Private tutoring centres, which constitute a multibillion-pound industry in Egypt, are due to receive long sought-after licences from the government, the country’s Education Ministry has said.
It's a move that proffessionals say could shake up the national provision of education, where there's been a shortfall of state funding - something admitted by the government.
We as people, as regular citizens on the streets, would not have stomached the consequences of placing the country’s entire limited resources on education
Egyptian President Abdel Fattah El Sisi
Though they were frequently vilified and banned by former education minister Tarek Shawky, who was replaced in an August cabinet reshuffle, private tutoring centres proved difficult to get rid of, leading the ministry’s new leadership under Reda Hegazy to make them official.
Mr Hegazy spoke out in favour of such centres during a plenary parliamentary session on Tuesday night while laying out his plans to incorporate them into the sector over the next academic year. He said the ministry had decided to “accept reality” and bring private centres into the fold.
Parents shop for school supplies at a back to school exhibition in Cairo, Egypt. The new academic school year will start on October 1. All photos EPA
The exhibition spanned several floors.
Parents and children had plenty to choose from.
Exercise books were in high demand.
Everything from stationary, bags and water bottles were available.
School uniforms were also for sale.
Everything children needed for the new school term under one roof.
Large class sizes, low teacher salaries, shortages in funding for public schools and a lack of availability of educational resources over the decades have made Egyptian parents and pupils favour private tutoring centres over public schools.
“When they said that they were closing private centres last year and fining them all that money, me and a lot of parents were worried for our children’s education,” Noura Ahmed, 41, a mother of three tells The National. "Public schools are really not viable and I want my kids to be educated so they can find employment later. But the ban didn’t really happen so that was a relief.
“My eldest daughter goes to school once or twice a week whenever there is a lesson by a proficient teacher, but mostly she just attends classes at a centre.”
Despite being banned last year in a large-scale crackdown, private tutoring continued unhindered. A testament to how integral such centres are to the Egyptian education system is the EGP 47 billion ($2.38bn) these centres receive in fees from learners each year.
Because their operations were largely unregulated in the past, the government gained little in taxes from the massive profits made by private centres, an error the ministry is trying to rectify by making them official.
Ms Ahmed, whose 16-year-old daughter is a second-year high school pupil, explains that unlike public schools, private centres give parents and pupils much more agency over the material being taught and take more steps to ensure exams are passed.
She points to the disparity in funding between public schools and private centres as one of the main reasons she opted to send her children to the latter. Where public schools are in a severe state of disrepair, private centres often use the latest technology for education.
“I took my daughter to a class at a private centre one time and I was shocked to see the sheer size of the room, there must have been around 1,000 chairs,” Ms Ahmed says. “The room was segmented into four sections, each with a dedicated huge plasma screen television. The teacher was standing at the front of the classroom with a microphone and a camera that would transmit his image on to the screens.”
A lack of trust in public school teachers also drives the massive success of private tutoring centres in Egypt.
“Last year was my first in secondary school and the material was much more difficult than the year before. But on the first day of school, I arrived to find that the same teachers from my preparatory stage were going to be teaching me that year,” explains Ms Ahmed’s daughter, Manal, saying that it became quickly apparent that her teachers did not know the more difficult secondary school curriculum well enough.
The National also spoke to Naglaa Abdel Moneim, the owner and manager of a large private tutoring centre in Giza. She says the reason why centres have become a necessity is because the country’s curricula need updating and that they are simply too difficult for people to learn without external help.
“The problem is undoubtedly the curricula," she says. "They need urgent streamlining. If parents had faith in the curricula or their children’s ability to understand it, they would not pay to have their children receive extra private classes. But they know that if they don’t the child would most likely fall behind and have a more difficult time getting employment later.”
Low teacher salaries in Egypt have also contributed significantly to the popularity of private tutoring centres. Teachers at public schools almost always conduct private sessions because of how profitable they can be.
“I don’t really blame the teachers," Ms Ahmed says. "I clean houses for a living so I understand how tough things can get when you are unable to make money. These teachers make next to nothing working at public schools and they have families and children to take care of, so it’s understandable that they give more attention to their private tutoring sessions.”
However, this creates a conflict of interest that eventually makes it impossible for students to get a good quality education without taking private lessons, Ms Abdel Moneim explains.
Ms Ahmed says that her younger son’s teacher repeatedly claimed he was failing, which turned out not to be true. She said the teacher misrepresented his level and repeatedly recommended that he be enrolled in her private lessons.
Private schools
However, the potential for profit does create more competition inside tutoring centres that ensures the best teachers are employed, according to Ms Abdel Moneim, who worked as a teacher at a public school for 20 years before dedicating herself to her tutoring centre.
On the other hand, she concedes that the financial motivation has also made many private teachers help pupils cheat in their exams to ensure they pass and subsequently return to the tutoring centre the following year.
“Teachers aren’t celebrated in Egypt and socially speaking the profession is looked at as inferior," Ms Abdel Moneim says. "So in their efforts to lift their families out of poverty, the less scrupulous teachers will act unethically to make profit.
"These are the decisions of a few bad apples, but by and large, I think private tutoring is beneficial."
After an incident this month where a staircase at a school in Giza collapsed, killing one girl and injuring 14 others, the country’s education sector came under intense scrutiny. The incident was blamed on the pupils stampeding up the stairs, however, critics have highlighted that many of the country’s schools are in urgent need of renovation.
As the country attempts to grapple with an economic crisis which has dried up funding for many of its sectors, President Abdel Fattah El Sisi says reliable electricity, roads and sufficient food supplies have been given a priority over education.
“We as people, as regular citizens on the streets, would not have stomached the consequences of placing the country’s entire limited resources on education,” the president said.
Shady Zalata, the official spokesman for the Education Ministry, phoned in to Akher El Nahar, a talk show on a private television network on Wednesday, explaining that the licensing for private tutoring centres should not be seen by Egyptians as a failure on the ministry’s part, but instead formalising them into the country’s education system.
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
