SA universities must shoulder some responsibility for funding challenges
Just before a representative from the Auditor-General’s office was set to address delegates during the Higher Education Funding and Financial Sustainability into the Future session of the 3rd annual Higher Education Conference, the Session Chairperson delivered a sobering message, of alarming statistics about the state of South Africa’s higher education sector.
Referencing the former Minister of Higher Education and Innovation — Dr Blade Nzimande’s account of critical challenges in the sector, Professor Bismark Tyobeka (right), Vice-Chancellor and Principal of the North-West University, and Chairperson of the Funding Strategy Group (FSG) of Universities South Africa (USAf) said “… in 2023, 1.2 million students applied for higher education, yet only 913,000 were funded.”
Nzimande’s 2023 projections had already painted a bleak picture, noting that the cost of a Bachelor of Arts degree averaged between R150,000 and R160,000 over three years. Professor Tyobeka confirmed that while universities provided 1.1 million spaces for new students, financial strain remained a significant obstacle.
“Broader socioeconomic challenges compound the issue of higher education affordability,” he continued, citing that South Africa’s expanded unemployment rate—which includes those who have stopped looking for work—stands at a staggering 42.6%. “We are dealing with a slow-growing economy and stagnation. On top of this, we face wastage and corruption in government.”
He went on to highlight that R24.1 billion had been spent on unauthorised expenditure in 2023. “This points to fiscal indiscipline in the country,” he remarked, adding that despite South African Revenue Service (SARS) collecting R10 billion more in revenue this year than expected, the country is still grappling with economic and social challenges.
“More than 17 million citizens depend on social grants,” he noted, emphasising the competing priorities the government faces. “With such financial pressures, how do we ensure higher education remains accessible? Is it affordable?”
Turning the spotlight on the National Student Financial Aid Scheme (NSFAS) again, he stated, “We spent R51 billion last year on NSFAS, but the question remains—are we doing this sustainably and effectively?”
He challenged the audience to think about international examples where countries had opted for free education. “Why can’t we do it? But at what cost to other social benefits? There’s no such thing as a free lunch,” he warned. “More taxes will have to be collected, and that impacts everyone.”
Universities urged to reprioritise spending
Doctor Thamsanqa Zikode (left), Head of Portfolio: Regularity Audit at the Auditor General’s office, echoed Professor Tyobeka’s concerns but added that universities themselves must reprioritise their spending. While Professor Stan du Plessis, Economics Professor at Stellenbosch University, had earlier suggested that students take on more responsibility for their education, Dr Zikode pointed to the need for universities to manage their operational costs more effectively.
“Operational costs in universities are increasing at a faster rate than revenues,” he cautioned. He noted that while the minister caps student fees, universities face escalating costs due to long- and medium-term contracts with escalation clauses that exceed the rate at which fees can increase. “This creates a situation where universities must generate more income than they need, to pay,” Dr Zikode said, presenting a perpetual financial challenge for institutions.
The Auditor General’s role in higher education
Dr Zikode then provided valuable insights into the Auditor General’s function in auditing higher education institutions. He emphasised that the Office’s mission, rooted in its constitutional mandate, is to strengthen South Africa’s democracy by ensuring oversight, accountability, and governance in the public sector. This includes auditing public institutions such as universities, which receive significant public funding.
Under Section 4(3) of the Public Audit Act, the Auditor General is required to audit all public institutions, including universities, the Department of Higher Education, Sector Education and Training Authorities (SETAs), and the National Skills Fund. Dr Zikode highlighted that university funding had increased from R24 billion in 2014 to R49 billion in the 2023-2024 period. However, he pointed out that this growth is misleading when compared to the unchanged 0.6% of GDP allocation.
Universities’ overreliance on government funding
He expressed concerns about universities’ increasing reliance on government funding, which is under pressure due to South Africa’s economic challenges. “Even with attempts to increase funding, operational costs for universities are rising faster than revenues,” he said. This financial squeeze has created significant challenges for universities, particularly around the affordability of tuition fees, debt recovery, and operational costs.
“The government is under pressure to meet its subsidy obligations due to budget constraints,” Dr Zikode explained. “All three spheres of government are competing for resources, leaving state coffers dry.” This competition for resources makes it difficult for the government to prioritise higher education funding over other essential services such as social welfare and healthcare.
Unsustainable financial position
African universities is unsustainable. With rising costs and stagnant revenue streams, universities are facing a crisis that requires immediate attention. Zikode pointed out that while everyone agrees on the importance of education—especially in a globalised world where skills and development are crucial—simply increasing funding is not a straightforward solution.
“There is consensus that we need educated employees to compete in the global economy, but we must balance the funding, fees, and student access,” Dr Zikode said. He urged universities and the government to find a way to make higher education more affordable without sacrificing the quality of education or burdening the economy further.
Rethinking alternative funding strategies
Dr Zikode concluded by outlining the need for a culture shift in how universities and the government approach higher education funding. “We must rethink how we fund our institutions,” he said, noting that the current strategy of increasing student fees and government subsidies is not sustainable in the long term.
He called for a more integrated approach to addressing the financial challenges in the sector, one that involves all stakeholders working together. “We cannot argue against the synergic benefits that arise when everyone is working as a team, rather than in silos,” he said, further urging universities to strengthen their financial controls, particularly around managing operational costs and exploring additional sources of revenue.
Prioritising government spending on higher education
One of the key recommendations of this session was the need for the government to prioritise higher education in its budget. Dr Zikode stressed that if the government truly believes higher education is a priority, it must reflect that belief in its spending decisions. “It cannot be something we say at conferences, but then go back to business as usual,” he warned.
The government must also address the issue of irregular expenditure and wastefulness in the public sector. “We cannot afford to be a social grant state and that is not sustainable,” Dr Zikode cautioned, urging the government to refocus its spending on essential sectors such as education to boost economic participation and growth.
Yolande Lemmer is a contracted writer for Universities South Africa.
