eish! asked Elmarie de Beer, the executive director for finance and facilities, what the financial impact of the pandemic is on the university and how we are going to weather this financial storm.

 

Q: What is the biggest financial impact of the lockdown on the NWU?

A: Although the exact financial impact of the Covid-19 pandemic is unknown for the NWU and the higher education sector, it is clear that material financial losses will be inevitable.

 

Q: How does the lockdown influence our income?

A: The lockdown will lead to a loss of income, which will have a tremendous impact on our finances. The reason for this is that our budget is income-based – in other words our income determines what we can afford on the expense side of the budget.

 

Our biggest income sources are subsidy and tuition fees and any changes in these will have a huge effect on our finances. Examples of such changes might be that – due to a weaker national economy – government might reduce subsidies or students might cancel their studies.

 

The problem is that the exact impact on our income is still unknown. As more information becomes available, we will have to estimate to the best of our ability how the lockdown will influence our income, in order to take precautionary measures on the expense side.

 

Q: What is the influence on our expenses?

A: We have already had a lot of new and additional expenses, for instance the R30 million allocated to provide our students with data and electronic devices.

 

Other expenses include data for our staff, rolling out the online learning process, adhering to all the occupational health and safety regulations and providing isolation facilities.

 

Q: Are there any savings on our usual expenses?

A: Yes, we will save on expenses such as travelling, accommodation and refreshment costs for meetings.

 

We will also initially save on water and electricity costs, but these will be cancelled out later if the academic year is extended.

 

All of these savings will, however, be far less than our additional expenses. Furthermore, the biggest part of our expenses is fixed, namely salaries.

 

Q: How are we going to minimise the negative financial impact of Covid-19?

A: We have compiled a financial model that will guide our decision making. This model is prudent and flexible, and will be scaled up or down as and when more information becomes available. The purpose of this model is to ensure that our mitigation plan will support financial sustainability, not only for 2020 but also for the longer term.

 

Q: Tell us more about the mitigation plan?

A: Our mitigation plan is based on cash flow management that drives business decisions. In other words, the Rand value of the forecasted cash flow deficit will determine what additional savings we need. The mitigation plan also includes the possible impact the pandemic might have on our 2021-2023 budgets.

 

Q: What are the most important things that the NWU has to do now?

A: There are a few matters that we have to focus on:

• We have to manage the unknown as and when it occurs.
• We need to support the online learning mode to reduce any possible negative impact on the throughput rate of our students – in other words we have to empower them to complete the academic year successfully. We also have to do our utmost to retain students.
• We have to preserve jobs, both in the medium and long term.
• Regarding finances, the main focus is on cash flow management by means of adjusting the 2020 budget, and then on longer term sustainability by means of forecasting the impact on subsequent years.

 

Q: What can we, as staff members, do to help?

A: All of us – academics and support staff – must continue to pull out all the stops to save the academic year. These trying times require commitment, patience and flexibility to lend a hand wherever it is needed.

 

Help us keep the NWU’s finances healthy by limiting expenses to those matters that will get our staff and students safely through these uncertain times.

 

Q: A last word from your side?

A: The pandemic does not only influence our 2020 finances, but will also have a medium-term impact due to the predicted economic downturn and the possible effect on our main sources of income, namely the government subsidy and our tuition fee income.

 

We are however confident that our financial model will provide the framework for prudent decision making and that we will all work together to ensure long-term financial sustainability.