In April 2024, former Higher Education Minister Blade Nzimande dissolved the National Student Financial Aid Scheme (NSFAS) board and placed the government bursary scheme under administration.
Several factors led to the appointment of Freeman Nomvalo as administrator including the failure to pay NSFAS allowances to students, lack of institutional capacity and the board’s failure to implement the recommendation of the Werksmans Report.
NSFAS provides comprehensive bursaries and student loans to deserving learners enrolled in approved courses at universities and Technical and Vocational Education and Training (TVET) colleges. This includes money for tuition and registration fees as well as several allowances for food, accommodation and learning materials.
Failures and challenges to pay these allowances often have disastrous consequences for students.
Has NSFAS’ Administration Helped Students?
In a recent presentation of the portfolio committee on Higher Education, NSFAS revealed the steps that have been taken to improve the schemes’ operation since it was placed under administration a few months ago.
Despite implementing immediate measures to address urgent problems such as delayed payments and system failures, NSFAS acknowledged that long-term solutions are necessary to ensure NSFAS's sustainability.
One of the main challenges for the scheme is the significant growth in funding it distributes to poor and working-class students. NSFAS funding has seen a dramatic rise, disbursing nearly R50 billion this year compared to R21.4 million in 1991.
This rapid growth coupled with outdated systems and operational inefficiencies has often threatened to undermine the important work carried out by the scheme.
NSFAS has grown significantly, but this growth has introduced complexities that the current structure struggles to manage.
The administrator cautioned that resource distribution may be inadequate to meet NSFAS’s legislative mandate.
Modernising ICT Infrastructure
NSFAS conceded that the current ICT infrastructure is vulnerable to errors and manipulations, and the current business processes and governance model are not fit for purpose. Additionally, NSFAS's reliance on third-party service providers with questionable competency poses a security risk.
To address these problems, the administration has called for a complete overhaul of the organisation's ICT systems to ensure seamless processing of all activities, enhance security, and improve reliability.
They added that the vacant position of Chief Information Officer for 11 months has contributed to the ICT challenges. The administrator emphasised the need to fill the position to provide the necessary leadership and expertise to modernise the ICT infrastructure.
In addition to the ICT issues, the NSFAS administration has identified other operational inefficiencies. The lack of integrated systems for managing applications, appeals, and loans has led to manual processes that are time-consuming and prone to errors.
The Finance Business Unit is also grappling with costly and problematic contracts with student accommodation solution providers and direct payment partners. Moreover, unresolved Auditor-General findings have raised concerns about accountability and financial stability.
To address these challenges, the administrator said NSFAS needs to invest in modernising its ICT infrastructure, implement more efficient operational processes, and strengthen its governance framework.
Improvement Of Internal Control Environment
Steps are also being taken to improve the internal controls environment at NSFAS.
The administrator said NSFAS is actively recruiting a new Chief Financial Officer and Chief Audit Executive to enhance its financial oversight capabilities. The organisation is also implementing measures to improve expenditure control, including the use of expenditure registers and regular reviews of contract management.
NSFAS has engaged with external firms BDO and KPMG To address high-priority projects and unresolved queries. They believe these firms will assist in reviewing and designing more efficient processes.
The bursary scheme has also reported progress in addressing outstanding close-out reports for the period 2017-2022. The organisation has recovered a significant amount of funds from institutions and students that owe NSFAS money.
We are committed to implementing reforms that will ensure the organisation's long-term viability and ability to serve the needs of South African students.
