In a rare concession, Higher Education and Training Minister Blade Nzimade has admitted to failures within the National Student Financial Aid Scheme (NSFAS), listing its inability to recover student loans, its inadequate financial resources, a failure of leadership and its inadequate skills as key shortcomings of the State bursary and student loan organisation. 

Formed in 2000, the NSFAS had been mandated to provide loans and bursaries to prospective tertiary students whose combined parental income equalled less than R122 000, enabling them to attend one of the country’s 25 public universities and 50 public Technical and Vocational Education and Training (TVET) colleges.

The scheme was also tasked with administering these loans and bursaries and recovering the loans from students once they were employed and earned in excess of R30 000 a year.

However, while the funds allocated to the NSFAS had increased from R441-million in 1999 to R9.5-billion in the 2015/16 financial year, Nzimande said the scheme continued to struggle with budgetary shortfall, telling the media in Parliament on Wednesday that this was the result of the combined mismanagement of funds as well as insufficient funding.

“Is it that R9.5-billion is simply not enough or is it the result of corruption? We think [it’s] both. We can’t tell now how widespread the corruption is, but there is lots of anecdotal evidence,” he revealed.

The Minister added that a recently commissioned forensic report was expected to outline the extent of corruption that was linked to the awarding of bursaries to those that did not qualify.

Despite “considerable” investment in financial aid, Nzimande said the current NSFAS allocations were inadequate to meet the needs of all students already in the system as well as those eligible for NSFAS loans and bursaries.

An additional R1-billion was required to support the scheme’s some 200 000 existing students.

Additional shortcomings of the NSFAS, Nzimande expounded, were inefficiencies in the administration of loans and bursaries at universities and TVET colleges, implementation challenges surrounding the new student-centric model being piloted at 11 institutions as well as the body’s inability to raise funds as per its mandate.

He further cited a failure of leadership to put in place an effective strategy to collect revenue owed, with loan recoveries from student debtors having decreased from R372.3-million in the 2013/14 financial year to R261.2-million in the 2014/15 financial year.

The NSFAS was further beleaguered by limited human resources and requisite expertise, and the apparent inability of both management and leadership to ensure that the entity met its mandate in terms of the NSFAS Act.

The organisation had also been unable to ensure that “adequate and skilled resources were employed”, which put its operations at “considerable” risk.

“[There has been a further] failure of leadership and management to effectively provide oversight and internally manage financial and performance reporting, and comply with relevant legislation as well as a lack of internal controls and policies to govern its operations, which opens up the entity to fraud.

“The NSFAS has [also] not developed supportive relationships with its stakeholders and donors, and measures to improve the administration of donor funding take significant time to bear fruit, to the detriment of eligible students,” Nzimande appraised.

The Minister on Wednesday, meanwhile, announced the appointment of FirstRand Bank and FirstRand Holdings CEO Sizwe Nxasana as NSFAS chairperson for a four-year term from August 1.

He believed Nxasana’s experience in the financial sector, as well as his background as a chartered accountant, made him the “ideal person” to lead the scheme, address its current challenges and deliver on its mandate. 

“I cannot think of a more appropriate person to lead the NSFAS board at this stage,” Nzimande noted.

He added that Nxasana would be expected to put in place the necessary measures that would enable the NSFAS to become a model public entity that complied fully with the provisions of its governing legislation, including the NSFAS Act.

A chartered accountant by profession, he offered experience in the telecommunications and financial services sectors, serving as the CEO of Telkom between 1998 and 2005.

In 1989, he founded the accounting firm Sizwe & Co and later joined forces to form South African black accountancy practice Nkonki Sizwe Ntsaluba.

He holds several honourary doctorates from South African universities and was recently awarded the Doctor of Accounting Science degree (HonorisCausa) by the Walter Sisulu University for his contribution to the growth, development and transformation of the accounting profession in South Africa.