The National Student Financial Aid Scheme (NSFAS) and the Special Investigating Unit (SIU) have welcomed a Western Cape High Court ruling declaring the student allowance payment tender involving four service providers unlawful, invalid and unconstitutional.
In a joint statement, NSFAS and the SIU described the judgment as a significant milestone in efforts to strengthen governance, transparency and accountability in the administration of student financial aid funds.
The ruling, handed down on 12 June, found that the procurement process which resulted in service-level agreements between NSFAS and eZaga Holdings, Coinvest Africa, Noracco Corporation and Tenet Technology was unconstitutional, unlawful and invalid.
The judgment follows years of scrutiny surrounding the appointment of fintech companies to distribute NSFAS allowances to students.
In 2023, the NSFAS board moved to terminate its contracts with the service providers after an investigation by Werkmans Attorneys uncovered irregularities in the tender process. The investigation also raised concerns about an alleged relationship between former NSFAS Chief Executive Officer Andile Nongogo and two of the companies, Coinvest Africa and eZaga Holdings.
According to the court, the procurement process was marred by several irregularities, including the improper cancellation of tenders, irregular drafting and approval of bid documents, non-compliance with mandatory procurement requirements and the absence of critical internal controls.
NSFAS and the SIU said the ruling validates their efforts to identify and address governance failures within the student funding scheme.
“The judgment not only vindicates our efforts in identifying and addressing significant governance failures but also reinforces our resolve to root out maladministration and safeguard the integrity of public procurement processes,” the entities said in a joint statement.
However, the court found no evidence that any of the service providers were involved in corruption, maladministration or other wrongdoing.
As a result, the affected companies may submit claims for reasonable expenses and profits incurred while fulfilling their obligations under the contracts before they were declared invalid. Any claims submitted will undergo an independent verification process before compensation is considered.
NSFAS said it would engage constructively with the service providers to implement the compensation process in accordance with the court order.
The student funding scheme also sought to reassure students, parents and the public that it remains committed to restoring confidence in the administration of financial aid and ensuring that public funds are managed with integrity, accountability and transparency.
The ruling represents one of the most significant developments in the ongoing efforts to reform NSFAS and improve oversight of the billions of rand allocated annually to support students across South Africa’s higher education sector.