The recent regulation 194/2017 by the Addis Ababa City Administration to regulate private school tuition fees has reignited a familiar debate. While the intention of protecting parents from abrupt and often unjustified school fee increases is valid and timely. But the deeper issue remains: can such short-term interventions resolve the long-standing structural challenges in Ethiopia’s private education sector?

More than 1,200 private schools in Addis Ababa were reportedly planning to raise fees this academic year alone. It’s a recurring cycle every few years, tuition spikes, triggering public outrage and emergency regulatory action. Yet, beneath this surface lie deeper, systemic problems. From regulatory agency and Addis Ababa private schools Employers association data shows that close to 72% of private schools in Addis Ababa operate in rented buildings, which is the building construct not for schools firsthand and not much comfortable to meet standard for school and constantly exposed to escalating rental costs. Despite these challenges, private schools still serve nearly 70% of the city’s student population coverage. This shows both the massive contribution of private schools and the vulnerability of the system.

At the heart of the matter is the fact that Education is not a commodity, it’s a public good and a human right. Ethiopia’s Constitution (Article 41) and the UN Convention on the Rights of the Child (Article 28) affirm every child’s right to quality education, not just for those who can afford it. In a country where many still lack basic literacy, education must be seen as a public mission with private support, not a business venture. Private schools are not just service providers; they are nation-builders. They shape minds, values, and futures. Their work has to be transformational, not transactional and the policy must reflect that.

The current model, however, does not reflect this social responsibility. Ethiopia’s legal and policy framework treats private education largely as a commercial activity. From tax office to ministry of trade, from land management to custom authority the eco system define the sector purely as trade. As a result, private schools operate with a business mindset, driven by short-term returns rather than long-term investment in quality, equity, and impact. It is no surprise then, that whenever cost pressures arise, due to inflation, currency volatility, or real estate hikes schools react by raising tuition fees. And in the absence of a clearly defined legal identity for mission-driven educational institutions, regulators have no tool other than temporary fee caps.

But fee caps, while helpful in the short term, can also produce unintended consequences. Quality may decline. School infrastructure may suffer. Staff wages may stagnate. Some schools may even exit the sector entirely, making the problem worse. This is not sustainable.

In addition, the government’s new regulation does more than simply impose a tuition ceiling, it promotes a negotiation-based model where parents and school administrators are encouraged to reach mutual agreement, potentially even below the set cap. The intention is to strike a fair balance between affordability for families and financial sustainability for schools and quality of education. However, in practice, these parent-school negotiation meetings often devolve into chaotic and unproductive debates. Several factors make it difficult to reach constructive agreements: the definition of “quality education” remains highly subjective, parents vary widely in economic capacity, and profit expectations from school owners lack clear limits. Moreover, the regulation freezes tuition fees for a three-year period, prompting some school owners to overestimate future costs to hedge against economic instability, especially given Ethiopia’s unpredictable inflation and currency conditions. This leads to inflated fee proposals and mistrust between stakeholders.

While the regulation introduces tuition level categories that aim to balance price and service quality, it does so without offering adequate legal or structural support. Simply assigning schools into tiers and imposing high standards without providing corresponding subsidies, land access, or tax relief in the legal umbrella of social enterprise structure ,can actually increase operational costs. In response, schools may tighten budgets, cut corners, or compromise on educational quality.

Achieving a true balance between affordability and quality remains deeply challenging. For this model to succeed, negotiation must be supported by clear policy frameworks and mutual accountability. Only then can schools and families find common ground, align on long-term goals, and maintain high standards without sacrificing sustainability.

How the New School Tier Framework Works And Where It Falls Short

The regulation introduces a tiers system, categorizing schools from 1 to 4 based on performance, infrastructure, and service standards:

Tier 1: Underperforming schools at risk of closure

Tier 2: Average-performing schools (majority of institutions)

Tier 3: Above average in both academic and infrastructural performance

Tier 4: High-standard institutions (only one school currently qualifies)

Depending on their rank and grade levels, schools can raise tuition within a regulated range of 40% to 65%. However, once a tuition increase is approved, the new rate is locked in for three years, limiting future adjustments, even in the face of rising costs.

Herein lies a major contradiction: Schools ranked 1 or 2 are under pressure to improve performance, but the financial tools they need to make improvements like upgrading facilities or hiring better teachers are restricted by the same policy. This creates what development economists call a “resource constraint trap”: the inability to invest reinforces underperformance and prevents progress. It’s like asking a small business to transform into a world-class operation, while capping its revenue, even when its customers are willing to pay more.

What Structural Reforms Are Needed for Sustainable Private Education in Ethiopia?

We need a new framework that recognizes education as a social enterprise. This means creating a legal category and support system for schools that balance financial sustainability with a public service mission without compromise quality education. Schools that commit to reinvesting profits, maintaining fee affordability, and delivering quality education should be supported through bold and courageous government policy decisions such as tax incentives, land access, and regulatory flexibility. Those seeking only commercial gain without community value can be held to stricter standards.

Unfortunately, this kind of reform has not yet taken root. For instance, In the last year and a half, Addis Ababa City Administration Land Development and Management Bureau allocated for lease over 2,000 land plots for development, yet only one plot was allocated for educational use. That’s a signal that the private education sector is not being prioritized in urban planning or city investment strategies. If we want schools to be stable and affordable, they need to be treated as critical social infrastructure, not afterthoughts.

Ethiopia can also look beyond its borders for inspiration. Kenya has successfully supported low-cost private schools through a social enterprise model. Chile has built a Public-Private Partnership (PPP) framework that subsidizes private education while holding providers accountable for outcomes. In countries like Bangladesh, South Korea, and the UK, blended models of education delivery have ensured that access, quality, and sustainability are not left at the mercy of market forces alone.

The Addis Ababa City Administration’s recent regulation is a welcome step toward reform, but it must be seen as the beginning—not the end—of systemic change. If we are serious about building a resilient, inclusive, and high-quality education system, we must shift from control to collaboration, and from short-term solutions to long-term frameworks that empower all stakeholders.

To summarize, in order to balance quality education with affordability and to make sustainable private education sector, the stakeholders need to address and make Policy led decisions  on the following  points:

• Establish a new legal and policy framework that recognizes education as a social enterprise, balancing financial sustainability with a commitment to public service.
• Incentivize socially responsible schools through tax benefits, preferential land access, and regulatory flexibility rewarding those that reinvest profits, maintain affordable fees, and uphold quality standards.
• Hold profit-driven schools accountable by imposing higher standards if they fail to deliver tangible community value.
• Integrate private schools into urban planning by treating them as vital social infrastructure, with access to long-term land leases at reduced or socially adjusted rates.
• Promote innovative models like Public-Private Partnerships (PPPs) and cooperative schools that broaden access and improve service delivery.
• Facilitate access to low-interest infrastructure loans to help schools invest in quality facilities and long-term growth.
• Provide shared public facilities: such as science labs, libraries, and sports grounds—for clusters of private schools to reduce costs and improve educational resources.
• Mobilize private sector support, especially from multinational companies, to invest in physical infrastructure, digital tools, and teacher training through structured collaboration.

To truly redefine the role of private education in Ethiopia, we must encourage responsible investment that prioritizes students, community benefit, and long-term impact. This requires a supportive and bold policy environment where private education is not only regulated, but recognized and strengthened as a cornerstone of national development. It’s time to break the vicious cycle in private education by putting in place smart incentives that not only attract investors, but keep the right ones committed for the long journey .By embracing this vision, Ethiopia can build a sustainable and equitable education system that prepares every child for a better future.

Desalegn Mekuria is Dean of Kibur College and can be reached via Desalegn@kibur.edu.et