ActionSA to launch legal action against NSFAS regarding the direct payment allowance system

19 July 2023

Today, ActionSA has announced the legal measures we intend to take to challenge the awarding of the NSFAS Direct Payment of Allowances contract.

Specifically:

We are to take the matter to the High Court to declare the decision to outsource the disbursement of student allowance manifestly irrational in the first place.

We will also be asking the High Court to set aside the awarding of the contract itself as it is evident that the service provider/(s) are ill-equipped to do the job.

We firmly believe that, it is in the best interest of the taxpayer and students, we embark on this unprecedented legal action. Our main focus is to prevent NSFAS from becoming a feeding trough for unscrupulous tenderpreneurs whose greed undermines the well-being of students.

We have identified several key concerns that drive our challenge:

Firstly, beyond our intention to challenge the blatant dubious nature of the contact, we aim to address the immediate burden placed on students, who bear the cost of this fraud through excessive fee structures.

The 'NSFAS Bank Accounts' provided by four inexperienced service providers offer significantly more expensive solutions than those offered by four of the largest commercial banks in the country, all of whom were unsuccessful bidders.

Additionally, we have received multiple submissions through our NSFAS Complaints Database indicating that the transaction fees charged exceed what can be considered reasonable, in addition to the account fee already debited, adding to the financial strain on students.

Secondly, in recognising the impact on nearly 1 million students affected by this rushed and flawed migration to the new system, it is widely agreed that NSFAS neglected to conduct thorough consultations. This deprived key stakeholders of the opportunity to provide valuable inputs that could have aided in creating a clear migration plan. As a result, there is widespread confusion among students and university administrators.

In fact, The extent of consultations held is akin to an after-the-fact exercise, merely checking a box as evidenced by the last-minute information sessions held by NSFAS representatives just mere days before the implementation, where they failed to address even the most basic questions.

Thirdly, the functionality of the onboarding/registration portals has been disorganised and problematic. Students face difficulties in updating contact details and often do not receive the required One-Time Password (OTP) for account registration. Site crashes and rejections of Identity Documentation have also been reported, with one service provider acknowledging that this issue arose from NSFAS not providing correct student details. Delays in receiving allowances have been a significant issue, and students struggle to reach their respective Service Providers or NSFAS for assistance.

A submitted complaint included evidence of a desperate student spending a cumulative total of 2 hours and 43 minutes on the phone attempting to reach NSFAS for a response regarding overdue allowance disbursement.

The overall consequence of these concerns and challenges is that many students have not received their full allowances for more than 2 weeks due to a flawed onboarding/registration process, causing inconvenience and, more significantly, hardship for those who depend solely on timely access to their allowances. It is clear that neither NSFAS nor the 4 appointed companies have the capacity to implement the migration.

In light of these pressing issues, it is crucial to emphasise that our intervention is driven by the recognition that the politics of student protests necessitates a significant shift in methodology. We believe in adopting a more pragmatic, proactive, and sustainable course of action that ensures the effectiveness of our efforts while considering both the intended and unintended implications.

ActionSA upholds the principle that to truly serve the interests of our constituents, we must delve deep to unearth the root causes of problems, unveiling the hidden currents that fuel much of the frustration.

With regard to the specific issue at hand, it is this understanding that informs our commitment to challenging the glaring lapses within our Higher Education system, which have been a recurring source of unrest across institutions and have negatively impacted both access and the quality of teaching and learning.

Therefore, we are confident that the steps we have announced will serve as a framework for informed and methodical action, empowering our collective fight as young people. We are resolute in holding accountable those who compromise the interests of students and young people as a whole.

We want to make it clear that we are here, dedicated, and will not hesitate as ActionSA to challenge maladministration and corruption.

We would like to express our heartfelt gratitude to OUTA for shedding light on this matter. Their investigation has revealed the questionable awarding of the contract, and their unwavering commitment to drawing serious attention to this clear abuse of taxpayer funds serves as the foundation of our legal intervention.

Issued by Matthew George, ActionSA Western Cape Students Chairperson, 19 July 2023