Establishment of Ministerial Task Team on business processes; Remuneration of Vice-Chancellors; Funding of missing middle & historic debt; SRC elections

Higher Education, Science and Technology

19 June 2020
Chairperson: Mr P Mapulane (ANC)
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Meeting Summary

Video: Portfolio Committee on Higher Education, Science and Technology 19 June 2020

The Committee received a briefing from the Minister of Higher Education, Training and Innovation, Dr Blade Nzimande.

The Department indicated that a Ministerial Committee of Inquiry had been appointed to conduct an independent investigation into the business processes, systems and capacity of the National Student Financial Aid Scheme (NSFAS) and make recommendations for a future model of administering student financial aid. On the basis of the investigations to be conducted, as instructed by the Minister, the Committee should make recommendations for improvements in all areas, and also advise on an appropriate model and processes for ensuring effective student funding support at tertiary institutions for the future.

Regarding the Council for Higher Education’s advice on the Vice-Chancellor remuneration, the Department indicated that the Council had assured the Minister that the inquiry would be undertaken with the highest levels of integrity in line with the relevant codes of ethics, to ensure the credibility of findings and of the ensuing advice. As such they also understood the sensitivities around the enquiry and would avoid making public statements about it during and after the inquiry. Its chairperson was also willing to respond to queries about methodology and other technical aspects of the inquiry if necessary.

Concerning the missing middle students, the Department had a long-term plan of working towards a comprehensive student financial aid model or eco-system that addressed the funding needed of all students who required financial assistance and also considered postgraduate funding. This may include a combination of bursary and loan models. It was unlikely that this could be done without a substantial additional investment of funds from government. Funding from the Scheme and the Department, for poor and working-class students, was clearly a central part of this financial aid model.

In addressing historical debt, the Department said that it had made available, through reprioritisation, an amount of R1.7 billion to the Scheme to settle historic debt for students that were funded under the Scheme cap funding pre-2018 and if possible, ensure that these students were funded at the full cost of study until they graduated. The funding was linked to approximately 54 000 specific students. There were also students who had re-entered the university system, who may or may not have been funded by the Scheme in the past, were carrying historic debt, and were now funded by the Scheme. The Department, working together with Scheme, was investigating the quantum of historic debt of this group of students.

The Department reported that there currently was no process underway to standardise Student Representative Council elections at tertiary institutions. The Department monitored the elections annually to identify any irregularities and ensure free and fair processes were in place. The Department acknowledged that the COVID-19 pandemic may affect the dates of the SRC elections, given the changes to the academic year; it would engage with institutions on this matter. Institutions currently used their own processes to conduct elections. However, there have been discussions with the Independent Electoral Commission (IEC) about a possible approach to standardise elections, with the support of the IEC.

The Members appreciated the efforts made by the Minister, especially on the gazetting of the task team for the funding model of the Scheme.

Members noted that the Scheme had spent hundreds of millions of Rands to supposedly improve its IT systems but the systems were found to be adequate enough to deal with the existing problems. What caused this? What oversight role has the Department played in addressing this for future purposes in order to ensure value for money?

Having read the terms of reference on what needed to be investigated on the Scheme’s business model, the Members asked if the Minister would not agree that as part of the talks about the disbursement, that there be a review of allowances in Technical and Vocational Education and Training (TVET) institutions, in comparison to university allowances – particularly for accommodation and food. There were institutions which, despite sharing spaces of accommodation, were classified differently in that one was a TVET and one was a university – although their funding was different.

Regarding the missing middle, Members said that they would appreciate a report that had a breakdown of how many missing middle students were in institutions and how many of them were funded by the government. In the same light, they asked if there was a policy in place to regulate the funding of missing middle students and whether there were timeframes that the scheme had set as well as the kind of targets that it set. In March of 2020 it was reported that the amount was R910 million but the entity now said that R810 million was used to clear historic debt. Members pointed out the discrepancy and asked for clarification.

Meeting report

Opening Remarks by the Chairperson

The Chairperson said that the Members had had a good plenary meeting at the National Assembly, where the President was present to answer questions from Members. It was a fruitful engagement, particularly in terms of discussing challenges imposed by the COVID-19 pandemic. The session included Members who were at the Chambers and those who attended virtually. The President outlined the further measures that would be put in place by the National Command Council in order to limit the impact of the pandemic.

He announced that the Committee would be receiving an update briefing from the Minister on a number of issues that were identified by Members. The briefing was very opportune as Parliament would soon be going into recess; the Committee had also thought it proper to schedule another meeting before the recess, to discuss the state of readiness in saving the 2020 academic year.

The Chairperson then handed over to the Minister for the briefing.

Presentation by the Minister of Higher Education, Training and Innovation, Dr Blade Nzimande

The establishment of the Ministerial Task-Team on the review of NSFAS business processes

A Ministerial Committee of Inquiry had been appointed to conduct an independent investigation into the business processes, systems and capacity of the National Student Financial Aid Scheme (NSFAS) and make recommendations for a future model of administering student financial aid.

The terms of reference of the Committee of Inquiry (COI) were published in the Government Gazette, No. 43345, dated 21 May 2020. The COI would conduct its work over a period of six months. This meant that it would overlap with the handover period between the new leadership of NSFAS and the end of the period of current Administration. The work of the COI would be supported by the Department and NSFAS and would consider forensic and other investigative work already undertaken by NSFAS. The Minister appointed Professor Yunus Ballim to chair the COI along with a small team of other individuals, including expertise in finance, IT and university as well as student funding at Technical and Vocational Education and Training (TVET) colleges. The COI must act independently and objectively in relation to its terms of reference. It would be supported by the DHET.

Before continuing with the presentation, the Minister started with a brief background review of the NSFAS funding model and the changes that it had undergone:

In 2017, the NSFAS rolled out a new funding system for students to all universities and TVETs. The new system, referred to as a "student- centred" model, involved the direct funding of students by NSFAS. This model was intended to provide an improved information technology platform for submitting and processing student applications where students applied directly to NSFAS through an online application system. In the "old" system institutions received an allocation with an upfront payment, managed the awarding and payments of loans to students, and thereafter submitted claims to NSFAS for payment to institutions. The new system was intended to allow NSFAS to manage allocations, students to know their funding status before registration, and on signing of a loan agreement form and schedule of particulars, receive their allowances immediately after registration.

This new model never really lifted, at least not in the manner it was anticipated to. The reason for this was that NSFAS underestimated the magnitude of the processes and timelines required to implement it effectively. It did not have the requisite capacity and technical knowledge required for a successful student financial aid administration from the start of the applications process to successfully funding students. There were huge delays in paying students and making funding decisions and it was necessary for outside assistance to be brought in to resolve the 2017 funding cycle. By August 2018, there were still aspects of the 2017 student funding cycle that had to be resolved and these had a knock -on effect on the 2018 funding cycle. The Information Technology (IT) platform and systems built to manage the processes were not able to function effectively. The latter, in particular, the Minister found as quite an anomaly because he remembered when he was still Minister of Higher Education and Training that there was an amount of R100 million that was spent to get that system working. He said he did not understand why the system failed in just six years’ time.

Even with these challenges, there were changes to the systems and processes at NSFAS during 2017, which resulted in a relatively successful application phase for the 2018 cycle (with students applying directly to NSFAS in 2017 and many funding decisions were concluded by January 2018); the rest of the processes were subject to severe challenges and unacceptable delays in 2018. The 2018 failure was mainly due to the entity not doing enough to address the multiple system problems and inadequate business processes already under strain in 2017, although it was exacerbated by complexities introduced by the start of the roll - out of new funding for poor and working-class students announce in December 2017.

The implications for this were quite serious because it meant that NSFAS was unable to finalise funding decisions and process payments to students, even at a late stage of the academic year. In 2018 NSFAS relied almost entirely on institutions to make payments to students and many students remained unconfirmed and unfunded late in 2018. There were multiple data and IT integration system problems at NSFAS.

As it should be apparent by now, the core of the problems for the entity were partly a result of an inadequate IT architecture and system and business processes that were not fit-for-purpose and were designed without adequate consultation with and consideration of institutional systems. With the introduction of substantial new student funding from government the challenges facing NSFAS in these areas became acute. This was what led former Minister, Dr Naledi Pandor, placing NSFAS under Administration in August 2018, for an initial period of 12 months and with a second phase of Administration commencing in August 2019. The problems that were now apparent were unearthed during this period of Administration; as a result the DHET had seen significant changes for the better in the 2019 funding cycle – although there was of course substantial room for improvement.

Having done a brief review of the NSFAS, the Minister looked at the terms of reference for the COI. The COI had to launch an investigation that had to include, amongst other things:

-An assessment of the enterprise architecture and business processes for the student-centred model approved by the NSFAS Board in 2012/13. This must include a full examination of the role and responsibilities of all role players in the model.

-A full review of the IT systems that support the NSFAS student centred model, and specifically the interface between the NSFAS IT system, and the IT systems at universities and colleges. This review must identify the critical issues that had led to the failure of the integration of data between NSFAS and institutions and make recommendations on the possibility of adaptation to automatically support data transfer. It must decide on the extent to which the architecture of the NSFAS model was aligned with university and TVET college processes and IT systems, and what the challenges with the model may be.

-A review of the findings and determination of the progress on recommendations of all reports that had been undertaken by NSFAS between 2014 and 2020 to address systems and capacity deficiencies of the NSFAS funding model. This included the full student funding cycle from application to evaluation and funding decisions made, to the integration of institutional data and engagement with institutions to confirm funding for students, to the disbursement and payment systems.

-A review of the system performance of NSFAS in relation to the 2018, 2019 and 2020 application processes for TVETs and university students, in lieu of the implementation of the new DHET Bursary Scheme, including the assistance provided by the NYDA and other partners.

-A review of the approved processes set up for the NSFAS financial eligibility means test evaluation process in lieu of the new DHET Bursary Scheme for the 2018-2020 application process and the implementation thereof.

-An assessment of the roles and responsibilities and relationships between NSFAS and universities and TVETs and proposals for any necessary changes in this area.

On the basis of the investigations to be conducted above, the Committee should make recommendations for improvements in all areas, and also advise on an appropriate model and processes for ensuring effective student funding support at universities and TVETs for the future.

Council for Higher Education advice on remuneration of Vice-Chancellors

The Portfolio Committee had requested the Minister to request the Council on Higher Education to establish a CIO in the salaries of VCs and senior executives at public universities in 2019. In the beginning of this year, the Minister wrote to the Council on Higher Education (CHE) requesting that they conduct research on the matter and advise him, in accordance with Section 5(a) of the Act.

The Minister requested that the research should assess and/or provide advice on:

-the annual data on the remuneration of Vice-Chancellors (VCs) and senior executive managers, and annual salary increases for the period covering 1994 to the present (given the issue of data integrity limitations, the period was reviewed, and would start from 2005).

-comparison of salaries of VCs and senior executive managers to those of academics and the rest of non-academic staff for the period covering 1994 to the present (period also reviewed).

-the various administrative arrangements that existed to determine VC and executive managers’ salaries

-whether remuneration committees rely on external salary benchmarks in determining VCs pay, using a suitably constructed benchmark for each VC based on VC pay in similar institutions.

-the various mechanisms for evaluating the performance of VCs

-the relationship between VC’s salary and an array of observable performance indicators

-whether salaries of executives in the South African universities are comparable to salaries of executives in other countries with similar socio-economic contexts. It did not seem like there us a relationship between the number of students and the salary that VCs had. Some smaller institutions paid far more than some of the bigger institutions pay. There was clearly no correlation.

The Minister said he had already received a response from the chairperson of the CHE on two occasions to update him on the work which had commenced. These were some of the works that were on the way to completion:

The Council set up a task team led by the Chairperson and comprising five members of Council, the CEO and the CFO, to oversee the project. An initial meeting involving the Council task team and officials from the Department took place on 08 May 2020.

The CHE wrote to councils of all universities on 11 May 2020 to inform them about the objectives, scope, and processes of the study; and the nature of inputs expected from them and their respective institutions. By May 29, the CHE had received positive responses from seven universities.

On 21 May 2020, the council task team held a courtesy meeting with the Exco of USAf to brief them about the project, its background, and its plan of activities. The purpose was to solicit the buy-in of USAf into the project. The meeting ended with a commitment by USAf to support the enquiry. The Council Task Team met again on 27 May to consider various options for funding the project, appointment of a research assistant and consultants, and finalisation of the terms of reference as well as the research instruments.

This project by the CHE was set to run for a period of 11 months where it was expected to make a presentation on the research work undertaken and the findings to be completed by 31 March 2021. An advisory submission on the feasibility of institutionalising a system-wide policy on regulating remunerations of university executives, and the implications of such a measure on the principle of institutional autonomy within the context of public accountability for the resources dispensed to universities by the state, would be produced shortly after 31 March 2021. The Council had since assured the Minister that the inquiry would be undertaken with the highest levels of integrity in line with the relevant codes of ethics, to ensure the credibility of findings and of the ensuing advice. As such, the council also understood the sensitivities around the enquiry and would avoid making public statements about it during and after the inquiry. Its chairperson was also willing to respond to queries about methodology and other technical aspects of the inquiry if necessary.

On the above point, the Minister also mentioned that he wanted to have meeting with the 26 heads of councils of the various universities to discuss this matter even further with them.

Missing middle funding issues

In 2016, the Minister appointed a Ministerial Task Team (MTT), chaired by Mr Sizwe Nxasana, to develop a comprehensive funding and student support model for poor and “missing middle” students who required financial assistance to access public higher education and training. This decision was made after a fairly long process of attempting to find ways to respond to the National Development Plan proposal on student funding.

The MTT was meant to review the following issues:

-whether or not the existing NSFAS Act, structure and mandate were still suitable to address the funding and other forms of support to poor and “missing middle” students;

-to raise sufficient funding from the public sector, private sector and other sources to offer a complete solution to fund poor and “missing middle” students at universities and TVETs;

-the feasibility of granting fully subsidised loans to poor students and loans with progressive reducing subsidies as household income increases for the “missing middle” students;

-the funding of occupations in high demand; for this particular point the Minister said that as much as government funding was meant for everyone, in all institutions and all degrees, there also had to be a prioritisation of skills that were needed in the country so that there was a balance of all skills. Those that were needed most must get priority; this did not mean that the other degrees would not be considered. This was something that all countries did for growth of skills and the economy, and so it was important for South Africa to do it as well. It was part of a strategy of developing a skills-based economy.

-to develop proposals which would contribute towards the improvement of the success and graduation rates for poor and “missing middle” students in order to reduce drop-out rates.

The report of the MTT was finalised and presented to the Minister on 10 October 2016. The MTT recommended a ‘blueprint’ for the funding model entitled the Ikusasa Student Financial Assistance Programme (ISFAP). The blueprint recommended fully-subsidised education to the poor in the form of bursaries and grants, and progressively reducing bursaries and grants to the “missing middle” students as household income increases. It sketched scenarios on how this could be achieved using funds from both the public and private sectors through a PPP. The blueprint also proposed a range of key differences with the current NSFAS model, including the incorporation of a part focus on areas of high skills demand; a different approach to bursary-loan combinations; exploring a different methodology in assessing household income; the inclusion of wraparound student support for funded students; a disbursement model utilising the banking system; and legal amendments to allow the use of SARS for loan collection purposes. A range of other legislative amendments were suggested as necessary to make the proposed blueprint effective.

Using a household income cut-off of R600K per annum, the MTT modelled the possible number of students and the estimated potential cost per annum of funding poor and missing middle students (ranging from between R37bn and R67bn per annum, depending on the proportion of students funded). A range of sources of income were identified. The big proposed contributor to the funding model was private sector funding through incentives linked to the B-BBEE codes, and specifically the possibility of utilising a proportion (25%) of the 6% skills development expenditure as a direct input to ISFAP. The Minister noted that this had been one of the major ways in which the government had been attempting to raise funds. These incentives were meant to increase the funding without for all of it coming from the government.

The Cabinet considered the draft report, agreed to publish the report for public comment, and that some proposals be tested in 2017. On 15 December 2016, the report was published for public comment, the comments were received and analysed. These fed into the development of the model and into a feasibility study. After this stage the pilot was implemented in 2017 to test certain elements of the model with respect to students that were not able to access the NSFAS funding, i.e. from families with gross annual incomes above the R122 000 threshold, but below R600 000. However, during 2017, some NSFAS-supported students from participating universities were also included for top-up grants, as they were not receiving sufficient funding to cover their full cost of study at the time and were registered in the pilot institutions. Around the same time a feasibility study whose funds were raised from the private sector was conducted, which also continued until 2018, by which time substantial attention was focused on the rollout of the new DHET bursary scheme and the challenges facing NSFAS.

A loan-based system could not be implemented without government support because in all the modelling done, the bad debt, capital repayment, and capital interest was always bigger than the repayments and interest paid by the student. The student loan model directed to students required a constant injection of equity to break even. The Minister emphasised how this would require the government to constantly require government support.

The DHET was working with National Treasury and the Department of Planning, Monitoring and Evaluation to look at alternative models. This work took into account the work of the MTT, the pilot and feasibility study, the implementation of ISFAP as a private bursary provider, and the recommendations of the Heher Commission, particularly the proposal relating to an income-contingent loan model. This would need to consider the substantial changes in the student funding environment since 2018, the student debt issues in the system, and the many other demands on state funding for higher education and training (e.g. postgraduate funding support), as well as the fiscal context.

In the long term, the Department was working towards a comprehensive student financial aid model or eco-system that addressed the funding needed of all students who required financial assistance and also considered postgraduate funding. This may include a combination of bursary and loan models. It was unlikely that this could be done without a substantial additional investment of funds from government. NSFAS and the DHET funding for poor and working-class students was clearly a central part of this financial aid model. It was possible that the ISFAP, if it continued in its current form, could also be one part of the financial aid system along with other private sector and non-profit funders.

Addressing student historic debt

In addressing this point, the Minister first briefly defined historical debt in the context of his presentation. He explained that it referred to monies owed to universities by continuing or returning NSFAS qualifying students – who were registered in the 2018 academic year, and funded based on the pre-2018 NSFAS rules.

In line with the December 2017 announcement by the Former President, the DHET, in collaboration with National Treasury and the DPME, undertook a due diligence exercise to quantify the historic debt of NSFAS-qualifying students registered at universities in the 2018 academic year. Students who entered their university studies prior to 2018 qualified for a NSFAS grant according to the previous threshold of R122 000 total family income per annum. However, the funding provided by NSFAS for these students was subject to a funding cap as the student funding policy included an expected family contribution (EFC). In many cases the funding provided was insufficient to cover the actual fees and costs of study – where the cost of study was higher than the NSFAS cap.

The students funded through the pre-2018 NSFAS loan scheme often accrued debt with their institutions. In terms of an agreement between universities and the Department, all returning NSFAS qualifying students with university debt were allowed to register in 2018, provided that they signed an acknowledgement of debt (AOD) form. It was important to note that these students had to meet the NSFAS academic progression criteria to qualify. The due diligence process revealed that the total debt owed by continuing NSFAS qualifying students who were registered in 2018 amounted to R967 million. The Department had made available, through reprioritisation, an amount of R1.7 billion to NSFAS to settle historic debt for students that were funded under the NSFAS cap funding pre-2018 and if possible, ensure that these students were funded at the full cost of study until they graduated. The funding was linked to approximately 54 000 specific students. There were also students who had re-entered the university system, who may or may not have been funded by NSFAS in the past, were carrying historic debt, and were now funded by NSFAS. The Department, working together with NSFAS, was investigating the quantum of historic debt of this group of students.

Standardising Student Representative Council (SRC) elections

There currently was no process underway to standardise SRC elections. The Department monitored SRC elections annually to identify any irregularities and ensure free and fair processes were in place. The Department acknowledged that the COVID-19 pandemic may affect the dates of the SRC elections, given the changes to the academic year; it would engage with institutions on this matter. Institutions currently used their own processes to conduct elections. However, there have been discussions with the IEC about a possible approach to standardise elections, with the support of the IEC. These discussions would require engagement between USAf and the IEC. The Department, subject to available funding, was working to support leadership capacity development of student leaders in SRCs. The Department would work with SAUS and SRCs in 2020 and beyond to roll-out a student leadership capacity development programme which would supplement, rather than duplicate, the work that was already taking place at institution level.

Discussion

Prof B Bozzoli (DA) welcomed the establishment of the MTT by the Minister – especially since it was led by Prof. Yunus Ballim. She also welcomed the review of VC salaries because there were some serious anomalies that needed some serious looking into.

She noted that the Minster essentially indicated that the entity could not afford student funding – that it could not afford to support the missing middle even though there was a worthwhile investigation at earlier times when there was enough money. She said that eying provident fund and pensions was not right; using this money to fund students was not the way to go because everyone was going to start eyeing those funds to subsidise their own projects. The entity needed to start looking at cutting its spending. Perhaps there needed to be a review of the whole NSFAS scheme because it was never sustainable in the first place for a poor country like South Africa. It needed to be scaled down slightly because the scheme would never be able to fund the missing middle out of the private sector, out of the PIC or out of pensions. Something needed to be done concerning this and many other areas of government.

Lastly, she recounted that the DA claimed that funds were being written off. This was expressed in a meeting that she could not attend because of medical reasons. She acknowledged that the NSFAS had clarified that the funds were not being written off, but were rather used for other purposes. She apologised to the Minister for that misstatement and read a response given by the Department for the question that she had posed in Parliament:

Question: What amount of the R7.8 billion in irregular expenditure, which was uncovered at the NSFAS, was cleared, remained to be cleared and the timeline within which it would be cleared?

A section of the Department’s response said: shifting of earmarked funds: a historic debt of R1.9billion was in the process of being written off”.

She insisted that the DA could be excused for concluding that this response meant that the historic debt of R1.9bn was being written. In the absence of the broader explanation, her party could be forgiven for erroneously concluding that the debt was being written off. The remark was well-intentioned and it was following the initial question about the irregular expenditure. The misunderstanding was warranted.

Mr B Nodada (DA) thanked the Minister and said that he appreciated the efforts made by the Minister, especially on the gazetting of the task team for the funding model of the NSFAS. He asked if there was already a project plan for the allocated time and whether there was work that had commenced on it yet.

The NSFAS administrator’s term would end in August and there had been an indication that the administration had been given a timeframe of six months – implying an obvious overlap the term end of the administrator. He asked what the implication of this overlap would be and how the NSFAS would work when this was occurring.

Having read the terms of reference on what needed to be investigated on the NSFAS business model, he asked if the Minister would not agree that as part of the talks about the disbursement, that there be a review of allowances in TVET institutions, in comparison to university allowances – particularly for accommodation and food. There were institutions which, despite sharing spaces of accommodation, were classified differently in that one was a TVET and one was a university – although their funding was different.

Regarding the missing middle, he said that he would appreciate a report that had a breakdown of how many missing middle students were in institutions and how many of them were funded by the government. In the same light, he asked if there was a policy in place to regulate the funding of missing middle students and whether there were timeframes that the scheme had set as well as the kind of targets that it set. He said he asked this because the last time NSFAS made a presentation to the Committee it did not seem like there was a kind of policy put in place for this matter in particular. Concerning historic debt of the missing middle, in March of 2020 it was reported that the amount was R910 million but the entity now said that R810 million was used to clear historic debt. There was clearly a discrepancy and he would like clarification.

Finally, concerning some TVETs; there were some who did not want student political organisations for their SRCs and some did not have standardised SRC elections and SRC constitutions. Is there an investigation to this and if so, how much would this cost?

Ms J Mananiso (ANC) said that the Department needed to strengthen communication so that it could minimise opportunisms, where people could incorrectly say something about the Department to the public. She also welcomed the idea that the Department wants to incentivise students that were doing well so that that they would continue doing so. She appreciated that the Minister was walking the talk and delivering on his promises, unlike previously when this was not happening.

Mr P Keetse (EFF) recounted that when the Minister was appointed in 2009 by the Former President, Mr Jacob Zuma, students were quite happy – jubilant to the idea that they were going to have someone who understood their plight. If one was to be honest on the performance of the Department, the Minister himself would agree with a lot young people who were calling for his removal. Mr Keetse made an example of the R100 million that was spent on improving the IT infrastructure for NSFAS only to find out the system was not serving students and the same system was still being used today – supposedly integrated though it was the same.

He then spoke on the funds that were directed to TVETs for building infrastructure. He said whenever the Department was addressing this matter it was always saying that there were new campuses that were being built – as though the currently dilapidated campuses would be allowed to run down. There were funds to refurbish the infrastructure of these buildings – Wi-Fi connectivity and so on; these had not been done even though there was funding for them to be done. He also made a point on how commercial banks in South Africa were the ones that administer funds for students. He found issue with the fact that banks were benefiting off the backs of student activism. They should not benefit from the fruits of student activists. This highlighted the need for a state-owned bank, but this was a discussion for another day.

He also mentioned the ‘n+2 rule’. He framed this from the perspective of student activists, who, for example, had been at tertiary institutions for seven years, being targeted through this rule. To further demonstrate his point, he mentioned the student activists who were kicked out of the University of Free State on the basis of the n+2 rule. He said it must be understood that it was not student activists alone who were suffering from this rule – general students were also suffering as a result of it. This was something that needed to be looked at.

Mr W Letsie (ANC) welcomed the presentation delivered by the Minister on behalf of the Department.

The terms of reference of the Committee needed to also include the issue of funding for food and transport for students at TVETs. He said that students in TVETs were given far less money for food allowance than university students; the difference was almost double. This must be addressed before the expected report because if it awaited the report, which was likely to be done in 2021, it would be too late to be included into the 2021 funding cycle.

He also asked why the Minister did not mention that the NSFAS had spent hundreds of millions of rands to supposedly improve its IT systems but the systems were found to be adequate enough to deal with the existing problems. What caused this? What oversight role has the Department played in addressing this for future purposes in order to ensure value for money?

The Department’s new 2019-24 Medium-Term Strategic Framework (MTSF) committed the Department to developing a sustainable model for funding the missing middle students. What is the timeframe within which this model will be implemented?

He said that he needed clarity on the matter of the remuneration of VCs. He mistakenly muted his microphone and the rest of his question was inaudible.

He noted that ISFAP was a private funding scheme which was established through the MTT. How will the Department ensure that the programme would return to the Department?

Dr W Boshoff (FF+) expressed that he was surprised at the statement Mr Keetse that the EFF was happy with the appointment of the Minister because at the time one would not have guessed that the party was happy about him, but these were the kinds of things one hears after the fact.

Concerning the presentation he asked what happened to the idea of students getting funding from State-Owned Enterprises (SOEs), mines and so forth. Does this still happen? He mentioned that when he was still in school a lot of the people he knew studied through funding from Eskom, various government departments and even from some municipalities; banks also issued student loans. The fact that the Minister was saying that banks did not have the appetite to fund students, even though they were in the business of lending money, may have been an indication that they did not believe that the students would pay back within 15 years, nor did they believe in the South African economy. Funding students should not just government responsibility but should be a collective responsibility. It seemed as though the state was taking more initiative than necessary.

The Chairperson said he was happy with the presentation. The scope it covered was reflective of a responsive Minister because some of the issues, despite being sensitive, were covered thoroughly.

The Chairperson also welcomed the Committee of Enquiry because there was a need to review the funding model of the NSFAS and he was on the same page about many of the issues that needed to be addressed.

Concerning the matter of the missing middle, he reckoned that 400 000 was too a big number for students who were at risk of not getting funding. He asked how many of these students were funded through state funding other than NSFAS because many of them were also funded through the SITAs and various other government entities. He asked if the Minister looked into that because one might find the problem was not as big as it was said to be if these numbers were to be accounted for. The state must find a way to account for the missing middle because at the end of the day it was the state that was responsible for the education of students in the country.

Responses

Dr Diane Parker, Deputy Director-General (DDG): University Education, DHET, first responded to questions on policies relating to allowances for NSFAS students in TVETs and the problems surrounding that on the level of funding for TVET students. She said the task team was not tasked with reviewing these kinds of policies. There would have to be a review on these policies; these reviews were typically done annually and whilst it was something that did need to be reviewed, it was not through the Ministerial Task Team.

Responding on the ISFAP – she said it was not packaged the way it was intended to be; it was actually a very small funding scheme at the moment. In 2019 it only had about 1 250 students funded through the public sector. Even though this was done through the public sector, it was still a very small scheme. This also addressed the point made by the Chairperson regarding SITAs and other SOEs would need to be rallied and captured. The Department had tried to do this in the past but was unsuccessful in doing so.

She responded that the issue of historic debt had a number of different technical explanations. He recounted that in 2018, National Treasury as well as the Department and Department of Planning, Monitoring and Evaluations (DPME) came together to do due diligence on the number of students who were registered in universities in 2018. It was quantified that there were around 55 000 students who were in that category and the required amount of funding was quantified and made available to NSFAS to support these students. In the process of finding out if these students could all be funded through this fund there were a number of problems; this work was still ongoing. At the time, the Department injected some additional funding which was in the region of R1.7 billion which was approved by National Treasury because it was recognised that there would be a number of students who would be leaving university in the next two years but needed to graduate debt free.

Pertaining to the IT systems of NSFAS which costed around R100 million, she said that this was approved back in 2012 by the NSFAS Board and NSFAS itself; this was why it was seen as important for the Ministerial Task Team to look into it to see what happened and why.

She also addressed the idea that the system was still failing to date; since the administrator had taken over the entity, it had certainly improved and was functioning a lot better than it did in the past.

Regarding the n+2 rule she responded that there were numerous reasons why students were taken off NSFAS; some of these were that students were being funded for programmes that the scheme did not fund and others were being funded for periods longer than the stipulated n+2 period.

The Minister rounded up the responses from the side of the Department.

He said that he accepted Prof Bozzoli’s apology. However, he did not believe that the government had failed at making a readymade higher education loan scheme to address the missing middle. When the government was raising the matter of the usage of these funds (pensions and provident fund) it was not advocating for reckless spending. It was also as if all these funds were all being nicely and carefully invested while, in fact, billions of rands were being syphoned off by middle men within the financial sector. This was often medical aid schemes, insurance sector. Some of these monies were being invested in a manner which was not supportive of addressing the triple challenges – poverty, inequality and unemployment. At the very least, the Department should be looking at the R12 trillion in provident and pension funds which could be used and paid back within a period of around seven years. There could even be a self-sustaining scheme by the government. In any case, COVID-19 was calling on the government to invent a new economy – something that was going to require the government to source funds domestically. This needed to be explored. As the Minister that was responsible for research, he wanted to set aside funds that were going to be used for proper research into the financial sector of SA as a whole, in support of the kind of economy that was going to be built after COVID-19.

Responding to the question asked by Mr Nodada he said he would be meeting with Committee soon to see the fleshed out how the implementation of six months’ plan was going to be executed. Yes, he Mr Nodada was right, the report should be available before the end of the administration but it had not been possible so that was the reality of how the Department handled the enquiry. As much as he would not take every recommendation the Committee made, he took the enquiry very seriously and intended to implement as many of the associated recommendations, especially with the confidence he had in all of them.

The Minister buttressed the sentiments expressed by Dr Parker regarding the differences in funding for students in TVETs and those in university. As valid and important as those concerns were, they did not fall within the ambit of the task team; they were policy matters that required further inquiry.

The issue of how many students were in the missing middle, there would have to be an investigation into the quantum of how if these students were there; the Minister would like a report on this by the end of the financial year since this was dependent on a variety of things. The Minister said he was very worried by what Mr Nodada was saying about the APP because the team was very aware of the commitments he had made earlier and so that should have reflected there. If they were not reflected, he was asking his officials to address that.

The Minister thanked Ms Mananiso for her suggestion on strengthening communication from the Department. The Minister also mentioned that the DHET had the biggest number of entities in comparison to all the other government departments, according to the Auditor-General. Universities and TVETs were also entities of their own; what the Minister has realised was that there had not been a stakeholder and capacity management meeting between them. He intended on making this a reality because communication with the Committee was as good as the communication with the various entities. He also noted that there were a number of government entities being placed under administration; this all required government to evaluate capacity of these entities through monitoring and evaluations (by DPME) as means to build governance capacity.

The Minister also mentioned he would have been very worried if he heard the EFF saying he was doing a good job. He said that he expected the criticism from the EFF and he also appreciated it for political reasons too. He was glad that Mr Keetse invited him because he would outline all these to the EFF as well. He said that his contribution to this sector date back as a political academic. There was a lot that had been done since he took office in 2009 – from building universities and TVETs to a wide expansion of the NSFAS; Mr Keetse could debate this if he wanted to but the facts were the complete opposite of what he said.

Concerning the IT systems, the Minister said that he was considering something more sophisticated – the use of data analytics. For NSFAS, this was needed and it was necessary for the post-school education in this digital age. This was also the reason why the Minister was looking at the possibility of changing one of his directors, forming a portfolio of Chief Director: Data Systems.

Regarding NSFAS, the Minister said that he was the one that requested that the scheme be looked into to see to ascertain where it was lacking; this would also apply to the infrastructure in institutions, but he said he did not want to discuss infrastructure in the present meeting. If the Committee wanted him to give a briefing on the post-school and training infrastructure, he would be happy to do so.

The Minister responded to comment about banks benefiting from disbursing NSFAS allowances. He said that this was the kind of system that existed in SA and that was why there had been talks on having a state-owned bank for diversification.

Lastly, on the n+2 rule, he explained that it was not applied on student activists but to all students. The government had a right to say that the students that had started their studies must finish their studies within a particular time; it was only fair that be the case. The government understood that there were many challenges facing students and that was why the NSFAS loan had now been changed into a bursary and provided wraparound support for students to support learning and teaching. Students also had a responsibility to do well and that was why now students were not allowed to finish their degrees more than one year longer than their prescribed degree time (n+1); the Department would and should not be apologetic about that.

With regards to student politics, there needed to be a discussion about SRC elections. In some countries students serving in the SRC were not involved in schooling during their time in office and one was not allowed to serve for more than a year. Perhaps this was something that needed to be reviewed as well. Indeed, there were student leaders who spent too much time in universities because they were spending a lot of their time with student politics instead of their studies; this may be a matter that may need to be integrated into the matter of standardising SRC elections.

There were students who were still being funded privately and by SITAs; the problem with these had been in making sure that there were no students that were double dipping because resources were too scarce to allow that.

The Chairperson thanked the Minister for his responses and said that he indeed answered all the questions that Members of the Committee had.

The meeting was adjourned.

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