Around 60% of young people (15–24) are unemployed, driven by skills mismatches, poor education quality, and a stagnant economy, impacting nearly 9 million young people not in education, employment, or training.
Image: Henk Kruger/Independent Newspapers
South Africa’s struggling Technical and Vocational Education and Training (TVET) sector is being repositioned as a cornerstone of inclusive growth, with a new policy proposal placing public-private partnerships (PPPs) at the heart of a sweeping reform agenda aimed at tackling youth unemployment and unlocking long-term investment.
A research paper, compiled by sector specialists and published by the Public Investment Corporation (PIC) on Tuesday, argues that the country’s persistent mismatch between high unemployment and scarce technical skills is not a failure of concept, but of institutional design and funding structure.
The paper proposes a fundamental shift: transforming TVET colleges into investable social infrastructure through coordinated partnerships between government, private operators, industry, and institutional investors.
At the core of the proposal is a blended PPP model in which government retains ownership of land and infrastructure while conceding operations to private sector partners. These operators would be responsible for managing institutions, upgrading facilities, aligning curricula with labour market needs, and delivering measurable employment outcomes.
Industry, meanwhile, would play a direct role in co-designing training programmes and providing workplace-based learning, while long-term investors would finance infrastructure upgrades and expansion through structured, risk-mitigated vehicles.
The paper highlights that South Africa’s current TVET system is constrained by fragmented funding, weak industry alignment, and limited capital investment, with more than 95% of public funding going toward operational costs rather than infrastructure. This has left colleges under-equipped and unable to deliver the practical, work-ready skills demanded by employers.
Under the proposed PPP framework, funding would be restructured to align incentives across stakeholders. Government support, including National Student Financial Aid Scheme (Nsfas) funding, would be tied not just to enrolment but to progression, completion, and employment outcomes.
Private operators would be paid based on performance metrics such as graduate employment rates and employer satisfaction, introducing accountability and competition into the system.
For investors, particularly the PIC, which is already a significant investor in education-focused social infrastructure with investments exceeding R7 billion across the sector, the model presents a new asset class with both financial and developmental returns.
The paper notes: “For long-term institutional investors, such as the PIC, a revised TVET model would present a compelling opportunity. It would offer structural, enduring demand driven by demographics, industrial policy, and government commitments.”
It adds that the model would provide “multiple investment entry points across infrastructure, operational platforms, and outcome-linked instruments,” alongside “downside protection through government participation, predictable annuity-like cash flows, and potentially outcome-linked payments.”
This framing positions TVET not merely as an education intervention, but as a scalable investment platform capable of delivering stable, long-term returns while addressing one of the country’s most pressing socio-economic challenges.
The PPP approach also seeks to address systemic inefficiencies by integrating existing funding streams, including Sector Education and Training Authority (SETA) grants and employer contributions, into a unified financing framework. This would reduce fragmentation and ensure that training is directly linked to workplace demand.
Crucially, the model introduces outcome-based funding as a central accountability mechanism. Institutions would be rewarded for producing employable graduates rather than simply enrolling students, marking a significant departure from the current input-driven system.
The proposal draws on international examples, including dual vocational training systems in countries such as Germany and Switzerland, where strong collaboration between the public and private sectors has led to high employment absorption rates.
If implemented, the reforms could significantly expand artisan training, improve youth employment outcomes, and attract domestic pension capital into productive infrastructure. Over time, this could boost tax revenues and reduce pressure on social grants.
Around 60% of young people (15–24) are unemployed, driven by skills mismatches, poor education quality, and a stagnant economy, impacting nearly 9 million young people not in education, employment, or training.
However, the success of the PPP model will depend on careful design, particularly in balancing risk between stakeholders and ensuring that access and equity are preserved. Safeguards such as portable student funding, transparent performance metrics, and equal regulatory standards for public and private providers are seen as critical to maintaining system integrity.
Ultimately, the paper argues that South Africa already has the institutional footprint needed to deliver large-scale skills development. The challenge now is to unlock its potential through smarter partnerships, better incentives, and sustained investment.
“The scale already exists,” it concludes. “The challenge and the opportunity is to unlock its performance.”
BUSINESS REPORT