Gigaba: How government will fund free education to be clarified at 2018 budget

Finance Minister Malusi Gigaba has left it until next year’s budget to clarify how the state will pay for the presidency’s announcement on fee-free higher education.

The higher education announcement came as the ANC’s 54th elective conference got underway at Nasrec on Saturday. In a statement, President Jacob Zuma said poor students at South African universities would be fully supported through “government grants not loans”.

The Commission of Inquiry into Higher Education recommended an income-contingent loan model to fund higher education students, where loans would be sources from commercial banks.

But Zuma has instead said that government grants would subsidise those first year students categorised under a reworked definition of working class students. Free education, he said, would be available to these student in 2018, which is less than a month away.

Reacting to the announcement Finance Minister Malusi Gigaba said government would make an announcement on how it is going to deal with the matter at the 2018 budget in February.

“We had indicated that we are going to complete our fiscal consolidation programme, the details of which will be announced at the budget, including outlining the ways of funding fee free higher education in a fiscally sustainable manner,” he said.

“So we will provide the details at the budget in 2018, we can’t provide any details at the moment.”

When asked if this will mean a higher budget deficit, Gigaba, again said that he could not provide any further details on the announcement, because the budget process is still in motion.

“Only at the budget in February will we be able to indicate what steps we are going to take to be able to respond to the announcement that the president has made,” he said.

The Treasury had been engaging with credit ratings agencies about the possibility of a decision on higher education, he continued.

“If you remember in the [Medium Term Budget Policy Statement] we flagged higher education and health insurance as budget risks and we knew that they could materialise one way or the other. And so we are working through the budget process to deal with all those issues and as I keep on saying at budget next year we will make further announcements.”

Additional reporting by Ra’eesa Pather 

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.
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