GCC education spending reaches $50bn but teacher shortage looms

More than 500 educational projects worth $50bn are in various stages of development across the Gulf Cooperation Council, but the region faces a teacher shortage, according to a new report.

Investment bank Alpen Capital forecast the number of students in the regional education sector would increase to 15 million by 2020, at a compound annual growth rate of 3.6 per cent from 2015 to 2020.

This demand will create the need for 7,000 new schools across the region in the next five years, reaching a regional total of 50,978.

But it said the region faces challenges including the second highest teacher shortage in the world.

A key driver for new education places is expect to be the growing number of people below the age of 25, which is likely to surpass 22 million by 2020.

The region’s diverse expat population is also creating demand for international curricula, attracting several international schools and colleges.

“A high personal income level alongside a tax-free environment has resulted in additional disposable income among the GCC population. Consequently, the population displays a strong ability and willingness to spend on quality education at international schools, translating into a huge opportunity for the private players,” the bank said.

As these trends continue, the percentage of private sector institutions is forecast to continue to increase from 22.1 per cent in 2014.

However, instances of schools poaching staff from each other with higher incentives are expected to continue due the regional teacher shortage, impacting profitability.

The sector’s reliance on expat teachers, due to a lack of local interest in the sector, also meant a high teacher turnover rate in the region with the average stay at a school about two years.

As new schools open competition is expected to increase, leading to an oversupply in markets like Dubai.

In addition, Alpen said government restrictions on school fees will impact institutions’ ability to spend on infrastructure as costs increase.