Higher education, science and innovation minister Dr Blade Nzimande has appointed a ministerial committee of inquiry (COI) to investigate business processes, including an “inadequate” R100 million IT system, of the National Student Financial Aid Scheme (NSFAS).
This information came to light during a virtual presentation to Parliament’s Portfolio Committee on Higher Education, Science and Technology on Friday, with Nzimande detailing NSFAS’s challenges in introducing its current funding system.
To change the funding process for students in need of financial aid, NSFAS decided to introduce a new model that would see it directly fund students for their studies instead of the funds being managed by individual institutions.
However, the higher education, science and innovation minister told the committee that the financial aid agency lacked the requisite capacity and technical know-how to implement the new system.
The IT platform and systems built to manage the processes were not able to function effectively, revealed Nzimande, adding this is something he is concerned about.
“I will have to go back…I remember approving around 2010/2011, if I’m not mistaken, the procurement for about a R100 million of a new IT system for NSFAS. By 2017, it was being exposed as being inadequate. I don’t understand why.
“I’m still very concerned to go back to that and properly understand why we would pay a R100 million for an IT system, which then five or six years down the line is found to be terribly wanting.”
System changes
According to Nzimande, in 2017, NSFAS began rolling out a new funding system for students at all universities and TVET colleges.
The new system, which is referred to as a student-centred model, involved the direct funding of students by NSFAS. The model was intended to provide an improved IT platform for submitting and processing student applications.
In addition, this new model was a way to overcome some of the challenges with the old system, according to Nzimande.
“In the old system, institutions received an allocation with an upfront payment, managed the awarding and payments of loans to students, and thereafter submitted claims to NSFAS for payment to institutions. In other words, the institutions were managing NSFAS through their financial aid offices and all that NSFAS had to do was just to pay on the basis of that information.
“The new system was intended to allow NSFAS to manage allocations, students to know their funding status before registration, and on signing a loan agreement form and schedule of particulars, receive their allowances immediately after registration. This is the system that is now in place.”
Including the IT challenges, NSFAS also encountered huge delays in paying students and making funding decisions.
This resulted in outside assistance being brought in to resolve the 2017 funding cycle, stated the minister. “By August 2018, there were still aspects of the 2017 student funding cycle that had to be resolved, and these had a knock-on effect on the 2018 funding cycle.
“Some changes to the system at NSFAS during 2017, however, resulted in a relatively successful application phase for the 2018 cycle, with students applying directly to NSFAS in 2017 and many funding decisions were concluded by January 2018.
“In other words, the situation was not all that cloudy, despite the challenges.”
Time is of the essence
Nzimande believes the short time frame in introducing the new funding system may have caused NSFAS’s troubles.
“The new bursary scheme of NSFAS was announced on 16 December 2017, to be implemented in January 2018.
“I don’t think in future government should ever do such a thing because [it is] expected that in two weeks, a whole new system will be administered. We were even lucky that we did not have worse problems than what we had because there was no need to do that.
“The effect of these challenges was serious. As the student funding cycle progressed in 2018, NSFAS was unable to finalise funding decisions and process payments to students, even at a late stage of the academic year. It relied almost entirely on institutions to make payments to students and many students remained unconfirmed and unfunded late in 2018. There were multiple data and IT integration/system problems at NSFAS.
“The root cause of these problems are multiple and complex, and relate to problems in the areas of business processes, policy and controls, and staffing capacity.”
He added the core problems relate to, but are not restricted to, an adequate IT architecture, system and business process that are not fit-for-purpose and were designed without adequate consultation with and consideration of institutional systems.
Way forward
The minister said the COI will conduct its work over a period of six months, noting this will overlap with the handover period between the new leadership of NSFAS and the end of the period of administration, which is at the end of August.
He added the work of the COI will be supported by the department and NSFAS, and will take into account forensic and other investigative work already undertaken by NSFAS.
In terms of reference, Nzimande said the COI investigation must include:
- An assessment of the enterprise architecture and business processes for the student-centred model approved by NSFAS board 2012-2013. This must include a full examination of the role and responsibilities of all role-players in the model.
- A full review of the IT systems that support the NSFAS student-centred model, and specifically, the interface between the NSFAS IT system and IT systems at universities and colleges.
This review must identify the critical issues that have led to the failure of the integration of data between NSFAS and institutions, and make recommendations on the possibility of adaptation to automatically support data transfer.
It must make a determination on the extent to which architecture of the NSFAS model is aligned with university and TVET college processes and IT systems, and what the gaps/challenges with the model may be.
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