Working with Zuma’s free education promise – SA’s new fiscal challenge

President Jacob Zuma poses for a photograph following a Bloomberg Television interview at his state residence in Pretoria. Photographer: Waldo Swiegers/Bloomberg

CAPE TOWN — While the incendiary political mix that is higher education in South Africa received a good stir from President Jacob Zuma shortly before his Zuptoid bubble was punctured, not everything that Msholozi touches necessarily turns to sludge. The timing of his announcing free tertiary education to lower-earning households was no doubt politically inspired – and will be used to maximum advantage by the EFF – but that’s no excuse to dismiss the concept out of hand. Just as Madiba said, that people of good will and generous hearts are distributed evenly across the population, so too are budding intellects and brilliant minds. Giving more equitable access to higher education is a long-term economic no-brainer, and you don’t need to join the EFF to believe that. While campuses brace themselves for another anarchic populist assault come registration time, the new ANC executive led by non-Zuptoid Cyril Ramaphosa will be grappling with how to re-align budgets to make more equitable education affordable. Economists reckon simply sinking corruption and ridding us of a mafia-like state will re-float the boat. But creative redesign at basic education level like university-graduate teacher-conscription and boosting competent teacher salaries are equally important. Bottom-up re-building and introducing market-friendly skills are as critical to reignite the economy. – Chris Bateman

By Arabile Gumede

(Bloomberg) — President Jacob Zuma’s move to scrap tuition fees for students from poor South African homes and freeze tariffs for those from working-class households may cause chaos during registration at public universities this month.

Zuma unveiled the plan on Dec. 16, two days before Cyril Ramaphosa replaced him as leader of the ruling African National Congress and two days after a body representing the 26 state-owned institutions said each would raise fees by 8 percent. The University of South Africa, the country’s biggest with more than 400,000 students, held fees at 2017 rates, it said Dec. 7.

On Jan. 1, the universities said they won’t allow walk-in applications from people who qualify for free education, but people should instead submit details online for assessment. A day later, the opposition Economic Freedom Fighters party condemned the move and called on all academically deserving students to report to universities of their choice for registration.

“Zuma’s announcement on free tertiary education is very much a political project and it puts a lot of pressure on the new ANC National Executive Committee,” Joleen Steyn-Kotze, a senior research specialist at the Human Sciences Research Council, said by phone. “It is possible that there will be chaos and universities are going to be on high alert.”

Earlier Protests

Weeks of violent protests at universities across the country in 2015 and 2016 delayed the end of those academic years, and institutions’ finances were stretched by the state’s decision to limit tuition costs in 2016. Africa’s most-industrialized economy is contending with a skills shortage and a 28 percent jobless rate. Investors are concerned that the fee proposal, which ignores fiscal targets set in the budget, will add to government debt and hasten another rating downgrade to junk for the country’s local-currency credit.

The EFF said if walk-in applicants are not allowed onto university campuses, nobody else should be allowed to enter.

“We don’t intend to cause anarchy, but if we are pushed, we will be left with no choice,” Phuthi Peter Keetse, the party’s student leader, said Thursday. “We are capable.”

Keetse’s comments came on the same day that the government said South Africa’s school-pass rate rose to the highest in three years in 2017, with 153,610 students obtaining passes that make them eligible for university.

Under the plan that will be phased over five years starting in 2018, students from homes where the combined annual income is 350,000 rand ($28,400) or less annually won’t have to pay for tuition, books, meals, accommodation and transport. The directive also froze fees for students from households earning 600,000 rand or less per year.

The National Student Financial Aid Scheme, which provided assistance to about 226,000 university students whose family income was below 122,000 rand annually in 2016, will assess applications from prospective students who didn’t previously qualify for financial aid but who now do, Chief Executive Officer Steven Zwane said Thursday in the capital, Pretoria.

NSFAS disbursed 12.4 billion rand in financial aid to almost 482,000 students at universities and technical-vocational colleges in 2016, according to its annual report. Under the new plan, all those who are funding their studies through the organization will have their loans converted to grants.

Funding Allocation

The National Treasury allocated 76.7 billion rand to higher education for the year through March 2018, and estimates this will increase by an average of 8.2 percent in each of the following three years, the fastest-growing spending item after debt-service costs, it said in the mid-term budget in October.

South Africa will increase subsidies to universities to 1 percent of gross domestic product from 0.7 percent now over the next five years, according to Zuma’s Dec. 16 statement. The National Treasury will outline how the government will fund free higher education “in a fiscally sustainable manner” in the Feb. 21 budget, Finance Minister Malusi Gigaba said after the presidency’s announcement.

“We can easily afford it if we cut out the amount of government money that is currently being wasted on corruption and state capture,” Azar Jammine, the chief economist at Econometrix, said by phone. “Under the current circumstances there is too much pressure on the fiscus to afford the new measure.”

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