Can business bridge the gap for universities?

With all the talk around ‘fees must fall’ it is essential that universities maximise their earning potential through the creation of business development initiatives to help students afford tertiary education in the future

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The University of Venda (Univen) became the first historically black university in South Africa to establish a commercial wing to tackle its financial challenges last year.

Over the years, Univen has played a significant role in the social transformation and social cohesion of the country. It has produced some of the most influential and inspirational leaders, who have helped shape its present and future direction.

The current alumni of the university boasts some of the country’s most distinguished and well-known names in the field of politics, industry and social transformation, including Limpopo Public Works MEC, Jerry Ndou, Jayson Ngobeni, Professor Azwindini Muronga, and Judge Tshifhiwa Maumela. Minister Faith Muthambi is also an alumnus of this institution.

One of the leaders in their business wing is highly regard chief executive officer of the Univen Innovation and Growth Company, Dr John Mudau, who has been instrumental in creating the university’s business arm, which hopes to create enough revenue to provide free education.

To find out more, Gregory Simpson caught up with the knowledgeable Mudau recently.

Please tell me about your background?

My training is in development and I got into corporates almost accidentally when the University of Venda established a company, which is supposed to be the commercial wing of the university. As you would know universities are not allowed to make proceeds because they’re public entities and funded by the State. However, funding is very, very small now and it’s important for universities to find a way to generate revenue. They thought the best way to do it would be for them to come up with a parent company, which is Univen Innovative Growth Company (UIGC). We are fulfilling our mandate, and I am happy to be the one associated with the success of the company.

What are the key areas you are looking at improving?

Well, our key focus areas are in agriculture, mining and financial services. Our training is still on the short learner programmes, which we focus on. Let’s start with agriculture, we are only in commercial agriculture now, we are producing bananas, macadamia nuts and avocados and our farm is doing very well considering it has been going for two years. We do have offers on the table from the mining houses who are willing to partner with us, so we are carefully looking into those offers to see where we are going to multiply value for the university.

Financial services, we invest our money in a number of other areas, and we are happy with that as well. Training; we have more than 60 short-learner programmes and we think our programmes are good because they are tailormade to the needs of the client. If a client requires project management we tailormake it to the project, and if finance managers are needed, we do it for you. Of the 50 clients that we have local government are still our biggest client, and we offer them a wide variety of programmes and relevant courses; we are in broad areas, so to speak.

It must rewarding because it provides learners with an opportunity to get practical experience while they’re still at university?

Well exactly, but our targets are those who are not at university, those who are from the communities, and those who work for the municipalities. The university gives us the leverage to expose our learners or students to that tertiary environment. Local municipalities, people who are in the industry, people who are in business come to the university to train on a number of programmes.

Would you say this is the evolution of education – smaller, shorter specialised courses?

It is, the universities in South Africa in particular have come to realise that it’s going to be very difficult for them to survive with all this ‘fees must fall’ and all of those things. There is no way a university can survive purely from the grant that comes from government, so a university has to come up with creative means of getting revenue. We, from UIGC’s side, have given the university in the 2016 financial year R8 million and the whole of that R8 million was for them to fund students who are unable to pay for their tuition. The universitites in South Africa are realising that if they are to get anywhere that’s the way to go.

I wouldn’t be surprised if in the next five years all the universities in the country have a commercial wing.

Is there a fine balance between the will of the business and still keeping it for the people, so to speak?

The balance is there, what is key is the balance between university management and the company governance, because you need the two entities to have some kind of common understanding in terms of where this is going. The mandate of the university is to provide training and research and they will do community engagement but the role of the corporate company, commercial company for that matter, is generally to check your bottom line, to make sure that you invest, make sure that at the end of the year you declare some dividends to the shareholder, which is the university. That understanding is very key and for that to happen the university would have to step aside and allow the company to operate purely as a private corporate company. The company interacts with the university during general meetings where the shareholder would come and say this is what we want for our company but then the board of the company will say this is where we are going, so that interface is very key.

Also communities are beginning to understand that it’s important to partner with the university in order to partner with the commercial wing of the university, because even though they are separate there’s a lot of synergy. If we provide training, for example, our training still has to go through the university channels for accreditation, and when we get into venture capital that venture would go straight to the Board. That balance is very, very critical, and the two entities would have a mandate from time to time to say, look we are still for you, we are not running away, and we are not going astray, the money we are making—it is for you as the university. The university also needs to see value in the company.

One of the biggest projects that we are getting into now is where we are saying to the university, we as a commercial wing want to build residences for the university, we want to build 2 000 beds for the university and when we do that we are saying it will be the project of UIGC, it’s a commercial project. We get revenue from students coming in, staying in our residences, but the university will get their return for that building because it is on their land. UIGC will manage it for as long as the building is there, and UIGC is a private company, we manage the loan, so you take away the risk from the university to a private company. This is exciting, very exciting.

Onto the ‘fees must fall’ debate, fees clearly need to come down, but where is the money coming from?

Well in our case the ‘fees must fall’ debate as it may be, we approach it differently. With the said ‘fees must fall’ part of the baggage comes the in-sourcing debate, and had a discussion with our shareholder, the university, to say instead of you in-sourcing people, staff members and everybody else into your payroll let’s bring them to the company payroll, which is owned by you. Because at the end of the day our view is that as long as you are able to address social justice everybody will be happy. The problem will be if there’s a huge disparity between the salaries of those who are working for the private entity of the university and those who are working on the investor side. We then agreed to say let’s see which of the components of the university we can outsource, so to speak, to the university commercial wing.

What are the checks and balances to make sure that the money reaches students?

When we give the university the money and we say to the university here is the money, but this money is dedicated to bursaries, so instead of us just saying here is R8 million, here’s R40 million we are saying give us the names of the learners who are in need, and we compare the money against the students, so when the money goes to an investor account it’s already allocated to a student. The investor would not use it for any other purpose, but to pay for this student. We then say to the students you should come and check with us if your money has been paid before you go to the university and for us we think these are all the balances and checks that you need. Once we have that we know our money is going to be put to good use, nobody will say but I thought I was given a bursary but when I go to university the money is not there, or the university will say but they give us the money but the money was not adequate, we will say no, we give you the money and the money is strictly for this.

There shall come a time when we will say to the university we are giving you money for building a soccer stadium, for example, building a sports ground, building this or that, again we will ringfence that money so that it doesn’t get into the bigger pool of the university where it can easily be moved into so many other things. That’s how we enforce our checks and balances.

This can almost be replicated in the macro-economy of South Africa?

Yes, it can, this has been our mission to say let us think nationally but start locally, and when we do that we will realise that even other companies, your SETA’s, will come forward and say we want to partner with UIGC because we think what UIGC is doing will assist us at a micro and eventually at a macro level and we think that’s the way to go. The economy of the country will be supported when we start by supporting small people in the crowd, and all this will build up into the broader economic development we are all looking for.

And with technology growing every day, how do you make sure you stay up-to-date with developments?

Technology is important, in our country for the next 20 years, people tell us we are still way behind, so we need people to do the actual work, for a very, very long time to come. Technology is important; technology will assist us to improve from where we are. I don’t see technology as competition for our labour force, I see technology as complementing our labour force, and I see technology as enabling us to improve on our labour force.

In our commercial farm that we own as UIGC we are doing what you call smart farming.

Now smart farming will tell you what you are able to do, the general manager will tell you which part of the farm requires irrigation, which part of the farm needs harvesting when, which part of the farm needs more attention, more fertilisers—now that’s technology for you.

But when we look at that it is not hidden away, the farmer now knows when to harvest in terms of technology, which area requires less irrigation and this enhances the labour force’s abilities – things are still the same but we know better now, we know things differently.

We know how to maximise our farm, technology assists us to relate to our labout force and not reduce it—it helps us to maximise on our production.

When you measure production in terms of the capital and also in terms of the labour force we are improving, that’s what technology is doing for us, so we welcome technology.

If you look into your crystal ball—in 30 years time, what’s the university going to be like?

I see this university, through UIGC, as one of the richest universities in the country. This is going to be one of the universities where they will be able to say we are enrolling 20 000 students, half of those we will give them free access to education.

That’s where we are going; we are looking at a situation where the university will invest in projects where there is a big return.

I wouldn’t be surprised that if in the next 30 years the university will have a net profit, profits after tax of not less than R200/R300million.

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