The Kazakh government has typically paid a very active role in the organization and governance of higher education in the country. Over time the particular policy instruments du jour have changed depending on the main aim being pursued by the state. Of late, there has been an uptick in the number of university mergers as well as the (pseudo-)privatization of the many state funded universities and specialized institutes.
In the most recent round of reorganization in October 2019, 25 universities have been affected. The top-down directive switches their status from ‘republican state enterprise*’ (i.e. state funded) to ‘non-profit joint stock company’. This isn’t quite an act of privatization as the new status transfers all shares in the new company to the Ministry of Education and Science!
This status of non-profit joint stock company (NPJSC) is unusual: joint stock companies tend to be profit-making, which make sense given their ability to make the company’s stocks available to buy and sell. According to the Kazakhstani Law on Non-Profit Organizations (2001), a non-profit organization may be created as a joint stock company or in several other formats (e.g. religious association, public association, foundation).
NPJSCs are described in article 16 of the law as ‘a legal entity that issues shares with the aim of attracting funds to conduct its activities whose income used exclusively for the development of this company’. It may not issue preference shares, derivative and converted securities and it cannot later become a profit-making organization.
The economic aim of the status change appears to be to move the burden of funding these universities away from the state, although if as suggested the only shareholder so far is the Ministry of Education, this must be a long-term goal. It appears there is a secondary (also longer term) mission to diversify ownership of these universities through the transition to a shareholding organization, but without the ability to make profit from the shares, it’s not clear to me which individuals or companies might like to part-own a university.
The October reorganization also envisages the merger of a number of universities – Taraz State Pedagogical University is to be brought together with Taraz State University to become Taraz Regional University; the same fate awaits the State and State Pedagogical universities of Kostanay. In addition, various so-called ‘daughter state enterprises’ – research institutes and laboratories – of the Al-Farabi National University are to be folded into the university.
As usual, it’s a blur of activity in Kazakhstan, with the latest changes reflecting the state’s continued interest in higher education and its creativity in applying new legal and organizational statuses to universities. For more background, check out other posts I’ve written on this topic at Universities for sale in Kazakhstan, Privatizing Kazakhstan’s universities, Mergers and acquisitions in Kazakhstan’s universities and I’d close some universities if I could – Kazakh Ambassador to Canada.
*In Russian, this is республиканское государственное предприятие на праве хозяйственного ведения, often shortened to РГП на ПХВ which translates more specifically as ‘republican state enterprise on the right of economic management’ – can any legal experts out there help explain this in lay terms?
The latest wave of privatization in higher education in Kazakhstan is well underway, with news this week that four higher education institutions (HEIs) are up for sale[ru]. The range of offerings is quite diverse – as are the starting prices – so there’s sure to be something to suit all tastes.
Take your pick from:
- Kazakh Ablai Khan University of International Relations and World Languages [en/kz/ru], a well-known and quite prestigious humanities and social sciences university based in former capital Almaty. Bids start at US4.5m and must also guarantee to make an additional $200,000 available for investment.
- Baikonurov Zheskazganskiy University [kz/ru], located in central Kazakhstan and started life as a single faculty offering evening classes at Karaganda Polytechnic, expanded to offering daytime courses a decade later in the 1970s, becoming a standalone institute in 1992 and a university in 1996. It is being offered for a starting price of US$889,000
- Kazakh Leading Academy of Architecture and Civil Engineering [en/kz/ru], based in Almaty, which leads the pack with a starting price of US6.6m
- Almaty University of Power Engineering and Telecommunications [en/kz/ru] – founded as the Almaty Energy Institute in 1975 and upgraded to university status in 1997 and offering specialized courses starting at high school and continuing through PhD. Starting price US$3.7m
Also up for grabs is the Republican School of Advanced Sports Skills in Water and Applied Sports [ru/kz] (really, that is an actual school) with a starting price of US$875,000.
Bids are being accepted until March 7 and are to be submitted by ‘closed electronic envelope’.
For more on the background to Kazakhstan’s privatization drive, check out my post from August 2018.
In an interview with Gazeta.uz [ru] published on 18 September, Uzbek Deputy Prime Minister Aziz Abdukhakimov offers some insights into higher education reforms in the country. The list is impressively long, indicative of broader reform trends taking place across government and in society as a whole.
In higher education, I’ve already flagged Uzbekistan’s growing interest in cooperation with neighbour and former arch-enemy Tajikistan, the release of the first national university ranking and the role of higher education in the country’s international relations.
Now let’s add to those efforts the reforms described by Abdukhakimov earlier this week:
- Autonomy – there’s a proposal for Rectors (Vice-Chancellors) to be elected by faculty under an open vote. This makes the state one step further away, and the open voting is intended to avoid the possiblity of what Abdukhakimov calls ‘clan politics’ entering the higher education system. However, Abdukhakimov notes that the state will retain the right to veto the choice of Rector in state universities, so let’s not get carried away with too many ideas about academic freedom and the like;
- Decentralization – universities are to bring in their own managers to deal with finance and local administration, and should establish governing bodies (usually called boards of trustees in former Soviet systems) to oversee their affairs;
- Expansion – universities will be allowed to recruit more students (within the limit of the number of faculty they have and capacity of their facilities – classrooms, dormitories etc) and offer a wider range of course ‘in order to respond to the demands of the market more flexibly’;
- Income – connected to the point on expansion above, universities will be able to admit students who did not achieve the required admissions test score by charging them tuition at between 1,5 and 3 times the amount of the regular fee. Whilst Abdukhakimov does not encourage universities to admit students who did not meet the requirements [ru], it’s hard to see how the prospect of extra income that these ‘super-contract’ [ru] students will bring with them will deter HEIs;
- Privatization – the legal system will recognize private higher education institutes (HEIs) and the government is planning tax breaks and other incentives to encourage more such HEIs to open. The government also wants to encourage more public-private partnership HEIs e.g. by offering state-owned buildings for privately run use;
- Internationalization – the country wants more international students and has ambitions – rather like Kazakhstan – to become a regional education hub. Abdukhakimov asserts that these international students will then return home to be brand ambassadors for Uzbekistan, ‘which is very advantageous for the country’s image’;
- Choice – new admissions processes will be introduced allowing prospective students to apply earlier and to more HEIs than the current system permits;
- Access – the state will fund a small number of students from disdvantaged or rural backgrounds to attend privately run universities (a grant system already exists in publicly funded HEIs). Former military personnel will be able to get funding from a specific grant scheme rather than applying to the main grant pot;
- Commercialization – the state is going to invest in 80 HEIs and provide free places so that they can turn into what Abdukhakimov calls ‘Universities 3.0’. Beyond teaching and research (as making up 1.0 and 2.0 if you want to think about it like that), these HEIs will emphasize the commercialization of knowledge – so I’m imagining the government is thinking of US models like Stanford or MIT that has many highly successful spin-off companies and opportunities for students to be involved in social and business entrepreneurship.
The interview is followed by a fairly lively discussion which mainly focusses on the financial aspects. The idea of ‘super-contracts’ [ru] is new and is quite clever if you think about it from the government’s point of view. By legitimizing practices they know are already happening (I too have heard about this in other universities in neighbouring countries – e.g. you pay a ‘double contract’ – two years’ fees – for the first year of study if you didn’t quite make the grade), the state gets to take the credit for giving HEIs more flexibility and income, all the while arguing that this low stakes because if the students aren’t smart enough to make the admissions cut-off, they’ll probably drop out – but not before paying at least a year’s worth of fees. But on the other hand, as one commentator suggests: “The name ‘super-contract’ makes it sound like an achievement, but really it’s just a straight path into university for rich idiots’.
There’s an awful lot to digest in this short summary of the Uzbekistan government’s plans, and it’s an exciting time for those of us (OK, for me!) interested in how higher education is changing in the Central Asia region. Almost all of what Abdukhakimov is proposing puts Uzbekistan squarely in the growing group of nations seeking to conform to what they see as ‘global best practices’ in higher education, which basically means attempting to emulate the US research university system and neoliberal funding models where higher education is seen as primarily a private good.
Many of the ideas for reform are also underway in neighbouring countries, although as far as I know, the ‘super-contract’ is unique to Uzbekistan. I’m planning to discuss the prospects for regional integration in the Central Asian higher education systems in a future blog post, and something I will consider there is the extent to which the convergence on the type of reforms being pursued helps or hinders those prospects.
There’s much more to say about the direction Uzbekistan is choosing to travel in when it comes to higher education, but that’s enough for today.
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.
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.
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.
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.