National Student Financial Aid Scheme (NSFAS) student allowances provider eZaga Holdings(eZaga) drew first blood in the legal quarrel with the scheme to get its contract reinstated.
This week, the Western Cape High Court threw eZaga and the other fintech partners a lifeline when it interdicted NSFAS from terminating their contract. NSFAS was also ordered not to allow higher learning institutions to pay allowances directly into students’ accounts.
The ruling sees eZaga’s immediate reinstatement as a direct payment provider for universities and Technical and Vocational Education and Training (TVET) institutions.
However, the financial aid scheme said it would appeal the court’s judgement, in addition to the application at the Special Tribunal.
Noting the Western Cape High Court order, the scheme says: “NSFAS wishes to emphasise that this judgement is limited to the circumstances surrounding the actions taken by NSFAS post the Werksmans report, which recommended that the contract with eZaga and others be terminated on the basis of procurement irregularities.
“The judgement seeks to restore eZaga’s contractual position with NSFAS. The order granted was reached without taking into consideration the validity of the tender award on which the contract is premised. The Special Investigations Unit and NSFAS’s application to set aside the contract is already pending at the Special Tribunal.
“NSFAS stands by its position of implementing the recommendations made in the Werksmans report and will appeal this judgement.”
eZaga, Coinvest, Noracco Corporation and Tenet Technology were awarded the NSFAS direct payments contract, to the value of R47 billion, over a period of five years.
However, the Werksmans investigation into the NSFAS’s affairs found the tender process followed to appoint student allowance dispensing service providers was irregular.
Last October, the NSFAS board said it planned to cut ties with the firms, but continued making use of the direct payment providers’ services.
In May, NSFAS administrator Freeman Nomvalo announced a process was under way to terminate the contract of the fintech partners selected to disburse monthly allowances to tertiary students.
The administrator revealed that NSFAS had filed court papers to sever ties with the direct payment service providers. The papers were filed on Friday, 24 May, he stated, adding it is collaborating with the Special Investigation Unit in dealing with this issue.
This move, he said, was in line with the recommendations in the Werksmans investigation report, which found undue process in their appointment.
eZaga and Tenet Technology have denied the allegations of corruption levelled against them in the awarding of the NSFAS contract.
‘Rigorous checks’
eZaga, meanwhile, has welcomed the court order, describing it as a “landmark win”. According to the company, the judgement enables it to continue its mission of enhancing financial inclusion and providing seamless payment experiences for students, institutions and stakeholders, subject to the highest standards of service and compliance.
“We are relieved with the court's decision to reinstate eZaga as a trusted payment provider for universities and TVETs,” says Saud Ally, CEO of eZaga Holdings.
“This judgement is a testament to our commitment to integrity and excellence. We look forward to continuing our work with educational institutions, providing solutions that enhance financial inclusion and streamline payment processes.
“Most importantly, we are dedicated to ensuring the students in our care receive their allowances efficiently and securely, supporting their educational journeys without interruption.”
eZaga says since being awarded the contract, it has adhered to the “highest standards of financial integrity and transparency” in all its operations.
“The company implemented rigorous checks and balances to ensure the proper management of funds and maintain accountability. Its systems were designed and are implemented to prevent any mismanagement or misappropriation of public funds. eZaga remains committed to upholding these standards.
“In its judgement, the High Court recognised the tender awarded by NSFAS appeared to comply with the requirements of section 217 of the Constitution. Additionally, the court found that eZaga had established, or at least on the face of it, a right stemming from NSFAS's unconstitutional actions and should have been given a chance to present its case against the implementation of the Werksmans report's recommendations. eZaga remains committed to fully co-operating with any legitimate investigation to clear its name.
“With this favourable court ruling, eZaga is more determined than ever to continue its efforts to enhance financial inclusion and provide secure, transparent and efficient payment services.”
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