After an investigation into alleged tender irregularities was done involving the National Student Financial Aid Scheme (NSFAS) and their direct payment system for allowances, NSFAS is due to terminate their CEO's contracts along with the service providers which were involved.
The Organisation Undoing Tax Abuse (OUTA) has welcomed this move with Advocate Stefanie Fick, director of OUTA’s accountability division, saying:
Transparency is key in a democratic society. We look forward to reading the full report.
OUTA previously spoke on possible corruption happening at NSFAS and the challenges the direct payment system presented once implemented. This resulted in NSFAS denying the allegations and threatening legal action.
"This report therefore also signifies an important win for accountability and transparency. It proves yet again how important the voices of civil society are, and also explains the blatant attacks on NGOs in an attempt to silence us,” Fick says.
Rudie Heyneke, head of investigations at OUTA, said that the NSFAS CEO should have "known better than to blatantly ignore legal prescripts". OUTA has previously laid criminal complaints and a formal complaint against Nongogo with the South African Institute for Chartered Accountants (SAICA).
Students suffered the most because of the irregularities that took place, yet their pleas to NSFAS fell on deaf ears, as did OUTA’s requests for access to all the relevant information. We repeatedly warned that this scheme would negatively impact on students who can least afford it, while costing the country millions if allowed to continue.
OUTA does however say that all their attempts to share what their investigations uncovered with NSFAS or the Minister of Higher Education, Blade Nzimande were ignored.
Findings of Investigation Into NSFAS Direct Payment System
- No feasibility study was done before the payment system was implemented, particularly for the justification for the appointment of the four service providers
- Investigator said there was no reason given as to why a feasibility study was not conducted and that it is integral in the implementation of the project
- A feasibility study would have resulted in NSFAS making a much more informed decision and to evaluate the practicality and chances of success of the system
- There was an amendment to the bid specifications to include fintech companies which resulted in drastic changes in mandatory requirements of the original bid
- The changes made to the bid specifications would have required a deeper analysis to be made on the need of the fintech companies
- There was a conflict of interest with the NSFAS CEO, Andile Nongogo, who actively participated in the presentation to the bid evaluation committee
- Nongogo was involved in the appointment of two of the four service providers, namely Coinvest and eZaga as he has a possible relationship with those service providers
- Technical advisor, appointed by Nongogo, was "inherently incorrect"
- Inability to conduct due diligence to service providers
- Appointment of service providers were irregular
How did this all start?
In June 2023, NSFAS implemented a new direct payment system to disburse allowances to students. Four service providers were awarded tenders to administer NSFAS allowances through this system.
The four service providers appointed were eZaga, Norraco, Coinvest and Tenet Technology:
- Coinvest Africa was registered in 2019
- Tenet Technology was registered in 2013 but was dormant until 2021
- Norraco Corporation was registered in 2019
- eZaga Holdings
The investigation sought to determine whether these service providers are registered financial entities and whether there is a historical business and tender relationship between the CEO and the director of these companies.
The corruption allegations against Nongogo relate to their previous work with Services SETA (SSETA) which lead to concerns being raised about potential improper practices in the awarding of bids for the direct payment of allowances from NSFAS.
OUTA believes that the report won't solve all issues at NSFAS such as with student accommodation and 2024 applications. The organisation also calls for Nzimande to be fired.
We need ethical leadership to protect the interests of our country’s youth. From what we have uncovered so far in Higher Education, it is clear that Minister Nzimande is not the right man for the job.
Currently, NSFAS irregularities are being investigated through the Special Investigating Unit (SIU).
