South African universities heading for serious trouble

South Africa’s higher education sector is at a vital crossroads, with historic underinvestment and poor post-graduate employment rates showing the need for major reform. 

These deep-rooted fragilities have even led some prominent analysts to call for some of South Africa’s universities to be closed down and replaced with technical colleges. 

A report from BDO South Africa showed that universities in South Africa are increasingly producing graduates who do not have the skills demanded by the country’s labour market. 

This results in many of them struggling to find jobs despite having a high level of education, with their skills being irrelevant in a modern economy. 

BDO analysed the higher education across key dimensions of funding, skills development, curriculum, digital transformation, and governance. 

It revealed a system that is characterised by lofty policy goals that suffer from poor implementation, structural inequities, and unsustainable financial models. 

BDO explained that South Africa’s higher education sector has transformed into a redress mechanism while aiming to be a driver of human capital and competitiveness. 

“The central premise — that higher education should serve as a catalyst for inclusive access, equity, and competitiveness — has yet to be fully realised,” BDO said. 

This can be seen in the data, with an increasing number of students failing to complete their degrees on time and find meaningful employment. 

“A key indicator of this shortfall is the systemic tolerance of low academic standards, exemplified by the 30% school pass threshold,” BDO South Africa audit director Ebrahim Mahomed said. 

“This creates a weak education foundation and fosters a culture of credentialism rather than competence. As a result, many students enter higher education underprepared.” 

This translates further down the line into an inability to complete their studies and graduate with the skills required for participation in the country’s labour market. 

Mahomed pointed out that while two decades of expansion has increased access to higher education, it has failed to translate into enhanced competitiveness and productivity. 

More broadly, this points to major reform required at a national level to shift focus away from access to conversion, ensuring that students do not just enter the system, but progress through it to employment. 

At a crossroads 

The current trajectory of South Africa’s higher education sector cannot be maintained for an extended period of time, as it faces serious trouble without reform. 

BDO South Africa believes that capacity constraints are one piece of the puzzle, with a lack of investment in creating new universities and technical colleges. 

This leaves a small number of universities having to absorb a growing student body, which has come at the expense of standards and output quality. 

It also results in many potential students missing out on higher education opportunities. BDO estimates that around 130,000 qualified applications are unable to secure placements every year. 

The private sector has invested heavily to solve this problem, with private higher education institutions growing rapidly in recent years. 

These institutions now accommodate 13% of all students, but are severely limited by their exclusion from state subsidies, university accreditation, and National Student Financial Aid Scheme (NSFAS) funding. 

A lack of capacity is not the only problem, with Mahomed explaining that the lack of new universities has created significant financial challenges for existing institutions. 

As they try to expand to accommodate more students, their costs have ballooned while quality has dropped, creating a potential downward spiral. 

“Financial sustainability is the most acute pressure point. Enrolments have nearly doubled since 2000, while government subsidies have stagnated,” Mahomed said. 

“Universities increasingly rely on tuition fees and third-stream income, deepening inequalities between historically advantaged and disadvantaged.” 

These funding pressures are compounded by a persistent skills mismatch. Graduate unemployment stands at 12.2%, signalling a disconnect between academic outputs and economic needs.

BDO South Africa recommended moving beyond fragmented reforms to fix parts of the higher education system towards overhauling it in its entirety. 

In particular, the firm urged the government to redesign funding models to balance inclusion with financial stability and embed employability and entrepreneurship as core educational outcomes. 

This should be coupled with investment in digital capacity to bridge infrastructure gaps and strengthen governance to enhance accountability. 

“With coordinated reform, higher education can evolve from a system that expands access on paper to one that delivers tangible success, employability, and inclusive economic growth,” BDO said.