The NSFAS Investigation: A Media Briefing With Ernest Khosa On Direct Payment Provider Appointments

The NSFAS Investigation: A Media Briefing With Ernest Khosa On Direct Payment Provider Appointments. Ladies and gentlemen, esteemed members of the media, fellow South Africans, I extend a warm welcome to all of you to this significant NSFAS media briefing. Today, we gather to unveil the findings of the investigation report concerning the allegations surrounding the appointment of direct payment service providers.

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NSFAS: A Commitment to Accessible Education

Before delving into the report, I would like to emphasize the critical role that the National Student Financial Aid Scheme (NSFAS) plays in our educational landscape. Established in accordance with the National Student Financial Aid Scheme Act of 1999, NSFAS has a three-fold mission: providing financial aid to eligible students at public TVET colleges and universities, identifying eligible students, providing bursaries, and collecting past student loan repayments to ensure funds for future generations, and supporting access to post-school education for students from disadvantaged backgrounds. These ideals remain at the forefront of our commitment to accessible education.

NSFAS: An Evolving Entity

Over the years, NSFAS has undergone remarkable growth, transforming from a humble budget of R33 million in 1991 to a budget of 47.6 billion in 2023, serving a student population of 1.1 million. This growth has had significant economic and political implications, as student allowances for tuition, accommodation, and monthly stipends stimulate local economies and fuel businesses. NSFAS has become an important social safety net intervention by the state, affecting millions of South Africans.

The Investigation Context

The purpose of this media briefing centers on the investigative report. The NSFAS Board appointed Werksmans Attorneys and Advocate Tembeka Ngcukaitobi to investigate allegations of irregularities related to Bid NO. SCMN022/2021. These allegations were made against Mr. Andile Nongogo, the CEO of NSFAS, regarding conflicts of interest in the appointment of service providers.

Findings of the Investigation

1. Direct Payment Method: The Board remains committed to implementing the direct payment solution to prevent unauthorized access to allowances, ghost students, inconsistencies, and delayed payments. However, the investigators found a lack of a feasibility study before implementing the direct payment system, particularly regarding the appointment of the four service providers.
2. Amendments to Bid Specifications: The report highlights amendments to the bid specifications, including the inclusion of fin-tech companies, leading to substantial changes in the original bid’s mandatory requirements.
3. Allegations Against the CEO: The investigation revealed that Mr. Nongogo actively participated in the presentation of proposals by service providers to the Bid Evaluation Committee (BEC), a violation of procurement processes he was entrusted to safeguard. There was also a potential conflict of interest in the appointment of these fin-tech service providers.
4. Lack of Due Diligence: The report points out the failure to conduct thorough due diligence on the service providers, exemplified by the relationship between directors of Tenet Technologies and Coralite (Pty) Ltd.

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Board Decisions

In light of these findings, the Board has taken decisive actions:

1. A letter has been written to Mr. Andile Nongogo, allowing him to provide reasons why his contract should not be terminated.
2. Disciplinary inquiries will be initiated against staff members involved in wrongdoing as outlined in the report.
3. All four direct payment service providers have been informed that their contracts will be terminated, with due consideration for the welfare of students.
4. The Supply Chain Management (SCM) Policy will be reviewed in compliance with National Treasury Regulations and Policies, including the PFMA.

These decisions will be implemented progressively from today, October 18, 2023.

Conclusion and Acknowledgments

In conclusion, I wish to express my gratitude to Minister Dr. Blade Nzimande for his continuous support and guidance. I also extend my thanks to Werksmans Attorneys, Advocate Tembeka Ngcukaitobi SC, NSFAS Board Members, diligent NSFAS staff, and the educational institutions we collaborate with. Our commitment to providing efficient and effective financial aid to students from disadvantaged backgrounds remains unwavering.

We will uphold the values of accessibility, transparency, affordability, reliability, and authenticity, ensuring that our employees act with integrity, accountability, and respect. The challenges highlighted in this report will not deter us from implementing progressive policies, including our interventions in student accommodation.

We look forward to announcing the opening of the NSFAS application process for the 2024 academic year, and we will provide detailed information through various communication channels. Thank you for your attention, and we remain dedicated to our mission.