The education sector in the Middle East is expected to grow exponentially on the back of rising population, increasing private sector participation and growing unemployment. Especially for investors in the private education sector, prospects appear very bright as there have been a slew of regulatory developments promoting the education sector. Although investment opportunity is on the rise in the education sector, we know that with high returns come higher risks as well. Private players need to determine the right location, right offering and correct price points to capture a healthy share of the pie. ValueNotes has recently published a White Paper titled “Growing Saudi Education Sector | An Oasis or a Mirage?” This White Paper provides an outlook of the current Saudi Arabian education sector by exploring the current industry scenario, key market dynamics and scope for future growth. A complimentary copy of the white paper can be downloaded from here: http://bit.ly/17V2HWb

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Opportunities in the
Saudi Arabian
education sector

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Table of contents
1. Saudi Arabia – Background to the rise in education sector
2. Pressure to reduce unemployment
3. Education is a top priority
4. Promotion of private education
5. Demand for technical graduates to lead to increase in tertiary enrolment
6. Social changes to drive improvements in education
7. Education sector as an attractive destination for foreign investors
8. Stringent regulations may not be of the best interest
9. Reaching the Oasis

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• Higher unemployment rate amongst Saudi youth is a big area of concern for the government. The Kingdom expects the
private sector to play a significant role in the diversification, which in turn will generate job opportunities for Saudi
nationals. Private companies prefer non-Saudi employees who are more skilled than their own nationals
• The need of the hour is to improve the overall education system of the country to battle unemployment. Although the
government has been taking several actions, the real change in the education sector is expected to come from the
private sector
• Private enrolment rate for overall education has been growing at 9% as compared to public enrolment growth rate of
1%. Out of ~42,000 schools in 2012, 10% are privately held as compared to 9% in 2009. This shows the increase in
importance given to the private sector
• In Saudi Arabia, private sector engineering colleges still lack the quality education that multinational firms seek. As
demand for technical education is increasing, there remains a huge potential for private players
• Although investment opportunity is on the rise in the education sector, with high returns come higher risks as well.
Private players need to determine the right location, right offering and correct price points to capture a healthy share of
the pie
Executive Summary

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Promotion of private education
Number of private higher education institutes has risen from
10 in 2005 to 29 in 2012
The private higher education segment in Saudi Arabia is
growing at an annual rate above 35%, compared to the
public sector, which is growing at only 10%
Between 2007 and 2011, the revenue of private education
has grown by over 40% per annum and is currently
estimated at USD300 million. 50% of private higher
education revenue comes from medical courses, where
enrolment is growing at 45% per annum
This figure confirms the interest of Saudi students in medical
courses and also proves that the status of private sector
medical colleges is much better than that of other
professional courses
10
20
29
2005 2009 2012
Source:MinistryofHigherEducation
Private higher education institutes in Saudi Arabia
“Almost 90% of the education output of Saudi Arabia is not
linked with the labor market thus it becomes difficult for
students to get desired jobs.”
- Abdullah Al-Obaid, Ex Saudi Minister of Education

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Demand for technical graduates to lead to increase in tertiary enrolment
97% 100%
86%
100%
41%
55%
2011 2020 2011 2020 2011 2020
Primary Secondary Tertiary
Source: UNESCO
Rise in enrolment in the tertiary education
7%
11%
4%
12%
9% 9%
16%
17%
21%
15%
2007 2012 2007 2012 2007 2012 2007 2012 2007 2012
Education Engineering Healthcare,
Medical
Social,
Business,Law
Science
Enrolment in tertiary education by field
Saudi Arabia aims to achieve 100% enrolment in primary and
secondary education by 2020, which does look achievable.
However, improving enrolment in the tertiary segment remains a
major challenge due to the lack of infrastructure and trained
teachers
Most students consider tertiary education in Saudi as a waste of
time owing to poor placements. But due to improvements in the
overall education system, the scenario doesn’t look all that bleak
In fact, a few segments like engineering have witnessed rapid
growth in recent years. The enrolment figure confirms the
interest of Saudi students in the engineering and medical field
Local teachers are not qualified enough and not highly skilled,
especially in the technical and engineering domains. Saudi
universities have negligible research capabilities due to the lack
of eligible teachers. They are expected to face a huge dearth of
skilled teachers in next three years. In hindsight, this offers an
opportunity for teacher/faculty training institutes in Saudi
Source: Ministry of Higher Education

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Reaching the Oasis
Investment opportunity is on the rise in the education sector, but with high
returns come higher risks. A few steps that can help private players make most
of this opportunity are:
• Need to determine the right location, right offering and correct price points to
capture a healthy share of the pie
• Before starting an educational institute, one must be clear as to which type of
education (primary /secondary/tertiary) can be offered
• The courses offered should match with the industry demand to ensure
placements are high
Collaborating with foreign universities and multinational companies can ensure an improvement in the quality of education
and the employability of students
But the decision about which university or company to tie up with, needs to be evaluated with a lot of care.
As the journey is long and the road is less known for most of the companies, it is advisable that new entrants seek a research
partner who can guide them in the process
“Higher investment in educational
institutes is necessary as they are the
only way to develop a country’s most
important resources, namely its
human resources. Saudi Government
wants to increase private sector
participation in education”
- Saudi Princess Lolowah bint Faisal Al
Saud

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A complimentary copy of the white paper can be downloaded from here
http://www.valuenotes.biz/knowledge-center/white-papers/opportunities-saudi-arabian-education-sector/
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