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NSFAS initiates process to sever ties with fintech partners

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 28 May 2024
NSFAS administrator Freeman Nomvalo.
NSFAS administrator Freeman Nomvalo.

The National Student Financial Aid Scheme (NSFAS) is reviewing its IT systems to improve turnaround time and integration with higher learning institutions.

In addition, a process is under way to terminate the contract of the four fintech partners selected to disburse monthly allowances to tertiary students.

This is according to former SA accountant-general Freeman Nomvalo, who in April was appointed as the administrator of the troubled financial aid scheme.

Nomvalo yesterday briefed media on the progress relating to the disbursement of student allowances, student accommodation and other related administrative reforms at the scheme.

The administrator revealed the scheme has filed court papers to sever ties with the direct payment service providers. The papers were filed on Friday, 24 May, he stated, adding it is collaborating with the Special Investigation Unit in dealing with this issue.

This, he said, is part of “ramping up” implementation of therecommendations in the Werksmans Attorneys investigation report, which found the providers were appointed without following due process.

“Through our lawyers, we have communicated this decision to all the direct payment services providers today [Monday]. Furthermore, we have made significant progress in subjecting all implicated NSFAS employees in the report to appropriate disciplinary action. Where appropriate, we will also consider laying criminal charges.”

The four firms – Coinvest, eZaga Holdings, Noracco Corporation and Tenet Technology – were awarded the NSFAS direct payments contract, to the value of R47 billion, over a period of five years.

In October 2023, 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.

In April, higher education, science and innovation minister Blade Nzimande dissolved the NSFAS board, pointing to their failure to terminate the contracts of the direct payment service providers as critical to his decision-making process.

Despite the Werksmans report findings, NSFAS continued to rely on the fintech partners to disburse beneficiary allowances to TVET college students. Allowances to university students were disbursed by the respective institutions.

To further iron out payments to beneficiary students, Nomvalo yesterday said NSFAS has devised a new student allowance payment mechanism for universities and TVET colleges, to be fully operational by September.

Student support scheme NSFAS is mandated to provide financial assistance to deserving scholars from working class and poor households.

The embattled entity of the Department of Higher Education and Training runs a budget in excess of R52 billion, providing financial aid to eligible students at public TVET colleges and universities.

Moving forward

According to Nomvalo, to keep up with the payment of monthly allowances to university students, NSFAS requested universities to assist with these processes until the end of July.

“This payment arrangement underscores the scheme’s commitment to students to receive uninterrupted monthly allowances with precision and without delays.

“In our conversation with universities, the need for the smooth and efficient reconciliation between NSFAS and institutions is critical. This is the case for the payment already made and the future payment.”

With regard to the TVET college student allowances, NSFAS has devised a payment mechanism that’s currently paying allowance directly to students’ bank accounts.

“We have requested all TVET students who do not have bank accounts to open bank accounts with banks of their choice to avoid delays in the payment of their allowances.

“In terms of the data received thus far, a total of 21 1591 students’ bank accounts have been verified and a total of 7 160 failed the verification checks, for various reasons, including bank accounts that do not belong to students; for example, a parent’s bank account.

“I, therefore, want to call upon all students who have already uploaded their personal banking details and have received a notification through the myNSFAS portal indicating the verification of their banking details failed, to please resubmit their correct banking details on the portal.

“I must emphasise that the banking details provided must belong to the student, to enable NSFAS to verify these against the student's details in our records and minimise potential risks.

“We are equally mindful of challenges experienced by university students; however, this direct payment mechanism will currently be applicable [only] to TVET college students. University students will continue to receive their allowance through their institutions, as arranged.”

Meanwhile, on the missing middle loan scheme, Nomvalo said the scheme received about 24 000 applications, noting it has already completed the financial eligibility assessment for all applicants.

Additionally, NSFAS is in the final planning phase for the appointment of specialised capacity to finalise the implementation of the loan scheme for 2024 and beyond.

“We intend to communicate with the successful applicants no later than 15 June,” he stated.