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Boss, here is my latest column, have a good weekend

Gabriel @kuepa


http://latinvex.com/app/article.aspx?id=1634


The private sector is increasing its role in Brazilian education


In June of this year, Brazil
<http://latinvex.com/app/section.aspx?id=164&g=1> ’s Congress approved one
of the most ambitious education reforms in the history of the country – the
<http://www.timeshighereducation.co.uk/news/brazil-passes-goal-for-education
-as-world-cup-looms/2013802.article> National Education Plan, or PNE. Among
other things, the PNE mandates an increase in education expenditure to at
least 10 percent of GDP, guarantees basic universal education for all, and
will expand higher education access.


It is, to be sure, an ambitious agenda, and there is already spirited debate
within Brazil – with some arguing that the focus on funding levels rather
than indicators of quality is the wrong approach, especially with
uncertainty about where the financial resources for the program will come
from.


At the same time, the efforts show that Brazil is trying to prioritize its
education sector after receiving
<https://www.insidehighered.com/blogs/world-view/brazils-scary-pisa-results>
negative results in the most recent OECD Program for International Student
Assessment (PISA) evaluations and long struggling with a
<http://www.globalpost.com/dispatch/news/regions/americas/brazil/130111/braz
il-education-income-inequality> remarkable level of inequality.


Still, while the focus on education is refreshing, the question remains – is
the national government the best way to achieve better education? According
to Emily Gustafsson-Wright of the Brookings Institution, “Brazil is a hotbed
of education innovation at the state and municipal levels.” Given the role
of both state governments and private sector involvement at the local level,
would a more decentralized approach be a better formula for true reform?


Higher education, especially, is where much of the innovation is being
focused, as demand continues to increase. In the past decade, the number of
Brazilian students attending college has doubled to reach some
<https://www.edsurge.com/n/2013-10-15-the-new-giants-of-brazilian-higher-edu
cation> seven million enrolled – although this is less than a fifth of all
college-age youth (18-24) in the country.


The need is huge. And higher education is being pushed not only by the
government, but also by the growth of the economy and the need for greater
human capital to boost competitiveness. New companies in new industries are
demanding higher levels of training and education in their workers. This
includes the oil industry – with state-owned Petrobras discovering
<http://www.forbes.com/sites/kenrapoza/2014/06/20/brazils-petrobras-says-its
-discoveries-developing-faster-than-gulf-of-mexico/> massive new fields,
there are not enough engineers to meet the medium-term demand from the
hydrocarbon sector.


Thus, new players including entrepreneurs, non-profit foundations, social
impact investors, and private equity funds are all stepping in and seeking
ways to help improve higher education. “The government has had no choice but
to work with the private sector,” says Fernando Iunes, global head of
investment banking for Brazil’s Itaú BBA, said in a
<http://dealbook.nytimes.com/2014/06/19/as-demand-for-education-rises-in-bra
zil-for-profit-colleges-fill-the-gap/?_php=true&_type=blogs&_r=0> recent
interview with The New York Times. “It cannot meet the demand on its own.”


This has generated significant controversy, above all in a country where the
best universities have long been public, free – and generally targeted
toward the elite. Nevertheless, new private options are meeting the rising
demand from the emerging middle class – precisely the type of students whom
public schools have not been able to adequately provide for.


Brazil’s higher education market has, indeed, been the most active in all of
Latin America. The publicly traded education companies Kroton Educacional
and Anhanguera Educacional recently
<http://dealbook.nytimes.com/2014/06/19/as-demand-for-education-rises-in-bra
zil-for-profit-colleges-fill-the-gap/?_php=true&_type=blogs&_r=0> merged to
create the world’s largest public higher education firm, valued at over $8
billion. International investors have also been active, with Laureate
Education acquiring 12 universities with a total of 200,000 students since
2005, and British firm Pearson investing more than $880 million in a 2013
deal to acquire a local educational chain.


And in March 2014, the multinational media company Bertelsmann
<http://lavca.org/2014/03/18/new-fund-to-invest-in-brazilian-education-start
ups/> announced a partnership with Bozano investments, a Brazilian asset
management group, to create the BR Education Ventures Fund. The Fund will
invest $40 million in some of Brazil’s most innovative edtech companies.


But there is more to it than these investments. For instance, Juan Romero,
director for Strategy at GEMS Global, argues that expanding higher education
in Brazil will require more than just proliferating universities. Instead,
it will require scholarships and credit transfer programs that make it more
affordable for lower-income and middle class students to attend school.


Prouni is one such program that is making a difference. Launched by the
government of President Lula da Silva in 2004, by 2012 Prouni had
<http://www.universityworldnews.com/article.php?story=20140710115554910>
delivered 1.7 million scholarships across Brazil. Interest rates on the
loans are just 3.4 percent, and students have 18 months after graduation to
begin payment. Out of the 5.3 million college students attending one of
Brazil’s private institutions, over 30 percent
<http://dealbook.nytimes.com/2014/06/19/as-demand-for-education-rises-in-bra
zil-for-profit-colleges-fill-the-gap/?_php=true&_type=blogs&_r=0> have
received subsidies from Prouni or other similar government programs.


While such loans are programs of the central government, they are also
incentivizing further private sector investments by generating more demand
for higher education services. Private options are far from perfect – but in
a region such as Latin America where public higher education is almost
always some combination of expensive, exclusive, or poor quality, more
options should be welcomed.


At the same time, government supervision of the sector will be key to
ensuring a quality product. The sector requires greater transparency, more
reliable school rankings, and strong public supervision.


Achieving this balance – between regulations that make sure that the for
profit education sector is meeting basic requirements for quality, and
allowing for enough freedom in the sector for expansion and experimentation
– will be the primary challenge moving forward. This is definitely an issue
the candidates running for president should be debating.


<http://latinvex.com/app/section.aspx?id=210&g=1> Gabriel Sanchez Zinny is
president of <http://www.kuepa.com/> Kuepa.com, a Latin American Blended
Learning company, working in incorporating technologies to reduce drop out
rates. Followhim on Twitter at <https://twitter.com/gzinny> @gzinny. He
wrote this column for Latinvex.