NSFAS to take over payment of student allowances by September as it tries to cut out 'middle men'

The National Student Financial Aid Scheme (NSFAS) plans to begin paying allowances directly into university students’ bank accounts by September as it heads to court to cancel contracts with irregularly appointed direct payment service providers.

NSFAS held its first media briefing on Monday since the appointment of administrator Freeman Nomvalo in April by higher education minister Blade Nzimande.

Since then, the financial aid scheme has announced a new payment system for technical vocational education and training (TVET) college students to be rolled out at the end of May, due to students not receiving their funds through the appointed service providers.

“As it is the end of May, I’m pleased to announce that the payments that are currently being made are directly into students' bank accounts as announced on April 26. We have requested all TVET students who do not have bank accounts to open bank accounts with banks of their choice to avoid delays in the payment of their allowances,” Nomvalo said.

NSFAS filed an application to the courts on Friday to terminate its contracts with four payment service providers.

This is part of implementing the Werksmans Attorneys report which was commissioned by NSFAS to identify areas needing improvement concerning procurement services and management.

The probe followed allegations of irregularities related to the appointment of direct payment service providers, with former NSFAS CEO Andile Nongogo accused of a conflict of interest in awarding the contracts.

The report found that Nongogo actively participated in the presentation of proposals by service providers to the bid evaluation committee, which was a violation of NSFAS’ public procurement process.

It also revealed that there appeared to be a conflict of interest in the appointment of the four service providers — Ezaga Holdings, Coinvest Africa, Norraco Corporation and Tenet Technologies.

Nomvalo said they worked with the Special Investigating Unit in deciding to terminate the contracts.

“I am happy to announce that the process to terminate these contracts has commenced with the filing of the necessary court papers on May 24. In the termination of these contracts, NSFAS collaborated with the SIU. Through our lawyers, we have communicated this decision to all the direct payment service providers [on Monday]. Furthermore, we have made significant progress in subjecting all implicated NSFAS employees in the report to appropriate disciplinary action. Where appropriate, we will also consider laying criminal charges,” he said.

In the meantime, university students will continue to receive their allowances through the university, as NSFAS had requested the institutions to assist until the end of July.

Nomvalo said the rollout was dependent on whether the transition would cause disruptions to academic time, which was a concern raised by universities when he met them on Friday.

“We intend to be ready by the end of July, but there may be issues that come into play at that time, which is why we initially said September. What will inform the rollout process in September is the smooth transition that avoids further problems in institutions ... What will guide us is to what extent is the introduction of a new mechanism likely to cause disruptions. If it does cause disruption, we will find ways to make sure it is implemented smoothly.”

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