OPINION | How NSFAS cash policy closed the book on students and small businesses

In a recent statement to Parliament on the state of readiness for the 2020 academic year, Minister of Higher Education, Science and Technology Blade Nzimande revealed that government would be spending R35 billion in 2020 through the National Student Financial Aid Scheme. This funding will support over 700 000 students in both universities and TVET colleges.

While making available tertiary education opportunities to more young people is definitely something to be applauded, it is also critical to ensure that NSFAS students are getting the support they need to succeed and fulfil their potential during their studies.

It is therefore disappointing that Minister Nzimande failed to outline how government was making sure that NSFAS funding was being spent in way that guarantees that young people can succeed and fulfil their potential for the country’s future.

Cashable allowance

In January 2019, NSFAS summarily changed the manner in which it distributed allowances for prescribed learning materials – public funds specifically allocated by the government to ensure that students have the materials they need to succeed in their tertiary studies. Instead of disbursing these allowances in a controlled manner, ensuring that it is spent on what it was intended for, NSFAS implemented an unauditable, cashable allowance policy that enabled students to draw the entirety of their learning material allowances at banks or supermarkets in cash.

As a result, many students have not bought their prescribed and academic books – new or second-hand. Academic book sales dropped by over R500 million last year. The drop in sales is most dramatic at the universities where a high proportion of students are NSFAS-funded, which themselves are rural and historically disadvantaged institutions.

While this clearly has major ramifications for an entire cohort of NSFAS students who will struggle to succeed academically without their prescribed textbooks, the policy change has also crippled the country’s book-selling industry.

Whereas the Administrator of NSFAS, Dr Randall Carolissen, has repeatedly referred to this sector as "entrenched monopolies", this is factually inaccurate. Academic booksellers come in all forms and sizes, but the Administrator appears to have not considered the dozens of small businesses and entrepreneurs the scheme is effectively putting out of business. 

Across the country, SMME booksellers are losing the businesses they have built, and they have shared their struggles with us.

A decade ago an enterprising young student started a business in his residence room at UCT, buying and selling second-hand books. Determined and entrepreneurial from the start, he fought for a formal space on campus, went on to open several stores in the Western Cape and the Free State, and built an online store, with staff across the country.  He offered innovative solutions to students, like renting of textbooks, which evolved to offering new books and other student learning material on or near campuses. The change in NSFAS policy has put paid to that. He has already closed one store and put two up for sale.

Another bookseller who has entered the industry in the past few years is in a similar predicament. After starting out five years ago in a 2nd floor office, his business expanded to campus bookstores where he was competing against more established booksellers. However, his business ground to halt when the policy change was instituted, particularly, due to his campus stores being located at historically disadvantaged universities where 70% of students are funded by NSFAS and where books sales have dropped between 60% to 90%. 

President Ramaphosa, in his State of the Nation address, announced national government’s ambitious plans to assist 100 000 young entrepreneurs over the next three years.

Yet, it is young, job-creating black entrepreneurs that the NSFAS policy is deliberately undercutting and destroying the value, skills and innovation they bring to the industry.

More established independent retailers are also closing. Another bookseller who grew his business from home, eventually opening a store in Durban faces an uncertain future due to a loss in book sales. 

The painful irony of Dr Carolissen’s unfounded "monopoly" argument is that it is actually eroding what has been healthy and growing competition in the textbook market.

Both big and small publishers are also struggling to find any incentive to publish new editions, particularly when developing local content. Even our local printing industry has seen contraction as a result of the policy change.

South Africa is one of the few sub-Saharan countries with the local capacity to commission, develop, produce, market and distribute Higher Education textbooks and content, including supporting material for lecturers and online tutorials. But this is at grave risk of being lost.

Minister Nzimande has himself, expressed concerns over the lack of monitoring of NSFAS funding and has called for systems to be put in place to ensure this funding is not misused.

It is therefore disappointing that he chose to avoid this crisis when addressing Parliament on NSFAS funding for 2020.

We call on the National Minister to urgently review this decision and to instruct NSFAS to reinstate the ring-fenced textbook and learning material allowance so we can put a stop to the South African ‘academic tsunami’. We agree with his call that more research on the impact of this policy change is also needed.

While it might come too late for many businesses in the industry, it will at least ensure that this year’s funding is being spent in a way that ensures students can succeed.

NSFAS now funds over half of all Higher Education students in the country, which means it can create or  destroy  the futures of a generation of students and those industries supporting education with the stroke of a “policy” pen.  Nothing can be more of an “entrenched monopoly” than that.

Kharwa is the Convener of the Alliance for Academic Success, a group of individuals and entities within the academic book supply industry, including the South African Booksellers Association (SABA) and the Publishers Association of South Africa (PASA). Views expressed are his own.

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