CORRUPTION CRACKDOWN: High Court Strikes Down 'Unlawful' NSFAS Direct-Payment Contracts Linked to eZaga and Others
CAPE TOWN — In a watershed victory for the preservation of public funds, the Western Cape High Court has officially declared the controversial multi-billion-rand National Student Financial Aid Scheme (NSFAS) direct-payment tender unconstitutional, unlawful, and invalid.
The major ruling, delivered under Case No: 9526/2024, was highly welcomed in a joint victory brief issued by NSFAS and the Special Investigating Unit (SIU), who have been aggressively probing systemic supply-chain corruption within the student financial aid scheme.
Dismantling the Direct-Payment Monopoly
The High Court judgment completely nullifies the procurement process and subsequent Service Level Agreements (SLAs) concluded between NSFAS and four tech financial service providers: eZaga Holdings (Pty) Ltd, Coinvest Africa (Pty) Ltd, Noracco Corporation (Pty) Ltd, and Tenet Technology (Pty) Ltd.
The targeted fintech firms had been awarded exclusive contracts to disburse monthly allowances directly into the bank accounts of over one million disadvantaged tertiary students. The rollout was plagued by widespread systemic failure, exorbitant transaction fees, and massive payment delays that sparked violent nationwide student protests.
The Court's findings completely vindicated NSFAS’s self-correcting legal bid, confirming that
the entire multi-billion-rand procurement network was fundamentally hollowed out by severe
administrative malpractice. The court exposed a litany of internal irregularities, including:
Improper and malicious cancellations of prior valid tenders.
Irregular drafting, manipulation, and back-channel approval of official bid documents.
Blatant non-compliance with statutory, mandatory supply chain management requirements.
A complete and total absence of critical internal financial controls.
Just and Equitable Compensation Ordered
Crucially, while the High Court firmly dismantled the state's procurement process, it cleared the individual corporate service providers of active criminal malfeasance. The bench determined that eZaga, Coinvest, Noracco, and Tenet were not directly complicit in the internal state-side maladministration, impropriety, or corruption.
"This judgment marks a significant milestone in our unwavering commitment to uphold good governance, transparency, and accountability in the administration of public funds. It reinforces our resolve to root out maladministration and safeguard the integrity of public procurement processes, ensuring that resources entrusted to NSFAS are used in the best interests of South Africa’s students," the joint NSFAS and SIU statement read.
To prevent total asset forfeiture where no fraud could be personally pinned to the external suppliers, the Court awarded "just and equitable compensation" to the affected fintech firms. This order allows the service providers to file financial claims to recover reasonable operational expenses and proven profits demonstrably incurred during the active lifespan of the invalidated SLAs.
| Fintech Service Provider Impacted | Primary SLA Status | Court-Ordered Remediative Action |
| eZaga Holdings (Pty) Ltd | Striked Down | Entitled to submit audited operational expense claims. |
| Coinvest Africa (Pty) Ltd | Striked Down | All claims subjected to independent forensic verification. |
| Noracco Corporation (Pty) Ltd | Striked Down | Complete disqualification from continuing student payouts. |
| Tenet Technology (Pty) Ltd | Striked Down | Disputed profit margins under strict state legal scrutiny. |
NSFAS and the SIU explicitly warned that the compensation phase will not be an automatic cash payout. Every single claim launched by the fintech firms will be subjected to aggressive forensic scrutiny and independent auditing to ensure that not a single cent of public money is unlawfully externalized.
The scheme reassured students and parents that alternative, highly transparent payment channels are already functioning to guarantee that monthly student bursary allowances remain entirely uninterrupted.
