Grading The Independent School Sector

For a number of reasons the growth of fee-paying independent schools continues across South Africa’s different income groups
Jan 3, 2017 9:00 AM ET

Posted from Old Mutual's Tomorrow 2016

Despite a turbulent and an agitated economic and political context, the growth of fee-paying independent/ private schools continues across South Africa’s different income groups.

The tertiary education crisis and the spectre of racial intolerance continue to intensify in South African society. Tough times lie ahead, with forecasts predicting only 1% GDP growth for 2016.

South Africa’s workers and middle class are feeling the weight of increasing costs, inequality and indebtedness. Youngsters from the black aspiring, middle and elite classes are at the vanguard of the #FeesMustFall campaign, which ignited in 2015 across our tertiary institutions. Restlessness is rife. And yet the growth of independent schools in the country has continued unabated.

The Department of Basic Education (DBE)’s latest education statistics reveal that the number of learners in independent schools has increased by 120.9% over the past 15 years, although the total learner numbers remain only 566 194 compared to those in public schools at 12.3 million. During the same period, enrolment at public schools increased by 5.2%. The new schools financed by the Schools and Education Investment Impact Fund South Africa (Schools Fund) that opened over the past two years in Gauteng did so with record high numbers of between 900 and 1 000 learners. In 2016, all existing schools located in Gauteng increased their learner numbers, while those in more rural locations grew at a slower pace. Curro Holding’s 2015 results, released in February, show a 16% increase in learner numbers from 2015 to 2016 and they remain upbeat about future growth. The Independent Schools Association of Southern Africa (ISASA) indicates that its membership numbers continue to grow year on year across all market segments.


Despite these strong growth figures and due to recent events at the universities, concerns have been raised about whether an #IndependentSchoolFeesMustFall campaign will emerge. In the short to medium term, this is not the most likely challenge the independent school sector will need to withstand, for three reasons. 

Firstly, independent schools are scattered across thousands of school sites countrywide, unlike the concentrated sites of the 25 universities (traditional and technology) in SA. Secondly, a diffuse group of schools, many of whom are embedded within communities, does not provide the ground for significant gains. In the case of widescale non-payment of fees at independent schools, there is no recourse to Government for a bail-out. The school will simply not be able to pay its teachers and will close. Thirdly, the high value parents place on their children’s education is the driving force behind the growth of the independent school sector. This sentiment was well expressed by Ms Phumzile Sikhosana, whose motivation for sending her child to an affordable independent school is: “I want the best. I am prepared to pay for quality.” Writing on education and black upward social mobility, Roger Southall, Head of the Sociology Department at the University of the Witwatersrand, says: “…levels of black access to educational opportunities have been massively increased. These openings are being seized upon by black parents and students themselves, who recognise the crucial role played by education in enhancing life opportunities. A good education is explicitly perceived as necessary for staying within, or entering, the middle class.” 

Parents are prepared to pay for quality education because of the huge challenges facing the education sector. Only half of the learners who start school will complete Grade 12; and only a third of those who reach Grade 12 will pass well enough to qualify for admission to bachelor’s level university studies. South Africa’s numeracy and literacy levels at primary school are much lower than those of comparable countries. In 2015, South Africa’s education sector ranked 139th out of 143 countries in the World Economic Forum’s Global Information Technology Report, while the standard of Mathematics and Science education was ranked last (143th out of 143).


In response to our education crisis, the Schools Fund was established by Old Mutual and the Government Employees Pension Fund and its asset manager, the Public Investment Corporation (PIC). As the first impact fund of its kind in South Africa, it has already spent over half a billion rand on behalf of its investors to develop affordable independent schools in South Africa. The Fund is an innovative initiative that utilises pension finance, in the form of debt and equity, to create additional quality schooling opportunities for learners at affordable independent schools. These schools work alongside public schools and Government in delivering quality education for learners from previously disadvantaged backgrounds. 

For the 2015 National Senior Certificate (NSC) exam results, the Schools Fund schools achieved a 97.6% pass rate, well ahead of the national NSC pass rate for South African schools, which was 70.7%. And 57.7% of the Schools Fund’s students obtained university exemption (Bachelor pass), 31.9% higher than the national average of 25.8%. This is an important achievement as it means that the quality of the matric pass is good enough to afford these youngsters an opportunity for a university education. 

This much is clear – to be successful, the Schools Fund needs to provide both quality education and an acceptable commercial return. But there is a third critical factor to be considered when measuring success: impact. This year there are approximately 15 600 learners at 22 schools with 1 000 staff in which the Schools Fund has invested. By the time the R1.2 billion funds under management have been spent, learner numbers should reach about 40 000. The number of youngsters needing education in SA presently stands at 12 million. To reach just 3% of these learner numbers as they increase, an estimated R7.2 billion will need to be invested. This is the time for additional finance to be allocated to the country’s independent schooling. 

The key value that impact investing in education offers is that it aligns the creation of economic value and social value. Through the mobilisation of long-term commitment of capital, the private sector is invested in the future as it only sees returns in 10 to 15 years’ time. Parents, learners, teachers, businesses and investors become excited about this approach when they see the possibilities, and this creates the kind of hope that helps drive change. The scale of investment can be significant and an impact can be created for large numbers of learners. 

The challenges facing education are many, but so too are the opportunities that arise. An African proverb states: “Smooth seas do not make skilful sailors.” Let’s move skilfully into this space.