Strengthening the Edupreneurship Ecosystem in South Africa 2015

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

Laura Tobar & Zoraida Velasco 18 MARCH 2015

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, as 1

illustrated in Figure 1, which reflects on the capacity of the government to fully provide a quality 2

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 public 3

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 government 4

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 report 6

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 fact 7

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 A

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Appendix B

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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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142. World Teach 143. Yellowwoods Capital 144. Yellowwoods Preparatory School

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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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Bibliography

"ConsciousnessBased Education Schools.", accessed 03/02, 2015, http://www.cbesa.org/whatsWrong.html.

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DatabaseatAGlance South Africa. 2014: Center of Education Innovations. "Education in South Africa." South Africa.info, accessed 01/29, 2015,

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Staff Writer. 2015. "South Africa’s First Startup Survey Launched." SME South Africa Online, January

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http://www.cbesa.org/whatsWrong.html

http://www.cbesa.org/whatsWrong.html

http://www.unisa.ac.za/news/index.php/2014/10/creating-education-and-training-pathways-in-south-africa/



http://www.hrdcsa.org.za/content/enabling-entrepreneurship

http://www.hrdcsa.org.za/content/enabling-entrepreneurship

Strengthening the Edupreneurship Ecosystem in South Africa 2015

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