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NSFAS board dissolved as unpaid allowances debacle unravels

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 12 Apr 2024
Higher education, science and innovation minister Blade Nzimande. [Photograph by GCIS]
Higher education, science and innovation minister Blade Nzimande. [Photograph by GCIS]

The National Student Financial Aid Scheme (NSFAS) board has been dissolved, with chairperson Ernest Khosa also tendering his resignation.

This comes in the wake of an uproar from students over delayed payments of the April round of direct and accommodation allowances.

The situation has escalated to the point where NSFAS beneficiary students have threatened a national shutdown “soon”, citing funding delays, mismanagement of the scheme and failure to give the four fintech partners the boot, among their grievances.

NSFAS has said the non-payment of some student allowances is the result non-compliant TVET colleges and universities, saying they submitted data after the payment file generation.

As part of interventions to the troubles at the financial aid scheme, Nzimande last night announced the dissolution of the NSFAS board, after meeting with it.

Further to this, the minister placed the institution under administration, saying the legal effect of the decision will be communicated today through the Government Gazette.

“On Sunday, 14 April 2024, at 14:00, the minister will convene a special media briefing to explain the rationale for dissolving the NSFAS board and the further steps arising from this decision,” reads the brief statement.

Nzimande also confirmed the resignation Khosa as chairperson of the NSFAS board, which he accepted.

Khosa’s resignation follows his leave of absence from the entity in January, after OUTA released a report alleging he and Nzimande received millions in kickbacks from the fintech partners selected to disburse monthly allowances to tertiary students.

Ernest Khosa has resigned his role as NSFAS board chairperson.
Ernest Khosa has resigned his role as NSFAS board chairperson.

An entity 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.

The embattled scheme has been faced with 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 (eZaga), Noracco 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 suspended CEO Andile Nongogo and the appointment of the four fintech partners, to assist the NSFAS to administer direct payment services to students.

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

Further, the board fired suspended Nongogo, after the investigation established he actively participated in the bid evaluation process. The probe also flagged a possible relationship between him and some of the providers.

eZaga and Tenet Technology denied the allegations made against them.

Despite adopting the recommendations in the Werksmans Attorneys investigation report to do away with the service providers, NSFAS continued to use them.

Providing an update in February, the NSFAS board restated its decision to terminate the services of the direct payment service providers, namely, Ezaga, Coinvest Africa, Norraco Corporation, and Tenet as per the recommendations of the Werksmans Attorneys report.

“NSFAS has commenced with the legal process which will lead to the termination of the services of these direct payment service providers.

“While the legal process is underway, the board has decided that, in the transitional period, these direct payment service providers continue to onboard and disburse allowances to students.

“Universities and TVET Colleges will continue their collaboration with the designated direct payment service providers allocated to their respective institutions for the purpose of onboarding and disbursing allowances to students.

“It is imperative that institutions adhere to this directive to ensure the smooth facilitation of student allowances.”

Fintechs speak out

eZaga confirmed to ITWeb that it, along with the other fintechs, has continued to disburse funds to NSFAS students since being contracted.

“To date, there has been no official update regarding the termination of the contract based on the findings of the Werksmans report. eZaga has not yet received the report in which the allegations were detailed and the recommendation for cancellation was made.

“In February, NSFAS announced that it will maintain the arrangement, ensuring that the four fintech companies continue to distribute funds to students throughout the academic year. This decision was made to minimise disruptions for students, at least until the legal process is concluded.”

According to eZaga, it has been disbursing funds to NSFAS TVET students since November 2022 and to university students since June 2023. eZaga distributes funds to six universities and 11 TVET colleges.

Responding to the delay in NSFAS student allowance disbursements, eZaga said the delay is due to an issue on the side of the NSFAS and is not related in any way to it.

“eZaga serves purely as a payment intermediary and does not play a role in deciding who receives payments or how much each student is allocated. The company receives instructions from NSFAS each month on which students to pay.

“Despite this, eZaga often faces undue blame when payments are delayed or not made, leading to significant frustration and anger among students. However, it is important to note that these issues are outside eZaga's control, as they operate strictly based on NSFAS's directives.”

Tenet CEO Ryan Passmore asked that ITWeb direct all enquiries through to NSFAS.

The other direct payment partners had not responded to ITWeb by the time of publication.

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