NSFAS Contests High Court's Ruling Favoring eZaga in Payment Contract Dispute

The saga involving the National Student Financial Aid Scheme (NSFAS) entered a new chapter as they disclosed plans to appeal a recent Western Cape High Court decision that favored eZaga's contract to manage student disbursements. NSFAS initially sought to sever its ties with the contracted firm, a move disrupted by the court’s latest judgement.

Notably, the ruling permitted eZaga, Coinvest Africa, Tenet Technology, and Norraco Corporation to retain their responsibilities for handling direct deposits to university and TVET college students — a five-year arrangement that began in July 2022.

NSFAS spokesperson Ishmael Mnisi expressed that the court's judgement, delivered on 15 July, left key issues unaddressed, specifically the core legality of the tender process which underpins the partnership with eZaga. He remarked that the findings did not scrutinize the tender's validity but rather sheltered eZaga's contractual dealings.

The decision to cancel the contract with eZaga was a repercussion of a meticulous investigation into the contract's legitimacy. A joint effort by Werksmans Attorneys and advocate Tembeka Ngcukaitobi, SC, led to the revelation of irregularities in the contract awarding procedure, notably tainted by the involvement of former NSFAS CEO Andile Nongogo, who was implicated for his ties with Coinvest Africa.

Discontent arose as eZaga impeded NSFAS’s plan to halt the fund disbursement through these companies, insisting that the contractual obligations remained legally binding, a stance endorsed by the court. Moreover, revelations of mismanaged funds emerged when the Special Investigating Unit (SIU) found that over 40,000 disqualified students had wrongfully obtained approximately R5 billion in NSFAS aid.

In the wake of these findings, NSFAS took action on 24 April, distancing themselves from the use of the services offered by eZaga and its cohorts. The matter escalated in late May when both the SIU and NSFAS petitioned the Special Tribunal to intercede and annul the agreements with the implicated companies.

The resolution of this legal contention is pending as NSFAS readies to lodge their appeal, which will significantly impact the course of student financial assistance in South Africa. Mismanagement claims and the fight for transparency in tender processes weave a complex tapestry of accountability challenges at NSFAS, which the impending appeal will further unfold.