The National Student Financial Aid Scheme (NSFAS) is currently facing a significant leadership crisis, operating without a CEO, CFO or chief audit executive (CAE), while the position of chief information officer (CIO) has been vacant for 11 months, Cape {town} Etc reports.
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A new board is expected to be announced in October, but the situation remains challenging.
On April 14, former Higher Education Minister Blade Nzimande took the drastic step of dissolving the NSFAS board and placing the organisation under administration.
This action was prompted by severe governance issues, including the scheme’s failure to address recommendations from a critical Werksmans Attorneys report. The report recommended ending contracts with four irregularly appointed direct payment service providers and implicated six NSFAS bid committee members in these irregularities.
Nobuhle Nkabane, the current Higher Education and Training Minister, emphasised the gravity of the situation.
‘It is clear, it is not desirable that NSFAS is currently under the second administration intervention within the five years of conclusion of the previous intervention,’ she stated. ‘The underlying causes of this intervention are maladministration and mismanagement, which have combined to produce corruption in the NSFAS grant payment system.’
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Sithembiso Freeman Nomvalo, the newly appointed NSFAS administrator, has confirmed that efforts to cancel the problematic service provider contracts are underway. However, one of these providers, Ezaga, has challenged the action in court. NSFAS’s counter-application was rejected in July and is now under appeal.
Nomvalo also discussed the disciplinary actions related to implicated employees.
‘As it relates to the disciplinary process of the employees, the CEO is no longer with us and the CFO,’ Nomvalo said. ‘The other employees in the report, the level of culpability of the rest of the employees, was not as severe as that of the CFO as well as the CEO. So the processes have been underway in relation to that and are about to be concluded.’
According to IOL, two employees resigned in July 2024, and formal hearings for the remaining staff are pending.
In addition to internal management issues, the Special Investigating Unit (SIU) is actively addressing financial discrepancies at NSFAS.
The SIU has signed Acknowledgement of Debt (AoD) agreements with 421 students who inappropriately received funding, totalling R112.2 million.
The unit has also recovered significant unallocated funds from various institutions, bringing the total recoveries to over R1.16 billion.
The investigation revealed that NSFAS failed to reconcile funds annually, leading to substantial overpayments and underpayments. The SIU is authorised to investigate allegations of corruption and maladministration and will refer any criminal findings to the National Prosecuting Authority (NPA).
The Democratic Alliance (DA) has welcomed Nomvalo’s honest assessment and the interventions implemented but remains cautious. They have raised concerns about ongoing issues at NSFAS, including corruption, fraud and inefficiencies in the direct payment system.
The DA stressed the importance of rigorous assessments of the ICT and Business Processing Review Project and suggested exploring direct payments to students to combat fraud.
As NSFAS works through these challenges, there are plans to decentralise its operations to establish a presence in Gauteng, KwaZulu-Natal, and the Eastern Cape, alongside its Cape Town headquarters. Nkabane has highlighted the high cost of the Cape Town office, which amounts to approximately R2.5 million per month in rent.
By the end of the 2022/2023 financial year, NSFAS’s budget increased to R54.221 billion from R47.607 billion, an increase of R6.613 billion.
Despite this, Nomvalo noted that inefficiencies persist, especially in ICT infrastructure, with a system error leading to incorrect funding for thousands of students.
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Picture: OJ Koloti / Gallo Images