Investors in Kenya now pump billions to build schools for the super-rich

Diversified investment firm, Centum wants to conquer the African continent. And it thinks the quickest way to get there is through education.

Centum Investment Company has partnered with Investbridge Capital and Sabis Education Network, a Beirut-based firm with a network of schools in 20 countries to set up schools in Kenya. And for a start, the consortium has invested Sh2 billion.

Africa Crest Education (ACE) Holdings, a holding company domiciled in Dubai and set up by the tripartite consortium in 2016 is now accepting applications ahead of the opening of SABIS International School at Two Rivers Mall in September.

Centum CEO James Mworia says the consortium wants to focus on nursery, primary and secondary schools.

“The curriculum is shifting more to skills development and that has been the strength of our partners (Sabis). I think that is where the trend is headed to and many parents will be demanding to get a standard of education that is comparable to the best in the word,” said Mr Mworia.

The school, sitting on 20 acres in Nairobi’s Runda Estate, will have a capacity of 2,000 students and will be equipped with interactive whiteboards, a sports centre, a modern performing arts theatre, a semi-Olympic pool, and extensive outdoor sports facilities.

For this, parents will be parting with at least Sh200,000 per term even as the tripartite investors plan to deepen their presence in Kenya and beyond the borders.

“We are planning to open seven other schools in Kenya, Uganda and Morocco. We are planning smaller schools that will sit on five-acre pieces of land in Kenya soon,” said Mark Desario, the Board Director at ACE during the ground breaking session.

This, signaling that the three firms still see attractive investment opportunities in the country’s education sector. High returns, growing demand and Kenyans’ allure for quality education at any price are catching the eyes of investors.

The 2016 study by the Financial Sector Deepening Trust (FSD Kenya) noted that many Kenyans would rather spend money on education than put food on the table or start a family. More than a third of Kenyans, the study showed, attach more importance on educating themselves or relatives.

“Overall, Kenyans place a lot of value on educating themselves and their families. The importance placed on putting food on the table increases with age, while the goal of earning an income decreases with age,” says the report.

About 21 per cent said education was the reason they had taken loans while 33 per cent say they are saving for education. Only 3.2 per cent consider having children or getting married a priority. Building or improving a house is also the least of their goals.

Growing demand

According to data from Kenya National Bureau of Statistics, total enrollment in pre-primary schools in 2016 hit 3.2 million while enrolment in primary schools increased to 10.3 million in 2016. Enrolment in secondary schools rose by 6.3 per cent to 2.7 million.

With such statistics in mind, many investors are now choosing to open new private schools mostly targeting the middle class to high-end market segments. The investors are setting up new schools to fill the growing demand that has overstretched Government’s facilities.

In 2015, Christopher Khaemba, a former Principal of Alliance High School and ex-Dean of the African Leadership Academy in South Africa, teamed up with Oliver Sabaot, Oliver Rothschild, Chinezi Chijioke and Humphrey Wattanga to establish Nova Academies in Kenya.

According to Khaemba, investing in education is crucial to complement Government schools.

“Over time, the demand for quality education has been increasing. When schools like Alliance start overstretching their facilities by admitting more than they can handle, as an investor you see a reason to move in and support public schools,” he said.

The first Nova Academy, located in Tatu City, opened in January 2016 with 120 boys. He has since opened Nova Pioneer Girls and Nova Pioneer Primary within the same location. In Athi River, he has set up another primary school.

His school, built on South African model charges Sh500,000 per year in addition to Sh4,000 for enrollment and Sh10,000 as caution money. Khaemba says that he still sees opportunities to set up more schools.

Nova is constructing a Sh400 million primary school within Tatu City, signaling the growing demand. It will be charging fees in the region of Sh65,000.

“The middle class keeps growing and the focus on quality is also growing. When you see schools where learners can fly in a chopper to and from, it points to another market that can only be met by private investors,” Mr Khaemba says.

Last year, South Africa’s private education firm Advtech announced that it had acquired land in Tatu City. It wants to build a school under its Crawford Schools brand, becoming the latest international investor to enter the local market.

Many wealthy families and expatriates working for multinationals, foreign governments and global institutions are seeking for high end education facilities or education systems which cannot be met by public sector.

Grade of study

Peponi School, located in Ruru, Thika Road is one such school. Parents pay as high as Sh983,400 per term to sustain their children in a facility designed around the British Public School tradition.

To be admitted, a student pays application fees of Sh5,000, registration fee of Sh10,000 and Sh5,000 for students pass. In addition, Kenyan residents pay refundable caution deposit of Sh275,000 while non-residents fork out Sh350,000.

At International School of Kenya, which offers a North American curriculum, tuition fees is between Sh1.5 million and Sh2.9 million per year depending on the grade of study.

Parents pay application fees of Sh40,000, one-time capital levy of Sh925,000 and Sh1.2 million for school bus per year.

Braeburn Imani International School, owned by Braeburn Group of Schools charges tuition fees up to a high of Sh1.04 million per year and lunch charges of up to Sh111,600. Learners also part with Sh203,100 for transport and Sh616,800 for full boarding.

Ayisi Makatiani the Managing Partner and CEO of Fanisi Capital Ltd, which manages the Fanisi Venture Capital Fund for investing in East Africa, told Weekend Business that with better planning, returns in education sector are promising.

In 2011, his fund lifted Hillcrest Group of Schools from five-year receivership status to send a strong signal of how promising the sector is. The fund bought the schools and settled the Sh620 million debt that the the family of politician Kenneth Matiba and other investors owed Barclays Bank of Kenya.

Spreading on a 52-acre plot in the secluded Karen suburb of Nairobi, Hillcrest offers the British education curriculum. The schools comprise of full-fledged early years, preparatory and secondary school facilities.

In the school, playgroup, usually for kids below three years, pay Sh89,950 per term in addition to annual caution fees of Sh25,000. Transport costs Sh46,350 per term.

Children in nursery I part with tution fees of Sh221,850 while those in nursery II pay Sh239,800 per term. This is in addition to transport and caution fees.

Quality education, Makatiani says, is in high demand and parents are willing to pay what it takes to match the desired quality.

Parents with children between Year 9 and 11 of Hillcrest Secondary School pay Sh635,000 per term while Year 12 to 13 attracts Sh671,500 per term. Both groups also pay Sh35,750 for lunch while transport is between Sh38,300 and Sh100,400 depending on distance from school.

“If you do the right thing as investor, then there is a good return. We are still very keen in this sector and we will continue investing in it,” Mr Makatiani says.

Other high end schools that charge more than Sh500,000 in fees include Banda School, Brookhouse, Nairobi International School, Nairobi Academy, Aga Khan Academy, St Andrew’s Turi and Rossyln Academy.

In the Kenyan education system, investors see new opportunities coming with the roll out of new education system that wants to shift from just grades to equipping learners with practical skills.

Retired President Daniel arap Moi’s family has also invested heavily in education under Kabarak Schools and others.

Shelmith Mugoh, Group Commercial Manager at FEP Holdings which runs Fountain Group of Schools in Mwea and Tigoni, says that investors who will take the lead in implementing the new curriculum stand high chances of getting a return on investment.

“We have had a system that had squeezed children to a certain box and all that was needed is that good grade. We are now shifting to a new system by upskilling our teachers and unpacking this new curriculum for them,” she says.

Part of this has been to ensure all kids below three years are put under playgroup category. Recognising that private schools education is no longer a preserve of high end families, Fountain Group of School has segmented its schools to reflect different levels of income.

Quality of teachers

“We have two schools in totally different locations targeting different types of clientele in terms of purchasing power. One of the school is 30 per cent cheaper from their other one in terms of school fees,” Ms Mugoh says.

In Limuru, Tigoni area, FEP Holdings’ assessment is that urbansation rate is about 65 percent with most families headed by parents who are either business people or work in Nairobi. That boosts their purchasing power.

While in Mwea, parents are charged below Sh30,000 per term, those in Tigoni pay as high as Sh40,000.

Many religious institutions such as churches also see opportunities in education sector. Many of the evangelical churches have now invested in schools in bid to be self-sustaining institutions. In estates, they have netted their congregation who see such schools as that built on religious foundation as well as being closer to home.

Dr David Oginde-founded Christ is the Answer Ministries (Citam) runs several schools in places such as Woodley, Buruburu, Ngong and Kisumu.