The four companies contracted by the National Student Financial Aid Scheme (NSFAS) to pay allowances directly into students’ bank accounts are set to rake in millions of rands from the deal.
Fintech companies Tenet Technology, eZaga, Norraco Corporation and Coinvest Africa were awarded five-year renewable contracts to pay allowances to NSFAS beneficiaries at South Africa's 26 public universities and 50 Technical Vocational Education and Training (Tvet) colleges.
NSFAS, which is funded by the department of higher education, provides bursaries to students from poor and working class families.
According to calculations by the Sunday Times based just on the 360,771 university students who have so far been “on-boarded” onto the new payment system by NSFAS's banking partners, the four companies will score R4.3m a month through a R12 banking fee deduction from each student’s R1,650 allowance before it is paid out.
This deduction excludes other charges such as ATM withdrawals, which will cost students R10 plus R2.50 for every R100 withdrawn.
A card replacement fee of R50 is levied for lost cards while R60 is levied for delivering it.
The four companies also charge NSFAS a fee for “on-boarding” each student but the scheme refused to divulge the cost, stating it was a contractual matter between it and the partners.
NSFAS, which has come under fire from students who this week marched to the Union Buildings in Pretoria in protest against the excessive banking charges, also refused to divulge the amount it paid to the four service providers, saying they “are paid in accordance with the tender specifications”.
North West University (NWU), the University of the Free State (UFS) and Vaal University of Technology (VUT) were forced to close their campuses for in-person lectures this week after student protests over the exorbitant charges.
Kristoff Smith, 23, a third-year mechanical engineering student at NWU, said R59 was deducted from his R1,650 allowance.
This included the R12 bank charge, a R7 fee to activate his NSFAS Mastercard and R40 for transferring R1,500 from his NSFAS account to his FNB account.
“I’m a bit frustrated because it’s money I could have used that’s just gone. I could have bought bread or spoilt myself with a packet of chips. It’s not a lot of money but it amounts to quite a bit for a year.”
He said previously he received the full R1,650 from NWU in his bank account.
“I just want to know why they changed the system.”
Rhodes University, which is serviced by Coinvest Africa, confirmed that 2,300 out of the 3,138 NSFAS-funded students did not receive their allowance, while the University of Johannesburg (UJ) said about 1,200 out of the 23,000 NSFAS-funded students were not paid.
Several universities this week said that the new direct payment system was worse than the previous one where the institutions themselves, or service providers contracted by them, paid out the allowances.
The director of eZaga, which according to a CIPC company search was registered on July 12 last year, is Saud Ally. Koobandhra Naidoo is the director of Tenet Technology, which was registered in 2013. The directors of Coinvest Africa, registered in 2019, are Tshegofatso Ntumba and Merilyn Makelve. Approached for comment, all three companies referred the Sunday Times to NSFAS.
Neal Macintyre is the director of Norraco Corporation, which was registered in January 2019. He declined to comment.
NSFAS confirmed to the Sunday Times that 360,771 university students have so far been “on-boarded” onto the new payment system by NSFAS's banking partners — 86,592 by Tenet Technology, 108,253 by eZaga, 89,300 by Norraco Corporation and 76,626 by Coinvest.
NWU spokesperson Louis Jacobs said the new system is “a lot worse”.
“The first payment was made by the service provider on July 31 and we still have problems of not all funded students having received their allowances and bank cards.”
The University of Pretoria said several shortfalls in the new payment system had to be addressed, such as paying students the correct amounts.
Nelson Mandela University said not all students on the NSFAS-funded list are on the Norraco Corporation payment system.
Rhodes University said complaints related to excessive bank charges.
I’m a bit frustrated because it’s money I could have used that’s just gone. I could have bought bread or spoilt myself with a packet of chips. It’s not a lot of money but it amounts to quite a bit for a year
— Kristoff Smith
University of the Western Cape said the student representative council had rejected the new system “as unreasonable in terms of the charges”.
The University of Cape Town said previously UCT paid allowances directly to students’ nominated personal bank accounts, and the SRC had firmly indicated to NSFAS that they were happy with this system.
Some of the difficulties experienced by students in terms of the new contract were that the bank charges for the NSFAS mastercard “were higher than student bank accounts in the market”.
Stellenbosch University said it had expressed concerns about NSFAS’s new payment system at a meeting with it in June “and the high charges that students will have to pay”.
NWU SRC president Yikumba Andreas, who called the new payment system a “money-making scheme”, said students were being exploited.
“NSFAS is supposed to be for students who are less privileged and who don’t have a lot. By charging students such high fees, we can clearly see that NSFAS or whoever is involved in the direct payment process doesn't have the best interests of students at heart.”
Vezinhlanhla Simelane, president of the South African Students’ Congress (Sasco), said they had supported the new direct payment system when it was first launched “but given the challenges we are beginning to think otherwise”.
“If they can’t fix things, we are saying it must collapse and we will look for alternatives.”
Simelane said that during a meeting with NSFAS about three weeks ago, one of their demands was that students should not be liable for bank charges.
Meanwhile, NSFAS confirmed that the R12 banking fee per student went to the four companies “as is the case with normal banking regulations”.
It said that because it was not a banking institution, “it necessitated the appointment of fintech companies to assist in the creation of bank accounts for beneficiaries”.
NSFAS said there was an open tender process.
It said the four companies had paid out R608.6m to NSFAS beneficiaries at universities and R383.6m to those at TVET colleges for July.
On UJ students who did not receive allowances, NSFAS said they would engage with the university “as these would be case specific and require specific beneficiary information for us to respond”.
Higher education spokesperson Ishmael Mnisi referred queries to NSFAS.
The scheme said on Saturday it would brief the media on Monday on its “current state of affairs”.
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