Address by the Minister of Higher Education and Training, Dr Blade Nzimande at dinner in honour of the success of the South African Actuaries Development Programme, Morningside, Sandton, September 29 2009

The challenge of skills shortage in South Africa

Programme director, Ms Thokozile Mahlangu
Executive Chairman of the South African Actuaries Development Programme, Cyril Ramaphosa
Vice-Chancellors Present
Chief Executive Officers of Companies
The Board of Directors of the Programme
Executive Director, Ms Nokwanda Mkhize
Distinguished guests
Ladies and gentlemen

It is a great honour for me to be part of this special occasion, which honours the success of the South African Actuaries Development Programme, which started in 2003.

Let me start by commending the South African Actuaries Development Programme and, in particular, the Board of Directors for the wonderful work that they are doing to make Actuarial Science accessible to the previously disadvantaged members of our communities.

You would agree that not many of our people have the slightest idea of what you would be referring to when you talk about Actuarial Science or the actuarial profession. Actuaries have a very important role to play, not just in our financial sector but in society broadly. Their role is particularly relevant in the context of the need for the transformation of the financial sector, including taking into account the voice of workers and trade unions as to where their pensions and insurance funds are invested as a means to rectify social inequality.

Actuaries also have a role to play in medium and long term planning in our country. The current global recession requires that we ask hard questions of all those who are involved in economic and financial sector planning, not least the actuarial profession itself. Among these questions is how we could not anticipate the global financial crisis and the extensive damage caused to the world economy.

In training actuaries therefore, we are not just training financial number crunchers but people who will understand the developmental imperatives and the impact of their decisions in addressing our socio-economic problems, poverty, joblessness, HIV and AIDS and others.

What exacerbates the problem of scarcity of graduates is that the majority of universities that offer a degree in Actuarial Science are the historically advantaged institutions. That on its own, for various reasons, already excludes those learners who cannot gain admission at these institutions.

Among the previously disadvantaged institutions only the Universities of the Western Cape and Zululand offer the qualification. It is in this context that efforts towards opening up the profession to the historically disadvantaged population are commendable. We need to expose young people to a variety of career opportunities so that they could make informed decisions about the career paths they choose. Moreover, the labour market should work in sync with us so that we are made aware of where we are lacking in terms of skills shortages; the quality of our graduates and in meeting the imperatives of transformation of our society.

The programme whose success we are honouring today, the South African Actuaries Development Programme, reported earlier this year that in 2003 South Africa had only four black Actuaries. Given the demographics, this totally unacceptable. The fundamental root cause of this problem begins with our schooling system. However, this is not the only place where the problem lies because one gets these bits and pieces of problems right up the education system into the labour market. Everyone of us, therefore, in this system must do their bit to address the problem of skills shortages. For instance, the problem of ill-preparedness of our learners in the schooling system is contributed to by factors such as lack of resources at schools including lack of necessary infrastructure; lack of capacity due to either poor training of educators or them being under-qualified and poor socio-economic statuses of the majority of learners. These and other factors combine to produce learners who do not have a solid foundation.

Then to those lucky few that manage succeed in basic education and proceed to enrol with institutions of higher learning, there are other factors such as the often alienating institutional cultures and poor or inadequate support for students. Remember, these are over and above the challenging conditions through which many learners have to overcome.

Still, the problem does not end with admission, our institutions experience high drop out rates of students especially at first year level of study. There are also a variety of reasons for this including, of course, the ill preparedness of some of our learners for higher education environment. Indeed, there is also a challenge of capacity even at our higher education institutions, and this also has historical origins in some instances.

Thus, our challenge is not only about ensuring that our children receive quality schooling education that takes them through to higher education, but is also about making sure that students' success in access is matched by equity in outcomes, as this is our higher education policy target.

One factor which we must also confront is a continuation of racist attitudes and outlook of some teaching staff, particularly when it comes to scarce skills professions such as engineering, business studies, accounting and the actuarial profession. This reminds me of my own student days when we were told that black power is only good behind the spade and black students can't be economists. The Soudien report, which investigated racism and discrimination in higher education, points to this challenge broadly in institutions of higher learning.

We therefore need to mobilise all South Africans to make sure no form of discrimination is allowed to prohibit the access and success for any academic programmes. It is for this reason that we appreciate the role that the South African Actuaries Development Programme is playing in promoting the actuarial profession, particularly amongst previously disadvantaged communities.

We notice that there are a number of initiatives supporting training in the accounting (SAICAs Thuthuka scheme) and civil engineering professions. Whilst focussing on specific professions is very important, it is also vital that these initiatives are networked in order to share experiences and make maximum possible impact.

A cohort study of 2000 and 2001 first time entering students conducted by the Department of Education showed that too few of these students, approximately 22%, graduated after five years. In fact, other studies showed that for many learners it takes as much as seven years to complete a three year degree. One of the major causes of this prolonged completion rate is that learners keep on taking time out, often more than once, and returning to complete their qualifications.

Students from rural areas, for instance, find it difficult to easily adapt and survive within the higher education environment especially at those institutions located in urban centres, compared, for instance, to students from affluent urban areas. We need to, therefore, find ways in which we could support them in terms of induction programmes to help them adapt and make success of their higher education experience. In the late 1980s and early 1990s, in those days of debates on "Academic Support" versus "Academic Development", we already identified these problems in South Africa . Perhaps, what we need to do now is to see if our suggested solutions then, which we now implement, match the changes in times and their demands to the social lives of our learners. In other words, are our solutions still relevant? Are our suggested solutions not overshadowed by the competing demands to the social lives of our higher education or post-secondary education youth?

I have mentioned it before that the blame for poor student performance at universities cannot be solely apportioned to poor schooling. Institutions need to also play their part to ensure that they enhance the chances of success of students in the system. They need to provide the necessary support to students to ensure that their talent is not lost for reasons that have nothing to do with their academic capabilities.

Again, the problem does not end with the few learners who are able to make it through the system by graduating. Often companies complain about the mismatch between the skills or type of graduates that our institutions produce, and the skills needed by the labour market. So, the problem seems to not only to be about the quantity of graduates but also the quality produced by our institutions.

Indeed, many of our graduates tend to be inadequately prepared to make an immediate impact when they enter into the labour market. Companies report that they often find themselves having to put resources into further training in order to bring graduates to a required functional competence. This calls for some introspection on the part of institutions to see to it that we produce the kind of graduates who are work-ready, and would make a positive contribution to the economic growth of our country.

As government, we have identified Further Education and Training (FET) Colleges as critical centres to help us overcome some of these challenges. The division of the Department of Education into two: Basic Education, and Higher Education and Training was aimed at ensuring that our system is better equipped to respond appropriately to the challenges of skills shortages in South Africa.

In this context, the department has embarked upon a process of reconfiguration of FET Colleges so that they become institutions of choice by many of our students, rather than being seen as what students settle for when they do not get admission into universities.

In terms of the Funding Framework for public higher education institutions, which is a tool used by the Department to steer the system, there has been an increase in Earmarked Funding for Foundation Programme from R84 million in 2004/05 to R143 million in 2009/10 financial year. This is money meant to improve progression and graduation of students, especially from disadvantaged backgrounds, which includes academic development programmes.

It is acknowledged that this amount may not be enough to address the existing challenges in this regard, but we will strive to increase support over the next few years. My department would also welcome views from you on how we can improve academic support for actuarial students especially those from disadvantaged backgrounds. My department is open to engagement and to receive views, critical or otherwise.

If ever we are to ensure that the country derives value for the investment it makes in our students and that the youth is supported to realise their potential, these challenges need a suite of solutions and not just one approach. Our government and my department in particular, has placed skills development as a top priority on the agenda. Although the department has over the years made great strides in terms of increasing access into higher education, more could and should still be done.

It is therefore my department's responsibility to expand options for young people in the post-schooling system. The bringing together of Higher Education Institutions, FET Colleges and the Skills Sector into a single Department of Higher Education and Training provides a useful platform for addressing education and training in an integrated approach.

Programme director,

In the lines above, I have tried to map out the development of human resources from basic education, right up to higher education and the labour market, and the challenges that both individuals and the system encounter in the process. If I were to stop here and say that our problems are confined within this mapping, then I would be fooling everybody.

Another important factor, especially with respect to the actuarial profession in South Africa , is that we need to ensure that we do not just grow the number of Actuaries we produce, but we should also make sure that we retain them. Our institutions need to produce more graduates in this field, but at the same time there is a need for the profession and the labour market to make sure that it retains sufficient experienced professionals to mentor newcomers.

There is a huge number of talented young people who find themselves outside of our education system. A Ministerial Report on Post-Compulsory and Post-School Provision shows that 2,8 million of the 6,8 million of 18 to 24 year olds in South Africa are neither in employment, education institutions or workplace training. This constitutes about 41 percent of our young people. Part of the reason for this grim picture is as a result of very limited access into post-school education and training opportunities; lack of financing and limited availability of jobs.

In 2006, government set itself a target of halving unemployment and poverty levels by 2014. For this to happen, it is estimated that the country's economy will have to grow at an average rate of, at least 4,5%, in the period to 2009, and by average six percent in the period 2010 to 2014. Therefore, the problem of skills shortages in South Africa has a debilitating effect on the country's economic projection and will be largely responsible for the country's failure to achieve the targeted six per cent growth rate in the period 2010 to 2014, in line with the set targets.

These shortages, of professionals and artisans in particular, need to be seen in relation to a number of issues that arise from the country's racially divided and unequal history. They also need to be considered in relation to international skills shortages and the global market.

To achieve these targets we would need to invest in skills development and training of our people, especially the youth. This is why my Department has earmarked about R3,2 million for scarce skills areas for the financial years 2010/11 and 2011/12, and this is a start. These include engineering at universities, universities of technology and comprehensive universities.

South Africa continues to face challenges of skills shortage at different levels. The country bemoans shortage of artisans, and other technically trained individuals such as electricians, technicians and mechanics. There is also concern over the number of engineers, scientists and health practitioners produced by our higher education institutions.

I therefore see the South African Actuaries Development Programme as a unique opportunity to contribute towards the broader challenge of skills shortages in the country. I would like to conclude by once again commending the Programme management and the Board of Directors for their work. It is encouraging to note that the programme has already started producing qualified actuaries since its inception.

I am happy to learn that your programme makes special efforts to provide support to students to ensure they succeed in their studies. Our idea in providing students with opportunities for post-secondary education is not so that they should fail, but, so that they have an opportunity to reach their true potential and play a positive role in the development of the country.

I hope that you will continue with your efforts to open up the actuarial science profession to many of our young people. I hope that you will look for ways and opportunities to further expand the programme to ensure that it reaches out to an even greater number of young people than it currently does.

Thank you.

Issued by the Department of Higher Education and Training

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