Kazakh-British Technical University

Privatizing Kazakhstan’s universities

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Kazakhstan has embraced private ownership of higher education and many other sectors since it became an independent state following the fall of the Soviet Union. This initially stemmed from the economic turmoil of the early and mid-1990s that led to a need to diversify what had once been a totally state owned and funded higher education system.

Privatization has led to the creation of new organizational statuses in higher education.

Kazakhstan may be the only country in the former Soviet space to have created the category of ‘joint stock company‘ covering higher education institutions (at least, it’s the only instance I’m aware of – please correct me if you know differently). This is, according to Ahn et al (2018):

a scheme where the Kazakhstani government shares ownership with other shareholders, which could be a private individual(s) or corporation. (p.208)

Joint stock companies have ‘the same legal status as privately owned businesses’, according to Hartley et al (2016, p.280). Just a handful of universities were created as joint stock companies to begin with, although an identifiable wave of privatization in the 2000s led to the conversion of some existing state universities into joint stock companies.

kbtu3
Kazakh-British Technical University’s main campus, the former Supreme Soviet of the Kazakh SSR

One of the country’s first joint stock company-universities was the Kazakh-British Technical University (KBTU), founded in 2000. KBTU makes a fascinating case study in and of itself, not least because of its initial links with then British Prime Minister Tony Blair and the recent debacle about its on-again off-again merger with Satbayev University (about which very little is publicly available so I am waiting to learn more from an inside source. See my April 2017 post for the “on-again” story).

So KBTU is a joint stock company-university, and here’s where it gets even more interesting. KazMunayGaz, an oil and gas company, currently owns 100% of the shares in the highly rated Kazakh-British Technical University (KBTU).

Yes, that’s right, petrol is fuelling degrees (sorry, couldn’t resist that one).

But the story doesn’t quite end there.

KazMunayGaz is not quite the sole proprietor of KBTU. It may own all the shares [ru], but KazMunayGaz itself is fully owned by the Samruk Kazyna Sovereign Wealth Fund, which in turn has just the one shareholder: the government.

So does that make KBTU a private or a public university? The answer is somewhere in between.

NB: Higher ed researchers take note: a new category is needed here!

Having not quite established what sort of higher education institution KBTU is – or is not – the next part of the story only complicates matters.

Earlier in August 2018, it was announced that KazMunayGaz will be selling all of its shares in KBTU.

This time, it seems, KBTU really is going private.

This is not a shock, as it formed part of the second wave of a government-led plan for privatization announced in 2015.

Nevertheless, the various news articles announcing the details of the share sale raise more than an eyebrow about the very fact that a cold hard value has been placed on education.

piles of cash
Ah, so that’s where I left that $30m

And, it seems, the cost of education is high: starting offers of US$31 million are expected to buy KBTU. Expressions of interest may be made until early November, at which point a bidding process will take place (these details included in case any of my blog readers ever felt like owning their own university and have some spare cash…).

The new owner is required to retain KBTU’s current profile i.e. range of academic specializations for at least 10 years, ensure that at least 50% of staff are Kazakh, promise to maintain student living conditions for the next five years, and retain use of the current buildings (including the iconic former Kazakh SSR Supreme Council in Almaty) for at least two years.

Further, the new owner may not re-sell or pass on its shares for at least two years and for the three years that follow may only do so with KazMunayGaz’s permission.

So KBTU is going private and it’s going to cost a helluva lot to buy it. And even once you’ve bought it, it’s not quite yours for a good decade, given the buying conditions.

I can’t wait to see who raids their piggy bank for this investment.

 

 

Reference

Ahn, Elise, John Dixon, and Larissa Chekmareva. 2018. “Looking at Kazakhstan’s Higher Education Landscape: From Transition to Transformation between 1920-2015.” In 25 Years of Transformations of Higher Education Systems in Post-Soviet Countries: Reform and Continuity, edited by Jeroen Huisman, Anna Smolentseva, and Isak D. Froumin, 199–227. Palgrave Studies in Global Higher Education. Palgrave Macmillan. www.palgrave.com/de/book/9783319529790.

 

Hartley, Matthew, Bryan Gopaul, Aida Sagintayeva, and Renata Apergenova. 2016. “Learning Autonomy: Higher Education Reform in Kazakhstan.” Higher Education 72 (3): 277–89. https://doi.org/10.1007/s10734-015-9953-z.

 

 

Mergers and acquisitions in Kazakhstan’s universities

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mergersIn an expected but still noteworthy move, the Kazakh-British Technical University (KBTU) in Almaty, Kazakhstan has now officially been merged with Satpayev Kazakh National Research Technical University (known by its Russian acronym as KazNITU). Announced in 2015, the merger is the brainchild of Kazakh President Nursultan Nazarbayev [ru] that aims to strengthen the engineering and technical specialties found in both institutions. To smooth the acquisition from the side of the junior partner (KBTU), the President has appointed Iskander Beisembetov – formerly Rector of KBTU – as the Rector of the newly enlarged institution.

Other than a short story covering the merger in Forbes Kazakhstan [ru] in April 2017, there is very little outward evidence of the change. The only mention I could find on the universities’ websites about the merger was a small link to KBTU’s website next to KazNITU’s on the latter’s homepage, and the story noted above from November 2016 about the appointment of the Rector.

Both institutions have interesting histories. KBTU was an early initiative of President Nazarbayev in higher education, being founded in 2000 by agreement with Tony Blair, then Prime Minister of the United Kingdom (as an aside, this helps set into perspective the longer-term working relationship maintained by the two leaders, which has been reported on rather incredulously from the West as if it was something more recent). KBTU has always been a specialist science and technology university and leads national rankings in these areas.

In contrast to KBTU’s positioning as being part of a ‘new generation’ of universities, KazNITU in its various iterations is one of the oldest higher education institutions in Kazakhstan, with a history dating back to 1934. Founded as the Kazakh Mining and Metallurgical Institute, it now has a mission much like KBTU’s, namely, to be a leading provider of high quality teaching and research specialising in technological education.

For the two institutions, it looks like – for the moment, at least – very little will change. But for the higher education system in Kazakhstan, this represents an important moment. Mergers reflect a change in the way institutions are governed and the context within which they operate. In the late 20th and early 21st centuries, mergers are often symbolic of a shift towards a managerial logic in higher education. Out are the old practices of academic collegiality and the pursuit of knowledge for its own sake (and at whatever cost), ushering in instead governance by tuition fee in a (pseudo-)market environment.

The good governance of universities is critical to their effective running, and there are doubtless cases where the introduction of new forms of governance (that may include mergers and acquisitions, as well as the closure of institutions) has helped universities and the system they operate in. Yet there are also concerns that the imposition of externally driven reorganizations may reduce institutional autonomy and differentiation or damage academic morale. And whether they improve the university’s core ‘business’ of teaching and research is, as well-known British higher education scholar Michael Shattock has argued, unproven.

 

Reference

Shattock, M. (2006). Managing good governance in higher education. Open University Press.