Govt warned against issuing bonds to fund free education
President Jacob Zuma established a commission in 2016 to investigate the feasibility of free higher education.
PRETORIA - Economist Thabi Leoka has advised government against raising money to fund higher education through social impact bonds, which would require government to pay funders a return on investment.
#FeesCommission Leoka: the education system needs to align with the needs of the economy. It’s currently not aligned. BB— EWN Reporter (@ewnreporter) February 6, 2017
Leoka made the comments during her submission to the Fees Commission of Inquiry in Centurion on Monday.
President Jacob Zuma established the commission in 2016 to investigate the feasibility of free higher education.
Leoka questioned whether using bonds to pay for education is the appropriate mechanism.
“You never issue bonds for consumption. You can argue education is an investment, but the returns are unknown.”
#FeesCommission Leoka: we have graduates not being absorbed into workforce because it has no need for them. BB— EWN Reporter (@ewnreporter) February 6, 2017
She says it would be difficult to secure investors.
“An investor would argue that 1 million students enter university but only 400,000 leave with a degree. That’s not a very good return on investment. They’d ask why they should invest on such a low return. One could also argue you have some sort of social responsibility.”
#FeesCommission Leoka: what’s in it (investment in edu) for the private sector if the absorption rate is low? BB— EWN Reporter (@ewnreporter) February 6, 2017
(Edited by Shimoney Regter)