• eZaga, Tenet Technology, Coinvest Africa, and Noracco are set to return as payment partners for NSFAS.
• eZaga won a court case that it launched against NSFAS and the SIU, with the Cape Town High Court ruling in its favour.
• The court found that the termination of the eZaga contract was unconstitutional.

Fintech eZaga is set to return as one of the National Student Financial Aid Scheme (NSFAS) payment providers after challenging the termination of its contract in a Cape Town High Court, and winning.

After an internal investigation found that eZaga, and the other three payment partners Noracco, Coinvest Africa, and Tenet Technology were allegedly hired through a dodgy tender process, NSFAS resolved to eliminate the contract it had with the four companies. A contract that OUTA believes is worth more than R5 billion over 10 years.

eZaga then sent an application to the High Court in the Western Cape in order to get this termination reversed, backed by the three other payment partners. They faced off against NSFAS and the corruption-busting agency the Special Investigation Unit (SIU).

NSFAS and the SIU wanted not only for eZaga and the others to be fired, but to also pay all legal fees and pay back to the government any profits they had made during the half a year they were disbursing monies to students.

The argument of the government institutions was that eZaga and the others were contracted illegally by former employees of NSFAS, namely fired ex-CEO Andile Nongogo and others.

eZaga’s argument was that NSFAS had ignored the legal consequences of the service level agreement it had with the four fintech companies in its attempt to fire them. NSFAS also failed to uphold certain rights that all contracted employees have.

“The decisions [to terminate the contracts] materially affect the rights and legitimate expectations of eZaga,” read court documents obtained by Hypertext.

“In violation of its fundamental rights to a fair procedure, NSFAS failed to provide eZaga with any notice of impugned decisions, or with an opportunity to make representations about the impugned decisions, before they were made.”

This means that NSFAS fired eZaga, or attempted to fire the company and others, without the proper process. The court found this action unconstitutional, and also found that the tender awarded by NSFAS appeared to comply with the requirements of section 217 of the Constitution.

“We are relieved with the court’s decision to reinstate eZaga as a trusted payment provider for universities and TVETs. This judgement is a testament to our commitment to integrity and excellence. We look forward to continuing our work with educational institutions, providing solutions that enhance financial inclusion and streamline payment processes,” says Saud Ally, CEO of eZaga, in a statement shared with Hypertext.

With the payment partners set to return to work for NSFAS, and again begin disbursing funds to students, the problem is now that NSFAS has once again to establish the direct payment system with students across South African universities.

For the last few months, universities and TVET colleges were paying beneficiaries directly, now this system will return to the previous system. Students will now be forced to change their method of receiving their monthly stipends again, with NSFAS and the payment partners only having half a month to iron out all the processes.

Students should expect delays in August.