NSFAS Will Terminate Contracts With Allowance Payment Service Providers

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While the direct payment of NSFAS allowances to students is viewed as a vital policy by the Financial Aid Scheme, the contracts of current service providers are set to be terminated. This comes after an investigation revealed possible relationships between the NSFAS CEO and service providers. 

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The National Student Financial Aid Scheme (NSFAS) is set to terminate contracts with service providers for the direct payment of student allowances. This comes after the board carefully reviews the findings of an investigation into potential conflicts of interest in the appointment of service providers.

Four service providers were appointed to facilitate direct payments to students as part of this bid.

NSFAS board chair Ernst Khosa briefed the media on Wednesday to announce the results of an investigation into allegations regarding the appointment of direct payment service providers. 

It's important to note that NSFAS funds more than one million students currently enrolled at public universities and Technical and Vocational Education and Training (TVET) Colleges around South Africa. 

NSFAS not only pays their tuition and registration fees but also provides students with allowances to cover costs associated with their studies. This includes an accommodation allowance, a learning material allowance and a meal allowance. 

In 2022, NSFAS announced it would be paying allowances directly to students. This direct payment of allowances would be facilitated by financial technology service providers. It has since been revealed that NSFAS CEO Andile Nongogo may have had personal relationships with individuals involved with these Fintech companies. 



What The NSFAS Investigation Found

The Board announced the launch of an investigation into Nongogo after corruption allegations were levelled against the CEO’s time at their previous employer Services SETA (SSETA). This raised concerns about potential improper practices in the awarding of bids for the direct payment of allowances from NSFAS. 

Werksmans Attorneys investigated the claims of corruption against Nongogo and reviewed NSFAS' procurement systems. This report was received by NSFAS last week.

Key Findings From NSFAS Investigation 

Several key findings were made by Werksmans Attorneys. They found that there may have been possible relationships between key individuals including CEO Nongogo and the Fintech companies appointed to pay allowances directly to students. 

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. Additionally, the appointment of an expert to the Bid Evaluation Committee was not in line with the SCM Policy.

The investigation also uncovered the Lack of a feasibility study before implementing the direct payment system and justifying the appointment of the service providers. There were also amendments to bid specifications that significantly altered the original requirements.

These changes would have required deeper analysis to be conducted amongst others on the need of the fintech companies, their value added services, their service direct cost to students and the cancellation of the 2020 tender. 

What Now?

Khosa revealed that the NSFAS board will allow CEO Nongogo to explain why his contract should not be terminated. They will also subject all staff members associated with wrongdoing to a disciplinary inquiry.

They will also inform the four direct payment service providers that their contracts will be terminated, with a focus on minimising negative effects on students. Despite this, NSFAS still views the Direct allowance payment system as necessary and its implementation is set to continue. 

The Board will ensure that this termination does not affect the students negatively. In this regard, the Board is mindful of the universities they have made and expectations they had over next step will take into account both the law and the implications to service delivery.

They will also review the Supply Chain Management Policy in compliance with national regulations and policies. All these decisions will be implemented progressively from 18 October 2023.

Nongogo's Response 

Nongogo has not responded publicly regarding the findings made in the report. This article will be updated to reflect his response. 

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