NSFAS Investigation Unveils Irregular Appointments in Direct Allowance Payment System

NSFAS Investigation Unveils Irregular Appointments in Direct Allowance Payment System. A recent investigation into the National Student Financial Aid Scheme (NSFAS) has uncovered troubling revelations pertaining to the allocation of contracts for disbursing NSFAS allowances directly to students.

Conflict of Interest in Appointment of Fintech Companies

NSFAS disclosed potential conflicts of interest in the selection of two fintech companies responsible for administering NSFAS allowances. The investigative report further pinpointed a significant breach of public procurement procedures, involving NSFAS CEO Andile Nongogo actively participating in the bid evaluation process.

Alleged Ties to Nongogo

The report suggests that two fintech companies, namely Coinvest and eZaga, may have had questionable associations with Nongogo. This, in itself, raises concerns about the impartiality of the selection process.

Thorough Due Diligence Lacking

The investigation’s findings also highlight the absence of rigorous due diligence concerning the service providers in question.

Presentation of Findings and Commitment to Action

On October 18, 2023, Ernst Khosa, an executive of the NSFAS Board, unveiled the investigation’s results to the media. These findings were the result of a probe into corruption allegations against Nongogo and a review of NSFAS’ procurement systems.

Pledges to Implement Recommendations

The NSFAS Board is committed to executing the recommendations made in the investigative report without detriment to the students who depend on NSFAS assistance.

Direct Payment Solution: A Necessary Measure

The board deems the direct payment system as crucial in safeguarding student allowances from unauthorized access.

Phased Termination of Contracts

Although the contracts with service providers won’t be immediately terminated in light of the report’s findings, it’s acknowledged that parting ways with these providers is inevitable.

Absence of a Feasibility Study

The report underscored the absence of a feasibility study prior to implementing the direct payment system, which should have justified the appointment of four service providers.

Changes to Tender Process

An adjustment to the 2020 tender allowed fintech companies to engage in the process of disbursing allowances directly to students, leading to substantial modifications to the mandatory requirements.

Continued Implementation

Despite the challenges, the NSFAS Board intends to uphold progressive policies and persist with the implementation of the direct payment system at higher education institutions.

Legal Action Against Wrongdoers

Any NSFAS staff implicated in wrongdoing will face legal consequences.

Sharing of Report and Background Information

Nongogo and the service providers have been provided with the report’s findings, and the full report will be shared with stakeholders and the media in due course.

Background to Investigation

NSFAS supports over a million students enrolled at South Africa’s public tertiary education institutions, providing financial assistance for tuition, registration, and various allowances.

Direct Allowance Payment System Expansion

In 2022, NSFAS introduced a direct allowance payment system for Technical Vocational Education and Training (TVET) colleges, expanding it to universities in 2023.

Probing Service Provider Relationships

The investigation aimed to establish whether the service providers were registered financial entities and whether there were historical business and tender relationships between the CEO and the directors of these companies.

Nongogo Response

Nongogo has not issued a public response regarding the findings contained in the report, and this article will be updated to reflect any forthcoming comments from him.