Private education booming as government schools crumble

Private education is booming in South Africa as the government fails to provide quality education, with Crawford-owner ADvTECH posting strong results for the year ended 31 December. 

ADvTECH revealed in its results for its 2024 financial year that its revenue grew 13%, and headline earnings per share was up 19%. 

“Our schools and tertiary divisions benefitted from good enrolment growth, moderate fee increases, and enhanced operating leverage,” said retiring ADvTECH CEO Roy Douglas. 

Across ADvTECH’s schools and tertiary institutions, enrolment grew by 6% to 93,728 students at the end of 2023. 32,786 of these students are enrolled in its South African schools. 

The company still has room to grow, with only 68% of its ultimate school capacity being utilised. 

This has been driven, in part, by the deterioration of education provided by the government, as South Africans continue to turn to the private sector for basic services. 

Financial services firm PwC revealed this in its South African Economic Outlook 2024, which outlined the major challenges facing businesses in the country.

One of these issues is the deterioration of public services as the state’s capacity has withered away due to corruption and incompetence. 

PwC said the country’s public sector is overwhelmed and unable to deliver the quantity and quality of services it previously could. 

The degradation or failure of key state institutions, from hospitals to the police and education, has severe implications for the economy and well-being of South Africans. 

In response, South Africans are turning away from government-run institutions and are simply not engaging with the public sector. 

Education is not immune to this trend, as shown in the graphic below courtesy of PwC.

ADvTECH is benefitting from this shift as its nine school brands, including Crawford and Trinity House, contributed 41% of its revenue by generating R3.2 billion in the last financial year. 

The company’s tertiary division also posted strong growth, with its Independent Institute of Education generating R3 billion in revenue or 38% of total revenue. 

This translated into strong growth for the company, with revenue climbing 13% to R7.86 billion and profit shooting up 18.56% to R998 million. 

ADvTECH also crossed a significant financial milestone, with it now generating more cash than is needed to fund its investments. 

Thus, the company increased its dividend payout to shareholders by 45% to 87 cents for the financial year. 

ADvTECH’s closest competitor, Curro, also posted strong results for its last financial year earlier this month despite a R378 million impairment hit.

It is another beneficiary of the decline in government-run institutions, with revenue growing by 14.6% to R4.8 billion in 2023, supported by growth in learners and increased school fees. 

Curro’s registered learners have continued to grow, reaching 73,159 as of 5 February 2024, marking a 1.6% increase on the average for the previous year.

As a result, headline earnings rose by 29% to R426 million, and headline earnings per share rose by 19.2% to 73.2 cents.