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Private higher education in Ethiopia: risks, stakes and stocks

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DOI: 10.1080/03075079.2019.1582010

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 Studies in Higher Education

ISSN: 0307-5079 (Print) 1470-174X (Online) Journal homepage: https://www.tandfonline.com/loi/cshe20

Private higher education in Ethiopia: risks, stakes

and stocks

Wondwosen Tamrat & Damtew Teferra

To cite this article: Wondwosen Tamrat & Damtew Teferra (2019): Private higher
education in Ethiopia: risks, stakes and stocks, Studies in Higher Education, DOI:
10.1080/03075079.2019.1582010

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STUDIES IN HIGHER EDUCATION
https://doi.org/10.1080/03075079.2019.1582010

Private higher education in Ethiopia: risks, stakes and stocks

a
Wondwosen Tamrat and Damtew Teferrab
a
School of Graduate Studies, St. Mary’s University, Addis Ababa, Ethiopia; bSchool of Education, University of
Kwazulu-Natal, Durban, South Africa

ABSTRACT KEYWORDS
Private higher education institutions operate amidst a litany of risks that Private higher education; risk;
can affect their operations and threaten their existence. This study was risk management; risk in
conducted to identify and analyze the nature and types of risks faced by higher education; Ethiopian
Ethiopian private higher education institutions through the perspectives private higher education
institutions
of their own academics. The findings revealed that the major types of
risks faced by private higher education institutions relate to the broader
areas of policy and regulation, financing, teaching and learning,
infrastructure and resources, and research and outreach. Among others,
the specific types of risks identified were found to be driven by the
nature of institutional establishment and operations, resources available,
and policies and regulations governing the private higher education
sector. The study further established that, in addition to their
contribution towards the strategic management of the sector,
understanding the pattern and trends of risks is paramount to ensuring
the survival—and advancement—of the fledgling private higher
education sector in Ethiopia.

Background
In its nearly two decades of existence, the private higher education sector in Ethiopia has passed
through two, if not more, critical moments which could have been detrimental to its existence.
The first took place in 2010 when the government banned private higher education institutions
(PHEIs) from running teacher education programs.
Private providers had little anticipation that such a decision would be taken given the earlier pol-
icies of the government and the burgeoning demand for trained teachers across the country. Since
the abrupt decision came about without prior warnings or transitional arrangements, it resulted in
the closure of teacher education faculties, significant drop in student numbers, employee layoffs,
and loss of massive prepared resources such as printed modules. In private institutions where
teacher education programs were the major income earner, the financial viability and existence of
institutions became critical issues.
The second serious risk followed two years later in 2012 when the government again put a mor-
atorium on distance education providers claiming that the academic provisions provided through
this modality were sub-standard. This led to the temporary banning of all distance education pro-
grams across the nation for two years causing anxiety and utter despair among private operators.
The two incidents that were triggered by government actions- and arguably in contravention with
existing regulatory frameworks governing such decisions- were instrumental in the closure of some
and weakening of many private institutions. Their negative effects are still felt within the sector
despite a variety of strategies designed by private providers to recuperate from their losses.

CONTACT Wondwosen Tamrat wondwosentamrat@gmail.com

© 2019 Society for Research into Higher Education
2 W. TAMRAT AND D. TEFERRA

Among the various lessons of experience these incidents provided are the need for understanding
the nature of risks as well as embodying risk management as a major component of institutional
imperatives which seem to be still lacking in the Ethiopian higher education sector.

Risk management (RM) in higher education: theoretical underpinnings

Conceptualization of risks often includes at least three core elements: ‘an object deemed to “pose”
the risk, a putative harm, and a linkage alleging some form of causation between the object and
the harm’ (Hilgartner 1992; in Boholm and Corvellec 2011, 177). The Royal Society (1992, 2–3)
defines risk as ‘the probability that a particular adverse event occurs during a stated period of
time’ while the Society for Risk Analysis (2008) sees it as ‘the potential for realization of unwanted,
adverse consequences to human life, health, property, or the environment’ (as quoted in Boholm
and Corvellec 2011, 177).
An immediate observation about risks in general conjures their pervasiveness in human history
and the way people have always dealt with them. From the first recorded instances of risk analysis
reported to have begun in 3200 BC (Covello and Mumpower 1985) to the modern forms of RM—
identified by phases as the traditional risk management, the advanced risk management, and the
strategic risk management (Kageyama 2014)—people and organizations have designed what they
considered to be the best mechanisms of responding to risks.
Along with the mounting challenges that human history has faced, a variety of mechanisms for
handling risks have correspondingly spawned. During the earliest phases, risk management had a
specific focus on addressing accidents that resulted in a loss (Whitfield 2003; Cienfuegos 2013)
whereas today’s approach is geared towards an integrated or comprehensive view of risk manage-
ment which is conceived as a central part of the strategic management of successful organizations
(AIRMIC, Alarm, IRM 2010; Cienfuegos 2013; Dionne 2013). Risk management currently encom-
passes more than addressing risk exposure and has assumed critical importance in terms of max-
imizing competitive advantage for organizations. Its value is surely set to continue since all human
events, past or future, can never be free from risks (Ciorciari and Blattner 2008; Dionne 2013).
Operating amidst a litany of challenges higher education has emerged as a hot bed of risks of
various natures. These include higher student expectations, competition for students and faculty,
financial austerity, heightened external scrutiny, and increased responsiveness and accountability
(Whitfield 2003; Lundquist 2011; Ruzic-Dimitrijevic and Dakic 2014; Gallagher & Co., 2013; Deck
2015; PwC 2018). Commensurate with the increasing complexity of the higher education environ-
ment it has become apparent that HEIs should seek mechanisms of adapting the principles and prac-
tices of risk management (Helsloot and Jong 2006; Bayaga and Moyo 2009; Kageyama 2014; Deck
2015). The Higher Education Funding Council for England (HEFCE), for instance, has made it manda-
tory that higher education institutions should implement RM as a governance tool (Huber 2009, 2011;
Hommel and King 2013). Echoing this practice, Australia has opted for a risk based approach to
quality assurance within higher education institutions (Towers, Alderman, and McLean 2010;
Edwards 2012). The University Transformation Program Green Book in Malaysia incorporates risk
and risk management as one of the duty and roles of universities’ board of directors (MOHE 2015;
Sum and Saad 2017).
It is obvious that risk management practices can ostensibly assist HEIs to achieve their missions
and visions, improve their institutional standing, meet the challenges they face, and help them
make more rational strategic decisions (Whitfield 2003; Bayaga and Moyo 2009; Ruzic-Dimitrijevic
and Dakic 2014). However, in spite of the evolving developments, the literature on RM outside of
the financial and corporate stream remains scanty and under developed, in addition to its late
arrival within the higher education sector (Huber 2009; Edwards 2012; Toma, Alexa, and Sarpe
2014). Raanan (2009, 43) aptly describes the irony of the situation in which HEIs find themselves:
‘While academic institutions have been teaching risk management to others-business people, finan-
ciers, statisticians, insurance professionals, etc.-very little “self-use” has been attempted.’
 STUDIES IN HIGHER EDUCATION 3

Classification of risks
The identification and classification of risks is an important element in the RM process (Huber 2011;
Ruzic-Dimitrijevic and Dakic 2014). Subjecting risks to strictly bounded categories is, however, not an
easy task (Helsloot and Jong 2006). That is why a wide variety of grouping criteria are suggested in
the classification and understanding of risks in higher education institutions.
The classification of risks given by Huber (2011), for instance, approaches the issue based on
responsibility or functionality. Accordingly, the most common types of risk faced by universities
are assumed to include Strategic Risks (risks that affect an organization’s ability to achieve its
goals), Financial Risks (risks that may result in a loss of assets), Operational Risks (risks that affect an
ongoing management process), Compliance Risk (risks that affect compliance with externally
imposed laws and regulations, or with internally imposed policies and procedures), and Reputation
Risks (risks that affect an organization’s reputation, brand or both) (NACUBO & AGB 2007; URMIA
2007).
The risk profile generated by Pricewaterhouse Coopers, PwC (2018), on the other hand, identifies
government policy/political landscape, student recruitment, information/cyber security, financial sus-
tainability (including pensions), teaching excellence framework (TEF), poor Management Infor-
mation/data quality, business continuity. Other main areas of note for HEIs in the UK include
organizational change and transformation programs and compliance. Lundquist (2015) groups
risks faced by universities into ten responsibility areas including boards of trustees and regents; pre-
sident; senior administrators, etc with each area having its own types of risk. Still others specify risks
into faculty, enrollment, facilities management, student life, financial, research, human resources,
crime and safety/safety and security, information technology, academic affairs (Whitfield 2003;
Wleugel, Osselton, and Arello 2011; Deck 2015). There are also writers that identify risks mainly at
the broader level. Brewer and Walker (2010, 2011), for instance, group risks into two major categories
of strategic risks (those related to the broad risk context) and operational risks (those at the level of
implementation). Hommel and King (2013) classify risks into endogenous (those emanating from the
organization itself) and exogenous (those necessitated by a hostile external environment); and also
into what are called white swans (quantifiable risks) and black swans (unpredictable risks with serious
impacts). Huber (2011) further offers classification based on institutional levels (e.g. risks occurring at
central, departmental, or institutional level) and risks viewed as an onion layer (e.g. core risks, organ-
izational risks and external risks) as additional typologies.

Approaches to risks in higher education

The two broad strands that have been employed by organizations as regards managing risks are
widely identified as the traditional approach and the strategic approach. Cienfuegos (2013) labels
the traditional approach as the ‘initial perspective for the implementation of risk management’
while he applauds the strategic approach as ‘the optimal application of the risk management disci-
pline.’ These two strands are found to be distinct in their focus, views of risk, and the manners that
they contend risks should be treated.
While the traditional approach focuses on risks related to such distinct areas as property protec-
tion, information security, health and safety (Cienfuegos 2013; Deck 2015), the strategic approach is
oriented towards addressing a comprehensive list of risks that an organization might face. In terms of
responsibility, the traditional approach, in concert with its defensive stance, ascribes the responsibil-
ity of handling risks to specific ‘threatened’ units such as human resource, accounting, finance,
internal audit, education and social services while risk handling in the strategic approach is shared
among all constituents of an organization in a proactive and organized manner (Cienfuegos 2013).
Notwithstanding the scanty research available about risk management per se and especially its
practical application in the higher education context (Lundquist 2011; Ariff et al. 2014), most HEIs
are critiqued as being far behind business and industry in terms of accepting and implementing
4 W. TAMRAT AND D. TEFERRA

institution-wide risk management practices (Whitfield 2003; Huber 2011; Tufano 2011; Ariff et al.
2014). Despite the need for a more integrated treatment of risks, the focus of higher education
has also been more on conventional risk management with responsibilities of managing risks
deferred to individual responsible units (Helsloot and Jong 2006; Bayaga and Moyo 2009; Raanan
2009; Lundquist 2011; Verdina 2011; Deck 2015). The situation appears worse in developing countries
where risk management awareness in general remains minimal and the involvement of universities in
introducing risk-wide management in their planning and operations is still limited (Bayaga and Moyo
2009).

The research context

Over the last few decades, PHEIs have become a common feature of higher education provisions all
over the world. Though their augmenting trajectory is discernible across the globe, their magnitude
of presence differs from one context to the other. By the global standard, the growth of the PHE
sector in Africa still remains low—currently hovering around 18 percent of overall tertiary enrollment
(Levy 2018). However, policy changes favoring privatization and continental developments over the
last three decades continue to account for the private surge. PHE has now become one of the fastest
growing segments of the higher education sector with the number of PHEIs continuously on the rise
and overwhelmingly dominant over public institutions in the continent (Tamrat 2017).
The rise of private higher education in Africa has been mainly driven by such factors as the inability
of the public sector to meet growing demands, strain on public finance that called for alternative
sources of funding, and consequent economic policies that led to structural reforms(Altbach 2016;
Tamrat 2017). Notwithstanding its limitation in size, the sector’s importance continues to be strongly
felt in terms of addressing the deficiencies of the public sector, creating job opportunities, enhancing
managerial efficiencies and infusing entrepreneurial culture into the hitherto conservative higher
education arena.
Although modern higher education in Ethiopia started in 1950—with the opening of the Univer-
sity College of Addis Ababa (now Addis Ababa University)—the sector remained exclusively a public
domain in its ownership and orientation until the incumbent government assumed power in1991.
New provisions issued in the Education and Training Policy (FDRE 1994) paved the way for private
investment in education that eventually led to the mushrooming of private higher education insti-
tutions in the country.
Currently there are 46 public universities in the country which account for 87 percent of enroll-
ment at undergraduate and 94.4 percent of enrollment at post graduate level (MoE 2017)—indicating
the continuing dominance of the public higher education sector.
With more than 130 accredited PHEIs, the sheer number of private institutions tops the public
ones by almost three fold. However, private institutions remain small in size and account for about
13.8 percent of total enrollment, with the number of students who attend their programs standing
at around 110,000 (MoE 2017). The majority of Ethiopian PHEIs is for-profit institutions owned as
Private Limited Companies (PLC) and mainly concentrates in offering business and economics and
other social science fields of studies. Among the existing PHEIs, only four have achieved a fully-
fledged university status.

Policy and legislative framework

Aware of the public sector’s limitations in addressing the increasing social demand for education at
various levels, the country’s Education and Training Policy (ETP) of 1994 paved the way for the par-
ticipation of private investors in education. Other successive policy and operational documents such
as the Education Sector Development Programs, ESDP, of the country (ESDP I, II, III, IV, and V), the
Ethiopian Investment Proclamation (FDRE 1996), the Investment Incentives Amendment Regulation
(FDRE 1998) and the Higher Education Proclamations (FDRE, 2003, 2009) were concurrently set with
 STUDIES IN HIGHER EDUCATION 5

similar tones. As a result, private higher education in Ethiopia enjoys legitimacy as a legally recog-
nized investment area.
While public institutions in Ethiopia are established by the government and administered by the Min-
istry of Education (under the Ministry of Science and Higher Education since October 2018), with the
exception of few institutions that operate under other ministries and regions, private institutions are
set up by individuals, organizations and associations with profit and /or non-profit motives (FDRE
2009). Despite the practical differences between public and private institutions, the law expects all
types of higher education institutions to respond equally to the broader missions of higher education
set as teaching/learning, research, and community services. However, the ways in which institutions
from both sectors are treated reflects a wide range of challenges in areas such as funding, institutional
support, and accreditation, indicating the apparent hurdles that call for attention.
Due to lack of access to public resources, the major sources of income for private institutions in
Ethiopia remain to be student tuition and fees. Hence, the excessive cost of renting buildings, the
lack of adequate finance for institutional growth, and the absence of student loan schemes continue
to pose serious hurdles. While lack of access to land and loans from financial institutions, as well as
absence of favorable taxation measures and investment incentives negatively impact PHEIs, chal-
lenges such as delays in accreditation, double standards in treating public and private institutions,
and government’s lack of capacity in enforcing rules and regulations on illegal providers add extra
regulatory burdens (Tamrat 2008; Tizazu and Tamrat 2011).
The foregoing underscores that neither the general incentives provided to private investors nor
the specific provisions set for PHEIs in Ethiopia meaningfully address the expectations laid down
for them by the government. Promises of promoting the private sector aside, the available govern-
ment policy frameworks are more indicative of a competitive regulatory approach than a cooperative
one (Papadimitriou et. al. 2017).

Objectives of the study

This study is guided by two major objectives:

(a) identifying the types of risks faced by Ethiopian PHEIs; and

(b) determining the magnitude of these risks as perceived by academics.

Research methodology
Sample determination
This study purposefully identified private higher education institutions with a longer history of exist-
ence to draw on their extensive experience and perspectives on the risk environment of PHE since
the sector’s inception. This approach yielded a list of six institutions in the country established in
the first two years of the sector’s existence (i.e. 1998–1999). While all six institutions were approached
to participate in the study, only four volunteered to take part. These were Admas University, Alpha
University College, St. Mary’s University and Unity University.
While the participant universities represent three out of only four such institutions within the sector,
the University College is among only half a dozen institutions that have acquired similar status so far in
the country. The sample institutions assume importance not only in their seniority but in terms of the
leading positions they occupy as regards student enrollment, institutional size and public regard.

Data collection instruments

The study follows a mixed methods design and uses both qualitative and quantitative methods.
Questionnaires and interviews were employed as major data generation tools.
6 W. TAMRAT AND D. TEFERRA

The design of the questionnaire first involved the development of an initial list of risks by referring
to institutional documents and previous research on PHEIs. The initial list was distributed to the top
management of the sample private institutions who were given the draft checklist to comment on
and refine it.
The final questionnaire with 33 items identified as risk elements of the sector was distributed to
200 randomly selected respondents in the four PHEIs identified for the study. Out of these, 161 were
dully completed and returned.
The questionnaire required respondents to rate the magnitude of each risk on a 5 point Likert
scale, ranging from 1 (least serious) to 5 (most serious). In addition to frequency counts, the modal
values of the ratings given by respondents were computed to determine the perceived rank of
each of the risks based on the severity of its impact for the sector.
Interviews were held with three out of four leaders of the sample institutions who volunteered to
be interviewed. Their opinions were used to gauge their views about the issues related to the types of
risks faced by institutions.

Respondents’ profile
While 89 percent of the 161 respondents were exclusively serving as academic staff, the rest
assumed additional administrative positions. In terms of their qualification, 20 percent had a
Bachelor degree, 65 percent had a Masters and the remaining 15 percent had a PhD. Thirty-two
percent of the respondents had 1–5 years of work experience while the remaining had more than
six years.
Among the three volunteer interviewees two assumed the position of president, while the other
one served as executive vice president.

Findings of the study

The identification of what are considered to be the prevalent risks of the private higher education
sector in Ethiopia bore five major categories: policy and regulation, finance, teaching and learning,
infrastructure, research and outreach. This classification concurs with those suggested by Huber
(2011) based on responsibility or functionality. The discussion of findings below is structured
along these five categories.

Risk one: policy and regulation related risks

Although PHEIs are largely assumed to fall outside of higher education policy (Levy 2002), the impor-
tance of legislative frameworks in strengthening or stifling the sector is widely acknowledged
(Fielden and La Rocque 2009; Zumeta 2011; Bernasconi 2011). In most contexts positive relationship
is predicted between governmental policy disposition and private sector growth patterns indicating
the potential in shaping the scope and nature of private provision (Pachuashvili 2011; Bernasconi
2011; Zumeta 2011; KlemencIc and Zgaga 2014). Properly crafted regulatory frameworks can
enhance the development of appropriate management structures, institutional policies and pro-
cedures, institutional documentation, quality assurance systems and procedures and business
decisions that add to the recognition that PHEIs vehemently seek from the government and the
public at large (Ellis and Steyn 2014).
Writers further contend that PHEIs must be supported in view of their public importance of pro-
viding access and the related societal contributions they make(Fielden and La Rocque 2009; Jamshidi
et al. 2012; Tamrat 2017). Government help can be provided in the form of access to public funds,
campus infrastructure, reductions or exemption from customs duties and assistance with planning
 STUDIES IN HIGHER EDUCATION 7

Figure 1. Respondents’ rating of policy and regulatory risks.

requirements at the local level (Bjarnason et al. 2009). However, these forms of support may not be
always forthcoming specially in situations where public authorities harbor mistrust towards private
institutions whose controversial features of operation can at times be a cause for restrictive regu-
lations (Levy 2003; Bjarnason et al. 2009; Kinser 2013; Shah and Nair 2016).
Respondents’ views towards the various components of policy and regulatory risks were gauged
using a set of related items in the questionnaire. The results are given in Figure 1.
The highest level of risk was accorded to sudden policy shift, followed by lack of government
support. This does not appear surprising given PHEIs’ limited locus of control over these factors
and previous bad experiences. Interviewed respondents also emphasized the critical role of policy
as compared to the other risk factors identified:
The issue of policy should be considered first when it comes to choosing the most serious risk for private higher
education institutions. The domino effect of policy on the other areas is obvious. If the sector is guided with sound
policy, this would definitely have a knock- on effect on all other risks (Interviewee 3).

Our major risk lies in being unclear about the future as the sector is not well-planned and well-informed.
Private higher education institutions are constantly worried about the future while they should have been
able to plan about it in tranquility. Most often, what’s put in the form of policies is quite different from
the reality on the ground. Arbitrary decisions are common as evidenced in the past by the banning of
private institutions from offering some programs. The nature of the government’s arbitrariness can have
adverse effect on the delivering capacity of institutions, and the sector’s benefit to the larger community
(Interviewee 2).

The double standard used between public and private HEIs has been identified as the third most
serious risk in this study. In practice, while government institutions can introduce their programs
without undue bureaucratic restraints, the under-resourced private institutions can do so only
after passing through rigorous and lengthy processes of accreditation. This has also been raised
during the interview session:
The major threat of the private sector relates to the regulatory regime put in place. This is mainly reflected in the
poor implementation of policies, the excessive focus on the private sector which has a limited share as compared
to public universities, and the double standard being exercised by regulators (Interviewee 1).

Interviewees’ reiterated focus on policy issues was also reflected in their suggested solutions to the
identified risks. This included measures that they said need to be taken at institutional and govern-
mental levels as the view below exhibits:
The solution lies in making efforts at three levels. Institutions should make risk management part of their strategic
management. At sectoral level, engagement with other operators is an important consideration to be made. The
Private Higher Education Institutions’ Association should also engage with government to improve existing
8 W. TAMRAT AND D. TEFERRA

situations. At the national level, government should see the possible problems that might ensue when the sector
fails to operate properly. Incentives should be provided for those who are doing better. All private higher edu-
cation institutions should not also be judged similarly (Interviewee 3).

Despite policy intentions, the actual assistance provided to the PHE sector in Ethiopia has always
been questionable and unsatisfactory (Birru 2002; Nwuke 2008; Tamrat 2008; Tizazu and Tamrat
2011). The findings of this study are also in congruence with studies in other countries where prohi-
bitive regulations, lack of transparency, unclear and confused regulatory regimes, changing require-
ments, uncertainty about procedures, delays in accrediting PHEIs, government’s double standards,
and limited capacity to enforce rules and regulations were identified as factors that can stifle
private growth (Levy 2005; Fehnel 2006; Bjarnason et al. 2009; Fielden and La Rocque 2009; KlemencIc
and Zgaga 2014).

Risk two: financial risks

The funding strategy of PHEIs distinguishes them from their public counter parts. Their major sources
of funding are identified as tuition fees, subsidies from sponsoring organizations, donations, gifts and
endowments from sponsoring organizations (Bjarnason et al. 2009; Levy 2013; Altbach 2016). As
noted by Shah and Nair (2016), in contexts where private providers operate without the backing
of the government a degree of financial uncertainty on the education provider and students who
commit their resources and time is to be expected. Financial limitations in PHEIs are usually mani-
fested in the form of inadequate infrastructure, inability to pay qualified personnel, and limited insti-
tutional growth which can hinder an institution’s viability.
The responses obtained from research participants were gauged with regard to how risks related
to finance and income was rated. The results are given in Figure 2.
The escalating cost of materials and buildings that PHEIs have to grapple with stands at the top of
the risk list. Interviewees’ observations as regards forbidding costs borne by their institutions and
their inability to counteract the bad effects of such risks are also instructive:
Costs are increasing at an unprecedented rate which is in turn affecting the type of infrastructure institutions are
acquiring. Our diversification strategies have been curtailed due to the effects of financial problems (Interviewee
2).

The finance related risks are getting serious with the growing cost of materials in the market. While this could
have been contained with the strategy of expanding our programs which would earn us additional income,
the prohibitive environment is seriously preventing us from doing that (Interviewee 3).

The issue of excessive reliance on tuition which came second on the list has also drawn a significant
attention from respondents. Admittedly, excessive dependence on student tuition could easily jeo-
pardize the operation of the private sector at any point in time—especially in times of dwindling
enrollment (Altbach 2016; Shah and Nair 2016). That is why issues of financing are identified as

Figure 2. Respondents’ rating of financial and income related risks.

 STUDIES IN HIGHER EDUCATION 9

the most prominent material risks whose critical role can be reflected in the execution of strategic
and operational goals of PHEIs and in influencing the operation and growth of the sector (Raanan
2009; Pachuashvili 2011; Wleugel, Osselton, and Arello 2011). Previous research in Ethiopia has
also highlighted the overreliance of the PHE sector on income generated from students and the
associated dangers in the face of little government support, lack of philanthropic and alumni tra-
dition, and limited institutional diversification (Desta 2001;Tamrat 2008).

Risk three: teaching and learning

Teaching and learning risks pertain to those factors that are considered to be critical in running insti-
tutional programs. They include risks related to the quality of programs, students and faculty, admis-
sion rates, competition for best students and support systems that drive student satisfaction. By
standard measures of academic quality, the capacity of PHEIs is usually assumed to be low; PHEIs
are said to be dominated by part time faculty often without advanced academic credentials; and
libraries and laboratories are meager (Bernasconi 2003; Wleugel, Osselton, and Arello 2011;
Altbach 2016).
Respondents’ answers to risks related to teaching and learning bore the results indicated in Figure
3 which outlines a variety of challenges the private sector is experiencing.
The findings reveal that faculty turnover appears to be the highest risk that confronts the PHE
sector, followed by shortage of experienced staff. This concurs with previous local studies that indi-
cated high turnover rates driven by low salary scales, limited training opportunities, poor retention
schemes and benefit packages (Birru 2002; Ayenew 2007; Eneyew 2010).
Poor staff-mix is another risk PHEIs admitted to be facing. This may not be surprising considering
the fact that many PHEIs are still far behind meeting the national requirements of the Higher Edu-
cation Relevance and Quality Agency (HERQA) which set 30% PhD, 50% Masters and 20% Bachelors
as national standards to be met by all higher education institutions. Despite their efforts over the
years, the continued shortage of PhD staff within the PHE sector has especially been a critical
factor in meeting the particular demands of HERQA as well as expanding programs at postgraduate
level as the following observation from one of the interviewees attests:
Staff turnover is becoming a serious issue. While the regulators make demands on having PhD staff, this is some-
thing the private sector has not been able to fulfill. The public sector has a similar problem but the demand on
them to meet such requirements is literally nonexistent (Interviewee 1)

The findings also support the observation in the extant literature which highlights ill-qualified
staff and the ability to attract and retain talented faculty as PHEIs’ major Achilles hills (Levy
2002, 2003; Altbach and Levy 2005; Wleugel, Osselton, and Arello 2011; Altbach 2016). The fact
that the rating of quality of programs came at the bottom may not necessarily imply that the
issue is unimportant; rather it might be indicative of the precedence of factors the respondents
have little control over.

Figure 3. Respondents’ rating of teaching and learning related risks.

10 W. TAMRAT AND D. TEFERRA

Figure 4. Respondents’ rating of infrastructural and resource related risks.

Risk four: infrastructure and resource related risks

Obviously, the lack of sufficient resources can slow down or derail institutional growth in a given
context. Inadequate infrastructure—as manifested in the lack of classrooms, and other facilities—
can be amongst the most critical problems private providers face (Bjarnason et al. 2009; KlemencIc
and Zgaga 2014).
As may be shown in Figure 4, in the eyes of research subjects, the lack of ICT facilities and their
utilization are considered as the most serious risks that the private sector faces, followed by poor
quality of buildings.
This finding corresponds with local studies where the lack of proper ICT facilities was regarded as
one of the most serious deficiencies and a source of student dissatisfaction in PHEIs (Cf. Woldu 2004).
The same is true of buildings that most Ethiopian PHEIs rent to run their programs but are unfit for
educational purposes. In addition to substandard ratings on infrastructural requirements of HERQA,
deficiencies in this area have been a source of negative public opinion about PHEIs in the past (MoE
2003; Ketema 2004; Mesfin 2006; Tamrat 2008).
The fact that the remaining factors did not surface higher in the ratings of respondents may mean
either the institutions fare better in their provision or the factors are considered less critical to the
smooth running of academic programs in PHEIs.

Risk five: research and outreach related risks

Respondents’ views were also solicited on research and outreach functions of a higher education
institution as provided in Figure 5.
The two most serious risks identified are limited participation of staff in research and lack of
funding. Previous studies in this area indicate the failure of PHEIs to engage actively in the generation
of new knowledge and rather minimal time, if at all, dedicated by staff to research (Birru 2002; Ale-
bachew 2004; Nwuke 2008; Tamrat 2008; Tamrat and Levy 2017). The extant literature also identifies
the lack of research culture as one of the major weaknesses of PHEIs in many parts of the world
(Bernasconi 2003; Levy 2003; Altbach and Levy 2005; Altbach 2016). Interviewees also noted the
deficiencies by identifying possible causes and remedies:
The fact that PHEIs rely on student tuition affects the level of their engagement in research. Research grants from
financiers and the government are not made available to private institutions on competitive basis. Government
does not provide the assistance in this area due to the prevailing negative attitude towards the sector (Interviewee 2).
 STUDIES IN HIGHER EDUCATION 11

Figure 5. Respondents’ rating of risks related to research and outreach.

External funding which could have served as an additional source of income is poor due to the credibility chal-
lenge that PHEIs face. Private businesses and other clients prefer to go to public institutions as compared to the
private ones when it comes to research and consultancy services. In this regard the government should seek ways
of providing seed money and support to the private sector (Interviewee 1).

As compared to others, links with community and employers, which came at the bottom of the list,
have not been considered as serious risks that the sector has to contend with. This may be an indi-
cation that the private sector has a reasonable participation in these areas since they require less
capital and talent compared to research.

Conclusion
This study employed multiple methods to establish the history, state and trends of risks in Ethiopian
PHE sector. It has systematically targeted four private institutions using survey questionnaires and
interviews with key players in the sector. While we take note of the limitations in terms of the mag-
nitude of our sample, we feel that the study captures the narrative of risks in the Ethiopian PHE sector
—credibly and substantially. The research illustrates fairly well the state and magnitude of risks that
the Ethiopian PHE sector is currently grappling with.
The key challenges faced by Ethiopian PHEIs were identified as policy and regulatory risks followed
by financial and other types of risks inherent in almost all spheres of their operation. Understanding
these risks and their magnitude should provide significant inputs for government, PHEIs and other
stakeholders in their collective quest to address existing challenges in the area. Efforts in this direc-
tion are especially important to an emerging private sector that is currently operating with little
financial assistance, a host of regulatory restrictions and a multitude of external challenges that
can impinge on its daily operation—and future performance.
It should be emphasized that PHEIs may find it increasingly difficult to achieve their strategic
objectives and maintain their organizational health unless the risks identified are progressively
addressed. A strained private sector fraught with risks- and little support can easily get derailed
from discharging its responsibilities, beefing up its stakes, and building its stocks. The danger of
the PHE sector withering away—with major consequences to multiple stakeholders—students,
parents, and businesses alike—are imminent. Hence, there is a compelling reason on the part of
the government for a closer—and constructive—dialogue with PHEIs and pertinent stakeholders
that would lead to the development of a responsive policy to help avert detrimental risks to the
sector.
The recent effort of the Ethiopian government in setting up a directorate within its Ministry of Edu-
cation (now Ministry of Science and Higher Education) to facilitate support to the PHE sector may be
an encouraging trend in this regard. Among others, the unit is engaged in identifying core areas of
12 W. TAMRAT AND D. TEFERRA

challenge and providing support where possible and advisable. It is our view that proposals enter-
tained at the unit should include, among others, substantive policy directions for developing a sec-
toral road map, providing different forms of indirect support, and access to critical resources like land.
Many are of the view that the unfolding—and conducive—socio-political changes in the country
have the potential to assist this development further. Indeed, positive changes in this direction
will not only help the private sector thrive but also advance government interest in effectively deploy-
ing the sector as its strategic partner in the expansion of higher education opportunities—through
non-public avenues.
Furthermore, this study has shown the importance of using risk management as an effective
instrument to understand and address the multitude of challenges faced by higher education insti-
tutions that are increasingly confronted with a complex, uncertain and risky environment (PwC 2018).
Given its absence in the management of most higher education institutions, it is high time that insti-
tutions consider using risk management as an essential tool of mitigating potential hazards and
unfortunate events when and before they occur (Raanan 2009; Huber 2011; Hommel and King 2013).
As regards private institutions which are most often considered to be more vulnerable compared
to their public counterparts, the use of an integrated risk management system—that embraces
setting clear objectives and ensuring the alignment of risk systems and programs with other insti-
tutional processes and activities—appears to be not a matter of choice but of uncontested necessity.
Hence, institutional strategies that focus not only on individual risks faced but on directions that are
mission-centered, and broad enough to capture issues of fundamental concern to the ongoing
success and goals of institutions (Tufano 2011) remain a matter of paramount significance and
urgent importance to the private higher education sector.

Disclosure statement
No potential conflict of interest was reported by the authors.

ORCID
Wondwosen Tamrat http://orcid.org/0000-0002-2688-8744

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