In South Africa, students often live in poor and unsafe conditions located in decaying parts of a city, in informal settlements or areas that are far from their campuses. This applies particularly to students attending previously disadvantaged institutions. Where on-campus accommodation is available, residences are often overcrowded and in a rundown condition. These conditions hamper students’ ability to succeed academically, which has far-reaching consequences impeding their opportunities. As a result, the Department of Higher Education and Training (DHET) has prioritised the acceleration of the rollout of much-needed student housing infrastructure in the public higher education sector through the Student Housing Infrastructure Programme (SHIP). The objective of the programme is to accelerate the rollout of 300 000 student beds at the 26 universities and 50 TVET colleges over 10 years. The programme is aimed at providing safe, accessible, affordable and decent student accommodation to improve educational outcomes through the following initiatives:
- Support and implement a funding model underpinned by National Student Financial Aid Schemes (NSFAS) allocations to students for housing (meals and rent)
- Catalyse private sector investment into the sector
- Standardise the procurement method and building standards of student housing infrastructure, to lower transaction and building costs
To successfully rollout this much-needed infrastructure, the DHET, in partnership with the DBSA, has developed and implemented a funding model underpinned by the National Student Financial Aid Scheme (NSFAS) bursary allocations to students for housing through a programmatic approach consisting of two phases:
- Phase 1: Supporting seven priority universities (University of Limpopo, University of Fort Hare, Sefako Makgatho University, Western Cape University, University of Zululand, North-West University and Vaal University of Technology) with their immediate student housing needs amounting to more than 15 000 student beds in the short term through a funding model developed by the DBSA. Accordingly, the DBSA provides a debt facility to the respective universities using the source of repayment for the senior debt derived from students’ annual allocation from NSFAS for on-campus housing, or the ‘rent equivalent component’ which excludes meals, security, electricity and water, etc.
In the year under review, under phase 1, SHIP has commenced implementing its first project in the Eastern Cape at the University of Fort Hare (UFH), Alice campus. This project is aimed at commissioning 1 437 new student bed capacity at a total cost of R400 million, wherein the DBSA provided a R278 million facility to partially finance the development of infrastructure, with the balance addressed from DHET’s Budget Facility for Infrastructure. The formal launch of the Alice Student Village on 3rd October 2019 was a significant achievement and testimony to the success of the SHIP initiative with the support of National Treasury, Infrastructure Investment Programme for South Africa (IIPSA) and UFH to create a sustainable and effective delivery model for critical infrastructure. The UFH development is earmarked for completion at the end of 2020 with student occupation expected in the first semester of 2021. The successful implementation of this student village will immensely benefit the student population, allow them to focus on their studies and realize their potential. The extended benefits derived from this development include positive social benefits, employment creation for community members during and post-construction and local economic development.
- Phase 2: Replicating the successful rollout of student housing infrastructure across the remaining universities. The 12 institutions earmarked in Phase 2 include 6 (six) universities (Walter Sisulu, University of Johannesburg, Cape Peninsula University of Technology, Central University of Technology, Tshwane University of Technology and University of KwaZulu-Natal) and 6 (six) TVET colleges (Lephalale, North Link, Gert Sibande, Majuba and Vhembe). All these projects are at various stages of feasibility assessment. This will consist of the establishment of a project management office to provide much-needed project management and implementation oversight especially to poor and under-resourced rural universities over ten years. A further component of Phase 2 will involve the development of a funding platform/ structure aimed at mobilising (leveraging and catalysing) funding from other potential funders and at supporting subsequent phases of DHET’s long term student housing infrastructure rollout programme for the public higher education sector.
In the previous financial year, in the development of Phase 2, the DBSA assisted DHET with securing the ring-fencing of R300 million from the Infrastructure Investment Programme for South Africa (IIPSA) to support SHIP through capital grants or interest-rate subsidies, project preparation and by covering the initial operating costs of the SHIP Project Management Office (SHIP MO). On the 23rd of July 2019, the DBSA and the DHET signed an MOU establishing the SHIP MO which is managed by an oversight committee consisting of representatives from both the DHET and the DBSA. The management office is crucial in providing much-needed programme management and implementation oversight especially to poor and under-resourced rural and township universities.
A programmatic approach allows for the standardisation of procurement documents and a transparent procurement process. Standardisation will allow for faster procurement in the market due to players becoming familiar with the standardised set of procurement documents, which ultimately results in reduced transaction costs. In addition, the programmatic approach allows for transparency and certainty. These are key ingredients that encourage the private sector to invest time and resources to bid on the projects. It also provides private sector funders with the comfort that a robust procurement process will ensure the best value for money.
Other highlights for the year under review
- The DBSA signed a R480 million loan facility for the University of Limpopo (UL) earmarked for the development of 3 500 new student bed capacity at Turfloop Campus. The total project development cost is R856 million. At 3 500 beds, this is the largest student housing project currently implemented on any campus in the public higher education sector.
- North-West University (NWU) was approved for a conditional facility of up to R235 million to support an on-campus development of 1 728 new student bed capacity at Mafikeng Campus estimated to cost R489 million.
- The DBSA also approved a conditional facility of up to R375 million for the University of the Western Cape’s proposed 2 700 beds student housing infrastructure in Belville, Cape Town. The development will cost approximately R603 million.
- Support of R17 million being made available to fund feasibility studies for the next 12 Universities/TVET colleges which will facilitate the development of further student housing. These new feasibility studies will include baseline assessments being done from a Green Technology perspective and articulate the benefits to be derived in terms of lowering the operational costs of the residences themselves.
- Funding of R3 million for a cost optimisation model for both Universities and TVETs to ensure that cost per bed for different geographies can be benchmarked for consistency and to limit the opportunity for unnecessarily inflated costs.
being made available to fund feasibility studies for the next 12 Universities/TVET colleges which will facilitate the development of further student housing.
in further funding for a cost optimisation model for both Universities and TVETs to ensure that cost per bed for different geographies can be benchmarked for consistency and to limit the opportunity for unnecessarily inflated costs.
loan facility signed by the DBSA for the University of Limpopo (UL) earmarked for the development of 3 500 new student bed capacity at Turfloop Campus.
was approved for a facility for North-West University (NWU) to support an on-campus development of 1 728 new student bed capacity at Mafikeng Campus.
facility was approved of up to R375 million for the University of the Western Cape’s proposed 2 700 beds student housing infrastructure in Belville, Cape Town.
in support being made available to fund feasibility studies for the next 12 Universities/TVET colleges which will facilitate the development of further student housing.
facility approved by the DBSA for the University of Fort Hare proposed 1 437 beds student housing infrastructure in Fort Hare.
in funding made available for a cost optimisation model for both Universities and TVETs to ensure that cost per bed for different geographies can be benchmarked for consistency and to limit the opportunity for unnecessarily inflated costs.
The SHIP will provide decent, safe, accessible and affordable housing to students across the country, especially in rural areas. This will allow students to focus on their studies, realise their potential and contribute to the growth of the South African economy.
The implementation of the programme highlights the important role played by the DBSA from prefeasibility to the eventual funding of projects. This exemplifies the DBSA’s role as a DFI. By leveraging the full infrastructure development value chain, the Bank can provide a sustainable solution to the Student Housing backlog. It further showcases how the collaboration between multiple stakeholders (the DHET, the Universities, local municipalities, NSFAS and the DBSA) can yield tangible infrastructure delivery in the student housing sector which is both innovative and scalable.
The programme is expected to positively impact economic growth, reduce poverty (particularly in rural areas) and to enhance access to quality education by creating direct and indirect jobs, stimulating local procurement and production, addressing skills shortages and providing much-needed student housing in South Africa. By incorporating green building solutions, the programme will also support climate change initiatives.