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14 October 2020 | Story Prof Francis Petersen | Photo Sonia du Toit
Prof Francis Petersen.
It is a well-known fact that the South African economy was in deep trouble before the COVID-19 pandemic, with unsustainable levels of debt, a growing budget deficit, and an 8% projected contraction of the economy post the pandemic.  There is a clear realisation that the economy needs a recovery plan, with the significant expansion of productive employment opportunities for South Africans.  In fact, the Social Partners’ Economic Recovery Plan, coordinated by Nedlac, was developed to increase investor, consumer, and public confidence, and to turn the economy around in the short and medium term.  The plan provides specific interventions, and although the actions as specified are not new, it argues for ‘significant convergence among the Nedlac partners on what needs to be done to set our economy on a new accelerated, inclusive, and transformative growth trajectory’.  President Cyril Ramaphosa will present the plan to parliament this week.

The private sector, industry, and business are key components of the economy, primarily driven by manufacturing, financial services, transport, mining, agriculture, and tourism.  Although I believe that government can and should contribute to economic growth, the private sector, business, and industry are the components that will generate real growth in the economy.   Business for South Africa (B4SA) has pledged their commitment to work with the social partners to implement these action steps – and it needs to be emphasised that these interventions are not new!  However, the dilemma lies in the implementation of these actions in terms of inaction, urgency, and effectiveness.  Whether it is to address the energy crisis (more specifically, the security of energy supply), local manufacturing, supporting the recovery and growth of tourism, investment in the mining, agriculture, and infrastructure sectors, adversarial relationships, egos and political rhetoric needs to be replaced by collaboration, co-creation, and action.  


Lack of action threatens livelihoods

It is clear that the political, business, and societal spheres do not need more workshops, conversations, policies or plans – these are all available and known.  We need to build a capable state (which includes the architecture of the SOEs), introduce appropriate labour reform, corruption across all spheres of government, business, and social partners is unacceptable and need to be decisively addressed, policy and regulatory certainty and proper fiscal reform are required.  Why is it then so difficult to implement these if all stakeholders are in agreement, even if everyone is aware that lives and livelihoods are threatened every minute when these actions are not implemented?  Is it the lack of political will or lack of political leadership?  

Although B4SA also places emphasis on the implementation of these actions, I find the individual voices of industry, private sector, and business leaders absent. In my engagement with some of these leaders, they have stated that although their responsibilities are to their boards and shareholders, two sets of principles drive their business agenda: doing more with less (effectiveness and efficiency), and doing good while doing business (community upliftment through social performance), underpinned by a green focus.  Although international leaders in the mining industry, such as Mark Cutifani (Anglo American), Mark Bristow (Barrick), Mick Davis (ex-Xstrata), and many other business and industry leaders argue for foreign investment in South Africa, certainty in the country’s regulatory framework is required for this to materialise. 

A strong economy is also important for graduates 

It is obvious why the South African economy needs to recover, and that the existence of a strong private sector, industry, and business is critical in achieving this recovery.  From a higher education perspective, a powerful and effective educational experience is developed when academia and a strong private sector and industry work side by side.  Such a collaborative and co-created model results in breakthroughs and overall advancement of higher education institutions, business, and industry, and importantly – the students.  The continuous contraction of the South African economy further lends itself to the unemployment crisis, where the weak economic performance is not sufficient to create jobs in line with the population growth, which in itself presents a massive challenge for university graduates.  A strong focus on employability as part of the core business of a university, and the ability to equip graduates with the necessary skills to navigate the future world of work will remain crucial factors – not only now, but also in the coming years, and a relationship with a strong industry, private sector, and business is pivotal in driving this.

The financial model used in a South African (residential) university consists of three main income sources: (i) the state or government through a subsidy (the so-called ‘block grant’), (ii) tuition fees, and (iii) third-stream income (which is mainly a cost-recovery component from contract research, donations, and interest on university investments). The National Student Financial Aid Scheme (NSFAS) contributes to the tuition fees through a Department of Higher Education, Science and Innovation Bursary Scheme, providing fully subsidised free higher education and training to poor and working-class South Africans (recipients will typically be students from households with a combined income of less than R350 k per annum).  

Negative impact of COVID-19

The negative impact of COVID-19 on the income drivers of the university can be severe.  The subsidy from the state or government has already been cut, with potential further cuts in both the subsidy and specific earmarked funds. The pressure on income derived from tuition fees (that component which is not funded through NSFAS) will increase, as households would have been affected by the nationwide lockdown and the economy in deep recession, and a significant number of jobs would have been lost. The economic downturn, due to both COVID-19 and a sovereign downgrade by all rating agencies, has already negatively impacted local financial markets as well as the global economy. The multiplier effect of this would be that the value of investments and endowments would decrease, and philanthropic organisations and foundations would most probably reduce or even terminate ‘givings’ to universities.  Although industry, private sector, and business will re-assess their funding to universities, whether for research or bursary support, it is also an opportunity for such a strong sector to at least assist universities to ‘fill this financial gap’ in the short and medium term.  

Although, it is not expected that business and industry will just ‘fill this financial gap’ – institutions of higher learning need to argue and demonstrate a value proposition to these sectors.  COVID-19 has clearly demonstrated the focus of collaboration and co-creation among different stakeholders – these should be explored more concretely.  Should vice-chancellors (a representative of this group) not be part of BUSA or Business Leadership SA as a first step to bring higher education institutions and the different leaders of the economy closer?  Although COVID-19 has negatively impacted the financial position of the industry and business sectors, my assessment is that these sectors would recover faster than anticipated, but the effective and urgent implementation of a ‘state economic recovery plan’ is essential – every day that this implementation is stalled, it is affecting the country and its people severely.

Public-private partnerships key to economic growth

Government and the industry and business sector need to work together to foster economic growth – now more than ever.   The plans to achieve this are available – the implementation thereof, however, is lacking. A strong industry and business sector have major benefits for the country, among others, for the higher education sector. Let us not delay this further, political leadership needs to be decisive and the industry and business sector must continue to speak out – this sector is too important to be neglected.

Opinion article by Prof Francis Petersen, Rector and Vice-Chancellor of the University of the Free State and former executive of Anglo American Platinum.

News Archive

SRC Inauguration speech: 22 January 2005
2005-01-22

Campus Head (Prof Peter Mbati). Dean of Students (Dr Natie Luyt). Deputy Director: Student Affairs and my boss (Mr. Teboho Manchu), Members of the University executive and Academic staff members, SRC members, Leaders of trade Unions and Student organizations, Distinguished guests, Ladies and gentlemen, most importantly first entering students and Parents receive my heartfelt revolutionary greetings.

Let me extend my word of appreciation to our distinguished guests for adding value and dignity to this event. Your presence here means a lot to us. Program Director what I bring here with me, assisted by facts, and is therefore just the work of my imagination. Like a love letter addressed to a sweetheart miles away, even though you do not know how she feels, what she wants to hear, and do not even know how her face looks like.

To me a speech is just an honest and intimate conversation. That is why I got into the habit of establishing a dialogue, or a debate, with my acquaintances looking at their faces and trying to persuade them of what I am telling them.

Mr. Speaker and Madam Deputy Speaker of the Student Parliament we are gathering at this ceremony, significantly few weeks after the release of grade 12 results, with the exception of those from Mpumalanga because of fraud. The Grade 12 results also show that only 18% of Black learners matriculated with exemptions, as compared to 53, 6% of white learners. This is an indication that our education system needs an overhaul.

We are also gathered here significantly a day after the management retreat held in Bloemfontein, Masselspoort. The retreat discussed, among other things, the transformation agenda, and some possible solutions to challenges we are facing now.

Most regrettably, we are gathered here when the whole world morns the victims of Tsunami tragedy. Let me therefore tore the line and convey our deepest condolences, from the last robot of my heart, to the affected families. Our hearts and thoughts will always be occupied by this horrified tragedy.

Creating a new Institution

I would submit, for purposes of debate and discussions that this Institution should strive to specialize and excel in regional rural development studies. Since our higher education, institutions in South Africa are generally weak in rural development studies. Instead, most of them tend to have an urban orientation to their programmes. Training everybody for the cities, big business and the private sector. This is a big weakness in a country with such large rural areas and population trapped in poverty, disease and ignorance.

Women’s studies

Program Director, it is only a moron who can argue against the fact that for us to reposition the institution around the regional development challenge, we need to start first with women empowerment. It is a fact that in most of our poor communities and families, it is women who withstand the worst of poverty. They are the ones who daily have to wipe tears from children who are hungry. It is women who look after the sick, the elderly, those dying from AIDS and the jobless. They are the one who have to fetch water, make fire and cook. There can therefore be no rural development studies without women studies, in particular on how to empower them and assist in the provision of basic services, so that they are relieved from some of the burdensome task of the society.

Registration Process

Mr. Speaker and Madam Deputy Speaker of the Student Parliament let me indicate that the registration is a process and not an event, so it cannot be concluded overnight. This huge process demands for people to stay calm, as there is no crisis. People should stop being excited. At the same time, no organization should use its cheap popularity and unilaterally disrupt the continuous and smooth running of the registration process at hand.

Let me strongly indicate, madam deputy speaker, that I am on record for stating that I have forgiven all those who have wronged us. I harbour no bitterness towards the protagonists of our painful and unfortunate events of the past week. And we will overcome this process not by our own devices but by the help of Almighty God and the grace of our Lord Jesus Christ.

Concerning registration of first years, we have programs, concerning that of senior students, we have programs, regarding graduations we have programs, and concerning HIV\AIDS we have programs. So, there is no need for people to press panicking buttons.

Mr. Speaker and Madam Deputy Speaker of the Student Parliament let me be opportunistic and welcome the entire student body on Campus for the academic year 2005. May our lovely first entering students have a happy and momentous year as part of Qwaqwa Campus of University of the Free State. May your studies be fruitful and enjoyable.

Student years are generally the happiest years of your life, so please make the most of them. While you are doing, all your preparations bear in mind that University is not an opportunity, it is just creating opportunities for a person.

On behalf of SRC members, our people, our students and management members I would like to welcome you all. Even though your parents are far away, here at Uniqwa you have more brothers, more sisters and more parents. Since we will love you with the same love as if we are from one family, and I have no doubts that management members will love and care for you as if you are their own children. Should you encounter any problem while studying at the Qwaqwa Campus of University of the Free State do not hesitate to contact us at the SRC offices because we need to ameliorate any factor influencing you negatively while on campus. I wish you well in the attainment of your academic pursuit.

Senior Students: We are not faced with just a new year but another academic year where we all have to work together to achieve our common goal of building our Institution through the development of human power. I urge you to invest your whole selves in this SRC.

For quite some time now, a debate has been ranging as to, whether has there been any progress in this incorporation process, or we are just moving with no direction. This debate is important, but I hasten to add not essential. The SRC is also involved in this debate, but with definite shift in emphasis. For us it is not important to participate in the debate than it is in finding solutions for the challenges of this new chapter in the history of humankind.

To my colleagues: Comrades, we are leading this Institution with a sense of pride and duty, and I know very well that we lead men and women, students who are determined to ensure that we all reach our destination safely and on time.

I said in one of our meetings that there are more enemies on our way, more than we can imagine. I think you witnessed that during the course of this week. The excitement and unnecessary confusions caused by some confused and loosed charlatans bear testimony to my statements. We should not reveal our game plans unless we are ready to slam.

Let me also borrow from the words of the late Albert Lethuli when he said and I quote: “There remains before us the building of the new land, from the ruins of the old narrow groups, a synthesis of the rich cultural strains which we have inherited. The task is immense”. Lastly, a navy divided within its ranks will be vanquished and destroyed by the enemy, but a navy united in purpose and action, loyalty and commitment will not drawn but sail on to victory.

In conclusion, let me call upon all political structures, church denominations, developmental structures, clubs, societies and forums to put aside all their differences, ideological insinuations and forge unity towards transforming Qwaqwa Campus of University of the Free State into an institution that is seen playing vigilant role in developing students academically, politically, socially, spiritually, religiously, culturally and otherwise.

Program Director, let me end my speech by indicating that every drop of my blood is telling me that Uniqwa is my home. I firstly became a student here, I became an activist here, I became a leader here, I became a president here, I will become a graduant here and hopefully I will become an employee here. So never, doubt my commitment towards the community of this campus.

Please be informed, in a central University of Technology’s way, that if there is no UNIQWA in HEAVEN, then I am not GOING.

Let us broaden the social base.

Tello Titus Wa-Motloung President General

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