Background to the National Skills Fund and Skills Development in South Africa

The National Skills Fund (NSF), established under the Skills Development Act of 1998, serves as a key public entity within the Department of Higher Education and Training (DHET). It channels resources into national priority skills initiatives that support economic participation and social development. Unlike direct student funding bodies, the NSF partners with training providers, technical and vocational education and training (TVET) colleges, universities, and private entities to deliver project-based programmes aligned with the National Skills Development Plan 2030.

These efforts target critical shortages in engineering, technical trades, and other high-demand sectors. The fund operates through memoranda of agreement with implementing partners, disbursing public money against performance milestones. Over the years, the NSF has supported thousands of learners through apprenticeships, internships, and workplace-based training, contributing to South Africa’s broader goals of reducing unemployment and building a capable workforce.

The Suspended R354 Million Project: Scope and Objectives

The affected initiative was a two-year apprenticeship and internship programme valued at R354 million. It placed nearly 800 young South Africans in structured training across engineering disciplines, including electrical engineering, avionics engineering, and related technical competencies. Placements occurred at established training centres and employers such as Denel, South African Airways Technical (SAAT), Hamba Nathi, and Ntalane.

Participants received on-the-job experience supplemented by stipends, accommodation, travel, and meals funded through the NSF. The programme targeted unemployed youth, many with prior theoretical qualifications from TVET colleges, aiming to bridge the gap between classroom learning and industry readiness. Training commenced around March 2025, positioning learners midway through their commitments when the suspension occurred in early June 2026.

Reasons for the Suspension and Contractual Disputes

The NSF terminated its agreement with implementing partner Phila Jordan Capital (PJC) citing repeated contractual non-compliance. Key concerns included unauthorised relocation of learners from Johannesburg to Pretoria and other areas without prior approval, persistent learner welfare issues, governance failures, and questions over the management of public funds. NSF spokesperson Lebohang Somo emphasised the fund’s duty to safeguard learners and ensure accountability from partners.

PJC, represented by Phila Jordan, contested the move, describing it as a crisis created by the NSF. The company maintained that relocations were discussed and approved in advance due to practical challenges, such as electricity cut-offs at accommodation facilities in Tshwane. PJC reported funding alternative arrangements itself and urged continued stipend payments while negotiations continued until late May 2026. The partner denied financial mismanagement and labelled the mid-programme termination unethical.

Immediate Impact on the 800 Affected Learners

The suspension has left participants in limbo, with many reporting non-payment of stipends for two months. Learners face uncertainty about completing practical components required for diplomas or certificates. Without these qualifications, years of prior study and training risk becoming ineffective for employment prospects.

Stories from participants highlight personal hardships. Ayavuya Onceya, a 30-year-old single mother from the Eastern Cape enrolled in electrical engineering at Denel in Pretoria, described leaving her three young children with family to pursue the opportunity. She now worries about basic necessities while staying in NSF-arranged accommodation without income. Tebogo Makwa, 31, from Thaba Nchu in the Free State, training at SAAT, expressed frustration at potentially returning to retail work after investing a year in technical skills development.

These cases illustrate broader vulnerabilities: learners often relocate far from support networks, relying entirely on programme provisions for sustenance and progress.

Photo by Edoardo Frezet on Unsplash

Stakeholder Perspectives and Ongoing Rescue Efforts

The NSF has stated that no learner will exit the programme without support. Officials are prioritising continuity through advanced engagements with alternative skills development professionals. Focus areas include resolving stipend backlogs and ensuring training pathways remain intact. The fund attributes current difficulties to the former partner’s shortcomings while committing to learner welfare.

PJC maintains its commitment to the learners and criticises the NSF for failing to meet obligations despite prior warnings about operational challenges. Broader sector voices, including those from TVET institutions and employer partners, have called for swift resolution to prevent talent loss in critical technical fields.

Learners themselves have voiced determination to complete their training, underscoring the programme’s value as a rare pathway out of unemployment for many from disadvantaged backgrounds.

Historical Context of NSF Challenges and Reforms

The NSF has faced scrutiny in recent years over financial management and project delivery. Past investigations by the Special Investigating Unit (SIU) and forensic audits examined multiple projects for maladministration, improper procurement, and unaccounted funds. Consequence management has included suspensions of officials and charges against senior staff in some instances.

Parliamentary oversight committees have repeatedly highlighted the need for stronger governance to maximise the fund’s contribution to national skills priorities. These episodes have prompted calls for enhanced monitoring, transparent contracting, and better alignment with DHET strategic objectives.

Implications for Higher Education and TVET Institutions

While the suspended project operated primarily through workplace placements, it intersects directly with the higher education and training ecosystem. Many participants entered with N1–N6 qualifications from TVET colleges such as Buffalo City College, relying on the NSF programme for the practical component essential to full diplomas.

Disruptions of this scale can erode confidence in public skills funding mechanisms, affecting enrolment patterns at TVETs and universities offering engineering and technical programmes. Institutions may face increased pressure to provide bridging support or alternative placements, stretching already limited resources.

The episode also raises questions about quality assurance in outsourced training models, a common feature in South Africa’s post-school education and training (PSET) landscape.

Broader Economic and Social Ramifications

South Africa continues to grapple with high youth unemployment and skills mismatches in technical sectors. Programmes like the one in question aim to address these by producing work-ready graduates in areas such as electrical engineering and avionics, critical for infrastructure, aviation, and manufacturing revival.

Delays or failures risk compounding existing shortages, slowing economic recovery efforts, and perpetuating cycles of poverty for affected individuals and their families. The human cost extends beyond lost stipends to diminished career trajectories and psychological strain on participants who viewed the opportunity as transformative.

Photo by Ashikul Islam Anik on Unsplash

Pathways Forward and Lessons for Skills Funding

Resolving the immediate crisis requires coordinated action between the NSF, DHET, alternative providers, and employers to reintegrate learners swiftly. Transparent communication on stipend payments and programme resumption will be essential to restore trust.

Longer-term reforms could include stricter vetting of implementing partners, real-time monitoring of learner welfare, diversified funding models, and stronger integration with TVET and university systems. Such measures would enhance resilience and ensure public funds deliver measurable skills outcomes.

Stakeholders across the PSET sector are watching closely, recognising that successful resolution could set precedents for future national skills initiatives.

Future Outlook for South African Skills Development

Despite setbacks, the NSF remains a cornerstone of government efforts to build a skilled citizenry. Ongoing SIU probes and parliamentary attention signal continued commitment to accountability. As South Africa pursues its National Development Plan goals, sustained investment in quality-assured training programmes will be vital for competitiveness and inclusive growth.

Learners, institutions, and employers alike stand to benefit from clearer governance frameworks that minimise disruptions and maximise impact. The current situation serves as a reminder of the complexities involved in scaling skills interventions at national level.