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July – December 2019

This is how South Africa can handle the growing demand for higher education

This is how South Africa can handle the growing demand for higher education

By Annaliese Jeanne Badenhorst

  • DEC 2019
30 minutes to read

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Why is higher education so important?

In South Africa, higher education is mostly offered through private education, and through open and distance learning (ODL). Here, ODL refers to the amalgamation of open learning (with open referring to no specific entry qualifications) and distance education (usually digitally delivered).

South Africa’s triple challenge of poverty, inequality and unemployment has severe consequences for the economic, social and political conditions in the country. Private higher education, offered as distance education, could potentially help to address all three of these challenges.

Numerous studies have investigated the link between education and economic growth, showing that it is most likely the combination of factors resulting in sustained economic growth. However, the policy dilemma that South Africa is facing is how to spend money to best address poverty, inequality and unemployment. Should tertiary students receive free education while thousands of primary school kids are still using pit toilets and secondary learners cannot read or write?

Indeed, the expansion of tertiary education in South Africa (and in Africa) has significant potential to increase the per capita income growth rates of the county. Therefore, how can South Africa make higher education more accessible over the next ten years?

About open and distance learning

Open and distance learning (ODL) has grown in popularity due to its perceived potential to increase access to education – ultimately to gain qualifications to ease unemployment. Developing countries, especially, are turning to ODL to help solve their problems of lack of resources and access to higher education. The advantages of OLD include cost-efficiency, easier access, flexibility and lifelong learning. ODL also comes with challenges, like older students, lower completion rates, and the risk of favouring accessibility over quality.

Public versus private higher education

Private higher education has seen significant growth over the past few decades. Today, about one-third of all higher education enrolments are at private institutions.

Free higher education is seen as the best and sometimes only way out of poverty and unemployment.

The public versus private question of higher education has raised debates on social and economic policy. The debate continues around the private versus social or public benefit of education, i.e. who bears the cost and who gets the benefit from higher education. Should higher education be publicly funded if the greatest portion of the benefit will be the personal gain in terms of higher lifetime salary earned?

Developing countries like China, India, Nigeria and South Africa have the potential of a demographic dividend, where a large proportion of the population is young and potentially productive workers. However, the demographic dividend can only be realised by countries that are able to educate and train these young people and provide jobs for them. The increase in demand for higher education in these countries can arguable only be met with a combination of private and public higher education.

It is interesting to note that the remarkable growth in private higher education enrolments happened despite some formidable forces. These forces include unparalleled growth in public enrolments in the same time; partial privatisation of public institutions oftentimes helping to expand public enrolment; persistent expression of the view that higher education is a public good and a basic human right; responsibility for higher education provision assigned to the state with the resultant begrudging acceptance of private higher education; expanding regulation in terms of quality assurance and accreditation systems.

Although private higher education holds many benefits, it also has shortcomings. In a study of private higher education in Africa it was concluded that even though private higher education was successful in improving access to education, the quality of education, student experience and the recognition of qualifications, it nevertheless failed to reduce costs and retain skills on the continent.

How can higher education help South Africa to grow?

Both private education and open and distance learning (ODL) has the potential to increase access quickly for masses of students, and at lower cost than traditional face-to-face instruction that needs expensive physical infrastructure.

The private sector can arguably provide this increased access more efficiently than government. Above all, South Africa, like most developing countries, simply does not have the budget to provide higher education for all that demands it, because the country also has to meet the increased demands for better housing, health and schooling – all which are essential for economic growth.

The private sector, on its own or in partnership with the public sector, is thus perfectly positioned to provide increased higher education access where governments are unable to. This is why this study explored how the combination of private and ODL in the higher education sector will evolve over the next ten years in South Africa.

How was the study conducted?

The method used to explore the future of private, and open and distance higher education in South Africa over the next ten years was strategic foresight – the capability to craft a diversity of forward views, and to apply emerging insights in practical ways. In this study, framing, scanning and forecasting (scenarios) were used to develop future scenarios for the private and ODL higher education sector. This is how the scenarios were developed:

Step 1: Identifying the scenario field

The issue to be addressed by the scenario process is: What is the future of private ODL in higher education in South Africa over the next ten years? How can private ODL assist to solve some of the current higher education problems in the country?

Step 2: Identifying the key factors

This step comprises describing the scenario field according to the key factors (trends, variables or events) that impact the field, while also serving as the means for the field to have an impact on the world. These key factors, which were identified during the causal layered analysis and environmental scanning processes, are detailed below:

  • #Feesmustfall: The most important recent event that impacted the higher education industry is the announcement in 2018 of free higher education for poor students. The NSFAS system that provided loans and bursaries to students was changed to a system of student grants to qualifying students from poor families to study at public universities and colleges. The #feesmustfall movement has significantly increased the demand for higher education, for both public and private providers. Free higher education is seen as the best and sometimes only way out of poverty and unemployment. However, the expectation has been created that higher education must be free for poor students, and hence private providers are finding it more difficult to charge and collect tuition fees. Private providers are facing the dual challenge of increased demand but more resistance to fee payment. The reality is that the ‘excess’ students will not automatically find their way to private institutions unless free education is expanded to the private sector, or if alternative methods of financing can be found. With South Africa’s large youth population it is expected that the demand for free higher education will increase over the next ten years.
  • Poor school outcomes: Poor school outcomes in terms of literacy and mathematics skills has a significant impact on the higher education sector. Students are ill equipped for the demands of higher education. Students take longer to complete their courses and the dropout rates are very high. On the other hand, poor school outcomes also create opportunities for the higher education sector to focus on courses that help students to complete or improve their matric results, or to gain basic literacy and numeracy skills. It is expected that this trend will not change significantly over the next ten years.
  • Unemployment: The high unemployment rate in South Africa both has an impact on and is impacted by the higher education sector. The high number of unemployed youth is due in part to their poor schooling and lack of higher education. Young people with some further education are more likely to find employment. Being unemployed makes it very difficult if not impossible to access educational opportunities. It is not expected that South Africa’s unemployment rate will change significantly over the next ten years.
  • Skills shortage: South Africa is experiencing both a skills shortage and a skills mismatch. The country has a surplus of low and unskilled workers, while the modern economy needs higher skilled workers. Government has also not put policies in place to assist with the transition of workers from vanishing low-skilled jobs to the new higher skilled ones. The continued decline of industries like farming and mining is exacerbating this trend. It is anticipated that the skills shortage in the country will continue to increase over the next ten years.

The reality is that the ‘excess’ students will not automatically find their way to private institutions unless free education is expanded to the private sector, or if alternative methods of financing can be found.

  • Technology: Technology has significantly changed the face of higher education, especially in the ODL sector. The mode of delivery is now through online, individualised courses, with study materials provided electronically. In South Africa, a large part of the population still does not have access to the internet. In addition, data is still expensive compared to international standards. Thus, even though it is expected that technology will play an increasingly significant role in higher education, it is expected that in South Africa the technology adoption will be slower than internationally over the next ten years.
  • Open and international education: The trend for open higher education (without academic admission requirements) is growing internationally, but is not yet as prevalent in South Africa. Taking into account the country’s past and current poor school outcomes, open education may be the only way for previously disadvantaged groups to gain access to further education. Going hand in hand with open education is the internationalisation of higher education. Technology has made it possible for students all over the world to attend virtual classrooms via the internet (MOOCs, Getsmarter). Higher education businesses thus have to compete globally for students. It is expected that the opening up and internationalisation of higher education will continue or even speed up over the next ten years.
  • Private education: Internationally, private education is growing rapidly. In South Africa, two large listed private education companies, Advtech and Stadio, have announced ambitious expansion plans for their higher education businesses. In the light of the huge demand for higher education, which the public sector will not be able to meet in the short term, huge opportunities remain for the private sector, and for public-private partnerships. Over the next ten years, the demand and opportunities for private providers are expected to grow.
  • Changing skills demand: One of the major trends that the higher education industry in developed countries has to contend with is changes to the types of skills being demanded by the Fourth Industrial Revolution. The challenge for higher education institutions is to identify which courses to discontinue and which new courses to develop. Due to the uncertainty and the fast pace of change in the skills market, the ability to learn has become a key skill. ‘Learning how to learn’ is already one of the most popular online courses. The implication for the industry is that ‘what’ people learn will be changing, and there may be a shift from focusing on ‘specific’ job-related training to ‘general’ skills training. It is anticipated that the pace of changes in skills demand will speed up over the next ten years.
  • Lifelong learning: The trend of lifelong learning has implications for both ‘who’ is being trained and ‘what’. Higher education institutions will have to adapt to cater for older students, and possibly more educated students. Over the next ten years it is expected that the demand for lifelong learning will increase.

Step 3: Analysing the key factors

After the key factors had been identified, they were assessed according to the degree of unpredictability or uncertainty, and the degree of impact or importance. This was done to test whether the ‘key’ factors were in fact the key uncertainties impacting on the future of the industry.

Step 4: Scenario generation

The study developed four scenarios for higher education in South Africa over the next ten years. The scenarios were generated using the following two pivotal uncertainties:

  1. Will the future demand for higher education be for structured (mostly classroom based) or unstructured learning (shorter, open access, skills-based courses, taken at the learner’s own time and place, usually online, with little or no prerequisites)?
  2. Will the future supply of higher education be increasingly public or private?

Four possible scenarios were developed: the status quo, distinction, pass and fail scenarios:

Status quo scenario

The current state of higher education in South Africa will continue more or less as it is for the next ten years. Using the two pivotal uncertainties, the current state can be described as mainly public and structured.

About 80% of higher education students are studying at public institutions, with only the minority of 20% at private institutions. Courses at these public institutions are mostly structured three- or four-year diplomas and degrees, with strict entrance criteria and formalised curriculums. Even though the largest public higher education institution in the country, Unisa, is a distance only provider, the majority of students at public institutions are attending classroom-based lectures. In this scenario, looking at the next ten years in South Africa, the following factors remain more or less unchanged: high unemployment levels, poor school outcomes and skills shortage. It is anticipated that it would take much longer than ten years to significantly improve school outcomes because some of the underlying causes like poor teacher training, the lack of investment in school infrastructure in poor areas and the current below average learner performance in basic skills like reading and mathematics will not be addressed quickly and sufficiently. The recent significant increase in the budget allocation for higher education has come at the cost of basic education, where the budget for infrastructure has been reduced. If some of the increased funds for higher education can be used to train school teachers then school outcomes may show some improvement, but so far there has been no indication that the higher education funding will be used to address specific skill shortages.

With the status quo, the current high unemployment levels as well as the shortage of skills continue over the next decade. The country’s economic growth rate has been very low, and government does not seem to have plans to address either the economic growth or unemployment.

In terms of addressing the skills shortage, government has started building two new universities, but demand for higher education far exceeds supply, as can been seen from the current NSFAS applications. Once again, there are no plans to address specific skills shortages, like teachers, scientists, computer programmers and software engineers.

The #feesmustfall campaign continues to put pressure on government for free education.

Government has already increased the budget allocation for the next two years to include second and third year students (this year only covered first year students). Currently, NSFAS only covers public education, thus if this policy remains, the demand for public education will continue to increase. As long as NSFAS does not finance studies at private institutions, the growth prospects of private institutions remain limited.

With the status quo, the current split between public and private higher education provision remains more or less constant, thus the majority of students will be at public institutions. Without specific intervention, the balance between public and private higher education will remain at current levels.

Developing countries, especially, are turning to open and distance learning to help solve their problems of lack of resources and access to higher education.

Private education relies on paying customers, but the current low economic growth rate and the high number of indebted credit consumers makes it difficult to envision significant growth in the industry. The private providers can assist with the increased demand that has been created for higher education, but some form of government intervention will probably be needed, either through funding or policies to specifically promote private education.

The status quo also assumes that most higher education students attend classroom-based lectures

and that ODL remains a minor player in the higher education industry. Most courses will be structured diplomas or degrees with strict entrance requirements. The structured nature of these courses will continue to put them beyond the reach of many South Africans who did not have adequate schooling results and who may have limited time and resources for further studies.

Stringent entrance requirements will continue to put barriers in the way of ‘non-traditional’ students who are seeking to overcome past poor schooling outcomes. Higher education will remain accessible only to those who have already achieved some measure of success in good school results.

The status quo scenario shows that South Africa will make slow progress towards addressing the skills shortage, unemployment and economic growth. Higher education is delivered mainly through public, classroom-based institutions. No significant increase in access takes place and public institutions continue to expand at a slow pace. Growth in private institutions is modest. Structured courses will take preference over less structured, ODL courses.

Distinction scenario

In this scenario, South African higher education gets a distinction. This scenario projects a future for higher education over the next ten years where both public and private institutions significantly increase the number of students gaining access. At the same time, higher education courses become shorter, skills based and more unstructured. More students get access and complete their courses successfully, because courses are tailored to student and industry needs, hence reducing the skills shortage and unemployment, and potentially aiding economic growth.

An important factor in realising this scenario is that public and private institutions will work together, either informally or through public-private partnerships. The best outcome for higher education will be achieved if the best of public and the best of private higher education are combined, and the best assets and skills of each leveraged to the gain of all students. There are already a few examples of where public and private institutions are working together. For example, Unisa students attending classroom lectures at private colleges, hence private tuition used to obtain a public qualification. Other examples include government departments paying for their staff to study at both public and private institutions.

Public universities have limited infrastructure and state subsidies to deal with the growing demand, whereas private entities such as Stadio have raised millions to expand private higher education access. Stadio plans to expand into fields like medicine and engineering, which are qualifications that are expensive to develop and accredit, thus it would make more economic sense to partner with existing public institutions to share resources. Public institutions have a lot of knowledge capital that can be leveraged by private institutions through either classrooms or distance learning. By working together, access is increased significantly and cost-effectively, and some progress made to alleviate the skills shortage in the country. In this scenario, government sees the private sector as a partner in providing access to higher education to an increasing number of students.

By working together in partnership, the financing of higher education is applied where it is utilised most efficiently, for both public and private studies. Rather than ‘forcing’ students to public institutions (some that have less than stellar reputations), because only public studies are funded, students can go where it suits them best. ODL studies are traditionally less costly than classroom studies, hence by paying for private ODL studies government is assisting many more students from the same budget. Government continues to look for the most cost-effective ways of studying in order to make a significant improvement to the country’s skills shortage.

Increased access to higher education not only relies on more ‘seats’ being made available at both public and private institutions but also for access to be more ‘open’. This means that access is available to everyone, regardless of past academic performance or other selection criteria.

To cater for both the unskilled and those requiring mid-career retraining, courses that are shorter less structured and more skill focused are developed. Someone making a midlife career change does not necessarily have the time and money to complete a full three-year degree, but they can complete a one-year focused skills programme. All higher education institutions will be considering the job requirements in designing future courses. Future job seekers will acquire a portfolio of skills and courses, rather than follow a fixed degree programme. A balance is achieved between public and private institutions and between structured and unstructured higher education.

The message of the distinction scenario is that South African higher education, and hence the country, will only be successful if both private and public institutions work together in all areas of higher education.

Pass scenario

In the third scenario, South African higher education achieves a pass grade. In the pass scenario, higher education develops to be more private and less public.

Two potential wild cards or black swans for the higher education industry in South Africa have been identified; the one relating to privatisation or nationalisation, and the other relating to technology development.

Over the next ten years, private higher education increases its share from the current 20% to over 50% of students, which brings the country more in line with other developing countries. It is forecasted that enrolments at public institutions stagnate, while the growth occurs mainly at private institutions. The stagnation at public institutions is the result of increasing demands for free education, the failure of the NSFAS system or shortage of government funds. Simultaneously with increased privatisation, higher education also becomes more unstructured, open and distance based, and international. Increased privatisation of higher education happens because of either specific government intervention to promote private higher education, or through a deterioration of public education, or a combination of both. Government encourages more private institutions through deliberate policies and by making it easier to register private institutions by local and international institutions. By facilitating the funding of private studies, either directly (grants) or indirectly (bank loans), government significantly increases the supply and demand of private studies. By promoting private studies, government is using the private sector to accommodate the excess students that the public institutions do not have space for. ODL institutions are uniquely situated to cost-effectively handle the overflow of students. It is cheaper and quicker to expand capacity at ODL institutions, because there is no need for additional costly physical infrastructure.

In this scenario, it is anticipated that the enrolments at public institutions stagnate at current levels

for two reasons. Firstly, due to the high cost of free public higher education, it is unlikely that government can afford to expand access significantly. Secondly, since government has only built two new universities in the last 20 years, it is unlikely that it will have the capacity or the budget to build many new public institutions over the next ten years.

Government has not indicated that it plans to either build more facilities or significantly increase the number of places at current institutions. Therefore, if the country wants to significantly improve the skills shortage and unemployment, it would be up to the private sector to supply such skills.

If the #feesmustfall campaign continues to cause disturbances at public institutions, students may be disinclined to go there and many may prefer private institutions. Similarly, the problems at NSFAS, which has been put under administrative management recently, may cripple public institutions, if funds are not dispersed to them timeously. Students may prefer to attend private institutions that are not affected by political problems.

Private institutions are better at adjusting to the trends of changing skills demand and lifelong

learning. Some of the international ODL institutions, especially the online educators, have been much quicker in adjusting their course offerings in response to the changes in skills demand than

the traditional public providers. The demand for shorter skills-based programmes is increasing, especially for workers that do not have the time or money for a full course or degree.

This scenario is better than the status quo, because supply (access) in the private higher education

sector is expanded and it plays a bigger role in alleviating the skills shortage in the country, and possibly also unemployment. At the same time, less structured, shorter, open-access programmes make higher education more accessible and affordable to more students.

Fail scenario

In the last scenario, South African higher education fails. This scenario envisages a decline in both

public and private higher education, thus fewer students at both public and private institutions.

The failure of the NSFAS student financing scheme leads to fewer students being assisted financially and hence fewer students studying at public institutions. Continuing administration and financing problems at NSFAS result in delays of payments to public institutions, which puts them under severe financial strain. Questions are also arising around government’s ability to fund the increased budget allocations for higher education as the scheme is extended to second and third year students over the next few years.

As the scheme continues into future years, the institutions’ funding is more and more based on government funding. Should government not be able to meet all the funding requirements, or if government decides to reprioritise spending (like to primary education or national health care), public institutions are forced to reduce their student intake.

This scenario anticipates that private higher education will simultaneously decline, or at best

remain static. If there is no significant change to the way private studies are financed, private institutions will not expand significantly to take up the slack from public institutions. Similarly, without government policies specifically promoting private higher education, growth in the sector will remain subdued.

It is expected that the opening up and internationalisation of higher education will continue or even speed up over the next ten years.

This scenario expects that the problems of high unemployment, skills shortage and poor school outcomes will continue, or possibly even worsen over the next decade. In this scenario both education and the country fail.

Step 5: Scenario transfer

What can one do with these scenarios? Some of the recommended scenario transfer options for this study are impact analysis, actor analysis, sectoral analysis, strategy development and policy evaluation, and backcasting.

Wild cards and black swans

Wild cards are events that have a low probability but that can have a high impact. Similarly, black swans are random, unsystematic and unforeseen events that could have a high impact on a business or sector. They are often described as the ‘unimaginable’. Two potential wild cards or black swans for the higher education industry in South Africa have been identified; the one relating to privatisation or nationalisation, and the other relating to technology development.

What did the study find?

To recap, this study wanted to find out if and how the combination of private and ODL higher education can help to address South Africa’s education challenges over the next ten years.

The study has shown that both private and ODL higher education providers are uniquely situated to address some of the main challenges that higher education will face. Indeed, the increasing demand for access to higher education can be met with an increasing supply of both private and ODL institutions.

ODL institutions already have the capacity to enrol many more students, and private groups have raised funding to expand their capacities. ODL specifically addresses some of the trends in higher education like changing skills demands and the need for lifelong learning. ODL also opens access for those who did not have the opportunity in the past or with inadequate schooling, a significant constituency in South Africa.

The scenario exercise showed that the best outcome for higher education in South Africa will be if public and private institutions both form part of the future. This creates the opportunity for private-public partnerships to deliver the best education outcomes.

The scenarios show where higher education policy in the country needs to be focused. Policy makers need to decide on the best balance between public and private higher education, and also on the balance between structured programmes and open, unstructured programmes. Appropriate policy will encourage private investment and partnerships in the industry. Government should also expand financing to students at private institutions.

It is recommended that the expansion of private higher education is encouraged through relevant government policies. Private capital should be encouraged to invest in higher education, both as new ventures and the expansion of current institutions.

In terms of future strategies, it is recommended that both private and public institutions become more ‘open’ in terms of entrance requirements, are less structured, and develop shorter, skills-based modular courses. The transferability of credits and qualifications between institutions also needs to be made easier. In addition, private institutions should focus their efforts on areas where skills shortages have been identified.

A further recommendation is that both government and the private sector explore ways to work together to create the best outcome for higher education in South Africa through public-private partnerships, joint ventures and other collaborative efforts.

  • This article is based on the research assignment of Annaliese Jeanne Badenhorst – a PGDip in Futures Studies alumnus of USB. The title of her research assignment is: The future of private, open and distance higher education in South Africa over the next ten years.
  • Her study leader was Prof André Roux, programme head of USB’s portfolio of Futures Studies programme. Prof Roux lectures in Management Economics and Africa Country Risk Analysis at USB

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