South Africa Turns To Multinational Companies For Education Investment

Earlier this month, Nelson Mandela’s village saw its first high school thanks to German engineering giant Siemens AG, which invested $9 million to turn Mandela’s dream into a reality.

In South Africa, multinational companies struggle to find qualified workers hence forced to bring in foreign labor. To help ease the shortfall, Siemens has started investing in education joining in the force of many other companies in the country.

“There are lots of students coming out of school with grades that are really not up to par,” said Rita Nkuhlu, Siemens’ South Africa head of corporate strategy and the project leader for the Mandela School of Science & Technology in Mvezo, a rural district 900 kilometers (560 miles) south of Johannesburg.

In a survey by the World Economic Forum last year, South Africa’s education was ranked the third-lowest, ahead of only Yemen and Libya. However, it is the aim of multinationals to lift South Africa off the bottom of that list.

The push is often coming at the secondary school level rather than the university and apprenticeship programs they tend to fund elsewhere, as about half of all South African students drop out of high school in the final two years. A chronic shortage of employees who can take on complex jobs can be eased with corporate money.

“The one sure way to mitigate high levels of unemployment is to make sure that you take the bulk of your people through a huge educational program,” said Bonang Mohale, South Africa head at Royal Dutch Shell PLC, which has more than 1,500 employees in the country. In addition to supporting literacy and numeracy programs, the oil company has equipped 45 schools in Kwazulu-Natal province with science laboratories.

According to Nkuhlu, talent shortfall is a hindrance for Siemens which would ideally have 400 more employees in the country than its current 1,600. Many engineers Siemens hires in South Africa require further training to meet its needs — unlike other countries where it operates.

As reported by Alex Webb and Kamlesh Bhuckory of Bloomberg, luxury automaker Bayerische Motoren Werke AG, which has introduced a mathematics, science and technology program at 37 schools in impoverished areas, echoed that experience. Over the past 15 years, the company has invested 10 billion rand in South African manufacturing and other operations.

“We unfortunately need to employ many German engineers in our plant because we can’t always find the right skills locally,” Johannesburg-based BMW spokesman Guy Kilfoil said by e-mail.

Education projects are also seeing increased investment from local South African firms. For instance, in the 12 months through last March, Transnet SOC Ltd., the state-owned ports and rail operator, says it more than doubled its spending on education between 2010 and 2013 to 864 million rand.

According to a Goldman Sachs study released in November, while education represented the biggest single item in South Africa’s 2013 budget, the efficiency of its system, measured in outcomes relative to expenditure, is lower than that in Brazil, Russia, India, or China.

“We appreciate the support from the private sector, in our quest to improve the quality of education in the country,” South Africa President Jacob Zuma said today at the opening ceremony of the Mandela School. “We still have challenges in science and technology.”

South Africa’s school pass rate rose for a fourth consecutive year led by improvements in mathematics and science in the continent’s biggest economy — signs that the investments in education may be starting to pay off.

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