Fort Hare University is technically bankrupt
9 December 2015
A reply to a DA parliamentary question has established what the DA has always suspected. The Minister of Higher Education and Training, Blade Nzimande, confirmed yesterday that R35 million will be taken from the University of Fort Hare’s (UFH) infrastructure grant just to keep the University afloat for the remainder of the financial year funding operational expenses.
It is simple; Minister Nzimande and his colleagues in Cabinet need to reprioritise, trim the fat and frivolous expenditure in their respective budgets, and save tertiary institutions from having to cannibalise themselves in order to survive. This needs to happen sooner rather than later.
In addition to the R35 million being syphoned from infrastructure at Fort Hare; R361 million is already being taken from the national grant to meet the shortfall arising from the fee increase moratorium in all Universities. But the financial precariousness of this iconic University is so great that it will be unable to survive until the end of February even though funding may be provided to it to compensate for the 0% fee increase.
Specifically the Minister states in the parliamentary reply that “the University of Fort Hare [UFH] informed the Department that it has continued to experience financial strain and requested approval to utilise R35 million of its earmarked infrastructure grant to enable short-term relief.” This is effectively to keep UFH from complete financial collapse in the immediate term.
It is an unsustainable solution which fails utterly to address the serious problems being confronted by all Universities, and historically disadvantaged Universities in particular.
The ear-marked infrastructure grant was given to uplift historically disadvantaged institutions. But you cannot pay for recurrent expenditure from once-off grants indefinitely. It is simply postponing the inevitable. The Minister disingenuously asserts that UFH “must reimburse this amount from its subsidy in April 2016” and that “this will not negatively impact the progress of projects”.
However he also confirmed that UFH will be operating at a deficit, and thus remain effectively bankrupt, into the 2015/16 and 2016/17 financial years. It is thus clear that such reimbursement will not be possible. What will he do when the infrastructure grant and all the other patchwork solutions he has scrambled to find, finally run out of funds themselves?
When asked what he would do to rescue the University from liquidation, instead of promising additional funding, the Minister requested a “turnaround strategy” from University management. But this is the same University which is so desperate for funds that its Vice Chancellor has admitted to transferring money from student grants to pay staff salaries.
It is clear that Minister Nzimande remains unwilling to provide real leadership, or to find the funds the sector urgently needs. The ANC government and the Minister of Higher Education have repeatedly refused to address, or even admit to, the decrepit financial state of affairs at our tertiary institutions. Our Universities, which are already owed R4 billion in student debt, need immediate and sustainable long-term relief which should not be coming from inside the already cash-strapped Department, let alone their own budgets.
In fact, Minister Nzimande let slip to the Sunday Times on 25 October 2015 that eight Universities are on the verge of bankruptcy and will require bailouts and simply left it at that.
We cannot accept a situation where government’s inaction on this funding crisis is likely to see a third of our Universities bankrupt. This indicates the depths to which government’s management of our tertiary institutions has sunk.
Their precariousness will be worsened should government not provide the funding required to offset the long-term effects of the 0% fee increase, which will put pressure on income for the foreseeable future. To make it worse, no Universities have as yet received any undertaking in writing from the Minister that they will actually receive compensation for the immediate income shortfalls from the President’s Napoleonic “decree” that there would be no fee increases next year.
Proper funding for tertiary institutions will be a wise investment in the future of our country, and will repay itself many times over as more qualified young people are more likely to find jobs, start small businesses, employ others and pay taxes to government once they become economically active.
Issued by Belinda Bozzoli, Shadow Minister of Higher Education and Training, DA, 9 December 2015
