/ 28 May 2024

NSFAS commended for terminating contracts of controversial payment providers 

Nsfas is responsible for funding the public tertiary education of poor and working class students (Madelene Cronje/M&G)

The South African Union of Students (SAUS) has hailed the National Student Financial Aid Scheme (NSFAS) for terminating the contracts of payment providers that have left students in limbo. 

“We welcome the decisive and long overdue steps to finally terminate the illegally appointed service providers,” said  Asive Dlanjwa, the secretary of the SAUS. 

NSFAS terminated the contracts of direct payment service providers Ezaga Holdings, Coinvest Africa, Norraco Corporation and Tenet Technologies.

This comes after the scheme said it was working towards implementing the recommendations of the Werkmans Attorneys report, which raised the alarm on procurement systems and management deficiencies at NSFAS. 

Since the report’s damning findings in September last year, NSFAS chief executive Andile Nongogo was fired after investigations revealed his conflict of interest in the appointment of service providers. The board chairperson, Ernest Khosa, also resigned in April after leaked audio tapes by the Organisation Undoing Tax Abuse (Outa) detailed his involvement in irregular activities

“We have made significant progress in subjecting all implicated NSFAS employees in the report to appropriate disciplinary action [and] where appropriate, we will also consider laying criminal charges,” the newly appointed NSFAS administrator, Freeman Nomvalo, told a media briefing in Pretoria on Monday. 

Nomvalo was giving an update on the NSFAS payment systems, which left many students in limbo at the beginning of the academic year. 

For NSFAS to keep up with the payment of monthly allowances to university students, higher institutions were asked to assist with payment processors as a “middleman” until the end of July 2024. 

While the SAUS said the payment systems worked for the interim, NSFAS’s new interventions allow better payment options for students. 

“We welcome the interventions which will see students receiving their allowances on time and in the bank accounts of their choosing and convenience,” said Dlanjwa.

The scheme has confirmed that it will resume its duty as the payment provider as of September 2024.  

Concerning the technical and vocational education and training (TVET) colleges student allowances, all payments are currently being made directly to student bank accounts. 

“We have requested all TVET students who do not have bank accounts to open bank accounts with banks of their own choice to avoid delays in the payment of their allowances,” Nomvalo said. 

In terms of the data received thus far, 211 591 student bank accounts have been verified. A total of 7 160 failed the verification checks for various reasons, including bank accounts that do not belong to students, for example, a parent’s bank account.

NSFAS said the direct payment mechanism would be best applied to TVET college students.

One other critical issue that NSFAS has been faced with is dealing with student accommodation, particularly the outstanding payments to private student accommodation landlords.

This led to hundreds of students squatting because of a lack of accommodation placements in February. 

Earlier this year, NSFAS launched a student accommodation pilot project aimed at ensuring the scheme only pays for student accommodation that is conducive to studying and saves students from having to live in inappropriate housing.

Outa criticised this decision, calling it “a time bomb waiting to explode”.

But NSFAS said it has opened up communication between accredited accommodation providers to resolve outstanding invoices. 

Nomvalo has assured NSFAS beneficiaries and institutions that the scheme will develop a reliable direct payment system by September 2024, when the scheme plans to host a national conference on the future of its system.