The National Student Financial Aid Scheme (NSFAS) introduced a new payment distribution system, that charges 15% more than commercial banks, this system is facilitated through a company called Izaga that received backlash from students and student representative organizations.

NSFAS Spokesperson Slumezi Skosana says, “When they decided to implement the student-centric model, the idea was to make sure that all the touch points were catered for sufficiently, making sure that intuitions were paid for, accommodation was paid for directly, and the allowance was paid.”

He continues to cite that the direct payment system is intended to be done in an accountable manner; whenever a student has a problem, they are closer to taking action in order to solve the problem.

However, some students say that this payment system has already created problems because some poor students don’t have phones to gain access to the Izaga app, and secondly, some students didn’t receive SMS to get on board the Izaga system. NSFAS-funded students continue to cite that previously, when students faced problems with funding, we would talk to the universities because the universities were responsible for distributing funds, and the problem would be fixed. We don’t know where Izaga is based.

Students alleged that the charges using Izaga are 15% more than the commercial bank. In response to the allegations, the NSFAS Spokesperson says that because NSFAS sorts FinTech solutions and is not necessarily a bank, people tend to compare charges between FinTech solution providers with a bank. The solution that we sorted was specific for a specific cohort with specific requirements.” Slumezi continues to cite that what they’ve done to mitigate the situation, together with their FinTech partners, was able to reduce the monthly cost of running the account to twelve rand and current refining the offering charges that are out of bundle, such as charges for transection.

The Guardian Report asked the spokesperson to clarify the allegation that Izaga is operating without banking registration and VAT registration. Slumezi says the company went through the procurement process, and based on the requirements that were put out, they satisfied them. In terms of the commercial arrangements they have with their sponsor banks, we don’t get involved on that score.

The South African Student Congress (SASCO) Ekurhuleni Chair John Manganyi said that this new system is a challenge because, in the past, when you had a problem with funds, you would speak to the university or college and the problem would be resolved. This new system is putting pressure on poor students.”

It is alleged that there is tension between Universities and NSFAS, where institutions withhold student data from NSFAS in order for them to receive money. The spokesperson said, “I don’t want to step into that zone; it is a volatile and sensitive issue to talk about. However,  when somebody may have been providing a service in that field, they will be reluctant to accept the introduction of a new and secure system.”

John Manganyi, SASCO Ekurhuleni Chair, says “the allegation between NSFAS and Institutions is true because we end up having financial exclusion at the end of the year.”