The Western Cape High Court ruled in favor of eZaga Holdings, compelling the National Student Financial Aid Scheme (NSFAS) to continue using its services for distributing student allowances, following NSFAS’s decision to terminate contracts after allegations of corruption.
As the National Student Financial Aid Scheme (NSFAS) prepares to appeal a court ruling, students are reassured that their allowances will not be affected, despite a change in the service provider responsible for payments.
The Western Cape High Court ruled in favor of eZaga Holdings on July 15 compelling the NSFAS to continue using the company’s services for distributing student allowances.
This ruling came after NSFAS announced its intention to terminate contracts with four service providers—Coinvest, eZaga Holdings, Noracco Corporation, and Tenet Technology and to transfer the distribution of allowances directly to universities.
In response to NSFAS’s decision to terminate these contracts, eZaga Holdings applied for an interdict to prevent the cancellation of its five-year contract. The court ruled in favor of eZaga, ordering NSFAS to continue issuing payment instructions to the company for student allowances. NSFAS, however, has announced plans to appeal the court’s decision.
Speaking to Wits Vuvuzela, NSFAS spokesperson Ishmael Mnisi said,” this will not affect students at all because we are currently not using any of the payment partners to pay allowances to students, we are paying through universities, and TVET colleges students are getting their allowances directly”
Wits SRC Deputy President Simphiwe Mntungwa criticized the ruling, expressing opposition to eZaga’s continued role. Mntungwa stated, “I am strongly against the continued use of eZaga as a service provider for distributing NSFAS allowances. I, together with the Wits SRC, believe that this decision is a corruption stunt by the government that undermines transparency and efficiency in the distribution process. The court’s ruling, while binding, does not align with the best interests of the students.”
Mntungwa advocated for institutions to handle allowance distribution, highlighting the benefits of direct institutional oversight and accountability. He pointed out that the shift to institutional distribution has already proven to be more effective, reducing delays and issues linked to third-party providers.
The legal battle between NSFAS and service providers stem from an investigation by the Organisation Undoing Tax Abuse (OUTA) into corruption within the Department of Higher Education. OUTA’s findings, supported by voice recordings, allege that service providers paid substantial kickbacks to former Minister of Higher Education Blade Nzimande, NSFAS Chairperson Ernest Khosa and the South African Communist Party (SACP) to secure tenders and protection.
As NSFAS prepares to appeal the ruling, the immediate impact on students remains minimal, according to the scheme.
FEATURED IMAGE: Photo: File
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