Open University dons also in the old capital (7)
I believe the answer is:
yaounde
'capital' is the definition.
(capital of Cameroon)
'open university dons also in the old' is the wordplay.
'open university' becomes 'OU'.
'dons' is an insertion indicator (don means to wear or put on).
'also' becomes 'and' (I've seen this before).
'in' indicates putting letters inside.
'the old' becomes 'ye' (resembles a historical spelling of 'the').
'ou' going inside 'and' is 'aound'.
'aound' placed within 'ye' is 'YAOUNDE'.
(Other definitions for yaounde that I've seen before include "African capital" , "Republic of Cameroon capital" .)