The underserved education sector in Nigeria is a potentially lucrative investment opportunity for companies with the right business model and sufficient scale.
According to Adetunji Adegbesan, CEO of Nigerian edtech company Gidi Mobile, the numbers make the sector attractive. Nigeria has a population of over 200 million people, about half of whom are below the age of 18. Of those of school age, just 10 million are in high school, he says, and about 20 million are in primary school. Unicef estimates about 13 million people are not in the schooling system at all, with the bulk of them situated in the northern Nigerian states.
Finding ways to get more people into the system or improve the quality of education for those already in school are where the opportunities exist.
Devising the correct business model is key. It is critical to get the balance right between quality and price and aligning these to the ability to scale, says Adegbesan. There is little competition in the education space at the lower end of the market, and a savvy investor can find real opportunity.
Lagos-based Gidi Mobile presents a new approach with its mobile learning platform. Gidi Mobile uses gamification – the application of game-design elements and principles in non-game contexts – to boost the learning capability of secondary school students. Through a digital game called The Land of Kyrion, Gidi Mobile aims to make learning fun as it helps students to master the main concepts in the school curriculum.
The company’s products offer scalability and quality educational achievement at low cost; learners pay just $2 per term. It is not offering schooling as such but rather the improvement in the learning capability of students already in the system.
“There is too much focus on passing exams and you can pass without knowing that much. Our multi-year programme enables pupils to master every subject and each class; we make it a journey that will not only help them at school, but afterwards as well,” notes Adegbesan.
System overhaul is necessary
But, he says, education in Nigeria – and the rest of Africa – needs more than a digital solution; it requires a complete overhaul of the present outdated approach to education and learning as a whole. Between 2005 and 2018, an average of 66.83% of Nigeria’s secondary school leavers failed their final exams and 80% never made it to university, according to Adegbesan. Many school leavers don’t have the skills to build successful careers. As a result, youth unemployment rates are high. “This entails a shift in focus to learner readiness and personal mastery and not merely academic achievement to change the current trajectory for learners in the education system.
“In the next three decades, Nigeria, along with India, will have the world’s largest population of working age. Whether this huge workforce is a benefit or a danger to society depends on if we can build that workforce capacity at scale. This is where the future of education is,” Adegbesan adds.
The authorities in Nigeria are unable to scale schooling. The school system has been built over 60 years since independence and has not come close to addressing the potential market. It is up to the private sector to find a way to satisfy demand. “This calls for a doubling of current education provision, not just linear growth,” he explains.
Building school chains
Nigerians are highly aspirational when it comes to education; parents seek better education than they find in the public system and private education has mushroomed over the years as a result. In Lagos State alone, more than 18,000 private schools were operating in 2018.
Adegbesan says the opportunity is not at the tier-A schools level. Nigeria has several top private institutions and international schools; this segment is well served, given the profit potential. With quality teachers and materials that are imported largely from developed countries, these institutions are aimed at wealthy families. Rather, the demand is for tier-B and -C schools including neighbourhood and community schools where the quality varies widely in terms of educators, facilities and resources. “Typically, people seek tier-B quality for tier-C pricing.”
Business model innovation is required to make education facilities profitable and easy to scale, with profits based on low margins but high volumes.
Low-end community schools present an opportunity for upgrading. They could also form the basis for growing a chain of branded institutions across a city, region or even the country. The huge need in Nigeria makes it ripe for the creation of school chains which benefit from economies of scale, including centralised services and management systems software. It is also faster to replicate a model than build it from scratch. This, says Adegbesan, is a feature of India’s education system where one chain may have up to 40 schools in its network.
He believes there is also a chance to build a brand that goes beyond basic schooling: creating a product that links learning to economic advancement. “We need to think about how learning connects pupils to opportunities later in life in the same way students from the world’s top business schools are head-hunted by top global banks or consulting firms. We could look at doing the same for people wanting to go into trades, for example.”
The regulatory requirements for starting a school are not onerous but Adegbesan acknowledges that it helps to have a local person to guide an investor through the process. They will help navigate the bureaucracy and understand cultural sensitivities and the value system of host communities, which must be built into any business model.
Technology can undoubtedly play a role in new models but it is not a silver bullet. At the lowest levels, a tech intervention will not work as parents may not have smartphones or laptops that integrate with a technology-based system. The solution depends on the type of school and income bracket of the target audience.
Marketing a tech-based learning programme has not been easy. Gidi Mobile has reached out to parents and schools to explain the value of learning in a non-traditional space. It is complicated by potential consumers who believe that their children are already at school and cannot understand the necessity to pay for an extra product. “The initial explanation is difficult but once they see how it works, they love the product.”
The Covid-19 pandemic has shifted attitudes towards online learning significantly as people were forced to embrace technology to manage lockdown. “We have seen the scales falling from people’s eyes in terms of the opportunity,” says Adegbesan.