Private higher education institutions are warning that tighter licensing rules, rising compliance costs and a mandatory profit-reinvestment requirement could weaken their financial sustainability, discourage investment and threaten the sector’s long-term viability.

Stakeholders say the growing regulatory burden is making it harder for private colleges to introduce new academic programmes, recruit qualified instructors, expand enrolment and invest in the infrastructure needed to improve educational quality.

The concerns centre on the Education and Training Authority’s Licensing and Re-Registration Directive No. 988/2024, which introduced stricter licensing requirements and quality standards for higher education institutions.

While stakeholders acknowledge the need to maintain academic standards and protect students, they argue that some requirements are difficult to meet within the prescribed timeframes and could constrain the sector’s growth.

Private institutions have called on the government, the Education and Training Authority and the Ministry of Education to review the regulatory framework, improve transparency and ensure that requirements are applied fairly to both public and private institutions.

The private higher education sector began developing in the late 1990s, following the adoption of the 1994 Education and Training Policy. Higher education proclamations issued in 2003 and 2009 helped establish the legal framework for private institutions and supported substantial expansion over the following two decades.

The sector has become an important provider of academic and professional training, helping expand access to higher education across the country. However, rapid growth also raised concerns about uneven educational quality.

In response, the federal government reorganised the former Higher Education Relevance and Quality Agency into the Education and Training Authority in 2022, giving it broader regulatory responsibilities.

Concerns over disparities between public and private institutions in staffing, research capacity and infrastructure contributed to tighter oversight, culminating in the 2024 licensing and re-registration directive.

The directive sets requirements intended to strengthen institutional accountability and improve educational standards. These include provisions on ownership or leasing of buildings used exclusively for educational purposes, teaching hospitals for health-related programmes, qualified academic staff and administrators, and minimum pass rates in national exit examinations.

Private institutions, however, say the combined effect of these requirements and existing financial and administrative obligations is placing considerable pressure on their operations.

One of the main points of contention is Article 4(36) of Directive No. 988/2024, which requires private institutions to reinvest at least 25 per cent of their net income generated from the education sector into educational improvement.

Habtamu Teka, President of Harambee University and a member of the Ethiopian Private Higher Education and Technical and Vocational Education and Training Institutions Association, said the requirement could further restrict resources available for institutional development.

While acknowledging that reinvestment can improve educational quality, Teka argued that the mandatory allocation adds to the financial pressure on institutions already facing high operating costs and rising compliance expenses.

Private colleges must continually invest in campus facilities, laboratories, teaching equipment and qualified academic staff. Establishing new campuses or introducing additional programmes also requires substantial upfront investment.

Stakeholders warn that imposing a fixed reinvestment requirement without accounting for differences in institutional capacity and operating costs could limit colleges’ ability to finance expansion and respond to changing educational needs.

Restrictions on instructors working across multiple institutions have also emerged as a major concern.

Private colleges say limitations on employing academic staff who teach at more than one institution make it harder to recruit experienced professionals, particularly in specialised fields where qualified instructors are already scarce.

Industry representatives have called for greater flexibility in interpreting and enforcing legal provisions governing academic employment, including those under Proclamation No. 1152/2019.

They argue that allowing qualified instructors to work across institutions under clearly defined conditions could help address staffing shortages while maintaining academic standards.

Stakeholders have also questioned a reported requirement for institutions to deposit 500,000 birr for academic credential verification.

Teka argued that regulatory fees should be reasonable, transparent and proportionate to the services provided, warning that additional charges could further increase the financial burden on private institutions.

The association has called for greater clarity regarding the purpose, administration and justification of the payments.

Restrictions on opening programmes in certain fields, including law and education, have raised further concerns among private higher education providers.

Stakeholders argue that limitations on introducing new programmes, combined with reported requirements for a minimum distance of 500 metres between campuses, could constrain institutional expansion and limit access to higher education.

They say such restrictions may prevent institutions from responding effectively to labour-market demand and emerging skills requirements.

Without the ability to expand enrolment, diversify academic offerings or establish additional campuses, institutions could struggle to generate sufficient revenue to cover rising operating expenses and meet increasingly demanding regulatory standards.

The Ethiopian Private Higher Education and Technical and Vocational Education and Training Institutions Association has submitted a list of concerns to the government, the Education and Training Authority and the Ministry of Education, calling for a review of the regulatory framework.

The association is seeking clearer implementation procedures, greater transparency and more consistent treatment of public and private institutions.

Molla Tsegaye, President of Admas University and President of the association, told Capital that directives issued by the regulatory authority had become a major bottleneck for private higher education institutions.

The concerns were also discussed at a recent forum titled Private Higher Education in Ethiopia: Contributions, Challenges and Prospects, which examined the sector’s contributions, regulatory challenges and future prospects.

Participants acknowledged that effective regulation is essential to maintaining academic standards and protecting students. However, they argued that regulatory measures should also support institutional development, encourage investment and enable private providers to contribute more effectively to expanding access to education.

They called for constructive engagement between the government and private institutions to ensure that quality-assurance requirements remain achievable and proportionate to the sector’s financial and operational realities.

The Education and Training Authority said it had taken the issues raised by stakeholders into consideration and would assess possible adjustments following consultations.

Tamiru Mesfen, Head of the Authority’s Office, said the concerns raised by private institutions were being evaluated alongside the existing legal framework, including Proclamation No. 1152/2019.

“Taking the questions raised from the sector into account, we are closely evaluating the necessary adjustments and will communicate decisions in due course,” he said.

However, no substantive decisions addressing the disputed requirements had been announced at the time of reporting.

Meanwhile, the Authority has taken action against institutions that failed to submit required materials within prescribed deadlines, underscoring its continued enforcement of the regulatory framework.