ATC210604: Report of the Portfolio Committee on Higher Education, Science and Technology on Its Oversight Visit to the National Student Financial Aid Scheme (Nsfas), Dated 2 June 2021

Higher Education, Science and Innovation

Report of the Portfolio Committee on Higher Education, Science and Technology on Its Oversight Visit to the National Student Financial Aid Scheme (Nsfas), Dated 2 June 2021
 

The Portfolio Committee on Higher Education, Science and Technology (herein referred to as the Committee), having conducted an oversight visit to the NSFAS Head Office on 18 May 2021, reports as follows:

1. DELEGATION LIST

1.1 Members of the Committee

Mr MP Mapulane: Chairperson (ANC), Mr WT Letsie (ANC), Ms JS Mananiso (ANC), Ms D Sibiya (ANC), Mr BS Yabo (ANC), Ms C King (DA) and Ms N Tarabella-Marchesi* (DA).

1.2 Support staff:

Mr A Kabingesi: Committee Secretary, Ms F Ndenze: Parliamentary Communications Officer (PCO) and Ms T Kleinhans: Executive Secretary.

2. INTRODUCTION

2.1 Purpose of the visit

The Committee undertook an oversight visit to the NSFAS Head Office as part of its resolution to have an in-depth insight and deliberations regarding the state of affairs of the Entity. Notwithstanding its resolution of visiting the Entity, the Committee received a letter of invitation from the NSFAS Board Chairperson, dated 20 April 2021, wherein the Board extended an invitation to the Committee so that it could have an opportunity to introduce its members and share its strategy and plans for the Entity.

The Board of the Entity was appointed in January 2021 following the expiry of the Administrator’s term in December 2020. The Entity had been under the administration from August 2018 following a period of poor performance and governance, which contributed to inadequate disbursement of funds and allowances to students.

The purpose of visiting the Entity was to interact with the newly appointed Board and management in line with the Committee’s long standing resolution of having a physical interaction with the representatives of the Entity and to have insight into the daily operations of the institution with respect to its mandate of disbursing funds and allowances to eligible students in the post-school education and training system.

2.2 Opening remarks by the NSFAS Board Chairperson

Mr E Khosa: Board Chairperson, expressed his gratitude on behalf of the NSFAS Board for the Committee’s visit to the Entity. He said the visit was a watershed for the Entity and the cause of access to education. The presence of the Committee also drew inspiration for several reasons, and for the fact that it was the first time that the Committee of the 6th Parliament visited the Entity. Mr Khosa said the Entity observed the passion the Committee members had, not only on broader governance issues, but also on matters of transformation and access to education. In addition, the inputs of members during the Budget Vote 17: Higher Education and Training debate were encouraging.

Mr Khosa said the institution had challenges, some of which preceded the administration period, and these challenges would require sustained firmness and decisiveness on the part of the Board and the CEO. He proceeded to list some of the key challenges of the Entity starting with the laptops.

In relation to the laptops, Mr Khosa said the laptops deal seemed to have been badly designed and the shortage at the markets made it nearly impossible to deliver the instruments as per the commitments to students. Consequently, these necessitated contract variations which the Entity believed that they required National Treasury’s direction. However, the first response by Treasury was negative and on further verbal explanations, they seemed to adopt a different view. The different view ofNational Treasury had not been confirmed in writing. In light of the risks that may ensue if the Entity does not secure laptops that may still be in the market, the Entity would seek legal advice on the matter.

With respect to the audit findings, Mr Khosa indicated that the newly appointed Board took office in January 2021, three months before the end of 2020/21 financial year. There were many audit findings raised by the Auditor-General (AG) in respect of the 2020/21 annual report, and the Board had subsequently discovered more challenges that require time to be resolved. Mr Khosa urged the Committee not to be surprised if the 2020/21 annual report of the Entity does not show fundamental improvements. However, the Board was working hard to minimize negative findings.

In relation to the organisational development matters, Mr Khosa said the Entity was attending to organisational development matters and all the challenges related to staff performance. This would include a complete realignment of the organisational structure and ensure that there are skills base in line with the mandate and the challenges the Entity faced.

In so far as the review of key decisions made, Mr Khosa indicated that the process of appointing a service provider was underway and the terms of reference were prepared but were interrupted by new observations. Mr Khosa assured the Committee that the Board was resolute and up to the task of turning around the Entity. He said the Entity had a budget amounting to R43 billion and its client base which were students, was no ordinary constituency.

2.3 Remarks by the Chairperson of the Committee

Mr M Mapulane: Chairperson of the Committee, said the invitation of the Entity coincided with the Committee’s discussion to have a physical oversight to the Entity. He indicated that the Committee had its first engagement with the new Board during the presentation of the Entity’s Annual Report 2019/20 in February 2021. The Committee had indicated to the Board that it would provide the necessary support it needed to turn-around the situation at the Entity following its two-year tumultuous period under the administration. The Chairperson indicated that when the Entity succeeds, the country would also succeed given its important role in supporting students from the poor and working class families to access post-school education and training (PSET) system opportunities.

The Chairperson said the Committee was more inclined in having a successfully managed Entity that responded to the clarion call for fee-free higher education. He indicated that the #FeesMustFall campaign by students signified a change in student funding in the PSET system. Students had demanded that they be provided with fee-free higher education, and government responded by acceding to this proposal of having fee-free higher education for students coming from the poor and working class families. This major policy decision resulted in a number of challenges for the NSFAS which at the time, was not adequately prepared to fully roll-out the fee-free education for qualifying students.

The Chairperson indicated that the inadequate performance of the Entity coupled with poor governance resulted in the dissolution of its Board, and the subsequent appointment of the Administrator in August 2018 to turn-around the situation. However, the administration period became a terrible stint due to a regression of performance and poor audit outcomes as per the 2019/20 Annual Report. The Chairperson encouraged the management and Board to work towards achieving a clean audit for the Entity. He urged the Entity to resolve the challenges with respect to the delays in the distribution of laptops to students. The Chairperson also suggested that it would be critical for the Entity to move its premises in the administrative capital of the country given its mandate.

3. EXHIBITION WALKTHROUGH

The Committee was taken to the Exhibition walkthrough to get insight into the end to end applications and funding process of the NSFAS students.

3.1 Applications

The first step that learners or students needed to complete in order to be considered by the Entityfor financial aid was the application process. The majority of the applications that were processed by the Entity were done online through the NSFAS portal /website. There were still manual applications that were considered for those learners in rural areas who did not have access to the internet, and those applications were collected and automated at the Entity.

The Entity had arranged for a learner from a Quintile 2 school to demonstrate live the application process. The student was a South African Social Security Agency (SASSA) grant beneficiary, and she used her identity document (ID) number to apply for the NSFAS funding. Once the student completed the online application, she received a reference number that was used to track her application status. The SASSA beneficiaries were not required to submit proof of income from parents since the NSFAS system was linked with the Department of Home Affairs (DHA) and the Department of Social Development (DSD) systems. The Non-SASSA beneficiaries were required to submit the necessary supporting documents which were verified. The system automatically checked the validity of information submitted and the Entity had agreements with the South African Revenue Service (SARS) and Credit Bureau for validity checks. The Entity would also be entering into agreements with the Unemployment Insurance Fund (UIF) and the Companies Intellectual Property Commission (CIPC) to check the validity of information for learners whose parents were not employed or in business.

3.2 Evaluation

The following step after an application was completed is the case management or evaluation. Evaluation entailed the validation of data and documents submitted by students. The Entity had a target of 180 cases per day that needed to be managed or resolved. Once the application has been evaluated, its status changes from awaiting evaluation. Evaluations were undertaken within an hour after the application has been successfully completed.

3.3 Financial and Academic Eligibility

The financial and academic eligibility stage is whereby the Entity makes decisions based on approval of the evaluated application. The funding decision for new students were made if they submitted the requisite documentation and met the criteria for the NSFAS funding. For continuing students, the academic eligibility was depended on the academic results submitted by institutions to the Entity. The N+2 rule was also applied in determining financial and academic eligibility of continuing students. The students from TVET colleges were evaluated differently from University students. The requirements for University students was 50 percent pass rate to progress to the next level, whilst TVET students were expected to pass all their key subjects. TVET students were given an extra year to complete their programmes if they failed some of their subjects, whilst University students were given two extra years. The NSFAS family income threshold limit for new applicants was R350 000 per annum and R600 000 per annum, for students with disabilities.

3.4 Appeals

The appeals process considered the queries from students with respect to their funding or non-funding status. The majority of first-timeentering students’ appeals were related to family income eligibility. The team leader in the appeals unit refers the appeals to the case worker, and the Unit processed 100 appeals per day. The credit bureau, including SARS provided critical information to the appeals unit with respect to family income declared by students in their applications. The new Board has requested the Entity to consider the individual circumstances of students when dealing with appeals, and this would be taken into consideration in the future.

3.5 Registration

The registration stage dealt with the registered students at a public TVET colleges or Universities. As soon as students are registered with the institution, they expect funding from the Entity when their applications have been successful. The registration unit mainly reviewed the student registration data received from the institutions to ensure that the correct funding and allowances would be paid to the students.

 

3.6 NSFAS Wallet

The NSFAS Wallet is an allowance system for TVET college students. Students receive allowances, directly from the Entity to withdraw or spend funds at any service provider / trader that partnered with NSFAS. The Entityhad 44 TVET colleges under the Wallet system and six colleges were still paying allowances directly to students. The unit dealing with the Wallet system kept record of all the payments made to students based on the registration data received from the institutions. Students needed to have a working cellphone number in order to have access to the Wallet system. The Entity had paid 96 percent of students through the Wallet system successfully, and those that have not received their payment were due to various reasons.

3.7 Call Centre

The NSFAS call centre managed all queries from students with respect to their applications, funding and other related matters. The majority of queries from students were related to blocked accounts, wherein students were not able to access their funds and allowances. The contact centre agents assist students to unblock their accounts and related queries. The contact number of the call centre was toll free and students were allowed to communicate in any of the 11 official languages with the contact centre agents. The total staff complement in the contact centre was 109. The contact centre also managed the social media platform of the Entity and dealt with student queries raised on these platforms.

4. Summary of the presentation

Mr A Nongogo: Chief Executive Officer (CEO) made the presentation on the overall organisational challenges and mitigation plans. He said the first 100 days since the appointment of the new Board and CEO was a crucial period, in terms of learning, adjustment and setting the agenda. The new leadership focused on maintaining the organisation, and ensuring that the 2021 academic year began with a smooth transition from the administration period in a normal operational state of the Entity. The key delivery commitments and priorities for the new leadership included: Revising the 2020 – 2025 Strategic Plan; developing the 2021/22 Annual Performance Plan (APP); improving audit outcomes; developing the new disbursement model; implementation of the digital learning devices project; interim information and communication technology (ICT) tools and refining processes throughout the value chain.

In relation to the audit outcomes and remediation actions, the CEO indicated that the Entity received a qualified audit opinion with findings in 2019/20. In terms of remediation strategies, the new leadership has appointed a team to address the negative audit outcomes, and also sought external capability to help address and improve on the findings. The CEO acknowledged that there were areas that were not properly accounted for in the past, and this has resulted in increased irregular expenditure in the past financial year. The plans put in place by the new leadership would improve the control environment.

With regard to performance information, the CEO indicated that performance reporting was previously not entrenched in the Entity. Consequently, there was under-achievement of the APP targets and performance qualification. The Entity did have not performance contracts signed by staff members as part of their performance management. In improving the situation, performance management would be institutionalised and there would be a link between organisational performance and individual performance. In addition, consequence management would be institutionalised.

In relation to the core business operations, the CEO indicated the key challenges of the Entity included: increased funding demand; timing of funding decisions; timing of resolving appeals; data exchange challenges with institutions; weak query resolution mechanism and timing of disbursements. The CEO also mentioned the remediation strategies which included: collaboration with DHET on the sustainability of the Entity and funding mechanism; providing real time decision for new applicants; review direct disbursement to students; improvement in data exchange between the Entity and institutions and improve query resolution.

With respect to the human resources (HR), the CEO said HR was the most important resource for any organisation to thrive.  He acknowledged that the previous staff challenges at the Entity, which led to low staff morale affected its overall performance. In mitigating the situation, the review of the organisational structure was underway. The Entity has developed continuous professional development and training for its staff, and they were also funded to pursue their academic studies. The new leadership aimed at building a conducive environment for its staff to perform their duties.

In relation to information technology (IT), the CEO indicated that when the new leadership took over during the beginning of the year, there were inadequate ICT governance arrangements. The Entity did not have an ICT Digital Strategy and its systems were not fit for purpose. The mitigating strategies included, developing an NSFAS ICT Digital Strategy and building and buying a fully integrated system. The CEO mentioned that the plans to acquire the fully integrated system were underway and it would take nine months to have a fully operational new system. The Entity aimed at procuring the services of a local IT service provider, which would also enable the transfer of skills to the NSFAS employees.

In relation to the procurement of digital learning devices for students, the CEO indicated that the Entity had undertaken a survey to determine the extent and demand of laptops by students.The results of the survey showed that only 15 000 University students indicated that they would need laptops, though the Entity had ordered 180 000 laptops. There were a number of institutions that opted out of the laptop initiative by the Entity and undertook their own procurement process. The tender for the laptops was awarded to four companies, including Microsoft. The impact of Covid-19 and limited stock contributed to the delays of this project.

5. OBSERVATIONS

The Committee having undertaken an oversight visit to the NSFAS Head Office noted that:

5.1 The exhibition walkthrough provided insight into the application value chain and other processes involved.

5.2 There were still too many queries received from students, complaining about outstanding allowances and the delays by the Entity in resolving them. The slow turn-around time by the NSFAS in responding to student queries was noted with concern.

5.3 The newly appointed Board had skilled and capable members that had the ability to move the Entity forward and improve its governance.

5.4 The high volume of monthly inbound calls (500 000) received by the Entityshowed that there were challenges with its systems in particular the resolution of students’ appeals. The proposed plan to procure a new system to cater for the student-centred model was welcomed.

5.5The funding of courses or programmes that were not relevant to the labour market needs by the Entityremains a concern.

5.6The delays by the Entity in paying out student accommodation allowances remains a concern and also contributed to the exploitation of students by private accommodation providers.

5.7 The financial sustainability of the Entity remained critical in light of the fee-free higher education for students coming from the poor and working class families. The slower economic growth and the overall budget cuts have a potential to negatively affect the sustainability of student funding.

5.8 The ICT systems supporting the core operations of the Entity were not fit for purpose. This was indicated by poor data exchange between the Entity and institutions as well as the continuous complaints with respect to the wallet system.

6. SUMMARY

The oversight visit of the Committee provided an opportunity for further engagement with the newly appointed Board and management on its strategy and plans to stabilise the organisation. The Committee had an opportunity to meet and interact with the new Board members and also got to understand their background and qualifications. The visit also gave members insight into the application life cycle and other business processes to identify areas of systems failures.

The Committee reiterated its support to the Board and management team and also indicated that it had confidence that the new leadership will turn-around the situation at the Entity. The Committee also indicated that it would give the new leadership time to implement its turn-around strategy so that it is able to hold it accountable for its interventions.

The Committee’s overall impression of the visit was positive and it left the Entity with the hope that the strategy and plans in place would contribute significantly to improved service delivery. The Entity was an important asset for the country, and it managed significant resources aimed at improving access and opportunities for students coming from the poor and working class families.

The Committee acknowledged that the provision of fee-free higher education for the poor and working class was not an easy task, and this would require support from government and capable and committed personnel from the Entity to implement.The Committee requestedthe Entity to ensure that funding is allocated to the right student at the right time, and for the Entityto improve its internal controls environment which will improve governance and service delivery. The Entity also needed to strive for a clean audit in the near future.

 

 

7. RECOMMENDATIONS

The Committee having undertaken an oversight visit to the NSFAS recommends that:

7.1 The procurement of the newly integrated ICT system aimed to support the core operationsof the NSFASbe expedited. The new system would enable the Entity to function optimally and provide real time responses to students’ applications.

7.2 The turn-around time for the resolution of student appeals and queries be improved. The Entity needs to develop effective and efficient query resolution strategy.

7.3 The Entity needs to improve its outreach programmes in rural areas in light of its limited presence in the provinces. The deployment of human resources / front line staff in different provinces will assist the Entity to improve its communication with students and institutions.

7.4 The implementation of fit for purpose organisationalstructure be expedited to bring stability in the Entity. This will create a conducive environment which will enhance staff morale and improve service delivery. The Entity needs to recruit skilled and capable candidates upon finalisation of its new staff establishment.

7.5 The NSFAS considers outsourcing its call centre given its inadequate human resource capacity to deal with the volume of calls and queries.

7.6 The financial sustainability of the Entityis critical for the delivery of its mandate in support of the increasing demand for fee-free higher education. Therefore, the DHET should engage withtheNational Treasury to ensure that there will be no further funding shortfalls for the Entity in the near future.

7.7 The DHET needs to review the disparities with relation to the funding eligibility criteria between University and TVET college students. The existing criteria arediscriminating towards TVET college students, and should be standardised and non-discriminatory.

Report to be considered.