Education: South Africa’s Next Big Small Business

I have spoken endlessly in the past about making money from government incompetence. We’ve seen the health and security industries boom under the current dispensation as those state services go to shit. We have also seen the education landscape change with entrants such as Curro and ADvTECH – backed by private equity – rapidly expanding. However I believe that South Africa’s education is so poor that even Curro and ADvTECH will eventually be disrupted. Here is how it will look and why.

The Future
The future of education in South Africa will be teachers opening (registered) independent schools the same way that doctors and other medical professionals run private practices. The schools will have a low student to teacher ratio (lower than Curro) where children can be taught as individuals in an impactful manner. These “schools” will be run out of offices, houses with classroom sizes as low as 10, you might even see these schools being run out of industrial areas where space is cheap and plentiful. Like any business each will have a different approach, some will have a focus not only education but religious or other moral values (something which is needed in my opinion).

The 9-5 school
If a school is small and nimble. Teachers can work like any other job, OK, they can’t open at 9am more like seven, but they can work until 5pm. Here is the benefit of such as school:
After school is covered for kids with working parents
Homework assistance
Tutoring

These private schools can go a step further and even have holiday programs. These things would all help the kids, the parents don’t have to pay an extra premium because things go on as normal. Unlike SADTU members they won’t burn down the country if asked to work on “school holidays”. And children who would usually be without adult supervision will be with their usual teachers.

If you look at a state school, unless your child is a genius, they will need extra tutoring. If parents work, there is a safe space where kids can do their homework while waiting for them and get guidance. This is a 3 in 1 service. Even light meals and transport could be offered extra. But you are getting value for money. These are all preferable to leaving a latchkey kid roaming around.

Rationale
There is no reason that quality education should not be affordable. Curro is first and foremost a multinational corporation who has to return its shareholders value, in this case not only PSG and their owners but also PSG investors. But teachers opening independent schools making enough to cover rent and salary, they don’t want to be like Jannie & Piet “Vaccine Dompas” Mouton and make billions . So a small independent school can offer a better service than Curro at a fraction of the price. I don’t think schools need massive facilities either, look at the state schools with their sports facilities but they produce students who will end up being unemployed. No need for large tracks of land and the accompanying water bill to keep the grass green, that don’t add value to the education quality for the child. There is also no need for many teachers to offer ten subjects just important ones. Township schools offer a bouquet of subjects but the children come away there so dumb you have to wonder if they would not have been better off being taught one thing intensively after all a one trick pony is better off than a no trick pony.  Most subjects offer little to no value in the context of South Africa, most history textbooks can be summed up in a Wikipedia page (it is unclear to me why a child needs to know more than that about something that happened a long time ago unless they want to study for something of which there is no jobs available in SA).

Business Model
These schools can be run like any business, it can be run by the teachers teaching, or by a principal owner employing teaches it can even be run as a “holding company” opening small “campuses” (by that I mean classrooms). Even if teachers work like a studio model like a tattoo artist or a nail technician moving between these schools I still believe that they will produce superior results to the current state offering. Much more attention can be offered, there can even be teacher assistants like there are in civilised countries and much more individual attention can be offered tailored to the child. It is comparable to government hospitals vs. private and armed response vs. SAPS.

Even if a school follow the “CAPS” curriculum it is still going to be better if it offers individualised instruction, teaching at the child’s pace, even if a child takes longer to grasp a concept they can be accommodated without falling behind or end up graduating one day and thinking that a VW Polo is a status symbol.

The opportunity
South Africa does not have enough state schools to house all its students, rapid population growth, half of Zimbabwe is here as well as millions of “refugees” from other countries creating an endless stream of children.

Kicking Bird : How many illegal foreigners are there in South Africa?
John Dunbar : Like the stars in the sky.

Enough schools are not being built, the irony is not lost that the previous dispensation was far more efficient in building schools – even in “non-white” areas at the time. Administrators like Angie Motshekga, Debbie Schäfer and Panyaza Lesufi are in way over their heads, they try to act like they know what they are doing but the results speak for themselves: 3/4 of our youth are unemployed sitting at home twiddling their thumbs sitting on Twitter the whole day tweeting the most mundane garbage, unable to earn an income in the most developed country in Africa.

The Matric “results” are useless if the bar has been lowered where very little is required to actually pass which does appear to be the case. From my time spent observing our youth I reckon our public education system is fucked and it is no surprise that  education in SA will continue to evolve to the point where less affluent people can afford private education. The marginal increases in pass rates after a decline is not a sign of an improved system but what we call a “dead cat bounce” in investing – even a dead cat will bounce if it falls from a great height. The proof is in the pudding: the highest youth unemployment rate in the world.

Watch how office blocks start filling up with with little private schools, offering education, tutoring, after-school services etc. As usual don’t forget where you heard it first.