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The National Student Financial Aid Scheme’s (NSFAS) woes continue. A recently concluded investigation into corruption and irregular procurement at the organisation has revealed major concerns with the issuing of a tender to four service providers, for direct payment to students. The official implicated is CEO Andile Nongogo.
The NSFAS board received the report from Werksmans Attorneys, who conducted the investigation, on 12 October 2023. At the time of writing the report was not publicly available, but NSFAS board chairperson Ernest Khoza shared some insight into the findings, and actions the board planned to take.
His address follows below.
Address by the chairperson of the National Student Financial Aid Scheme (NSFAS), Mr Ernest Khosa, on the occasion of the NSFAS media briefing on the outcome of the investigation report into allegations on the appointment of direct payment service providers
Programme Director Mr Ishmael Mnisi
Fellow Board Members;
NSFAS Acting CEO Mr;
Members of the media;
Fellow South Africans
Good afternoon
The Board of the National Student Financial Aid Scheme (NSFAS) has convened this media briefing this afternoon to publicly release the outcome of the investigations into allegations on the appointment of the direct payment service providers.
Let me take this opportunity to remind us all that the National Student Financial Aid Scheme (NSFAS) was established in terms of the National Student Financial Aid Scheme (Act 56 of 1999).
The NSFAS mission is made up of three distinct elements, which describe why NSFAS exists and its impact on its constituency:
- NSFAS exists to provide financial aid to eligible students at public TVET colleges and public universities;
- NSFAS identifies eligible students, provides bursaries and collects past student loan repayments to replenish the funds available for future generations of students; and,
- NSFAS supports access to, and success in, post school, education and training for students from poor and working class families who would otherwise not be able to afford to study.
These are ideals that this Board will always ensure that it defends at all material times.
We are conscious that over a period of time, from her humble beginnings of a budget of R33-million in 1991, serving a total of 7 240 students to a budget of R47.6-billion in 2023 serving a student population of 1.1-million.
NSFAS has now become so considerable an organisation with huge economic and political ramifications.
Fee paid to students, whether in the form of tuition, accommodation and monthly allowances are stimulating the growth of many student towns and continue to have a impact on many local economies.
In this sense, one of the spin-offs of NSFAS funding is the growth of businesses.
At the University of Limpopo, Turfloop for instance, students allowance is R26-million and Tshwane University of Technology (TUT) R70-million.
Mankweng boom when allowances are paid and there is doom when allowances are not paid. The same can be said of many other student towns.
By virtue of the number of beneficiaries involved, the profile of the families directly affected by NSFAS operations has since become a major political item.
In the last two years (2020, 2021) NSFAS spent an average R11.9-billion per annum on student accommodation funding.
When something goes wrong at NSFAS, it immediately affects 1.1-million and when factoring parents and siblings, it affects more that 6-million people at a go. This is far higher than the readership of the biggest newspaper.
We are therefore aware that NSFAS is a very important intervention by the State. In fact, one of the most important social-net intervention.
Our posture will always be to do everything we can to assist and in the process the students should not be the proverbial grass when elephants are fighting.
The context of the report
In relation to the purpose of our media briefing this afternoon, let me remind you all that the Board of NSFAS appointed Werksmans Attorneys and Advocate Tembeka Ngcukaitobi to conduct an investigation into the allegations of irregularities relating to Bid NO. SCMN022/2021.
This investigations follows allegations against the NSFAS CEO, Mr Andile Nongogo as covered in the media and other sources. These allegations relate to his conflict of interest in the appointment of these service providers.
This is a bid that was issued and advertised on 25 January 2022. The closing date was 25 February 2022. In this Bid, Four (4) service providers were appointed to facilitate the direct payment of allowance to students.
Ladies and gentlemen.
The Board met on 15 October 2023 here in Pretoria to consider the findings and recommendations by the investigators as captured in this interim report as presented by the Werksmans Attorneys and Advocate Tembeka Ngcukaitobi SC. The Board has since adopted the recommendations of the report and resolved to implement them.
Yesterday, 17 October, as the Board, we meet the Minister of Higher Education, Science and Innovation, Dr Blade Nzimande, to brief his on the outcome of the investigations which culminated into this interim report.
Let me also indicate that the information that the investigators relied on consists of both documentary evidence and interviews.
Again, let me indicate that this report is a Board report and will be implemented in its completeness.
Yesterday, the Board wrote a letter to the CEO, Mr Andile Nongogo and gave him a copy of the report.
We also met with the representatives of the four (4) direct payment service providers also to bring the content of this report and its implication to their attention.
Scope of the investigations
In conducting their investigations, the investigators considered the following:
- Method of direct payments;
- Allegations against the CEO as covered in the media and other sources;
- Conflict of interest in the appointment of the service providers;
- The review of the NSFAS supply chain policies and procedures and the legal compliance of the procurement system.
Let me take this opportunity to now reflect on the findings of the investigators in relation to each of these areas or scope of investigations:
On method of direct payments
Notwithstanding the current challenges, the Board reaffirms its commitment to implement the direct payment solution.
The Board views the direct payment solution as necessary measure to reduce instances of unauthorised access to beneficiaries’ allowances, payment of ghost students, inconsistencies and delayed payments of allowances. The direct payment solution is in-line with the Student-Centered Model which NSFAS adopted.
Having said that the Board has noted that there was no feasibility study before the current implementation of the direct payment system, particularly the justification for the appointment of the four (4) service providers.
There was no reason furnished to the investigators why the feasibility study was not conducted, which is a critical part of the project preparation for the implementation of the project.
Such an assessment would have enabled NSFAS to make an informed decision on the proposed solution and to evaluate the practicability and chances to success of the proposed direct payment solution.
Amendments of Bid specifications
The Board also notes the fact that the Report indicate there was an amendment the bid specification to include fin-tech companies, which resulted in drastic changes in the mandatory requirements of the original Bid.
These changes would have required deeper analysis to be conducted, amongst others, on the need to appoint four (4) fin-tech companies and their value-added services, the service direct costs to students and the details and the cancellation of the 2020 tender, which was a precursor to this bid under investigation.
On allegations against the CEO and conflict of interest in the appointment of service providers
The Report established that Mr Nongogo actively participated in the presentation to the Bid Evaluation Committee (BEC) of proposals by service providers. This is a material violation of public procurement processes of NSFAS which he was employed to safeguard and uphold.
Furthermore, the Report reveals that there seems to have been a conflict of interest in the appointment of these (4) fin-tech service providers.
The report also states that the CEO appointed Dr Chirwa to assist the BEC as a technical advisor. This appointment was inherently incorrect, as the 2021 SCM Policy does not provide for the appointment of an expert to the BEC.
The Report noted that the aforementioned SCM policy and position was altered in the 2023 SCM Policy to cure the defect of appointing Dr Chirwa in the BEC when the 2021 SCM Policy did not provide for such.
What is more noteworthy is Dr Chirwa’s association with certain companies that were appointed as service providers, both at the Service SETA (SSETA) and at NSFAS.
The companies in reference are eZAGA Holdings in which eZAGA Remit is a subsidiary, Africawide Consulting (Pty) Ltd and Africawide Foundation.
According to the Report, there is a possible relationship between Mr Nongogo and Coinvest and eZaga Holdings.
Another concern raised in the report in the inability of not conducting a through due diligence of the service providers.
For an example, in its presentations, Tenet Technologies mentioned that they would be subcontracting to a company known as Coralite (Pty) Ltd.
The investigators conducted a CIPC search on the company and the search reveal that some directors of Tenet Technologies are the same directors of Coralite. This clearly indicates that there is a clear relationship between the directors of Tenet Technologies and Coralite.
Board decision
As a result of the following findings, the Board has therefore decided to do the following:
1. Write to the CEO Mr Andile Nongogo and grant him an opportunity to advise on why his contract should not be terminated.
2. Subject all Staff members associated with wrong doing, as mentioned in the report to a disciplinary enquiry.
3. Advice all the four (4) direct payment service providers that their contracts will be terminated. The Board will ensure that this termination does not affect the students negatively. In this regard, the Board is mindful of the universities they have made and expectations they had over next step will take into account both the law and the implications to service delivery.
4. Review the Supply Chain Management (SCM) Policy, in line with the National Treasury Regulations and Policies, including the PFMA.
All these decision of the Board will be implemented progressively, from today, 18 October 2023.
Conclusion
Let me take this time to thank our Minister, the Minister of Higher Education, Science and Innovation, Dr Blade Nzimande, who continue to support us as the Board by providing us with the necessary guidance in implementing our responsibility as the Board. I must indicate that the Minister is always available whenever we seek his counsel as a Shareholder.
To our investigators from Werksmans Attorneys and Advocate Tembeka Ngcukaitobi SC, I thank you very much for producing this quality report within the allocated timelines.
To NSFAS Board Members, thank you very much for your dedication to the cause of service the children of the working class and the poor.
To hardworking and dedicated members of the NSFAS staff, who despite of these challenges continued to do their work diligently, I thank you very much. I urge you all to keep on working more harder and to keep on improving on your work.
I also would like to thank all the Vice Chancellors and Principals of our TVET Colleges who are working with us to resolve the challenges experienced by students on a day-to-day basis. This Board is looking forward to your continued support and cooperation to ensure that we serve our students and South Africans diligently.
To our students or beneficiaries and their parents, we want to assure you that the NSFAS Board remains committed to work even much harder to ensure that we transform NSFAS into an efficient and effective provider of financial aid to students from poor and working-class families in a sustainable manner that promotes access to, and success in, post school education and training.
We will continue to uphold the value of accessibility, transparency, affordability, reliability and authenticity.
We will ensure that our employees act with integrity, accountability and respect and that they find innovative methods in communicating with and service you as students.
I must emphasise that the challenges reflected in this report will not deter us from proceeding with progressive policies taken by this Board. This include our intervention on student accommodation.
By next week, we would have met the management of the Tshwane University of Technology (TUT) with a view of sharing our plan on how we may take control of accommodation for NSFAS beneficiaries for the rest of that university.
Lastly, let me indicate that we will soon be announcing the opening of the NSFAS application process for the 2024 academic year.
We will communicate to all our current beneficiaries and our prospective beneficiaries through all NSFAS communication channels including through public media on the details of process.
Programme Director, Mr Mnisi, thank you very much.
Issued by National Student Financial Aid Scheme
