What prompted the National Student Financial Aid Service to move its head office from a modest location in a suburb of Cape Town to a prime new location in the city centre - with a corresponding increase in rental costs?
Is it best for students to have to sign up with new financial providers and pay transaction costs to access their NSFAS allowances - when the bank accounts they probably already have would usually come without transaction costs for things like cash withdrawals?
Because of some unusual decisions taken by NSFAS over the last few months, the civil society organisation that campaigns for transparency in the way that tax money is spent decided to investigate.
Leader of the UDM General Bantu Holomisa is also concerned about the new offices rented by NSFAS and has written a letter to the SIU and Hawks asking them to launch a criminal investigation into the move.
Holomisa alleges that the student funding body paid R2million per month from December 2021 to September 2022 - even though it had not yet taken residence in the new offices. He says this totaled almost R20 million - at a time when students are struggling to find accommodation they can afford..
The Organisation Undoing Tax Abuse (OUTA) launched their own investigation into the NSFAS office contracts after conducting an investigation into a large Services Sector Education and Training Authority Services (SETA) tender with the Grayson Reed consortium.
OUTA found the service providers were linked to other tenders among the SETAs and NSFAS and followed those links.
The organisation looked into three tenders which include a five-year contract for the direct payment of NSFAS allowances to students which OUTA believes could be worth at least R1.5 billion.
This cost will be paid directly by the students out of their allowances as it will be deducted from their NSFAS bank accounts.
The investigation found that NSFAS hired service providers without banking licenses or VAT registrations to make direct payments of student allowances, which offer students more expensive accounts and banking fees than what is available from four of South Africa's biggest commercial banks.
The organisation states that documentation showed that the initial service fees on the proposed NSFAS bank card would be approximately R102 per month including VAT.
However, after OUTA sent a letter to NSFAS about their concerns, the service fees were reduced to R29 per month which is still higher than competitive bids.
They say that the NSFAS bank card would favour the contractors and not the students.
OUTA’s portfolio manager on this project, Rudie Heyneke said:
We believe the students are being locked into very expensive deals aimed at benefiting the service providers, not the students, which smacks of an enrichment scheme for the new, inexperienced companies, who stand to rake in hundreds of millions of rand at the expense of students and taxpayers,
NSFAS has acknowledged that they must still negotiate with service providers to add value to the NSFAS bank cards for students.
OUTA's research has shown that most of the commercial banks in the country already offer accounts structured for students with low banking fees and costs and substantially more value-added services than the service providers who have been approved for the NSFAS bank cards.
NSFAS has also been investigated for spending more money on offices for their staff than they allow students for accommodation.
The bursary scheme entered into an office lease for five years which will cost R166.906 million. OUTA has found that should all employment positions at NSFAS be filled, the total cost per employee per year to lease the building will amount to R74 000.
The organisation has noted that this is higher than the subsidies for student accommodation which NSFAS cut to R45 000 per student per year, which has left many students unable to afford accommodation.
NSFAS spokesperson Slumezi Skosana says that the main reasoning for moving to this office building in the city centre was to be closer to their stakeholders and to be more easily accessible for students.
He said that the offices in Wynberg, outside Cape Town were not accessible to students - even though it was within two blocks of a major transport interchange which includes train, bus and taxi routes.
The new NSFAS offices on the Foreshore in Cape Town are not situated on major taxi or bus routes and are a long walk from the central Cape Town train station.
Skosana denies that the building was left unoccupied - but accepts that the move was staggered with departments moving at different times.
"The first two months we were given a rental holiday and then the third month we paid 50%. The allegation is unfounded," said Skosana.
Responding to allegations that some offices in the new building are still unoccupied, Skosana explains that the organisation is working to its current 5 year plan and needs the capability to plan ahead and have space for future growth.
Skosana says he cannot speak to the rate per square metre charged in central Cape Town. He confirmed that the organisation is currently funding 1,020,000 students. He did not specify how many are actually based in Cape Town and would ever need to visit the organisation's head office in person.
He emphasised that the NSFAS annual budget is R47,6billion per annum and that their work was pouring a skilled workforce into the South African economy every year. Based on this, he felt that the approximately R24 million spent on rental each year was not significant.
