Private sector educational institutions are entering the new academic session amidst controversies still unresolved. New Business Age analyses the controversies and the distortions that have crept in Nepal into the concept of private sector in education in Nepal.

The private sector was re-allowed into education after about a decade-long experience-in-failure of nationalized education under the so-called New Education Policy of early 1970s. However, despite a two-decade long involvement into this field the private sector in education is still at infancy and confused, say experts. "It is only after the seventh amendment in the Education Act that went into effect early January 2002 that the private sector involvement is legally recognized in education", says Dr. Tirth Raj Khaniya, who served as the vice-chairman of the Higher Secondary Education Board that regulates the 10+2 schools that are almost 100% privately run.

According to Keshar Bahadur Bista, an educationist and former Minister for Education, privatization in education is now more urgently necessary than in the past. "With the teachers in government school motivated less by professional ethics and more by party politics, we cannot depend entirely on the government for quality education", says Bista who is involved in a number of public and private educational institutes as the chairman of the school management committees.

The seventh amendment in the Education Act has however put severe limitations in the professional growth of the private sector in education, complain some private sector educationists. It has to be recognized that education is like any other product that can be produced and marketed by the private sector, but at the same time, it is also a public good with significant positive externalities. Once this concept is recognized, the society (or the government as the representative of the society) becomes the buyer of education and thus is it the government who has to bear the cost of education.

But the new law has left education as a battlefield of the private and the public sectors. The policymakers have kept the government as the producer of education whereas logically it should be the buyer only. 

Ajaya Ghimire, the CEO of Ace Finance Company and Ace Institute of Management, suggests that the government should concentrate more in the provision of primary education and also to some extent the secondary education as the positive social externalities of these levels are far greater than the private benefits.

The higher education and technical education should be left more to the private sector since the private benefits are far higher from such education. The people should be left free to choose the type of higher education and they should be made to bear the expenses as well for such education. And people will be ready to pay for such education because with this sort of education they are sure of being employed and recovering the expenses.

However, as everybody would not be able to afford the full cost of such education, the government should develop a mechanism to make it affordable for everyone interested. Such mechanism can be a system of scholarship or loan facility or a combination of both. If it is a scholarship, it is a case of education being bought by the society; if it is loan-financed the implication is that the person who pays the loan can appropriate the benefits as he/she wishes.

Nepal’s experience in sending people to good educational institutes for higher level technical education, such as Medicine and Engineering can be regarded as the example of how the scholarship system can be used.

But the problem in education in Nepal is not only the cost. In closer scrutiny, it can be found that cost is not the problem at all. If the courses offered are such that the person who receives the education is going to be employable immediately after completing the course, meeting the cost is only a matter of arranging the loan from a bank or elsewhere. A quick survey across private schools will easily bring to fore a number of parents who are already doing it, though the purpose of the loan as declared to the bank is something else, not education. Only recently, some banks have also started educational loans, the example being "Ghar, Car, Career" scheme of Everest Bank Ltd.

The next issue of debate in education is quality and that is related with the cost. People complain, for example, that the students who come out of the private schools pass with good marks in the examination but lack the analytical capability. Reacting to this Dr. Khaniya says, education always has a cost attached to it, and better the quality of education, the higher is the cost likely to be. Better teachers and better methodologies of teaching will be available at a higher cost. The implication is that, if you insist on reducing the cost, the quality also will suffer. And the providers of private education say they do not like to cut costs. "We don’t want to cut corners and compromise on the quality on the name of reducing cost", says Arun Chaudhary, Managing Director of Chaudhary Group, who also looks after the management of the Chandbagh School, an educational institute that the Group has promoted.

The question of reducing the cost is thus the question of who is to foot the bill. If all the costs of the education are to be borne by the parents or the students, education will certainly be costly. Hence the argument of some people that the government should subsidise education fully or partially.

Freedom of Course Design

The next problem with education in Nepal is with the course of study. "The books prepared in the style of the grandfather are taught by the teachers who are of the father’s age. And the poor students of today are always at loss as to what is being taught to them", summarises Kailash Dewan, CEO of Campion Associates, a corporate style organization that runs two secondary schools, three 10+2 schools, two bachelor level colleges and one MBA course. Dewan’s argument is for the freedom to the private sector also to design the syllabus to be taught in the schools and the colleges. According to Dewan, the objective of Campion is to become a University and be able to design the course of study on its own. But right now it has no alternative except following the courses prescribed by the Board or University it is affiliated to.

Ghimire too has similar views and argues that the private sector should be entrusted also the course designing. He goes even further to say that the evaluation too can be entrusted to the private sector. This views is supported also by Dr. Khanyia who says that there can be several Boards of Examination so that the students can choose among the Boards and courses. The issue of private sector involvement in education is related with the freedom of choice - to chose the school, the course and also the examination board.

In the existing situation, the best that the private sector units can do is to choose the field of specialization. And the fields selected by the private sector are Medicine, Engineering, Management and Information Technology as most of the private institutions are offering courses only in these fields. Campion is specializing in the education of management and IT, because, as Dewan puts it, "these are the fields in which there is ever growing demand of human resource at home as well as abroad". At all the higher levels, where the degree of specialization is higher, all private educational institutes can be found concentrating in areas which have maximum employability. This is true in almost all cases, whether they are 10+2 schools, colleges or universities.

The next controversy going on about education sector in Nepal is related with the complaint that the private sector has commercialized education. The people who have this complaint argue that education should be made available to everybody and the one who provides education should not charge for it.

It is not only a question of who foots the bill. It is related to the tendency among some private schools to overcharge. For example, some schools can be found billing students also for computer education while the students may not get any chance during the entire session to glance a computer. Many schools are also reported to have raised money from the students for the construction of school building. Another method of profiteering is by forcing the students to go to a particular bookstall for the books and stationery, thus limiting the choice for the students or parents to buy the books from where they like.

These problems are however, found to be prevalent more in lower level schools than in the colleges. This means, as the level of education goes higher, the parents as well as students are less likely to be exploited, because, to borrow the words from Ghimire, "the information gap" is less in these levels.

Institutions that run programs for all levels – lower as well as the higher – claim to have more rational fee structure for all the levels. According to Dewan, a student who enters grade one today in Campion’s Angel's Heart School or Kathmandu Valley School, will not have to pay any admission fee rest of his/her educational life within Campion till graduating out of the Executive MBA, the course it started just recently.

But the fee structure under the government system is not rational – the school fees are higher than the college fees.Perhaps this is one of the reasons why the students in TU campuses are not reducing despite so many 10+2 schools opened and a declared policy to phase out the Intermediate level from under TU. But Dr. Khaniya has one more explanation for the failure in phasing out the Intermediate level. "It’s politics", says he, "the political parties need the college to breed their cadre. You rarely see any student from 10+2 college going into politics".

Schools as Companies

The private sector’s involvement in education so far has come in two different ways. The joint stock company is one such form. The other is by the way of a non-profit making organizations or NGOs. However, the business persons, who have invested in schools by registering them as a company generally like to call it a charitable deed, not a business. Says Arun Chaudhary, " We invested in a school not for profit but because we feel we owe something to the society. Secondly, we have done so also because we need quality human resource for our own business units".

Chaudhary’s claim may sound plausible when one looks at the fact that the group’s investment in education is a very small fraction of its total turnover and the investment is routed through a charitable trust.

But when those institutions in which the investors are clearly guided by profit motive say that they are in the business for altruistic purpose, they sound hypocrites. But this hypocrisy is thrust upon them, opine experts. For example, Campion Associates used to describe its head office as the corporate office and its chief as the CEO. The objective obviously was to express professionalism. But now, though Dewan is still called the CEO, the corporate office is called simply the Campion Head Office. The reason? The people were found having negative attitude towards the institute.

As a result, though over 600 schools and colleges across the country are registered as limited liability companies, only two of the 28 schools contacted by NBA identified themselves as company – even those recorded in the list of Companies Registrar’s Office as joint stock companies chose to hide the fact.

Since you cannot set up a non-profit company in Nepal, the schools think if you identify yourself as a company you are accepting to be a profiteer.

"But profit-making is not bad as long as the taxes are paid out of the profit", says Bista. However, this seems to be a challenge that the private educational institutes have to overcome.

With a very good pass percentage compared to government schools (see table) the private sector has proved that its standards are far higher. But as to the other expectations, for example, that they will reduce the number of people going abroad for education have not been fulfilled as the data from the government reveal (see table in page 30). And these data show the recorded cases only.

However, education business is attractive for the investors as shown by the rate of growth in the number of HSEB affiliated 10+2 schools. If this enthusiasm of the private sector is channelised properly, educating some 300,000 persons, that enter the school-going age every year at the current rate of population growth, is not going to be a problem. As Ghimire say, "Money should not be a problem with so much of foreign aid coming into the country for education."

Some notable educational institutes registered under company law

Amar Adarsha Awasiya Ma Vi Pvt. Ltd., Baneswor

Baba Academy Pvt. Ltd., Chabahil

Chandbagh School Pvt. Ltd., Bansbari

College of Business Management Pvt. Ltd., Nardevi

Galaxy Foundation Pvt. Ltd., Kathmandu

Gitanjali Education Foundation Pvt. Ltd., Maharajganj

Kathmandu Medical College Pvt. Ltd., Jorpati

Littler Angels School System Pvt. Ltd., Lalitpur

Malpi Institute Pvt. Ltd., Lazimpat

Nagarjuna Academy Pvt. Ltd., Lalitpur

National Institute of Dental Science, Janakpur

Nepal Medical College Pvt. Ltd., Jorpati

Nobel Academy Pvt. Ltd., Kathmandu

Pokhara Engineering College Pvt. Ltd.

VS Education Foundation Pvt. Ltd., Kathmandu

White House Education Network Pvt. Ltd., Kathmandu

SLC Result at a Glance

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