The economic benefit of making education an export commodity

By XN Iraki

In 2007, education overtook tourism as the leading services export in Australia, only ahead of coal and iron ore in overall ranking. In the USA, education and training ranks fifth in terms export of services.

Data from UNESCO shows that the USA, UK, France, Germany. Japan, Australia, Canada, South Africa, Russia and Italy are the top hosts to mobile students (a better term than foreign student), while sub-Saharan Africa, Central Asia and Arab states are leaders in "exporting" students. Most of the students pursue bachelors and masters degrees, with business administration emerging as the most popular course.

Closer home, Kenyans have been flocking to Uganda to pursue higher education. But very few Ugandans and Tanzanians have been coming to Kenya, despite our pride, as the economic engine of East Africa. This may be historical, with the pioneering spirit of Makerere still alive. Newer Ugandan universities may be benefiting from this positive spill over, and should probably pay Makerere a "loyalty" fee.

Important industry

So, if Education is such an important industry, why have we ignored it?

We only talk about the number of tourists arriving in the country, but never about the number of foreign or guest students coming. Other countries, including our neighbour Uganda, realised the strategic importance of education as an export a long time ago. Students coming to Uganda or any other country have to pay fees and spend money. That money is not always generated from within the host country. Parents, and guardians or sponsors send the money, hence the use of the term export.

The export is invisible, because we rarely think about it, the same way we think of the bales of cotton or iron ore.

Education as an export commodity has many advantages. The most obvious one is that the mobile students stimulate the economy the same way location of universities in Nairobi’s CBD has created demand for real estate.

The students consume goods and services, which creates jobs. But this stimulation is catalysed by the fact that students are usually and energetic. The host country benefits from all this energy, without paying the "rearing Cost" of bringing them up.

Some countries make it easier for students to work to exploit this energy.

Youngsters can work odd hours and on odd jobs. Others make it easier for graduating students to stay on, leading to "brain gain". This gain is also evident in entrepreneurship, with the newcomers creating a disproportionate numbers of new enterprises as compared with the indigenous.

Retention of such students makes lots of economic sense, since there are no rearing costs. The country just starts reaping the fruits of other countries’ labour. Curiously, as this happens, the home countries of the students may not mind, since the new employee sends home much needed remittances.

Influence consumption

The long-term benefit of making education an export commodity is that you get a chance to influence the consumption patterns of the next generation. You are more likely to drive a sports utility vehicle (SUV) or sport utility truck (SUT) if you schooled in USA than say Uganda.

The host nation creates a future market for her goods and services and even political ideas. Some observers have noted that colonial powers retained economic and political interests in their former colonies. They would have been less successful without "creating their own image" through educating the pioneer policy makers.

Jomo Kenyatta and Mwai Kibaki went to London School of Economics (LSE). Would Kenya be different if we were colonised by say Mongolians? Does it surprise you that despite changing from 7.4.2.3 system to 8.4.4, UK is still a popular destination for Kenyan students?

Investing in services like education may be easier than in products. We can argue that we do not have the massive capital to build factories but we have the brains that drive education and software engineering. We even have surplus brains. Services are also harder to replicate, which makes it attractive in the long run.

Think about it. Why is it so hard to replicate Harvard or Alliance, yet most modern cars look very similar? US long realised that and focused more on services where they have a surplus. IBM’s reinvention from computers makers to service provider is a classic case of insightful thinking.

Where do we go from here?

Our institutions focus too much on the local clientele, the Kenyan students, a complete contrast with the other leading sector, tourism, which focuses on the foreign clientele.

Yet, we can catalyse our economic growth by building schools and institutions that cater for the global community. Do we have five star universities and colleges the same way we have five star hotels? It seems that as tourism shifts the focus to local markets, education should focus on global market, since the local market is already guaranteed.

Though entrepreneurs have invested a lot in education, they may not always be long sighted particularly in a country with such a high proportion of young people. We need to deliberately promote education as a leading export the same we way we promote coffee or tourism. Australia has shown that it can be done.

New ideas

Making education an export will bring money, generate new ideas and new thinking to dilute our deeply entrenched ‘local thinking’, espoused by tribalism.

Exporting education can also dilute the effects of the quota system, which has made our children narrow-minded.

Our national problems were not confronted when they were few and unripe. But now they have ripened and they need new thinking. The solution to our economic problems may lie in sectors we take for granted like education. This new thinking is what is needed beyond the new constitution.

As a start, we need to build quality schools, boosting our content and curriculum. Such quality and branded schools should be like magnets, attracting students from all over the world creating a new export that we have long ignored.

The writer is a lecturer at the University of Nairobi, School of Business. [email protected]