top 500.
Regulatory Reforms
In an effort to address these issues, MINEDU has, since 2014, been working to reform the sector by improving the registration and regulation of tertiary education. Notable among these moves have been the promulgation of Law No. 30220 of 2014, also known as the University Law. Among other things, the law created the National Superintendency of University Education ( Superintendencia Nacional de Educación Superior Universitaria, SUNEDU), a new supervisory authority under the purview of MINEDU. SUNEDU assumed a regulatory role over both public and private universities, which are now required to obtain a licence to operate. SUNEDU is also tasked with authorising the establishment of new institutions and supervising quality standards, among other functions.
The University Law aims to address three fundamental shortcomings in Peru’s university system. The first of which is to enable the state to oversee and align education policies at all levels through a national education programme; second, ensuring the quality of education services offered: and lastly, taking on a more active role in ensuring that universities are places of innovation by bringing research and training in line with international academic standards. Specific measures introduced by the bill include stricter requirements for higher-education programmes and staff, including a rule requiring all university lecturers to have completed a doctorate degree. In secondary schools new regulations requiring public school teachers to undertake regular appraisals remain a controversial sticking point among educators. As such, the implementation of the University Law has faced hurdles and elements of it have proven controversial, particularly SUNEDU’s supervisory role. The requirement that tertiary institutions gain licences from the organisation has been criticised for being prone to extended administrative delays, prompting calls from some policymakers and academics for the organisation to be restructured.
Compounding this issue, Congress extended a moratorium on opening new higher education institutions until 2020, which includes a ban prohibiting existing licensed universities from opening subsidiary institutions in the country. While lawmakers claim that the new moratorium will allow SUNEDU officials time to complete its ongoing review process, university representatives have stated that it is stifling sectoral growth. “The University Law imposed a series of conditions on universities in the country, including on expansion into other regions,” Juan Carlos Salazar, the director-general of postgraduate studies at Universidad San Ignacio de Loyola (USIL), a private institution in Lima, told OBG. “This has put a break on university expansion plans.”
Innovation
In spite of these temporary restrictions on the establishment of new universities, existing institutions have succeeded in broadening their reach, both domestically and on a global scale. The major players in the segment have increasingly made use of emerging technologies and new teaching methodologies to improve student outreach, while establishing partnerships and exchange programmes with international education providers. For example, PUCP is undertaking efforts to bridge the geographic education divide by building campuses in 10 of the largest metropolitan areas outside Lima, as well as an international campus in Colombia.
Furthermore, through its Centrum Católica Business School programmes, PUCP has begun to provide online instruction to students, notably business courses in partnership with EADA Business School in Spain. The university has also developed a digital employment portal and an online MBA programme, which was rated the best programme of its type in Latin America and 19th globally in the Financial Times Online MBA ranking in 2018.
Value for Money
This innovative approach to the provision of education extends beyond the country’s universities to the secondary segment. Traditional private schools are generally out of reach for most middle-class families looking to move their children out of the public school system. In the primary and secondary school segment, private education providers have, therefore, begun to increasingly capitalise on the lack of high-quality, low-cost schooling options. “There is a gap in the market for private, non-religious schools in Peru for the country’s middle class because there currently are not many of these,” Marco Bassino, headmaster of Markham College, a private school in Lima, told OBG.
Indeed, this market for mid-priced private schools is growing in the country. Innova Schools, a partnership between local and international businesses, operates 49 schools in 12 regions and has plans to double its presence by 2023, bringing its student body up from 40,000 to 100,000 across 100 facilities. There is strong profitability potential in the market, with Innova projecting revenues of PEN170m ($52.3m) in 2018. Price and quality are both important factors in attracting students. Innova, for example, charges $130 a month, which puts it within reach of a growing segment of the population. Use of modern teaching methods and technology can also set private schools apart, as evidenced by their results. At Innova 61% of second-grade students reached proficiency in the 2013 federal maths exam, compared to 17% on average nationally.
Foreign Investment
High levels of demand in the Peruvian education market have also attracted several foreign universities, some without formal campuses. These institutions include the University of Tarapacá, a Chilean public institution, and Mexico’s private Instituto Tecnológico y de Estudios Superiores de Monterrey, both of which offer online degrees. In addition, multinational equity firms such as Colombia-based Kandeo have also invested heavily in the sector. In December 2017 Kandeo agreed to invest $50m in USIL’s operations to fund the institution’s $120m expansion plans in Peru, Paraguay and Miami – where it already has campuses established. Kandeo now holds a 25% minority stake in USIL and its investment is expected to grow to approximately $140m in the next five years, Juan Carlos Mathews Salazar, general manager of USIL, told OBG. At the same time, foreign universities are also seeing an increase in the number of applications from Peruvian students. For example, the total number of US student visas issued to Peruvian nationals has steadily increased from 1924 in 2015 to an estimated 2177 for 2018. Meanwhile, countries like France are also working to attract students from the country, through programmes like Campus France, a French-government study initiative that provides financial support to foreign students – the European nation plays host to around 1000 Peruvian students per year.
With the Peruvian government launching a new initiative in 2015 to increase and improve English-language proficiency, the number of applicants to foreign English-language degrees can be expected to rise. Educational establishments teaching in English are already growing in Peru and a number of private domestic universities have increased their course offerings to include “Business English” programmes, capitalising on the growing demand within the local corporate sector for English-language proficiency.
There are positive signs that local companies are increasingly investing in training for their employees, Carla Mares, director of postgraduate studies at the private Universidad de Lima, told OBG. Nevertheless, local companies tend not to invest in English-language training for employees below managerial-level, according to the British Council in Peru. However, this situation may change over the long run, as greater exposure to international markets, coupled with higher demand for skilled employees brings more English speaking and bilingual workers to the Peruvian labour market. Furthermore, with rising levels of internet access and an increasingly tech-savvy population the country has a potentially expansive market for self-directed language learning.
Challenges
Although steps are being taken by the government to expand access to education and regulate poor-quality secondary and tertiary institutes, bottlenecks remain for the sector. The country faces a $4.6bn education infrastructure gap, according to estimates made by the industry lobby association Afin. Greater public investment and improved infrastructural provision beyond Lima will be required to address the divide in education provision and outcomes between urban and rural areas. Nevertheless, the current administration has expressed its determination to close the gap, through an ambitious private-public partnership investment programme. One problem that has exacerbated this challenge has been a tendency of regional governments to underspend their education budgets. The national government has begun to take action on this issue centralising overall expenditure on education in 2017 and increasing the share of the budget allocated to the sector in both 2017 and 2018.
Balancing efforts to improve the quality of secondary education through greater regulatory oversight of teacher performance while avoiding conflict with sector labour unions presents another challenge. In 2017 a national teachers’ strike over wages and government teaching assessments lasted two and a half months and affected almost 1m primary and secondary school students, almost forcing many to retake the academic year. In addition, severe flooding in early 2017 damaged or destroyed around 1000 schools, according to UNICEF, further exacerbating the country’s education infrastructure shortfall.
Outlook
Peru has historically lagged behind its peers, in both education provision and outcomes. However, steady improvements in investment and a vibrant and expanding private sector covering the primary, secondary and tertiary segments, are providing solid foundations for the country to overcome these hurdles and establish the system that it needs to support the transition to an economic model more orientated towards high-value exports and technology. Efforts to reform the regulatory framework for the industry, provide qualitative assessment and coordinate national education policy are both welcome and necessary. Nevertheless, delays in university accreditation and opposition faced from policymakers and educators highlight that these efforts remain a work in progress. Yet, despite these issues the outlook appears positive.
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