A lesson in economics as UAE schools get competitive

The cost of a child’s education from preschool to university in the UAE has been estimated at around $255,000. (Shutterstock)
Updated 25 August 2018
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A lesson in economics as UAE schools get competitive

  • chools in the UAE could find themselves in a price-and-quality battle to attract students
  • A flood of new schools across the UAE means parents have more choice yet are seeking value

ABU DHABI: Schools in the UAE could find themselves in a price-and-quality battle to attract students as competition within the nation’s education sector hots up.
After years of near-constant growth and an infrastructure boom in the field of education, a flood of new schools across the UAE means parents have more choice yet are seeking value as salaries become squeezed in a tougher economic environment.
While education analysts do not see a so-called “expat exodus” leading to empty spaces in UAE classrooms, they believe rising living costs and uncertainty in the job market mean schools will have to carefully consider their price structure and show they can continually drive up standards if they are to survive. As the sector becomes increasingly competitive, some schools are taking heed by turning down the option of raising tuition fees.
Mahboob Murshed, managing director at Alpen Capital (ME), said: “The UAE education sector — which has in the past seen a phase of robust growth in student enrolment coupled with an expansion of infrastructure — is now entering a phase of transition.
“For the first time, there are concerns of oversupply as demand struggles to catch up with supply, with the entry of a large number of new schools in the past few years. The competition among private players has intensified over the years with new schools offering incentives and discounts to attract students.
“The increased competition has ensured a greater focus on quality of education, with players focusing on continuous improvement to enhance their ratings.
Any drop in enrolment numbers has a direct impact on profitability of schools and newer entrants are at a greater risk as compared to older and more established schools. We expect to see consolidation in the sector and only those with a high-quality offering in their price segment will be able to maintain and enhance their profitability.”
While concerns have been raised that tougher economic times mean that some expats will leave the UAE, with a resulting impact on school numbers, WorldOmeter — one of the world’s leading sources on global population growth — estimates that the UAE’s population will continue to expand at a net rate of 1.5 percent.
But according to Mansoor Ahmed, director for health care, education and public-private partnerships at Colliers International, the potential client base for schools is only one factor in whether they thrive or stagnate. He feels providers need to look at “the composition of the population,” which is becoming more mid-income than high-income, and make “affordability” their focus.
“The government in Dubai has already taken a step in this regard, by freezing private school fees in 2018/19, while the private sector is also moving in this direction by introducing more and more affordable schools,” he said. “Dubai is expected to maintain its status as one of most buoyant private school market in the world.”
However, he emphasized that studies have shown the cost of private education in the UAE is still the second highest in the world — behind only Hong Kong — with parents spending an average of 365,025 dirhams ($99,378) to send their child to school. Meanwhile, the cost of a child’s education from preschool to university in the UAE has been estimated at around $255,749 — and that excludes the cost of books, school trips, and uniforms, which could add another 40 percent to that figure where leading schools are concerned.
“In Dubai, based on 2015/16 data, almost 57.5 percent of students pay tuition fees of less than 20,000 dirhams per annum, whereas a large number of schools that have opened in the last few years, especially branded international schools, were catering to the premium end of the market,” said Ahmed.
“However, as the education market is maturing in the UAE and in Dubai, parents are becoming more and more careful in selecting a school for their children, as being expensive does not guarantee better quality. This hypothesis is also supported by the KHDA School Inspection Report which does not show a one-to-one correlation between tuition fees and a school’s ranking, as there are a number of schools charging affordable and/or mid-level tuition fees and still being ranked as ‘outstanding’ or ‘very good’.”
Ahmed said that while schools in Dubai are allowed to increase tuition fees based on the Education Cost Index (ECI) released by the Dubai Statistics Center — which, in 2017, enabled eligible schools to raise fees by between 2.4 percent and 4.8 percent — some schools decided not to do this for the 2017/18 academic year.
He said this decision was based on their desire “to attract and retain students in their schools as a result of a slowdown in economic activities,” which reduced the enrollment growth rate from 6.4 percent between 2011/12 to 2015/16 to only 3.13 percent in 2016/17.
“There is also increased competition, with the opening of around 10 new schools in 2017, following a record 15 new schools in 2016,” Ahmed added. “In fact, a number of schools in Dubai — especially this year — are offering incentives such as scholarships founder’s discounts, and sibling discounts to attract and retain students.”


Jair Bolsonaro uses WEF platform to sell a ‘new Brazil’ to Davos elite

Updated 25 min 18 sec ago
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Jair Bolsonaro uses WEF platform to sell a ‘new Brazil’ to Davos elite

DAVOS, Switzerland: Brazil’s new president, Jair Bolsonaro, threw out the welcome mat for big business and major investors on Tuesday, telling a summit of CEOs at the World Economic Forum in Davos that his government would make the country one of the top 50 in which to do business.
Bolsonaro said he would work to open up Brazil’s relatively closed economy, reduce and simplify taxes, privatise assets and give his new justice minister the tools to tackle corruption and organized crime.
The newly-elected Brazilian president told the audience that he was “moved and honored” to be addressing the good and the great at Davos, calling the forum an opportunity to show the world a revamped Brazil that he was building.
“I want to introduce to all of you the new Brazil we are building,” he said. “We are committed to changing our history.”
He reassured political and business leaders in attendance that his government has the credibility and the tools required to reform his country.
Big investment to turn Brazil into a global tourist destination was the main thrust of Bolsonaro’s speech. But given the importance placed on climate change and protecting the natural world, he was keen to point out that he would strive to preserve the environment while developing the economy — saying policies on the two “should go hand-in-hand.”
Bolsonaro surfed a populist wave last year to ride to power, vowing an end to rampant corruption and a restoration of law and order in Brazil.
But staging his first foreign trip as president, Bolsonaro has left behind a scandal about suspicious payments involving his politician son Flavio Bolsonaro, who denies any wrongdoing.
Focusing instead on a pro-business message at the WEF, Bolsonaro told his well-heeled audience that he was determined to open up Brazil’s economy.