/ 17 December 2017

Zuma ignored treasury, NEC on higher education

Thanks but no thanks: President Jacob Zuma made a public announcement about funding higher education but did not discuss his decision with the national executive committee
Thanks but no thanks: President Jacob Zuma made a public announcement about funding higher education but did not discuss his decision with the national executive committee

President Jacob Zuma’s announcement on fee-free education appears to have come against the advice of the treasury and without consulting the ruling party’s national executive committee (NEC).

Treasury had warned against making an announcement and efforts by Finance Minister Malusi Gigaba to get the president to respect the budgetary process and examine sustainable funding options for higher education came to naught, according to well-placed sources in government.

The presidency released a statement on Saturday detailing a plan to provide free education for poor and working-class first-year students in 2018. The announcement took place on the first morning of the much-anticipated 54th national conference of the ANC currently taking place at Nasrec, Johannesburg.

The announcement has been met with mixed reactions.

The plan is in contrast to the position taken by the Heher Commission of Inquiry into Higher Education which recommended an income-contingent loan model to fund higher education students, in which loans would be sourced from commercial banks.

The president and the interministerial committee responsible for the funding of higher education, which included the finance and higher education and training ministers, decided on Wednesday that the best option out of seven would be free higher education for poor and working-class students.

Higher education and training director general Gwebinkundla Qonde told the Mail & Guardian that the interministerial task team had worked out seven scenarios and proposals.

“The president said we need to work out a number of scenarios looking at the question of affordability. We worked and reported to him [the president] that this was too much … On Wednesday at one o’clock we met the president with our recommendations. The mninisters were there [Gigaba and the higher education and training minister, Hlengiwe Mkhize]. ”

The treasury’s position was that it was too premature to make an announcement, said one of the sources, and despite the concerns that it raised, notably on issues such as affordability, the president went ahead. An NEC member, who spoke to the M&G anonymously, said the NEC was also not informed about the president’s decision.

“He never said anything during the NEC meeting this week and the special NEC meeting this morning [Saturday],” the member said.

The presidential fiscal committee, which was set up to find ways to return the state’s finances to sustainability and which has been at the heart of devising plans to fund free higher education, is also believed to have not been consulted.

The ANC and the presidency did not immediately respond to requests for comment on these issues.

During his political report to the ANC conference, however, Zuma said that the plan would be implemented in a fiscally sustainable manner. He stressed that the introduction of free higher education was policy of the ANC.

“We have to invest in education and we have responded therefore to the Heher Commission this morning, partly because this organisation, in its conferences, had taken a serious decision which needed implementation,” Zuma said.

Treasury did not respond to specific questions from the M&G. But in a statement it said: “National Treasury notes the announcement by the presidency this morning and is in the process of reviewing the details of the higher education proposals, as well as possible financing options. The proposal will also be considered by the ministers’ committee on the budget and the presidential fiscal committee. Any amendments to existing spending and tax proposals will be announced at the time of the 2018 budget.”

Meanwhile, Universities South Africa (USAf) — the body representing the country’s 26 universities — was still waiting for Mkhize to make the formal announcement of the 8% fee increase that they had agreed on in a meeting last week.

On Thursday, USAf released a statement on its meeting with Mkhize and the increase saying they could no longer delay it as institutions had to have made “realistic budgets” by January.

No indication was given by Mkhize of a change in plan.

Qonde told the M&G that the announcement by Zuma was a major intervention by government and that it would have a huge impact on the lives of students who come from poor and working-class families.

But universities had not been consulted before Zuma made the announcement, Qonde said.

The director general said the intervention was going to have a huge impact on 90% of South African households.

Mkhize, will come up with a “road-map” on how the intervention will be implemented, Qonde said. He was confident that come January it would be all systems go.

Speaking on the sidelines of a business breakfast shortly after the announcement was made, Gigaba said the country would have to wait for the 2018 budget in February for details on how the plan would be funded.

“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.

With a R50-billion revenue shortfall expected this year, it is not clear how the uncosted proposal will be paid for.

The treasury has already warned of the extensive cuts that would be required to fund the president’s plan, which is estimated to cost in the region of an additional R40-billion. It is unclear how much the move to immediately convert all existing National Student Financial Aid Scheme loans to subsidies will add to the potential costs of the plan.

Last month the M&G reported that the treasury had warned in a report to the presidential fiscal committee, that substantial cuts to the budget would be needed if the plan were to go ahead.

These included cuts to grants and housing, halving the armed forces budget, curbing infrastructure spending and freezing civil servant wage increases. An increase in the value added tax rate is also a possibility, as is the sale of state assets and reducing the number of departments.

The controversy led to the resignation last month of Michael Sachs, the respected head of the department’s budget office.

Zuma’s higher education plan appears to ignore the recommendations of the Heher commission of inquiry into higher education. It found that free higher education for all students would be unaffordable and proposed an income-contingent-loan programme, hinged on the involvement of the private banking sector.

Zuma’s announcement did not outline any funding plans for how government would pay for this proposal.

It also appears to ignore the stern warnings Gigaba made about the state of government’s finances in his recent medium-term budget speech. He warned that the revenue shortfall will be R50.8-billion this financial year, rising to R69.3-billion in 2018-19 and R89.4-billion in 2019-20. He also warned that servicing debt would swallow an ever-growing portion of government income, rising to 15% in the coming three years. — additional reporting by Lisa Steyn

‘A cheap gimmick, lacking in substance and badly timed’

Most organisations involved in education, professional bodies and political parties are critical of President Jacob Zuma’s announcement on fee-free education for certain categories of students.


#FeesMustFall student leader Fasiha Hassan has taken President Jacob Zuma’s announcement with a hint of caution, calling it a “potential victory” for students. Hassan said the timing of the announcement was suspicious and could easily be read as a gimmick in the run-up to the elective conference.

“At this point it’s definitely a step in the right direction but if it’s a gimmick then it’s quite unfortunate, because students will never forgive government for that,” said Hassan.

South African Students Congress

General secretary of the South African Students Congress Lwando Majiza said the sacrifices and struggles of students had finally paid off.

“We welcome this news with jubilation. We had students expelled and being shot at because of this cause. We believe it is the blood of those students that will now ensure the increase of access into higher education,” said Majiza.

But he cautioned that the fight was not over — issues such as curriculum reform and student accommodation were still outstanding.

EFF Student Command

The Economic Freedom Fighters’ Student Command’s secretary general, Rendani Nematswerani, said although the command welcomed the announcement, they rejected the idea that free education should apply only to the poor and the working class.

“There are a lot of people who are poor in South Africa but can’t prove that. There are people who earn more than [R350 000] but support five families,” he said.

Nematswerani added that he believed that free education was nothing but an “empty promise” and “rhetoric” by the ANC.

“There’s no way they will give free education,” he said.

Democratic Alliance

Belinda Bozzoli, a DA member of Parliament who sits in the portfolio committee on higher education, said in a statement that although the announcement was welcomed, it was nothing but Zuma “playing politics” with the lives of young people.

“The statement is a combination of populist politicking, deceptive language, uncosted proposals and one positively dangerous assertion,” said Bozzoli.

“The president waited until the very end of the year so that he could make a splash at the ANC conference … Such cheap politicking is appalling.

“Unsurprisingly, his statement is full of promises, but lacking actual implementation details.”

Banking Association of SA

The managing director of the Banking Association of South Africa, Cas Coovadia, criticised the plan as lacking substance and being deliberately vague.

He said that the president clearly lacked any understanding of South Africa’s economic predicament.

“Given the lack of economic growth, a growing fiscal deficit, ongoing falls in tax revenues and increasing demands on the fiscus from other pressing social needs, it is not clear how [these] promises will turn into action,” he said.

Universities South Africa (representing 26 universities)

The chairperson of USAf, Professor Ahmed Bawa, told the Mail & Guardian that the body welcomed the announcement.

He said a “positive element” was that there was a “clear recognition” that the system is underfunded, adding that the subsidy increase from 0.68% to 1% over five years is a very important move in the direction of a more sustainable higher education system.

Bawa also applauded the announcement that students would receive a fully subsidised package, and not just tuition fees.

But he was concerned that the intervention was directed only at first-year students, and that second- and third-year students might fight to be included in the new system.

Bawa said an 8% increase would remain in place for students who come from families that earn more than R600 000 a year.

Lesedi Foundation

Khaya Sithole, an accountant and founder of the educational organisation Lesedi Foundation, said the president’s plan was incomplete because it addressed only the issue of access and did not detail how this would be self-sustainable in the long run.

“It means that every single year we are going to have to spend more money to keep these students in the system and retain them.

“The infrastructure question also needs to be addressed because institutions don’t have the capacity to absorb these students. And once students access the system, how do we make sure they get out within record time, so that the system doesn’t cripple itself?” Sithole asked.

He said the president’s grand announcement was opportunistic and unfair to the people who must implement it because there was a sense that there was no consultation.

“The finance minister was busy delivering another speech altogether when the president pressed the send button and released it to the media. You get the sense that he is doing it for his own political gamble.” — Bongekile Macupe, Tebogo Tshwane, Lynley Donnelly & Lisa Steyn

Zuma’s great fees plan is silent on budget

NSFAS goes from loan to grant

The National Student Financial Aid Scheme (NSFAS) loan system will be converted to a “100% grants effective immediately”, President Jacob Zuma announced on Saturday. Students on the NSFAS system are usually required to pay back their loans when they leave university and begin earning an income. But now, in their further years of study, they will instead receive a grant that will be administered by NSFAS.

Government increases funding to institutions

The government subsidy to postschool education and training institutions will increase from 0.68% to 1% of gross domestic product in the next five years. This solution was also proposed by the fees commission.

Poor TVET students to receive free education in 2018

“The provision of fully subsidised free education and training will be extended to all current and future poor and working-class South African students at all public TVET [Technical and Vocational Education and Training] colleges, starting in 2018 and phased in over a period of five years,” the president said.

These students will be funded through grants, and TVET colleges will also receive further support from government to hasten development and improve the quality of education.

No fee increment for poor students at public universities

Public university students who live in households that earn less than R600 000 a year will be exempt from a fee increment in 2018.

“This policy intervention will enable government to extend fully subsidised free higher education to youth from well over 90% of South African households.

“Duly, from 2018 onwards, eligible South African children of the unemployed, social grant recipients, South Africans earning below a minimum wage, domestic workers, farmworkers, mineworkers and entry level civil servants … will now access public universities and TVET colleges for free through grants provided by their government,” the president said.

Historic debt to be discussed

The higher education minister will be responsible for dealing with debt accumulated through NSFAS loans after a due diligence report has been completed by the higher education ministry, planning, monitoring and evaluation department and treasury to work out the extent of funding needed.

Student accommodation to be prioritised

Accommodation at historically disadvantaged universities will be addressed “urgently”.

Zuma also said government would investigate the viability of online and blended learning in South Africa and work on ways to help post-school institutions transform.

But for all of this, the president has yet to say how government plans to produce an estimated R13-billion to fund this policy from the budget. — Ra’eesa Pather