DM: Are our universities in jeopardy without another fee increase?

Georg: Universities need to balance their budget like everyone else. Every year, they receive money from government subsidies, funding agencies like the NRF, and student fees. They spend this money on staff salaries — more on administrators than academics — and operating expenses such as electricity and building maintenance.

The big problem is the massive reduction in government subsidies to universities. Between 2000 and 2012, these subsidies shrank from almost 50% of universities’ budgets to about 40%. Student fees increased by 7% during the same time to compensate. This devastating trend continues. University expenses are bound to go up next year, because of inflation and the horrible performance of the rand. Estimates about the size of this automatic increase in expenses vary, but they will be somewhere above the consumer price inflation, perhaps at 8-10%. Estimates for this shortfall are around R4-billion for 2017.

This money needs to come from somewhere, or universities that cannot account for that shortfall by digging into their savings are in existential jeopardy. It might even be the case that classes cannot be held as scheduled. In the worst-case scenario, exams could not be taken, although I think universities will do everything to avoid this.

DM: So how do we achieve a solution? And when?

Georg: We need to do two things. First, we urgently need to address the funding shortfall for next year, otherwise university operations will be massively disrupted. Treasury convincingly argues that there is no money in the budget, but the reality of national budgets is that sufficient political pressure leads to a reprioritisation within the budget, and it’s possible to find an amount of R4-billion. It is difficult to get a sense of what the ANC wants at the moment. In the wake of their municipal election disaster, President Zuma announced a 0% fee increase, but remains mum on how this should be financed. We will see a decision soon. But without additional funding from National Treasury, a fee increase is inevitable, since universities need to cover their increased expenses.

The even bigger challenge is structural. Our population is continuously and rapidly growing. This means that in future, more students will want to go to university. And rightfully so. We desperately need highly qualified employees to close the skills gap in this segment of the labour market. But it puts additional pressure on our universities, who need to cope with the additional student numbers.

The question is not if we need additional funding in the future, but where it will come from. The government is dragging its feet for purely political reasons. For years now, ANC policy has been to enforce loyalty by keeping people dependent on the government instead of empowering them. […] It makes no economic sense whatsoever to cut university funding when we have a skills deficit that stifles our economy. We need to completely overhaul university funding and make sure that our top institutions stay internationally competitive. The mass of South African universities will need to deal with a significantly increased number of students, while guaranteeing sensible minimum standards.

DM: Can we afford free, quality higher education in SA?

Georg: I would say it’s the other way around: We cannot afford not to have free quality higher education. Not only to overcome the skills deficit that stifles our economy, but to ensure social cohesion. University fees in South Africa are too high for the mass of students from poor backgrounds. I had students in my class who told me that they couldn’t afford to eat three times a day because they need to save money. And others who have to work two jobs despite having a full scholarship because their brothers or sisters won’t be able to get a scholarship. Students simply cannot study like this. Fees will always exclude students from poor backgrounds, and there is a strong racial component to this exclusion. 

But students are fighting the wrong battle. Instead of fighting for 0% this year, students should fight for -100% every year. Otherwise we will have the same debate again next year, and the next. Nothing will change fundamentally. South Africa’s tax base, personal income tax, corporate tax, and value added tax, is at around R1,000-billion per year. To have free tertiary education, we would need an additional R40- to R50-billion per year, plus some additional money for new buildings (lecture theatres and student residences). So, effectively, we would need to re-allocate 5% of the budget. This is not a small number, but could easily be re-allocated if the political will were there. Alternatively, we could see a moderate tax increase for middle and high-incomes together with savings in other budget positions. Since students from middle and high-income families are the majority at our universities, these families benefit disproportionately from free quality education and should therefore shoulder the additional burden.

DM: It appears, at least anecdotally, that part of what is driving the anger regarding education and other issues of service delivery in South Africa is the perception that essential funding is being lost to corruption and mismanagement. Is this a fair assessment?

Georg: Universities in South Africa are by and large managed effectively. But there are cases where there has been mismanagement, in particular at rural-based universities. This is clearly a concern, but mismanagement at universities pales in comparison with mismanagement in government at large. December’s Nenegate saga cost us upwards of R2-billion, and continued and unfounded attacks by the Hawks on finance minister (Pravin) Gordhan costs us upwards of R1-billion due to increased government bond yields and higher-risk premia for South African assets. This money was simply wasted on a “government being at war with itself”, as Deputy President Cyril Ramaphosa put it. The president wants a new R4-billion jet, but we don’t have enough maintenance personnel to even keep the existing government jets in the air. The president and his cronies want to spend R1,000-billion on nuclear power, although renewable energy is cheaper by now. Our government has failed the people of South Africa. In most European countries, this president would not be in office, but in jail.

But none of this justifies not trying to fix our higher education system. If anything, the current lack of leadership should be even more reason to strengthen our education system and give future generations fertile ground to nurture better leaders.

DM: There are countries that have quite successfully managed to improve education access, even when starting on a back foot; in Southern Africa, for instance, I’m thinking of Botswana. What did they do differently?

Georg: In one word: funding. Botswana spends about 1% of its GDP on higher education, which is substantially more than South Africa’s 0.75% and in line with what the UK and European countries spend on higher education. Another country that substantially improved their higher education system is China, who increased the number of graduates by 600% between 2000 and 2010. Again the key to achieve this was determined leadership with substantially increased funding. There are still many issues at Chinese universities, in particular regarding academic freedom and freedom of speech, but the growth they achieved is still staggering.

DM: UCT for example has suggested a model where rich students would pay more and poor students face no increase. Would that be feasible?

Georg: I have two problems with this model. First, when the university speaks of “rich” and “poor” students, they mean students from rich and poor parents. The students have not started a professional life yet and are not rich or poor themselves. If we divide students according to their parents’ income, we ignore their independence and individuality. And second, practically, this model is not sustainable long-term. We might be able to fix the funding shortfall for one year by increasing fees for students from rich households disproportionately. But we would have to do the same again next year. And the next. At some point very soon, we will end up in a situation where the gap in the fees would get completely out of proportion. Therefore, the proposed model can only be a short-term fix, not a solution to the deeper problem of receding government funding.

DM: Protests recently flared up at schools, also tackling institutionalised racism. What do you foresee happening here? 

Georg: I did not think that we would still have to debate these issues more than 20 years after the end of apartheid. It is shameful to see that some schools think they need to dictate how children want to express their individuality. I hope that these protests become more organised and bring to light any and all instances of institutionalised racism at our schools. It is also important that students tackle this issue at universities.

I will say that some criticism about transformation is unwarranted. I have been involved in hiring faculty at UCT a few times. Every time, we have actively tried to recruit someone who is not a white male. But the applicant pool is [very] small… One time we ended up not hiring anyone because we decided there was no suitable candidate, but this is not always possible. 

In my experience, we lose students from previously disadvantaged backgrounds in two ways. First and foremost, these students don’t graduate because they have to work jobs in the evening and over the weekends while students from more affluent backgrounds can afford to study more. And second, students that graduate are immediately absorbed by the private sector, in particular in finance, where I teach. This is good for the students, but means it is almost impossible to find faculty members willing to work for 60% of what they would get in the private sector. This is where the skills gap comes in, and is the reason we need to broaden university access in order to solve the transformation issue.

DM: What is the best way to move forward constructively? 

Georg: It is absolutely crucial that students organise large-scale protest against university fees. Not just against a fee increase, against fees at all. Every generation is faced with different challenges, and ours is to ensure that future generations have free access to quality higher education. This is by far the best way out of poverty and to generate significant growth in South Africa.

The best way to move forward constructively is to ensure four things for the next round of protests. First, they must be peaceful and supported by the large mass of students, not just an extremist minority. Second, they must be targeted at the right source. Make the faculty your allies and protest against a government who is wasting billions on political infighting and billions more on patronage networks and corruption. Third, find allies outside the university, most notably at schools and within your families. And fourth, make the protests creative, lasting, and sustainable. Do not waver in your resolve, and stop only when all fees are abolished and education is free for everyone. DM

Dr Co-Pierre Georg is a Senior Lecturer at the African Institute of Financial Markets and Risk Management (AIFMRM) at UCT. He held visiting positions at Oxford, Princeton, and Columbia Universities and has won several awards and grants for his research on financial stability and systemic risk. He is a Policy Associate at Economic Research Southern Africa. Last year, he began analysing how free tertiary education in South Africa could be financed. This interview has been edited minimally for brevity.

Photo: Teacher Reginald Sikhwari poses for a picture with his class of grade 11 students at Sekano-Ntoane school in Soweto, South Africa, September 17, 2015. REUTERS/Siphiwe Sibeko