Public Protector To Investigate NSFAS Direct Payment System

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The implementation of a new direct payment system by the National Financial Aid Scheme has not been received well by students and stakeholders alike. Grievances raised have now led to an investigation by the public protector.

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The public protector is investigating the awarding of a contract to service providers by the National Student Financial Aid Scheme (NSFAS) to make direct payments to students funded by the scheme. 

This comes after Stellenbosch SRC Vice Chairperson, William Sezoe, lodged a complaint asking the public protector to look into the awarding of the contract for the new NSFAS direct payment system.

Sezoe explains:

I have last week written to the public protector to investigate the National Student Financial Aid Scheme direct payment system and in particular the involvement of the CEO of NSFAS with the awarding of the specific tender.

NSFAS partnered with four banking service providers to bring the new payment solution to students. These service providers include Tenet Technology, Coinvest Africa, Ezaga Holdings and Norraco Corporation.

Sezoe says that in his complaint he highlighted concerns around three critical issues:

  • The involvement of NSFAS CEO, Andile Nongogo in the tender awarding process, considering his relationship with the directors of Coinvest, raises legitimate doubts about the fairness and impartiality of the selection procedure.
  • The decision to award tenders to companies lacking financial licenses warrants clarification from NSFAS, as this poses serious doubts about their ability to handle students’ funds responsibly; and
  • The justifiability of appointing companies charging exorbitant fees to students requires scrutiny, as it affects public funds, especially those allocated for education.

According to investigation findings by the Organisation Undoing Tax Abuse (Outa), all four service providers NSFAS partners with are young and unexperienced companies. Outa further revealed that the companies were also not registered as Financial Service Providers at the Financial Sector Conduct Authority (FSCA).

The investigation also found that NSFAS CEO, Andile Nongogo had an alleged “business relationship” with the directors of one of the service providers – Coinvest.

Sezoe noted, “It must be investigated whether Nongogo as the CEO of NSFAS declared his relationship with the directors of Coinvest in particular and whether his relationship with the directors could had an influence in the successful awarding of the tender.”

Student Complaints

Since its implementation there have already been a number of complaints about the system, including students not receiving their funds, exorbitant bank charges, glitches, and unauthorised access resulting in loss of funds. 

In addition, some students have already expressed frustration noting that the onboarding process has been everything but ‘seamless’, with some questioning communication around the new system and why it was introduced at universities in the middle of the academic year.

Sezoe adds, “It is unjustifiable that students have to cut their allowances to access them and be able to live in a country where the cost of living is already high,”

It is unacceptable that NSFAS is charging students they ought to serve. It is unacceptable, hence we will await the outcome of the investigation and the public protector must make sure education funds are protected.

Many have welcomed the public protectors decision to investigate the direct payment system and have noted that should they find evidence of tender fraud, swift and decisive consequence management is expected.

Political Parties Raise Alarms

ActionSA has decided to take legal action challenging the awarding of the contracts for the direct payment of allowances in light of recent difficulties students have had receiving NSFAS payments.

The parties Western Cape Students Chairperson, Matthew George said that they would approach the high court to not only declare the decision irrational, but also to ask the court to set aside the awarding of the contract.

George said the party believed it was in the best interest of taxpayers and students to launch the challenge.

We firmly believe that it is in the best interest of the taxpayer and students, we embark on this unprecedented legal action. Our main focus is to prevent NSFAS from becoming a feeding trough for unscrupulous tenderpreneurs whose greed undermines the well-being of students.

Meanwhile, the Democratic Alliance (DA) has asked Nompendulo Mkhatshwa, head of the portfolio committee on higher education, to fastrack a meeting with NSFAS.

The DA has written to the chairperson of the parliamentary portfolio committee to request a rescheduling of the committee programme to prioritise holding the National Student Financial Aid Scheme (NSFAS) to account on their controversial direct payment system.

DA MP Chantal King explained that while they welcome the idea of a direct payment system as a “secure and student-centred approach” the way that NSFAS has chosen to implement the system, is highly worrisome.

The party wants NSFAS to be held accountable for the “high” costs charged by its chosen service providers and have urged the scheme to provide clear explanations on the implementation of the new system and the criteria used when selecting service providers.

For all the latest NSFAS news and information visit the Careers Portal NSFAS section.


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