In an economy struggling with unemployment and de-industrialization, higher education institutions should no longer remain isolated educational institutions. Graphic: John McCain
South Africa faces a structural problem defined by high youth unemployment, graduate exclusion from the labor market, slow economic growth and falling industrial capacity.
Despite there being universities and technical and vocational education and training colleges across the country, these institutions function largely as learning and certification centers rather than engines of direct economic participation.
The national policy proposal I have submitted to the President, the Treasury and the Department of Higher Education and Training aims to fundamentally reshape the role of higher education in the South African economy.
The policy reform proposal argues that universities and technical and vocational education and training colleges should no longer be seen only as educational institutions, but also as productive economic centers that create employment, support enterprise creation, promote industrialization and stimulate local economic development.
South Africa already has many of the assets needed for transformation, including campuses, workshops, land, laboratories, student populations, technical skills, procurement budgets and research capacity.
The problem is that these assets are underutilized and do not contribute adequately to national economic growth and employment generation.
At the heart of the proposal is the idea that higher education institutions must perform five integrated national functions: educate, employ, produce, innovate and industrialize.
In this model, students will not only study towards a qualification, but also participate in structured work opportunities through campus enterprises, apprenticeships, production systems and entrepreneurship programs while completing their studies.
The proposal seeks to bridge 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.
The universities will focus on high-value areas such as software development, engineering innovation, research commercialization, artificial intelligence, digital services, biotechnology, advanced manufacturing partnerships and start-up incubation.
Technical and vocational education and training colleges, on the other hand, will become leading centers of practical production and industrial capacity, 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) in each institution. These units will serve as structured commercial and enterprise divisions responsible for identifying business opportunities, managing campus enterprises, coordinating student employment systems, attracting private investment, and linking institutional activities to surrounding local economies.
Campus enterprises may include logistics, printing services, furniture production, software agencies, maintenance services, uniform and apparel manufacturing, canteens, agro-processing operations and digital service centres.
The proposal emphasizes re-industrialization as a national objective.
South Africa has experienced years of industrial decline, import dependence and weak manufacturing competitiveness.
The policy proposes to use higher education institutions as decentralized industrial anchors capable of stimulating domestic production.
The campuses will become regional production centers linked to provincial economic power. For example:
• Gauteng institutions can focus on engineering, electronics, software and manufacturing;
• KwaZulu-Natal ports could focus on logistics and agro-processing;
• Eastern Cape institutions can focus on automotive components and manufacturing;
• 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 has been identified as a key lever for success. Government departments, municipalities and state-owned institutions may direct part of the procurement towards recognized campus enterprises. Through procurement reforms, institutions will gain reliable markets while students will gain real economic opportunities.
This policy will promote strategic cooperation with the private sector.
Businesses will 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 emphasizes that such partnerships must protect public value, ensure student participation, and avoid exploitative arrangements.
Financially, the proposal recommends a mixed funding model involving government allocations, development finance institutions, commercial investments, donor funding, private sector funding and institutional assets.
Initial pilot programs will require initial funding to establish governance systems, technology platforms, infrastructure, training systems and working capital.
Over time, institutions will generate recurring revenues from commercial operations, service contracts, production activities, technology licensing, retail margins and digital platforms, improving their financial sustainability and reducing pressure on public finances.
The expected impact 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 around the campuses.
The proposal also highlights the wider social benefits of reducing youth unemployment, including lower crime rates, improved household incomes, stronger community stability and new confidence among young people.
To implement the policy, the proposal recommends a phased national rollout with pilot institutions selected according to size, leadership preparation, sector suitability and economic location.
A national steering structure comprising the government, higher education institutions, technical and vocational education and training leadership, private sector representatives and student bodies will oversee implementation.
Legal and regulatory reforms will also be needed to allow institutions to operate as commercial entities, participate more effectively in procurement systems, and establish structured student employment frameworks.
Ultimately, the proposal presents higher education not just as a social service, but as a strategic national development platform.
In an economy struggling with unemployment and de-industrialization, higher education institutions should no longer remain isolated educational institutions.
Instead, they should become active engines of employment, enterprise growth, production, innovation and industrial renewal, capable of contributing directly to building 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.