The Gulf is looking to expand its educational offerings through PPP as part of its wider economic diversification plans.
While the region has historically leveraged the PPP model for essential services and utilities, governments are increasingly turning to the finance tool for social services, such as schools, hospitals and clinics.
The UAE, Saudi Arabia, Kuwait, Oman, Jordan and Morocco all have plans afoot for major school projects funded by the PPP model.
As the Gulf Cooperation Council (GCC) nations look to build sustainable economies away from hydrocarbons, building out social infrastructure and growing education capacity is a logical next step and represents a key economic imperative.
“Quality education is a known enabler of future economic growth,” says Dominic Holt, partner at PwC Middle East, adding that development of social infrastructure, increasing private sector participation and attracting foreign investment are “central" to Gulf economic visions.
According to Nicholas Kramer, Dubai-based partner at law firm Norton Rose Fulbright, PPPs are becoming increasingly important in the Gulf to assist with growing and diversifying the education sector.
“Whilst the Gulf’s focus has primarily been on infrastructure projects, there is a strong and growing pipeline of PPPs in the education sector. These projects include the development of new education facilities, upgrading existing facilities and outsourcing management services,” he explains.
Kramer adds that the Gulf is looking to plug PPPs into its education sector to attract private expertise, promote innovation and economic growth, while reducing governmental financial burdens and sharing risk with private entities.
Regional rollouts
In a landmark deal for the UAE, Abu Dhabi announced the Zayed City Schools (ZCS) project in 2022 – the country’s first education PPP project. Administered by Besix and Plenary, the deal covers 20-year operations and maintenance of three campuses, with a total capacity of 5,360 students.
Nicolaas De Koning, head of bids and assets at Besix Middle East, recently told Partnerships Bulletin the ZCS project could mark the "first of a wave" in the region.
Meanwhile, Saudi Arabia is building 60 schools via PPP in Mecca and Jeddah, and has plans for more training schools and boarding school bundles. Eleven education projects were announced earlier this year under the kingdom’s PPP programme.
Notably, one of these projects aims to tender 180 education buildings and relevant facilities across various locations in Saudi Arabia.
Oman’s Ministry of Finance recently accepted tenders for its first PPP in the education sector. This is also an ambitious project, which attracted a strong response from the private sector, with 170 companies submitting expressions of interest. This project will see a winning partner design, build, finance, and maintain 42 schools across the Sultanate.
Lessons learned
With strong political backing and a commitment from governments to go down the PPP route in developing social infrastructure pipelines, it is perhaps no surprise that the region is attracting plenty of international interest. And in the education sector, the Gulf can benefit from plenty of expertise and experience, thanks to a relatively long history of schools projects in other parts of the world, particularly in Europe.
“The many global lessons learned through multiple rounds of international education projects can be instigated from the start in the GCC markets,” says Holt.
And perhaps unlike some other sectors, such as transport or even hospitals, school design and delivery is broadly similar the world over, meaning that experience can quickly and effectively be brought to bear in the Middle East.
Holt adds that creating a committed pipeline will be key to the success of the Gulf’s education-focused PPP drive. That will enable foreign investors and providers to plan the necessary investment and form partnerships, as well as allow authorities to take advantage of economies of scale and maintain competition.
“Sponsoring authorities need to ensure that the proposed programmes are fully aligned to their long-term education strategies, and that the required services and requirements are well considered prior to coming to the market, thus allowing for efficient procurement,” he concludes.
With plenty of projects waiting to get off the mark - and a growing recognition from governments that such investment is required by growing populations - being able to attract a strong range of international investors will be critical to ensuring bidders don’t simply cherry pick the most profitable. Strong competition must be the focus.