<\/p>\n
Over the past couple of months, two critical public institutions have provided insights into the unique problems affecting the governance of public institutions.<\/p>\n
The National Student Financial Aid Scheme (NSFAS) and the Public Investment Corporation (PIC) are important not only due to the scale of funds they oversee, but also due to the wide range of stakeholders who are dependent on both institutions being able to function.<\/p>\n
Listen\/read:
Third time\u2019s a crisis: NSFAS collapse forces intervention
Investigation reveals ghost beds and funding risks in NSFAS system<\/p>\n
On an annual basis, close to a million students rely on NSFAS being able to assess their funding applications and, if successful, ensure they are paid fees and allowances timeously.<\/p>\n
The relationship encompasses not only the multitude of students but also the 76 public institutions (26 universities and 50 colleges) and perhaps less uniformly, a range of third parties that form part of the higher education ecosystem.<\/p>\n
Since the announcement by former president Jacob Zuma of the revision of the funding threshold of NSFAS in 2017, the organisation has been trying to balance the broken canvas of high and escalating demand and limited resources.<\/p>\n
In addition to the resource squeeze, NSFAS has kept sailing into governance turbulence that has resulted in substantively-appointed CEOs (Steven Zwane and Andile Nongogo) not completing their terms, boards not completing their tenure, and administrators being appointed to steady the ship.<\/p>\n
In the past decade, Randall Carolissen, Freeman Nomvalo and Hlengani Mathebula have taken on the role of NSFAS administrator.<\/p>\n
The appointment of Mathebula has proved the most controversial of them all.<\/p>\n
In the aftermath of the descent into disgrace of the erstwhile\u00a0minister of higher education\u00a0\u2013 Nobuhle Nkabane \u2013 in 2025, long-serving deputy minister Buti Manamela took on the role of Higher Education Minister at a time when the board of NSFAS was still trying to find its feet. That board, having been appointed by Nkabane, became an immediate focus (if not target) of Manamela.<\/p>\n
On a surface level, the issue seemed to be the question of whether the board had been properly constituted or not.<\/p>\n
In Manamela\u2019s view, if the board had not been properly constituted, then a process of disbanding it was necessary \u2013 and off to the courts the matter went under the guise of a self-review.<\/p>\n
In November 2025, Manamela announced that he had initiated a process of filing a self-review court application on the NSFAS board appointment process, attributing the decision to \u201ctaking collective responsibility for ensuring that the governance of NSFAS is not only effective, but legally compliant, stable and resilient\u201d.<\/p>\n
Manamela\u2019s commitment to legal compliance could have been lauded if he had pretended to stay true to it.<\/p>\n
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Not long after the November statement \u2013 which coincided with the resignation of board chair Karen Stander \u2013 Manamela formed a view that the board had become so dysfunctional he needed to appoint an administrator to run NSFAS for a period of 24 months.<\/p>\n
The problem with this assertion, at least according to the high court judgment that invalidated it, is that Manamela seemed to conjure up facts and chronologies out of convenience to justify his actions.<\/p>\n
For example, while he cites the opinions of the Auditor-General (AG) as one of the purported dealbreakers that led him to the decision, he is unable to reconcile that assertion with the fact that the board he replaced had little to do with the AG reports he cites, and was also at odds with his own utterances relating to the progress achieved by the board.<\/p>\n
On 25 March 2026, the minister issued yet another statement acknowledging that the board \u2013 which was appointed on 1 February 2025 \u2013 was not responsible for the disclaimer of opinion relating to the financial year of April 2024 to March 2025.<\/p>\n
In front of the portfolio committee on the same day, the minister is said to have acknowledged NSFAS\u2019s successes.<\/p>\n
The relevance of these assertions is that the governance anchor for the organisation \u2013 the NSFAS Act \u2013 provides little latitude for the appointment of an administrator to usurp the functions of the board.<\/p>\n
The minister must consult the board regarding an intention to appoint an administrator in circumstances where:<\/p>\n
Audit outcomes reflect serious financial or other maladministration that seriously undermines the functioning of NSFAS;
\nAny other circumstances that reveal equally serious financial or other maladministration; or
\nIf the board simply requests that an administrator be appointed.<\/p>\n
Despite the undisputed existence of these narrow grounds for the appointment of an administrator, Minister Manamela somehow managed to form the opinion that an administrator needed to be appointed just weeks after his utterances in parliament.<\/p>\n
The narrow scope of areas for intervention means that unless the board had initiated the request itself, any appointment of an administrator would be a reflection of a board that had failed in its job.<\/p>\n
Unfortunately for Manamela, the remaining members of the decimated board decided that it was in the interests of NSFAS to challenge the appointment of the administrator on the basis that the minister had simply not followed the law.<\/p>\n
And then there\u2019s the PIC \u2026<\/p>\n
Meanwhile, in the same period, the PIC underwent yet another governance crisis that pitted the board against itself, the board against the CEO, the board chair against the shareholder, and the PIC governance model against common sense.<\/p>\n
Central to the dispute is that question of where the lines of authority lie in the management and oversight of the affairs of the PIC.<\/p>\n
As an institution whose board is made up of delegated representatives and independent directors, the PIC\u2019s governance model lacks the linear elegance that guidance documents like the Companies Act and the King Code champion.<\/p>\n
Under such guidance, directors have a clear fiduciary obligation towards an institution itself \u2013 and the board selection and appointment process has to ensure an appropriate representation of skills and competencies to ensure adequate collective oversight over the institution.<\/p>\n
This means that a company responsible for complex engineering projects would struggle to explain the absence of anyone with insights and expertise in engineering on its board.<\/p>\n
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Similarly, a company responsible for the biggest asset management pot on the continent would struggle to explain the absence of core expertise in asset management in its board structures.<\/p>\n
Read: PIC\u2019s governance crisis is self-inflicted \u2013 Mavuso<\/p>\n
While the PIC has not been bedevilled by a complete absence of requisite skills, its primary limitation is that it relies on the ability of deploying institutions like the Government Employees Pension Fund\u00a0(GEPF) and National Treasury to undertake a collective assessment of the board composition before deciding on its deployees.<\/p>\n
If, for example, a board lost the expertise of an asset management specialist for any reason and the GEPF or a union had the responsibility to recommend a replacement, common sense indicates that such a process should start with an internal scanning of the board gaps and then determine the type of individual who should be deployed.<\/p>\n
If that process is broken \u2013 in other words, the GEPF or a union simply deploys whoever holds a particular position or office within its structures, it escalates the risk of the new appointee not assisting the PIC cover its governance gaps.<\/p>\n
But the GEPF or the unions at least have some latitude, flexibility and hopefully wisdom in their processes.<\/p>\n
The political deployment process on the other hand, is the great Achilles heel.<\/p>\n
Under the current PIC Act, the chair of the PIC must be a deputy minister from the economics cluster of cabinet. This means the PIC will be chaired by someone who just happens to have prevailed over a political lobbying and lottery process that resulted in a deputy ministerial post.<\/p>\n
Regrettably, very few people campaign to be deputy ministers based on their governance experience within the asset management or pensions industry.<\/p>\n
Listen\/read: PIC turmoil highlights need for independent board appointments<\/p>\n
The consequence of this is that the PIC starts off with a compromise in that it has to accept that one board member will be someone whose basis for appointment has nothing to do with the skills but rather the political position they hold.<\/p>\n
If only the problems ended there.<\/p>\n
In addition to the great implicit compromise, the PIC\u2019s governance model seems to distribute key decisions across the different stakeholders so that:<\/p>\n
The CEO has some authority;
\nThe board has some authority;
\nThe GEPF has some authority; and
\nThe shareholder ministry has some authority.<\/p>\n
It is in identifying the lines of authority where the now-defunct board ended up in crosshairs of the CEO and the shareholder minister.<\/p>\n
As the crisis escalated, some board members resigned voluntarily and the remainder were asked to engage the shareholder minister on what could solve the governance crisis.<\/p>\n
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CONTINUE READING BELOW<\/p>\n
In corporate governance parlance, this was framed as a request for the remaining directors to make representations explaining why they should not be removed.<\/p>\n
Rather than make successful representations, the board simply liquidated itself after its chair \u2013 deputy finance minister David Masondo \u2013 resigned ahead of the shareholder meeting.<\/p>\n
The problem with that development is that is coincided with a court application by the suspended CEO who alleged that the board\u2019s decision to suspend him had been unlawful.\u00a0By the time the court engaged on the matter, the affected directors were no longer in office and did not defend their actions in court.<\/p>\n
Predictably, the court ruled against them and the CEO suspension was lifted.<\/p>\n
Read:
Seiso Mohai appointed new PIC chair as cabinet overhauls board
PIC CEO back at work three weeks after being suspended
Godongwana: Dlamini court victory doesn\u2019t end scrutiny
Dlamini breaks silence after PIC reinstatement<\/p>\n
Regrettably for the PIC, this might leave some questions around lines of authority and delegations of responsibility unresolved.<\/p>\n
While the erstwhile directors might still have lost, we were denied the benefit of understanding whatever motivated them to do the suspension.<\/p>\n
Such a question could have shown either a board hopelessly clueless about its own governance documents or reliance on legal advice that is debatable or ill-conceived.<\/p>\n
Where this leaves us<\/p>\n
In the NSFAS case, the concluded case reinforced clarity about what the NSFAS Act intends and means.<\/p>\n
With the PIC Act, the scope for claiming there is still a difference of opinion will remain unless someone initiates a process of interrogation before the next governance crisis hits.<\/p>\n
And given how fundamentally flawed the governance politics of the PIC remain, and how lucrative its business will always be, one can never discount another governance crisis in the long-term horizon.<\/p>\n
#NSFAS #PIC #chaos #disturbing #parallels<\/p>\n","protected":false},"excerpt":{"rendered":"
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