NSFAS board booted after ‘serious’ IT systems failures

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 15 Apr 2024
Higher education, science and innovation minister Blade Nzimande. [Photograph by GCIS]
Higher education, science and innovation minister Blade Nzimande. [Photograph by GCIS]

Minister Dr Blade Nzimande yesterday lashed out at the now-dissolved National Student Financial Aid Scheme (NSFAS) board for its failure to remove fintech partners selected to disburse monthly allowances to tertiary students.

This, despite the board adopting the recommendations of the Werksmans Attorneys investigation report, key among which is the termination of the contracts of the fintech firms after it was found they were appointed without following due process.

Last week, Nzimande announced the dissolution of the board with immediate effect, placing the entity under administration, with former SA accountant-general Freeman Nomvalo as administrator. NSFAS chairperson Ernest Khosa also tendered his resignation.

The board’s dissolution came in the wake of uproar from students over delayed payments of the April round of direct and accommodation allowances.

Yesterday, the higher education, science and innovation minister said he came to the decision to dissolve the board following numerous engagements on the inability of the NSFAS to implement some of its most basic responsibilities.

“I raised this issue [removal of fintech service providers] in December that steps must be taken to remove these service providers and that hasn’t happened,” stated Nzimande.

Also notable is the board’s consistent inability to oversee the timeous payment of student allowances, as well as its failure to address capacity deficiencies within the organisation, including the call centre, which is still not functional, he said.

“In an attempt to resolve these challenges or mitigate their impact, I engaged the board on several occasions on various solutions, including a turnaround strategy, which has not been achieved within agreed timelines.

“Despite several engagements, the NSFAS continues to face serious challenges in its business processes, IT systems, capacity, and policies and controls. All of this has not just negatively impacted the well-being of students, but has also brought serious reputational damage to the NSFAS itself.”

As administrator, Nomvalo is tasked with taking over the governance, management and administration of the NSFAS for 12 months, depending on progress made.

Furthermore, his task involves resolving the data integration challenges as a matter of urgency, finalising all the necessary funding decisions and outstanding payments, including student accommodation, and overseeing the opening of the 2025 online applications process.

Embattled entity

As part of the Department of Higher Education and Training, the NSFAS runs a close to R50 billion annual budget, providing financial aid to eligible students at public TVET colleges and public universities.

In its 33-year history, it has supported more than five million beneficiaries.

However, the scheme has had a litany of issues over the years, with the latest being the selection four fintech providers to disburse monthly allowances to tertiary students.

Service providers Coinvest, eZaga Holdings, Norraco Corporation and Tenet Technology were awarded the NSFAS direct payments contract, to the value of R47 billion over a period of five years.

The board appointed Werksmans Attorneys and advocate Tembeka Ngcukaitobi to investigate allegations against former CEO Andile Nongogo and the appointment of the four fintech partners, to assist the NSFAS to administer direct payment services to students.

In October, the NSFAS board said it planned to cut ties with the firms after the investigation of their appointment uncovered “conflict of interest”.

eZaga and Tenet Technology denied the allegations made against them.

Despite the minister pointing to the termination of the contracts of direct payment service providers as a critical issue in the dissolution of the board, the NSFAS will continue to rely on them to disburse beneficiary allowances to TVET college students.

Allowances to university students will be disbursed by the respective institutions.

NSFAS COO Errol Makhubela explained: “The scheme granted an extension to all universities to continue to disburse allowances to students, from April to July.

“On 12 April, the scheme advanced a payment to universities to disburse student allowances on 15 April. This includes the catch-up allowances to all universities that submitted their registration data after the 19 March cut-off date.

“With regards to the TVET college payments, the catch-up will be disbursed on 15 April through direct payment partners. This is to ensure all outstanding student allowances and tuition are settled for students whose valid registration data was uploaded onto the NSFAS portal by 11 April.”