Reimagining higher education as an engine of economic growth

South Africa faces a structural problem defined by high youth unemployment, graduate exclusion from the labour market, slow economic growth and declining industrial capacity.

Despite having universities and technical and vocational education and training colleges across the country, these institutions largely function as centres of teaching and certification rather than engines of direct economic participation.

The national policy proposal I have submitted to the presidency, the treasury and the department of higher education and training seeks to fundamentally redesign the role of higher education in South Africa’s economy.

The policy reform proposal argues that universities and technical and vocational education and training colleges should no longer be viewed only as educational institutions but also as productive economic hubs that generate employment, support enterprise creation, drive industrialisation and stimulate local economic development.

South Africa already possesses many of the assets required for transformation, including campuses, workshops, land, laboratories, a student population, technical skills, procurement budgets and research capacity.

The problem is that these assets are underused and do not contribute sufficiently to national economic growth and job creation.

At the centre of the proposal is the idea that higher education institutions must perform five integrated national functions: educate, employ, produce, innovate and industrialise.

In this model, students would not only study towards qualifications, but would also participate in structured work opportunities through campus enterprises, apprenticeships, production systems and entrepreneurial programmes while completing their studies.

The proposal seeks to close the gap between education and economic participation by ensuring that institutions themselves become employers and enterprise ecosystems.

The proposal highlights that South Africa’s universities and technical and vocational education and training colleges can become productive economic nodes distributed across all provinces.

Universities would focus on higher-value sectors such as software development, engineering innovation, research commercialisation, artificial intelligence, digital services, biotechnology, advanced manufacturing partnerships and start-up incubation.

Technical and vocational education and training colleges, on the other hand, would become frontline centres of practical production and industrial capability, focusing on welding, fabrication, electrical systems, construction, agro-processing, plumbing, machinery maintenance, repair industries and technical contracting.

A key feature of the policy is the establishment of campus enterprise units (CEUs) at every institution. These units would operate as structured commercial and enterprise divisions responsible for identifying business opportunities, managing campus ventures, coordinating student employment systems, attracting private investment and linking institutional activities to surrounding local economies.

Campus enterprises could include logistics, printing services, furniture production, software agencies, maintenance services, uniforms and apparel manufacturing, canteens, agro-processing operations and digital service hubs.

The proposal strongly emphasises re-industrialisation as a national objective.

South Africa has experienced years of industrial decline, import dependence and weakened manufacturing competitiveness.

The policy proposes using higher education institutions as decentralised industrial anchors capable of stimulating domestic production.

Campuses would become regional production hubs linked to provincial economic strengths. For example:

• Gauteng institutions could focus on engineering, electronics, software and manufacturing;

• KwaZulu-Natal could focus on port logistics and agro-processing;

• Eastern Cape institutions could focus on automotive components and fabrication;

• Western Cape institutions could focus on food technology and green industries; and

• Limpopo and Mpumalanga institutions could focus on mining support industries and agro-processing.

In the proposed policy, public procurement is identified as a major lever for success. Government departments, municipalities and state-owned entities could direct portions of procurement towards accredited campus enterprises. Through procurement reform, institutions would gain reliable markets while students gain real economic opportunities.

The policy would promote strategic collaboration with the private sector.

Businesses would be encouraged to partner with institutions through supplier development programmes, technology transfer, investment partnerships, incubation support, infrastructure development and co-production agreements.

However, the proposal emphasises that such partnerships must protect public value, ensure student participation and avoid exploitative arrangements.

Financially, the proposal recommends a blended funding model involving government allocations, development finance institutions, commercial investment, donor funding, private sector funding and institutional assets.

Initial pilot programmes would require seed funding to establish governance systems, technology platforms, infrastructure, training systems and working capital.

Over time, institutions would generate recurring revenue from commercial operations, service contracts, production activities, technology licensing, retail margins and digital platforms, improving their financial sustainability and reducing pressure on the public fiscus.

The anticipated effect of the proposal is significant.

It aims to create large-scale employment opportunities for students and graduates, strengthen small and medium enterprises, expand local manufacturing, improve tax revenues, reduce dependence on social grants and stimulate local economies surrounding campuses.

The proposal also highlights the broader social benefits of reducing youth unemployment, including lower crime rates, improved household income, stronger community stability and renewed confidence among young people.

To implement the policy, the proposal recommends a phased national rollout beginning with pilot institutions selected according to size, leadership readiness, sector suitability and economic location.

A national steering structure involving government, higher education institutions, technical and vocational education and training leadership, private sector representatives and student bodies would oversee implementation.

Legal and regulatory reforms would also be required to allow institutions to operate commercial entities, participate more effectively in procurement systems and establish structured student employment frameworks.

Ultimately, the proposal presents higher education not merely as a social service, but as a strategic national development platform.

Higher education institutions should no longer remain isolated academic institutions in an economy struggling with unemployment and de-industrialisation.

Instead, they should become active engines of employment, enterprise development, production, innovation and industrial renewal, capable of contributing directly to the creation of a more productive, inclusive and economically resilient South Africa.

Andile Shongwe is the CEO of the Black Business League, a national chamber dedicated to the advancement of black-owned enterprises. His focus is on trade justice, entrepreneurship and economic development.