New model schools thrive on subsidy

Before 1996 only a few elite private schools catered to the needs of the relatively few families wealthy enough to send their children to exclusive campuses in places such as the Midlands in KwaZulu-Natal.

Today, 765 independent schools are members of the Independent Schools Association of Southern Africa (Isasa), the largest body representing private schools in the region.

The increase has been triggered by the continued rise in urbanisation, which has placed enormous pressure on the public schooling system.

According to World Bank data, 65% of South Africans live in the five major cities now, up from 47% in 1960.

"In many ways education is becoming big business," said Isasa CEO Lebogang Montjane.

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Half of the association's member schools are in Gauteng, followed by the Western Cape and KwaZulu-Natal.

"Independent schools generally go, as one would expect, with prosperity."

Montjane said starting a school was not cheap because of the infrastructure and property costs involved.

However, private equity had been pouring into the establishment of independent schools space, which accounted, in part, for the increase in the number of these schools, he said.

Funding sources such as the Public Investment Corporation (PIC) and Old Mutual had also boosted the number of schools.

Six years ago, Old Mutual and the PIC established the Schools and Education Investment Impact Fund of South Africa to address infrastructure backlogs and support the improvement of education.

Nolwandle Mthombeni, an equity analyst at Mergence Investment Managers, said there was definitely room for more players and South Africa would continue to have growth in the number of private schools.    

So far, the booming demand for private schooling has been met in the main by dominant players such as Curro Holdings, whose share value has increased more than 1,000% over the past five years, outperforming Capitec.

Smaller players have, however, emerged on the scene and have found traction.

One such entrant is Nova-Pioneer Education Group, which operates three schools in South Africa and two in Kenya.

Speaking at Pioneer Academy Jackal Creek in Northriding, co-founder and CEO Chinezi Chijioke said that over the group's two years of operation locally, applications had roughly doubled each year.

Establishing and maintaining the schools had not been easy, he said, adding that the biggest challenge of breaking into the market had been maintaining the focus of the group's vision for private education.

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The school programme is based on Singapore's core curriculum, an educational approach that recognises the value of cognitive and emotional development.

Working mom Katlego Dibakoane, whose six-year-old son is a Grade 1 pupil at Pioneer Academy Midrand, said the school taught kids to develop their own ideas through investigating and finding out things on their own.

"My son's reasoning is amazing, he has an independent way of seeing things and he opposes things that he doesn't understand or believe in," she said.

Dibakoane said she was paying R36,100 a year for her child's education and was getting value for her money.

According to StatsSA's Living Conditions Survey, the average annual income in South Africa is about R138,168.

However, Montjane said many new independent schools were charging less than their public counterparts.

As a result of their low fees, these schools were receiving high government subsidies.

Subsidies were paid on a five-point progressive scale, with 60% of the provincial average estimate cost per pupil in ordinary public schools being the highest subsidy that a school could receive, and 15% the lowest, depending on the school's fee level and socioeconomic circumstances.

Schools that charged fees of more than two and a half times the provincial estimate were not eligible for a subsidy.

gumedeM@businesslive.co.za