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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

Qwaqwa Campus opens: Prof. PA Mbati's speech
2005-01-22

Official welcome speech by Prof. PA Mbati for 2005 first year students held on Saturday 22nd January 2005. Program Director, The Chief Director Operations Rev. Kiepi Jaftha, Dean of Students Dr. Natie Luyt, Program Head of the Faculty of Humanities, Dr. Elias Malete, Program Head of Faculty of Natural and Agricultural Sciences, Prof. Riaan Luyt, Acting Program Head of the Faculty of Economics and Management Sciences Prof. Andries Venter, Deputy Director Student Affairs Mr. Teboho Manchu, Coordinator Finance: Mrs. Elizabeth Nchapi, Senior Librarian Mr. Stoffel Kok, Senior Magistrate Mr Saul Mohosho, SRC President Mr. Tello Motloung, members of staff, invited guests, parents, guardians, my dear students, ladies and gentlemen.

It is indeed my pleasure to welcome you to the official welcoming ceremony of the UFS-Qwaqwa Campus 2005 first year students. Our Rector and Vice Chancellor Professor Frederick has requested me to pass to you his warmest wishes and regards on this special occasion. I am confident that the orientation exercise in which you have participated has achieved the desired effect of introducing you to your new way of life here on campus, and that you are now sufficiently prepared to get on with the rigors of being a student at this University.

Following the restructuring of the higher education landscape, the Qwaqwa campus was incorporated into the University of the Free State with effect from January 1 2003 . As a consequence, Management was faced with a whole complex series of challenges including, primarily making the campus financially viable, but also ensuring that it remains relevant in it’s core business as a satellite campus of the University of the Free State in terms of its teaching, learning, research and community service responsibilities.

A whole series of strategic planning workshops were conducted last year with both internal and external stakeholders. Various important strategic objectives were flagged out, and the next level of consultation will take place soon. I know that there is a lot of eagerness, sometimes to the level of impatience to see this process completed as quickly as possible. But again on the other hand, due to the far reaching consequences of any hasty decisions, plus the need for a carefully planned process, we need to be a little more patient before the implementation of the strategic objectives is implemented. You will be kept informed as this important and critical aspect in the evolution of our campus takes place.

As a response to the need for a more effective governance model on the Qwaqwa campus, a review of the governance structure was completed towards the end of 2004 and will soon serve before the Executive of the Executive Management for approval.

Due to the importance that top management attaches to the development of an effective governance on the Qwaqwa campus, the process was facilitated by an internationally acclaimed consultant. Again the contents of the revised governance model will be made known to the campus and the broader community once it is approved.

I am glad to report that in recognition of the need to improve the infrastructure on campus to provide a conducive learning atmosphere to our students, a total of 8.2 million rands was made available towards the end of 2004 for recapitalization of specifically our student residences and lecture venues. The first phase of the residence renovation is completed and residences C, D and E have now been officially handed over to the University by the Contractor. Among the features of the renovated residences is that they will now computer rooms, kitchenettes for cooking, and a redesigned TV room. The rooms have even been fitted with heaters. Our challenge will now be to maintain our newly acquired facilities and to ensure that they do not again deteriorate to an un-acceptable level. The second phase of renovation will start soon.

As indicated in my address during the orientation week, our obligation to you as a campus is to offer you quality training to the best of our ability, and to disseminate this knowledge to you within a conducive atmosphere worthy of good learning. On the other hand, our students have to take advantage of this opportunity to acquire the necessary skills and training in the various academic programs that we offer on campus.

We have a very simple agenda on this campus – our vision is to continuously strive to build and develop the Qwaqwa campus of University of the Free State into a truly quality institution of higher learning in our country. To develop a tradition and culture in which we are proud of who we are, and constantly and tirelessly working towards excellence in our academic programs, and other non-academic but core and important aspects in your growth and development such as sport and community service. To nurture young conscientious citizens who are aware of their duties and responsibilities. Ultimately to produce hard working young people who fully exploit their potentials, and who will serve this country with diligence when unleashed into the real world in effectively managing their roles and responsibilities in society, whether in private or government civil service.

I would like to encourage that the various stake holders of this campus, the students, academic, administrative and support staff, and our broader community, to work together in harmony for the well being of our campus. For this campus to continue to be relevant in the environment that we find ourselves, there is a need for continuous engagement of its various stake holders, and genuinely listening to each other. We must continuously and regularly keep our feelers on alert in order that we can remain relevant.

I am particularly inviting our parents and guardians, the alumni of this campus, and leaders from our community to join hands with us in seeking solutions to the various challenges that we continue to face on campus. I am open for frank and honest discourse on the best way forward for our campus.

The University of the Free State is committed in making tertiary education accessible to as many students as possible. In this regard, students who do not have the required ‘M’ score to gain entry into main stream classes are given an opportunity to study in the highly successful ‘bridging program’ in which learners are integrated with main stream students but with fewer courses to tackle in order to ensure success. This is done on the premise that such students have the potential to pursue a degree course, and that therefore within a well structured program, they can make a success of their lives.

The University is conscious of the fact that in many instances several academically deserving students fail to be admitted into university due to financial reasons. For students who are academically deserving but who because of reasons of poverty cannot pay the requisite fees, the university is able to assist such students through the National Financial Aid Scheme – commonly known as NSFAS, and University Merit Awards. Other incentives such as Sports bursaries are also available.

Please remember that it is important to balance your life on campus and the phrase ‘a healthy mind in a healthy body’ aptly describes this statement. Ensure that you participate in sport and cultural activities of this campus so that you can develop and strengthen the various God-given talents that you have been blessed with.

A second major ingredient for your success on campus is discipline and respect for rules, policies and procedures that govern the University of the Free State , and respect for your fellow students. Good discipline is a major contributory factor to success in life, and more so in your formative academic life at University. This means for example that you must attend all your lectures, complete your assignments on-time and visit the library frequently. Please manage your time wisely and responsibly. Remember that as a university student, you are basically the master and architect of your own destiny.

Think very carefully when you are confronted with difficult situations, be they negative peer pressure, or temptations to indulge in intoxicating drugs, and make the right choice.

The University has well trained personnel including a social worker, a psychologist and counselor, and members of the student affairs division under the leadership of Mr. Teboho Manchu, Deputy Director Student Affairs, who are available to assist whenever you require their help.

Today is also a special day because we have officially inaugurated the SRC President and the rest of the SRC leadership. I am sure that you all join me in congratulating the SRC for being elected to their leadership roles for 2005. Mr. SRC president and your team, please remember that you now have a huge responsibility in carrying out the aspirations of the student body on campus. I want to wish you luck and success as you champion the rights of your constituents, which I believe and trust will be compatible with management’s expectations with regard to quality teaching and learning on campus. As you are aware, Management values the input that the student leadership makes in the operational management of the affairs of this campus, and we look forward to a cordial, non-confrontational working relationship with a view of rendering un-paralleled service on campus.

Mr. Program Director, allow me to wish everyone here a successful and prosperous year. May the good Lord give us the strength and courage to overcome any obstacle that may be placed in our way in the course of our work in 2005.

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