OPINION: QUALIFICATIONS ALONE DO NOT RELIEVE SKILLS CRISES

The announcement from the Minister of Finance that officials must beef up on qualifications[1] is a step in the right direction.  However, qualifications alone are not going to solve the high levels of skills shortages experienced in the state departments.

In 2007, some officials were given an eight-year window in which to obtain qualifications.  That window has expired in 2015 and one must ask how many officials are indeed better qualified compared to their qualification status eleven years ago.

Demanding that officials must now have a qualification after eighteen months, begs the question on what sort of qualifications the minister has in mind.  The Minister’s 18-month demand could have different implications for different officials.

• There could be officials who already have a qualification and who need to upskill because his/her current qualification is not adequate for the current role.
• There could be officials who already have a qualification that is completely irrelevant to the current role. In such a case a new qualification must be achieved in 18 months
• There could be officials who have no qualification whatsoever and who need a first qualification in 18 months. For this group, a National Diploma at level 6 may be out of reach within an 18-month window.  Level 6 National Diplomas take at least three years to complete, so a lower level qualification would have to be completed in the time frame envisioned by the Minister

Another question to ask is whether 18 months is adequate time for officials without qualifications and who are doing a job that requires a degree as a minimum competency?

Third, if officials still do not have qualifications after the last 8-year window has expired, is it not a signal to the State that so such officials are dead wood that have no place in any department?

Whilst qualifications are necessary, one must question some of the State’s employment policies – especially as those policies could have a negative impact on some sections of previously disadvantaged groups.  There are vacancies that existed for years and that are not yet filled because of dogmatic adherence to policy views that only a specific group of previously disadvantaged persons are suitable for that vacancy.  Would the State be willing to fill vacancies with competent people from other disadvantaged groups to improve the skills situation, or will a blind adherence to policies aggravate skills shortages in such a way that the status quo still prevails five years from now?

Dealing with a legacy in which appointments were made out of patronage and not merit is very difficult to change.  Government stands in front to a big courage test.  They would have to make a choice between relaxing draconian employment policies or perpetuating the skills shortage by demanding results that previous windows of opportunity did not achieve.

[1] https://mg.co.za/article/2018-08-09-nene-cracks-down-on-unqualified-finance-and-supply-chain-officials

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New B-BBEE Codes: Bursary Incentives

Newly proposed B-BBEE codes to incentivise companies when they offer bursaries[1] could help alleviate some of the skills shortages experienced in South Africa.  In terms of the new proposed codes, companies that offer bursaries could get additional points on the Skills Development Scorecard.  In addition, there is an expectation that any bursary spend on the new B-BBEE codes, will be tax deductible.

The new codes plan than 2.5% of a company’s leviable expenditure must be allocate to a bursary scheme.  Thus, a company with an annual payroll of R 30 million must allocate R 750 000 towards a bursary incentive.

Employers must consider how best to implement the bursary incentive in their organisations.  The scheme is a valuable tool providing current employees with a study opportunity so that the company can have a broader base of skilled staff.  One of the big gripes from employees is that they do not get study opportunities and that they then miss out on being considered for promotions.  On the other hand, the envisioned bursary scheme will be a valuable recruitment tool to attract Matriculants with good marks and to give them opportunities to study and get practical work experience. There are many Grade 12’s who have excellent marks but who are not able to get a tertiary qualification due to financial constraints.  They will benefit from the envisioned bursary scheme, and they have the potential to add value to future employers.  In a recent drive to recruit candidates for learnership openings at clients, Growth Institute noticed that more than 25% of applications received are from Grade 12’s who have very good school marks and who could benefit from the new bursary incentive.

Unfortunately, there is another side of the coin to consider.  The main concern is that employers could use the newly proposed codes as just another checklist to score points, not caring whether beneficiaries have passed the courses for which they received the bursary or not.  Seeing the newly proposed B-BBEE codes as a means to reduce taxes and nothing else will not have the desired effect.  There are far too many cases where persons are put on learnerships or study programs, knowing full well that they are not going to pass a single subject.  Such a practice is ethically questionable because it does not improve the levels of skills so desperately needed to sustain economic growth.

Under the current learnership schemes, there is a phenomenon known as “Professional Learners”.  What it means is that some of the youth migrate from one learnership to another.  They would benefit from Learnership A but since that learnership does not automatically lead to employment, they migrate to Learnership B in the hope to land employment.  In addition, some learners migrate from learnership to learnership, never completing a single program.

Technically, there is a mechanism preventing someone to move to another learnership without completing a prior program.  How well this mechanism is enforced is debatable and requires some scrutiny.

If the new codes about bursaries come into effect it would be beneficial if checks and balances exist to catch out people that migrate from one bursary incentive to another; never completing a qualification.

[1] https://www.thedti.gov.za/gazzettes/41709.pdf

State Capture, Living Conditions and Free Education: Tremors of a Crisis

Reading the Landscape

Last week, students have barricaded entrance to the Sefako Makgatho Health Sciences University[1] to highlight bad living conditions and lack of accommodation at that tertiary institution.

Having access to decent accommodation while studying is important, as there is a direct link between academic performance and living conditions.  Visiting some university or college campuses is a shock to the system.  Many buildings are in disrepair and some campuses are forthright dirty.  Funding, to keep decent facilities at campuses, is under pressure – especially in the light of the Free Education debate.

Funding Pressures

There is a perception that public tertiary institutions are getting rich from tuition fees and that they can build luxury accommodation blocks at the snap of a finger.  Unfortunately, tuition fees account for about 30% of the total operational budgets of public universities and colleges.  The State provides a maximum of 40% of the funding needed by public institutions, and, for the balance, public institutions depend on the Private Sector and benefactors.

Considering also the expenses to rebuild facilities destroyed by protesters, public institutions simply cannot sustain the upkeep of accommodation block at all times.  As the damage of State Capture and wastage at State Owned Enterprises come under more scrutiny, it may come as no surprise that the State could be forced to reduce funding to public tertiary institutions.

The Law of Foreseen Consequences

Public tertiary institutions are caught in a vicious circle.  They are pressured by the State’s “Massification of Education” policies to admit as many students as possible.  In addition, public institutions have no guarantees that the NSFAS scheme would pay over tuition fees in time.  There are still shortfalls on payments from previous academic years that put pressure on the operational budgets of all public institutions.

There is simply little or no funding available to spend on the upgrade of residences.  Instead, the wave to privatise student residences is picking up momentum, leaving some students in a lurch.  Not all can afford to pay for private residence, so they are forced to consider living arrangements elsewhere or they have to make do what public institutions can offer within their operational constraints.

One-man crusades on lecture tours about free education create expectations that the State will be in a position to make good on unsustainable promises.  State Capture has already evaporated R 100 billion out of Treasury and the tax base is already overburdened.

All of this point to a scenario where public institutions will have to expand on Third Income Stream activities.  Contributions from the private sectors and from benefactors would have to increase.  Also, keeping tuition fees low whilst upgrading residences and other student facilities will become more difficult to achieve.

One of the after-effects of the free education crusades and of State Capture could be that tertiary institutions will have to protect their income statements.  Only those who can afford to pay for their tuition within the specific timelines demanded by tertiary institutions, could eventually be in a position to graduate.  Many first years already fall out after the first semester because they cannot pay for their tuition and because funding bodies such as NSFAS are in chaos.

New Grounds for Protest

Unsustainable tertiary education funding models, as preached by the State, generate unrest.  It seems that the State have not learnt any lessons from past protests about not fulfilling promises because the mirage of free education is still a handy toll to buy tick marks at the polls.

New waves of protest mean that more damage could be inflicted on facilities, costing millions to rebuild each time.  Insurance premiums do not always cover damage due to public unrest and protests, forcing tertiary institutions do rebuild facilities using funds earmarked for something else.

Closing Thoughts

The State’s policy regarding the “massification of education” is unraveling.  The blind insistence to proclaim unsustainable schemes for the sake of ballots or for the sake of scoring personal political points, are bringing many new chickens home to roost.

[1] https://twitter.com/hashtag/SefakoMakgatho?src=hash

State Capture Shock Waves: Time to consider the youth

The only ones who still deny the harsh facts of State Capture, are the Rip van Winkles of the 21^st Century.

One must ask how years of corruption and looting is impacting the South African youth.  A significant number of South Africa’s population are under the age of twenty-five[1].  They seem to face a future of little or no hope.  How can anyone, who benefited or still benefit from illicit deals, look the youth in the eye and say that their crooked ways brought a new deal for the youth?

Deprived of Tertiary Education Opportunities

Some sources say that R 100 billion was lost due to State Capture[2].  Past and present commissions of inquiry could add another R 500 million or more to the State Capture Invoice[3].  Last, State Owned Enterprises seem to think that the feeding troughs are still overflowing[4].

If one accepts a number of R 100 billion as the final cost of State Capture and if one selfishly assumes that said evaporated funds could have been used to pay for tertiary education, then 2.7 million of South Africa’s youth are deprived of a tertiary education; thanks to a rotten few[5].

Possible Impact on the “Free Education” Mantra

Given that NSFAS is already under pressure to fulfill commitments for the 2017 and 2019 academic years, where would the funding for 2019 come from?  Stopping the tide of State Wastage is not going to happen overnight.  Second, the tax base is already so overloaded that there is little or no room to left to milk already thin tax cows[6].  Clearly, the State cannot borrow themselves out of a very deep pit anymore – especially when there is a very slim chance to avoid another credit downgrade[7].

Call to Accountability

The State owes the youth an answer.  For a long time, the youth were told that other factors are the reason why they are deprived of access to tertiary education opportunities.  Now that the ugly truth has shown the tip of its very ugly horns, who will the State think of to blame?

As the facts emerge, there very little room to hide.  It is very clear that the clever tales spun by Bell Pottinger are being exposed for what they were.

Moving Forward

State Capture has evoked emotions and hard words from many sides.  For the youth of South Africa to regain confidence in the State and its doings, much depends on the rhetoric that is going to play out over the next couple of months.  It will be counter-productive for the State not to acknowledge the fallout of State Capture and not to take harsh steps against the culprits.

Since State Capture has deprived many of a better economic life, we can no longer talk about the Missing Middle.  It becomes more a case of the Missing Many.

And, for the next 30 years or more we have to look today’s youth in the eye, explaining what could have been amongst many “should haves”.

Appendix: Assumed number of students deprived of Tertiary Education

Conservative cost of State Capture	100 000 000 000
Average annual cost of Tertiary Education	36 000
Number of students deprived of tertiary education	2 777 778

[1] https://www.indexmundi.com/south_africa/demographics_profile.html

[2] https://www.news24.com/MyNews24/the-real-cost-of-state-capture-20180525

[3] https://www.moneyweb.co.za/moneyweb-opinion/the-state-capture-commission-can-restore-justice/

[4] https://www.iol.co.za/news/politics/millions-wasted-on-soes-says-das-mazzone-16705511

[5] See Appendix 1

[6] https://www.biznews.com/budget/budget-2018/2018/02/21/latest-tax-tables

https://www.dailymaverick.co.za/article/2018-08-29-sa-express-amplifies-saas-burden-to-the-taxpayer-without-much-hope-for-a-turnaround/

[7] https://www.biznews.com/sa-investing/2018/09/13/sa-dodge-another-downgrade-moodys

Accounting Profession in Crisis?

A recent report[1] that the accounting profession faces a crisis because learners avoid mathematics is interesting. There are a number of myths under learners about the accounting profession and this opinion wants to dispel some of the myths.  The myths are:

• Accountants must have degrees
• All accountants must be CA’s
• Without a degree there are no accounting jobs
• Accountants must have mathematics

Accountants must have degrees

Some professional bodies state as a requirement that their members must have accounting degrees.  There are, however, other professional bodies that allow persons with National Diplomas in Accounting to become members.  In fact, there are professional bodies that award persons with the status of Certified Financial Accountant after they completed a National Diploma and after they have gained a specific period of work experience.

In addition, there are a number of international professional bodies that allow persons with a National Diploma in Accounting to do additional professional exams and board exams so that they could get the status of Certified Chartered Accountant.  Thereafter, persons with a CCA status could progress into other professional programs focusing related accounting disciplines such as ethics, auditing and governance.

All accountants must be CA’s

The majority of school leavers are under the impression that they cannot practice as accountants unless they are CA’s.  Also, they are under the impression that they have to be auditors in order to practice as accountants.  The reality is that only 2% of South African businesses need the service of auditors.  The rest of South African businesses need the service of professional financial accountants.  This means that persons with a National Diploma in Accounting and with recognition from a professional body could create their own accounting practice in line with the professional body’s mandates.

Without a degree there are no accounting jobs

It is true that the big accounting firms ask for a degree. Industry does not realise that some professional exams have a required pass mark of 60% compared to a required pass mark of 50% for degree programs.  The argument that a degreed accountant is better qualified than a person with only a National Diploma, must be reconsidered.  Also, considering that persons with National Diplomas can do most accounting functions except auditing (which is an element of the degree program), should be cause for employers to reconsider their views.

Accountants must have mathematics

Accountants need numeracy skills, good language skills and good reasoning skills. Mastering algebra does not necessarily transform someone into a master accountant.  A strong foundation in arithmetic serves many professional accountants well, unless one has an ambition to become an auditor, actuary or forensic accountant.  Experience has shown that a student with 60% Mathematics Literacy is better equipped to master work in the National Diploma (Accounting, Business Management, Entrepreneurship and Office Administration) than persons with 50% in Mathematics Core.  They may not be able to go to University but there are so many alternatives that they could become very proficient accountants over time.

There are no jobs but there is work!

The days that any qualification is an automatic ticket to a job, are over.  It can take a graduate up to three years to land a first interview.  Instead, persons with National Diplomas and other qualifications that are recognised by professional bodies need to consider starting their own practices, providing services to the many small and medium businesses that cannot afford the big-ticket price tags of some providers.  For this reason, there are a few Small Business Support Centres in Gauteng[2] that can help the youth to start their own businesses at a very small cost.

A Last word

Professional bodies are rightfully concerned that their professional ranks could shrink in the future.  Public and private tertiary education will have to become more aware of the different routes that are available to professional accountants.  Like in some other professions, different core functions require different skill sets.  But to argue that a degree or mathematics is the one and only entry level skill set to the accounting profession is not the whole story.

[1] https://city-press.news24.com/News/accounting-industry-loses-out-as-sa-pupils-drop-it-to-avoid-maths-20180911

[2] http://www.growthinstitute.co.za/page19.html

 

Kudos!

Congratulations to Amy Williams and Nadine Bergman who were two of the top students in the last national exam.  Growth Institute is very proud of the fact that Amy and Nadine we recognised as top learners by the Institute of Certified Bookkeepers.  Their performance shows that dedicated hard work can create rewards.  Amy and Nadine have to balance the pressure of work while studying for a professionally recognised qualification.

Nadine and Amy qualify for the Phahamisa Award and we are sure that they will continue to perform at the highest possible level.

Issued by Lynn Duke, Dean, on 7 September 2018

Campus Unrest: The Start of a Migration?

Whatever the reason for campus unrest, parents are rightly concerned about the safety of their children on campus.  Parents cannot be blamed to think that campus unrest is an excuse not to write exams or semester tests.  They feel there is too much of a co-incidence between the outbreak of unrest and exam dates.  The recent outburst at the University of Venda during exams, serves as a validation of parents’ views.  UKZN is in lockdown mode[1] and it seems that the situation could continue[2].  At NMU, students protested after another student was allegedly raped[3].  At TUT, the death of a student, allegedly at the hands of the police, sparked angry actions[4] .

Student protests are not unique to South Africa.  Police are preparing for a standoff at the Chapel Hill Campus at the University of North Carolina[5].  At Duke University, the name of a building has sparked protests[6].  Mexican students are clashing with the police about fees and other reasons[7].  In Bangladesh there are riots about road safety[8].

Are protests a disregard for manners and decorum[9] or is it a case that students feel their extreme actions are the only way to highlight issues such as safety, crime, injustice, etc.[10]?

Parents are questioning whether it is worth the risk to send their children to institutions where no one’s safety and uninterrupted access to higher education can be guaranteed.  No one knows what little spark could trigger protests at any time.  In a South African context, parents bluntly state that unrest at public tertiary institutions are allowed to simmer because politicians are too afraid to act in case they may lose votes at the next elections.

In the wake of the current technical recession and in view of the fact, that smaller economies outperform us on the Global Competitiveness Index, one must ask for how long could our leaders allow these protests go on before they step in?  Allowing misbehaviour for ballots’ sake fan views that South Africa is not an attractive investment destination.  More alarming, though, is the toll that these protests take on the nation’s ability to develop a knowledge economy.  For almost ten years, the country has been hovering on the left side of an efficiency-driven economy that is a small step away from sliding back to a factor-driven economy.  The fact that many indicators on the Global Competitiveness Index still show downward trends, compel parents to ask about the future of their children’s education.  They feel that public institutions of learning have lost control and that standards cannot be trusted.

Such a perception cannot be good news for public tertiary institutions who are already battling to find sufficient funds for their operational requirements.  Protecting public tertiary institutions against thuggery and disruption must become an important agenda.  There is much appreciation for Government’s initiatives to make education accessible and affordable to all.  But disruptions, unsafe conditions, dirty campuses, burnt down classes or auditoriums create the perception that higher education has become just another sort of reality TV show.

Since public institutions of tertiary learning are under financial strain to improve safety, clean learning environments, rebuild burnt down facilities, there will be increased pressure on third income streams.  Said third income streams will not be based on short courses and other extra-curricular teaching programs.  Instead, public institutions would be forced to form closer bonds with the private sector.  Research agendas would have to change so that the private sector commissions more research and innovation projects at public tertiary institutions.  This will also mean that the separation between the academic arm and the innovation arm at public institutions could undergo change.

A migration away from public institutions of learning towards private institutions will gain momentum.  The perception that private institutions are more expensive than public institutions, is no longer valid.  In addition, higher throughput rates at private institutions (50+% compared to less than 30% at public institutions) will fuel the migration.  Third, programs at some private institutions are recognised by professional bodies, which means that students do not need degrees to obtain professional status after they have completed a program.

South Africa’s tertiary education landscape is going to transform in ways that may catch politicians by surprise.

[1] https://www.timeslive.co.za/news/south-africa/2018-08-14-ukzns-westville-campus-on-lockdown-after-protests/

[2] https://www.iol.co.za/mercury/news/ukzn-westville-campus-protests-may-resume-16645714

[3] https://www.iol.co.za/mercury/news/ukzn-westville-campus-protests-may-resume-16645714

[4] https://ewn.co.za/Topic/TUT-student-protest

[5] https://www.heraldsun.com/news/local/counties/orange-county/article217889470.html

[6] https://twitter.com/iandembling/status/1037454623509041154

https://abc11.com/politics/protesters-gather-at-duke-to-urge-name-change-for-carr-building/4156445/

[7] https://www.newsobserver.com/news/nation-world/world/article217852485.html

[8] https://timesofindia.indiatimes.com/world/south-asia/no-helmet-no-fuel-for-bangladesh-bikers/articleshow/65683923.cms

[9] https://www.pressreader.com/south-africa/daily-dispatch/20180906/281788514943896

[10] https://www.hotpress.com/opinion/student-special-take-streets-22755815