With the department of basic education’s budget for 2024-25 set at R32.3 billion, and with strategic priorities including improved outcomes and access, an opportunity exists for edtech companies to become key players in the education landscape.
Most students and educational institutions struggle to afford education technology, and many edtech companies rely on donor funding, which presents sustainability issues when it is discontinued. Without the ability to earn directly from end-users (students), who often use freemium subscriptions, companies find it difficult to build sustainable revenue models.
For both basic and tertiary education edtech service providers, the government should be the primary customer. With the department of basic education’s budget for 2024-25 set at R32.3 billion, and with strategic priorities including improved outcomes and access, an opportunity exists for edtech companies to become key players in the education landscape. If 5% to 10% of the government’s education budget were allocated to edtech solutions, the industry could capture nearly 40% of its projected earnings from 2024 to 2029. For this to happen, edtech providers need to interact regularly with the departments of basic education and higher education and training. These conversations should focus on identifying priority areas where edtech can be most effective, including improved learning quality, pass rates and longer-term outcomes such as employability and workforce readiness.
Currently edtech companies are not working with the government as actively as they should to foster more buy-in from this critical stakeholder on edtech being further adopted across the sector (including tangible results in terms of outcomes and effectiveness). Closing this gap will be essential to unlocking revenue streams through government contracts and long-term partnerships, enabling companies to move beyond short-term donor funding and towards sustainable profitability.
A shift towards outcome-based business models will be key to the long-term success of South African edtech firms. From a viability standpoint, these companies need to build solutions that address specific, measurable educational outcomes. Prioritised outcomes could include improved school attendance, better academic performance across core and non-core subjects, higher public examination pass rates, smoother university enrollment, reduced university study completion times, and better integration into the workforce. By directly addressing these areas, edtech companies can demonstrate clear value to governments and educational institutions.
To build outcomes-based solutions and business models, collaboration with key stakeholders will be necessary to ensure that edtech solutions are fit for purpose. Aligning content and platforms with the national curriculum and institutional needs will not only improve the effectiveness of these tools but also justify a reasonable price for the services provided. Governments and academic institutions are more likely to invest in solutions that clearly contribute to their own strategic priorities, such as increasing graduation rates and workforce preparedness.
Last, a modular approach to solution development is advisable, where solutions can be scaled based on their performance and user engagement. This strategy allows edtech companies to refine their offerings and achieve economies of scale, improving financial sustainability while delivering better educational outcomes.
One of the main shortcomings of current edtech offerings is an overemphasis on theoretical knowledge rather than practical, real-world application. To improve educational outcomes, edtech companies should develop content that is practice-based, enabling students to apply what they learn in meaningful ways. Tools such as virtual simulations, augmented reality and artificial intelligence-driven tutoring offer opportunities to provide hands-on learning experiences in a digital environment. Practical learning solutions can also improve outcomes in subjects that traditionally require expensive resources like laboratory equipment or workshops (resources that are often unavailable, particularly in rural schools).
Moreover, the integration of practical learning solutions in edtech platforms can help narrow the gap between education and employability. When developing their solutions, edtech providers should prioritise content that bridges the gap between theory and practice, ultimately improving both educational and employment outcomes.
One of the most significant challenges to edtech adoption in South Africa is the financial barrier. Many students, especially from disadvantaged backgrounds, simply cannot afford to pay for online education tools. To address this, edtech companies need to rethink their financial models by targeting government and educational institutions as primary customers, with students benefiting from free or subsidised access.
In this model, governments and institutions such as universities or vocational training centres would purchase access to edtech platforms on behalf of their students. This approach removes the financial burden from students, allowing them to benefit from high-quality educational resources without cost being a barrier. It also provides a sustainable revenue stream for edtech companies through long-term contracts and institutional agreements, reducing reliance on donor funding. Governments, recognising the strategic value of edtech in achieving educational outcomes, could allocate a portion of their education budgets to invest in these platforms.
Institutions could also pursue public-private-partnerships to co-fund the development and deployment of digital education tools that meet both academic and industry needs. Such partnerships would not only ensure the long-term viability of edtech companies but also enable the development of tailored solutions that deliver real, measurable impact on educational outcomes. Moreover, development finance institutions and philanthropic organisations focused on educational reform could also play a role in scaling edtech platforms with proven social impact.
Such approaches could support edtech companies to overcome their current barriers to adoption and profitability.
James Maposa is the managing director of Birguid.