Striking a balance between public and private higher education

With increasing investment in private higher education worldwide it is important to strike the right balance between public and private universities to ensure quality and equity, according to participants at last week's International Finance Corporation conference on private education.

“There is a strong demand for more and better education services and governments are embracing private sector participation as a way to increase quality and efficiency while also trying to ensure that such provision meets appropriate standards and benchmarks,” said Rashad Kaldany, vice president for global industries at IFC, the private funding arm of the World Bank.

In contrast to recent decades, few people now believe that developing country governments in particular can meet the challenge of providing high quality higher education at affordable costs quickly to meet the demands of populations that are growing in size and aspirations.

Many countries are looking for new combinations of public and private education to meet the challenge.

“We see a key role for the private sector to work with governments to provide opportunities that would otherwise not be possible,” Kaldany said.

This has become even more urgent as lack of skills among young people, which is exacerbating high levels of unemployment, has become a significant factor in unrest in many countries, particularly in the Middle East and North Africa.

But expanding private higher education to swiftly plug gaps in provision leads to other problems.

In particular “countries need to resolve the tensions between public and private funding and strike a balance between efficiency and equity,” said global higher education expert Jamil Salmi, formerly of the World Bank.

Knowing how far and how fast to let private institutions grow is crucial, particularly to maintain quality, which in turn is important for ensuring that graduates are employable.

In many countries private higher education provision is growing apace, but market changes could easily reverse that.

And in some countries the private higher education sector is shrinking, in part because of more rapid growth in funding for the public sector such as in Colombia, or because of a declining population such as in South Korea, Salmi pointed out.

“Private secondary, vocational and higher education is here, like it or not,” said Michael Barber, chief education advisor to the Pearson group. “The question is more, what private-public combination strikes the right balance?”

“The role of the government is going to shift from sole provider to purchaser, quality assurer and regulator,” predicted Barber, indicating a continued strong role for the state in a hybrid system.

Alex Wong, senior director at the World Economic Forum in Switzerland, said private providers needed to be integrated into national education plans and broader country objectives.

Private education providers “are there, they are filling a gap. The reason the private sector should be involved is because of their flexibility and innovation. But the danger is that they can become a parallel sector if they are not integrated,” Wong told University World News.

Despite the recognition that private providers can swiftly plug education gaps, the conference heard that there is still deep ambivalence in many countries about private institutions.

In particular, for-profit institutions still carry a stigma, according to delegates from private equity finance organisations, making it difficult for them to work with governments in the education sector.

“Private equity and higher education are like oil and water,” said Sandeep Aneja, managing director of Kaizen Private Equity in India.

The IFC’s Kaldany pointed to “the ideological bias against private, especially for-profit, education in some parts of the world” and governments’ resistance to accepting the private sector as a partner in education, as one of the reasons why the IFC has not funded more private higher education as a way to bolster public higher education.

Nonetheless the IFC has funded a number of major private universities to enable them to expand and take on more disadvantaged students.

These include US$100 million in loans over the past two years to Brazilian university Estacio Paritcipações to upgrade and expand, in Brazil’s north-eastern region, to improve higher education access for an under-served group; and loans worth US$2.5 million to finance a new campus outside Ghana’s capital Accra for Ashesi University College, to expand the number of courses to include science and engineering degrees, which will improve employment prospects.

The IFC is the world’s largest multilateral investor in private education, in developing and emerging countries, at a total cost of US$1.5 billion. It said it was looking to work more closely with providers based in developed economies who are looking to expand their investments into under-served developing countries.

“Our strategy encourages and provides financing for the expansion of these global providers into new markets to build capacity and increase access to services. Developing country companies can also benefit from global knowledge and expertise,” said Kaldany.

“We also want to explore other ancillary services that are important to the education sector,” said Kaldany, referring to content and technology.

“In every case, our investments aim to improve access as well as quality and efficiency of services which, ultimately, will lead to better job prospects for students.”