1. Funding Higher Education and Research in South Africa Prof. Bassey E. Antia University of the Western Cape

2. Outline Chapter one: Introduction – contextualising research productivity: – Africa within the world – South Africa within Africa Chapter two: Funding of higher education in South Africa Chapter three: Funding and the broader research landscape in South Africa Chapter four: Conclusion – Assessment – What is innovative and what are the lessons?

3. CHAPTER ONE: CONTEXTUALISING RESEARCH PRODUCTIVITY

4. Two views of Africa in the World: population and scientific research output Territory size shows the proportion of all scientific papers published in 2001 written by authors living there. Source: http://www.worldmapper.org/display.php?selected=205# World population in 2001 Source: http://www.worldmapper.org/imagemaps/http://www.worldmapper.org/imagemaps/ imagemap2.html

5. Africa within the World

6. Picturing Africa from Within (1)

7. Picturing Africa from Within (2)

8. SA=1 st in 15 (4 with 1%); Egypt = 1 st in 5; Nigeria= 1 st in 1

9. South Africa: not yet “there”, but some successes A fact sheet GERD as a percentage of GDP: in 2013 = 0.87%. Target of 1.5%* Even given this GERD, low R & D workforce (World Bank: bottom 30%: about 1.5 per 1000 total employment. Argentina: 2.9%, Russia: 6.4%, China: 1.9%)* Higher education participation rate under 20% norm for middle-income countries** Demographic imbalances (esp. race) in RDI participation levels Dominates scientific publications in sub-Saharan Africa: “46.4% of the sub- continent’s share, far ahead of the two next most prolific countries, Nigeria (11.4%) and Kenya (6.6%)” (UNESCO 2010) Highest African country share to world publications: 2000 ranking = 35 th ; 2010 ranking = 33 rd 23 universities and several research institutes, over 10 of which appear in the top 20 league of most research-related rankings in Africa 34% of university academics have a PhD

10. CHAPTER TWO: FUNDING OF HIGHER EDUCATION IN SOUTH AFRICA

13. “New” Funding Framework Background: A “new” funding framework came into effect in 2004 (esp. 2007, given transition period) Rationales: Transformation to address apartheid-era injustices (inequitable access to HE, specific disciplines). Other concerns with earlier framework (South African Post-secondary Education Funding Framework (SAPSE)), implemented from 1983–2003: – (a) responsibility of government in financing higher education was simply to contribute to institutional costs – (b) market forces (student choices) determine the enrolment size and shape of the higher education system, and funding having to follow students Premise of new funding framework: – There are national development needs (access, redress, human resource) which the higher education system needs to address – The higher education system needs to be planned, governed and funded as a single national coordinated system – Instruments relevant for such steering are planning, funding, quality assurance

15. General Features Goal-oriented and performance-related: government grants distributed to institutions according to national goals and approved institutional plans. Payment for services and outputs Improvement-oriented: rather than necessarily being punitive, it has instruments for encouraging improvements when targets not met Caveat! On-going reviews, changing benchmarks*. Examples drawn largely from funding architecture, categories and benchmarks of the first triennium of the new funding framework (2004/5 – 2006/7)

16. Minister of Education allocates grants to individual institutions based on allocation from Treasury and approved enrolment plans National Treasury considers and determines MTEF budget and budget for following financial year Ministry submits Medium Term Expenditure Framework (MTEF) budget + budget for following financial year to National Treasury For next cycle, Ministry sets totals of student funded places per institution and aggregates to obtain system-wide totals Ministry (iteratively) interacts with institutions on likely size and shape of funding Ministry analyses enrolment data + student output for a cycle PROCESSPROCESS

17. Components

18. Formula for teaching input grant Formula: i = [a/A] * I passed through funding grid where – i = a given institution’s teaching input grant – a = units derived from number of FTE enrolled students in the institution. Derived by placing students in subject matter (CESM) categories and applying weighting factors by funding group, course level and delivery mode – A = ‘a’ at level of all higher education institutions in the system – I = sum allocated in the national budget for teaching input grant

20. Sample calculation of teaching input grant Suppose institution X’s enrolments converted into weighted total of teaching input as shown in Table generates 24 650 units Suppose also that weighted teaching input for entire system in year Y is: 870 000 Suppose finally government’s allocation for teaching input for year Y for entire system is: Rands 5 500 000 000 Then institution X’s teaching input allocation for year Y is: Funding group Undergraduate Honours & equivalent MastersDoctoral 11 x 35002 X 2003 X 6004 X 100 21.5 x 25003 X 1004.5 X 5006 X 200 32.5 X 10005 X 1507.5 X 30010 X 100 43.5 X 5007 X 5010.5 X 10014 X 100 Total weighting 24 650 24650/870000 x 5 500 000 000 = Rands 155.8 million

21. Formula for teaching outputs grant Formula: o = [c/D] * O processed through funding grid Where: – o = an institution’s teaching outputs grant – c = an institution’s actual weighted total of teaching outputs for year Y. Determined by multiplying non-research graduate totals by weightings for each qualification category. NB: Aggregating ‘c’ from all institutions gives system-wide C. – D = Aggregated ‘d’ from all institutions, where ‘d’ is the weighted normative teaching output for one institution. Small ‘d’ derived by multiplying headcount enrolment totals per qualification category in institution by graduation benchmarks approved by Education Minister for 3-year rolling period – O = sum allocated in national budget for teaching outputs Actual weighted teaching output for institution X 1 st certificates or diplomas of 2 years0.5 X 00 1 st diplomas and bachelor’s of 3 years1.0 X 16001600 Professional bachelor’s: 4 years or more1.5 X 7501125 Postgraduate diplomas0.5 X 200100 Postgraduate bachelor’s degrees1.0 X 350350 Honours degrees0.5 X 200100 Non-research masters0.5 X 200100 TOTAL3375 Normative weighted teaching output total for institution X Benchmark x Contact totalBenchmark x Distance total 3-year diplomas and bachelor’s degrees 22.5% x 8000 = 180013.5% x 3000 = 405 4-year professional 1 st bachelor’s degrees 22.5% x 4000 = 90013.5% x 1500 = 202.5 Postgraduate diplomas18% x 1000 =1809% x 0 = 0 Postgraduate bachelor’s degrees 18% x 500 = 909% x 500 = 45 Honours degrees500 x 18% = 900 X 9% = 0 Non-research masters1000 x 54% = 5400 X 27% = 0 GRAND TOTAL4252.5

22. Teaching outputs grant (2) Suppose the following system-wide totals: – normative total of weighted teaching outputs (D) = 121 000 – actual total of weighted teaching outputs (C) = 90 000 – budget allocation for teaching outputs (O) = Rands 1 378 000 000 Then institution X’s teaching output grant is: c (actual output = 3375)/D (system normative output = 121 000) x budget (Rands 1 378 000 000) = Rands 38.4 million

23. Teaching output grants (3) Where normative total of teaching outputs for entire system (D) exceeds actual weighted total (C), the amount disbursed as teaching output grant will be less than amount provided for in national budget. Surplus is then distributed as teaching development grants to all institutions whose ‘c’ is lower than ‘d’. An eligible institution X’s teaching development grant is its output shortfall e (i.e. d – c), divided by the system shortfall ‘E’ (that is, D – C) multiplied by surplus ‘S’. Thus, possible development grant is: [e/E] * S

24. Research outputs grant Formula: r = [f/G] * Q passed through funding grid Where – r = research output grant allocated to an institution – f = total of actual weighted research output in the institution. Determined thus: institution’s output of research graduates and publications for preceding 2 years multiplied by weighting. – G = total of weighted normative outputs for the entire system; thus an aggregation of ‘g’ in all institutions, where ‘g’ is determined as follows: institution’s total of permanently employed academics for preceding two years multiplied by annual publication unit approved by Minister of Education for rolling period. – Q = amount allocated in national budget for research outputs Weightings for research outputsInstitution’s output x weighting Publication units 170 x 1 Research masters graduate 180 x 1 Doctoral graduate 310 x 3 TOTAL180 Weightings in 2004/5 – 2006/7 Permanently employed academic/research staff in university X Weighted normative research output (g) for university X Universities 1.252001.25 x 200 = 250 Technikons 0.5 NB: Aggregate each institution’s weighted normative research output to get output for the system (G)

25. Weightings for research outputsInstitution’s output x weighting Publication units 170 x 1 Research masters graduate 180 x 1 Doctoral graduate 310 x 3 TOTAL180 Weightings in 2004/5 – 2006/7 Permanently employed academic/research staff in university X Weighted normative research output (g) for university X Universities 1.252001.25 x 200 = 250 Technikons 0.5 NB: Aggregate each institution’s weighted normative research output to get output for the system (G)

26. Research outputs grant (2) Suppose the following system totals: – weighted normative total of research outputs is: 15 500 – budget allocation for research output is: Rands 1 123 000 000 Then institution X’s research output grant for year Y is: f (180)/G(15 500) x 1 123 000 000 = Rands 13 million

27. Research output grants (3) Where normative total of research outputs for entire system (G) exceeds actual weighted total, the amount disbursed as research output grant will be less than amount provided for in national budget. Surplus Q is then distributed as research development grants to all institutions whose ‘f’ is lower than ‘g’. An eligible institution X’s teaching development grant is its output shortfall ‘h’ (the difference between ‘f’ and ‘g’) relative to the entire system shortfall H multiplied by surplus Q. Thus, possible research development grant is: [h/H] * Q

28. Institutional factor grants Of two kinds: – (1) to encourage admission of (racially) disadvantaged students (African and coloured who are South African citizens) – (2) for small sized institutions that do not enjoy economies of scale For both, grant in form of addition to teaching input grant. Re: 1: institutions with disadvantaged students constituting 80% and above of their population can have as much as 10% of their teaching grant as top-up. Re: 2, while institutions with 25 000 and more FTE enrolled students do not obtain any top-up, those with 4000 and less can have as much as 15% of their approved teaching grant as top-up.

29. CHAPTER THREE: FUNDING AND THE BROADER RESEARCH LANDSCAPE IN SOUTH AFRICA

30. Overview of R & D expenditure and performance (1)

31. Overview of R & D expenditure and performance (2) Source: Enhanced>>> What is the organizational & strategic framework for funding and research performance?

32. National System of Innovation in South Africa High-level policy: Government advisory E.g. Council on Higher Education, Academy of Science of South Africa, … Level 1 Ministry E.g. Science & Technology, Higher Education & Training, Trade & Industry, Treasury, Health, Energy, Arts & Culture, … Level 2 Agency E.g. NRF, Technology Innovation Agency, Medical Research Council, National Institute for Humanities & Social Sciences, … Level 3 Research and Innovation Performers E.g. NRF (DST), Universities, National Research Facilities (DST), Human Sciences Research Council (DHET), MRC (DoH), National Arts Council (DAC),... Level 4

34. NRF: Place within NSI and Objectives The NRF performs a dual function in the National System of Innovation (NSI): as an agency that steers the system according to strategic policies, and as a research performer (via management of national research facilities). Objectives: – The promotion of internationally competitive research as the basis for a knowledge economy; – The growth of a representative science and technology workforce in South Africa; – The provision of cutting-edge research, technology and innovation platforms; – The operation of world-class evaluation and grant-making systems; and – Contribution to a vibrant national innovation system.

35. NRF FUNDING SOURCES More than 90% of its funding from government … in three forms, namely: MTEF baseline allocation: to fund programmes and operations, Ring-fenced funds: designated by the DST for particular projects, e.g. equipment, Centres of Excellence), and Contract funds: for specific projects and programmes from DST and other government departments).

36. Finances

37. Some strategy frameworks National Research and Development Strategy (NRDS) of 2002 – Objectives: human capital development, mastery of technology change in society and economy, aligned government science & technology system. Identifies knowledge investment priority areas (Astronomy, Human Paleontology, Biodiversity, Antarctic Research, Indigenous Knowledge) Complementary Ten-Year Innovation Plan in 2007. Broad Goals: – Develop capacity to generate knowledge, especially in areas referred to as grand challenges: Biodiversity, Space Science and Technology, Energy Security, Global Change, and Human and Social Dynamics. – Secure for South African Research, Development and Innovation (RDI) a strong position internationally – Develop human capital for RDI – Build world-class RDI infrastructure

38. Synthesis of strategic thrusts People Knowledge Infrastructure Quality Investments

39. NSI-ACTOR RESPONSES TO STRATEGIC IMPERATIVES: 1. PEOPLE 2. KNOWLEDGE 3. INFRASTRUCTURE 4. QUALITY AND INTERNATIONALISATION 5. INVESTMENT

40. NRF and People (human capital)

41. NRF and Knowledge(1): Geographical Advantage

42. NRF & Knowledge (2): Grand Challenges

43. NRF and world class research platforms NATIONAL RESEARCH FACILITIES: grouped according to area of knowledge production or addressed national need. Astro/Geosciences South African Astronomical Observatory (SAAO), also responsible for managing the Southern African Large Telescope (SALT); and ƒ. Hartebeesthoek Radio Astronomy Observatory (HartRAO). Biodiversity/Conservation/Environment ƒSouth African Institute for Aquatic Biodiversity (SAIAB); ƒ. South African Environmental Observation Network (SAEON); and ƒ. National Zoological Gardens of South Africa (NZG). Nuclear Sciences ƒiThemba Laboratory for Accelerator Based Sciences (iThemba LABS).

44. NRF AND OTHER ACTORS ON QUALITY NRF Researcher rating: – A: Researchers who are unequivocally recognised by their peers as leading international scholars in their field for the high quality and impact of their recent research outputs – B: Researchers who enjoy considerable international recognition by their peers for the high quality and impact of their recent research outputs – C: Established researchers with a sustained recent record of productivity in the field who are recognised by their peers…. – P: Young researchers (normally younger than 35 years of age), who have held the doctorate or equivalent qualification for less than five years at the time of application and who, on the basis of exceptional potential demonstrated in their published doctoral work and/or their research outputs in their early post-doctoral careers are considered likely to become future leaders in their field. – Y: Young researchers (40 years or younger), who have held the doctorate or equivalent qualification for less than five years at the time of application, and who are recognised as having the potential to establish themselves as researchers within a five-year period after evaluation …

45. QUALITY CONT’D Department of Higher Education & Training (DHET) and quality of publications + research subsidy

46. Department of Science & Technology, the National Treasury and Investment Research and Development (R&D) tax incentive introduced to: – encourage private-sector investment in scientific and technological research and development (R&D) activities – facilitate South Africa's goal of achieving R&D expenditure of 1% of GDP (target of 2008) Operations: Tax deductions for 2 types of R&D expenditures. – 150% deduction of R&D expenditures incurred – accelerated depreciation deduction for expenses on building, machinery, equipment, …used for R&D purposes. Logic: revenue lost through incentive is gained from tax to be paid in future by companies making more money because they have applied results of R&D undertaken; the job opportunities in industry could attract young people to choose careers in science, engineering and technology.

47. CHAPTER 4: CONCLUSION

48. Financing South African higher education (HE) and research in theoretical perspective The new funding framework for HE and other interventions from actors in the National System for Innovation, especially the NRF, confirm that, internationally, government allocations to the HE sector consists of – Block grants (based on formulas) to support teaching, research and other operational costs – Allocations to support loan schemes for students – Ad hoc, earmarked and/or competitive allocations

49. Funding in theoretical perspective cont’d Of three major funding approaches, viz. – incremental funding (line-item, historical, adjustments to previous year’s allocation for all or specific line items, encourages lobbying, little incentive for performance) – formula-based funding (using enrolment & graduation data, anticipated trends, research output; little room for lobbying) – Performance-based funding (output-based, includes contract mechanisms, KPIs and competition) South Africa, like most other countries, employs a mix, especially of formula and performance

50. Assessment Goals (1997 White Paper)Targets (1997 White Paper) Status (2013 Review) Student enrolments in the public higher education system Goal 1: Opportunities for entry into the system must improve Gross participation rate of 20% by 2010 Overall GER grew from 14% in 2001 to 18% in 2010. Goal 1 was thus not attained, although progress was made. Goal 2: The participation of disadvantaged students in the system must increase Gross participation rates are equalised African, coloured and Indian students grew from 70.4% in 2000 to nearly 80% in 2010. Progress made with regard to changes in the racial profile of the students (Goal 2) Goal 3: The participation of female students in the system must increase Goal 3 was attained.

51. Goals (1997 White Paper)Targets (1997 White Paper) Status (2013 Review) Goal 4: Science, engineering and technology (SET) and business/management (BUS) enrolments in the system must grow Enrolment proportions to be 30% SET and 30% BUS The target for SET was thus not attained. The target for BUS was however reached (31%). Goal 5: Masters and doctoral enrolments in the system must grow 15% of enrolments to be masters plus doctoral students Minimal progress: 4.6% growth in postgraduate enrolments Academic staff in the public higher education system Goal 6: The academic staff in the system must be well qualified 50% of permanent academics to have doctorates, and 40% to have masters degrees Staff with PhDs increased from 32% in 2000 to 36% in 2010; staff with master degrees from 29% to 35%

52. Goals (1997 White Paper)Targets (1997 White Paper)Status (2013 Review) Teaching and research outputs of the public higher education system Goal 7: The output of graduates of the system must improve a) Growth in total graduates must exceed growth in enrolments b) Cohort completion rate to be 65% Progress with undergrad. certificates and diplomas (5.7% graduates vs. 4.9% enrolments) more than with number of graduates in undergrad. degree progs. (4.7% graduates vs. 5.2% enrolments). Ditto for M/PhD. Completion rate of cohorts of M/PhD below 50% Goal 8: The high-level knowledge outputs of the system must improve a) Total research outputs must increase b) Ratios of doctoral graduates to permanent academics should be 0.15, and of research publications should be 1.0 Although there was marked improvement in the productivity of research publications, there was very little improvement in productivity with regard to doctoral graduates

53. Assessment

54. What is innovative and what lessons? Innovation as far as funding mechanisms are concerned is not an absolute; it is contextual and dependent on goals. Therefore, it is perhaps inappropriate to pass non- contextual value judgments on known funding approaches. An innovative funding mechanism must ultimately be seen as strategy-driven. South African initiatives are embedded in explicit strategy that foregrounds the role of knowledge as driver of development and as the basis of the new global economy.

55. Lessons cont’d Funding occurs through a structured network, a delineated National System of Innovation with clear pillars. National research productivity and innovation output not left to higher educations alone. Private sector is incentivised (e.g. R & D tax incentive, Technology and Human Resources for Industry Programme – THRIP) to contribute to RDI. Incentives for academics/researchers and institutions tied to goals that are SMART (specific, measurable, attainable, relevant and time-bound) At the operational level, funding initiatives require a culture of accountability, transparency and open communication, ethics. A strategic culture has to be institutionalised, providing a goal-context for decision- making and behaving, even in the minutiae of daily administration. An effective monitoring system required, with options for constant revision.

56. THANK YOU