• eZaga says it is still paying students despite its contract with NSFAS being supposedly terminated last year.
• NSFAS sends funds directly to its fintech partners to disburse digitally to its million-plus student beneficiaries.
• This means that either the contract with eZaga is still operating despite official comments, or the partnership is continuing without a contract.

*UPDATE:

It turns out that NSFAS will only cancel the contracts of the four fintech firms pending legal review, which has yet to happen. In fact, eZaga has reached out to us to say that they have yet to even see any of the findings of the investigation.

NSFAS has said as of earlier this month that they will continue having the four controversial fintech companies disburse funds to students throughout the academic year as to minimise interruptions to students, at least until the legal process has been completed. There is no timeline set as of yet.

Original article follows:

Amid what it deems a “payments crisis” facing NSFAS, eZaga Holdings, one of the four fintechs contracted to digitally disburse funds to the scheme’s students, claims it is still paying monthly allowances, despite the fact that its contract with NSFAS has been terminated.

“The past year presented significant challenges for many universities and students due to the controversial cancellation of contracts between the National Student Financial Aid Scheme (NSFAS) and four fintech companies appointed to distribute monthly student allowances,” shared eZaga in an emailed statement to Hypertext.

In October last year, the NSFAS Board of Directors declared that fintech firms eZaga, Narocco, Tenet Technologies and Coinvest would be fired after just over four months of sending out funds to students for the NSFAS direct payment system launched in earnest in July last year.

This followed an official investigation launched by the Board which found a conflict of interest between the companies and then-CEO Andile Nongogo. It was alleged that Nongogo had violated the public procurement process when he onboarded the four companies, since he was financially implicated in two of the fintech firms, namely eZaga and Coinvest.

Nongogo was soon fired after this was revealed.

In the statement, eZaga said that it is committed to continue assisting NSFAS students by paying their monthly grants on time. The way the direct payment system works is that NSFAS directly sends funds to the four fintech firms, which then disburse the funds to the students through their respective digital platforms.

“One major problem with the previous NSFAS disbursement system, before appointing direct payment providers, was its unreliability and lack of payment security measure in place, often leading to delayed or incorrect payments being made,” the fintech explains, which led NSFAS to introduce the direct payment system to limit inaccuracies and the potential for fraud. In general, the implementation of the new system was shoddy, to say the least.

The Board found that the scheme did not even conduct a feasibility study before launching the new system, which controlled over R5 billion in government funds last year.

eZaga receives the grant funding directly from NSFAS, which means that if it is still paying grants on time then the contract is either still valid despite official comments from the scheme, or the two companies are working together without a contract.

Both of these are concerning possibilities, especially when billions of taxpayer Rands and the education of over a million young people are on the line. We have reached out to eZaga for clarification.

“Much uncertainty still surrounds the cancellation of the contracts,” eZaga says, which may indicate a third option – that NSFAS has yet to actually cancel the contracts at all even after months have passed since the investigation and the new academic year has started.

As for eZaga, it says that much of the initial backlash against it from students has dissipated through engaging with respective SRCs at universities. Last year Saud Ally, the eZaga CEO told Hypertext that the company’s teams were being threatened and sometimes barred from entering certain campuses by students irrate at the abrupt system changes.

Applications for funding from NSFAS are currently closed as the beginning of the academic year has arrived. However certain students can still apply for a loan from the scheme.