The Future of Higher Education in SA

Higher education is important for growing South Africa’s economic capability, but the sector is facing serious challenges, especially in relation to declining budgets. The state subsidy has declined in real terms while students are demanding more access to education. To understand the extent of the funding crisis, we hosted a CEO engagement with Sizwe Nxasana, Chairman of National Student Financial Aid Scheme (NSFAS) and the Vice-Chancellors (VCs) of the four Western Cape universities to discuss The Future of Higher Education in SA.

Sizwe opened the session and shared his insights about the current issues with the NSFAS model, the aims of the new funding model, IKUSASA Student Financial Aid Programme (ISFAP), and the role of the Ministerial Task Team to make higher education accessible for the poor and “missing middle” students. Sizwe joined NSFAS in 2015 and found a few areas of concern. Firstly, while NSFAS funds 400 000 students costing R13 billion annually, the drop-out rate is 45% – 63% which is exceptionally high. For students who pass a minimum number of modules during first and second year, 40% of the loan they received is converted to a bursary. However, students are still under-funded and set up for failure, often dropping out with a loan for a qualification they never received. Secondly, the NSFAS model does not take into consideration the field of study of the student and only looks at a household income of less than R120 000 p/a. Thus some degrees might not be in demand and don’t help with employment and addressing South Africa’s skills shortage.

Sizwe highlighted the important role of the private sector in student funding and thanked Allan Gray and Old Mutual for their support of the Ministerial Task Team and the pilot model, which is currently running at a few universities. By working through SAICA and with the expertise of the private sector with firms such as KPMG, the pilot looks at the new ISFAP funding model and how to get qualified students to address our skills shortage. To address the high drop-out rates, Sizwe believes that poor students should be allocated a grant, and the “missing middle” get a combination of grants and loans to ensure that they are properly funded and improved pass rates.

Looking to the future of higher education in SA, Sizwe said that legislative changes will need to be made to incentivise the private sector and create a sustainable funding pool using a PPP model. He said  that the private sector role is important as the fiscal capacity of the country is simply not enough to deal with the demand for higher education. The Ministerial Task Team, together with the dti, have agreed that the revised B-BBEE codes will have a specific category and target for funding students at university and TVET colleges. Sizwe shared that if a company would like to obtain additional B-BBEE points, up to 2,5% of its payroll may be allocated towards skills development, under the new category.

The session concluded with a lively panel discussion where the VCs shared their thoughts on the state of higher education in SA. Prof Tyrone Pretorius Vice-Chancellor, University of the Western Cape, said that he believes the role of the private sector runs deeper than funding. He said that business has a key part to play in changing the societal mindset that success is determined by a Bachelor’s or Master’s degree and TVET colleges are substandard, especially in a developing country such as SA where we desperately need artisans and skilled workers. Dr Chris Nhlapo Deputy Vice-Chancellor, Cape Peninsula University of Technology (CPUT), shared that CPUT is home to several successful technologies. He said that with respect to innovation and research, a university such as CPUT would greatly benefit from the insights of private sector partners.

Prof Loretta Feris, Deputy Vice-Chancellor, University of Cape Town, said that the ISFAP model offers a holistic solution, and has the potential to be successful as it provides students with more than tuition, books and accommodation. ISFAP will provide students with a support system that will help them navigate university life and gearing them towards academic success. Prof Wim de Villiers Vice-Chancellor, Stellenbosch University, said that he believes business should view student funding as a crucial and strategic part of investing in our youth and the future of SA.

The evening ended with consensus amongst the private sector and VCs alike that regular senior level business engagements, such as the CEO dinner hosted by Accelerate Cape Town, continues to create meaningful change with respect to higher education in SA.


IKUSASA Student Financial Aid Programme (ISFAP) – Sizwe Nxasana, Chairman NSFAS

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