Is NSFAS Still Terminating Direct Payment Service Provider Contracts?

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Earlier this year the NSFAS Board announced they would be terminating the contracts of service providers contracted to facilitate the direct payment of student allowances. Several months have passed since this announcement so does NSFAS still plan on terminating these contracts?

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In 2023, the National Student Financial Aid Scheme (NSFAS) proudly proclaimed that they would be funding more than one million students enrolled at tertiary institutions across South Africa. 

Students approved for funding did not only have their tuition and registration fees paid by NSFAS but also receive several allowances. 

While the funding of one million students is significant, NSFAS faced several challenges during the 2023 academic year which some stakeholders characterise the bursary scheme challenges as a state of crisis. 

NSFAS Board Chairperson Ernest Khosa told parliament that the challenges faced by NSFAS in 2023 are not indicative of instability but rather the board's strong consequence management 

We must not confuse consequence management as instability as a matter of fact if there's anything that this board of NSFAS should do moving forward is to be firm on consequence management 

Khosa said NSFAS may face the same challenges in the future if they do not address these challenges. 

If we are not firm on consequence management we'll have the same kind of problems that have led us to where we are regarding direct payment. 

A major challenge faced by NSFAS was due to the implementation of the direct payment of allowances system. 

NSFAS Direct Allowance Payments 

In 2022, NSFAS revealed its plan to pay allowances directly to students. The payment system was first introduced at Technical Vocational Education and Training (TVET) colleges and was expanded to include universities in 2023.

Four companies were chosen to facilitate the direct payment of allowances to students. An investigation conducted later in the year found that there may have been possible relationships between key individuals including NSFAS CEO Andile Nongogo and these companies. 

It was also revealed that there was active involvement of the CEO in the presentation to the Bid Evaluation Committee and potential conflicts of interest in the appointment of service providers. The report also has several other issues including a lack of a feasibility study and amendments which allowed these companies to win the tenders. 

What happened with the problems related to the direct payment system amounted to pitting the youth against the state, it's something that we shouldn't allow and we're going to be very firm in taking action in anything that will lead to instability at our institutions 

After considering the findings of the investigation, the NSFAS Board took the decision to terminate Nongogo's tenure as CEO of the bursary scheme. 

Khosa says the board remains resolute in their decision to terminate the contract of former CEO Andile Nongogo. They have, however, revealed that Nongogo has taken the matter to court. 

It was taken there [to court] on an urgent basis, the judge has not communicated back to us on that, it was about two weeks ago that the matter was heard. 

Khosa added that NSFAS is still working to terminate the contracts of the direct payment service providers. This is on the basis that they agree that these contacts were irregular. 

We should do that [terminate contracts with service providers] in the most responsible of ways, that the guiding principle is that the students should not be disadvantaged in the process. 

The board chairperson said they are in communication with other stakeholders in the higher education sector regarding these terminations. . 

We are working on that and we did meet USAf last week and indicated to them that we should come back to them on how this should be done. 

They added that NSFAS is anticipating that the termination of these contracts will be challenged by the service providers. 

We are dealing with this as a sensitive matter and we are aware that we will face some resistance and whatever action that we are going to take may be challenged. We are taking mitigation steps in that regard.  

Khosa added that they are also taking appropriate action against NSFAS employees who may have participated in the procurement of service providers for the direct payment of allowances. They say this is being handled in a responsible manner that does 

On the matter of taking action against other members of staff who may have played a hand in the procurement process, we're doing that as responsibly as we can bearing in mind the need for convergence between taking that action and ensuring that the organisation is fully functional. 

NSFAS 2023 Challenges

A few months after the direct allowance payment system was introduced, students marched to parliament to reject its implementation. 

NSFAS initially said that students would only be charged R12 per month for using their NSFAS bank account. However, this has not been the case. In addition to the R12 bank fee, students have complained about exorbitant charges they have incurred as they transact with their money.

They also raised their concerns on other issues that faced in 2023 including the NSFAS accommodation cap, bank charges for the NSFAS bank account, the 60 credit policy and delayed NSFAS appeal decisions.

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It has been a challenging year for NSFAS and students who rely on them for funding. The Auditor General revealed that the scheme has received an adverse audit opinion.

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