NSFAS Accused Of Irregular Spending

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While NSFAS gears up to fund all qualifying students for the current academic year, the bursary scheme has come under scrutiny over the spending of allocated funds.


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The Organisation Undoing Tax Abuse (OUTA) has accused the National Student Financial Aid Scheme (NSFAS) of irregular spending, following an investigation into the bursary scheme’s recent tender allocations. 

In a statement issued on Thursday last week, the organisation claimed that the bursary scheme’s hiring of a service provider to provide bank cards to NSFAS beneficiaries was irregular. This was primarily because the company that was awarded the tender did not have the required banking licence according to OUTA. 

We believe these tender awards are irregular. We question whether awards such as these are unnecessarily draining NSFAS resources and contributing to its cuts to student subsidies.

The organisation also accused the bursary scheme of renting out expensive office space and of reducing the subsidies for student accommodation. OUTA looked into the three tenders listed below when conducting their investigation.

  • SCMN022/2021: A five-year contract for the direct payment of NSFAS allowances to students, which OUTA believes could be worth at least R1.5 billion;
  • SCMN004/2021: A three-month contract to supply a digital tool to calculate student allowances; and
  • SCMN015/2021: The leasing of the NSFAS head office for two years, renewable for a further three years.

According to OUTA's portfolio manager Rudie Heyneke, the company questioned the value of these contracts, especially in light of the Nsfas's reduction in student housing subsidies.

“We question whether contracts such as these are not unnecessarily draining Nsfas' resources and contributing to its cuts to student subsidies. OUTA’s research shows that most of the commercial banks in South Africa offer accounts structured for students with very low banking fees and costs and substantially more value-added services than the approved service providers,"  said Heyneke

He added that although all the banks now have these incentives in place, Nsfas acknowledges that they still need to engage with businesses to provide value for students with their Nsfas bank cards.

In a letter addressed to the Special Investigating Unit and the Hawks, United Democratic Movement UDM leader, Bantu Holomisa also accused the scheme of spending R2 million a month to rent office space despite not occupying the premises between December 2021 and November 2022 which amounted to a total of R20 million. Before this, NSFAS is reported to have been paying R500 000 rent

In response, the bursary scheme has stated that the allegations are unfounded and that the relocation of its offices was necessary to accommodate the scheme’s growing capacity. NSFAS Spokesperson Slumezi Skosana further stated that the building was occupied NSAFS began paying rent for it.

“What happened is that we did move from our premises and Wyberg to the city centre because you must remember we are a service-oriented organisation and we had to be closer to our stakeholders so that we can be accessible. So that was the main reasoning behind that” Skosana stated.

The Special Investigating Unit (SIU) has since August 2022 been investigating NSFAS, and OUTA and is of the view that their current findings relating to the above-mentioned tenders should form part of the SIU investigation.

The Skills Portal made efforts to contact NSFAS regarding these allegations but is yet to receive a response.   

 

Suggested Article:

Nsfas allowances helps students to access allowances

For over two decades, the National Student Financial Aid Scheme has been providing financial aid to students in public universities and Technical Vocational Education and Training Colleges. The government bursary scheme has introduced a new way of paying out allowances to its bursary recipients.

 

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