Third Stream income as a means of funding higher education

Doctor John Mudau, CEO of the UNIVEN Innovative Growth Company Pty (Ltd) at the University of Venda, shares his insight into the challenges of funding higher learning

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What role does the UIGC play in higher education in South Africa?

The UIGC is a third stream income entity (commercial wing) of the University of Venda. It is registered as a (Pty) Ltd. The higher education sector is faced with critical funding challenges today and, in order for the sector to survive, creative means of generating funds for universities are essential. The existence of a private company owned by a university influences the thinking within the higher education sector. It brings to reality the fact that grant funding and students’ tuition alone cannot sustain a university.

As part of the public sector, universities aren’t allowed to generate any profit—however, their sustainability depends solely on the availability of funds. The lessons learnt by the University of Venda are that it is essential for each university to have a third stream income in the form of a private company. To date, this practice is more dominant and deliberate at historically white universities, and the existence of the UIGC gives higher education a perspective to encourage any university to establish such a company and to ensure that it is managed properly and to meet the highest standards of corporate governance.

The university is the sole owner of the company, so any funds generated are returned to the university in the form of dividends. In 2016 alone, the UIGC has given just over R8 million back to the university to support students who cannot afford to pay their tuition fees. In this way, the company increases the number of students who, otherwise, cannot afford to be at a university.

Why is higher education crucial for enabling leaders be more effective?

South Africa is leading a global economy that is, to a great extent, becoming increasingly digital. The manner in which business operated in the 20th century and how it is supposed to operate now represent vast extremes. An easy-to-understand example is that, in those days, communication was mainly through letter correspondence, while today, business is internet- and cloud-based. People communicate via Skype and other social media streams far more quickly than they used to do in the past.

We are living in a time when leadership is everything, and the skills and management knowledge is best acquired from training institutions. I am aware that many people argue that a lot of education is bad, but the absence of it is far worse. The UIGC provides training from as low as NQF Level 1, which enables the company to provide skills even to those who have little formal education. The company trains even the local municipality leadership in programmes such as Local Economic Development (LED), Integrated Development Planning (IDP), Finance for Non-Finance Mangers, and so forth. These programmes are geared towards empowering local leadership to govern with at least the minimum skill set needed in their job. Political leadership at a local level also benefits greatly from these kinds of programmes.

Any business or political leader must continually upskill themselves. If South Africans want to run their economy efficiently, it is common sense that those who are at the forefront of decision-making have the requisite skills to lead and govern. Universities that have commercial wings similar to the UIGC are better-positioned to offer such functional training to business and government leaders.

How did your youth shape you into the man (and leader) you are today?

Being born and bred in Miluwani (Sibasa), life has always been a struggle. It was a struggle for survival and wondering where your next meal would come from. Being raised by a hardworking single mother, life was really full of fun and pain. We didn’t have much but that was not a problem because everyone around us didn’t have much, so life was pleasant. I don’t think poverty was a problem because no one was rich, so it was just life and I enjoyed it.

I was born in a family of entrepreneurs and survivalists. My father died when I was 13, but he was a farmer and my mother sold home-brewed beer. This was great and very empowering for me and, ultimately, made me who I am today. My upbringing in a family of entrepreneurs prepared me to effectively run and lead UIGC so successfully. Apart from the skills I acquired through formal education at prestigious institutions such as UNIVEN, Oxford in the UK and the Virginia Business School (USA), it was always in me to want to be an effective leader and successful manager.

Coming from a family of survivalists, you always want to understand social problems, so my first degree was in Social Work. My mother wanted me to become a teacher because it was much cheaper in those days to get a teaching diploma. I then went on to get my Masters in Management and Supervision, followed by a PhD. I also obtained several certificates in the process. Education and reading have always been my passion and, from a very young age, I wanted to become a doctor—I always knew it would happen. I grew up with an urge to prove that one’s background does not define one’s destination, and my belief is that we are who we want to be and not what the environment wants us to be.

We are all the masters of our destinations… not the victims of circumstances.

Why should poverty alleviation and community development be a top priority for business leaders?

I believe economic transformation is a business-imperative. It is in the best interests of business that the economy is transformed. Addressing poverty challenges in this country benefits business as, when poverty and under-development are given attention, the rate of crime and other social ills that are directly harmful to the business environment can be dealt with swiftly. South Africa needs to understand that its potential lies in its people. Attention should be given to ensuring that local problems are dealt with through empowering local people to deal with them. I always argue for training for local problems.

What is your role at the university?

The Board of UIGC requested me to lead UIGC Pty (Ltd) as its CEO, and the university is the UIGC’s sole shareholder. This opportunity is one of honour and privilege to me as, in this capacity, I am expected to ensure that the company raises money for the university within a short space of time.

Three years ago the UIGC was operating at a negative but today is a multi-million rand company, and its contribution to the university’s account continues to increase. The challenge of transforming a small company into a multi-million rand company is exciting for me and my colleagues.

We are all humbled to have been given the opportunity to contribute where it matters most, which is in assisting the university with its cash flow.

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