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DA calls on Minister Nzimande to suspend NSFAS contracts pending SIU outcomes

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Lerato Mbhiza

DA MP and Shadow Minister for Higher Education Chantel King on Monday called for the suspension of the National Student Financial Aid Scheme (NSFAS) contracts of the four companies involved in the direct payment tender, pending the SIU report.

This comes after a “damning report” from the Organisation Undoing Tax Abuse (OUTA) on the NSFAS direct payment tender which alleged a relationship between NSFAS CEO Andile Nongogo and Coinvest Africa.

“In light of the OUTA investigative report, Minister Nzimande must instruct the NSFAS board to temporarily put aside the contracts of Coinvest Africa, Tenet Technology, Ezaga Holdings and Norraco Corporation until such time the SIU and the Public Protector investigations are completed,” said King.

Minister Nzimande’s mandate as the accounting authority of the Higher Education and Training sector is to ensure that no student is left behind or financially deprived.

According to the report the third tender notice was glaringly changed from the previous two bids to exclude requirements for the tenderers to be a financial service provider, and stated that only a sponsored bank is needed to tender. This opened up the door for companies with no banking or fintech experience to apply.

“More than 1 million students receive funding from NSFAS, it therefore only makes sense that well established service providers like ABSA Bank, Nedbank, Standard Bank or FirstRand Bank, who applied should have been awarded the tender. This would have lowered the costs to students. A clear comparison is highlighted in the OUTA report,” the DA added in a statement.

The OUTA report also revealed that Tenet Technology and Noracco Corporation are not registered for VAT at SARS. Access Bank, the sponsor bank, is not listed as an official bank with whom the state institutions can transact.

Sub-contractors as stipulated in the contract are not mentioned by any of the four service providers.

It said, the fee structure was discussed well in advance and these were deliberately not communicated to students, institutions and the higher education parliamentary portfolio committee.

“The professional indemnity of R20 million is inadequate considering these service providers will rake in R1 billion per month from service fees. NSFAS direct payment scheme will cost students R3 billion for the remainder of the service provider’s contract period.

“The four service providers’ contracts not only relate to the direct payment scheme but the scope was extended to deal with student accommodation accreditation services – the tender on this need to be questioned,” the OUTA report revealed.

The party said the Minister must exercise his duties to take students’ concerns to heart and call for the immediate suspension of these contracts.

King also called on SARS to investigate possible tax evasion of the two service providers, adding that the Minister of Finance must clarify if Access Bank can conduct business with state institutions.

“The Financial Sector Conduct Authority to give clarity on the position of these service providers, their alliances and services provided to them, as recommended in the OUTA report,” the DA added.

“We will not allow funds meant to better the economic prospects of the poor and the working class be squandered, leaving many to be erroneously defunded in the middle of an academic year,” it added.

INSIDE EDUCATION 

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