Nsfas CEO ‘a law unto himself who should be fired’
Report reveals ‘chronic state of dysfunctionality’ in student funding scheme
● National Student Financial Aid Scheme (Nsfas) CEO Andile Nongogo was “a law unto himself” and should be axed “for breach of trust”, according to a damning report into a controversial tender for student allowances.
A number of senior staff at Nsfas will also face the music after a recommendation that acting CEO Masile Ramorwesi and members of two bid committees involved in the tender be subjected to disciplinary hearings.
On Wednesday, Nsfas chair Ernest Khosa set out the preliminary findings of a probe by law firm Werksmans and adv Tembeka Ngcukaitobi SC into the irregular award of a contract for the direct payment of allowances to students.
The scheme manages a budget of R47bn meant to fund those who cannot afford tertiary education.
While the full report has not been made public, the Sunday Times has seen it. It states that Ramorwesi, who is the Nsfas CFO, failed to comply with the scheme's supply chain management (SCM) policy in relation to his duties as chair of the bid evaluation committee (BEC).
Other BEC members should also be hauled before disciplinary hearings “for their failure and deliberate neglect of their duty to conduct bid evaluations as prescribed in the 2021 SCM policy”.
Disciplinary procedures were also recommended for all bid adjudication committee (BAC) members “for approving the BEC’s recommendation despite [them] clearly raising concerns about the recommendation, such as the exorbitant student fees charged by the bidders”.
There were 10 members involved in the contract — seven from the BEC and three from the BAC. It is unclear how many of these members are still employed at Nsfas.
The contract was awarded to four service providers: eZaga Holdings, Tenet Technology, Norraco Corporation and Coinvest Africa.
The Nsfas board has given Nongogo, who is on leave, until tomorrow to provide reasons why his contract should not be terminated.
However, the Nsfas board did not escape criticism, with the report saying it was of “further concern” that it did not take issue with Nongogo’s recommendation when it would have led to such a high cost for students.
The report recommends that the contracts with the four service providers be “cancelled on notice” owing to the irregularities in their appointment.
The tender was advertised three times. The first tender was cancelled owing to “non-responsiveness”.
The report details how Nongogo involved himself in the tender process from start to finish — first by cancelling the second tender, which the BEC had recommended be awarded to First National Bank.
Nongogo said the bid was “exclusionary” and should be cancelled, but the bidders were told the reason for cancelling the bid was that there was no longer a need for the “goods or services” specified. However, a bid for the same services was advertised for a third time last year, with the mandatory requirements being drastically reduced from 17 to five.
A crucial one that fell off the list was that the successful bidder have a banking licence.
In their conclusion, Werksmans and Ngcukaitobi say: “There was no need to amend the bid specification. Mr Nongogo recklessly amended the specification by relaxing the mandatory requirements to ensure that the tender was awarded to the four fintech service providers.
“While the appointment of fintechs might look harmless, there is currently no regulation of fintechs in South Africa. Considering the amount of money these service providers were tasked to handle, it was negligent, to say the least, to appoint service providers who are all fintechs and who all have a turnover of R10m or less. It is inexplicable why an entity whose regulation is fluid or uncertain would be preferred to companies that are established and are effectively regulated in South Africa.”
There was no feasibility study conducted before the project was implemented, which was “a critical part of the project preparation”, the report said. A feasibility study would have enabled Nsfas to “make an informed decision” on whether the project was practicable.
Nongogo also participated in the bid evaluation process against procurement policy, the report finds. Though he was meant to be an observer, he was actively involved in evaluating the bids, putting questions to bidders.
Then there was the questionable involvement of Dr George Chirwa, appointed as an independent expert to the BEC to provide technical advice and guidance. His letter of appointment said he was an employee of MNB Chartered Accountants.
“He was expected to be independent and not to have any association with the bidders. We do not know why Dr Chirwa was preferred over any other expert, and what made him stand out as an expert,” the report says.
The appointment of Chirwa to the BEC was “inherently wrong”, as it was in breach of SCM policy, the report says.
“Having considered Dr Chirwa’s involvement in the BEC, it seems most likely that he was strategically placed [there] in order to influence the BEC members to prefer fintech companies and resultantly appoint them. The unexplained selection by Mr Nongogo (who attempted to plead innocence to us) simply proves that there is a probable case of collusion between them to achieve their mutually desired ends.”
The report said Nsfas is “chronically mismanaged”. “There is a general climate of fear and bullying, which means that employees take unreasonable and unlawful instructions without any regard to established rules. The organisation appears to be in a chronic state of dysfunctionality, which must be addressed urgently to restore proper governance,” the report recommends.
Professor Kedibone Phago, director of the school of government studies at North-West University, said: “The Nsfas board needs to be reminded that the failure of Nsfas will have catastrophic consequences on the entire higher education sector.
“This is because Nsfas affects most universities’ cash flow directly and immediately, as a large proportion of the student population is Nsfas-funded.”
Professor Daniel Meyer from the college of business and economics at the University of Johannesburg said that since former president Jacob Zuma’s announcement on free higher education in December 2017 Nsfas had “deteriorated in terms of governance”.
“The poor governance is affecting thousands of students when payments are delayed or not paid. Nsfas should be restructured because good governance is not negotiable.”
Ryan Passmore, CEO of Tenet Technology, said they would challenge any cancellation of their contract “that is unlawful and without cause”. He said they had not seen the report. eZaga said it strongly denied any association with Nongogo before the tender was awarded and was seeking legal advice.
Commenting on the report’s recommendations that Ramorwesi and members of the BEC and BAC be subjected to disciplinary hearings, Nsfas spokesperson Slumezi Skosana said the board had extended the scope of the lawyers to advise the scheme on how the hearings should be conducted.
He said they would engage with the four service providers soon on the implications of the recommendations. “In these engagements, the interests of the students and applicable policies will be taken into account.”
Skosana said Nongogo had not yet submitted to Nsfas any reasons why his contract should not be terminated.