ADvTECH, owner of SA private schools Crawford International, Trinityhouse and Pinnacle, is seeing continued success in its schools in Kenya. We spoke to CEO Roy Douglas about why it is succeeding in Africa, where so many SA businesses have struggled.
The recent half-year results to end-June show ADvTECH’s revenue in Kenya and Botswana is up almost a third, with operating profit up 70%.
What has ADvTECH done right on the continent?
Kenya was probably much worse affected by the Covid-19 pandemic than SA. The Kenyan government actually shut down all schooling and didn’t provide much guidance on what needed to happen. When schools reopened, we shifted to online classes, but the offering was a bit more limited [than SA schools]. So [the results] show some recovery from the Covid-19 [base].
On the other hand, we also introduced lots of operational efficiencies and quality improvements into the offering since we took over Makini [government-curriculum] schools.
Crawford International School [in Kenya] has continued to grow from strength to strength.
The growth is from a combination of factors but does show the inherent, underlying potential of those markets for us.
What makes ADvTECH different to SA retailers and hotel groups that have exited parts of Africa as they lost too much money?
I’m not so surprised that SA retailers struggle a little in Africa.
Retailing doesn’t really cross boundaries all that well. Think of Walmart in Africa, SA [retailers’] experiences in Australia, and some of the UK businesses trying to operate in America.
Retailers, particularly sophisticated ones, depend on very efficient supply chains and replenishment. In essence, Africa, is not renowned for its sophisticated infrastructure and supply chain capability. Education, on the other hand, is a completely different sector. We’re not dependent upon any supply chains whatsoever.
One of the things that we always refer to in our business model is that each school and educational institution is an autonomous and independent operating unit, with low cost requirements.
Is there a demand for private education on the continent?
People are desperate for quality education as the best way out of the poverty trap. They understand [that] to give their children a better life than they perhaps had, [their children need access to] quality education.
If we are able to deliver on that promise, then it’s not surprising that [it leads to] demand for our schools.
Teaching is considered to be a very professional and aspirational occupation throughout the rest of Africa. We’re able to find good calibre individuals who are willing to work and the cost structures are generally lower than in SA.
Obviously, you don’t want to expand too fast. But is there room for growth in Africa?
We believe so. I think any business which tries to expand too rapidly or gets overly excited about the opportunity will probably hit some bumps in the road. But we do believe that the demographic and economic features of the continent are in our favour.
There’s a massive young population, urbanisation, growing economies and an emerging middle class. If we’re careful and prudent, I think there are going to be some good opportunities.
Competitor Stadio, whose tertiary brands include Embury, AFDA and Milpark Education, has complained of lengthy delays in securing accreditation for new tertiary courses.
Do ADvTECH’s tertiary brands, which include Vega School, Varsity College and Rosebank College, face a similar difficulty in adding new courses or adjusting existing ones to provide relevant skills?
I think the travails of working with regulatory and governmental authorities are well established and well documented. It is unfortunate. Education should be keeping pace with society and developing quickly.
We do appreciate and understand that the authorities also want to ensure that there is quality and control. They do not [want to] allow any old qualification.
However, I think there does need to be a balance between the ability to expedite applications for enhanced and improved new areas of qualification versus the argument for quality.
Are SA parents managing to pay school fees as times get tougher with rising interest, fuel, food and energy bills?
There’s no doubt that consumers, right across the board, are under pressure.
It’s something that we pay very specific attention to. We’ve set up efficient [fee] collection structures.
While people may have to withdraw from our systems due to their inability to afford the education, the other side of that equation is that people will make a lot of sacrifices and reduce a lot of discretionary spend before they change their children’s education.
If we look at it almost on a hierarchy of needs basis, the last thing that you would do is stop your child’s [private] education. So I think we’re quite fortunate that there is a hierarchy of expense commitments.
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