• NSFAS says that it will appeal a decision from the Western Cape High Court to reinstate fintech partners eZaga and others.
• The scheme says it will follow the findings of the Werksmans Report which alleges that the four companies were hired in a dodgy tender deal.
• Now unable to fire the companies, NSFAS must now find a way to navigate the chaos while students await on their stipends to survive.

The National Student Financial Aid Scheme (NSFAS) says that it will appeal a judgement made earlier this week in the Western Cape High Court to reinstate its four fintech partners after it sought to fire them.

On Tuesday, the Western Cape High Court found that NSFAS sought to terminate fintech partner eZaga Holdings without fair procedure, which the court found unconstitutional. The court ordered NSFAS to reinstate eZaga, and consequently, the other three partners NSFAS hired in 2023 to operate the digital direct payment system to students, namely Noracco Corporation, Tenet Technology and Coinvest Africa.

“NSFAS wishes to emphasise that this judgement is limited to the circumstances surrounding the actions taken by NSFAS post the Werksmans report, which recommended that the contract with eZaga and the others be terminated on the basis of procurement irregularities,” the scheme said in a statement.

The Werksmans report was issued to NSFAS after lawyers took a look at the events that led up to the hiring of the four companies and the tender procedure, which the report alleges was corrupt with eZaga and another fintech said to have been hired because of financial connections to then CEO of NSFAS Andile Nongogo.

NSFAS and the Special Investigating Unit (SIU) argued that, according to the report, the tender process in which the four companies were contracted – for an alleged R5 billion in 10 years – was illegal and their contracts should be terminated.

They also argued that the four companies should pay back legal fees and any profits they made during their tenure as direct payment partners.

The court saw otherwise, taking the side of eZaga and the other fintechs, who said that NSFAS did not follow the proper protocol when seeking to terminate contracts, and never allowing the four companies to even see the Werksmans Report in order to defend themselves and address allegations made therein.

“NSFAS stands by its position of implementing the recommendations made in the Werksmans Report and will appeal this judgement, in addition to [an application made] at the Special Tribunal,” it said.

The battle between the four companies and NSFAS in the courts will likely take months to reach its final conclusion, all the while the scheme must now somehow find a way to work with the fintechs as was ordered by the court.

Currently, NSFAS has instructed its over a million TVET and university beneficiaries to not use the black cards and the direct payment system/bank accounts it launched in July last year. Instead, students are once again receiving their tiny stipends – which they rely on for living expenses, educational material and tuition – from universities and colleges directly.

The scheme has found itself in a precarious place, where the new administration is trying to move forward from mistakes made in the past, like the chaotic and rushed launch of the direct payment system, and find a way to right all of its wrongs.

Only the four companies involved in the system, according to the court, are legally contracted and should be given law-compliant and fair procedures if they are to be terminated. NSFAS beneficiaries will be those who suffer the most from this house in chaos, with the scheme already wracked by maladministration and delays.

[Image – Photo by Wesley Tingey on Unsplash]