Curro’s billion-rand pivot – lasting reform or idealistic illusion?: Darron Tarr

Key topics:Curro’s shift to low-fee schools faces scepticism and challengesLow-fee independents seen as key to fixing SA’s failing educationPrivate sector urged to invest in sustainable school models.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Darron Tarr*.Having worked in education for the past 33 years, with nearly 11 years under my belt as a school principal, I admit to being rather sceptical about the potential impact of the Curro development on the broader education landscape in our country. Personally, I don’t believe it’s going to move the needle in terms of rendering quality education accessible to the masses, and in truth, this significant investment on the part of the Jannie Mouton Foundation could have been made elsewhere in the independent education space with a far more immediate and pervasive impact.It is certainly not my intention to cast aspersions on the Jannie Mouton Foundation in any way. Indeed, the administrators of this foundation are to be commended for this extraordinary act of patriotism. However, although the theory of what they propose has generated widespread optimism, the practicalities are not quite as straightforward.This said, a significant investment of this nature in independent education in South Africa by the private sector is long overdue. In the past, corporates have either ignored certain sectors in the education space, or directed funding to educational institutions that really don’t need their financial assistance. I will elaborate on these respective contentions in due course. Hopefully, the Jannie Mouton Foundation initiative is not considered too anomalous, and signals a broader paradigm shift within the private sector in terms of the importance of investment in basic education in our country.Encouragingly, Curro’s pivot towards a more affordable, non-profit, public-benefit model has drawn attention to the most marginalised, yet arguably the most important sector in education in the contemporary South African context, namely low-fee independent schools.Since 1994 low-fee independent schools have proliferated, as the ANC’s inability to provide quality education to the masses has become increasingly obvious, and parents, desperate to secure quality and affordable education for their children, have ensured the exponential growth of the low-fee independent schooling sector.Affordable and viable alternativeRun by dedicated principals and educators, untethered by the nefarious activities of militant teacher unions such as SADTU and incompetent provincial education officials, they provide an affordable and viable alternative to parents who want quality education in institutions that are not overcrowded and populated by principals and educators of questionable commitment and ability.It is a well-established fact that South Africa’s state education system is performing extremely poorly when measured against global metrics. More than 80% of South Africa’s youth cannot read for meaning by the time they reach Grade 4. If schools cannot produce competent readers by the time learners reach Grade 4, then they are, by definition, dysfunctional.Therefore, by deduction, only a small percentage of South Africa’s schools are currently fully functional. This group includes certain state schools as well as most independent schools, be they high-income or low-fee institutions.These functional schools form a very important buffer against the total collapse of the South African education system, and if they fail, it will have catastrophic consequences for the country in the longer term.The ANC is doing everything in its power to drag functional schools in South Africa down to the level of mediocrity in which it currently wallows and finds comfort. The amendments contained in the BELA Act, some of which wrest control away from state school governing bodies and centralise it in the hands of the state, are a prime example of this intent on their part.It is no secret that the ANC despises independent schools, and for years it has searched for ways in which it can interfere in this sector. The ‘quality control’ it imposes on independent schools through Umalusi is a prime example. Many of us in the independent education sector contend that this quality control is unnecessary. Independent schools in South Africa achieved remarkable success and built enviable reputations decades before the ANC decided to ‘lend a hand’.The reason for the ANC’s animus towards independent schools is that this sector consistently outperforms the state school sector and repeatedly draws attention to the incapacity of the Department of Basic Education and its provincial departments. Some ANC officials have gone so far as to suggest that the final matric examinations be standardised and detached from the auspices of independent bodies such as the IEB (Independent Examinations Board).MediocrityThe independent sector routinely produces a matric pass rate upward of 98%, and these results, if combined with NSC (National Senior Certificate) results, most certainly would mask to some extent the mediocrity that is currently emanating from our state schools. This would be rather expedient politically for the ANC.Due to the managed decline of our economy by the ANC, credible low-fee independent schools are at risk of becoming unsustainable. These schools are usually non-profit institutions that rely exclusively on the payment of school fees by parents to remain operational.Due to their non-profit status, they are unable to build up meaningful financial reserves to mitigate a decline in income. The ANC’s policies are directly responsible for the escalating job losses in our country, which are decimating the middle class, the primary market for low-fee independent schools..Read more:.Mark Burke: Treasury’s school tax blunder - Parents to pay for policy folly.Many low-fee independent schools, especially in the pre-primary sector, have been forced to close their doors over the past four years due to a significant decline in learner numbers, and low-fee independent schools offering options in the Foundation Phase, the Intermediate and Senior Phase and the FET Phase are operating under severe financial constraints for the same reason.Schools in the low-fee independent sector urgently require injections of capital to sustain them until such time as South Africa’s economic fortunes begin to change for the better.It is within the context offered above that the private sector donation to Curro and donations to other educational institutions come under the microscope. Those of us who are familiar with Curro schools know that the majority of them, admittedly with some exceptions, are located in affluent areas across the country.If Curro is now going to redefine itself as a group of non-profit, low-fee schools, it is still hard to imagine it attracting a different demographic from the one that currently populates its schools.Logistical challengesA combination of logistical challenges and diminishing personal income will prevent many learners in less affluent areas from migrating to established Curro schools. In addition, even without shareholders syphoning off school profits, as was the case in the past, the costs associated with running a school are inordinately high, and it is not feasible for Curro to significantly lower its school fees if it wishes to keep its group operating at its current capacity. Even a low-fee independent school can incur overheads in excess of R2 million per month.In a purely pedagogical sense, the Jannie Mouton Foundation’s vision for education is impressive, with the intention being to make bursaries available to disadvantaged learners, fund expansion into less affluent areas and subsidise school fees.While its stated intention is admirable, it is very idealistic, and the jury is still out on whether these developments will materialise. Even if Curro’s management initiates projects of this nature, it will not dramatically alter the education landscape and make quality education significantly more accessible to the masses in the near future. The intentions listed above have several potential drawbacks associated with each of them.Offering bursaries is a very costly endeavour, and it is unlikely that the allocation for each of the Curro schools will be significant. Curro will need to develop corporate partnerships to subsidise its bursary programmes.Trying to offer this benefit at scale independently will quickly diminish its internal resources. Independent schools that wish to remain sustainable cannot afford to give away too much in the way of free education. Curro’s current proximity to the corporate environment may be of benefit to it in procuring subsidies for bursaries, but this will still be a challenge.Notoriously parsimoniousIn my experience, corporates are notoriously parsimonious when it comes to giving, especially when the monetary return on their investment is perceived by them as negligible.I once received an approach from a senior executive of a local multi-billion-rand company who dispatched a fact-finding group of three employees to my school to establish our needs, which we in turn enthusiastically shared with them. It was with a large measure of expectation that a delegation from my school met with their local asset manager to discuss the donation they had settled upon.Ultimately, we were offered one learner bursary worth less than R40 000, which wasn’t on our list of needs in the first place, because bursaries generally only benefit the recipient and are of negligible material value to any school. This action on their part was both condescending and patently disrespectful, and only served to reinforce the notion of corporate antipathy towards the education sector. Needless to say, I politely declined their offer.Building and developing a new school is both a costly and lengthy process and probably won’t happen until the Curro group can stabilise the income-generation capacity of its new operational model. Rather than seeking to develop new schools from the ground up, a better strategy for Curro would be to identify existing low-fee, functional non-profit schools that already exist in less affluent areas and are already serving their new target demographic.Incorporating these schools into the Curro fold would save considerable time, money and effort and enable Curro to fulfil its expansion mandate a lot sooner than anticipated. According to Jannie Mouton’s son, Jan Mouton, there is R1 billion left in the fund used to make the Curro donation. Disbursing this remaining money to deserving low-fee, non-profit schools outside the Curro group would be a very smart move and would significantly expedite their transformation agenda..Read more:.“Boere Buffett’s” gift to SA: Mouton’s R7.2bn injection will turn 189-school Curro into a non-profit.Conventional wisdomReinventing itself as a non-profit entity grants the Curro group access to government funding, which conventional wisdom dictates could be used to subsidise schools and enable them to keep their tuition fees as low as possible.However, this is one rabbit hole they really shouldn’t venture down. Besides the fact that some education departments are on the verge of bankruptcy and probably will not be able to routinely pay the subsidy tranches as required, being bound to a provincial department of education creates a quid pro quo expectation on their part and affords them a modicum of control over the operational aspects of a school.We only have to look at the appalling mismanagement of state-owned enterprises in South Africa to remind ourselves that there is nothing positive about an association with a government entity, and it is best avoided. As with their bursaries, Curro would be advised to secure private partnerships and financing to subsidise their schools. This is necessary because, as Curro ventures into less affluent, lower-income areas, it will discover that the culture of school fee payment is not nearly as intrinsic as it is in more affluent areas. It is going to use a lot of time and resources chasing arrear fee payments from defaulting parents, which is going to compromise the collection of their operational income.While I have asserted that the recent investment in Curro will not be the panacea that cures the ills of South Africa’s woeful education system, it does represent a move in the right direction. Curro’s role will be important, but it must be emulated and supported on a far larger scale if we are to begin reversing the precipitous decline in our country’s education standards.As mentioned earlier, a paradigm shift within the private sector must take place. This would require corporates being more receptive to the actual needs of schools, rather than unilaterally deciding what they believe schools need, and taking their cue from educators themselves.Fruits of our labourAs educators, we seldom see the fruits of our labour in the long term. Our only assurance is that the effort we put into nurturing and developing young minds will enable these individuals to one day lead a fulfilling existence, crafting successful careers and family lives for themselves. If we do our work as we should, we are confident of our return on investment. We do not need the assurance of propitious numbers on a balance sheet to validate the value of our actions and the investment of our time, energy and intellect in the development of potential.I have long argued that the private sector would be far more amenable to investing in educational institutions, if occasionally it allowed itself to adopt the same mindset as the Jannie Mouton Foundation has now done in a groundbreaking manner. While many corporates, including various trust funds, will claim that they already have invested in the education sector, the truth is that in many instances, this has been done without consideration for real transformation. Too often the recipients of generous funding are state schools that really don’t need the financial assistance.A well-established state primary school in KZN levies annual school fees in excess of R60 000 per year, which is significantly higher than the norm for most fee-paying state schools, as well as low-fee independent primary schools. Despite the fact that the government pays the salaries of approximately one-third of this school’s employees, despite the fact that this school has an extremely bountiful trust fund, and despite the fact that the learner racial composition of the school clearly does not align with the demographics of the country, it consistently receives significant corporate investment.Much greater needConversely, schools such as low-fee independent schools, which have far more representative demographics, receive no government assistance and have much greater need, are either overlooked or rejected because their ‘independent’ status apparently decrees that they are wealthy and not in need of financial assistance. Nothing could be further from the truth. The aforementioned considered, corporates, including trust funds, must accept a large measure of culpability for perpetuating the enormous inequality that already exists in this country.In education parlance, the Jannie Mouton Foundation deserves enormous credit for doing its ‘homework’ and concluding that education in South Africa requires significant and ongoing private investment. This concept has also gained traction at government level, with the minister of basic education, Siviwe Gwarube, mooting the idea of business and public partnerships in education.Personally, I cannot see the private sector being drawn into partnerships with the government to subsidise state schools, especially since the majority of them are dysfunctional. This aside, Minister Gwarube has access to an annual education budget of R450 billion and would be better advised to optimise the use of this very sizeable budget before prevailing upon the private sector to plug the holes in state education that ANC ineptitude has caused.Unfortunately, as competent as she is, Minister Gwarube presides over a department of basic education that is devoid of the talent and capacity to effect meaningful changes in state education. This is why I contend that stand-alone low-fee independent schools, which are highly functional, offer exceptional academic standards, and are unfettered by the corruption and incompetence that bedevil state schooling, represent the future for South Africa in terms of quality and their unique ability to offer accessible education to previously disadvantaged communities.They are more deserving of the lion’s share of investment than any other education sector in our country. Cash reservesIf anecdotal evidence is to be believed, the top 50 companies in South Africa are collectively sitting on cash reserves in excess of R1.4 trillion. One can understand the trepidation on the part of these companies to invest in an ailing economy, but unfortunately this conservative and penurious mindset appears to be dictating to the private sector that investable opportunities in our country in general are a scarce commodity. This is simply not true.An investment in good education is never a waste, as the Jannie Mouton Foundation has very indubitably demonstrated. A novel idea would be for each of the top 50 companies in South Africa to leverage a very small portion of their abundant reserve and take on a stand-alone, low-fee independent school as a benevolent project, the expectation being a social return on investment rather than a monetary return on investment.With widespread illiteracy already a feature of South Africa, the future prospects for our country are dire if we cannot arrest and reverse the pernicious effects of the decline in our education standards. The infrastructure, the capacity, and the function are already in place, and they reside in the low-fee independent school sector. The private sector just needs to mobilise to extract and optimise the considerable value this sector offers and ultimately contribute meaningfully to the creation of the future South Africa we all envisage..*Darron Tarr is the Principal of a South African independent school that exclusively serves children from historically disadvantaged communities. South Africa’s stagnant economy is disproportionately and negatively impacting middle-class families, primarily from Black communities, and unnecessarily depriving their children of the opportunity to receive an excellent and transformative education, such as that which his school offers. The redress of past inequality cannot occur without a flourishing economy, and the current focus of South Africa's leadership betrays the promise of a better life that many anticipated after 1994. Darron believes that unless our leaders shift their thinking to embrace a capitalist, free-market paradigm, prosperity for all who live in South Africa, and particularly the youth, will remain elusive..This article was first published by Daily Friend and is republished with permission.

Curro’s billion-rand pivot – lasting reform or idealistic illusion?: Darron Tarr

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