Go back

South African universities ‘generate R500bn for economy’


Sector as profitable as gold mining or beverages and tobacco industry, academics argue

South Africa’s 26 public universities contributed significantly to the economy—about R500 billion (US$26bn)—in 2018, a pair of academics have argued.

This makes the sector as profitable as the gold mining, or the beverages and tobacco industry, they write in the South African Journal of Science September/October issue.

The findings come from an analysis carried out for Universities South Africa, an umbrella body for the country’s public education institutions, to estimate returns on investments in higher education in the country.

Its authors—immediate past Usaf chief executive Ahmed Bawa from Johannesburg Business School, and Anastassios Pouris from the University of Pretoria—hope their analysis will prompt policymakers to view investments in universities in a new light.

“What must strike readers is the extent to which higher education impacts the economy,” Bawa told Research Professional News in an email.

Spillover benefits

Bawa and Pouris used a novel method of calculating the total economic benefits of higher education that aims to not just pick up on direct spend attributed to universities, but also the additional economic activity they generate.

They grouped income under four general areas: the economic benefits generated by international students, by research activities, by the production of graduates and by universities’ local expenditure on goods and services.

For example, international students pay tuition fees and their families visit the country, generating about R11bn for the economy, the pair found. However, this expenditure is multiplied by something known as “benefit-transfer” the authors say, and they estimate the total benefit of international students amounted to R33bn in 2018.

Using similar analyses for research income, training of graduates and universities purchasing products and services, Bawa and Pouris found that these activities contributed R123bn, R134bn and R147bn, respectively, adding up to a total income of R510bn in 2028.

By comparison, the gold mining industry contributed more than R700bn to South Africa’s economy in 2016, while the beverages and tobacco industry contributed around R400bn that same year, Bawa and Pouris state.

A first attempt

The paper is a “first attempt” at understanding the contribution South Africa’s public universities make to the national economy, the pair write.

Bawa told Research Professional News that the analysis does not take into account the myriad other ways in which universities contribute to society besides economically, such as strengthening democracy and improving the innovative capacity of society.

“One would hope that the outcomes of this study (and future ones) would also allow policymakers to use a more evidence-based approach to areas like the funding of higher education and student funding,” Bawa said.