Department Will Terminate R2.5 Million A Month NSFAS Lease, ending a costly agreement. Read about its impact and future changes.
The Chairperson of the Portfolio Committee on Higher Education and Training, Tebogo Letsie has welcomed the proposed plans by the Higher Education Minister to terminate the rental agreement of the National Financial Aid Scheme (NSFAS) headquarters in Cape Town.
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The NSFAS headquarters in Cape Town has always been a sore point for the committee since moving from its previous leased building in Wynberg to the Cape Town City Centre.
Plans were recently unveiled which indicated that NSFAS decentralised its operations, with new offices set to open in the Eastern Cape, Gauteng, and KwaZulu-Natal. As part of this restructuring, the current NSFAS headquarters in Cape Town will be closed.
The Cape Town office has been criticised for high rental costs, which no longer make business sense. The decision to move to Cape Town was initially driven by a lack of capacity in the old offices, but contracts with the landlord will now be terminated.
While many students suffered in terms of funding, getting their allowances on time and accommodation challenges, the entity enjoyed a building with scenic views at a whopping R2.5 million a month.
The committee has always been critical of the decision by NSFAS to move its headquarters to a place where most of its clients do not have access to their services.
Letsie said the termination of the Cape Town office lease agreement was long overdue.
NSFAS budget is bigger than many national departments and we have always maintained that the offices of NSFAS must be in Gauteng where we have the highest concentration of the student population.
Why The Cape Town Office Move Was Controversial For NSFAS
In early 2023, United Democratic Movement (UDM) leader Bantu Holomisa called for a criminal investigation into NSFAS’s rental arrangements. The parliamentary member alleged that the organisation paid nearly R20 million for office space between December 2021 and September 2022 without occupying the premises.
Former NSFAS spokesperson Slumezi Skosana Skosana says that the main reason for moving to the Cape Town city centre was to be closer to their stakeholders and be more 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 Cape Town NSFAS offices on the Foreshore in Cape Town are not situated on major taxi or bus routes and are an approximately 2 km walk from the Grand Parade bus terminus.
Skosana denied that the building was left unoccupied during the first two months in which the government bursary scheme paid rent. However, they acknowledged 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.
Per Capita Office Rent More Than Annual Student Accommodation Allowance
The Organisation Undoing Tax Abuse (OUTA) pointed out that the annual cost per employee for office space exceeds the amount students are allocated for accommodation.
NSFAS has entered into a five-year office lease costing R166.9 million, which amounts to R74,000 per employee per year, compared to the R45,000 allocated for student accommodation annually.
The introduction of the R45,000 NSFAS accommodation cap was particularly problematic for students enrolled in institutions in metropolitan areas where annual rent would exceed the NSFAS accommodation allowance.
OUTA raised concerns about the fairness of these financial decisions, suggesting they benefit service providers rather than students.