Governance is like rugby refereeing: when it’s good, nobody notices; when it’s bad, the consequences are obvious and demanding of explanation.
Governance at the National Student Financial Aid Scheme (NSFAS) has been so appalling for so long that, to continue the analogy, the organisation’s activities represent what a rugby match would look like without any referee at all — laws broken with impunity, chaos, everyone for themselves and no meaningful result.
NSFAS is a government entity established in 1999 to provide tertiary study bursaries and loans to deserving poor and working-class students. Its stated purpose is “to redress past discrimination in education, ensure equal access and support human resource development needs”. Funding is primarily by the department of higher education & training, with additional funds from donations.
Legally, NSFAS is run by a board appointed by the minister, who is supposed to provide oversight. In practice, that duty has translated into the board being dissolved several times (the latest dissolution was last week), with NSFAS being placed under administration. As usual when governance fails so spectacularly, the reality on the ground is that the organisation is not functioning. For years, tens of thousands of eligible students have not been receiving their bursaries on time, if at all.
This could mean that the wrong people are being appointed to the board — they are clearly incapable or unwilling to exercise their duties of good faith, care, skill and diligence.
It could also mean that the demands on NSFAS, with a budget of more than R40bn, have grown far beyond its administrative capacity. In that case, successive boards were in obvious dereliction of their duty by not acting to create structures commensurate with the demands on the organisation.
It cannot have helped that there have been at least 10 chairs in 25 years
The search for accountability then narrows to the chair of the board. As governance expert Mervyn King points out in his book The Corporate Citizen: Governance for All Entities, the chair “has constantly to keep in mind that he has the key role of leading the board in discussion, reasoning and decision”.
More to the point, the chair “must endeavour to ensure that bad news reaches the top quickly”. And they must ensure that “every year the key risk areas and the key performance indicators are reassessed, and the strategic plans are discussed”.
Clearly, this was not done to any meaningful extent at NSFAS. It cannot have helped that there have been at least 10 chairs in 25 years, with most of the turnover clustered in the past decade.
Again, two explanations are possible. Either the chair was a person of substance but did not have the backing, in principle and in practice, of their board or the minister, or they were lacking in ability and integrity, indicating a flawed appointment process and a minister whose eye was not on the ball.
Sadly, NSFAS is not the exception among large state-owned entities. Similar chronic governance failures have been seen over the years at Eskom, Transnet, SAA, Denel and others. It is as if the boards of these entities have been seen not as stewards of mechanisms to serve the people, but rather as opportunities to place the politically well-connected in comfortable positions.
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