The board of National Student Financial Aid Scheme (NSFAS) has given its suspended CEO Andile Nongogo until Monday to explain why he should not be fired.
This after an investigation found widespread irregularities in the appointment of four service providers to disburse allowances to students at South Africa’s 26 universities and 50 TVET (Techical and Vocational Education and Training) colleges.
In addition, the four fintech companies have been advised that their contracts will be terminated.
Fintech companies Ezaga, Coinvest, Norocco and Tenet Technology have been appointed to disburse billions of rands in allowances to 1.1-million NSFAS beneficiaries a year for the first five years.
The investigation, conducted by Werksmans Attorneys and advocate Tembeka Ngcukaitobi, found that Nongogo has a direct relationship with two of the companies.
NSFAS chair Ernest Khosa said the investigation found that Nongogo actively participated in the presentation to the bid evaluation committee of proposals by service providers.
“This is a material violation of public procurement processes of NSFAS, which he was employed to safeguard and uphold,” said Khosa.
“Furthermore, the report reveals that there seems to have been a conflict of interest in the appointment of these four fintech service providers.
“There is a possible relationship between Mr Nongogo and Coinvest and eZaga Holdings.”
Another concern raised in the report is the inability of NSFAS to conduct thorough due diligence on the service providers.
Khosa said in addition to the allegations against Nongogo and the conflict of interest in the appointment of the service providers, the probe also looked at the NSFAS supply chain policies and procedures, as well as the legal compliance of the procurement system.
The report also found that there was no feasibility study before the current implementation of the direct payment system, particularly the justification of the appointment of the four service providers.
“There was no reason furnished to the investigators why the feasibility study was not conducted, which is a critical part of the project preparation for the implementation of the project,” he said.
“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.”
The report indicates that there was an amendment to the bid specification to include fintech companies, which resulted in drastic changes in the mandatory requirements of the original bid.
“These changes would have required deeper analysis to be conducted, amongst others, on the need to appoint four fintech companies and their value-added services, the service direct costs to students and the details of the cancellation of the 2020 tender, which was a precursor to this bid under investigation.”
Despite these damning allegations, Khosa said NSFAS is still committed to its student-centric model of direct payment.
He said the board is committed to implementing the recommendations of the report, which include axing Nongogo.
“The board will ensure that the termination [of the contracts of service providers] does not affect the students negatively … and will take into account both the law and the implications to service delivery,” he said.
He added that the board will also subject all staff members associated with wrongdoing to a disciplinary inquiry.
“[The board will also] review the supply chain management policy in line with the National Treasury regulations and policies, including the Public Finance Management Act.”
All the decisions will be implemented progressively from Wednesday.
