Even before the largest refugee crisis since WWII, governments across the Arab world have been struggling to provide quality education to serve a growing population of enrolled students. Even the top performing Arab country on the PISA is well below the OECD average, despite data from the World Bank showing that the percentage of public expenditure on education in the Arab world actually exceeds the OECD average.
Unfortunately for Arab learners, the stagnation in learning outcomes across the public education system is coupled with very weak interest and support for education entrepreneurs across the region. For example, as global investment in the education technology space is on a meteoric rise (exceeding $9 billion in 2017, and then $16 billion last year) less than 1 percent has been invested in the Arab region.
More poignantly, whereas impact investment and venture philanthropy seem to be on the rise globally with players like the Acumen Fund, the Omidyar Network and others taking an active role in supporting education ecosystems around the world, there is essentially no such activity in the Arab region. This lack of support from both regional and global actors is quite puzzling for a region that adds around 300,000 new learners annually (to a base of well over 50 million students).
In light of the above, and inspired by conversations with actors in other parts of the world where small sums of capital have played a significant role in helping shape ecosystem building efforts, the Queen Rania Foundation (QRF) launched an award for education entrepreneurs in late 2018. We ran the competition to validate a few assumptions that came up in our research efforts, specifically whether there existed a strong pipeline of investable startups based in our part of the world. The competition evaluated startups on the quality of their innovation, their impact to date, and their potential to scale.
Over 400 applicants later, we are optimistic about the existence of a pipeline of worthy and investable startups working on everything from the creation of VR experiences for schools, to the application of AI to improve Arabic literacy learning. The startups were primarily located in Egypt (31%), Jordan (18%), and the UAE (8%), and our 16 semi-finalists boasted an average quarterly revenue at USD $500,000.
The competition afforded us the opportunity to dig deeper into the nascent ecosystem and come back with three key lessons:
Lesson 1: Help startups design for impact.
One of the key areas of focus for the competition was to identify purposeful and impactful innovation. Across the board, the applications made it clear that the levels of understanding around impact evaluation are low, and that there was a clear tendency among applicants to frequently overstate the standard of evidence that they had secured. For example, some cite having paying customers as proof that people are learning from using the product. But we know that is not always the case.
We believe this can be partly explained by the lack of education-focused accelerator or incubator programs, the absence of frameworks for collaboration with academics that can help startups better understand the impact of their work, and finally the absence of “test-bed” sites. Sponsoring or creating programs like as Injini, EDUCATE, emerge or iZone in the region can go a long way in remedying this problem, and it’s great to see people like UNICEF and Al Fanar Venture Fund think about these challenges.
Lesson 2: There are abundant opportunities (and technologies) for innovation.
We were surprised that some seemingly obvious opportunities to improve education didn’t show up more frequently among our applicant pool. For instance, given the needs of the region, we expected to see more low-cost private school models, outcome-focused kindergarten providers, and scalable models to support effective teacher professional development. In terms of professional development, the most promising application we saw came from Educate Me, based in Egypt, but we did not come across a scalable model for professional development that was customized for the needs of their respective country or the larger region.
There was also a clear need for more innovative business models, such payment by results or income sharing agreements, for programs whose end goal is getting learners into work. Finally, there was also room for more use of artificial intelligence technologies to improve outcomes. In other markets, we’ve seen companies apply AI to create new forms of assessment, or provide support for teachers to help them better orchestrate learning. Many of the applicants talked of their ambitions to use this technology to improve learning, but only three—Kamkalima, Nexsquare and Loujee—had made tangible progress.
Philanthropists, investors, and academic institutions have a rare opportunity to spur innovation in these areas. At QRF, we are already working to support the competition winners, and others, to deepen their work in this space.
Lesson 3: The presence of highly centralized school systems might lead to further inequity.
Education is a notoriously difficult sector to work in: sales cycles are long and subject to seasonality, meaning that cashflow is frequently an issue; government ministries are often bureaucratic and hard to access; opening new institutions is capital intensive; and, when it comes to edtech, informed demand is frequently low.
Alongside this, school systems in MENA (especially outside of the Gulf Cooperation Council where the majority of learners are in the private sector) are characterized by low school autonomy, so all purchasing decisions are centralized and there is very little discretionary spend at the school level.
This means that unlike their peers in the U.K. or the U.S., education entrepreneurs in MENA find it often wiser to pursue a predominantly B2C model for after-school or supplementary programs where the parent, or learner, pays. This was reflected in our data: 30 percent of applicants said that their dominant source of revenue was parents; 29 percent were learners; and only 11 and 4 percent, respectively, were schools and the government. We believe it’s fair to assume that more than half of the existing education startups in the MENA region are running a B2C model, focusing on the parent as the consumer.
One uncomfortable implication of this is that accessibility is systematically affected by both willingness, and ability, to pay. On the reasonable hypothesis that well-designed edtech tools can support learning in areas such as foundational reading or math skills, this is a social issue for governments and foundations to address—either by looking at decentralizing purchasing decisions at the school level (with the associated capacity building) or subsidizing parental purchases through tax rebates, for example.
Apart from all the above, one lesson stands out: all education entrepreneurs, especially in developing countries, have their work cut out for them. We salute all those working hard to create better opportunities for learners inside and outside the classroom. The competition was a great learning experience for us and one that we hope can add to the broader global discussion on nurturing and sustaining innovative educational ecosystems.