Economic Growth and Human Development Overview: South Africa Post-Apartheid

1. Higher education overview Fort hare University 12 april 2012

2. Overview • Big picture – national and international context of HE • Distance between institutional/local and national/global • Economic growth and development • Higher education and development • Higher education in Africa • New policy responses currently underway • Key issues

3. Economic Growth and Human Development A substantial body of academic and technical literature provides evidence of the relationship between informationalism, productivity and competitiveness for countries, regions and business firms. But, this relationship only operates under three conditions: information connectedness, organizational change in the form of networking; and enhancement of the quality of human labor, itself dependent on education and quality of life. (Castells and Cloete, 2011) The structural basis for the growing inequality, in spite of high growth rates in many parts of the world, is the growth of a highly dynamic, knowledge-producing, technologically advanced sector that is connected to other similar sectors in a global network, but it excludes a significant segment of the economy and of the society in its own country. The lack of human development prevents what Manuel Castells calls the ‘virtuous cycle’, which constrains the dynamic economy. (Castells and Cloete, 2011) Connecting growth to human development – trickle down don’t work

4. Gross Domestic Product (GDP) per capita vs Human Development Index (HDI)

5. Economic Growth in Post Apartheid SA During the first decade of the post-apartheid era in South Africa, gross domestic product (GDP) grew at a ‘modest rate’, averaging one percent, though edging up to around three percent. Nevertheless, this has been the longest period of positive growth in its history. The envisaged post-1994 economic policies for the development project stated that the economy would require steering onto a new development path which, amongst others, would reduce dependence on resource sectors through industrial deepening and diversification (Bhorat 2010). Mohamed (2009, 2011) states that we experienced the ‘wrong type’ of economic growth from the end of apartheid and particularly during the five years prior to the 2008 financial crisis. Economic growth was not only associated with high unemployment and growing inequality, it was unsustainable because it required growing private sector indebtedness and was accompanied by decline in productive services and manufacturing

6. Economic Growth and the 2008 Financial Crisis The worst impact of the 2008 crisis, resulted in at least a million job losses is associated with: • structural industrial weaknesses and de-industrialization as a result of development centred around mining and minerals • continued reliance on extractive mining and minerals exports • consumption led growth and increased investment in services sectors, such as finance and retail • speculative asset bubbles in real estate and finance and increased construction (mainly around the 2010 Soccer World Cup) and car sales • the role of the financial sector which has emulated the behaviour of US financial institutions in increasing leverage and misallocation of capital in SA economy. (Mohamed 2009)

7. Economic Growth and Change of Skills Profile A major change in the South African economy is the change in the skills profile. The National Planning Commission Diagnostic Report (NPC 2011) shows that job growth between 1995 and 2009 saw a 50% increase in high-skilled jobs and a 20% decrease in low-skilled jobs. Using data for the period 1970–2005, and updated to 2009, Bhorat (2010b:20) argue that “… this growth path has been built on a rising demand for skilled labour with a steady erosion in the demand for unskilled or under-skilled workers. The modern era in the South African economy has thus been defined by a growth path with a constant increased demand for educated workers at the expense of those with lower level of human capital”

8. Poverty Reduction in Post Apartheid SA (1) The stated goal of the post-apartheid economic policy was to reduce poverty, inequality and unemployment. A 2% growth should lead to a 1-7% reduction in poverty, depending on the country – meaning the success of redistributive policies (Bhorat 2010a). In South Africa, poverty declined from 52% in 1995 to 49% in 2005 and in the lower poverty group a 7% decline (31% to 24%). In addition, there were definite gains in poverty reduction, particularly in African female-headed households (Bhorat 2010a). All people, regardless of race, experienced increases in expenditure, meaning that growth was ‘pro-poor’. Despite the modest gains in poverty reduction, the inequality gap did not decrease; instead, it increased amongst all groups. This led Bhorat (2010a) to conclude that in 1994 South Africa was ‘one of the world’s most unequal societies, but by 2005 it may have become the world’s most unequal’.

9. Poverty Reduction in Post Apartheid SA (2) While spending on education and health remained fairly constant in real terms, recipients of social grants (excluding administration) now consumes 3.2% of GDP, up from 1.9% in 2000/01. The total number of beneficiaries increased from 3 million in 1997 to 15 million in 2010 (Woodard and Rembrandt 2011). The share of households in the first income deciles with access to grant income increased from 43% in 1995 to almost 65% in 2005 and that even for households in the sixth deciles grant income increased from 19% in 1994 to 50% in 2005. According to Bhorat (2010a) this suggests that grant income does not only support the very poor, but also a large number of households in the middle income distribution. More recent estimates suggest that 25% of the population are on social grants and 40 per cent of household income in the poorest quintile (Woolard and Leibbrandt 2011). Post-1994 South African democratic redistribution model operates through extensive social grants at the bottom end, few benefits at the middle of the distribution curve and the main growth is at the de-racialising top end. Based on this growth path, both Bhorat (unequal income distribution) and Mbeki (the disempowerment of welfarism) express concern for the future of democracy.

10. Higher Education and Development • SA has a development model crisis • The small “productive” sector is increasingly globally connected while the majority remain disconnected, but is “maintained” through social welfare which should be supplemented by service delivery – but this is not Productive nor Empowering • We need more and broader growth which connects Growth to Human Development • Castells project of Finland, Chile, Taiwan, Costa Rica, SA and California • Higher education, and ICT, has a crucial role to play in virtuous growth - Knowledge production (growth), broadening medium level skills and participation (equity) • Basic link is education and employment (linked)

11. The relationship between scientific excellence and economic development (R = 0.714, P = 0.218) (R = 0.961, P = 0.002)* Data source: Thomson Reuters InCitesTM (21 September 2010); The World Bank Group (2010) Vuyani Lingela, 24 November 2011

12. Participation Rate and Development Indicators

13. BRICS: Selected higher education and economic development indicators (WEF 2010)

14. Gross participation rates in SA higher education by Race, 1986 - 2009

15. Effective Participation: Throughput rates of general academic first-B-degrees

16. Structure of the South African Education System (2010) Not in Education, Employment or Training (18 to 24 year olds) 2,781,185 comprising persons with the following qualifications: B degree/ Masters/ PhD 11,552 Gr 12 + dipl/cert 72,588 Gr 12 with/without exemption 696,992 Gr 10 less than Gr 12 990,794 Less than Grade 10 1,009,259 Universities 986,559 UG diplomas & certificates 285,948 UG degrees 440,934 Total undergraduates 726,882 PG to M 80,321 Masters 46,699 Doctors 11,590 Total postgraduate 138,610 Occasional students 27,444 Total enrolment 892,936 Private Universities 93,623 FET Colleges 404,849 N1 – N324,937 N4 – N6144,837 NC(V) 130,039 NSC 3,916 Occupational 23,160 Total Public 326,889 Private FET Colleges 77,960 Public and Independent Schools 12,644,208 FET Band 2,460,961 GET Band 9,742,078 OTHER 7,441 Total 12,260,099 ECD 279,476 Special Schools 104,633 Public ABET (2011)312,077

17. South Africa and Brazil Brazil Education, 2009 South Africa Higher Education and Post-Secondary Provisioning, 2010 Provisional Headcounts Public state (10%) Knowledge Production – High (8%) Public federal (12%) Knowledge Production – Medium (55%) Total: 594 018 Public municipal (2%) Knowledge Production – Low (19%) Private Higher Education (60%) Post-Secondary (10%) Private PG (mainly business schools) (3%) Private Higher Education (8%) Distance (13%) NEET with Grade 12/ STD 10/ NTCIII (NEET's with matric) Students in system : 6 302 000 Total population : 193 million Private students : 63% Participation Rate : 35% Contact Institutions Population: 49 000 000 HE Participation rate: 17% White PR: 58% African PR: 13% Private Distance Provider Source: CHET

18. A low Gini coefficient indicates a more equal distribution of income or wealth, with 0 corresponding to perfect equality, while a higher Gini coefficient indicate more unequal distribution, with 1 corresponding to perfect inequality.

19. Knowledge EconomyGlobally Central role of knowledge in government policiesFocus in Knowledge Policies on:1. Global economic competitiveness2. Innovative capacity of societies3. High Level Skills and Competencies of Labour force (Knowledge workers)Claus Swabe (WEF) Not Capitalism, but Talentism

20. International Knowledge Policies – Maassen Starting point = New conditions in the global economy Growing focus of national (regional – supranational) policy makers and other central socio-economic actors on the university as a driver for economic growth through its role as source for innovation and job creation. Consequence = Two new university governance aspects First targeted policies for and investments in universities’ research capacity are assumed to be needed in order to improve the global competitiveness of a specific economy. Second, targeted policies for and investments in connecting the enhanced research capacity of universities to the knowledge needs of society (incl. private and public sector companies and organisations) in order to ensure the link of new knowledge to economic growth (innovation & new jobs ). «Balancing academic excellence with economic relevance»

21. HERANA: 8 African Countries and Flagship Universities Higher Education Research and Advocacy Network in Africa • Starting point is to increase understanding of the complex links/interactions between higher education and economic development – at national and institutional levels • Three successful systems – Finland, South Korea and North Carolina (USA) • Eight African countries and their national universities: Botswana, Ghana, Kenya, Mauritius, Mozambique, South Africa (Nelson Mandela Metropolitan University/UCT), Tanzania, Uganda • Network consists of 50 people from 15 countries, include Manuel Castells, Peter Maassen (Oslo) John Douglas (Berkeley) and Pundy Pillay (Wits) Funded by: Ford, Carnegie, Rockefeller, Kresge and Norad

22. Findings from Three Successful Systems Finland, South Korea, North Carolina (USA) • As part of reorganising their ‘mode of production’, a pact was reached about a knowledge economy (high skills and innovation) as development driver • Close links between economic and education planning • High participation rates with differentiation • Strong ‘state’ steering (projects) • Higher education linked to regional development • Responsive to the labour market • Strong coordination (prime ministers office) and networks Pundy Pillay (2010) Linking higher education to economic development: Implications for Africa from three successful systems (CHET)

23. HERANA Findings on 8 African Countries and Flagship Universities • There is a lack of agreement (pact) between national and university stakeholders about a development model, and about the role of higher education in development • Only one of the eight countries (Mauritius) has accepted knowledge, and the associated human capital and research development, as a key driver for economic growth • Linking higher education to development requires considerable coordination within government, and between government, the university and external funders, and all three must contribute • The absence of a pact about the role of the university in development affects negatively implementation and resource allocation – which raises the possibility that we a have double problem; lack of capacity and a lack of agreement

24. New policy responses currently underway • New policy frenzy reminiscent of 1995 • Economic, environment, labour and even constitution • Focus on: • National planning Commission • DHET Green Paper • Focus on knowledge policies, participation and differentiation

25. National Planning Commission (Nov 2011): Functions of HE (1) Higher education is the major driver of the information-knowledge system, linking it with economic development...Universities are key to developing a nation. They play three main functions in society: Firstly, they educate and train people with high-level skills for the employment needs of the public and private sectors. Secondly, universities are the dominant producers of new knowledge, and they critique information and find new local and global applications for existing knowledge. Universities also set norms and standards, determine the curriculum, languages and knowledge, ethics and philosophy underpinning a nation's knowledge-capital. South Africa needs knowledge that equips people for a society in constant social change

26. NPC: Functions (2) "Thirdly, given the country's apartheid history, higher education provides opportunities for social mobility and simultaneously strengthens equity, social justice and democracy. In today's knowledge society, higher education underpinned by a strong science and technology innovation system is increasingly important in opening up people's opportunities." (p262) For the first time knowledge production and equity are linked by stating that "high quality knowledge production cannot be fully realized with a low student participation rate" (p274). Also universities are not mainly fro individual mobility or for equity redress - equity is mentioned last and transformation in the Castells sense

27. NPC: Knowledge Enthusiasm The NPC is so enthusiastic about knowledge that it declares that "knowledge production is the rationale of higher education" (p271) - indeed a radical departure from the traditional 'rationale' of higher education in Africa, that is, disseminating (teaching) knowledge from somewhere else. Posters outside Parliament for Thursday’s State of the Nation: Knowledge Economy and Development Opportunities. At ANC 100thZuma said: “Education and skills are the key priority for our people” These are huge steps away from HE as individual mobility and an equity instrument – but in State of Nation President announced the biggest infrastructure project in history – not a word of KE

28. NPC Knowledge Policies • the notion of knowledge production consists of a combination of PhD education and research output. • a target of tripling the number of doctoral gradates from 1,420 to 5,000 per annum, and increasing the proportion of academic staff with PhDs from 34% to 75% • a number of world-class centres and programmes should be developed within the national system of innovation and the higher education sector. • a new future scholars programme needs to be developed, both to increase the proportion of staff with PhDs and to meet the increasing demand for professional PhDs in the non-university research, financial and services sectors • role of science councils should be reviewed in light of the world-wide tendency to align, or merge, research councils with universities

29. NPC: Differentiation • deals with the worldwide policy debate about the concentration of resources by proposing world-class centers and programmes across institutions (High science - Ska) • advises the Ministerial Committee for the Review of the Funding of Universities that such revisions should be based on the needs of a differentiated system with adequate provision for both teaching and research • requires flexible pathways for student mobility between institutions • the Higher Education Quality Committee should finally start developing a core set of quality indicators for the whole system;

30. Differentiation: Key Issues • Differentiation a process – diversity and hierarchy • Concentration: • Institutions – world class/underclass • Programmes – skills • Institutional profiles – faculties • Special centers/networks - (High science - Ska), Networks, Institutes

31. DHET Green Paper Research and innovation • Economic depends on innovation and technology absorption • While investment in research has tripled, there has not been a commensurate increase in personnel • Total knowledge output has increased 64% (2000-2009) but the system must become more productive • Poverty is a significant constraint on masters and Phd studies – students under pressure to obtain jobs?? • Drastically increase number and quality of masters and PhD’s • Need for increased coordination between DHET and DST • Caliber and workload of academic staff must be addressed • Long term plan for renewing the academic profession - doctorates for academics and professions

32. Ministers Presentation to HESA (3 April 2012) Research The research output of 2010, 57% of accredited research in the sector takes place at five institutions. These are all institutions with a historical research focus. In contrast with this, less that 10% of total research takes place at another eleven institutions. These eleven includes all Universities of Technology and many of the previously disadvantaged institutions. When looking closely at these eleven institutions, output per staff member is the lowest here and that, in general, the percentage of staff with Doctoral qualifications is also the lowest.

33. Ministers Presentation to HESA (3 April 2012) Research The fact is that Government cannot afford to develop all higher education institutions to become research intensive. Our institutions have different missions and agendas, and rightly so. It is, therefore, important for institutions to identify their mission and develop their strengths accordingly. This does not exclude institutions from engaging in research at all. All universities must conduct research. It is only the nature and quantity of research that will differ. It would not benefit society if research were to be developed to the detriment of quality teaching and learning.

34. NPC and DHET: The Good, the Bad and the Incomprehensible • Differentiation (whatever form) is official • Knowledge production (PhD and research output must increase – different counts of research outputs) – at last recognising the knowledge producing role of the university • Big focus on doctorate – for academics (target more than 60%), professions research councils and other sectors (finance) • Good quality undergraduate education – including infrastructure funds for labs, libraries, housing • Improvement of through put – efficiency • Dramatic increase in participation rate – mainly in FET sector • Mission and profile differentiation • Improved Coordination between DSHT and DHET (HESA meeting) • More funding for higher education • Shift from Transformation to Development

36. * Mauritius enroll large numbers of students as MPhil students, and depending on their performance only some graduate as PhD students

37. Summary of high-level inputs and outputs Graph 1offers summaries for the 15-year period 1996-2010. Doctoral enrolments were 1.3% of national total of 893 000 students in 2010. Permanent academics Doctoral enrolments Research publications Doctoral graduates

38. Percentage of doctoral enrolments in race groupings Graph 4 shows how the % of doctoral enrolments by race group changed between 1996 to 2010. African doctoral students rose from 13% in 1996 to 33% in 2004, and 44% in 2010.

39. It is important to note that the two countries produce almost the same number of PhD graduates but that South Africa’s population is in the order of 48 million whilst Norway’s population is 4.8 million