Funding of public higher education institutions in South Africa

Current model for universities

The cost of delivering university education in South Africa amounts to close to R50 billion annually. South Africa subscribes to a funding framework in which costs are shared among the beneficiaries of university education (mainly government and students). 

State contributions to university education declined from 49% at the beginning of the century to 40% by 2012, while the burden on students increased from 24% to 31% during the same period. It is therefore not surprising that each calendar year starts off with student protests demanding free education or lower tuition fees or a cap on tuition fees. The report of the ministerial committee reviewing university funding³, recommended that capping of fees should not be implemented. The Minister of Higher Education and Training in his foreword to this report, expressed the view that “the capping of student fees is an area that I believe requires further attention”.

From 2010 to 2012 tuition fees at the 23 public universities in South Africa increased from R 12.2 billion to R 15.5 billion, while enrolments only increased by 7% during the period. At the same time, student debt rose from R2.6 billion to R 3.4 billion – an increase of 31% over two years. In light of the dependence of universities on tuition fees as a source of revenue, a scrapping or capping of tuition fees would leave universities with a major revenue shortfall.

Let's look at international jurisdictions to see how other countries are approaching tuition fees.

Selected international comparisons

Different countries fund education differently. We will look at the models applicable in Germany, the United Kingdom and the United States.

Higher education has historically been state funded in Germany, since education has been regarded as ‘a public good’. In 2006, the German Constitutional Court ruled that tuition fees did not conflict with Germany's commitment to universal education and as a result tuition fees were introduced. After exploring tuition fees for almost a decade, public universities in Germany have now abolished tuition fees for undergraduate students in all 16 states – the last state did this during 2014. Higher education in Germany is therefore free again, with 84% of funding coming from government.

The United Kingdom introduced tuition fees for the first time in 1998, with an upper cap of £1 000. This cap increased to £3 000 in 2004 and in 2010 the cap on tuition fees was removed, which enabled universities to charge students up to £9 000 annually.

More than half of the UK universities announced their intention to charge students the full £9 000 in annual tuition fees. In the UK, the state contributes 30% of the cost of higher education. During the 2015 UK election campaign, the future trajectory of tuition fees has been a hotly debated election issue.

In the US, which has one of the most expensive higher education systems in the world, the state contributes 34% to the cost of higher education. State-funding for public universities decreased significantly over the last decade, which resulted in an increased reliance on tuition fees as a source of revenue. This also resulted in student debt in the US exceeding $1 trillion for the first time in 2014, which is bigger than the nation’s credit card debt of $0.7 trillion.

In his state of the nation address in 2015, President Obama proposed that the state fund two years of community college education for every citizen with an interest in progressing towards a degree and with sufficient academic marks. The higher education model whereby students share in the cost of education is truly under pressure in both the USA and the UK.

Future funding of higher education

The National Development Plan (NDP)5 requires the higher education sector to increase enrolment levels annually from 950 000 in 2010 to 1.6 million by 2030. Unless we find ways to reduce the costs of delivering higher education, an increased enrolment will require increased funding.

While South Africa is spending 0.75% of its gross domestic product (GDP) on higher education, the US and the UK spend 0.9% of GDP on higher education and Germany spends 1.1%. I agree with the ministerial committee’s recommendation that Government should increase the level of spending on higher education. Increasing Government’s spending from 0.75% of GDP to 2% of GDP will relieve the burden on students to fund their own education.

Sources:

• DHET 2010: Audited financial statements of the universities for the period 2000/01 to 2011/12
• Moving Forward: Trends in annual reporting by South African public universities - September 2014
• Report of the Ministerial Committee for the Review of the Funding of Universities - October 2013, released February 2014
• OECD Indicators: Education at a Glance 2014
• National Development Plan 2030, Our future - Make it work, 2012

The original article was posted at www.pwc.co.za

Industries where South African's richest got their wealth

A report published by New World Wealth reveals the industry from which South African multi-millionaires have acquired their wealth.

According to NWW, South Africa is home to 2,060 multi-millionaires – high net worth individuals (HNWIs) worth US$10 million or more.

Unsurprisingly, the financial services industry is the primary source of wealth for 20% of local multi-millionaires.

Other important industries for them include real estate and construction (16%), basic materials, which includes the mining and refining of metals, chemical producers and forestry products, and diversified.

NWW defines wealth as the net value of assets, which includes financial holdings, business interests and tangible assets. The group excludes primary residences from it’s valuation.

Multimillioniares by industry

Forbes recently listed seven South African billionaires in its 2015 ranking of the world’s super wealthy individuals.

While the country has no individuals from the financial services and construction sector with billionaire status, the source of super-wealth comes from a diverse pool.

South Africa’s richest man, Johann Rupert, made his fortune in retail – though more specifically, luxury goods. He is joined by Shoprite chairman and investor, Christo Wiese in the sector.

Diamond Magnate, Nicky Oppenheimer, Patric Motsepe of Africa Rainbow Minerals, as well as mining group Assore’s MD, Desmond Sacco (who edged out of billionaire status in 2015) all found wealth in basic minerals.

Incoming Naspers chairman and former CEO, Koos Bekker drew fortune from Media, with Stephen Saad’s wealth tied to pharma-care, and Allan Gray tied to his investments.

Richest people in South Africa

#	Name	Net Worth 2015	Industry
1	Johann Rupert	R91.9 billion	Luxury Goods
2	Nicky Oppenheimer	R83.2 billion	Basic Minerals
3	Christo Wiese	R78.3 billion	Retail
4	Koos Bekker	R28.6 billion	Media
5	Patrice Motsepe	R27.3 billion	Basic Minerals
6	Stephen Saad	R26.1 billion	Healthcare
7	Allan Gray	R19.9 billion	Investing

This article was originally published www.businesstech.co.za

South African's poor living on R7 a day

A new report shows the impact of food price inflation for low-income households in South Africa.

The report, published by Pietermaritzburg Agency for Community Social Action (Pacsa), found that low-income households are underspending on food by as much as 55.6%.

The 2015 PacsaFood Price Barometer Annual Report is a composite index of monthly food prices from  November 2014 to September 2015.

The cost of a basic but minimum nutritional food basket for a household of 7 (the average

household size of urban households in Pietermaritzburg) was R3,644.09 per month in September 2015.

For a household with an income of R3,200 – the maximum income level for 60% of Pietermaritzburg households – proper nutrition comes to 113.9% of household income.

The food which these households buy every month cost R1,616.97 in September 2015; and comes to 50.5% of the R3,200 household income.

Broken down further, when dividing that amount between seven people monthly, it means R230 for each inhabitant, or R7.66 per person, per day for food.

The overall food price inflation on the Pacsa food basket over the period of review:

from November 2014 to September 2015 was 4.3%.  In Rand value, the cost of the basket increased by R66.10 from R1,550.87 to R1,616.97, the organisation said.

It found that maize meal (25kg), South Africa’s core staple food, increased by 14.4%, white  sugar (10kg) increased by 6.7%, rice (10kg) increased by 6.3% and salt (1kg) increased by 9.7%

For households living on low incomes, food expenditure is not the first priority. Households prioritise transport, education,  electricity, and burial insurance, Pacsa said.

“Because food is last in the line of expenditure, in a context of low levels of

income, households struggle to purchase the food they require.  In most low-income households the food runs out before the end of the month,” the report said.

While R2,362 is the average minimum wage set by the Employment Conditions Commission across sectoral determinations, Pacsa says that the minimum wage should be R8,000 “if we are talk of the possibility of accessing a basic life of dignity”.

This article was originally posted by www.businesstech.co.za

Success as a process

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Many people do not understand what success is. Success is not a destination as many may think. In fact, success is a process. It is a discipline and culture in which a person partakes in order to reach or meet a set goal/s.

Discipline can  be defined according to Oxford dictionary as "a system of rules of conduct" or according to www.thefreedictionary.com "to train by instruction and practice, as in following rules or developing self-control". Note the use of the word "system"; which is a set of interrelated ideas or a structure based on interrelated ideas with the purpose of producing or reproducing a known/expected outcome.

Any form of discipline whether be at social, financial, military, religious, academic or whatever you can think of takes time to develop. In many cases, most disciplines are obtained through years of training while others remain a life long process. This applies especially to success, which I said it is a process or discipline (not the outcome) practiced through a specific system with the intention of achieving/obtaining a specific outcome.

No one wakes up to be amused by the news that they are successful. No one comes to your door to announce that now you are a successful woman/man. Your achievements though maybe be surprising to many are never a surprise to you. That's because of the set of principles and discipline you took in order to reach where you are today. Your achievement is the direct result of your pain, sweat and sacrifice you made along the way to get to where you are. Hence I find it very insulting when someone tells me that I'm lucky, and I'm sure you do too.

Many people what quick fix or overnight riches, but these things are not success because one can never maintain such. Gamblers and lotto winners can not maintain their quick earned riches because they never took the time to learn the discipline concerning the handling of money. Money fell took quick into their palms and slipped through their fingers just as quick because they haven't development the skills required to maintain it.

This applies to many of us, including of sports heroes and heroines. Although these people have mastered their art in whatever field their in, they still lack the discipline required to handle money. Handling money requires a set of skills and discipline like every other sport, and those who achieve this art and master it have the bank accounts to prove it.

Success itself has nothing to do with money. Yes, one can be success in the handling of money and accommodates wealth as a result but this is just a small portion of what success really entails. Success applies to managing your family, your relationships, your occupation, your service to your community and fellow human beings and animals but most importantly managing your time. If you can't successful manage your time then how can you enjoy the fruits of your labour?

Like everything we have mentioned this far, time management requires discipline and takes time to excel, but those with the desire to achieve this skill can one day manage it better than others.

Whatever your dreams, whatever your challenges, take time to learn and master the field and you will one day achieve. Remember, its a process. It takes time. Be patient and willing to learn.

I'm @PowderBlaq, and thanks for reading

Money tips: The difference between saving and investing

Written by: Opinion Piece, posted by: www.sabreakingnews.co.za

Savings is regularly putting away part of your income into a low or no-risk account, meaning that your money is guaranteed to earn a specific amount of interest and the original deposit is safe.

People do not always understand the difference between saving and investing and the two are sometimes confused. However, understanding and putting both concepts into practice will go a long way to ensuring your financial future.

“In a nutshell, saving is the short-term practice of putting money away for a goal or unexpected expenses and investing is the long-term strategy of putting money away and letting it grow,” says Eunice Sibiya. “It is important to understand the difference between saving and investing, as they are two ways of making your money work for you to achieve different goals.”

Savings is regularly putting away part of your income into a low or no-risk account, meaning that your money is guaranteed to earn a specific amount of interest and the original deposit is safe.

Regular deposits gradually build up, and this money can be used at a later stage. Savings is vital as building up reserves is an effective way to ensure that you are financially secure when you are hit with unexpected expenses such as a medical emergency or a car breakdown. It is also a way of paying large expenses such as holidays or school fees without taking on debt.

“Every single South African with an income should be saving,” says Sibiya. “Those who haven’t started usually use the excuse that they don’t have the money. However, in most of these cases, if they scrutinise their budget they will find that they are spending money on unnecessary items and expenses, such as clothes or entertainment.”

Another myth is that you need lots of money to save, putting away just R100 a month will jump start this critical step in your financial journey.

Investing is when you commit money for the long-term and let it grow. It is different to savings in that there is no set or guaranteed interest rate, and there are varying levels of risk meaning that your money isn’t always fully guaranteed. However the potential for profit or more aggressive growth is much higher.

“Investing may seem intimidating, with concepts like stocks, unit trusts or bonds,” says Sibiya. “However, what you need to understand is that investing is not gambling and is the next step after saving to make your money work for you and provide additional income in the future.”

If you are just starting out, opt for something that is not too daunting. There are multiple options available to save or invest with most financial institutes.