NSFAS Investigation Uncovers Possible Corruption With Contracts Terminated



The aim of the NSFAS bank account was to empower students with greater control over their allowances and additional services. Nevertheless, various obstacles have hindered the direct payment system from delivering the promised services to students.


The National Student Financial Aid Scheme (NSFAS) has received the findings of an investigation of alleged corruption related to the appointment of direct allowance payment service providers. 

NSFAS board chair Ernst Khosa briefed the media to reveal findings of an investigation into allegations regarding the appointment of direct payment service providers. 

The investigation found that there may have been possible relationships between key individuals including NSFAS 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. 

The investigation specifically focused on irregularities related to Bid NO. SCMN022/2021, which involved the appointment of service providers for direct payments. The report also several other issues including a  lack of a feasibility study and amendments to the bid specifications 

Actions Following Investigation 

As a result of these findings, the NSFAS Board has decided to take various actions, including giving the CEO an opportunity to explain why his contract should not be terminated, subjecting staff involved in wrongdoing to disciplinary proceedings, and terminating contracts with the direct payment service providers.

They also plan to review the Supply Chain Management (SCM) Policy.

NSFAS Direct Allowance Payment System 

NSFAS funds more than one million students currently enrolled at public universities and Technical and Vocational Education and Training (TVET) Colleges around South Africa. 

As of 2023, NSFAS-funded students (with the exception of disabled students) began receiving their allowances via a direct allowance payment system. The system was facilitated by four service providers, namely, eZaga, Coinvest, Norocco and Tenetech. 

However, the implementation of the direct payment system was not smooth sailing. 

NSFAS initially said students will 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 allowance money.

The Organisation Undoing Tax Abuse (OUTA) did a price comparison which revealed students are being charged for transacting with their NSFAS bank account at significantly higher charges compared to other banks.

Future Of Direct Payment System 

NSFAS announced its intention to terminate the contracts it currently has with the four service providers. However, this will be done in a manner that does not negatively affect students. 

The board views the direct payment solution as a necessary measure to prevent unauthorised access to student allowances.

The Financial Aid Scheme board still views the direct payment of allowances as a viable solution for the payment of allowances. They also declared that they would continue to implement “progressive policies”. 

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