NAMIBIA Students Financial Assistance Fund (NSFAF) Chief Executive Officer, Hilya Nghiwete (HN), who inherited poor accounting records at the parastatal in April 2013, has confirmed that the N$1.7 billion under scrutiny by the National Assembly’s Standing Committee on Public Accounts, was not in fact “missing” and had been disbursed by previous accounting officers to institutions of higher learning.
The monies in question were disbursed between 2009 and 2013. Nghiwete also rejected the notion that NSFAF has “boycotted” last week’s parliamentary standing committee meeting, and clarified the initiatives undertaken to sort out the historical issues at the parastatal.
Confidente’s Patience Nyangove (PN) spoke to her this week.
PN: Can you give us the background on the N$1.7 billion that is ‘unaccounted for’, which was disbursed by the education ministry to NSFAF between 2009 and 2013.
HN: The N$1.7 billion funds disbursed to NSFAF Division in the Ministry of Education needs to be contextualised. The total funds disbursed to the NSFAF during 1997 to 2013 were indeed dispersed for students’ funding. However, the recording or accounting of such funds was not clearly captured, which unfortunately presented some challenges with regard to reconciliation of the accounts. The records at our disposal, however, do not suggest any missing or misappropriated money, but rather poor accounting records.
The total amount paid of N$1.7 billion comprises of grants, as well as loans. For grants there is no requirement to repay after students complete their study, whereas for loans the amount will be recorded as an amount recoverable from the student. Since 2013, NSFAF has tried to assess the 46 000 files that have been taken over from Ministry of Education, to make the determination of whether the amounts paid was a grant or a loan. Due to various challenges, the exercise has taken longer. It is, however, expected that the exercise will be completed by March 2018. In order to finalise this exercise, NSFAF will need to closely work with universities, vocational training centres, colleges and Namibian embassies and missions, as well as former employees who were seconded to the NSFAF Division.
PN: When did you take over as CEO and what steps have you taken to get to the bottom of what happened?
HN: I commenced in April 2013 and immediately started with the reconstruction of the 46 000 inherited files, for proper auditing purposes. There have been a number of challenges on working with these files, as some of them contained incomplete or inaccurate information. This has delayed the finalisation of completion of these files. With the strategy that has just been implemented, we anticipate to complete this assignment by March 2018.
PN: What were the issues that delayed the appearance of the NSFAF management Parliamentary Standing Committee on Public Accounts last Thursday?
HN: NSFAF did not boycott the Public Accounts Committee and would never do that. The engagement of NSFAF with Public Accounts Committee needs to be put in perspective. The engagements unfolded as follows:
On the 18 July, 2016, NSFAF appeared before the Public Accounts Committee to respond to the Auditor-General’s reports related to 2009 up to 2013 situation, the total funds in question during the 2016 hearing was N$2 billion.
During the 2016 hearing, NSFAF made a commitment to ‘reconstruct the accounts with the available records’ to enable the Office of the Auditor-General to re-audit and present their results again to the National Assembly.
Following the July 2016 Public Accounts Committee hearing, NSFAF performed a high-level reconciliation, by matching the funds received from treasury to funds paid out of the NSFAF bank accounts directly to institutions of higher learning. This high-level reconciliation/stage 1 of reconstruction of 2009 to 2013 accounts revealed that all monies received during that period were disbursed to institutions of higher learning, thus no money was mismanaged or went missing.
The results of the high-level reconciliation were shared with the Office of the Auditor-General in April and May 2017.
On the 7 June 2017, NSFAF also informed National Assembly Permanent Secretary that it has forwarded a report to the Office of the Auditor-General.
The Office of the Auditor-General, wrote to NSFAF on the 9 November 2017; where they pointed out that they could not verify the transition and migration of data from when NSFAF was a division in the Ministry of Education to the ‘new’ NSFAF. This was followed by a number of questions, which they sought clarification on. From the work that was performed by NSFAF, the Office of the Auditor-General raised further questions, as the complete picture could not be followed through the accounting treatment of the transactions. From their analysis, there was a net amount disbursed which was not reflecting on the financial statements. The focus and scope of Auditor-General was broadened and included the total funds disbursed as from 1997 up to 2013, which was reported as N$1.7 billion. The N$1.7 billion are funds made available to NSFAF during the period 1997 to 2013, which amounted to N$1.8 billion and loans recovered during same period of N$54 million, which gave a net amount of N$1.7 billion misreported as missing or mismanaged.
Despite the fact that NSFAF wrote to the Office of the Auditor-General in May 2017 and to the National Assembly, giving progress on the agreed actions from 2016 Public Accounts Committee hearings, the only communication we received since our May 2017 progress report , from National Assembly , was an invitation letter of 23 November 2017, a few days after Auditor-General raised further questions on the N$1.7 billion total students disbursements, inviting NSFAF to appear before the Public Accounts Committee on the 30 November, 2017.
PN: When was the committee informed about NSFAF’s request for a postponement and what is the way forward?
HN: As indicated above, NSFAF received an invitation on 23 November 2017 to appear before the Parliamentary Committee on Public Accounts Committee.
In preparation for the Public Accounts Committee hearing, on 22 November 2017, NSFAF engaged the National Assembly and informed them that NSFAF intends to meet the Auditor-General to understand their expectations. That meeting took place on 28 November 2017. After that meeting, NSFAF realised that it will be beneficial if all key stakeholders (Auditor-General, PwC and NSFAF) come together to align expectations. This intention was also communicated to the National Assembly on the 29 November 2017.
After the tripartite meeting of 28 November 2017, NSFAF was of the opinion that since the second stage of reconstruction of the 2009 to 2013 funds has not commenced, and the scope of enquiry was broadened to include historical issues, dating back as far as 1997, coupled with the clarification of Auditor-General’s expectations, it was prudent to request postponement to March 2018. The letter requesting a postponement was delivered to the National Assembly on 29 November 2017. Unfortunately, it was only brought to the attention of Mr Kavekotora on the 30th of November 2017, which is the date of the hearing.
PN: What detailed validation and analysis of the 46 000 files, which were transferred from the education ministry when NSFAF became an independent body in 2013, is required before the NSFAF management can appear before the parliamentary standing committee?
HN: The huge expectations on NSFAF from the public has compelled NSFAF staff members to be focused and committed to the noble vision of making NSFAF a sustainable and equitable organisation, which contributes to Namibian Human Capital Development, thus ensuring that our productive time, talents and resources are directed to serving students. The high public expectations have also provided NSFAF with both challenges and opportunities to do things differently. So, the 1997 to 2013 situation has and will be addressed from three different angles. The 46 000 files are only related to the period of 2009 to 2013, although in total NSFAF has close to 80 000 files, dating as far back as 1997, up until 2015
The NSFAF team has been spending 20 percent of its time focusing on the legacy issues related to the 1997 to 2013 situation and 80 percent of its time forward-looking. The aim was to lay the foundation for going forward and not spent time and resources on historical issues. As a result, the reconstruction of the accounts has not been completed, as anticipated. In the meantime, NSFAF key focus areas were, among others, the perfection of the loan and grants management information system, the creation of awareness in the remote areas and among the marginalised communities. In this regard, in 2016 NSFAF had a roadshow among the learner populations of the Kunene region; in addition to that, NSFAF also focused on the revision of the key critical policies namely Award and Recovery policies, and last but not least, the diversification of NSFAF products and engaging key strategic partners, such as banks, State-owned enterprises and philanthropists to collaborate and expand the number of Namibians to be assisted to access tertiary education.
In relation to the historical and legacy issues related to 1997 to 2013, the following key initiatives were undertaken by NSFAF:
Stage 1 of reconstructing the NSFAF legacy accounts or what is known as high-level reconciliation. This entails the matching of monies disbursed from Ministry of Finance to NSFAF against the money paid out to institutions of higher learning, using the NSFAF Student Bank Account. I wish to re-emphasis that this exercise revealed that no money went missing under the leadership of the previous accounting officers, Vitalis Ankama and Alfred Ilukena, who were permanent secretaries at one point during the period in question. I can speak with authority, as I spent a great deal of my career in government as an Auditor in the Office of the Auditor-General during the period under review (1996 to 2002). Fir the eight years that I spent in the Office of the Auditor-General, I have no recollection of any report(s) that were produced confirming that there were money missing at one of our client ministries, in this case the Ministry of Education. From 2002 to 2004, I was the Head of Internal Auditing at the Ministry of Finance, and my area of responsibilities included the production of the executive summaries for all Auditor-General reports for tabling in National Assembly by the Minister of Finance.
Initiative number two was the creation of a NSFAF students’ master file from manual records (1997 to 2013).
This initiative was carried out with the assistance of the Namibia Statistical Agency. At that time, NSFAF did not have a Chief Information Officer, the consultant who was acting in the position managed to get all historical manual files in the system. However, the initiative was not 100 percent successful. The key impediments to successfully recreating the NSFAF students’ master file were, among others, the quality of the records in the files for some students. For example, in some files the only record available is the manual application form, or in some cases, the payment schedule was the only document found in the file, but there was no application form to guide whether the money advanced to a particular student was loan or grant.
A further initiative was the second level of the reconstruction of accounts related to 1997 to 2013.
The list of 46 000 files need to be assessed to determine each amount that was received by each student, the total amounts should add up to the N$1.7 billion. In addition, the N$1.7 billion needs to be categorised into whether it was a loan or a grant. Grant amounts will be expensed in the accounting records, whereas a loan will be recorded as a receivable. The balance of the loan needs to further be analysed into how much of this amount is recoverable and if any amounts need to be written off as a result of the loan holder being deceased, unemployed or if they have migrated to another country. Such amounts need to be determined and recommended to the shareholder and Ministry of Finance, in order to be written off. The remaining balance needs to be reflected in the books of NSFAF and any future recoveries will be set-off against these balances and not the current treatment where recoveries are recorded as income.
PN: Do you think that it is fair that you are being effectively targeted, despite the fact that these issues came about before your tenure began?
HN: During the July 2016 Public Accounts Committee hearing, NSFAF made a public commitment that it will not shy away from the historical issues related to 2009, up to 2013, or 1997 to 2013. As indicated, during the period of 1996 up to 2002, I was at the Office of the Auditor-General and I was not the Accounting Officer of the Ministry of Education. I took over NSFAF as the Accounting Officer since May 2013, the historical issues fall into my scope of responsibility, as the ‘new’ Accounting Officer of the ‘new’ NSFAF. However, I find it very peculiar that NSFAF’s historical issues are personalised and directly attributed to me, and for reasons only known to those making unsubstantiated allegations. When I took over at NSFAF in May 2013, as the Accounting Officer, NSFAF accounts were audited by PwC, Annual Reports were produced and no money/ funds were reported as missing. It is therefore not fair and unjust to personalise or directly attack me and mislead the section of the public that might not have the opportunity to interrogate issues.
Confidente. Lifting the Lid. Copyright © 2015