Africa, David Ricardo and the Promise of Education Outsourcing

The theory of comparative advantage is one of the most important concepts in international trade.  From 18th century economist David Ricardo’s explanation of why England should produce cloth and Portugal make wine–but not each country producing both– to more modern examples of credit card service centers in Bangalore or iPhone manufacturing operations in China, we intuitively understand that countries cannot and should not produce everything.  Yet somehow when it comes to education these trade principles are often ignored.

To students of economics, comparative advantage is a logical and elegant textbook explanation of how the world works. But what happens when an entire country outsources their educational system to a foreign, private provider? And what if the private group happens to be a commercial, non-state entity?

When the small, West African country of Liberia signed such a contract with Bridge International Academies recently, the response was swift and virulent, if not predictable:

• United Nations Special Rapporteur Kishore Singh warned that the “provision of public education of good quality is a core function of the State. Abandoning this to the commercial benefit of a private constitute a gross violation of the right to education (italics mine).”
• Local teachers questioned how a for-profit entity could benefit off of their country’s “fragile” educational system.
• Union groups sharply denounced the “privatization vultures” at Bridge (and, by extension, presumably such “vultures” as Mark Zuckerberg, Gates Foundation, World Bank IFC, and UK DID, all of whom are interested shareholders).
• In a slightly more nuanced critique, a UNESCO Director wrote that the lack of previous experience in rural Liberia should disqualify Bridge from entering into the contract, and more generally that such public-private partnerships (PPPs) that promise scale and effectiveness should be further investigated before moving ahead.

Beyond the rhetoric, there are two lines of thought here: one, Liberia should continue as always to manage the entire primary school system as a matter of sovereignty, and two, if it must outsource advisors for teaching and education support that entity should be be public and non-profit.

Let’s first examine the claimed “right to education” for Liberia’s school-age children. Liberia has emerged from over a decade of civil war (1990s to early 2000s) and a more recent Ebola epidemic and commodity crash that has exacted a toll on its educational system so devastating that over a decade of education statistics are not even reported in the UNESCO’s statistical database.  Partly as a result, in 2015 Liberia had among the world’s lowest literacy rates at 54.5%, which were not only lower than the African average  of 73.9% but also below all countries defined as Low Income by the UN, which have an average literacy rate of 68%.  From here the statistics get worse.  Following a relative high rate of primary attendance, as the years go by over 22% of lower secondary age students drop out of school and face predictably negative consequences over time.

Figure 1 sets out some of the more dismal performance metrics for Liberia in the context of Sub-Saharan Africa, South Asia and Latin America.

            Figure 1: Liberia’s Education Data in Comparative Context

Undeniably Liberia is a failed education state that does not provide adequate access to quality education for its population. Weakened economic growth has also made it more reliant on aid.  The past two decades of educational attainment growth, and the inevitable positive economic impact the results from this, have been lost. It doesn’t need to stay that way. At what point should the idea that somebody else can manage it better–perhaps even for an interim period–be accepted in the interest or “rights” of students?

The evidence suggests right now. Which leads to another question: Who can best provide this? And why not a private company such as Bridge International Academies or many of its competitors, local and foreign, that are sprouting up across emerging markets?

In my view, three issues matter here to Liberia and many other parts of Africa: quality, resource cost, and time.

Quality. There is no a priori reason why public-private partnerships should be inferior or less likely to succeed.  On the contrary, the wave of school and emerging Edtech solutions across Africa and emerging markets such as India and Brazil, from the management of schools to providing student finances to training teachers to business-education advocacy and Corporate Social Responsibility (CSR), suggests that public options are either not effectively meeting demand or lack the financial and technological resources to do so.  Companies from Omega Schools, Lekki Peninsula Affordable Schools, m-learning start-up One University Network, GEMS and others will continue to fill the education void in Africa.

Indeed a plethora of private solutions already coincide with public and multilateral education programs around the world, so much so that the “outsourcing” of educational training, advice and management is a normal occurrence in the developing world. In the case of Liberia, a single contracted educational provider was deemed sufficient to manage the entire (admittedly small) primary school system, a fact that somehow was threatening.  To be fair, there has been criticism about Bridge’s pedagogy and use of Android-based curriculum but this is beyond the scope of my analysis. Yet given that the company has grown rapidly across places like Kenya and Uganda based on tuition paid at the household level–that is, parents with limited resources choosing and paying for these schools out of pocket–it would be difficult to argue that Bridge’s market-based educational model is flawed or not delivering on its promises, in which case it would be out of business. More importantly, if the alternatives were so much more effective, where were they when Liberia needed them?

Resource Cost. Liberia is spending approximately 2.8% of its 2 billion GDP, which is equivalent to a paltry $56 million or $139 per student annually (based on an estimated school age cohort in Liberia is 400,541).  By comparison, the entire budget of the Los Angeles Unified School District ($6.78 billion), with has over 640, 000 students, is over 3x Liberia’s entire GDP.  Per student cost in LA is $10,593. Bridge’s contact is valued at $65 million over five years which amounts to $13 million per year and $58 per primary student. This is below Liberia’s average current spending level of $139 per student; in fact, Bridge’s entire modus operandi is to deliver a lower-cost “School in a Box” model at scale, as it does with in Uganda and Kenya. Is this confiscatory?

There is no evidence that less expensive contracts at similar scale and quality are available (with public or multilateral agencies, for example), and Bridge already has a transparent track record in Africa. Moreover a quick glance at Devex, a leading development marketplace, suggests that pricing for a country-wide and multi-year initiative in education, whether in Africa or emerging Asia, does not come cheaply from anyone, whether public providers, NGOs, or teams of well-fed education consultants.

But the more profound way to look at this is by understanding the opportunity cost. Outsourcing to Bridge will free up efforts by Liberia’s government and private resources to tackle structural economic problems, including diversification away from mining and more attention paid to industries such as agricultural processing, infrastructure and tourism. Why not take the near-term education burden off the backs of pressured government bureaucrats to focus on areas where they have greater chance of success? With proper monitoring of Bridge’s performance measures through pilot school roll-outs and buy-in from local constituents (teachers, administrators), Liberia can focus on what it can do more effectively, and cheaply, rather than trying to bootstrap its education system from abysmally low levels.

Time. What would it cost for Liberia to provide the level of education across its primary system that Bridge has promised?  We don’t know, but an educated guess would be a significant amount of money to rebuild, conceptualize, negotiate, bring in advisers (again) and then implement, assess and discuss, particularly when the country is facing a crippling economic crisis.   Time is critical.  Students in Liberia who are given access to quality education today can have a salutary impact on the economy and society tomorrow.  Missing that chance ensures another generation of poverty and despair, while the cost of inaction gets worse.

Liberia is perhaps an extreme example of education outsourcing at the country level rather than at the township, district or school level–and as such has struck a particular nerve about “national sovereignty.”  But its lessons are no less relevant.  Education is a globally tradable good and service and should be viewed as such by those in the field.  As with many other socially impactful industries, from healthcare to environmental solutions, technology-enabled access to education will continue to drive wider areas of trade, access and collaboration.  Countries and constituents may seek to build their own domestic education industries, erect barriers to this trade, raise tariffs on foreign education products and services; or they might bring in outside technology, services and advice as a long-term plan to “import substitute” their own educational efforts over time.

Either way, the promise of education outsourcing as a way students are educated, workers are trained and economies are structured is only going to gather pace as the needs of populations continue to rise.