The National Student Financial Aid Scheme (NSFAS) has joined the Special Investigating Unit (SIU) in an application to the Special Tribunal to nullify its controversial lease agreement for its Cape Town head office.
This follows years of criticism over NSFAS’s R2.5 million monthly rent for offices in Cape Town’s Foreshore area.
During a recent briefing to the Portfolio Committee on Higher Education, NSFAS said the move is in response to findings by the Auditor-General of South Africa (AGSA) and the SIU.
The AGSA flagged non-compliance with the Public Finance Management Act (PFMA). This was because NSFAS failed to inform National Treasury of cost escalations tied to the lease.
The SIU also confirmed procurement irregularities and notified NSFAS of its intent to challenge the lease in court. As a co-applicant, NSFAS submitted its application to the Special Tribunal by 30 April 2025.
The scheme said the legal challenge will rely on public law, which governs procurement processes, instead of contractual law, due to alleged maladministration.
The application by the SIU at the Special Tribunal will not be premised on contractual law but public law, which governs public procurement.
NSFAS stated this legal approach aims to avoid incurring penalties for breach of contract.
The scheme said they are cooperating with the SIU's investigation, which falls under Proclamation R.88 of 2022, authorising scrutiny of NSFAS operations.
NSFAS is currently responding to requests for information from the SIU as part of the current investigation in terms of Proclamation R.88 of 2022, published in the Government Gazette on 26 August 2022.
NSFAS is also preparing relocation plans to prevent operational disruptions if the lease is terminated.
Months of Criticism
In 2024, NSFAS came under fire for its R2.5 million monthly lease at the Foreshore offices.
The scheme’s Legal Services Unit launched a review to reduce leased space or terminate the lease entirely. However, the review originally due 25 October 2024 was delayed.
At the time, Higher Education Minister Nobuhle Nkabana said the delay was because no alternative premises had been secured.
The date for moving premises is unknown at this stage as new premises have not yet been procured. The same applies to the addresses of where these premises will be.
Meanwhile, the decentralisation process, which includes opening provincial NSFAS offices, has also been delayed.
On 25 February 2025, the Commission for Conciliation, Mediation and Arbitration (CCMA) ruled that the Decentralisation Task Team’s work be paused until consultations are held with the majority union at the Bargaining Forum.
Controversy Over NSFAS's Cape Town Move
NSFAS’s relocation to the Foreshore has been criticised for its high cost and poor accessibility for students. In early 2023, UDM leader Bantu Holomisa called for a criminal probe, alleging NSFAS paid nearly R20 million between December 2021 and September 2022 for unoccupied office space.
Former NSFAS spokesperson Slumezi Skosana defended the move as an effort to enhance student access. However, critics argued that the former Wynberg office better served students.
Skosana denied claims the offices were vacant for the lease’s first two months, stating NSFAS phased in operations during that period and received a discount.
