The National Student Financial Aid Scheme (NSFAS) has come under fire for its costly office rentals while enforcing strict accommodation allowance limits for students. Recent reports reveal that the scheme's rental expenses could surpass the R100 million mark over the past two years.
NSFAS has spent over R88 million on its head office rental in Cape Town’s Foreshore area, according to a recent parliamentary disclosure by Higher Education and Training Minister Nobhule Nkabane.
The Minister revealed that the rental agreement, signed on 22 March 2022 but effective from 1 December 2021, was authorized by former NSFAS CEO Andile Nongogo. The office space was reportedly chosen through a competitive bidding process to ensure value for money and compliance with procurement regulations.
The five-year rental contract, valued at R154.3 million, includes annual rent escalations. As of October 2024, NSFAS has paid R88.3 million, which covers rent, building fitments, and parking bays. However, utility costs—amounting to an additional R6.2 million for electricity and rates—bring the total expenditure to R94.5 million. These payments were made to Dynamic SA Holding (Pty) Ltd, covering the period from December 2021 to October 2024.
Rising Controversy Over Office Space
The substantial rental costs have sparked public outcry, particularly as NSFAS grapples with criticism over delayed student funding disbursements and allegations of mismanagement during Nongogo’s tenure.
The move to Cape Town’s Foreshore drew further controversy after United Democratic Movement (UDM) leader Bantu Holomisa called for a criminal investigation in 2023. Holomisa alleged that NSFAS had paid nearly R20 million for unoccupied office space between December 2021 and September 2022. NSFAS, however, refuted this, explaining that the relocation was phased in and included a two-month rental holiday.
Former NSFAS spokesperson Slumezi Skosana defended the move, citing improved accessibility for students and closer proximity to stakeholders as key reasons. However, critics argued that the previous Wynberg offices were better located near major transport hubs, while the new Foreshore location requires a 2 km walk from the nearest bus terminus.
The Organisation Undoing Tax Abuse (OUTA) also highlighted the disparity between NSFAS’s office rental costs and its student support allowances. According to OUTA, the annual rental cost per employee—R74,000—far exceeds the R45,000 annual accommodation cap provided to students.
This discrepancy has fueled backlash, particularly from students in urban areas where rental costs exceed the NSFAS allowance. OUTA has questioned whether the scheme prioritizes service providers over students.
Calls for Decentralisation and Accountability
In response to mounting criticism, Higher Education Minister Nkabane announced plans in September to terminate NSFAS’s rental agreement for its Cape Town headquarters.
Earlier this year, the government unveiled plans to decentralise NSFAS’s operations, with new offices set to open in the Eastern Cape, Gauteng, and KwaZulu-Natal. As part of this restructuring, the Cape Town headquarters will be closed.
The decision to relocate stems from criticism over the high rental costs, which are now considered unsustainable. While the initial move to Cape Town was justified by a lack of capacity at the Wynberg offices, the current contracts with the landlord are set to be terminated in favour of a more cost-effective, decentralised approach.
