Technical and vocational training


Business Model Description
Establish or acquire tertiary level technical and vocational training facilities, including colleges, adult education centres and on-the-job learning offerings.
Expected Impact
Improve accessibility, quality and educational outcomes of young adults.
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)
Policy priority
The Early Childhood Development (ECD) sector suffers from uneven resource provision - reducing the potential for ECD to enhance returns from later phases of schooling, especially for children from lower socio-economic backgrounds.(2) More adults are attaining upper secondary education yet are less likely to be employed than those with a tertiary degree.(4)
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.(16)
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.(16)
Key bottlenecks introduction
Basic education is hampered by challenges including poor infrastructure and an undersupply of qualified teachers.(1)
Pipeline Opportunity
Technical and vocational training
Establish or acquire tertiary level technical and vocational training facilities, including colleges, adult education centres and on-the-job learning offerings.
Business Case
Market Size and Environment
The government is targeting over 2 million new enrolments in the sector by 2030.
There are 487 registered tertiary learning institutions in South Africa, 83% of which are private institutions. Private tertiary institutions accounted for 14.6% of the 2.29 million enrolments across the tertiary sector in 2016 and have grown their share of enrolments steadily, increasing from 9.9% in 2011.(12),(13)
The government is targeting over 2 million new enrolments in the sector by 2030.(10)
Indicative Return
15% - 20%
A listed education company that obtained half its operating profit from tertiary education brands in 2018 and 2019 has a price to earnings (P/E) ratio of 13.57% in 2021, and averaged an operating margin of 17%.(11)
Investment Timeframe
Medium Term (5–10 years)
Investment necessary to support scale operations and grow enrolments requires an extended term. Short term opportunities exist with established firms, including listed companies.(11)
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Impact Case
Sustainable Development Need
The government is seeking to increase enrolments in colleges to 2.5 million students by 2030, up from around 400,000 in 2012. One strategy is to establish up to 12 new technical and vocational education and training (TVET) colleges by 2030.(11)
The government has also called for the introduction of community colleges to serve youth and adults who did not attend school or dropped out, enrolling at least 1 million such students by 2030.(9)
Gender & Marginalisation
Even though women's enrolment in secondary degree programs has improved significantly, participation remains limited to soft skills areas.(16)
Expected Development Outcome
Improved accessibility, quality and educational outcomes of technical and vocational training
Gender & Marginalisation
Increase women's participation in research and STEM (science, technology, engineering and mathematics) focused programs
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).(18)
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).(18)
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.(16)
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.(18)
N/A
N/A
Secondary SDGs addressed

Directly impacted stakeholders
People
Impact Risks
Stakeholder participation and unexpected impact risk: Lower and more racially skewed graduation rates without equitable and quality primary and secondary schooling (14)
Impact Classification
What
Provide affordable, quality alternatives to contact education
Who
High school graduates, school leavers with Grade 10, adults seeking further education and training
Risk
Mid-scale effect considering challenges managing trade-offs between commercial potential, quality and affordability
Impact Thesis
Improve accessibility, quality and educational outcomes of young adults.
Enabling Environment
Policy Environment
Growing technical and vocational education and training (TVET) and community college enrolments is central to government's strategy for improving access to post-school education and training.(9)
Financial Environment
Financial incentives: Private education institutions do not qualify for education subsidies. However 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) Statistics South Africa (2017). Education Enrolment and Achievement 2016.
- (9) Department of Higher Education and Training (2014). White paper for post-school education and training.
- (10) Kgobe, P. and Baatjes, I. (2014). White Paper on Post School Education and Training: Some new Policy directions. https://www.uj.ac.za/faculties/facultyofeducation/cert/Documents/Post-School%20Education%20Review%201.pdf
- (11) ADvTECH (2020). 2019 Annual Integrated Report.
- (12) Statistics South Africa (2019). Higher Education and Skills in South Africa 2017.
- (13) Department of Higher Education and Training (2018). Statistics on Post-School Education and Training in South Africa.
- (14) Taylor, N. and Schindler, J. (2016). Education Sector Landscape Mapping.
- (15) Moneyweb (2020). ADvTECH Group. https://www.moneyweb.co.za/tools-and-data/click-a-company/ADH/
- (16) 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
- (17) Field, S. and Guez, A. (2018). Pathways of Progression: Linking Technical and Vocational Education and Training with Post-Secondary Education. UNESCO. 68. http://www.unesco.org/new/fileadmin/MULTIMEDIA/FIELD/Beirut/images/Education/LinkingTVETHED.pdf
- (18) 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