EDITORIAL: Don’t make the same mistake with NHI
To understand why things at NSFAS disintegrated so badly, look no further than its governance structure
Administrator Randall Carolissen is doing a sterling job at exposing the historic dysfunction at the National Student Financial Aid Scheme (NSFAS), the government’s main conduit for supporting students from poor and working-class families.
Appointed by former higher education and training minister Naledi Pandor last August, he has rapidly improved the scheme’s capacity to disburse funds to eligible students and is peeling away the layers of rot within the institution.
NSFAS’s 2018/2019 annual report, tabled in parliament this week, gives a glimpse of just how badly things had deteriorated before he took the helm.
Irregular expenditure ran to a whopping R7.5bn for the 2017 and 2018 academic years combined.
It shows NSFAS has mistakenly paid out more than R1.2bn in loans and bursaries in the past two years, thanks to errors in the contracts it generated when it changed its funding model in 2017 and started paying students directly instead of via higher education institutions. And it has botched the interest calculations on the loans taken by graduates to such an extent that it needs to write off the funds associated with those who underpaid and track down those who collectively overpaid by about R26m.
These figures are hardly surprising, given that Carolissen’s team uncovered hundreds of thousands of irregular student records and unsigned student contracts.
That NSFAS received a qualified audit opinion — which means auditor-general Kimi Makwetu found problems with its books but still broadly endorses them — for the second year in a row makes it clear that there was no financial discipline or accountability at the institution. Irregular expenditure ran to a whopping R7.5bn for the 2017 and 2018 academic years combined.
To understand why things at NSFAS disintegrated so badly, look no further than its governance structure. The legislation that established NSFAS gives the minister the power to hire and fire every key position at board and executive level. Such appointments are determined by the ANC’s deployment committee, which has seen countless ill-qualified individuals appointed to state entities ranging from Eskom to SAA.
The model leaves institutions wide open to capture by politically connected interest groups and renders them vulnerable to corruption, because when the appointments of CEOs are politically driven they are protected from any attempt by the board to hold them accountable.
There is an important lesson here. It would be naive to think Carolissen can provide a long-term fix for NSFAS. Without a fundamental change to the institution’s governance framework, it will remain a sitting duck for political capture. No matter how carefully he redesigns its internal systems, once his tenure as administrator ends, if the wrong people are appointed without adequate mechanisms to hold them accountable, NSFAS will once again be a pot of money for the unscrupulous to plunder.
It is a lesson that health minister Zweli Mkhize would do well to heed, as he drives through the government’s ambitious plans for universal health coverage, better known as National Health Insurance (NHI).
Mkhize recently tabled the first piece of enabling legislation for NHI in parliament, which proposes setting up a central fund to purchase health services on behalf of the entire population. Critics have consistently raised the alarm about the fund’s governance structure, which mirrors that of NSFAS. They are right to be worried.
To leave the NHI fund’s governance structure as it is — with the minister given the power to hire and fire every key position — would be a grave mistake. NSFAS was in 2019 charged with disbursing R16.4 bn in grants, and approved funding for less than half a million new students. Contrast that to the NHI fund, into which the government wants to channel finances that are orders of magnitude bigger, on behalf of 100 times more people. The writing is on the wall: without a serious revision of the NHI fund’s governance framework, plunder is inevitable.
It is bad enough if NSFAS is in disarray and students’ opportunities to chart a better future for themselves are jeopardised. But if the NHI Fund crumbles in a similar manner, it will be people’s lives that are on the line.