The Committee met with the National Student Financial Aid Scheme (NSFAS) in Parliament to engage on the disbursement of funding and allowances; the new direct payment system; student appeals; the NSFAS query system; the student accommodation accreditation system; and the reasons for the leave of absence of the chief executive officer.
Members were scathing in their criticism of NSFAS for failing to provide the required support to students, leaving many of them destitute and frustrated. A focal point of their concern was the appointment of four service providers to distribute funds to universities and technical and vocational education and training (TVET) colleges. They questioned the legitimacy of the bid to appoint these institutions and criticised NSFAS for revising its requirements for the direct payment system tender, and questioned why capable service providers had been overlooked. NSFAS responded that there were no issues regarding the direct payment system, as it was universally accepted, but it had become an issue only when the big banks' bids had not won, after which media sensationalism had become prevalent. The Committee resolved that NSFAS should do a comparison of the strengths and weaknesses of the appointed service providers versus the “big banks” or capable service providers.
Responding to the allegations outlined in the OUTA report against the entity's chief executive officer, NSFAS told Members that the Board had not found the CEO at fault, although he had been requested to take a leave of absence while it was conducting investigations. An investigation firm and lawyers had already been appointed, and it was agreed that a preliminary report would be submitted within a month, and a final report would follow.
Members also directed strong criticism at the NSFAS contact centre, its portal and query systems, for gross inefficiencies and instructed the entity to urgently resolve the challenges as they were destabilising the sector by failing to service the students. Their level of disappointment was reflected by suggestions that NSFAS staff who were responsible for these systems should not be paid. Members warned the Board and management that if nothing was done, they would have to face the consequences. They also emphasised that the Scheme must urgently consider appointing a communications unit or team to advance its communication capabilities. Students often remained in the dark, and their queries often went unanswered. Members expressed shock that even their own queries were ignored by NSFAS.
Members expressed disappointment that over 14 000 eligible students had been defunded by mistake. They demanded to know what steps the entity was taking to address this issue, and how it planned to prevent similar incidents from happening in the future. NSFAS was also criticised for its handling of student appeals. Of the 170 683 financial and academic eligibility appeals received by NSFAS, 58 924 were funded, 6 337 were rejected, and 28 971 were deemed invalid due to withdrawn, deleted, or duplicated appeals. An additional 44 561 appeals were dependent on institutions to load results and applicants to upload missing information. Members inquired about the timeline for reducing the backlog of student appeals. NSFAS responded that the deadline for internally dependent appeals was 30 September, while those dependent on external factors such as the educational institutions, had until 31 October.
The Committee urged NSFAS to deal urgently with its student accommodation accreditation system and resolve the imbalances and inefficiencies regarding the accreditation of service providers. The accreditation system was also experiencing backlogs, which negatively impacted service providers that had modified their properties to meet the standards required by NSFAS. The Scheme was instructed to enhance its human resources capacity to reduce the backlog. Members also enquired about whether NSFAS had responded to the students' memo that had been submitted to it by students during a protest that took place in August.
The NSFAS board said it would provide a comprehensive action plan in response to all Members' questions, comments and suggestions.
Chairperson's comments on NSFAS challenges
The Chairperson commented that things were not good at all. When interacting with students, no one was happy. One of the most significant issues leading to instability was the anxiety in the student population. They had to be frank with one another so they could reach consensus and provide meaningful recommendations to the National Student Financial Aid Scheme (NSFAS). The Committee must be given the space to report to the student community and provide some assurance that something is being done.
Everyone wanted to know what was going on at NSFAS. Some students had been defunded. NSFAS must explain this in detail, and delays should be avoided. NSFAS must also explain why it funds ineligible students.
Members had been sending queries to NSFAS, but receiving no response. When there were responses, these responses were shady and unprofessional.
The accreditation of accommodation made sense, because it would ensure that NSFAS follows the money and ensures that students are housed in conducive environments. The Committee supported this -- but what was the status of accreditation, considering the student backlog on accommodation? How was NSFAS enhancing its capacity to improve its turnaround times on accreditation?
The new direct payment system was another decision by NSFAS that the Committee supported, because it made sense. A student had been sentenced for the R14 million incorrect payment. NSFAS had explained that this was not its fault because it had sent the money to the institution and the institution had used a service provider, and it was the service provider at fault. To circumvent these issues, NSFAS now proposed a direct payment system, although Members had expressed their concerns over its capacity to do this. NSFAS had assured Members that it would bring in the right people to do the job. Today, the stories were confusing – students were not being paid the right amounts; some students did not receive their allowances on time, but NSFAS did not communicate this on time to the students.
NSFAS needed to centralise its communication. The hearsay information was exhausting. Evidence must always support the claims. If NSFAS claims it had disbursed funds to a student, it must have evidence. If the service provider says they are not at fault, they must show their statements, and even the students must substantiate if the amount paid was incorrect.
Amidst this, there had been a pushback against what NSFAS and government were trying to do. The only way the Committee could get to the bottom of things was through evidence. However, the Committee must be able to trust NSFAS, and there was a trust deficit between the Committee and NSFAS. NSFAS lacks the decency even to respond to Members’ queries. Stakeholders do not trust NSFAS. The Committee understands the politics of institutional autonomy, but there had been a pushback on what the government was trying to do under the guise of institutional autonomy.
NSFAS could not be dealing with appeals in September. Students were nearing their final examinations. Some students were eligible for funding, but were not funded with all the proper documentation. There had been instability in the sector for the whole year. The query system was non-responsive, and the appeal system took ages to conclude. This entity should be one of the best-run entities in this country if it understands what the objective of the country is, if it understands that it must ensure that young people are skilled, are able to contribute to the development of the country and change the livelihoods of their families and communities they come from. Instead, it was an embarrassment. With all the increased amounts of money poured into NSFAS, it continued to fail them.
Something must give, and the Committee would no longer allow the perception that it was incompetent by not running the entity efficiently. This could not be tolerated anymore.
The Department had increased the administration budget of NSFAS after heeding complaints about its shortage. There were also complaints about student funding, but the budget had also been increased. The Committee was playing its part by pushing, but the NSFAS board must push back as well. If there was a pushback on NSFAS, it must come out with the truth and express where the challenges stemmed from and what challenges the Board was experiencing regarding the implementation its recommendations by management. Management must also come out with where the pushback comes from.
She urged the Board to ensure that NSFAS improves its communication capabilities. She pleaded with the Board and management to tell the Committee the truth about everything, and what the Committee could do to make things easier for NSFAS. It must take the Committee into its confidence and admit where the Board and management feel they are incapable.
The Committee understood that Mr Andile Nongogo, the Chief Executive Officer (CEO), had been placed on leave, and she asked the Board to bring the Committee into its confidence on this matter. There were also all the allegations that had been raised about the direct payment system, particularly the capacity of the service providers and how they were appointed to deliver that service. The Board must also take the Committee into its confidence on the investigations underway and the instabilities within management, considering the existing changes.
There had been quite a few resignations. The Committee needed to be brought up to date on that as well. NSFAS had just recently came out of administration, and Members wanted stability in the entity. The Committee had therefore not embarked on an enquiry into NSFAS, because it wanted to give the new Board and management an opportunity to fix things.
DHET's comments on NSFAS issues
Dr Nkosinathi Sishi, Director-General, Department of Higher Education and Training (DHET), said the sentiments of the Committee, as expressed by the Chairperson, were aligned with the views of the Department. The Minister had a meeting with the NSFAS board on 8 August to discuss these matters. The Department was due for responses from NSFAS within a week.
The NSFAS board had reported to the Minister on issues around bank charges, the costs for the NSFAS students, negotiations that took place with partners, and details on issues involving the bank account fees and additional bank charges. The Minister therefore had further questions after that presentation which required the Board to investigate these matters, and report back to the Minister within a week.
The second issue discussed in that meeting was the funding of ineligible students. Three categories were presented to the Minister, which included matters on hybrid applications, matters around missing parental relations and documents, and the delays in the data from the Higher Education Management Information System (HEMIS) system, including the academic eligibility assessments that were done.
The third issue was the appeals update. The Minister had demanded that the Board provide an update on the appeals. There were appeals with external dependencies, but the role of the Department in resolving these issues was tabled by the Board before the Minister.
The fourth issue was the defrauding of NSFAS through direct payments. Various complaints and allegations were made against the direct payment service providers, and the Minister demanded responses for this.
At the time of the meeting, 115 complaints related to alleged fraudulent activity had been received by direct payment service providers of the total cases reported. About 44 had been finalised, while 71 were still under investigation. At the next meeting of the NSFAS board, there was an expectation that the Board would clarify these issues and provide details on them.
In January, the Department noted that NSFAS had embarked on quarterly regional engagements with financial aid officers and student representative councils (SRCs) at technical and vocational education and training (TVET) colleges and universities. In these sessions, students' challenges were discussed, and how best they could be resolved. Many of the issues that were elevated and discussed on public platforms did not provide evidence to convince the Department that NSFAS was taking the concern of improving stakeholder relations seriously.
The DHET holds monthly meetings with NSFAS through its university branch. These meetings could be held more than once a month, depending on the matters at hand. The Department had noted that the NSFAS board had decided to visit institutions of higher learning to interact directly with management, student leadership and stakeholders about the issues. At the time of the meeting with the Minister, more than half of the 26 universities had been visited by the NSFAS board. The Minister expected to hear the issues on the ground in the next meeting. The Department was no longer generalising the issues, but reviewing them per institution to isolate areas that need improvement.
He emphasised the importance of stakeholder engagements, and said there had been improvement in this regard. During the engagements with the Board, the business unit included the communication team in all project update meetings at NSFAS and the forums established for sharing ideas, but the Minister had requested details.
The Board had also tabled matters around the challenges of the student-centred model. These challenges with the model emanated from the fact that NSFAS offers centralised services without a physical presence at the institutions. A balance had to be struck between centralisation and decentralisation -- the presence of NSFAS at institutions needed to be reviewed carefully.
The number of interventions that the Minister had made at NSFAS was on record to demonstrate that he had never failed to intervene when NSFAS expressed challenges at all material times. However, they could not accept that students were left and not paid allowances.
The Minister expected that the Board would table a meaningful turnaround strategy addressing institutional matters, and how NSFAS would be engaging with its stakeholders and the Department.
NSFAS board chairperson's comments
Dr Ernest Khoza, Chairperson, NSFAS board, acknowledged all the challenges that NSFAS had been experiencing. Issues that had been a source of protests included the defunded students; allowances concerning the direct payments system; delays in appeals; the new matter related to the costs; and press articles claiming to release exposures on how the entity was run, and irregularities related to direct payments.
He highlighted the Board’s response to these issues, and emphasised that the wheels had not come off at NSFAS. To date, it had disbursed R32 billion to universities and TVET colleges. The annual budget was under R50 billion, which was about R6 billion below Nedbank's revenue, and about five times the revenue of Capitec. These were very large amounts.
The principle on defunded students was that if a student had been incorrectly funded for whatever reason -- it could be incomplete information or incorrectly captured information into the system -- the default response was to defund the student. The Special Investigating Unit's (SIU's) pronouncement in the year had been that R5.2 billion was granted to undeserving students, but the problem with NSFAS was that it would be on the other side of the law if did it, but if it did, it faces protests. There were cases where students were defunded through NSFAS’s mistakes.
NSFAS had been asked consistently by Members of the Committee about when it would affect direct payments. This idea had seen universal acceptance from all stakeholders, including the big banks. All the big banks had submitted their bids but like any other bid, there were winners and losers. The big banks did not win -- Fintech did. Before that, there was no negative press about the concept of direct payments, but after that, all hell broke loose.
The Board accepts that NSFAS is navigating through extraordinary times. The Board would exhaust its resources and the legislative framework to ensure that the persisting situation at NSFAS was resolved.
Regarding the media articles, the Board’s approach was that one should separate sensationalisation from substance. The reaction should be informed by substance. The first reaction was to appoint a reputable firm of lawyers to investigate all the allegations published in the Sunday Times. The expectations of the Board from the investigators were two reports -- a preliminary report within a month, and a final report. The reason for the prelim report was that it would give one the basis upon which one could take certain actions and speak in more committed terms on what NSFAS would do.
As for Mr Nongogo, the NSFAS CEO, he had not been found guilty of anything in the Board's books. The Board had reviewed the nature and the profile of the allegations and what it meant for an institution like NSFAS, and had asked him to take leave while the Board conducted investigations. This was the reason for the leave of the CEO.
To address issues related to defunding and the problems with the direct payment system, the Board of NSFAS had decided to take a more hands-on approach. Even though the organisation's records showed that it had paid students, there had been complaints from students who claimed they had not received payment. To investigate this issue, the Board created two teams that would visit various institutions to assist the financial aid offices and address any student queries. Each team would spend at least one day on-site, and they had been given a ten-day deadline to complete their work and report back to the Board. The Board would use this information to determine an appropriate response. The first two universities to be visited were Rhodes University and Wits University, both of which had recently experienced protests.
The Board had also decided to obtain external assistance to come up with a turnaround strategy. Turnaround strategies had major implications, and could create instability and resentment in the organisation. The Board had taken an opportunity to address the labour unions at the entity, and had told the unions that it would not stop effecting the turnaround strategy. The issue was that the turnaround strategy would have an impact on the current profile of the human capital in the organisation. Not everyone was going to be pleased, but at the end of engagements, there was some consensus with one of the larger unions.
He acknowledged that the Board took the concern over communication seriously, and a new communication team would be announced within the next five days.
NSFAS had a new stakeholder, which was its service providers. That was strange. Indeed, there had been tensions between NSFAS and Universities South Africa (USAf). The Board had met with USAf to have a heartfelt conversation about the divisions. The conversation was healthy, and a resolution was taken that when NSFAS had new policy changes, it must engage USAf immediately. NSFAS believed that it always did so on both direct payments and accommodation. USAf expects a more hands-on approach between itself and NSFAS, to the extent that it expects the CEO of NSFAS to attend its meetings. More than 80% of the student population was funded by NSFAS, which reflects its weight in the ecosystem of the sector.
In conclusion, the Board had decided to take a hands-on approach in dealing with the challenges of the organisation and the management of stakeholders. This would include the relationship with the Auditor-General of South Africa (AGSA). The Board had had constructive inputs from the AGSA, and most of the observations in its report were often welcomed by the Board. The Board intended that whatever corrective measures were required must be taken.
Regarding the information communication technology (ICT) system, one of the convergences between the Board and management was the determination to change things, and one of the things identified was strengthening the ICT system. The resignation of the chief information officer had resulted from management having written a suspension letter on account of the performance of that department and its conduct, which had led to a failure to make payments timeously.
Mr Masile Ramorwesi, Acting Chief Executive Officer, NSFAS, took Members through the Scheme’s presentation.
[See the presentations attached for details]
Mr T Letsie (ANC) expressed his anger towards NSFAS. This was a R47 billion entity, five times bigger than Capitec Bank. Capitec had systems that worked, but NSFAS had nothing. There was a contact centre that was not functional. The waiting time on the line could be up to two hours. He wanted to know what the objective of the contact centre was. The employees at the contact centre were mere salary collectors because they were failing the students, and this could not be accepted.
Regarding appeals, they were now in September and there were 44 000 appeals that were dependent on external factors from February until now. During COVID-19, some students came out openly and spoke about how they had resolved to sleep with older men just to get by. The inability of NSFAS to perform was pushing these students further into prostitution.
Even queries to management by Members of Parliament remained unanswered. The NSFAS board must act on the officials who were salary collectors. They must be fired, or Parliament would fire the Board. If the Board could not fix this issue at NSFAS, the Board must resign. The Committee would find a mechanism with the Department to have people with the correct ethics and right state of mind to work in the public sector. The Committee was meeting NSFAS for the fifth time this year. If its systems were working, why did they meet with NSFAS so often? Its systems were not working.
During oversight at NSFAS offices, management had told Members that it was building a “Rolls-Royce” of a system, but Members were not convinced and had asked for a “Toyota Corolla” that would get one from point A to point B. There had been students from Langa and Khayelitsha to witness the live launch of the system. The system had failed, and the arrogance of the management almost embarrassed NSFAS for wanting to invite the media. This could not continue, and Members appealed to the board members to either "ship in or ship out."
He wanted to know how far NSFAS was with approaching the Competition Commission about the issue of universities colluding with private service providers. Some of the beds were overpriced. The Committee had expressed its support on this matter, and expected a report back.
He criticised NSFAS for not doing anything about the appeals in September.
He inquired about the progress of NSFAS in accrediting service providers. The delays adversely affected smaller service providers who had used their properties as collateral to secure capital and modify their properties to meet NSFAS's accreditation standards. In February, NSFAS had stated that it had accredited 3 000 beds, and would soon accredit another 3 000. It had also employed 38 accreditors. Some of them were being threatened with eviction by the banks.
Regarding the NSFAS annual performance plan, the Committee was in pain over the AGSA issue last year. It seemed NSFAS did not have a planning unit. Members had raised these concerns before, and the Committee had enquired specifically about whether the NSFAS annual targets were measurable or not. The differences between the NSFAS and AGSA had robbed Members of their duty to report to the public about NSFAS funds. NSFAS used public funds, so Members did not want to hear stories about conflicts with the AGSA anymore.
On 19 May, the Committee resolved that NSFAS must provide an update on how much it had disbursed to universities (R9.2 billion) and TVET colleges (R2.2 billion). This information had never come forth.
Regarding the Organisation Undoing Tax Abuse (OUTA) report on the direct payment matter, NSFAS would indicate that it could not comment on the report because the Board had appointed an investigator into the allegations. However, when one reads that report, it is scary. It painted a picture as if NSFAS was no longer a public institution, but a private institution where individuals did what they wanted. All four service providers did not apply the first two times with bids, only when the requirements were reduced or relaxed. The intention created with this was that one tested the waters the first time, and the third time, one tailored-made the requirements to suit the bidders one wanted. This was how it looked on the outside -- and even to the Committee. The tender was created for these four service providers, with no shame. Even the banking licence requirement was removed and reduced to a provision that stated one must have a relationship with an entity with a banking licence. NSFAS had created a mess for the Committee.
It had come to light that the University of Fort Hare service provider did not make payments on the 1st of each month. Instead, they attend to students only on the 12th. This raises concerns about how students were expected to cover their expenses during the first 11 days of the month. Additionally, it had been discovered that two service providers were not VAT-compliant when appointed.
While the direct payment system was supported, individuals who did not qualify for it should not be allowed to benefit from it. Students had also been charged VAT-inclusive amounts, but it was unclear where the VAT had gone.
It was recommended that the South African Revenue Service (SARS) investigate these service providers to address these issues. The Committee expected that after the investigations, the matter would be referred to SARS for further investigation.
Lastly, when would the investigation conclude? The SIU must also provide an update on the status of its investigation. The NSFAS board must meet with the SIU to obtain material information on the status of the investigation because their investigation could not go on forever.
Ms D Sibiya (ANC) pointed out that the lack of communication between the NSFAS and the students led to continuous and unnecessary protests. Though she welcomed the new communication team soon to be announced, some officials were deliberately failing them and the students, and they needed to be dealt with.
Ms C King (DA) expressed her frustration with the NSFAS presentation, and referred to it as a “half-cooked” presentation in numerous areas. This presentation prevented Members from doing oversight fully. She concurred with Mr Letsie’s sentiments.
Regarding the direct payment system tender, the 30% allocation towards small, medium and micro enterprises (SMMEs) was indicated in the tender document, but who were these SMMEs? What were the costs associated with them and the skills and expertise that they would bring to the table?
It was also projected that the SIU investigation would amount to R70 million, and for this financial year, R42 million had been budgeted for it. Considering the OUTA findings, did NSFAS now have the capacity to expand the scope of the investigation to ensure that some of OUTA's findings were covered? The SIU had been investigating up to 2021, and some of the allegations happened after that timeframe regarding the tender award and the allegations against the CEO. She also wanted to know if the tender issues and the CEO allegations would be incorporated into the Werkmans Attorneys' investigation, and how much it would cost. What was the timeframe for this investigation? The Committee would not welcome a perpetual investigation. The scope and terms of reference of the investigation must be provided to the Committee, and Members wanted to satisfy themselves that there would be no comebacks in terms of the findings that would emanate from that report.
After all the allegations about the four appointed service providers, had NSFAS found that the service providers for the direct payments were better suited than the established banks that had also bid? The irony was that some of these companies used Nedbank as the sponsored bank, yet Nedbank had applied but was rejected. Some of these companies were using Access Bank. There were legitimate concerns that had been raised about Access Bank.
To date, this Committee had not received any information on the out-of-service costs for students from the various service providers that receive direct payments. She wanted to see a comparison between what they offered compared to what the five commercial banks were offering, so that Members could satisfy themselves that students were not being left out.
If NSFAS was funding 1.1 million students, the cost to them was R10 for each student on-boarded as an initial price, R2 after every month, and 50c or 15c for communication. This would amount to R11 million per month, and R2 million for the R2 for service account, excluding transactional costs. If one did the maths, it would be the students that would be affected.
In 2022, TVET students had been introduced to the direct payment system. What were the successes and challenges that these students had experienced?
It was stressful when contracts were given to organisations not fully compliant with the SARS requirements. What investigations had been conducted by NSFAS to ascertain whether these companies were compliant or not? It was a big concern that a government institution may be a party to defrauding SARS.
There had been a tender for a three-month contract to supply digital tools to calculate student allowances. It was awarded to Futurenext Technology at a cost of R4 million. Futurenext had abandoned the contract after NSFAS had already paid R3.2 million. NSFAS had gone out to contract another company, Idle Consulting, to complete this contract at a cost of R1.9 million. This has led to it incurring irregular expenditure of R1.16 million. Was there any investigation into the submitted Futurenext Technology fleet management system tender? Futurenext was also the company that had a contract with the Services SETA, to do its fleet management system. There was a link -- the Services SETA was coming up again. Did NSFAS record the R1.16 million recorded as irregular expenditure? Did NSFAS receive its money back from Futurenext? Had the NSFAS personnel been vetted to ensure they were not employees of the Services SETA, and not doing business with NSFAS?
On the accommodation cap, NSFAS had indicated that 24 280 had been accredited for accommodation. On the system, 21 206 beds were registered. How many of the 24 280 beds were filled? 39 service providers were listed for accreditation, and she asked for a list of these service providers and the costs associated with accreditation.
As for the ICT system, the Committee had been given a breakdown that R65 million was required for the ICT budget, and another R54 million was requested to substantiate the ICT budget. With all the noise that happened this year, and even with the extra R54 million, NSFAS could not improve its ICT system. NSFAS must provide a breakdown of how this money was utilised. NSFAS would be stuck in this vicious cycle if fit-for-purpose people were not appointed.
NSFAS was failing the very same child it claimed it was protecting. She welcomed the introduction of regional offices. Lastly, how many institutions failed to provide the information required to finalise appeals and the status update on pending appeals?
Ms J Mananiso (ANC) said everyone knew that education was a basic right for every child in South Africa. As for the presentation, every time NSFAS presented to the Committee and they were certain about their story, it was specific about the information, but when they were uncertain, the data became generic. NSFAS must provide figures per institution regarding fraud cases that had been picked up and what the NSFAS had done about those fraudulent applications.
As for SCM at NSFAS, how did it differ from other public institutions regarding SCM processes and get itself entangled in the allegations outlined in the OUTA report? What was the status of those responsible for the SCM processes?
Mr Khosa had indicated that the CEO was not at fault, but she wanted to know why he had been suspended. Members also needed details on issues that had transpired regarding the resignation of the Chief Information Officer.
There were self-interests involved in student accommodation in the sector. NSFAS must also provide a programme of action for resolving the issues at the NSFAS contact centre. The detail must include the incoming calls and responses to queries that flow in the contact centre.
How much was NSFAS budgeting for the two reports it procured for its investigations, and the legal costs?
It was worrisome that whistle-blowing was now under the spotlight in the public sector, but this was indicative of the challenges within the sector and the Department needed to assess this. The public sector was often challenged with investigations and persistent corruption-related issues. NSFAS needed to strengthen its monitoring and evaluation.
The Committee should consider inviting the service providers to appear before it so that the Members could engage directly with them.
Lastly, based on what students were experiencing, one could safely assume that students were experiencing mental health breakdowns due to the challenges they experienced associated with NSFAS. Was NSFAS aware of such students, and was it working with Higher Health to assist those students?
Mr K Pillay (ANC) shared the sentiments of the Members, and asked if anything was working at NSFAS. Conversations after conversations and presentations, it remained clear that it did not seem as if anything was working at the entity. He suggested that NSFAS staff should not be paid for one month -- that might teach them to pull up their socks. It was okay for students to continue being neglected and left out until their issues were resolved. It seemed as if NSFAS did not exist before, the new payment system was not something new, and NSFAS was just outsourcing that responsibility to a third party. Therefore, it could not be that difficult.
What had led to the decision of the Board to politely ask the CEO to take leave, as this was something that should have been communicated directly to the Committee by the NSFAS board. Members get to learn of such critical decisions through the media. What had led to the resignation of the Chief Information Officer?
The presentation had not mentioned anything about NSFAS's ICT, and he had hoped for a decent explanation and detail about the ICT system. He asked who manages the NSFAS ICT system and the costs associated with that. Was NSFAS considering the best practices on payment systems?
How long has the pilot on accommodation been ongoing, considering the challenges crippling the student accommodation sector?
He was perplexed by the appointment of service providers who were not registered, and whoever had been responsible must be held accountable. It was pointless to have satellite offices when nothing was functional. So much money was spent on different functions, but nothing was working. Perhaps a formal resolution must be taken to not pay NSFAS staff, and things could turn around.
Lastly, NSFAS should return to the Committee within two weeks to update it on all the issues raised today. NSFAS was a ticking time bomb, which may have already exploded.
Ms K Khakhau (DA) expressed dissatisfaction with the Committee's engagements with NSFAS. She felt that the discussions were repetitive, and that NSFAS was not taking the issues seriously. She suggested that NSFAS staff should not be paid until the students' needs were met. She also questioned the competence of NSFAS management, citing the chairperson's claim that NSFAS's revenue was five times more than Capitec Bank's. She wondered how such a claim could be made when the management of NSFAS was in disarray. She suggested that NSFAS did not understand its mandate and that the Department of Education was not doing enough to address the issue.
Notwithstanding the outstanding investigation reports that Members were yet to see, how did NSFAS incorrectly fund R5.2 billion to ineligible students? Who was responsible for this, and had any consequence management yet been implemented, as this was a serious case that should have led to the dismissal of those responsible?
Did NSFAS have a turnaround deadline for the 31 224 students who were currently not funded due to some confusion in their applications? Some of the state of limbo that existed on funding decisions was because of the education institutions’ lack of responses to NSFAS, but surely this was not the first time, and was NSFAS not cracking the whip at these institutions? Why were they not sending the data to NSFAS?
Was there a turnaround plan for the 44 461 pending student appeals due to institutions' responses? Also, she asked how NSFAS had reached this point.
The NSFAS portal did not work, and earlier this morning, she was on the phone to a mother whose student had lost funding without any reasons given. The portal did not work and was ineffective. Thus, what work had been done to ensure that the portal would work effectively, since NSFAS refused to resuscitate the call centre? Students were being left on their own.
Future efficiency projections for 2024 reflect a 72-hour response on funding decisions, but how did NSFAS have the capacity to achieve this when it was struggling with “ABC” exercises now? How did NSFAS intend to assist students from rural communities with applications if it planned to do away with manual applications? Had NSFAS partnered with the Department of Basic Education (DBE) to ensure that this cohort of students was assisted? NSFAS was struggling with clicks and links as it was, so how was it going to be completely digital?
Regarding student accommodation accreditation, there were 58 444 beds that had been paid for, but only 21 903 had been accredited. This meant that 62% of the accommodation currently funded was unaccredited.
Last night, she had a phone conversation with a student from Letaba TVET College in Tzaneen, Limpopo. The student currently resides in an informal settlement that NSFAS funded. In the past, unions had criticised this as an allegation, and Letaba TVET College had denied it to be so. The student had confirmed that it was true. Did NSFAS have accreditors who could address this issue? What was preventing NSFAS from acting? How was NSFAS okay with paying for students to live in shacks? Any response to these queries could be submitted in writing, but NSFAS must also provide a list of the 62%, and the institutions they belonged to.
Brilliant ideas were often suggested, and the DA had recently published a position paper on dealing with student accommodation, funding, and partnerships with the private sector. However, there was also nothing new in that position paper, because the content had been proposed by the Members before them. She did not understand why NSFAS was not heeding such proposals. She was convinced that the NSFAS board and management were not bothered. Meanwhile, while students were struggling, NSFAS rented out R2 million offices overlooking the Cape Town harbour, with a Seattle Coffee facility downstairs. NSFAS had everything at its disposal, and if there was no capacity internally, it had to source the brains.
Could it be because it was not their children who were affected by the NSFAS failures that the Board and management seem unbothered? Student lives were being destroyed and ruined -- where was the humanity here? Why was NSFAS not seeking help from institutions, private companies, or civil society?
Mr M Shikwambana (EFF) said that perhaps the centralisation of NSFAS was the reason behind such inefficiencies, because they did not see what was happening on the ground. When he visited the University of Free State (UFS), he found students at the gate protesting and enquired about the reasons for the protest. They had said that they did not have food, allowances had not been paid, and they were facing eviction from their residences. Some female students had even resorted to dating the landlords to secure a shelter for themselves, because NSFAS was not doing its job.
There were close to 1 300 students at UFS that had not received their allowances since March although they qualified. NSFAS must consider decentralising and going back to the ground at institutions. After all these shortcomings, students were expected to pass and progress, while NSFAS was creating a crisis for them. NSFAS personnel’s humanity was in question.
Regarding the ICT system, there were unauthorised people at NSFAS who could access the IT system. They had created this mess by fiddling with student payments because of internal politics at NSFAS. The internal fights within NSFAS compromised the students on the ground, and the Board and management were aware of this reality. The internal fights and political differences at NSFAS were seriously affecting the students. How was NSFAS going to track students far on the outskirts of the country who had been incorrectly defunded? How was the NSFAS planning to close the gap that it had created? NSFAS had traumatised the students, and it was destroying lives.
Why was the CEO suspended if he was not at fault? He should be the one answering some of the concerns and allegations that directly implicated him, according to the OUTA report. This report told them that these appointed direct payment companies did not qualify, and were not even registered to provide financial services. These companies were cutting corners to provide these services while there were qualified companies who had applied but were rejected. The appointment of these service providers reeked of corruption and favours. Before all these service providers were appointed, there were stakeholders within institutions that represented the students, but were these stakeholders consulted before the appointment of these service providers?
There had been 20 mandatory requirements for the tender bids, but once the NSFAS management realised that their “friends” or cronies were not getting in, these requirements were loosened up. He alleged that the South African Union of Students (SAUS) was actively engaged by the NSFAS management, which questioned the relationship between SAUS and the NSFAS CEO. SAUS supported this direct payment system, and was at the forefront of informing students about it, but there had been collusion.
Student accommodation was in crisis, and had left students with no choice but to resort to criminal activities. Students even ended up living in informal settlements, and there was a woman who lived in a shack as a NSFAS beneficiary, who was killed in 2020 in Venda. He was once robbed as a student at gunpoint while he was going to write a test. Service providers willing to provide accommodation to students must not be ignored, especially those with suitable properties for students, because students need accommodation.
He had been told that NSFAS had moved from a building that cost R500 000 per month to one that was R2 million a month. The irony of this was upsetting, because NSFAS was still bloated with inefficiencies and incompetence. Why did NSFAS move from its previous building to one that cost more?
It seemed the direct payment method was not working for students. The students were exhausted, and a serious protest was looming. Why was NSFAS not making these payments directly to students instead of outsourcing this capacity? No one took responsibility for non-payments, and the students did not know who to cry to. The NSFAS board and management were fully aware of where the challenges came from. Even in the case of the UFH student who “incorrectly” received millions, the money had been meant to be paid to themselves but had mistakenly been paid into the student’s account. The problem was not the fruit; it was the root.
He supported the non-payment of salaries at NSFAS, as suggested by previous speakers.
Mr S Zondo (IFP) felt that all the salient challenges at NSFAS had been expressed. However, no one had proposed that NSFAS divorce itself from the process that had recruited those direct payment system service providers. Fraud had been committed in the process and was now revealing itself. The process had been manipulated. He felt sorry for the ANC, as opposition parties believed it was the ANC’s fault, but if they said so they may be perceived as fighting political battles.
Girls often resort to “prostitution,” while boys became "hitmen" to get easy cash. All these issues have come to affect many other departments and sectors of the country. There was a cry all over the country for the supply of food packs for students who had been disappointed by NSFAS. Some of the members of the delegation were where they were today because someone had helped them, but now they were using their positions to deny students much-needed opportunities. The bottom line was that the future of this country depended on this Scheme, but it was holding the country backwards.
He called on the institutions to try to accommodate as many students as possible. The reason why institutions in the bigger cities were complaining about the cap was that, in some parts of the country, there were imbalances where students paid much less for accommodation, and they received the same capped amount as those who were paying the lower rates.
Whatever Members expressed today, it would amount to nothing if the process of recruiting those service providers was not terminated, because that was the source of the problem. If the Board and management were unable to execute their duties, they must resign so that the Committee could appoint people who were capable of delivering and steering NSFAS in the right direction. Though he sympathised with people who were being sabotaged, equally, he could not sympathise with people who did not take a stand. If anyone was sabotaging or intimidating the Board or management, NSFAS must use its powers.
Mr B Yabo (ANC) emphasised the purpose of the meeting, which was to consider the 2020/21 NSFAS annual report; matters on the disbursements of funds and allowances to students; the roll-out of the new direct payment system; the issues around appeals; understanding of the leave of absence of the CEO; the query system; the student accommodation accreditation system, and the response to the memorandum of the students for the picket held in Cape Town on 16 August. However, the main reason they were gathered here was to find solutions that worked for a student who did not have a plan B. Many of the 1.1 million students did not have a plan B -- they do not have an uncle to call, or a mother or a father to close the gap. For many of these students, these allowances represented what was part of the meagre basket of income of the families they came from, if one excludes the South African Social Security Agency (SASSA). If these payments were delayed, it meant that there was a direct impact on the students and the families they came from. A day was one day too many, and it was inhumane to quantify the time lapses in days when one was dealing with lives.
The NSFAS Act was instructive on the type of entity that NSFAS was, as it related to its inner workings. The Act stipulates that NSFAS is governed and administered by the Board. Although it demands that the Board sit at least twice a year, the addition of the word “administered” enjoins the Board to take the reins in running the ship. It often became the norm for boards to regard themselves at arm’s length from the entity because of the King IV Report. However, the Act was instructive to the Board to administer. What powers were delegated to the executive officer, as contemplated in Section 9(1)? To what extent had the Board delegated its powers to this officer? What were the powers delegated to the executive committee? The Act enjoins the chairperson of the Board to chair the executive committee (EXCO). It further says that the decisions of the EXCO were equivalent to the decisions of the Board, though the Board could revise the resolutions of the EXCO.
According to the NSFAS Act, the Board had complete authority to govern and manage the organisation. This includes the power to appoint an executive officer, and other executive members to make decisions on behalf of the Board.
The Scheme just came out of a period of administration, and to seek that solution again would be akin to doing the same thing and hoping for different results – insanity or madness. This meant the solutions to these salient challenges were within the purview of the Board. The Board must stop throwing King codes in the Members' faces when it had an Act that was instructive and clear on the role of the Board. This was why the CEO, or executive officer, sits as a secretary to the Board with no voting powers.
The challenges that NSFAS faces could not be politicised. The Committee must enjoin the Board to do what it was empowered to do by the Act. There were no grey areas in this. He requested the Board to pull up its sleeves and execute its duties as per the Act.
There had been accusations of sabotage, but Members requested specific details about these alleged acts of sabotage. They would like to know more about the sub-contractors of the Fintech company, who account for 30% of the work advertised. What specific tasks had they performed as part of the project? Additionally, the Members would like to understand why the organisation did not choose a solution allowing them to pay students directly, rather than appointing these companies as intermediaries. Lastly, at which level was the decision to work with these companies made?
Members were disappointed that they were here. They were tired of beautiful presentations, but the NSFAS inner workings were like a war zone.
The Chairperson submitted that a lot of what Members had said was not new, and all the issues of the students, besides the direct payment system, mattered. She wanted to know if NSFAS had responded to the memorandum of the students.
The Committee needed a commitment from NSFAS regarding communications. Had NSFAS found the funds for communications? Why was NSFAS seeking to outsource communications instead of building internal capacity, or employing people internally who would be assigned to communication? The biggest problem was that students did not understand what was happening. They did not know that there were institutions that could disburse on their own, and those that could not. Hence, the plan was to centralise this system for better coordination and accountability, but the students did not know that. The problem was not the direct payment system, but the service providers. If the problem was with the service providers, had management sought accountability from them and evidence to support their claims? The Board must commit to a deadline for instituting a communications unit that would be proactive and disseminate information daily when advancements are made at NSFAS.
The Committee needed to meet with the service providers. Parliament was now forced to get this close to operations, which was not ideal. The Committee requested a summarised comparison between the big banks and the service providers, of what they could offer to administer the direct payment system. Why had NSFAS appointed four service providers, and not one? What were the pros and cons of appointing the big banks? What risks did NSFAS know it was taking in appointing these service providers?
What was the plan to boost capacity for student accommodation accreditation? NSFAS wanted to take on these responsibilities, but it had no capacity. Why did NSFAS lack the drive to prove itself to some stakeholders who doubted its capabilities? There was no conviction in the execution of the NSFAS mandate.
The Board must also provide details on whether it had the human capital capacity to deliver, and timelines of when things would get done. When would the query system be integrated?
The Committee had visited the NSFAS offices for working sessions, and Members had been told that the call centre was empowered to do more. Why were they still having issues with queries? It had been confirmed that people at the call centre now had capacity. Daily targets could be set for each day to ensure that queries were responded to, and the Board must ensure that capacity was enhanced.
The Committee would meet with the service providers after the NSFAS board and management submitted the summary of the comparison between the service providers and the big banks. The investigation scope must be enhanced to include the capacity of the service providers; the allegations against the CEO, Mr Nongogo; the process of appointment; capacity-related issues and SARS registration matters; and whether the service providers were disbursing or not. There had been conflicting views on the payment of incorrect allowances, so this also needed to be assessed closely.
The Committee wanted to see Day Zero on the appeals. What was NSFAS’s commitment to clear appeals by that date and start planning for the 2024 academic year?
She also wanted to know when NSFAS was opening applications for the 2024 academic year; when it would present the 2021/22 annual report to the Committee; an update on the four TVET colleges at which NSFAS was piloting the accommodation process; the difference between the registration of accommodation versus accreditation; and the issue of bank charges that continued to be raised by Members. NSFAS had brilliant ideas that were poorly implemented.
The Committee was pleading with the NSFAS board to deal with the personnel responsible for the queries, or ensure that it appointed capable people.
What had informed NSFAS to visit Rhodes University and Wits first to engage on the direct allowance challenges? Had NSFAS rectified the problems of the unjustly defunded students, and would the entities ensure that defunding would not persist into the 2024 academic year?
The Committee wanted actionable plans from the NSFAS board and management where it could identify challenges and the actions that would be taken to resolve those issues.
Dr Khoza said there was eagerness to respond to the questions and comments by Members, but due to time constraints, he requested permission to compile the responses into an action plan. The Board would be comprehensive in that plan and address all the questions raised.
A decision had already been taken that EXCO would take a hands-on approach, and 60% of the EXCO members were already in Cape Town. The Board understood the meaning of the word ‘administer’ as per the Act, and it would begin to act accordingly to resolve the challenges experienced at NSFAS and by the students.
Mr Ramorwesi, the acting CEO, responded to the Day Zero appeal, and clarified that there were two important dates. 30 September would be the Day Zero for all appeals with internal dependencies that needed to be finalised, and it would be 31 October when external dependencies were involved.
The balance of unfunded students was sitting at 31 229, and the reason for their status was that parental information was missing.
The Chairperson said that the NSFAS, in its responses or comprehensive action plan, must include the defunded students versus those funded; the appeals situation; student accommodation and the accreditation process; systemic issues of the direct payment system and the ‘rumours’; the strengthening of the communication unit; the R45 000 cap for student accommodation; and the integrated data from institutions which affect the ability to pay institutions and students.
The Committee wanted a plan of action from NSFAS. Members expected a sharp decline in the backlog of appeals. If NSFAS had questions about how to outline or unpack the information to the Committee, the Board or management could contact the Committee or the Department for assistance. The action plan must give clear accountability, and must be systemic and organised and inspire confidence in the Committee.
Ms Khakhau welcomed the deadline on appeals, and asked what NSFAS was planning to address the unjustly defunded students.
The Chairperson added an enquiry as to whether NSFAS had been able to identify the 14 703 unjustly defunded students, and rectify the situation. Was NSFAS up to date on the allowances for this month?
Mr Ramorwesi replied that the unjustly defunded students had been reinstated. The 31 224 students remained unfunded, and the reasons had been stated for these decisions.
When NSFAS experienced hiccups with payments, it did issue a communique to the students about how it was resolving the matter, with timelines. NSFAS had disbursed payments on 2 September to 25 institutions, and the last institutions had been disbursed on Monday. A communique would be issued, as it had not yet been issued.
Ms Mananiso suggested that NSFAS must issue a communique informing students who had not received their payments who they must contact for queries, and not to refer them to the portal that was not working.
Mr Letsie asked who would resign if the 30 September and 31 October appeal clearance dates were missed, as committed.
Ms Vuyokazi Mafilika, General Manager, NSFAS, clarified that the issue with the backlog of appeals was that students were continuously submitting appeals as soon as they received rejections. Closing on 30 September may compromise the students who had the right to apply for an appeal. Secondly, NSFAS now funded T3 students in TVET colleges, and the process required that when one was funded and rejected, that student also had the right to appeal.
Regarding the disbursements, provisionally funded students qualify or are eligible for NSFAS. NSFAS obtained the registration record from the institution and once validated, the NSFAS could proceed to pay. Some of the students who queried that were not paid, were exceptions. When NSFAS received their registration, they had found fault with it due to various issues, such as the increased cap, an unfunded course, or an incorrect articulation pathway. However, NSFAS was committed to payments for successfully validated students.
Dr Sishi emphasised that the turnaround strategy would be finalised within a week, as well as the finalisation of the AGSA issues. A comprehensive response to the student memorandum also had to be finalised within a week.
The SIU matter was one that was outside the control of the entity and the Department, although stakeholders eagerly awaited it. He was concerned about the University of South Africa (UNISA), because of the 31 000 students whose applications were still pending. This 31 000 may also include "ghost students," and it was a large number. All other institutions had much fewer numbers. He suggested that NSFAS investigate this number further.
The meeting was adjourned.
- NSFAS update on disbursement of funding and allowances to students, roll-out of direct-payment system, outstanding student’s appeals, CEO leave and related matters (Part 1)
- NSFAS update on disbursement of funding and allowances to students, roll-out of direct-payment system, outstanding student’s appeals, CEO leave and related matters (Part 2)
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