National Skills Fund – Costing

Established in 2001, the National Skills Fund (NSF) receives 18.36% of the skills development levy (a 1% levy on all payrolls minus costs deducted by SARS). The NSF is meant to play a catalytic role in post-school education and training. However, the various national skills development strategies were too broad and generalised to give direction to such a catalytic role. In addition, for about ten years, the fund was plagued by weak financial management and underspending, and by 2013, it had accumulated reserves of R7.7 billion. This situation was addressed through better financial management in the last two years, and the NSF is now in danger of over committing its funds: its total current commitment is R11.4 billion. Of this amount, R6.1 billion in reserves have been committed to training and capacity building – R4 billion for the NSFAS and FET colleges, and R2.1 billion for FET infrastructure, the New Growth Path and rural development. The remaining R5.3 billion was ‘forward committed’, and is to be financed from R1.6 billion in reserves and R3.7 billion from projected future income.Thus the bulk of NSF funding covers budgetary shortfalls in FET colleges and the NSFAS. These stopgap measures limit its ability to catalyse new, industry-relevant training programmes. Should it continue funding these stopgap measures, its reserves would run out in the next three years; this would place additional pressure on the fiscus. Should it instead reduce its stopgap funding of the NSFAS and refocus on bridging programmes for young and unemployed people to enter the post-school education and training system, especially for industry-relevant technical and vocational programmes, it could train up to 500 000 learners over three years (about 170 000 per year).