Educating Children for Export

A regular subject of conversation on a morning run is that of school fees. In the last week, it has come up several times. The going rate for a year of private high school fees per child is between R150,000 and R300,00. The range in fees is mostly dependant on whether boarding is included or not. However you look at it, that is a chunk of change to pay for schooling. In most civilised societies, schooling is one of the benefits you get from paying taxes. That is not the case in South Africa.

Education is one of those many functions that have suffered at our political overlords’ hands. In addition to being overtaxed, South Africans get very little in return for their taxes, especially when it comes to education.

Education is not the only “hidden tax” that comes from having to access private services because of government incompetence. Healthcare and security are other significant expenses that need to be squeezed into the monthly budget.

The cost of private schooling from Grade 0 -12 is approximately R2,2 million per child, including inflation at 6%. Starting in Grade 0 now, one can expect to pay R50,000 for the year. By the time matric rolls around in Grade 12, a year of school fees will be about R350,000, thanks to that other hidden tax known as inflation.

The opportunity cost of educating a child at a private school is R5 million. That is what you lose out on because you could invest the school fees in a Satrix 40 account and conservatively get a market-related return of approximately 15% per annum. R7.2 million (R2.2 m + R5 m) is the total negative effect of choosing to educate a child in private schooling in South Africa starting this year.

With a matric certificate in hand after Grade 12, what opportunities are there in South Africa for a young school graduate? Consider that 46% of adult South Africans are unemployed.

I remember my first boss telling me that he was educating his children for export. That statement didn’t mean much to me as a young twenty-something-year-old with no kids. Now that my daughter is about to embark on a learning journey to Stellenbosch University, I can’t help but wonder where she will end up in ten years. Part of me thinks that I too may have been educating my daughter for export.

I am hearing more about well-educated, successful young people leaving South Africa. It is no secret that South Africa’s best export for a long time has been its taxpayers. That is the inevitable result of a crony capitalist system where racial criteria determine access to business and who is “qualified” to get a job or pitch for a new project. This can be overwhelming for a seasoned businessperson. Imagine looking at this through the lens of a young graduate.

The sad part about this story is that many millions of Rands are being invested in private schooling for most of those kids to end up living and working overseas. South Africa is perpetuating the export of its cream of the crop human resources.

Justin Spencer-Young

www.fastforwardbusiness.net/justintime

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Daily content creator at Fast Forward Business. Chief Valueologist. Fast Forward Business Podcast…look out for my daily podcast…a shot of value in your day

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Justin Spencer-Young

Daily content creator at Fast Forward Business. Chief Valueologist. Fast Forward Business Podcast…look out for my daily podcast…a shot of value in your day