South African Public Universities Contribute Over R510 Billion to National Economy.

An assessment of the economic impact of South Africa’s public universities revealed that South Africa’s public higher education institutions contribute a significant amount in the national economy, nearly equivalent in size to the gold mining industry in terms of gross value added.


The sector contributes approximately R500 billion annually to the economy, illustrating its immense economic importance. This amount is even likely to be an underestimate of the actual contribution.


These were the findings of research by Professor Ahmed Bawa and Professor Anastassios Pouris, published recently.


In the groundbreaking study, the authors revealed the extent to which South Africa’s public universities contribute to the national economy. The study, analysing data from 2018, encompassed four key activities: education of international students, research performance and production, education of domestic students and production of graduates, and the universities’ role as business entities.


The total impact of these activities on the economy was estimated to be just over R510 billion. In 2018, the sector received inputs amounting to about R66 billion, resulting in an impressive cost-benefit ratio of 1:7.7.

The research paper highlighted that the public higher education sector’s contribution to the country’s value added economy exceeded that of various industries, including wood and wood products, textiles, clothing and leather goods, and paper and paper products.


Its economic significance is comparable to sectors such as gold mining, beverages, and tobacco, the duo found.


The study argued for viewing the university system as a vital economic sector that significantly contributes to the national fiscus, emphasising the need for investment rather than perceiving it as a mere expenditure.

With more than one million students enrolled across 26 public universities in South Africa, representing a participation rate of about 21% of 18- to 24-year-olds, the sector produces over 200,000 graduates each year. Notably, the unemployment rate among graduates was considerably lower than the general unemployment rate.


However, the study pointed out that South Africa’s government expenditure on higher education ranked low compared to other countries, contradicting the National Development Plan’s call for significant growth in the sector.


Despite steady increases in subsidies to higher education in real rand terms, they found that policymakers continued to view higher education primarily as an area of expenditure, rather than one of investment.


The report emphasised the importance of further research to indigenise economic modelling for local conditions, considering the limitations of using models developed for other economies.


This comprehensive analysis shed light on the substantial economic contributions of South Africa’s public universities, prompting policymakers to recognise the sector’s potential and importance as an area worthy of investment.


The findings provided a strong foundation for future research and policy decisions, taking into account the changing landscape, including the impact of the Covid-19 pandemic.

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