Link it to BEE scores
If a link to university funding could be directly incorporated into BEE scorecards, the funding shortfall could be reduced
Recent student protests against university fee hikes have brought the SA tertiary education sector to a grinding halt, with the suspension of lectures and final examinations. The demonstrations started at Wits University and quickly spread throughout the country as management and students deadlocked on the way forward. Students cited unaffordable fees as a barrier to tertiary education; the universities highlighted finite funding from government as a constraint.
Government then announced there would be no fee increases for 2016. But this is a short-term solution for a long-term problem as the funding gap will only be larger in 2017.
The more relevant question is whether there is a way to provide affordable world-class education to all without a lot more government funding.
The debates have largely centred on the quantum of the fee increase, which does not address the core issues. Some have suggested increased taxation or a decline in government salaries to fund the gap — both of which would prove as unpopular as the fee increases and are highly unlikely.
The crux of the issue is access to tertiary education at a reasonable cost. In an ideal world, qualifying students should have access to world-class education without being overburdened by excessive costs. University management should be focused on providing the best education and should be measured in terms of their output. This is critical to SA’s long-term success, as well as government’s broad-based black economic empowerment (BEE) initiatives.
High-quality education is the cornerstone of any success story and the primary objective of any education system should be to match the innate talents of individuals from as early on as possible to their vocation.
The Malaysian economic empowerment model, on which SA’s policies were originally based, has shown that a critical success factor has been providing jobs to adequately qualified previously disadvantaged locals and integrating them into the formal economy. If SA is unable to do this then its BEE policies are unlikely to be successful.
The output of the tertiary education system is therefore the litmus test and a sign of things to come.
Wits has about 30 000 students who are charged an average of R40 000/year in tuition fees. This equates to an annual funding requirement of R1,2bn from the students. If student fees were to be capped at R10 000/year, a 75% reduction, the additional funding required would be about R1bn — hardly significant to ensure 30 000 graduates enter the economy.
The market capitalisation of all the companies on the JSE is about R10 trillion and 0,1% of this sum equates to R10bn, or roughly 1% of net profit. This is in line with what companies spend on enterprise development and other BEE initiatives.
So what options are available to fund the above shortfall of R1bn? Companies receive points for enterprise development spend as well as various other items on the BEE scorecard. If a link to university funding could be directly incorporated into BEE scorecards because of its priority, the funding shortfall could be reduced. Universities would parcel this R1bn debt into smaller denominations via a divisible note which would be offered for sale to companies. In exchange companies would obtain enterprise development and BEE points and this would neatly solve the problems of both parties.
There is money available which could be channelled into the most optimal use to achieve the objectives of BEE, students, government and companies. The percentage funded and allocations could be amended for desired outcomes and available resources, but the allocation method would remain the same. Students with higher marks could obtain larger discounts and universities with better outputs could get more funding as the needs dictated.