The education sector in South Africa remains a top priority for the state, with basic education receiving the largest slice of government expenditure in the most recent budget as stakeholders move to improve both the quality of learning and student outcomes. The post-secondary segment has also seen funding for research soar in recent years, and the government has significantly expanded its portfolio of public universities to offer post-secondary access across every province in the country. Despite these efforts, both the K-12 and post-secondary segments are struggling to mitigate ongoing challenges of high drop-out rates, overcrowding and graduates’ employment outcomes, creating opportunities for the expansion of private schools, particularly low-fee K-12 facilities.
Structure
Primary and secondary education in South Africa is overseen by the Department of Basic Education (DBE), which was formed in 2009 when the previous Department of Education was split into two entities, the DBE and Department of Higher Education and Training (DHET). The DBE’s policies and strategy are guided by the 2030 National Development Plan (NDP) and Action Plan to 2014: Towards the Realisation of Schooling 2025, with a mid-term policy guided by a series of five-year plans, the most recent of which was published in March 2015 and runs until March 2020.
Primary school is compulsory for all children aged seven to 15, and the government’s No-Fee Schools policy, established in 2007, abolished school fees in the poorest primary schools to improve universal access to education. Although the public primary system boasts high levels of school attendance, performance levels remain lower than in many other regional countries. Moreover, major infrastructure deficits often play a role in students’ rocky journey through school – according to UN International Children’s Emergency Fund (UNICEF), 27% of public schools lack running water, 78% are without libraries, and 78% do not have computers.
Under the most recent five-year plan, the DBE identified the most pressing challenges facing its K-12 segment as poor learning outcomes and insufficient benchmarked measurement of learning outcomes, insufficient access to quality teaching and learning materials, lack of productivity in the classroom, and lack of access to basic education. The plan will address these challenges by ramping up its annual national assessments, which were first rolled out in 2011, and prioritising recruitment of new teachers and spending on small, rural schools and provincial governments.
Spending
Education has traditionally received one of the largest shares of government expenditure in annual budgets, and the country spends a larger share of GDP on education than any other country in Africa, according to UNICEF. Indeed, basic education received 6.2% of GDP in 2013, one of the highest spending rates of any upper-middle-income country globally.
In the 2015/16 budget, the DBE saw its funding rise by 9.2% to reach R21.51bn ($1.86bn), up from R19.7bn ($1.7bn) in 2014/15. Basic education funding comprised 16.7% of total expenditure, at R203bn ($17.54bn). New programmes in 2015/16 include the Mathematics, Science, and Technology (MST) conditional grant, intended to boost learning in maths and sciences, which was allocated a total of R1.1bn ($95m) between 2015 and 2018.
The Kha Ri Gude Mass Literacy Campaign, which has been rolled out to 3.5m students, was allocated R439.58m ($38m) in 2015/16, while Angie Motshekga, the minister of basic education, stressed in her budget speech that the public-private partnerships (PPP) which are a priority under the 2030 NDP also offer the education sector a number of opportunities to improve learning in the country. The National Education Collaboration Trust, which works with the private sector to roll out new programmes and procure various teaching supplies, was allocated R200m ($17.28m) until 2017/18, bringing its total funding to R326m ($28.17m).
Infrastructure improvements are also on the agenda, with the Education Infrastructure Grant having been allocated R29.62bn ($2.56bn) in funding until 2018, while the Accelerated Schools Infrastructure Delivery Initiative will receive some R7.04bn ($608.25m) until 2018.
Schools
According to the DBE’s Education in South Africa 2013 report, published in March 2015, South Africa had 30,027 public and registered private (or “independent”) schools in 2013, of which 25,720 were regular schools, and 4307 were specialty institutions and early childhood development facilities. Of the 25,720 regular schools, some 57% or 14,558, were categorised as primary schools with 6.38m students enrolled and 197,258 educators employed. Nearly a quarter, or 6098, were secondary schools with total enrolment of 3.9m students and 143,682 teachers. The remaining 20%, or 5064 facilities, were combined and intermediate schools, with total enrolment reaching 2.2m students and 83,903 teachers.
According to the report, the student-teacher ratio stood at 29.4:1 in 2013, while the student-school ratio was 486:1, and the teacher-school ratio stood at 16.5:1 nationally. South Africa’s gross enrolment ratio, which comprises total primary enrolment from grades one to seven, stood at 95% in the K-12 segment, and 94% for grades R (pre-primary) to 12.
Room For Improvement
The public sector has witnessed some improvements in basic education indicators over the last several decades. The number of students who attend at least one year of pre-primary education has soared from 5% in 1994 to 95% in 2013, and the number of teachers in training has risen from 10,500 in 2010, to 13,000 in 2012 and R3.09bn ($267m) was allocated to teacher training between 2015/16 and 2017/18 under the Funza Lushaka Bursary Programme.
However, the public system remains characterised by poor student outcomes, with the Centre for Development and Enterprise (CDE) reporting in 2015 that for every 100 students who started school in 2003, only 48 wrote the post-secondary qualification exam, the “matric”, in 2014, of which 36 passed and 14 qualified to attend public university. CDE notes that learner achievement is especially poor, as evidenced by frequent low rankings on regional and international comparative surveys.
Private Potential
This has left considerable space for expansion of independent K-12 schools, a segment that has already recorded rapid growth in recent years. Although these schools represented just 5% of the total student body in 2012, independent school enrolment rose by 76% between 2002 and 2012, according to the Independent Schools Association of Southern Africa, with a significant number of these private facilities charging less than R6000 ($518.40) in tuition fees annually. Although the DBE reported just 1681 independent schools in 2014, representing 6.4% of the total, CDE reports that this is likely an under-estimate of the size of the sector. Umalusi, a statutory body with the mandate to accredit independent schools, estimated there were a total of 3500 independent schools operating in the country in 2013.
Curro and Advtech are the only publicly listed private K-12 school chains in the country. Advtech has a market capitalisation of roughly R5.4bn ($466.56m), while Curro has a net worth of roughly R12bn ($1.04bn). Both companies have witnessed considerable growth in recent years – Advtech is set to continue with its ongoing R3bn ($259.2m) expansion plan after Curro withdrew a bid to take over the company in July 2015, while Curro announced plans to invest R1.5bn ($129.6m) in an aggressive expansion campaign in February 2015.
“The private education sector is burgeoning. At the mid- and high-fee level, Curro intends to continue to build new schools to meet a clear demand. Most of these schools are aimed at the middle and upper-middle class, while Advtech’s Crawford and Trinityhouse schools are aimed at the upper-middle class and elite,” Jane Hofmeyr, former programme director at CDE, told OBG. “Low-fee schools, with fees below R12,000 ($1037) per year, provide choice and access to disadvantaged communities, and this is where rapid expansion is occurring.”
Indeed, low-fee independent schools represent an area of significant opportunity within the sector. In its 2015 report on the growth potential of this segment, CDE also noted that, unlike many other countries, qualified non-profit schools that are charging low and mid-level fees in South Africa may obtain a state subsidy, while their right to exist is enshrined in the 1996 South African Constitution, as long as they maintain standards that are not inferior to comparable public schools.
Higher Education
South Africa’s post-secondary sector has been managed by the DHET since 2009. The department is mandated to organise and plan higher education strategies, grant loans and bursaries, provide training to public and private adult learning centres, govern and fund the country’s network of further education and training colleges, and monitor and regulate schools under the auspices of the National Qualifications Framework Act and Skills Development Act.
In 2003 the government began restructuring its higher education system to improve access and bolster transformation, resetting the policies of the former apartheid system. Small universities and polytechnics were incorporated into larger institutions to form the nation’s network of six “comprehensive” public universities. A flood of private universities simultaneously entered the market, and although they now outnumber public universities, they represent a much smaller proportion of total post-secondary enrolment.
Policy
The tertiary sector is governed by the Higher Education Act No. 101 of 1997, which established the country’s post-secondary accreditation agency, the Council on Higher Education. Broad, long-term objectives are outlined within the 2030 NDP, which targets increasing participation and graduation rates, including for those taking up a four-year university degree, combined with bridging courses and more support for universities that provide financial assistance to black students from disadvantaged backgrounds.
The DHET’s 2012 Green Paper on Post-School Education and Funding stands as another critical policy document. This policy document targets a rise in university enrolment from 900,000 to 1.5m students by 2030, and an increase in total post-secondary participation to 23% of the population.
Today the DHET oversees 25 state-subsidised universities and technical universities, as well as 50 provincial technical and vocational education and training institutions, the majority of which are located in the Eastern Cape, Gauteng and KwaZulu-Natal provinces. The country’s network of private universities stood at 89 in 2012, according to the South African Regional Universities Association (SARUA), although 75% of post-secondary students study at public universities, compared to roughly 21% at private institutions. Total post-secondary enrolment in 2012 was 826,817 South African citizens, 46,204 SADC citizens and 19,915 international students, according to SARUA figures.
Budget Announcements
The post-secondary segment has seen a number of new institutions enter the market in recent years, against a backdrop of rising government funding and increased research and development (R&D) expenditure. Under the 2014/15 budget’s Medium Term Expenditure Framework (MTEF) the DHET will see its funding rise by 5.9% annually until 2017/18, from R39bn ($3.37bn) to R46.3bn ($4bn), while spending is forecast to rise by 7.3% in 2015/16 alone, according to the February 2015 budget speech.
The money will be needed to manage rising demand for post-secondary education. In January 2014, the Financial Mail, a South African weekly business publication, reported that Wits University received 46,000 applications for just 5000 first-year student spaces, while the University of Cape Town received 20,000 applications for 4200 places, and the University of Pretoria had 42,000 applicants for 10,500 places. University of KwaZulu-Natal (UKN), meanwhile, reported 89,000 applications for just 8400 places.
As a result of this surging demand, the government has added three new public universities to the post-secondary segment within the past two years, with every province in the country now holding at least one university.
The University of Mpumalanga in Mbombela and Sol Plaatje University have both received their second cohort of students, and were allocated R4bn ($345.6m) from 2015 to 2017 for infrastructure development and operations expenditure. The Sefako Makgetho Health Sciences University, which opened in January 2015, is the most recent entrant, welcoming 5000 students during its first year in operations. Elsewhere, efforts to establish a new school of medicine within the Health Sciences Faculty at the University of Limpopo have come to fruition, with the school set to welcome its first cohort of 50 students in 2016.
R & D
South Africa’s Ten-Year Innovation Plan (TYIP), running from 2008 to 2018, envisions transforming the country into a leading global R&D centre in a number of high-priority segments. Under the TYIP, South Africa is expected to become one of the top three emerging economies in the global pharmaceuticals industry, deploy satellites providing a range of scientific and specialised service, as well as achieve a 25% global market share of the hydrogen and fuel cell catalyst market. Additionally, the country aims to meet a number of climate change and Millennium Development Goal targets using technology and innovation. “Everyone wants to have innovation in health research at the moment, so we are seeing a trend of funding innovations. Health R&D has risen to become much more important in recent years, especially in areas such as diagnostics and improvements to health systems,” Glenda Gray, president and CEO of the South African Medical Research Council, told OBG.
The government’s rising emphasis on R&D has had a key impact on the country’s post-secondary segment, as evidenced by the science-focused public universities that have opened in recent years, as well as a significant increase in R&D expenditure: in July 2015 a researcher at the University of Pretoria reported that funding for scientific research in the country rose by 71% between 2010 and 2015, with the government allocating some R7.6bn ($656.64m) for scientific R&D in 2015/16. At the Number of schools per province, 2013 same time, spending on R&D as a percentage of GDP has remained below 1% – at 0.76% – over the past several years, despite the government aiming to nearly double this amount by 2019.
Public Universities
The emphasis on R&D is also being reflected in public universities’ post-secondary programming. The University of Stellenbosch, for example, features an advanced health sciences research facility at Tygerberg Hospital and boasts enrolment of approximately 26,000 students, while the University of the Western Cape, which was initially established as a college for coloured students in 1959, houses the only African member of the Open Courseware Consortium, and offers degrees in community and health sciences, dentistry, education, economic and management sciences, law, natural sciences and arts.
With 42,000 students, UKN is one of the largest public institutions in the country, and houses four colleges specialising in agriculture, engineering and science, health sciences, humanities, and law and management studies. The University of Cape Town, meanwhile, is considered one of the continent’s top research institutions, and continued to improve on the annual Quacquarelli Symonds (QS) World University Rankings in 2014, rising four spots from 145th to 141st place.
Outlook
Although the education sector remains challenged by lack of available capacity, poor learning outcomes and high levels of youth unemployment for graduates, the government is intensifying its efforts to expand access to basic and post-secondary education. With public expenditure intensifying and plenty of room for growth within the private K-12 segment, the education sector should continue to witness improvements in 2015, while rising R&D spending will also be accompanied by significant knock-on economic benefits enabling the country to meet a host of critical policy goals.
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