Strengthening the Edupreneurship Ecosystem in South Africa 2015
1. Strengthening the Edupreneurship
Ecosystem in South Africa
Prepared especially for the
Aspen Network of Development Entrepreneurs
Laura Tobar & Zoraida Velasco
Emzingo NexGen Fellows
Johannesburg, South Africa
March 18, 2015
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Table of Contents
Page
Acknowledgements 2
Introduction 3
Status quo 4
Stakeholders 6
Findings 7
Conclusion 9
Appendices 11
Appendix A- Expenditure on Education 11
Appendix B- ISASA Member Schools by Fee Range 2013 12
Appendix C- Stakeholders Identified in the Ecosystem 13
Appendix D- Stakeholders Interviewed 17
Bibliography 18
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Acknowledgements
The authors would like to thank the ANDE team for their constant support, the expert advice
from our mentors Devang Vussonji and Samantha Maasdorp at Dalberg Global Development
Consultants, as well as the countless experts and stakeholders who contributed their time and
knowledge towards the writing of this paper.
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Introduction
Economic development for a country is driven as a result of many different things. Education
is considered one of the most important drivers in the growth of any economy. With this in mind, the
ANDE South Africa office has identified education entrepreneurship - edupreneurship - as playing a
crucial role in the development of this emerging market.
The challenge for our team was to identify the key constraints, challenges and opportunities
that edupreneurs in South Africa are facing to then discuss these during a round table hosted in
March. The findings and conclusions are summarized in this report which aims to come up with
collaborative action streams to be supported by ANDE in an effort to ultimately contribute to the
“Strengthening of the Edupreneurs Ecosystem in South Africa”.
The following report includes an assessment of the current state of education in South Africa,
a mapping of the key stakeholders in the entrepreneurial ecosystem for education, and the results of
a series of interviews done with these stakeholders. The first stage of the research focused on
identifying key constraints, challenges and opportunities. The assessment and mapping exercise was
accomplished through desktop research and interviews with field experts. The interviews with
stakeholders helped determined the current challenges and opportunities found for edupreneurs in
the ecosystem. These interviews focused on seven basic topics: finance, human capital and skills,
policy and regulatory environment, infrastructure and enabling technologies, road to scale, school
structure and curriculum, and market and demand. All of this information was used to design the
structure and flow of a high level interactive roundtable to be held on March 23. The discussion will
focus on the challenges faced by edupreneurs in South Africa, the ecosystem that supports them, and
the development of a collaborative action-based approach to improve the quality of education
through entrepreneurship.
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Status quo
With Apartheid ending only 20 years ago, South Africa’s new education system is still
considered to be in an early stage of transition. Unfortunately, students are not performing well, as1
illustrated in Figure 1, which reflects on the capacity of the government to fully provide a quality2
education to its population. Figure 1
According to the South African National
Development Plan, all South Africans should
have access to the highest quality education by
2030. Nevertheless, the country’s public3
education system is commonly cited as
dysfunctional and one of the worst performing in
Africa. This is particularly surprising considering
the government is spending more on education
than on any other sector; seven percent of its
gross domestic product and 20 percent of total
state expenditure is allocated to education (see Appendix A for more details on government4
spending).
The system has attempted to improve performance by offering independent school choices.
The problem with these offerings is that the cost to attend is very high (see Appendix B). In 2013 only
six percent of the total number of schools in the country were independent. Of that number, only 10
1
Charles Simkins, Dr Stephen Rule and Ann and Bernstein, Doubling for Growth. Addressing the Maths and Science Challenge in South
Africa's Schools. Executive Summary(Johannesburg: Center for Development and Enterprise,[2007]).
2
"Consciousness-Based Education Schools."<www.cbesa.org/whatsWrong.html> (accessed 03/02, 2015).
3
"Creating Education and Training Pathways in SA."University of South Africa,
<www.unisa.ac.za/news/index.php/2014/10/creating-education-and-training-pathways-in-south-africa> (accessed 01/20, 2015).
4
"Education in South Africa."South Africa.info, <www.southafrica.info/about/education/education.htm#.VMn3ZSuUeSo#ixzz3QCQuycmQ>
(accessed 01/29, 2015).
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percent were for-profit models, the rest are non-profit and only about 60 percent of those receive
subsidies from the government.5
The subsidies received by these schools are determined by policies and regulations stipulated
by the government. Depending what quintile the school is categorized as it will receive a certain
amount of funding per child. Figure 2 explains this funding mechanism.
Figure 2
According to UNICEF, poor quality teaching and infrastructure and plaguing social problems
are contributors to the low performance levels South Africa is currently experiencing. A 2014 report6
from the Centre for Development and Enterprise highlights a few other factors impacting low
performance levels. These include a lack of resources, large class sizes, poor commitment and
discipline from learners, and not enough involvement from parents. These challenges and the fact7
that the government does not see the sector as a source of profits can be considered opportunities
5
Jane Hofmeyr et al., Affordable Private Schools in South Africa(Johannesburg: The Centre for Development and Enterprise,[2013]).
6
Poverty Traps and Social Exclusion among Children in South Africa: A Report to the South African Human Rights Commission(Pretoria:
SAHRC: SAHRC and UNICEF,[2014]).
7
What does Research Tell Us about Teachers, Teaching and Learner Performance in Mathematics?(Johannesburg: The Center for
Development and Enterprise,[2014]).
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for edupreneurs to implement new ideas to improve the system. Nevertheless, this view of education
by the government coupled with lack of support provided to entrepreneurs proves a need for efforts
to be organized in order to create more efficient and long term impact.
With this in mind, a mapping exercise of the players in the edupreneurship ecosystem was
necessary to determine who is influencing the field, who is making a difference, and where
collaboration can be fostered to strengthen the ecosystem.
Stakeholders
A comprehensive but not exhaustive list of 144 stakeholders was compiled. The stakeholder
categories are illustrated in Figure 3 and their sub-categories are listed below, with the exception of
Corporate which does not have sub-categories. Figure 3
Capacity Development Providers
● Accelerators
● Incubators
● Attorneys
Investors
● Venture Capital
● Angels Investors
● Banks
Non-profits
● Charity
● Foundation
● Academia
● Trust
Government
● National
● Provincial
● Municipal
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Findings
Throughout a period of six weeks, 29 stakeholders were interviewed (see Appendix D for list).
Questions around seven different topics related to the state of the edupreneurship ecosystem were
addressed during each interview. These are listed and described in Figure 3.
From the seven topics understanding the mismatch between investors and edupreneurs
makes financing the main challenge in the ecosystem. This is followed by the lack of human capital
and skills available to meet the demands of the market both in reference to teachers for schools and
to the workforce needed for entrepreneurs to be successful. Although when speaking about
scalability, human capital and skills are a bigger issue for entrepreneurs than financing at that stage.
Figure 3
1. Finance Funds resources, investor interest and edupreneurs needs
2. Human capital and skills Hiring and team building opportunities, skills and knowledge gaps
3. Policy/Regulatory environment How it influence and contribute to edupreneurs journey
4. Infrastructure and enabling tech Physical resources and tools available in the education space
5. Road to scale Main challenges in growing the business
6. School structure and curriculum Areas to improve or include
7. Market and demand Generalities and market stage
To better address the results of these interviews and to avoid the repetition that occurred
between the rest of the topics, a SWOT analysis is presented for a better and more comprehensive
understanding of the edupreneurship ecosystem.
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Strengths
● Funding is available
● Teacher and staff training models already exist
● Technologies to reduce costs in Low-Fee Private Schools and to monitor student performance
are already being implemented
● Equity involvement from private funds increase commitment and provide support to the
edupreneur
● Successful edupreneurs have been able to formulate a clear mission to attract general interest
and support
Weaknesses
● There is a lack of government support to incentivize social enterprises
● A mismatch between investors and edupreneurs makes financing complicated
● Risk is not being mitigated because there is a lack of blended capital models to do so
● There is not enough early stage/seed funding available
● The number of investors is low and most are very risk averse
● The current banking system is very conservative deterring edupreneurs from pursuing projects
● There is a need for better and more solid business models
● A decentralized education system allows for things to fall between the cracks
● Most edupreneurs need training and better understanding of financial models
Opportunities
● The development of vehicles to access available funding
● Establishment of a support platform to share knowledge, create partnership, develop skills
(pitch).
● Ways to replicate successful models
● Development of a platform where investors can be organized by sector
● Development of high quality indicators to measure impact
● Improvement and development of communication tools
● Creation of a pro-bono support system to navigate government bureaucracy
● Use recent graduates from university as a source for skilled workforce
Threats
● Current initiatives are supporting mainly the middle class and private schools thus not
addressing the needs of bottom of the pyramid
● Some edupreneurs are not being as successful as others due to their lack of personal networks
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● Edupreneurs are having to function under hybrid models to be able to secure funds
● People, in particular teachers, are resistant to change and reluctant to new technology
● Overall the dysfunctionality of the system is yielding a lack of interest from potential college
students in becoming educators
● Bureaucracy at all levels of government make it nearly impossible to navigate the
procurement process or have access to serve public schools in general
Conclusion
“Education is the most powerful weapon we can use to change the world.” - Nelson Mandela
While the ecosystem has a myriad of challenges and opportunities we have identified four
main points that need to be given priority to be able to begin “Strengthening the Edupreneurship
Ecosystem in South Africa”, these include seed funding, human capital, support systems, and
scalability.
Even though there are funds available, there are no seed funds for early stage entrepreneurs
and there is a need to develop patient capital. Human capital is the second biggest challenge faced by
edupreneurs in order to build solid teams for their businesses. It is a costly resource in both
directions: there is a high opportunity cost for employees to work in a startup because corporate
experience is more valuable in the labor market and usually pays more; and for edupreneurs the cost
of salaries involved for qualified employees is high. Additionally, the ecosystem lacks an organized
support system to help edupreneurs in their journey. There is a need for collaborative spaces to share
knowledge and experiences, to avoid making the same mistakes and learn from best practices.
All these challenges influence edupreneurs in their road to scale as well. The main challenges
in the early stages are the same faced when trying to scale the business. Successful edupreneurs have
had to innovate in their business models to overcome those challenges including training and
developing programs for their employees, sharing knowledge in their personal networks, or hiring
recently graduate students from university with no experience but highly talented.
Finally, a country that can achieve good education levels increases its opportunities to
participate in international markets and to benefit from economic and employment growth. While
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South Africa’s education system is still suffering from the influence of the Apartheid era, there is
clearly a strong group of stakeholders interested, devoted and committed to give future generations
better and equal opportunities. These efforts will take decades to reflect change but bringing together
the right people to collaborate in strengthening the ecosystem for entrepreneurs interested in making
a difference is the first step in making this change a reality. By leveraging the power of technology and
our shared humanity, entrepreneurs have the potential to address the world’s greater challenges -
including advancing opportunity for underserved communities to access education.
This paper has served to design the “Strengthening the Edupreneurship Ecosystem” event to
be held on March 23. Said event is designed to start a dialogue and build a community between all
stakeholders including funders, capacity development providers, university actors, government
actors, and edupreneurs through which areas that need further work and exploration can be
identified. We hope and expect their discussions will catalyze future collaboration and activity, either
directly between participants or by the broader ANDE network. Their input will complement this
report by ultimately coming up with collaborative action streams to take forward. This will benefit the
edupreneurship and Small and Growing Business community at large, through knowledge sharing and
exposure to gaps and existing resources in the market.
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Appendix C
Stakeholders identified in the ecosystem
1. ADvTECH
2. African Leadership Academy
3. African Management Initiative (AMI)
4. African Scholars' Fund
5. African School for Excellence
6. African Social Entrepreneurs Network (ASEN)
7. Afrikan Tikkun
8. Allan Gray Orbis Foundation
9. AmazingBrainz
10. Andrew Grassnolar
11. Anna Foundation
12. Association for Educational Transformation(ASSET)
13. Bambisa
14. BASA Tutorial Institute
15. Behold SA
16. Bertha Centre of Social Innovation and Entrepreneurship at the University of Cape Town's Graduate
School of Business
17. Bertha Foundation
18. BETA Foundation
19. Beyond the Lemonade Stand
20. Biblionef
21. Bjatladi Youth Development Organisation
22. Bot River Education Foundation
23. Boy and Girls Clubs of South Africa
24. Branson Centre for Entrepreneurship
25. Branson Centre for Entrepreneurship
26. Bridge International Academies
27. Bridge South Africa
28. British Council
29. Business Partners
30. Cape Town Science Center
31. Carel du Toit Trust
32. CASME - Center for the Advancement of Science and Math Education
33. Catholic Institute of Education
34. Centre for Advancement of Science and Mathematics
35. Centre for Creative Education
36. Centre for Development and Enterprise (CDE)
37. Centre for Early Childhood Development - Integrated ECD Programme
38. Children's Assessment & Therapy Centre
39. Children's Disability Centre
40. Columba Leadership
41. COMMACT
42. Cotlands
43. Council on Higher Education
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44. Curro
45. D.Capital Partners
46. Dapt.io
47. Dell Foundation
48. Department of Basic Education
49. Department of Higher Education and Training
50. Early Learning Resource Unit
51. Education without Borders
52. EducoAfrica
53. Edunova
54. Edupeg
55. EdVillage
56. Enke: Make Your Mark
57. Enlighten Education Trust
58. Entrepreneurship Institute
59. Epworth Children's Village
60. Equal Education
61. Family Literacy Project
62. Flying Children
63. Franschhoek Valley Transformation Charter Trust
64. Funda Online
65. FunDza Literacy Trust
66. GADRA Education
67. GIBS
68. GOLD Peer Education Development Agency
69. Good Work Foundation
70. Grindstone Accelerator (programme of Knife Capital)
71. Grofin
72. Help2Read
73. IDC
74. Ikamva Youth
75. Imithayelanga Youth Development
76. IMSTUS
77. Innovate South Africa
78. iThemba Projects
79. Jet
80. Junior Achievement South Africa
81. Khululeka Community Education Development Centre
82. Klein Karoo Resource Centre
83. Knife Capital
84. LEAP Schools
85. Life College
86. Life College Group
87. LinvingIt
88. Maths Centre
89. MIB Technology
90. National Education Collaboration Trust (NECT)
91. Obami
92. Omidyar Network Africa Proprietary Limited
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93. Open Futures Foundation
94. Open Learning Group
95. Partners for Possibility
96. Pearson Affordable Learning Fund
97. Pioneer Academies
98. Praekelt Foundation
99. Proparco
100. PYXERA Global
101. Raiz Corp
102. Reading Adventure Rooms (RAR)
103. Rekindle Learning
104. Room to Read
105. Root Cause
106. SAB
107. Sangari South Africa
108. School Comunicator
109. Sci-Bono Discovery
110. S'Gela Connect
111. Shared Wealth SA
112. Siyakhula Computer School
113. Skoll Foundation
114. Small Enterprise Development Agency
115. Small Enterprise Finance Agency
116. South African Democratic Teachers Union
117. South African Education and Environment Project
118. South African Women Entrepreneurs' Network
119. SPARK Schools (Eadvance)
120. Sparrow Schools
121. Streetlight Schools
122. SW7 Accelerator
123. Syafunda
124. TEACH South Africa
125. The Amy Biehl Foundation
126. The Business Place
127. The Impact Hub
128. The Innovation Hub
129. The Tertiary School in Business Administration (TSiBA)
130. Thomson Reuters Foundation
131. TIA
132. Trialogue
133. Ubelele
134. UFS School Partnership Project
135. UMALUSI Council for Quality Assurance in General and Further Education and Training
136. Unity for Tertiary Refugee Students (UTRS)
137. U-Start
138. Village Capital (VilCap)
139. WITS School of Education
140. WITS University Centre for Entrepreneurship
141. World Reader
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Appendix D
Stakeholders interviewed:
1. African Management Initiative (AMI)
2. Afrikan Tikkun
3. African School for Excellence
4. Andrew Grassnolar
5. Bambisa
6. Bridge South Africa
7. Centre for Advancement of Science and Mathematics
8. D.Capital Partners
9. Dapt.io
10. Department of Higher Education and Training
11. Equal Education (off the record)
12. Funda Online
13. GIBS
14. IDC
15. Kusile Labs
16. LEAP Schools
17. Life College Group
18. Partners for Possibility
19. Pearson Affordable Learning Fund
20. Pioneer Academies
21. Rekindle Learning
22. S'Gela Connect
23. SAB
24. SPARK Schools (Eadvance)
25. Streetlight Schools
26. SW7 Accelerator
27. Syafunda
28. The Innovation Hub
29. UMALUSI Council for Quality Assurance in General and Further Education and Training
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