South African commission urges more government spending on higher education

Reuters News
Posted: Nov 13, 2017 5:07 AM

JOHANNESBURG (Reuters) - South Africa should raise spending on higher education and training to at least 1 percent of gross domestic product (GDP) from around 0.75 percent at present, a presidential commission report released on Monday found.

The recommendation by the commission appointed by President Jacob Zuma came as a senior Treasury official in charge of the budget process resigned, following news reports that he had complained over presidential interference in the budget process.

The presidency said in a statement that Zuma would make an announcement on the report once ministers had processed its findings.

Zuma set up the commission in response to protests by university students demanding free education.

South African markets have been spooked in recent days by reports suggesting Zuma was close to announcing plans to introduce free tertiary education - a move that would pressure already strained public finances.

Ratings agencies are scheduled to review South Africa's credit ratings this month, and many economists are predicting further downgrades on the back of dismal medium-term budget projections unveiled by the finance minister last month.

South African GDP was around 4.3 trillion rand ($296.6 billion) last year, so an increase in government spending on higher education of 0.25 percent of GDP would amount to around $750 million.

The higher education commission also recommended that all students should be funded through a cost-sharing model of government guaranteed income-contingency loans sourced from commercial banks.

The rand, which weakened after the presidency said it would release the commission's findings at midday, was little changed after it was published.

A currency trader said the report shed little light on the presidency's plans for higher education.

The Treasury said Deputy Director-General Michael Sachs, a senior official in charge of the budget office, had resigned because he wanted to serve the public sector in a different capacity.

(Reporting by Alexander Winning and Mfuneko Toyana; Editing by James Macharia)