“On the one hand it’s this national interest, social theme that you have, on the other hand every parent wants the best education for their children and they are willing to spend on it. That can only be accomplished by the private sector,” Jens Yahya Zimmermann, partner at New Silk Route Growth Capital, told CNBC Africa on Monday.
“It’s a sector of high social interests so it’s a little more sensitive than other sectors that we are invested in. There are massive issues in most countries if not every country.”
According to the World Bank’s education statistics, sub-Saharan Africa and South Asia have the highest primary pupil-teacher ratios, with sub-Saharan Africa recording a ratio of 43 pupils per teacher in 2011.
The 10 countries with the lowest primary enrolment rates between 2009 and 2011 were all found in Africa. This illustrates a shortage in substantial education investment and a need for involvement by private equity companies.
“In most countries that we are active in, the government is still by far the largest provider of school education and very often, they’re not doing a great job unfortunately. Parents do turn to the private sector so generally it’s a good sector to invest in,” Zimmermann explained.
New Silk Route Growth Capital is a growth capital firm focused on investing in private companies in the Indian sub-continent and other rapidly growing economies in Asia. Its education portfolio is made up of the Beaconhouse School System and Varsity Education Management Limited.
“We are a fairly large investor in education in the K to 12 sectors – K to 12 is kindergarten, primary schools and secondary schools. There we are co-owners of about a thousand schools across 10 countries with about 650,000 students today,” Zimmermann indicated.
“On an operational scale that’s fairly large and it’s been a very interesting journey. Education is one of the sectors where we have really invested.”
Zimmerman indicated that stakeholder satisfaction and location also plays a role in the success of private sector education investment.
“Not only does the macro image matter but it really depends in that specific location, where you’re thinking about offering school services, what’s the situation there – are there already a number of offerings or are there not,” he said.