Parliament Committee Grills NSFAS Over Roll-out Of Direct Payment System


Earlier this month, NSFAS was grilled in Parliament by the Portfolio Committee for Higher Education over several student funding issues, particularly the scheme’s new direct payment system.


The National Student Financial Aid Scheme’s (NSFAS) introduction of a new direct payment system has not been received well by students and stakeholders alike and has received tons of backlash as a result.

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.

This meant that NSFAS-funded students would now be receiving a MasterCard and bank account in which they will receive their monthly NSFAS allowances. 

However, 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. 

Parliament’s Criticism of NSFAS Direct Payment System

During a recent portfolio committee meeting, the bursary scheme was harshly criticized for not adequately supporting students, leading to many facing financial hardship and frustration.

Chairperson of the committee Nompendulo Mkhatshwa (ANC) opened the meeting with harsh words for the funding scheme. “This entity, with the mandate it has, should be the best run entity in the country … but right now it is not. It’s an embarrassment.”

The committee particularly questioned the appointment of the four service providers to distribute funds to students at both universities and TVET colleges.

Members also raised concerns regarding the legitimacy of the bid to appoint these institutions and criticised NSFAS for revising its requirements for the direct payment system tender and questioned why capable service providers had been overlooked.

According to a report by the Organisation Undoing Tax Abuse (OUTA), NSFAS hired four companies without banking licence registrations to handle direct payment to students, and these businesses charged much higher rates than commercial banks.

The Committee resolved that NSFAS should do a comparison of the strengths and weaknesses of the appointed service providers versus the “big banks” or capable service providers.

NSFAS Defends Direct Payment Systems

Responding to grievances raised by the committee, NSFAS defended itself, stating that the direct payment system had no issues until big banks' bids were unsuccessful.

All the big banks had submitted their bids but like any other bid, there were winners and losers. The big banks did not win -- Fintech did. Before that, there was no negative press about the concept of direct payments, but after that, all hell broke loose.

Furthermore, Regarding concerns on students who claim they haven’t been receiving allowances, the bursary scheme said they were currently investigating the issue.

The Board created two teams that would visit various institutions to assist the financial aid offices and address any student queries. Each team would spend at least one day on-site, and they had been given a ten-day deadline to complete their work and report back to the Board. The Board would use this information to determine an appropriate response.

The first two universities to be visited were Rhodes University and Wits University, both of which had recently experienced protests.

NSFAS CEO Investigation

Last month, NSFAS announced that its CEO Andile Nongogo had taken “a leave of absence” while the board investigated allegations against him related to his conduct in awarding bids at NSFAS.

The decision to place Nongogo on leave comes amidst public outrage on the OUTA report which highlighted questionable practices surrounding the contracts awarded to the third-party financial service providers (FSPs) Nsfas partnered with for the new direct payment system.

Nongogo faces corruption allegations related to his previous work at Services SETA (SSETA). These allegations further raise concerns about potential improper practices in the awarding of bids at NSFAS

Parliament also sought transparency regarding the investigations and requested details on the allegations surrounding the direct payment system and the capacity and appointment of service providers.

Responding to the allegations outlined in the OUTA report against Nongogo, NSFAS told the committee that the Board had not found the CEO at fault.

"I want to emphasise this point: in our books, he (Nongogo) has not been found guilty of anything,” said NSFAS Board chairperson Ernest Khosa.

We are conscious of all the challenges NSFAS is facing. We have seen the protests and read articles in the media. We have constantly received instructions from our shareholders for greater accountability.

Khosa says the board enlisted Werksman Incorporated to investigate allegations against the CEO and review procurement systems and processes. The investigation was currently underway.

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