Investigation launched into tens of thousands of ghost accounts in NSFAS system

The government will investigate tens of thousands of alleged NSFAS ghost accounts suspected of siphoning funds from the student-aid scheme.

The National Student Financial Aid System (NSFAS) is tasked by the Department of Higher Education to provide financial support to under-privileged learners pursuing a tertiary education.  

However, it has now launched yet another investigation into the legitimacy of its payment scheme. This comes after tens of thousands of so-called beneficiaries failed to provide proof that they are enrolled anywhere or have valid bank accounts, reports BusinessLive.

NSFAS GHOST ACCOUNTS

Potential NSFAS ghost accounts are a scandal new Minister of Higher Education Dr. Nobuhle Pamela Nkabane could do without right now. Like so many government-run grant schemes, the NSFAS has moved from one scandal to another over the years. It was placed under administration between 2018 and 2020. And corruption allegations in 2023 forced the immediate resignation of chairperson Ernest Khosa.

Furthermore, former Minister Blade Nzimande placed it under administration again back in April. This followed after it failed to terminate contracts with four companies that had been awarded tenders dubiously, reports The Citizen.

FUNNELLING MONIES OUT

The emergence of these NSFAS ghost accounts came to light when approved beneficiaries were asked to provide banking and enrolment details. This is standard procedure so the aid scheme can pay funds directly to students, and not via the allegedly corrupt intermediaries. However, 6% (more than 11 000 NSFAS ghost accounts) of the people contacted did not respond in kind. Therefore raising the suspicion that these people were not students at all and merely NSFAS ghost accounts used to funnel money.

Central to the discovery of these NSFAS ghost accounts is the new process of direct payments to students. By circumnavigating the intermediaries, each transaction costs R1 per student, versus a deplorable R22 per transaction via the third party. The four companies whose contracts have been terminated are: Coinvest, eZaga, Noracco and Tenet Technology. It’s understood that each contract is valued at R47 million.

MALADMINISTRATION AND FRAUD

The National Prosecuting Authorities’ Special Investigations Unit, otherwise known as The Hawks, is already investigating alleged corruption, maladministration and mismanagement of the NSFAS. There are allegedly 420 students who did not qualify for support from NSFAS but had collectively received more than R112 million in student aid. Likewise, it’s been fighting to get money back from universities and colleges that received over-payments by the NSFAS.