CIDA City Campus, South Africa’s first university that does not require students to pay fees, faced the threat of being liquidated next month if did not pay R20m it owed creditors, acting executive director Martins Mbah Njah has said.
The institution has been under business rescue since December 2012, but has yet to raise money it owes the City of Johannesburg, the South African Revenue Service and suppliers.
The deadline for settling the debt is March 25.
“The truth is that if Cida doesn’t have the money by March 25, we will be liquidated, or we will have to make another plan with our creditors,” Mr Njah said on Thursday of last week.
Closure of the institution would end the academic lives of 750 students from poor communities and leave 86 employees without jobs.
Cida was founded in 1999 by social entrepreneur Taddy Blecher as South Africa’s first “free university”.
The institution is registered as a not-for-profit organisation and started offering a three year bachelor of business administration (BBA) degree in 2000. It gave scholarships to students from families that earn R40,000 a year and less. The scholarships covered tuition, books, accommodation and meals. More than 1,800 students had graduated since the institution was established.
Cida raises money from donors, and Investec is one of its past sponsors. Billionaires Richard Branson and Oprah Winfrey have also donated.
Its financial troubles began after Mr Blecher left it in 2007.
Mr Njah said some of its sponsors left with Mr Blecher, who now runs the Maharishi Institute, while others changed their corporate and social investment goals. Poor management, a high turnover of executive directors, and a poor pass rate were some of the problems.
Students were required to pass 75% of their courses or 11 courses out of 15 for the BBA programme to renew their full scholarship.
Mr Njah said Cida had appealed to the City of Johannesburg to write off the R8.7m owed for municipal services, but had not received a positive answer.
Sturns Business Rescue Practitioners’ Rob Devereux, who was appointed Cida’s rescuer, could not be reached for comment.
The Department of Higher Education and Training said it did not fund private higher education institutions such as Cida.
The institution retains accreditation for its programmes with the Council on Higher Education, but its financial problems would mean losing lecturers, which were one of the main requirements to keep the accreditation.
Mr Njah said staff had not been paid in the past eight months.
The collapse of Cida also raises questions about the feasibility of free university education in South Africa. The government has resisted calls to make university education free. Instead it provides loans and bursaries to poor students.
“It would not be appropriate to provide free university education to all, including the richer classes, because this would not lead to increased access for the poor,” said Department of Higher Education and Training spokeswoman Kefilwe Makhanya. “South Africa operates on a cost-sharing model for higher education, where student fees, subsidies from government and funds from donors are combined to enable universities to function effectively.”
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