What’s the impact of online higher education in Africa?

Research Report by cdcgroup.com/insight

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At one point during the global COVID-19 pandemic, 1.6 billion children and youth in 161 countries were out of school and university – close to 80 per cent of the world’s enrolled students.1 Could online education become part of the solution to make education systems of the future more resilient? This report, written before the coronavirus outbreak, addresses the role of online higher education within the ongoing challenges of providing quality, affordable education to students in Africa. Africa has the world’s fastest growing youth population. Secondary enrolment and completion rates have gone up, resulting in a strong demand for higher education. University enrolment rates across the continent are set to triple by 2040. Yet, there is a stark undersupply of quality, affordable higher education across the continent.

The positive impact of higher education for individuals, the economy and society at large is well established. However, few methodologies assess the impact of investing in educational institutions in a rigorous way. For this reason, in 2019 CDC Group published an Education Impact Framework, offering practical guidance for companies and investors seeking to measure impact. In this report, we first look at the trends in higher education in Africa, and the importance of online education. We then explore the impact of UNICAF, Africa’s largest online higher education company and one of our portfolio companies.

We analysed internal data and asked over 1,000 students about their backgrounds, learning progression, their motivations for studying for an online degree and some of the life outcomes their degree may bring in terms of increased earnings and confidence.

Key insights from our study include:

On higher education in Africa:

– Africa suffers from a significant undersupply of higher education and demand is set to increase even further over the next decade.

– More high-quality universities are needed throughout the continent.

– Employers are looking for skills that traditional higher education is not providing.

 – Higher education in Africa is still out of reach for far too many.

– Private sector institutions and investors have an important role to play.

On online higher education in Africa:

– Online higher education is still an under-developed market, but it is expanding fast – both globally and in Africa.

 – Online and blended learning2 models are rising due to their increased flexibility and reduced cost.

 – Offering degrees accredited by institutions based in the US or UK can help gain initial acceptance with students and employers. However, local accreditation and a reputation for

     quality will be crucial to scale.

 – Demonstrating learning outcomes and improved career advancement is paramount to industry growth.

– Pricing and affordability are critical, as many students still struggle to afford degrees.

Higher education in Africa

Courtesy–Africa Business Insider

 Africa suffers from a significant undersupply of higher education. Current tertiary enrolment rates across Africa stand at roughly 8 per cent – well below the global average of 32 per cent.3 This contributes to low wages and a shortage of skills and talent. In most African countries there are not enough student places to satisfy demand; in Zambia, for example, there are 3.6 times as many applicants as spaces available.4  

Demand is set to increase even further over the next decade. Enrolments in Africa are expected to increase from 7.4 million in 2015 to 8.8 million by 2030 and 21.7 million by 2040.5 About three-quarters of the expected global growth for the population aged 18-23 is expected to be concentrated in ten countries: Angola, Democratic Republic of the Congo, Egypt, Ethiopia, Kenya, Niger, Nigeria, Pakistan, Uganda, and Tanzania.6

Africa has the world’s fastest-growing youth population, with rising education levels. Over the past 40 years, secondary enrolment rates have gone up and completion rates have more than doubled from 22 per cent to 44 per cent.7 Many 22-40-year-old Africans are also now in an economic position to seek further education, which means mature students are competing with fresh graduates for limited tertiary seats. By 2035, countries from sub-Saharan Africa are likely to become the sunrise markets for higher education.8

(Enrolment in tertiary education in Africa is roughly 8 per cent.)

More high-quality universities are needed throughout the continent. Good quality public universities often cater to less than 5 per cent of the student population and are mostly located in capital cities. Further, the 2020 QS World University Rankings, which rate the world’s best 1,000 universities, features only 13 African universities, of which eight are in South Africa.9 Quality assurance mechanisms at private universities, including their compliance with local regulations designed to uphold quality, are often weak.10

Employers are looking for skills that traditional higher education is not providing. Over 70 per cent of graduates in Africa study humanities and social science disciplines, yet more data scientists, managers and science, technology, engineering and mathematics (STEM) graduates are needed.11 In addition, many of the STEM skills currently being taught in African higher learning institutions lag behind the technical needs of the job market. This means the graduate unemployment rate is high, while the lack of talent is restricting business growth.

Reacting to job market demands, prospective students are looking for more innovative universities with multi-disciplinary, job relevant, technology-focused content and better quality teaching. Traditional campus-based higher education will still be a large part of the solution, and is expected to show growth, but online and blended higher education is best-positioned to fill the growing needs arising from these economic, technological and demographic trends. Higher education in Africa is still out of reach for too many.

The majority of students in sub-Saharan Africa will continue to struggle to afford Bachelors, Masters and PhD degrees. Universities will therefore have to adapt to make more affordable and relevant education available, as well as develop innovative student financing arrangements, such as income share agreements,12 to ensure equitable access for the brightest minds. Private sector institutions and investors have an important role to play. Currently, the private sector provides around 30 per cent of higher education seats.13 According to the World Bank, private universities can help create more opportunities for students from disadvantaged backgrounds to access tertiary education.14 There is strong pressure to increase higher education capacity, but at lower price points. This opens up opportunities for technology-based delivery models, including hybrid/blended learning and full online models that drive efficiency and scale to help meet these rising demands.

Impact of Higher Education…

1. … individuals: Over a person’s life, each additional year of schooling typically results in a 8–10 per cent boost in earnings.15 There is deep and extensive evidence that adult learning fosters a greater level of wellbeing, especially in older adults; an increase in life satisfaction and positive changes in mental wellbeing.16 Returns are especially high for tertiary education, and even higher for students from disadvantaged backgrounds in Africa.17

 2. … the economy: a higher share of education may translate into higher rates of innovation, higher overall productivity through firms’ ability to introduce new and better production methods, and faster introduction of new technology.18 Lifelong learning is key for pushing out the industry profitability frontier, gains in national output, employment levels and tax revenue.19

3. … society: a more educated society is associated with lower rates of crime,20 better population health21 and lower rates of societal conflict.22 These benefits are often transmitted across generations.23

The future of online higher education in Africa

Online learning: Understanding the rewards and drawbacks

 Online higher education is still an under-developed market. Globally, a few start-ups are trying to bring a more innovative, technologically-led, remote studying alternative to students. Yet, the annual costs of most of these options is still too steep for many. In some African countries, distance learning has already picked up. Estimates suggest that 60 per cent of Zambian students practice some form of distance learning. Nigeria’s Open University enrols some 160,000 students, making it the country’s largest tertiary provider.24 Yet, in general Africa has far fewer options in terms of quality online higher education. As such, there is an opportunity for start-up founders and investors. Conversely, being an early mover can also be costly: investment is needed to build the market and gain the trust of students.

Offering Western-accredited degrees can help gain initial acceptance with students and employers. However, local accreditation and a reputation for quality will be crucial to scale. Many students are risk averse when choosing a degree and are looking for degrees and institutions that are accepted by prospective employers. Accreditation from universities in the UK and US are important in these early days. It helps to signal quality and legitimacy at a time when local accreditation requirements are still geared towards ‘bricks and mortar’ delivery. Over time, degrees with local accreditation should become a larger part of the market. Some local universities, such as the University of Nairobi, are already offering online courses. In a post-COVID world, the trend of traditional universities putting courses online may be accelerated with local universities leveraging existing accreditation and a strong local reputation. However, as UNICAF CEO Nicos Nicolaou recently remarked, remote learning and well-crafted online learning are not the same.25 As such, there may be a blurring of the line between online and campus education as campus schools go more online and online schools develop more campuses and in-person learning experiences. Partnerships with large reputable firms – such as Microsoft, McKinsey and Google – and shorter job-relevant course offerings can also help establish the reputation of online learning.

 Demonstrating learning outcomes and improved career advancement is paramount to industry growth. To attract students, online education providers will also need to differentiate themselves by outcomes, such as improved career progression for graduates. To achieve this, universities need strong academic governance sitting alongside, but independent of, the commercial imperative. Quality online education requires high-touch support from the faculty and between students. In addition, to support job placement and career advancement, universities will need local partnerships with employers and active in-country alumni networks. As a result, online universities in Africa, including foreign ones, will need to invest in their local presence in their respective markets to remain competitive. It also requires a focus on relevance, including dialogue with the job market, offering vocational degrees, workplace readiness training, career coaching and guidance, and developing a methodology for assessing and improving student career outcomes.

Pricing and affordability are critical, as many students still struggle to afford degrees. The price for online higher education is usually lower than campusbased options, and helps individuals to keep working while studying. This dramatically changes the affordability equation, opening up higher education to an income group who otherwise would not have been able to afford it. For example, an engineering degree in India costs $7,000–14,000, whereas an online degree costs $250–300.26 The share of the market across Africa that can pay high prices for a master’s degree, even while continuing to work, is small. On the plus side, costs for internet-enabled devices and data are decreasing, and network quality is improving. The average price of one gigabyte of data throughout Africa decreased from 13.2 per cent of monthly GDP per capita in 2016 to just 6.8 per cent in 2018, and this trend is expected to continue.27 Student loans, and, in particular income share agreements, will be an important part of education take-up in Africa, whether for new or existing universities.28

Operators need to invest in new technologies and develop smart business models to keep costs down. Advanced technologies have the potential to keep costs down for operators. Artificial intelligence, for example, can reduce the costs of marketing and enrolment by using automated assistants and chat bots, as well as for content delivery, including personalised teaching and autograding assignments. New market entrants, however, may find it difficult to keep degrees affordable, as investing in these technologies – as well as investing in the marketing needed to build their market – can present a considerable up-front cost.

 Online higher education is expanding fast globally and will do the same in Africa. These trends present opportunities for an organisation like UNICAF. Uptake of online learning programs will continue at a moderate pace as many companies are yet to figure out affordability, acceptance, relevance and accreditation of short and degree courses, though this pace could be accelerated by the COVID-19 pandemic. To further increase acceptance, there is a clear need for each new provider to build their reputation by demonstrating the value proposition of online and blended learning to students. There is very little research on the effectiveness of online and blended learning, especially in emerging markets, and even less research on life outcomes and tangible improvements of the careers and net income of learners. This report helps contribute to the knowledge base and highlights how students at Africa’s largest online university currently value these aspects in their education.

1 Saavedra Jamie 2020, Educational challenges and opportunities of the Coronavirus (COVID-19) pandemic, World Bank Blog

2 Blended learning is a mix of in-person teaching and online learning

3 UNESCO: Welcome to UIS.Stat and Our World In Data: Tertiary Education

4 Caesar 2017: The Business of Education in Africa

5 Calderon 2018: The massification of higher education revisited, RMI University Melbourne

6 Calderon 2018

7 World Bank Data on School Enrolment

8 Calderon 2018

9 Top Universities in Africa

10 World Bank 2007: Higher Education Quality Assurance in Sub-Saharan Africa : Status, Challenges, Opportunities, and Promising Practices

11 Caesar 2017

12 Income share agreements (or ISAs) are financial structures in which the organisation provides the degree (often for free) and allows the student to pay back by deducting a percentage of their future income for a fixed number of years 13 Caerus 2017

14 World Bank 2017: Sharing Higher Education’s Promise Beyond the Few in Sub-Saharan Africa

15 Montenegro, C. and Patrinos, H. 2013: Returns to Schooling around the World. Background paper for the World Development Report

16 Schuller, T. 2017: What are the wider benefits of learning across the life course? Foresight, UK Government Office of Science

17 World Bank 2017: Sharing Higher Education’s Promise

18 UNESCO 2005: Education for all Annual Report

19 Stiglitz, J. 2015: Inequality and Economic Growth. The Political Quarterly 86;172–190

20 Machin, S., Marie, O. and Vujic, S. 2011: The Crime Reducing Effect of Education. The Economic Journal, 1

21( 552);463–484 21 Jamison, D. and Schäferhoff, M. 2016: Estimating the Economic Returns of Education from a Health Perspective. Berlin: SEEK Development

22 Agbor, J. 2011: Does School Education Reduce the Likelihood of Societal Conflict in Africa? Department of Economics, University of the Western Cape

23 Solon, G. 1999: Intergenerational Mobility in the Labor Market. Handbook of Labor Economics, 3 (Part A 1999);1761–1800

24 Caerus 2017

25 Nicolaou Nicos 2020: The new normal for Higher Education post-COVID-19 INSIGHT WHAT’S THE IMPACT OF ONLINE HIGHER EDUCATION IN AFRICA?

26 KPMG 2017: A study of online education in India: 2021

27 GSMA 2019: The State of Mobile Internet Connectivity

28 Income share agreements (or ISAs) are financial structures in which the organisation provides the degree (often for free) and allows the student to pay back by deducting a percentage of their future income for a fixed number of years.

Source: cdcgroup.com/insight

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