The National Student Financial Aid Scheme (NSFAS) has joined forces with the Special Investigating Unit (SIU) in a bid to nullify its controversial lease agreement for the scheme’s Cape Town head office, which costs taxpayers a staggering R2.5 million per month.
The joint application was submitted to the Special Tribunal by 30 April 2025, as NSFAS moves to legally challenge the lease following damning findings by the Auditor-General of South Africa (AGSA) and the SIU.
Legal Challenge Based on Public Procurement Law
NSFAS confirmed that the legal challenge would be based on public law principles, which govern procurement by state institutions, rather than traditional contractual law. The approach is intended to help NSFAS avoid penalties for breach of contract, as the lease agreement is still active.
“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.
AGSA and SIU Findings Spark Tribunal Case
The Auditor-General flagged non-compliance with the Public Finance Management Act (PFMA) after NSFAS failed to notify National Treasury about cost escalations related to the Foreshore lease.
The SIU also uncovered procurement irregularities, prompting it to initiate legal proceedings to set aside the lease.
NSFAS says it is fully cooperating with the investigation, which is being conducted under Proclamation R.88 of 2022, gazetted on 26 August 2022.
Relocation Plans Underway — But No New Premises Secured
NSFAS is preparing for a potential relocation to avoid operational disruptions should the lease be terminated. However, no alternative premises have been finalised.
“The date for moving premises is unknown at this stage as new premises have not yet been procured,” said Higher Education Minister Nobuhle Nkabane.
Months of Criticism Over High Costs and Accessibility
The lease, signed for offices in Cape Town’s Foreshore area, has faced sustained criticism since 2022 over its high cost, limited student accessibility, and the fact that NSFAS allegedly paid for unoccupied office space.
In 2023, UDM leader Bantu Holomisa called for a criminal investigation, claiming NSFAS paid nearly R20 million between December 2021 and September 2022 before the offices were fully occupied.
While former spokesperson Slumezi Skosana defended the move as a student access improvement, others argued that the Wynberg office was more accessible and cost-effective.
Decentralisation Process Also Delayed
In parallel, NSFAS’s plan to decentralise operations by opening provincial offices has also faced setbacks. On 25 February 2025, the CCMA ruled that the Decentralisation Task Team must pause its work pending consultations with the majority union at the Bargaining Forum.
Final Word
With more than R2.5 million spent monthly and questions about procurement legality, NSFAS’s Cape Town office lease remains a major financial controversy. The outcome of the Special Tribunal case could determine whether the lease is legally nullified and if future public procurement by NSFAS will be more tightly regulated.
For now, NSFAS continues to face scrutiny over governance, spending, and accountability, even as it remains central to funding more than a million students nationwide.
#NSFASLeaseDispute #SIUInvestigation #CapeTownOfficeControversy #NSFASNews #PublicProcurementSA #HigherEducationSA