private universities

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.

 

 

University closures in Russia – will Central Asia follow?

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Although this blog focusses on Central Asia, every now and then something happens in the broader sphere of influence on Central Asia that merits being featured. As part of its drive to enhancing the quality of university education in Russia, University World News this week reports on news that the federal government has recently decided that fully 40% of all universities in the Russian Federation should be closed. Under its 2016-2020 education development plan, the government has planned a series of closures and mergers – which will mainly affect the many private universities that have sprung up since 1991 – with the intention of wiping out some of the poorer quality education that is largely found in these newer institutions.

The Kyrgyz government in particular may well be taking notes on this strategy. As I have previously reported, the President himself has taken an interest in the burgeoning number of institutions in the country and the related reports of deteriorating quality of provision. There are no fewer than 52 universities in this small country – population just under 6 million – of which around a third are private institutions (source: Tempus Kyrgyzstan). Some of these private institutions like the American University of Central Asia are not only legitimate but offer exceptionally good education, but there are certainly many others that, like Russian Minister of Education and Science Dmitry Livanov says, are merely “offices for the sale of certificates”.