According to a recent article in the Financial Mail, South African universities are in trouble.
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Government is chained to the NSFAS model, spending more for less beneficiaries and facing corruption charges along the way.
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Universities are chained to the “mini-Harvard” business model (Prof Stan du Plessis, the former COO of Stellenbosch University) – having two businesses, โan undergraduate teaching college, which is not hard to make financially sustainable, and a research institute, which always runs at a loss,โ
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Getting an education does lead to higher wages. “According to a recent Econ 3×3 paper by UCT researcher Tim Kรถhler, the returns to tertiary education in South Africa have tripled in size from 7.3% in 2001 to 23% in 2023” (23% average wage increase per hour)
The challenge though is landing the job. In a slow labour market, the “expanded unemployment rate for graduates doubled โ from 5.8% in 2008 to 11.8% in 2023” (SA-TIED paper by researchers Hannah McGinty and Emma Whitelaw). However this ignores situations where graduates accept lower positions in relation to what they studied for.
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The articles does not discuss the opportunity of entrepreneurship in the tertiary education system.
Instead of grooming students for employment, government and universities should direct their efforts to nurture entrepreneurs – making a contribution in their communities and solving problems that others will pay for.
Government could provide specific NSFAS incentives for students pursuing entrepreneurial studies over just getting any degree, that is not relevant in the marketplace.
While may universities have “centres for entrepreneurship” and/or “rapid incubators”, it is not integrated into the overall development of students across all faculties and degrees. Universities should expand their business model to identify promising startups on campus, invest in them within acceptable risk framework and share the future returns,
In doing so, government and universities work together to develop the entrepreneurial ecosystem and improve sustainability in the long term.
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