Those who will be hit hard include deep-pocketed local and foreign investment firms that have ecstatically sunk billions into prestigious schools and branded hostels that were turning into the new gold mines.
Also to be affected are publishers and stores which depend on the sales of textbooks.
Investors who have put their money into prestigious schools, furnishing them with some of the finest facilities and highly qualified teachers and non-teaching staff, have charged parents high fees running into millions per semester to recoup their investments.
However, with the government declaring that there will be no learning until the start of next year, most of them will just be counting losses.
This development comes at a time investment in private schools has experienced a flurry of activities including mergers and acquisitions.
Centum Investments, listed at the Nairobi Securities Exchange (NSE), is one of the high-flying companies that waded into private school education, with its Sabis International School in Runda welcoming its first batch of 100 students in September 2018.
In the same year, AdvTech Group, a South African company listed at the Johannesburg Stock Exchange, teamed up with Scholé and Caerus Capital to form a consortium which bought out the Okelo family from the Makini Schools in Nairobi and Kisumu.
This acquisition was to mark the start of a five-year expansion strategy by the group in the East African region. The company did not reveal how much it spent to acquire 70 per cent stake in Makini Schools. Barely two years after the deal was signed, the glorious march in the region seemed to have been halted.
Tatu City, a 5000-acre mixed-use development, is also turning into a new melting pot for everything nice for the super-rich, including expensive international schools. Money has recently flowed into the budding smart city from South Africa and Dubai for construction of schools.
Advtech group also unveiled Crawford International School in Tatu City in 2018. Crawford International School Nairobi has a capacity for 1,700 students.
Also in Tatu City is South Africa’s Nova Pioneer with primary and secondary schools. Nova Pioneer is also in Athi River and Eldoret.
Private equity firm AfricInvest sold Brookhouse School to UK-based PE fund Educas for Sh3.6 billion in 2015, making it one of the biggest transactions in Kenya’s high-end education sector.
Brookhouse Schools then opened a new branch in Runda in 2017.
Last year, private equity firm Fanisi Capital also signed an agreement to sell Hillcrest International Schools, formerly owned by the late multiparty politician Kenneth Matiba, to Dubai-based GEMS Education for Sh2.6 billion.
For some of these schools, like International School of Kenya, fees can be as high as Sh3 million annually.
Virtually all of these fees, unfortunately, will not be flowing in the next eight months, a situation that might cripple some of the investors who had taken loans to venture into these businesses.
Peter Ndoro, the CEO of Kenya Private Schools Association, says there will be nothing but losses this year, and probably the next as well.
As a result, private schools, which he estimates employs close to 300,000 teaching and non-teaching staff, have either been laid off or sent on unpaid leave.
He also estimates that every two weeks after the school open, close to Sh30 billion get pumped into the economy.
“Those schools which opened in 2013 will find it difficult to operate yet they had invested a lot of capital,” said Ndoro, noting that because there is no cashflow it will be difficult for some of the schools to get loans against their emaciated books.
There are 90,400 private primary and 1,600 private secondary schools.
But with the purchasing power of most parents devastated by the pandemic, the future might be even bleaker for private schools.
“Most parents might consider sending their children to public schools as their purchasing power has been affected by Covid-19,” said Ndoro.
Earlier, the owner of Brookhouse disagreed with parents who wanted the fees reduced by half in compliance with a court order.
But it is not just the learning facilities that will be affected, there is also the publishing industry which will suffer, at least for the next two years, according to Lawrence Njagi, chairperson for Kenya Publishers Association. The association has 110 members who control 90 per cent of the market.
Mr Njagi said the revenues for the publishing industry add up to between Sh40 and Sh50 billion in a year, which means that the industry might lose close to Sh100 billion as children, who will repeat classes, will not buy books next year.
Njagi estimates that the entire book publishing chain, from publishing, printing and book stores, employs close to 500,000 people.
And then there is also the issue of brand hostels, some like those for Acorn Holdings, Qwetu. Acorn, with loan from UK’s Helios and the World Bank’s private wing, spent at least Sh5 billion on the branded hostels in Nairobi.
However, with Covid-19, the hostels were closed, but Acorn says they were opened after complying with the Government’s health and safety protocol.
A student who used to stay at one of the hostels, and who did not want their name revealed fearing recriminations, told The Standard that they were asked to come back and pay half price for their stay.
“For those who are stranded (outside of Nairobi during lockdown that has since been lifted) but would like to retain their current rooms worry not, you need only pay 50 per cent of the rent due for July and August but normal rent payments resumes in September,” said the management of the hostels to the resident students.
Patricia Wambua, Acorn’s communications manager, said they do not expect a significant impact on their business as they only closed for three months to put in place the authorised public health protocols in all residences.
“Following an audit by Public Health officials, all our residences were found to be compliant with the protocols, and therefore recommended for occupancy,” said Wambua.
She said many students are returning because they do not have the infrastructure to study virtually from home such as Wi-Fi and power etc; a conducive environment at home and also because they want their independence and space from parents.
Billions that were ecstatically sunk into education are dead capital after the government, in its fight against Covid-19, pronounced 2020 a lost year and asked students to resume learning next year.
With students at home for close to 10 months between March when President Uhuru Kenyatta directed all schools to be closed and December, investments worth billions will not be earning interest as parents clam up with the fees.