Nsfas financial chaos drives students to sugar daddies and crime – MP

The National Student Financial Aid Scheme (Nsfas) is responsible for students turning to sugar daddies and resorting to crime when their bursary payments fail, according to Tebogo Letsie, chairperson of the Portfolio Committee on Higher Education.

This alarming assertion comes amid revelations of massive financial mismanagement within the student funding organisation.

Nsfas mounting irregular expenditure

The Auditor-General of South Africa (Agsa) revealed that Nsfas has incurred nearly R60 billion in irregular expenditure between 2019/20 and 2022/23, a staggering figure that underscores deep-rooted institutional dysfunction.

Thomas Mamogwe, Agsa’s Western Cape deputy business unit leader, noted that most of this irregular spending was related to student disbursements and direct payment tenders.

Mamogwe was presenting in a parliamentary briefing before the Portfolio Committee on Higher Education and Training during Nsfas’ presentation of its 2022/23 annual report.

The report was submitted a year late, and it has also not submitted its 2023/24 financial statements.

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Nsfas beneficiaries lives hanging in the balance

Letsie pulled no punches in describing the human cost of Nsfas’s failures.

“Students’ lives were destroyed,” he emphasised.

He then starkly outlined the desperate choices students face when financial support fails: “When I opened the meeting I said there were students who would tell you if they don’t have money coming from Nsfas that month, or that extra day they are left with no choice but to enter into wrong things.

“Some of them are dating older men, some of them committing crime. Kids’ lives are destroyed here, and it’s as if you guys don’t understand it.”

Watch briefing below:

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Financial instability and systemic challenges

The financial aid scheme’s struggles are multifaceted.

In the 2021/22 financial year, Nsfas reported R1.9 billion in irregular expenditure, which marginally improved to R136 million in 2022/23.

Nsfas officials admitted that the institution had inefficient expertise to handle its responsibilities and demands.

Its administrator Freeman Nomvalo attributed some difficulties to obsolete technology systems that leave students in a perpetual state of uncertainty.

“Students get to be in limbo because you are funded today, then tomorrow you are not funded,” Nomvalo admitted while highlighting ongoing efforts to stabilise application and appeal processes.

He added that the scheme was working on IT systems that would enable Nsfas to conduct internal communications within its own departments. Moreover, he said that this would be later improved to make it easier to engage with external institutions as well.

The organisation achieved only seven out of 17 performance targets, with ongoing challenges in leadership stability and critical position vacancies.

Nomvalo candidly admitted that Nsfas lacks the necessary expertise to manage its reporting demands effectively.

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Potential remedy to Nsfas governance crisis

Higher Education and Training Minister Dr Nobuhle Pamela Nkabane also acknowledged the significant challenges.

“I’ve taken note of all the issues, and I want to confirm that we did receive a letter from the portfolio committee this morning tabling all the issues that involve governance, administration as well as management of this entity,” said Nkabane.

Despite allocating R160 million in the 2021/22 financial year to upgrade Nsfas’s systems, she expressed frustration at the continued performance issues.

Nkabane outlined potential steps to address the governance crisis, including appointing an independent assessor, conducting a forensic investigation, and referring the matter to the Special Investigating Unit.

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Future accountability

Letsie indicated that the portfolio committee will meet with the SIU to discuss investigations into the higher education and Nsfas sector.

He expressed frustration that despite initiating these investigations in 2021, they have yet to yield concrete results.

He emphasised that the financial statements presented by Agsa were horrible.

“This one is the worst, yes you have presented financial statements but they are so bad, bad, bad that you can’t go lower than this,” he said.

The chairperson added that it was probably a good thing that the former Nsfas CEO, Andile Ngongo, was contesting his removal.

He stated that someone had to be held accountable for the institution’s bad financial audits, which Nkabane said were not going to be any better in the 2023/24 financial year.

Letsie said Nsfas ought to follow up on all its irregular appointments to check whether they had material irregularities that Mamogwe spoke about in his presentation so that the committee could pursue those involved.

He also said there were public officials who view the public service as a joke.

“I’m honestly tired of us using soft gloves to pursue these cases,” Letsie declared, emphasising the urgent need for accountability.

Letsie further asserted his suspicion that there must have been material irregularity in the statements presented citing over R2 billion on irregular expenditure.

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