Zuma's fee free plan may cause chaos at SA's universities

Zuma unveiled the plan on December 16, two days before Cyril Ramaphosa replaced him as leader of the ruling African National Congress and two days after a body representing the 26 state-owned institutions said each would raise fees by 8%. The University of South Africa, the country’s biggest with more than 400 000 students, held fees at 2017 rates, it said on December 7.

On January 1, the universities said they won’t allow walk-in applications from people who qualify for free education, but people should instead submit details online for assessment. A day later, the opposition Economic Freedom Fighters party condemned the move and called on all academically deserving students to report to universities of their choice for registration.

“Zuma’s announcement on free tertiary education is very much a political project and it puts a lot of pressure on the new ANC National Executive Committee,” Joleen Steyn-Kotze, a senior research specialist at the Human Sciences Research Council, said by phone. “It is possible that there will be chaos and universities are going to be on high alert.”

Earlier protests

Weeks of violent protests at universities across the country in 2015 and 2016 delayed the end of those academic years, and institutions’ finances were stretched by the state’s decision to limit tuition costs in 2016.

Africa’s most-industrialised economy is contending with a skills shortage and a 28% jobless rate. Investors are concerned that the fee proposal, which ignores fiscal targets set in the budget, will add to government debt and hasten another rating downgrade to junk for the country’s local-currency credit.

Under the plan that will be phased over five years starting in 2018, students from homes where the combined annual income is R350 000 ($28 400) or less annually won’t have to pay for tuition, books, meals, accommodation and transport.

The directive also froze fees for students from households earning R600 000 or less per year. The National Student Financial Aid Scheme, which provided assistance to about 226 000 university students whose family income was below R122 000 annually in 2016, will assess applications from prospective students who didn’t previously qualify for financial aid but who now do, Chief Executive Officer Steven Zwane said on Thursday in Pretoria.

NSFAS disbursed R12.4bn in financial aid to almost 482 000 students at universities and technical-vocational colleges in 2016, according to its annual report. Under the new plan, all those who are funding their studies through the organisation will have their loans converted to grants.

Funding allocation

The National Treasury allocated R76.7bn to higher education for the year through March 2018, and estimates this will increase by an average of 8.2% in each of the following three years, the fastest-growing spending item after debt-service costs, it said in the mid-term budget in October.

South Africa will increase subsidies to universities to 1% of gross domestic product from 0.7% now over the next five years, according to Zuma’s December 16 statement. The National Treasury will outline how the government will fund free higher education “in a fiscally sustainable manner” in the February 21 budget, Finance Minister Malusi Gigaba said after the presidency’s announcement.

“We can easily afford it if we cut out the amount of government money that is currently being wasted on corruption and state capture,” Azar Jammine, the chief economist at Econometrix, said by phone.

“Under the current circumstances there is too much pressure on the fiscus to afford the new measure.”

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