Last week, Higher Education Minister Blade Nzimande decided to dissolve the National Student Financial Aid Scheme (NSFAS) board. The board’s inability to ensure the financial aid scheme implemented its responsibilities led the minister to his decision.
Through various formal engagements, as Minister, I have consistently raised my concerns and unhappiness with the outgone NSFAS Board, about the inability of NSFAS to carry out and implement some of the most basic responsibilities allocated to it by myself as Minister and the Act.
NSFAS provides comprehensive bursaries and student loans to deserving students enrolled in approved courses at universities and TVET colleges. The funding includes money for tuition and registration fees.
In addition to this, NSFAS also provides several allowances to students for food, accommodation and learning materials. The non-payment of NSFAS allowances in recent months put students at risk of hunger and possible eviction. This has prompted urgent action from the minister.
Why Nzimande Dissolved The NSFAS Board
Nzimande explained that the board had failed to fulfil its duties concerning its responsibilities. This includes implementing recommendations, ensuring student allowances are paid, submitting reports to Parliament, managing organisational capacity issues, and addressing student concerns at the speed required.
The Werksmans report specifically focused on irregularities related to Bid NO. SCMN022/2021, which involved the appointment of service providers for direct allowance payments. The report revealed several issues which pointed to possible corruption.
One of the recommendations of the Werksmans report, released in 2023, was that NSFAS should terminate the contracts of the four service providers Ezaga Holdings, Coinvest Africa, Norraco Corporation, and Tenet Technologies.
While NSFAS indicated that they would be terminating the contracts of service providers, they anticipated legal challenges from service providers. This meant that from April 2024, millions of rands will be given to these service providers to facilitate direct allowance payments to students.
While the legal process is underway, the Board has decided that, in the transitional period, these direct payment service providers continue to onboard and disburse allowances to students.
Nzimande said the board’s failure to terminate these contracts was a major contributing factor to their dissolution.
The inability to fully implement the recommendations of the Werksmans Report, key among which is the termination of the contracts of the direct payment service providers, who had been appointed irregularly.
Nzimande added that the board's consistent failure to distribute student allowances has not only caused undue stress for students and their families but has also jeopardised the stability of several TVET colleges and universities.
The consistent inability to oversee the payment of student allowances timeously by management, which has resulted in unnecessary stress for students and their parents, and also continues to threaten the very stability of some of our TVET Colleges and Universities
Additionally, the Board's inability to resubmit an accurate Annual Report to Parliament, finalise the close-out report, address critical capacity deficiencies, including its non-functional call centre, and respond efficiently to student inquiries worsened challenges faced by NSFAS.
Nzimande added that their failure to consult on guidelines for Missing Middle Funding and implement corresponding solutions has further hindered progress in addressing financial aid gaps.
The inability to consult on the guidelines for the Missing Middle Funding and the related inability to implement the Missing Middle solution.
The minister said engagements were held with the board in an attempt to resolve these challenges or mitigate their impacts, however, these resolutions were achieved within agreed timelines.
Despite several engagements with myself, NSFAS continues to face serious challenges in its business processes, IT systems, capacity, and policies and controls.
Nzimande says all these factors not only impact the well-being of students negatively but have also brought serious reputational damage to NSFAS, the Department of Higher Education and Training and the government.
Stakeholders in the sector have welcomed the dissolution of the NSFAS board including student structures. The Parliamentary Higher Education Committee also endorsed the actions taken by Nzimande.
Committee Chairperson Nompendulo Mkhatshwa said under the stewardship of the dissolved Board, NSFAS failed to effectively disburse funds to students and submit required reports to Parliament, while IT system issues caused further delays.
The committee said they were concerned about the instability these challenges cause at universities and TVET colleges due to unpaid allowances, accommodation pilot project challenges, and student protests disrupting academic programmes.
Student protests at the affected institutions have disrupted the academic programmes and this will affect students’ performance. The committee has engaged with NSFAS several times on the same issues, however, there seems to be no ending to the challenges, the Chairperson said.
Highlighting previous administrations of NSFAS, the committee questioned the efficacy of changing boards as opposed to addressing workforce and institutional culture issues. They called for a skills audit and implementation of performance management, emphasising accountability for failures.
The committee has noted that employees who have failed to do their jobs have not faced consequences for this failure. The Auditor-General has also raised concerns regarding NSFAS’s over-reliance on consultants, which indicates that the workforce is not skilled enough to perform the work or there are serious capacity challenges within the organisation.
The Role Of The Administrator
After the board was dissolved, Nzimande appointed Sithembiso Freeman Nomvalo, as the new Administrator for NSFAS. Nomvalo will take over the governance, management, and administration of NSFAS for 12 months and oversee several key developments at the scheme including developing guidelines for missing middle funding.
Mr. Nomvalo also holds the distinction of being the first African and longest-serving Accountant-General of a democratic South Africa. He also possesses extensive knowledge and an impeccable track record in public finance and government processes.
