NSFAF loses millions to debt recovery company
The Namibia Students Financial Assistance Fund has lost, in total, N$7.9 million due to a bad deal in which an outsourced company was contracted to recovery funds.
NSFAF last week moved to terminate an agreement with Tribesmen/Nics Joint Venture which was signed by its under-fire suspended chief executive officer Hilya Nghiwete.
To the students’ finance body’s frustration, it paid the company a whopping N$14.6 million for services rendered when it had managed to recover a mere N$6.7 million.
This thus left NSFAF N$7.9 million worse off.
These daunting revelations where disclosed by NSFAF’s acting CEO Kennedy Kandume who said the terminated agreement between the two had never been in their best interest.
In spite of this company having been tasked to recover funds optimally, Kandume admitted that the Fund has not been executing its recovery mandate as expected.
The company had charged NSFAF a fixed monthly fee for debt collection which usually should be a commission per amounts collected.
The company, it was agreed, would be paid a monthly management fee of N$287 500 inclusive of VAT on top of a 12% commission fee.
Due to this, Kandume said, “The Fund has faced a high volume of public criticism and suffered a great deal of reputational harm.”
Pressed on what the management at the time was thinking in going ahead to put ink to paper on such a bad deal, Kandume could not comment.
The agreement with Tribesmen/Nics Joint Venture was entered into between 2014 and 2015 after a tender process.
NSFAF by then was relieving itself of the debt recovery task and decided to hand it over to an outsider, but Kandume has come out to say that they are taking back that function.
He appeared confident that they will do an excellent job on their own although all options were on the table, including finding another second party who can carry on if need be.
Last week’s decision to part ways with Tribesmen/Nics Joint Venture was spurred when it came to light that the company was not acting in good faith following a breach of a clause of the Service Level Agreement (SLA).
Kandume said the company was not allowed to disclose terms of the agreement without prior written consent yet it published articles on 27 and 28 March 2018 in the print media containing information of a confidential nature.
“In good faith and while fully aware of the consequences of the breach so committed, we demanded a retraction of the articles published in according to 10.1 of the SLA.”
“Despite our explicit written demand for retraction, Tribesmen arrogantly tried to brush it off, finding far-fetched justifications for its action,” he said.
He added that in an alternative, and without waiving NSFAF’s right in terms section 10.2, they again requested Tribesmen to consider waiving the monthly fee of N$ 287 500.
“Compliance with either of the demands were therefore deemed as capable and convenient to remedy the breach so committed, but Tribesmen failed to use any of the remedy options thereof,” said Kandume.
So what’s the way forward?
Kandume said effective from 14 September 2018, recovery function has returned in-house with a minimum saving of N$ 1.8 million annually.
“In this regard, we are calling on the public to have confidence in our redirected recovery strategy. In the same vein, we are also strongly urging our former beneficiaries to come forward and repay their loans for the sustainability of the Fund,” he added.