STUDENT FUNDING: MPs slam NSFAS over R616m middleman payouts for accommodation system

MPs have expressed shock at learning that four external “solution partners” brought in to run the National Student Financial Aid Scheme (NSFAS) accommodation portal received R616-million across 2024 and 2025. Appearing before the Portfolio Committee on Higher Education on Wednesday, 23 September, representatives from the four service providers – Xiquel Group, New Dawn Technologies (NDT), Training Young Minds (TYM) and Profecia IT – faced tough questions over their earnings. The four service providers entered a five-year contract with NSFAS in 2023 following a competitive bidding process.There were sharp exchanges as MPs pressed the companies on how software platforms ballooned into massive state payouts. The contracts were established under former NSFAS CEO Andile Nongogo – who was fired in late 2023 – and former board chairperson Ernest Khosa, who resigned in April 2024 amid corruption allegations.An internal legal review by the law firm ENS and previous warnings by the Organisation Undoing Tax Abuse (Outa) revealed that the procurement process was fraught with irregularities. Outa noted that TYM was initially disqualified before being reinstated, and flagged that third-party agents certified inflated bed numbers, allowing landlords to claim for “ghost students”.The contract structure vs realityThe Service Level Agreement (SLA) for NDT set up a “system licence fee” model. A 5% monthly fee was deducted automatically from accommodation providers’ revenue, and the proceeds were split 80/20 between the service provider and NSFAS. The SLA also provided for a once-off accreditation fee of R100 to R200 per bed, depending on the size of the property.The SLA and the original tender document both stipulated that the platforms would be built and run at no upfront cost to NSFAS. According to the tender document, the providers’ costs would be recouped from “utilisation of the solution”, with any additional fee split “to be agreed” later. Bidders were nonetheless scored on a pricing schedule the document described as “for evaluation purposes only”, with the total tender value estimated at under R50-million.The controversy deepened when MPs pressed executive leadership to disclose their setup expenses compared to their total payouts. In response to questioning from EFF MP Sihle Lonzi, NDT executive Seleke Masemola reported a setup cost of R46-million, while TYM CEO Nthabiseng Mosena and Xiquel Group CEO Kgopotso Riba cited R9.4-million and R8.2-million, respectively. Profecia IT stated that its initial figures were still being finalised.EFF MP Sihle Lonzi. (Photo: Phando Jikelo / RSA Parliament) uMkhonto Wesizwe MP Sihle Ngubane disputed NDT’s R46-million setup claim, saying: “I can guarantee you now, there’s no website here for R46-million.”NSFAS told the committee that it disbursed R616-million to the solution partners in 2024 and 2025 before shifting the payment system in 2026. In 2025 alone, payouts to the four exceeded R260-million: Profecia IT received R86-million, Xiquel Group R110-million, NDT R51-million and TYM R18-million.NSFAS service providers received more than R260-million in 2025. (Created: Siyabonga Goni) Defending the numbers, Xiquel’s Riba used a vehicle analogy: “NSFAS says, ‘I am looking for people that already have trucks. We want you to convert the truck into a refrigerated delivery truck. How much will that cost you? From the base that you have already, how much will it cost you to convert it to a refrigerated truck?’ I need to then say, ‘On the truck that I already have, I only need R8-million to make it what NSFAS needs.’ So the R8-million is not ... how much the whole truck will cost you. If that was the question, it wasn’t going to be R8-million.”Lonzi dismissed the argument: “I think people of South Africa, Parliament, even NSFAS itself can see what is taking place here is a total injustice. At least all of them are saying something that was initially supposed to cost this much has not only tripled or quadrupled; it has increased in such an exponential manner that R8-million can jump to R120-million.”The committee chairperson, Tebogo Letsie, also voiced his disapproval: “Why would NSFAS want to be donated four systems to do what? I have a feeling that we’re not being told the truth. These systematic problems are affecting the poorest of the poor, and what I’ve heard is that these four providers were literally doing the same thing from different provinces, costing the PSET [post-school education and training sector] almost R600-million.”Higher Education and Training Parliamentary Portfolio Committee Chairperson Tebogo Letsie. (Photo: Phando Jikelo / RSA Parliament) System under fireThe NSFAS acting CEO, Waseem Carrim, confirmed that an independent review by ENS had identified serious procurement flaws.The acting CEO of NSFAS, Waseem Carrim. (Photo: Kopano Tlape / GCIS) However, Carrim warned against an immediate shutdown: “The premature termination of these agreements, without adequate internal systems in place, would risk disrupting the accommodation and payment processes upon which student beneficiaries depend,” said Carrim. He added that the executive leadership would never have implemented this model had they been in office at the time.Parliamentary members demanded that the Special Investigating Unit (SIU) expedite its probe into the scheme, and Letsie will write to the unit seeking an update on the investigation. DM