NSFAS cancels contracts of its four service providers

18 October 2023 - 18:25
By Herman Moloi
NSFAS CEO Andile Nongogo has been at the centre of a previous tender controversy while he was head of Sseta. File photo.
Image: Supplied NSFAS CEO Andile Nongogo has been at the centre of a previous tender controversy while he was head of Sseta. File photo.

NSFAS board has decided to terminate the contracts of its four direct payment providers tasked to pay allowances to students. 

The Fund announced yesterday that it had adhered to the findings and the recommendations that Werksmans Attorney Tembeka Ngcukaitobi SC on the allegations of irregularities in the funding scheme. They found that the Fund’s CEO Andile Nongogo had actively participated in choosing companies to disburse allowances to beneficiaries of the R47bn fund.

The companies, eZaga Holdings, Coinvest Africa, Norraco Holdings and Tenet Technology, were hired last year following a tender process.  

According to Fund’s board which met last week to consider the findings of the report and it [board] also noted that there was no feasibility study before the implementation of the direct payment system, particularly the justification for the appointment of the service providers.

South Africa
Over 20,000 students lose NSFAS funding
5 months ago

“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,” said NSFAS chairperson Enerst Khoza, during a media briefing in Tshwane yesterday.

The four fintech companies were often blamed for delayed payments of allowance and sometimes students would experience dubious withdrawals in the accounts. Some of them even took to the streets to voice their frustrations earlier this year. 

The report established that 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 service providers.

“The report also states that the CEO appointed Dr Chirwa to assist the Bid Evaluation Committee (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. What is more noteworthy is Dr Chirwa’s association with certain companies that were appointed as service providers, both at the service Seta and at NSFAS,” said Khoza. 

“According to the report, there is a possible relationship between Nongogo and Coinvest and eZaga Holdings,” added Khoza

He said Nongogo was handed the report yesterday and the four companies were also informed of the contents of the report. 

“We will advise all the four direct payment services that their contracts will be terminated. The (NSFAS) board will ensure that this termination does not affect the students negatively. In this regard, the board is mindful of the universities they had over the next step and will take into account both the law and the implications to service delivery,” he said.

He added that they will be expecting a letter from Nongogo telling the board why they should not terminate his contract and will subject all the staff members that are implicated to a disciplinary enquiry.

Students have been complaining about the direct payment system claiming that it has exhausting funds.

Khoza said that the board was committed to implementing the direct payment system.

“We see a direct payment service provider as a necessary measure to reduce instances of unauthorised access to beneficiaries allowance, payment of ghost students and inconsistencies and delayed payment of allowances,” he added.