Business is about people. Of course it’s about profit, processes, technology, and many other things too, but ultimately it’s about people. The end buyers in all value chains are people, and the energy that drives a business is people: employees, management, owners, stakeholders. These people have needs as well as worries. A big matter on the minds of many is their family, and within this, concerns about education. An innovation turn-key, tax-friendly employee benefit product, Kinfundi, hopes to change this.
Knowledge drives economic liberation and upward mobility, and therefore the twin daggers of education affordability and education quality are especially potent foes in South Africa.
By Dakin Parker, Co-founder of Kinfundi
Every parent will tell you that they worry about the world in which their kids will grow up. They'll also give anything to be able to say that they have provided the best possible education and knowledge platform for their children's success. But many parents and caretakers can't say that. To a critical mass of families in South Africa, affordable education remains a pipe dream. Government's programme for free education ends in Grade 9 (or age 15), and more than a third of enrolled scholars will drop out at that point. The single largest reasons are the lack of funds and the need to make money. The sad thing is that over 70% of them will still be unemployed four years later.
Working class and lower-income-earning families don't even know where to begin. The prospect of preparing for this insurmountable mountain of future tuition fees is so daunting that it's easier to bury our heads in the sand and ignore it. I should know, I've interviewed hundreds of parents from the townships in Cape Town to the poorer suburbs in Johannesburg. Every single one of our respondents said that they knew their dependents had a higher academic potential than they were able to financially provide for. And only 2% had started putting money away to ensure that potential was achieved.
In a world where knowledge means power and education is a key ingredient for success, these statistics should do more than sadden and concern us. They should drive us to action.
Despite many stumbles and public opinion to the contrary, government is trying. Together with the financial services industry, it launched the Fundisa Fund, an incentivised savings product to help poor families. Unfortunately, Fundisa's incentives can only be applied to public universities and FET colleges and can be administratively burdensome to the financially illiterate that it is set up to help, though it is a start.
With the updated Codes of Good Practice in the B-BBEE framework, government has prioritised skills development and expanded the ways that businesses can contribute to the competence of not only their own employees but all South Africans eligible for B-BBEE benefits. A recent UNISA study, however, showed that even employees themselves don't believe that B-BBEE spend has improved their development, morale, productivity or performance. This is where corporate citizenry comes in; deliberate, focused, strategic - not a scramble on 27 February every year to write a cheque and tick a box on the scorecard.
Businesses in South Africa (the "economic establishment") have an obligation to our shared future success. Some of that responsibility is codified in B-BBEE legislation: Being a responsible corporate citizen makes good business sense.
Indeed, some companies are getting it right. Investec's focus on education and the many feeder programmes it has launched within that focal area have made it a leader in CSI efforts that have demonstrable long-term benefits for the country (and for their bottom line). Many others companies are also doing well at this, though just as many are not. I've heard companies say that they'd rather risk non-compliant status than go through the onerous tasks required to earn and verify their B-BBEE level. A vast majority of these companies want to do good but they also want to do well. They need profits to ensure their very existence and the jobs that they provide. And so they've had to make difficult choices about costs and effort.
One challenge is that companies are on their own when it comes to helping educate their staff and their families. Large corporates have established staff bursary schemes, but at a significant cost and effort, and only a few cover the families of their entire workforce.
Industry SETAs try to fill the immediate need for sector-related skills but what about primary, secondary and tertiary education? What about developing your employees' kids? Unlike many other countries (including Zimbabwe), in South Africa education savings is not a commonly found employee benefit. That is because, up to now there hasn't been a widely available product that helps employers help their employees save for future tuition.
A new innovation changes that reality. Kinfundi is a turn-key, tax-friendly employee benefit product brought to market by TrustEd Bursaries (Pty) Ltd and enables both employers and employees to make monthly bursary contributions into accounts of those employees (who become Kinfundi members). It is like a medical aid savings account but instead of paying out for medical expenses, account balances can be redeemed for tuition fees at all primary and high schools, colleges and universities. Because TrustEd pays these institutions directly, it essentially guarantees that all contributions are spent on tuition fees. Kinfundi has been specifically designed to reduce the barriers to entry for employees, and qualifies as B-BBEE spend credits in the Skills Development and SED categories. In addition, it is a great value proposition to donors, and TrustEd actively pursues donations from foundations, CSI efforts and individuals, and shares these donations directly with Kinfundi members.
The 2013, the Alexander Forbes Benefits Barometer study showed that a R1 investment into a holistic employee benefits programme can bring returns ranging from R4.50 to R23, through reduced absenteeism and staff turnover, savings on the cost of training and improved financial health. It also showed that an engaged work unit is 38% more productive and 27% more profitable than a disengaged one. Imagine a staff benefit that motivates and incentivises employees, produces B-BBEE spend credits and improves the bottom line.
Knowledge costs money, this many of us know. But 10% of South Africans earn 60% of our income. If the #feesmustfall campaign has taught us anything, it is that the current spread of wealth and knowledge is untenable. And that citizens of South Africa consider good education a right, not a privilege. Government is considering various ways to increase affordability of especially tertiary education. Some have even whispered about additional corporate taxes for this purpose. Imagine if business got together and, through Kinfundi, demonstrated that they were already part of the solution. What a change that would bring about.
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