Distance learning
Distance learning
Business Model Description
Establish or acquire tertiary level distance learning institutions, including online and blended learning arrangements.
Expected Impact
Improve accessibility, quality and educational outcomes of distance learning.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- South Africa: Eastern Cape
- South Africa: Northern Cape
- South Africa: Free State
- South Africa: North West
- South Africa: Mpumalanga
Sector Classification
Education
Development need
South Africa has one of the most unequal school systems in the world. More than three-quarters of children aged 9 cannot read. For each 100 learners starting school, 50-60 will reach Grade 12, 40-50 will pass Grade 12 and only 14 go to University.(1)
Gender inequalities and marginalization issues
South Africa has made good progress in eliminating gender inequalities relating to access to education, with the ratio of girls enrolled at secondary and tertiary level being greater than that of boys.(18)
Investment opportunities introduction
The education sector's low productivity is contributing to a skills deficit and constraining growth across the national economy.(5) It is a significant factor frustrating the country's commitment to addressing Apartheid's legacy of economic inequality.
Key bottlenecks introduction
Challenges including poor infrastructure and supply of qualified teachers are hampering quality within the basic education system.(1)
Formal Education
Development need
Despite low access to tertiary qualifications, South Africa spends a larger share of its wealth on public funding of primary, secondary and non-tertiary post-secondary education than most OECD and partner countries.(4) Further, the ECD sector suffers from uneven resource provision - reducing the potential for ECD to enhance returns from later phases of schooling.(3)
Policy priority
Early Childhood Development (ECD) and upper secondary education - Despite the importance of the sector, ECD attracts only 1-2% of the total budget for public education.(3) The majority of the South African population has an upper secondary or non-tertiary post-secondary qualification (where most spending is allocated).
Gender inequalities and marginalization issues
Female participation in tertiary education has increased sharply, mainly in soft skills areas and not in STEM (science, technology, engineering and mathematics) fields. Few women in South Africa are researchers.(18)
Key bottlenecks introduction
Basic education is hampered by challenges including poor infrastructure and an undersupply of qualified teachers.(1)
Pipeline Opportunity
Distance learning
Establish or acquire tertiary level distance learning institutions, including online and blended learning arrangements.
Business Case
Market Size and Environment
33% - 40% of total higher education enrolments are in distance education.(8)
Distance education enrolments account for 33% - 40% of total higher education enrolments in South Africa.(8)
In 2015, South Africa had 4.5 million youth with at least a Grade 10 education. Among this population, Technical and Vocational Education and Training (TVET) enrolments were fewer than 600,000, while fewer than 550,000 students aged 18-25 were enrolled in undergraduate studies at university, leaving millions unserved.(12)
Indicative Return
< 5%
A large, listed education services holding company with distance education students accounting for 80% of enrolments had a price to earnings (P/E) ratio of 15.6% in 2021. This company averaged a return on equity between 3% - 5% in recent years and targets an operating margin of 20%.(9)
Investment Timeframe
Medium Term (5–10 years)
Based on studied benchmark projects, firms not pursuing acquisitive growth are likely to find that investments to support scale operations and grow enrolments require longer lead times to build facilities, establish operations and recruit students. These factors delay breakeven potential to the medium term horizon.
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Business - Business Model Unproven
Market - Highly Regulated
Impact Case
Sustainable Development Need
Distance education accounts for over 40% of the total higher education student headcount in South Africa. Promoting the availability of distance education encourages equitable access to education for all.(11)
Distance education plays a significant role in promoting access for students who are unable or unwilling to attend campus-based education, are non-traditional students or face other barriers to learning.(11)
Distance learning can further lower costs per student by distributing costs of curriculum design, material development and some teaching expenses across larger numbers of students, and by reducing the need for continuing physical infrastructure investments.(11)
Gender & Marginalisation
In 2016, female participation at public higher educational institutions (universities) was 58%, and 57% at Technical and Vocational Education and Training (TVET) colleges. At the University of South Africa (UNISA), the country's main distance learning institution, 63% of the student population is female.(13)
Expected Development Outcome
Improved accessibility, quality and educational outcomes of distance learning
Gender & Marginalisation
Increased access to distance learning can close the gap of women's participation in STEM (science, technology, engineering and mathematics) programs and degrees.(18)
Primary SDGs addressed
4.3.1 Participation rate of youth and adults in formal and non-formal education and training in the previous 12 months, by sex
4.4.1 Proportion of youth and adults with information and communications technology (ICT) skills, by type of skill
4.5.1 Parity indices (female/male, rural/urban, bottom/top wealth quintile and others such as disability status, indigenous peoples and conflict-affected, as data become available) for all education indicators on this list that can be disaggregated
(a) 15-24 years - male: 12% (2017), female: 15.2% (2017). (b) 35-64 years - male: 7.3% (2017), female: 8.7% (2017).(20)
N/A
Gender parity index: (a) Tertiary education - 1.257 (2007), 1.421 (2012), 1.393 (2016); (b) Enrolment in tertiary education by population group - Black African: 1.395 (2016), Coloured: 1.636 (2016), Indian/Asian: 1.521 (2016), White: 1.314 (2016). Percentage of 7–18 year olds with disabilities: 89.1% (2017), males: 89.1% (2017), females: 89.0% (2017). (20)
N/A
The Action Plan to 2019 - Key priority interventions for the Post-School Education and Training (PSET) system include: provision of a diverse set of training opportunities, especially in STEM (science, technology, engineering and mathematics) subjects; skills development for sustainable livelihoods; entrepreneurial skills development; annual monitoring and reporting on the performance of the PSET system.(18)
The Department of Basic Education (DBE) continues to collaborate with the Department of Science and Technology (DST) to enhance access to information and communications technology (ICT) and appropriate technologies for the basic education system. DST's Technology for Rural Development Programme (TECH4RED) transfers innovative technology solutions towards improving the quality and outcomes of the basic education system.(20)
Secondary SDGs addressed
Directly impacted stakeholders
People
Indirectly impacted stakeholders
Corporates
Outcome Risks
Student and instructor access to digital learning infrastructure and connectivity can be limited - only 56% of the population has access to internet (16)
Impact Risks
Stakeholder participation risk: Reinforcement of inequality trends related to digital divide - 30% of households in urban areas have access to computers, compared with only 9% in rural areas.(15)
Impact Classification
What
Provide affordable, quality alternatives to contact education
Risk
A potentially significant number of beneficiaries, tempered by the significant number of distance students already served by the University of South Africa.
Impact Thesis
Improve accessibility, quality and educational outcomes of distance learning.
Enabling Environment
Policy Environment
The Department of Higher Education and Training encouraged universities to expand online and blended learning programs as a means of broadening access, especially for 'niche' qualifications that may otherwise attract lower enrolments and post-graduate qualifications.(11)
Financial Environment
Financial incentives: Private education institutions do not qualify for education subsidies.
Other incentives: The sector at large has been attracting interest from a range of investors in recent years, including entities such as the Carlyle Group, Investec and Actis.
Regulatory Environment
Programs offered by private institutions must be registered with the Department of Higher Education and Training (DHET), accredited by the Higher Education Quality Committee (HEQC) of the Council on Higher Education (CHE) and registered on the National Qualifications Framework (NQF) by the South African Qualifications Authority (SAQA).
The Education White Paper 6 on Inclusive Education (2001), the Higher Education Act (1997), the National Student Financial Aid Scheme Act (1999), the Further Education and Training Colleges Act (2006), the General and Technical and Vocational Education and Training Quality Assurance Act (2001), the South African Qualifications Authority Act (1995) and the Policy for the provision of distance education in South African universities in the context of an integrated post-school system (2014)
Marketplace Participants
Private Sector
Stadio Holdings, ADvTECH, Educor Holdings, Old Mutual, Carlyle Group, Investec, Actis
Government
Department of Higher Education and Training, Council on Higher Education, South African Qualifications Authority, Umalusi
Target Locations
South Africa: Eastern Cape
South Africa: Northern Cape
South Africa: Free State
South Africa: North West
South Africa: Mpumalanga
References
- (1) Amnesty International (2020). Broken and Unequal: The State of Education in South Africa.
- (2) Mbarathi, N., Mthembu, M. and Diga, K. (2016), Early Childhood Development and South Africa: A literature review. https://researchspace.ukzn.ac.za/handle/10413/13338
- (3) Ilifa Labantwana and Kago Ya Bana (2018). A plan to achieve Universal Coverage of Early Childhood Development Services by 2030.
- (4) Organization for Economic Cooperation and Development (2019). South Africa - overview of the education system.
- (5) International Bank for Reconstruction and Development (2019). South Africa Economic Update: Tertiary Education Enrolments Must Rise.
- (6) Mkhwanazi, N., Makusha, T., Blackie, D., Manderson, L., Hall, K. and Huijbregts, M. (2018). South African Child Gauge-UCT. Negotiating the care of children and support for caregivers.
- (7) The Conversation (2018). Proper child care helps poor working women – and it can boost economies. https://theconversation.com/proper-child-care-helps-poor-working-women-and-it-can-boost-economies-92935
- (8) Prinsloo, P. (2019). South Africa. In Zawacki-Richter O. and Qayyum A. (eds). Open and Distance Education in Asia, Africa and the Middle East.
- (9) Stadio Holdings (2020). 2019 Integrated Annual Report.
- (10) International Bank for Reconstruction and Development (2019). South Africa Economic Update.
- (11) Department of Higher Education and Training (2014). Policy for the provision of distance education in South African universities in the context of an integrated post-school system.
- (12) Statistics South Africa (2017). Education Enrolment and Achievement 2016.
- (13) Statistics South Africa (2020). Education Series Volume VI Education and Labour Market Outcomes in South Africa.
- (14) Department of Higher Education and Training (2014). White paper for post-school education and training.
- (15) United Nations International Children's Emergency Fund (2020). COVID-19 Case Study in South Africa: Opening schools up better by expanding access to digital learning.
- (16) Statista (2020). Internet user penetration in South Africa from 2015 to 2025.
- (17) Simply Wall St. Is Stadio Holdings Limited's (JSE:SDO) High P/E Ratio A Problem For Investors? https://simplywall.st/stocks/za/consumer-services/jse-sdo/stadio-holdings-shares/news/is-stadio-holdings-limiteds-jsesdo-high-p-e-ratio-a-problem-for-investors
- (18) South African Government (2019). South Africa Voluntary National Review: Empowering people and ensuring inclusiveness and equality. https://sustainabledevelopment.un.org/content/documents/23402RSA_Voluntary_National_Review_Report___The_Final_24_July_2019.pdf
- (19) OER Africa (2021). Case Studies: Delivering Elearning in South Africa. https://www.oerafrica.org/supporting-distance-learners/case-studies-delivering-elearning-south-africa
- (20) Statistics South Africa (2019). Sustainable Development Goals: Country Report 2019 - South Africa. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf