We present the direct and indirect contributions of higher education institutions in South Africa to certain
macroeconomic indicators such as GDP and employment, with the ultimate purpose of establishing their
importance for the country. Taking this a step further, funding of these institutions is crucial in order for them
to continuously produce outcomes in terms of research and skilled graduates. Hence, we compare the South
African research and development (R&D) expenditure with international best practice. Policy implications are also
discussed, especially in the light of the new funding formula for universities to be announced by the Department
of Higher Education and Training.