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Interrogating sustainable financial models for South African Universities

Author: Charleen Duncan

Universities South Africa convened its fourth annual EDHE lekgotla to enable stakeholders to share best practice and reflect on progress, interrogating sustainable financial models for South African Universities.

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(Published - 16 October 2020)

South Africans’ hopes of making a decent living and other socio-economic benefits following the demise of apartheid were predicated on sustainable economic growth that never materialised. 

Recognising the potential of entrepreneurship and technological innovation to grow the economy, the Department of Higher Education and Training established the Entrepreneurship Development in Higher Education (EDHE) Programme in 2016 to mobilise student entrepreneurship, support entrepreneurship training in academia and support the creation of entrepreneurial universities. 

Universities South Africa (USAf), which has managed the EDHE Programme since mid-2018, convened its fourth annual EDHE lekgotla to enable stakeholders to share best practice and reflect on progress. 

In observance of COVID-19 lockdown restrictions, the conference, themed ‘#AfroTech - African Entrepreneurship through Technology’, was hosted virtually using the Whova app on the Zoom platform from 14 to 18 September. It was attended by more than a thousand student entrepreneurs, academics and leaders in entrepreneurship across Africa.

A highly topical panel discussion, entitled ‘Creating Sustainable Scenarios for Revenue and Cost Models in Higher Education’, featured on Day 4 of the lekgotla. With the pandemic expected to contract GDP by 6% and universities’ government subsidies cut by 8% for 2021 (approximately R10 billion), universities are seeking innovative ways to boost and diversify revenue streams and funding models.

I chaired the panel discussion which consisted of the University of the Western Cape’s Executive Director of Finance and Services, Abduraghman Regal, the Chief Financial Officer of the University of Limpopo, Nerulal Ramdharie, and the Chief Executive Officer of USAf, Professor Ahmed Bawa. 

In his opening remarks, Mr Regal observed that the sector is gradually abandoning silo thinking and acting more in common interest. The value of this sectoral approach had been repeatedly demonstrated in universities’ unified approach to common problems during the lockdown, such as the discussion between institutions regarding students’ requests for fee reductions because of the suspension of contact learning.

Mr Ramdharie stressed the need for universities to adopt an entrepreneurial business approach to sustainability by diversifying income streams, partnering with local businesses, looking for ways to assist industry to exploit opportunities for growth and access to markets and, particularly, exploring the opportunities offered by the 4th Industrial Revolution for increasing revenue. He said a notable example of this approach was the recent partnership between the University of Limpopo and local tourism businesses.

Prof Bawa argued that three fundamentals were required to drive entrepreneurship in higher education. Firstly, a new national ecosystem and a national platform are needed that can move universities into new, incentivised relationships with industry and government. Secondly, it is vital to build an institutional entrepreneurial culture and develop entrepreneurship across campuses that permeated all levels. Thirdly, higher education institutions need to constantly interrogate the context they are in to understand what it means to be engaged in society as a university. 

Mr Regal warned against institutions returning to their old ways now that the lockdown has been eased, rather than retaining and developing the innovations they have employed during the lockdown, such as using technology more effectively. Universities have learned to use the online space and “online learning had been de-stigmatised”. There are new opportunities to upscale learning and develop online courses outside the normal state funding scheme. Universities should exploit social media more effectively to sensitise corporate South Africa to the value of higher education. Mr Regal observed that multinational and local corporates are more sensitised to the economic importance of South Africa, and universities could initiate new partnerships with these entities and new donors.

Mr Ramdharie agreed that, in his long experience in the private sector, corporates are open to partnerships as they always aggressively seek growth and added value for their shareholders.

“But,” said Prof Bawa, “We need to be nimble. The CHE [Council on Higher Education] takes about two years to approve a programme. We need to fix the national regulatory system to allow the kind of flexibility needed.”

Prof Bawa stressed the importance of universities being locally and globally connected. Already, global partners provide 14% of universities’ research funding, which could be increased through universities seeking more partnerships that ensure their sustainability and public relevance. Moreover, the whole post-school education and training sector, including TVET, needs to be supported to ensure the future of universities. A problem related to this that requires urgent resolution is the near-zero investment by local and provincial government in science and technology. These tiers of government are not connecting the needs and challenges in the provinces to the “huge capacity in scientific expertise that exists in universities that could be used as a resource to address the challenges”.

In concluding the panel discussion, I reminded the audience: “We’ve learnt many new skills and have been exposed to an entrepreneurial way of doing things through the COVID experience, which we need to build on and grow as part of our financial sustainability.”

The clear consensus reached by the panel is that universities should learn to work together rather than compete for the same resources. An entrepreneurial approach and an entrepreneurial mindset needs to be embedded in their very DNA for the universities to be able to develop dynamic new revenue models.

  • Charleen Duncan is the Director of the University of the Western Cape’s Centre for Entrepreneurship and Innovation. The centre is a key stakeholder in the EDHE.

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