Its startling how many times you can have the following conversation in Cape Town: “She’s finishing her degree at UCT but she’s been offered a job in Johannesburg because that’s where the money and opportunities are.” It seems that Cape Town has styled itself as the beautiful holiday city, while Joburg’s streets are paved with gold and teem with entrepreneurs raking in the cash.
Despite having excellent universities (UCT, for example, has nearly 30 A-rated professors), why can’t Cape Town retain its top graduates? Why do they seem happy to study at world-class facilities but pursue their careers elsewhere? Does this even matter?
Yes, it does. The world has moved on from the industrial economy of the 1930s and 40s, when the emphasis was on machinery and processes, and is now firmly in the knowledge economy. The focus internationally is on innovation and creativity, and the rise of what is called “the creative class”. To be at the forefront of this economy, you need a world-class city that has a ready supply of intellectual capital. Companies in the knowledge economy need easy access to this talent. This means keeping engineers, research scientists, actuaries, computer specialists, writers and so forth in Cape Town. Simply put, if they’re here, big business will keep their offices here, and invest here. There’s no point having a branch or an HO in a city where there is no high-level staff to fill it.
This is why it is crucial for the long-term economic growth of the Western Cape for academia and business to enter into closer relationships. Accelerate Cape Town (ACT) – a business-led initiative that seeks to address long-term economic growth in the Cape Town city region – has hosted the first official conversation between the most senior leaders of academia and big business. Vice-chancellors Prof Russel Botman of Stellenbosch, Prof Brian O’Connell of UWC and Prof Njabulo Ndebele of UCT and Deputy Vice-chancellor Prof Chris Nhlapo of Cape Peninsula University of Technology have held a fruitful meeting with 16 top business leaders representing some of the Cape’s biggest companies, including Christo Wiese (Shoprite), Thys Loubser (KWV), Simon Susman (Woolworths) and Mo Kajee (Sekunjalo). Also attending was Nasima Badsha, CEO of Cape Higher Education Consortium (CHEC) and representatives of the National Business Initiative (NBI).
If we ensure that there are prestigious companies in which graduates can further their careers, all Capetonians will feel the benefits. Dynamic, innovative and knowledgeable people attract others like that, a great boost to our fledgling knowledge economy. They demand more than competitive salaries; according to a recent survey, graduates want employers who are multi-cultural, have a gender-balanced workforce and high ethical standards. They enjoy cities that stimulate their creativity by hosting international artists, exhibitions, speakers and conferences. We need to be thinking internationally if we want to stay on the international map. It is not enough to be a pretty tourist destination; we need to become a hub of research and business.
Government and business have a key role to play in building the infrastructure that will keep talented graduates here, and so evolve the Western Cape into a world player. “Young graduates know they will probably change employers as many as three times in 10 years, and they will not move to an area where they do not feel there are enough employers to provide these opportunities”, says Richard Florida, author of The Rise of the Creative Class and a professor of regional economic development. Stanford in California didn’t become Silicon Valley overnight: regional players built the infrastructure this high-tech powerhouse required. According to Florida, it is critical that leaders undertake aggressive measures to create “incubator facilities, venture capital, outdoor amenities and the environmental quality that knowledge workers who participate in the new economy demand”. The PWC ‘Cities of the Future’ report makes the point that, “Creativity – the bedrock of the new economy – cannot be ‘bought in’. Instead, city planners have to tease out their city’s unique qualities and invest in nurturing and developing them.” Newcastle, Dubai, Singapore and Shanghai are already doing this. The corporations that do business in the Far East employ only the best graduates and knowledge workers. The demand is so great that Harrow has opened a satellite campus in Beijing. Andrew Boraine, CEO of the Cape Town Partnership, raised the example of Barcelona, where the City, business and universities have monthly meetings to ensure they are working together and achieving their joint goals. Universities in Barcelona are measured by how many entrepreneurs they produce, a benchmark of creative, innovative thinking.
The 2008 budget has already gone some way in recognising what it takes for a South African city to reach these international standards. Minister Manuel announced a 30 percent tax deduction on investments in high-tech and high-growth industries. This is good news for the Western Cape as a number of technology start-ups, like Sunspace (which has its origins in the SunSat satellite programme of Stellenbosch University), and many innovative IT companies, are based here. The leaders represented at the ACT meeting overwhelmingly agreed that the universities should be actively encouraging and creating more entrepreneurs, while business should be developing a venture capital culture locally, providing the seed capital to commercialise the research and ideas that are coming out of the universities.
Manuel also stipulated that an extra R1.1-billion will go to universities over the next three years. However, it is clear that there will not be a lot more new money coming their way in the future. Therefore, as Prof Botman pointed out, the universities need to create a fourth stream of income in addition to their subsidies, student fees and industry contracts; namely the commercialisation of intellectual property that is created through research.
We desperately need to foster a culture of learning and love of knowledge in South Africa. It has been pointed out that the average reader will be able to name at least two or three CEOs or top businessmen in South Africa, but will struggle to do the same for university chancellors or scientists. We can name actors and pop stars, but not the country’s eight Nobel laureates. South Africans do not recognise the value of universities, or their importance in the economy. As Susman made clear, while universities can’t solve the nation’s problems directly, they can create the leaders who will tackle them. We also need to encourage life-long learning. This is already well-established overseas but here “education” seems to be something that ends when varsity students put down their pens at the end of their final exams. But making it to finals seems to be more the exception than the rule. Prof O’Connell concurs that because learning isn’t valued, young people are often totally unprepared for university. A drop out rate of 40 percent in First Year confirms this, making business reluctant to finance bursaries at this level. Yet they could sponsor Third and Fourth Years, and encourage the transition from university to the business world.
Already there are very encouraging signs that Cape Town can follow in the footsteps of classic “university towns” like Boston, San Francisco, Oxford and Cambridge to become a world-renowned centre of knowledge and excellence. In 2007, the UCT Graduate School of Business was ranked in the top four business schools in the world by the Economist Intelligence Unit for its customised programmes, while its open programme scored in the top 10. UWC has already broken ground on a R500m science centre along Modderdam Road, which it aims to make Africa’s premier R&D centre for science and technology. Given that, according to the South African Institute of International Affairs, the government only spends about one percent of GNP on this kind of research (the same as the Seychelles), this is a perfect opportunity for business to become involved. With South Africa’s long-term energy crisis, future water shortages, and falling longevity, it would benefit business to fund research in these areas, creating much-needed income for higher education institutions.
One lesson to learn from overseas, particularly the United States, is the strength of alumni associations, which fundraise for further facilities or create scholarships. Stellenbosch is leading the way in this regard. It is experiencing significant growth because a number of influential business leaders who went to university there have returned to make their homes. Former students, like GT Ferriera (FirstRand), Jannie Mouton (PSG), Michiel le Roux (Capitec) and Edwin Hertzog (Mediclinic), are today very active supporters of the university and make significant grants to it.
“The labour market for knowledge workers is different from the general labour market. Highly skilled people are also highly mobile. They do not necessarily respond to monetary incentives alone; they want to be around other smart people… Good people attract other good people, and places with lots of good people attract firms who want access to that talent, creating a self-reinforcing cycle of growth,” explains Florida. ACT wants to nurture and strengthen the link between higher education and business in the Cape, and the recent meeting was a great first discussion in what needs to be an ongoing engagement to create the seeds of a vibrant knowledge economy. This will make our region one of the world’s great places to live, study and work. To be considered a leading business destination, and not just a pleasant holiday resort, we must improve our collaboration between business and the universities. The spin-offs can only benefit every Capetonian.
By Guy Lundy
