Investors seize on opportunities of expanding private universities in Kenya

Dressed in a white lab coat and handling a set of artificial teeth she has just crafted, Brandina Wanjau personifies a new wave of Kenyan students.

While she did not make the grade for a place at public university, Ms Wanjau did not want to abandon the prospect of further education, or the better-paying jobs that come with it, so she is attending a technical course at one of Kenya's 17 private universities.

"If I didn't come here, I would have had to go to South Africa, but this is very affordable," says the 24-year-old, who is in the final year of a $400-a-year dental technology diploma at Mount Kenya University, the country's biggest private university.

As the spending power of Kenya's middle class grows, more people are prepared to pay for private education that offers courses relevant to the job market, creating scope for foreign funds to back an investment sector new to Africa.

More Kenyans are also benefiting from recently introduced free primary education, with free secondary education likely soon, swelling the numbers eligible for higher education. Today, 500,000 Kenyans sit the exams required to enter university every year, up from 300,000 six years ago.

"Public universities simply do not have the seats available seats for them all - there are more than two times the number of applicants as places," says Alex-Handrah Aime, managing director of Emerging Capital Partners (ECP), an Africa-focused private equity vehicle with $2bn under management. "We see a tremendous opportunity, because the private sector can fill that void."

Ms Aime's firm is scouting for deals in Kenyan institutions with at least 5,000-10,000 students. Kenya has a strong historic commitment to education - eight out of 10 parents send their children for additional lessons.

But despite the centrality of education, university enrolment rates are among the lowest in the region, according to ECP, at 4 per cent of those of the right age, versus 9 per cent in Uganda and far behind the 60 per cent for Kenyans of secondary school age.

Mount Kenya University in particular has grown from 2,000 students six years ago to 40,000 today across 11 campuses in the region. Co-founder Simon Gicharu has plans to expand at 30 per cent a year, on a tidy profit margin of 30-40 per cent a student.

"Before, because of political interference, it depended on who you knew to get a good job. Now, for many careers, you cannot get somewhere without a degree," says Mr Gicharu, a former maths teacher whose peasant-farmer parents were not educated beyond primary school. "For you to come in and pay, you must be confident that whatever you are studying will give you value for your investment, so we are careful in the programmes we introduce. All must be somehow market-driven."

Students pay an average of $2,100 a year for professional qualifications in subjects such as business, education and medicine - the most expensive course, at $6,000 a year - that are likely to lead to jobs after graduation, but they shun purely academic subjects such as anthropology or history.

"Employers around the African continent have an acute need for skills and talent, while parents really stretch themselves to give their children the best possible education. The public sector is not offering education that is fit for purpose," says Hichem Omezzine at Actis, a private equity investor eyeing Africa education deals.

Kenya's Higher Education Loans Board is providing some finance to students in the private sector, which is likely to boost numbers and access.

For Ms Wanjau, whose mother is paying her fees, the investment is already paying off: the university has organised an internship for her at a hospital in Mombasa. "It's what my passion is and it's very marketable - the money is good in this industry," says Ms Wanjau. When she graduates, an entry-level position would likely have a starting salary of Ks55,000 ($600) a month.

Some, such as Joy Okwuadigbo, Africa regional director at Portsmouth Highbury College in the UK, believe a franchise model backed by the public sector and employers can create institutions to produce job-ready graduates.

She has set up a branch of her college in Nigeria to educate people to work in the oil and gas industry and hopes to do something similar in Kenya.

Developments in technology are also making education cheaper and more accessible. Kabarak University, a Christian institute with 3,500 students in the town of Nakuru, launched online learning in November and aims to boost student numbers by enrolling students on distance-learning courses.

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