Outa sounds alarm over Inseta fund that surged from R20m to R443m

The Organisation Undoing Tax Abuse (Outa) has blown the whistle on an extraordinary increase in student funding by the Insurance Sector Education and Training Authority (Inseta) that appears to have bypassed normal tender procedures and went to a little-known company – Mabophe Business Solutions.

Inseta set up the Insurance Sector Student Fund (ISSF) to support transformation in the insurance industry by funding student bursaries.

The fund receives financial contributions from both the private and public sectors. One of the larger corporate contributors is the Standard Bank Group.

The value of approved ISSF funding jumped from R20 million to R442.8 million between 2024 and 2025 – nearly 22 times over the previous year’s allocation.

The amount recorded as ISSF expenditure in the 2025 financial year was R158.7 million, of which R70 million was paid over to Mabophe.

Students left without funding

Despite the massive increase, 879 bursary recipients went without funding during the first five months of 2026, according to a recent Sunday Times report.

Some were forced to pay for their accommodation, while others were evicted.

This was after Inseta reportedly paid about R70 million to Mabophe to distribute funds to students, educational institutions and accommodation providers. Inseta then reportedly paid R4.6 million directly to accommodation providers as emergency relief.

In 2022, Inseta advertised a three-year tender for an ISSF project management provider.

Three bids were received, but the tender was officially cancelled because funding was unavailable. The bid cancellation was announced by suspended Inseta CEO Gugu Mkhize in February 2023.

Mkhize was placed on precautionary suspension in June pending further investigation into disbursement failures within Inseta.

Despite her suspension, Outa has launched legal proceedings challenging the October 2025 decision by Higher Education and Training Minister Buti Manamela to reappoint Mkhize for a further five-year term to 2030, arguing that the appointment was procedurally flawed and lacked governance oversight.

Inseta has received qualified audit opinions from the Auditor-General for the last four financial years.

Mabophe appointment under scrutiny

Outa says it must be established how Mabophe was appointed.

It notes that the company has no discoverable company website setting out its services or experience, although it has been engaged by several Setas for different services, including fundraising, events and project management.

According to Outa, the publicly available information does not demonstrate that Mabophe has sufficient experience to manage tens of millions of rand in student funding.

“Key facts surrounding the payment failures include the fact that Inseta paid approximately R70 million to a middleman service provider, Mabophe Business Solutions, which failed to distribute the funds to the intended recipients, namely the students, their tertiary institutions or accommodation providers,” says Outa.

“Consequently, the affected students faced immediate threats of eviction, food insecurity, and potential academic exclusion. Inseta was compelled to provide emergency relief in the form of a R4.6 million direct payment to prevent student evictions.

“Mkhize’s suspension is reported to be part of broader governance controversies, with investigations tracked by civil groups and reports that highlight wider scrutiny of Inseta operations.”

One of the students who spoke to Outa is studying at the Central University of Technology in Bloemfontein. He invoiced Mabophe for his accommodation in July 2025 but did not receive payment during the year.

Despite holding a bursary that was meant to cover these costs, he ultimately had to pay for his accommodation out of his own pocket.

CEO’s suspension welcomed

Outa welcomed the proactive precautionary suspension of Mkhize on 3 June following the multi-million-rand breakdown of the ISSF, but said it had identified systematic vulnerabilities within the fund dating back to 2022, culminating in the unprecedented contract inflation during the 2025 financial year.

“Through the consolidation of four separate years of official Inseta annual reports, disclosure notes and commitments schedules, Outa has established an unassailable financial trail.

“This trail systematically dismantles any defence of ‘normal contract growth’ or ‘historical roll-over’,” it said.

Using data from Inseta’s annual reports, Outa says Inseta successfully managed the ISSF as a highly contained and minor portfolio. Contract values between these years ranged between R18.6 million and R20 million annually.

Things went awry in the 2025 financial year, when the ISSF budget increased to R442.8 million and actual spending jumped to R158.7 million.

It is therefore crucial for Inseta to provide its general ledger showing where the money went.

“Further investigations must be done to establish if Mabophe was appointed through the correct procedures and what is its mandate,” said Outa.

Questions over ASCEO

Another red flag identified by Outa is the formation of a non-profit organisation called the Association of Seta Chief Executive Officers (ASCEO). Its formation was announced on Inseta’s Instagram page on 6 August 2025.

The three founding directors were Inseta’s Mkhize, Nokuthula Selamolela of FoodBev Seta, and Felleng Anacleta Yende of the Fibre Processing and Manufacturing Seta.

There are 21 Sector Education and Training Authorities (Setas) overseen by the Department of Higher Education and Training and funded by a 1% payroll tax collected from employers in different economic sectors.

“The registration and purpose of this NPC [non-profit company] is unclear and suspicious and should be further investigated,” Outa said.

Moneyweb reached out to Inseta for comment but had not received a response by the time of publication.

This article was republished from Moneyweb. Read the original here.