Market Penetration Challenges for Edtechs in MENA

Emerging Technologies and Edtech April 28, 2022

Edtech startups must often simultaneously employ both a B2C and a B2B business model in order to capture market share and propel their growth. In the education sector, the B2B approach is likely to take the form of B2G, given that governments (and semi-government entities) are, in most markets, the largest operator in education (i.e. the public education systems), which in turn makes them the largest client for educational services companies.

For edtech ventures operating across the Middle East and North Africa (MENA), penetrating the market using both a B2C and B2G strategy is especially critical to long-term sustainable growth. This is the case in MENA for two reasons: 1) in MENA, governments constitute a disproportionately large portion of investments in education compared to other regions; 2) the highly fragmented consumer market (comprising a young demographic) presents a significant opportunity for edtechs to attain early adoption and prove credibility.

Over the past seven years, we’ve expanded CODED across several markets in MENA, employing both B2C and B2G market penetration strategies for different products. In doing so, we faced challenges that taught us the importance of considering some of the nuanced dynamics and challenges that could adversely affect an edtech startup’s ability to capture market share in MENA.

Market Challenges: B2C 

Firstly, the lack of ubiquitous online “payment mechanisms” can pose a significant hurdle for growing monetization across different countries. Credit card penetration is still in the single digits in some parts of the Middle East, while including a local debit card payment option often requires setting up a local legal entity, which adds significant overhead and cost, especially for early stage startups. There are a few fintechs working on solving this problem in MENA, but a clear solution is yet to exist. Being prepared financially and strategically to take on this challenge can be the difference between growth and stagnation. 

Alternatively, startups can choose to partner with a local business to accept local payment methods (thereby circumventing the lengthy legalities), or introduce mobile in-app purchases through Google and Apple’s payment mechanisms (which are made available in a variety of ways to customers in MENA). However, when considering both of these strategies, the associated cost (such as Apple and Google’s 30% cut) must be taken into account.

Secondly, it is important to pay attention to the nuanced “learning culture” within sub-regions in MENA. For example, one aspect of learning culture that is often overlooked is the importance of receiving content in the local dialect. Having the foresight and flexibility to produce content (whether written or otherwise) and creating a product that caters to different learning cultures in MENA can be a major propellant of expansion and adoption across the entire region.

For example, when creating educational content for our online platform,, we initially produced all of our video content in the formal Arabic dialect (fus’ha). Upon receiving feedback from users, we realized the importance of further tailoring our content to not just the local dialect, but local culture as well. This led to a change in strategy, whereby we focused on producing educational videos and content that spoke to the challenges, needs, and aspirations of different geographical subsects of our audience, instead of utilizing a one-size-fits-all approach.

Market Challenges: B2G 

First, edtech firms often have a misconception that governments in MENA (especially in the Gulf) are the direct financiers of most major public (or even government-backed) educational initiatives and investments, and as such the budget for education is relatively high. However, this is often not the case. Private companies are increasingly called upon to finance educational initiatives as a mandate for reinvesting into the economy. This can take the shape of sponsorships, partnerships, or direct financial backing. In these cases, budgets are often allocated under the Corporate Social Responsibility umbrella, which, naturally, is not as large as governmental educational budgets. Therefore, it is critical for edtechs building their projections on perceived government financing to more specifically assess how governments in each country have historically allocated and sourced budgets for investments in education.

Further to this point, governments in the Gulf might rely on semi-governmental entities under their purview to execute partnerships with educational services companies to circumvent the bureaucracy and restrictions within the government itself. Critically, these entities are likely to operate as private sector players, keeping a close eye on the bottom line, return on investment, and strict budgets financed by partners and sponsors. These dynamics often result in a far more apprehensive approach to contracting edtech startups with an innovative yet relatively unproven value proposition.

Secondly, for edtech looking to introduce their product or content to the public education system, the challenge of working with ministries of education can be especially difficult to surmount. In MENA, ministries of education are highly risk averse and bureaucratic, relying on the aforementioned semi-government entities to take the risk of piloting a new concept. Therefore, it can be draining and counterproductive for edtechs to focus their energy on trying to persuade the ministry directly to run a pilot, let alone execute a widespread rollout. A more effective approach would be to design a pilot for private or semi-governmental entities that work alongside the public sector.

At CODED, we had always had our eyes set on working with the governments in the Gulf, especially in Kuwait (where we’re based). However, for the first four years, our efforts yielded no substantial results. In 2019, we turned our attention to working with KFAS (the Kuwait Foundation for the Advancement of Science), which operated in the aforementioned mold of semi-governmental entities. KFAS was willing to pilot innovative educational products and programs (such as the ones we proposed), which gave us the chance to indirectly prove our credibility to the government. We worked with KFAS to roll out nationwide programs that eventually caught the attention of leadership in the Kuwaiti government, which helped us land direct engagements with different ministries. Our work with KFAS put us on the proverbial map,  propelling us to not only secure opportunities in Kuwait, but also regionally with the Ministry of Labor in Bahrain (through “Tamkeen”) and different semi-governmental entities in KSA. 

The MENA market poses an attractive opportunity for edtechs starting within the region itself or international players looking to expand their footprint. In both cases, understanding the nuanced dynamics and challenges of the B2B and B2G models in MENA is critical to unlocking the region’s market potential.