Top South African university says it is ‘financially vulnerable’

Rhodes university, one of the top tertiary institutions in South Africa, says it is ‘financially vulnerable’ because a large percentage of students still owe more than 50% of their fees for 2016.

Citing a circular sent to enrolled students last week, the Democratic Alliance, said that Rhodes University “now has less than two months of funds to cover its financial commitments such as salaries, electricity, water and food for the dining halls”

According to the DA, Rhodes, which is one of the smaller universities in the country, with around 7,000 students, said it has “never before been in such a difficult financial position at this time of the year”.

Rhodes said in a statement to BusinessTech, that the total value of outstanding fees is R86.8 million.

“At the end of June 2016, student fee income is R43.8 million (20%) behind the same time last year. What is of concern is that at the end of June there are 1616 undergraduate and honours students who still owe more than 50% of their fees and charges. The total value of this outstanding amount is R86,8 million. An analysis of these accounts indicates that in a high proportion of cases either no payment plan has been made, or the payment plan submitted has not been honoured.

“At a larger University with much higher levels of financial reserves, this situation would not be significantly problematic. Given our very modest reserves and our high level of dependence on regular income from student fees, the cash-flow of the University is being strained considerably. Inadequate cash levels compromise the University’s ability to meet its monthly obligations – salaries, meals in the residences, municipal services payments, retirement and medical fund payments, and so on.

“Turning the current financial situation around is going to require renewed and constructive efforts by the entire university community. The university is not bankrupt, but it is financially vulnerable. In order to remain financially viable in 2017, we need to continue to attract sufficient fee-paying students and ensure that we offer an uninterrupted high quality education. We are continually engaged in efforts to raise third stream income levels. Our academic staff need to produce knowledge across the disciplines, and we need to improve continuously the throughput rate of our student body to ensure our financial sustainability.”

Last week, the university took the decision to withhold the results of students who had not paid at least 50% of their fees.

“It is clear that the financial difficulties in the higher education sector have affected even formerly wealthy universities. Both WITS and UCT have already announced austerity measures, including the cutting of staff. And unsurprisingly, historically disadvantaged universities are even worse off,” said Prof Belinda Bozzoli, DA Shadow Minister of Higher Education and Training.

Read: How South Africa’s universities spend their money

In October 2015, president Jacob Zuma announced a zero percent fees increase for 2016, translating into a multi-billion rand shortfall for universities across the country.

Research conducted by the DA showed that government subsidies for SA institutions have dropped to 40%, from 50% in 1994.

“The government appears to be blind to the fact that South Africa’s universities are in serious financial trouble across the board. This comes after years of falling real subsidies from government which have forced universities to rely on increasing student fees.

“The moratorium on fee increases has put universities under even greater pressure, and the financial support for student debt in this year’s budget has failed to remedy the situation,” Bozzoli said.

The DA noted previously that students owe South African universities as much as R4 billion in unpaid fees and residence expenses.

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