The launch of the National Student Financial Aid Scheme (NSFAS) bank accounts, which seek to remove third parties and have the scheme pay student beneficiaries their stipends directly through fintech enablers, has been met with fierce resistance.

Between pending lawsuits from the likes of Action SA, and even threats of violence from university SRCs, the project to revamp the way nearly a million underprivileged students receive funding has been incendiary online, in the media and on campus.

Despite this, Saud Ally, Group CEO of eZaga, says that NSFAS has done a phenomenal job thus far. eZaga is one of the four fintech partners that NSFAS hired to facilitate the new student bank accounts through digital banking infrastructure.

These bank accounts are supposedly a way to modernise the scheme. They allow students to access digital banking, use tap to pay, purchase things online and receive SMS notifications.

Students are forced to adopt the new accounts as they quickly became the only means for them to receive stipends from NSFAS.

eZaga CEO: reaction against NSFAS bank accounts ‘propaganda’

“The adaptation of the students on the ground has been phenomenal,” said Ally of the accounts that were rolled out in earnest on 1st July 2023. He told us in an interview that eZaga has managed to pay out full stipends to 92 percent of the over 180 000 NSFAS bank accounts it manages.

“And then you get on SABC News and you get this article saying ‘I did not receive funds.’ Please explain why? What’s the problem?”

“And you figure out that it is not a problem,” he says. “It is a propaganda.”

Ally believes that the resistance to the entire project stems from the cutting out of the “middle men” that were previously facilitating the stipend payments for NSFAS. That a smear campaign has been raised against NSFAS and its banking partners, including Tenet Technologies, Narocco, Coinvest, and eZaga.

One which originates at the universities.

“Direct payments were really tough in a sense because we had massive opposition around us. And operationally that was hitting us quite hard. You get various student bodies, and you get various vice-chancellors, you get the universities all opposing this platform because you’re cutting them out. That’s the long story short,” he explained.

“Now because of that you get all these negative media effects and you wonder why. Where is it coming from?”

‘The universities and SRCs are angry they have been cut out’

Reactions on campus have been extremely negative towards the new bank accounts, and the fintechs that are maintaining them.

As the bank accounts were rolled out, SRCs like at the University of Johannesburg went as far as outright warning the agents of Narocco that they would be met with “tyranny” if they came to campus.

Ally says that his team at eZaga met with similar issues. His company supports students accounts at the Durban University of Technology (DUT), the Tshwane University of Technology (TUT), the Universities of Free State, Limpopo, Zululand, and the Vaal University of Technology.

“They never allowed us on campuses,” he said, telling us of a particular struggle they faced at TUT.

“TUT came back to us and said you guys can issue cards, and the SRC members walked in and disrupted the whole process.”

“And you think to yourself what are we doing here? Are we doing a disservice? Why are we heading towards this direction?”

Allegations against the NSFAS bank accounts and the scheme’s fintech partners

Ally was talking to us about allegations being levied against NSFAS and partners, particularly from university SRCs that the bank account project was rushed leaving thousands of students in the lurch, and that changes were not communicated in time.

“We have been in this engagement with this project for the last six months. Talking up and down. Universities knew about it for the last six months. The vice-chancellors, the SRCs,” he insists.

“eZaga has been sending communications to these students on a constant basis. How to utilise the account. We tried to do as much market awareness, and as fast as possible as we could.”

This goes directly against comments from the EFF student council at the University of Cape Town, who claimed earlier in July that the entire system was imposed, “with no thorough engagement with the student body, leadership, and the institution altogether to reach an agreement.”

In an official communication, UJ said that it was only notified in March about the changes to the bank accounts. It is Narocco, however, not eZaga that manages accounts for UJ students.

“We call upon the student populous to reject this imposed form of tenderpreneurship by NSFAS,” said the EFF student leadership, adding on to already mounting allegations of corruption, harped on further by political parties like Action SA.

Another allegation is that the new bank accounts seemingly are just not working. That students are not receiving their funds.

A Sowetan article called out eZaga directly, claiming that a student from a college in Soweto – Elise Manganye – lost her stipend from NSFAS, some R21 000, and blamed the eZaga app.

“There have been several complaints about the app’s functionality and suspicious withdrawals from students’ accounts. Some students have even taken their frustrations to social media,” the Sowetan wrote.

It came out later in the month that it was Manganye’s friends who stole the money from her eZaga bank account.

“When I got to the station, they showed me the tape and I realised that the people who withdrew my money were my friends. In the footage, you can see them withdrawing the money at a Nedbank ATM,” she told the Sowetan in a follow-up.

The bank account partners are licensed

Ally, who says his company is focused on providing fintech solutions to “South Africa’s unbanked”, came across as frustrated by the entire rollout. Almost incredulous that the entire process has occurred in this manner.

He explained that eZaga applied for the tender, which fit his company’s capabilities “perfectly”. NSFAS was originally looking for fintech partners that could “ring-fence” student bank accounts.

He said that the scheme took on eZaga because it could provide “elements of technology and stacks relating to the students and offering value-added products. And ring-fencing the bank accounts, specifically for student enablement. For example, if there is a card swipe transaction at a liquor store, we have the capacity or capability to decline that transaction.”

He said that the four partners handling the bank accounts are all licensed, despite claims to the contrary, specifically from organisations such as OUTA.

“We have a license underneath Access Bank, an alliance partnership agreement which allows us to offer solutions and banking services to our customers,” Ally claims.

“All the banking partners have licenses. Two partners are licensed with Access Bank and two partners with Nedbank. They also have corporate licenses underneath those platforms. All partners on this platform are fully compliant.”

He said the reason some students did not receive some of their stipends immediately as the rollout began was simply that the technology involved was entirely novel, and because NSFAS has over 900 000 beneficiaries who all had to individually sign up, not because the fintech partners were not capable or could not properly facilitate the payouts.

“Because of these hiccups, and because of the late registrations of students and universities, we could not pay the full file in June. Students were saying ‘Oh, we aren’t getting paid.’ It wasn’t that. It was a system issue related to the process.”

“Things have been moving quite scalable now,” Ally explains. “By the end of July, we should be in the green.” Practically, this means that at least eZaga’s university students will all receive their stipends, or at least that is Ally’s belief.

The NSFAS accounts fees issue

One of the largest complaints about the new bank account are the exceedingly high banking fees that NSFAS beneficiaries will have to pay. OUTA in particular released a comparison of the fees associated with NSFAS accounts with other student bank accounts from the likes of Standard Bank, Nedbank, etc.

In our own analysis using the OUTA fee structure, we came to the conclusion that beneficiaries would have to pay R29 every month to keep the account open, and then would have to pay for most transactions.

For example, every time beneficiaries draw money they will have to pay R10 plus a further R2 for every R100 they draw. This means that if a student draws R300 they will have to pay the banking partner R16.

Against the effective R41 per day wage that NSFAS beneficiaries receive for living expenses, these costs add up.

Ally says that the fees OUTA published are in fact incorrect. They stem from outdated figures from discussions that the partners were having with NSFAS and that the current fees are much lower.

“We also went through multiple hoops in terms of the fee structure. When we went live with the TVETs we realised that the bundle costs were high. We understood that. We went back to NSFAS and we wanted to negotiate the fees,” he tells us.

“The fees have changed drastically. We have approved [the monthly payment] down to R12.”

However, the setting of the fees themselves is on the shoulders of NSFAS and not the banking partners. eZaga and the others gave NSFAS their expenses and NSFAS decided on the fee structure in order to maintain the partners, he explains.

“We are a service provider on behalf of NSFAS. NSFAS is our client. eZaga treats NSFAS as our clients, not necessarily the students. NSFAS can decide tomorrow to terminate eZaga,” Ally says, adding that above everything, students were already paying banking fees even before the new accounts were rolled out.

Rocking the ship

Previous third-party facilitator Capitec was charging students R55 per month, he says. Another previous partner, Tyme Bank, was also charging students with universities acting as intermediates.

“NSFAS paid the university. The university paid a third-party provider. The third-party provider allowed the students to transfer the funds into Tyme Bank. Tyme Bank or any other bank was charging the fees. NSFAS still pays the full stipend. All that NSFAS is saying with the bank accounts is that we want to give it directly to a service provider that we are in control of.”

Ally alludes to the fact that universities now being cut out removes any kickbacks they were receiving from the process, while NSFAS has created the new bank accounts to reduce fraudulent activities associated with the scheme, which deals billions of Rands every year to students.

Recent news sees the Public Protector begin investigating the tender process between NSFAS and the four banking partners. One of the partners in particular Tenet Technologies is being taken to the Western Cape High Court over alleged copyright infringement after it came out that its name “Tenet” was already owned by another firm.

The scheme itself says that the entire debacle falls on its responsibility and that it is trying to do good for its beneficiaries. The entire point of the bank accounts was to make the lives of its students easier, it said.

“The programme has taken a hit,” Ally says. “I think there’s a massive propaganda against this platform. I think [the platform] good thing. I’m an ex-Wits student. I also know how it feels to be a student. I also come from an underprivileged environment. I’m not from Dubai, I don’t have a UAE company.”

As the project moves into its second official month of August, the NSFAS bank accounts are in a precarious place. While organisations like the DA each try to throw their names into an ever-expanding cistern of he-said-she-said the future and livelihoods of nearly 1 million young people hang in the balance.