The Organisation Undoing Tax Abuse (Outa) has lent its voice to the ongoing issues raised by students across South Africa regarding the alleged shoddy work of third-party operators that were awarded the responsibility of issuing student allowances, starting in June this year.
National Student Financial Aid Scheme (NSFAS) has been in the spotlight in recent weeks after various student leaders and student organisations have criticised the new direct payment system implemented by the scheme.
The scheme appointed four service providers to disburse funds to universities and TVET colleges, namely eZaga, Coinvest, Tenetech, and Norraco.
However, in just over a month, students have decried the appointment of the service providers whom they alleged were inexperienced, had exorbitant banking charges, and in some instances, delayed the payment of their allowances.
Now, in an updated investigation report on the NSFAS direct payment scheme released by Outa, the organisation believes these tender awards were irregular, and questioned whether these tenders were not unnecessarily draining NSFAS resources and contributing to the dilemma many students find themselves in currently.
Outa said it has shared all the information they have gathered on these tenders with the Special Investigating Unit (SIU), which has a proclamation to investigate NSFAS.
“Despite Outa’s concerns, which we shared with NSFAS and the SIU and to which we alerted the public in October 2022, NSFAS went ahead and introduced the new direct payment system with the four new service providers by the end of June 2023. The rollout caused total chaos, with thousands of students calling for the scrapping of the system,” it said in a statement.
The updated report detailed the differences between the current tender that was awarded to Coinvest Africa, Tenet Technology, Ezaga Holdings and Norraco Corporation, and the two tenders for a similar service of direct payment of student allowances, which was cancelled.
One of Outa’s findings included that the cancelled tenders had 20 mandatory requirements that had to be met by service providers, while the current tender only had five mandatory requirements.
The requirement to have a banking license was changed to having a banking license or a sponsor bank or an affiliation with a bank.
This, Outa said, opened the back door for bidders who were not registered as financial service providers (FSPs) to submit their bids. In this way, the appointed service providers were awarded a tender without being FSPs.
“Furthermore, Outa couldn’t find proof of any agreement between any bank and the service providers in November, and also not with the latest investigation. The only ‘proof’ is a notice in fine print on some websites of the service providers that they are affiliated with Access Bank or another fintech company called Ukheshe,” it said.
To date, NSFAS has not published the agreed fee structure it has with the service providers, Outa reported.
Its report further showed that NSFAS was determined to adopt a monthly fee of R102,35 when the tender was awarded.
But, after some pressure from students and civil society, the monthly fee was decreased to R12, “but it seems that the transaction fees increased drastically”.
In addition to the investigations undertaken by Outa and the SIU, students have launched new actions.
William Sezoe, vice-chairperson of the Stellenbosch University SRC, submitted a complaint to the Public Protector with the support of the SRC, while ActionSA announced that they will approach the high court to review NSFAS’ decision to implement the scheme and the awarding of the tenders.