SONA 2026: More task teams, still no consequences (copy) (copy)

The Organisation Undoing Tax Abuse (OUTA) has concluded a two-year investigation into corruption risks, governance failures, and student accommodation quality within the NSFAS (National Student Financial Aid Scheme) student accommodation system, finding that structural changes materially altered how billions in public funds flow through the student accommodation pipeline on which thousands of students depend.

This investigation builds on OUTA’s earlier report released in December 2023. It incorporates additional documentary analysis, Promotion of Access to Information Act (PAIA) records, and whistleblower disclosures gathered over the past two years. While recent public and political pressure has again placed NSFAS student accommodation under scrutiny, the warning signs have been visible for years.

Key findings from the OUTA investigation

• Structural changes to the NSFAS student accommodation model introduced multiple intermediaries into the funding pipeline.
• Accreditation agents approved properties that did not comply with DHET minimum norms and standards.
• One property listed as accommodating 200 beds appeared to be an ordinary three- or four-bedroom house.
• The NSFAS board appointed four student accommodation online portal providers despite two being recommended by the evaluation committee, including a company previously disqualified.
• Service level agreements allow automatic deductions from accommodation payments, raising concerns about how student housing funds are distributed.

The current student accommodation pilot project was introduced during the tenure of former NSFAS CEO Andile Nongogo and former NSFAS board chair Ernest Khosa. Prior to the introduction of the student-centered accommodation model, universities largely administered accommodation placement directly, and NSFAS did not manage accommodation systems directly.

Under the redesigned approach, a centralised student accommodation portal was introduced, and external accreditation agents were appointed to inspect and grade properties registered on the system. These changes inserted several intermediaries into the accommodation funding pipeline and fundamentally altered how accommodation providers, institutions, and NSFAS interact.

“There were already accommodation placement systems operating successfully at many universities,” says Stefanie Fick, OUTA’s Executive Director of Accountability. “Instead of building on those systems, NSFAS introduced a new portal and outsourced critical functions to external service providers and accreditation agents.”

According to OUTA, the redesign significantly changed how accommodation funding is administered and increased the number of entities involved in the system.

In terms of the service level agreement, the four appointed solution providers earn at least 4% of the total amount NSFAS pays for student accommodation. Over the duration of the contracts, this could amount to between R600 million and R1 billion.  According to OUTA, these costs ultimately fall on taxpayers for a function that should ordinarily be performed within NSFAS itself.   If these funds were directed towards accommodation providers, it could reduce the financial pressure on the system and limit the need for “top-up” payments at certain private residences.

“Our investigation found that accommodation providers paid approximately R33 million to register their beds on the student accommodation portal,” says Heyneke. “In addition, for eight months during 2025, roughly R230 million was withheld from accommodation providers to cover a so-called licence fee linked to the mandatory use of the portal.”

“When you introduce multiple intermediaries into a funding pipeline that manages billions in public funds, strong controls become absolutely essential,” says Fick. “If those controls are weak, the system becomes vulnerable.”

Against this background, OUTA’s investigation examined how the redesigned system operates in practice.

The investigation uncovered serious weaknesses in the accreditation and inspection of student accommodation properties.

With additional information now available, OUTA found that some accreditation agents failed to properly inspect buildings, submitted incorrect data to NSFAS, and, in certain instances, awarded top grading to properties that did not comply with the minimum norms and standards prescribed by the Department of Higher Education and Training (DHET).

In several cases, accommodation providers registered a high number of beds on the NSFAS accommodation portal, after which accreditation agents certified the bed capacity and issued an “A grading” for the property.

A closer review by OUTA revealed that one such property listed as accommodating approximately 200 beds appeared to be a normal three- or four-bedroom house.

“These findings raise serious concerns about the credibility of the accreditation process,” says Rudie Heyneke, OUTA’s senior project manager leading the investigation. “If agents are certifying properties without proper inspections or approving bed numbers that clearly do not reflect reality, then the reliability of the entire accommodation system must be questioned.”

OUTA has requested that NSFAS conduct a full audit and physical inspection of the identified properties.

OUTA’s investigation also examined the procurement and appointment of solution providers responsible for managing the NSFAS student accommodation portal.

Documentation reviewed by OUTA indicates that the bid evaluation committee initially recommended the appointment of two solution providers to administer the accommodation system. However, the NSFAS board ultimately resolved to appoint four service providers.

One of the companies that was subsequently appointed, Training Young Minds, had earlier been disqualified during the evaluation process but was later reinstated for further consideration.

“The procurement process raises important governance questions,” says Heyneke. “If an evaluation committee recommends a certain outcome and a different outcome is implemented, there must be clear justification and transparency around that decision.”

The service level agreements between NSFAS and the appointed solution providers further reveal how funds move through the accommodation system.

According to these agreements, NSFAS automatically deducts 5% from accommodation rental payments before distributing funds between the solution providers and NSFAS itself.

In OUTA’s view, this arrangement raises serious governance concerns, as NSFAS is the funding entity responsible for supporting students’ accommodation and should not benefit financially from funds intended for accommodation providers.

The agreements also make provision for additional fee structures involving NSFAS, the solution providers, and accreditation agents for fees paid by accommodation providers to register beds on the accommodation portal.

“These arrangements introduce multiple financial interests into a system that should primarily serve students,” says Heyneke. “Where public funds move through several intermediaries, strong transparency and oversight are essential.”

OUTA’s investigation also reviewed documentation relating to student accommodation off-take agreements - an initiative introduced during the Nongogo and Khosa leadership period that proposed entering into lease agreements of up to 20 years with accommodation providers.

According to NSFAS’s response to OUTA’s PAIA request, the organisation was unable to locate business plans or board resolutions supporting the development and implementation of this initiative.

“If long-term lease agreements were pursued without proper planning or board oversight, that would represent a serious governance failure,” says Fick.

Another significant finding relates to the long-standing narrative that South Africa faces a severe shortage of student accommodation.

Information provided by NSFAS itself indicates that at several institutions, the number of accredited beds exceeded the number of beds funded.

This discrepancy raises difficult questions.

If sufficient accredited beds exist but are not funded, students are being destabilised unnecessarily. Or is money being allocated to beds that only exist on paper?

Either answer signals governance failure.

“The numbers do not align with the public narrative that has been presented for years,” says Heyneke. “If the data provided by NSFAS is correct, we need to rethink how accommodation shortages have been communicated. If the data is incorrect, that raises serious questions about internal controls.”

OUTA emphasises that the majority of student accommodation providers operate within the Department of Higher Education and Training’s minimum norms and standards. Many facilities are compliant, safe, and properly managed. The issue is not the entire sector, but whether the governance framework protecting NSFAS student accommodation funding is robust enough to prevent abuse and safeguard public funds.

The consequences of instability within the accommodation system are felt most directly by students. Payment delays, uncertainty around placement, and administrative breakdowns can leave students unsure about where they will live at the start of the academic year.

“A funded student should never start the academic year unsure where they will sleep,” says Fick. “Student accommodation funding must deliver beds and stability. If the system creates confusion, weak verification, and opportunities for abuse, it must be fixed.”

OUTA will share its report with the NSFAS board, the Auditor-General of South Africa, and the Special Investigating Unit (SIU), which already has a proclamation to investigate aspects of NSFAS operations.

Students deserve stability and safety. Taxpayers deserve accountability. The NSFAS student accommodation system requires reform.

Supporting Documents

A copy of the report can be found here. 

Annexure A - DHET Guidelines Bursary Scheme 

Annexure B - SLA Solution Provider 

Annexure C - PAIA Request 

Annexure D - NSFAS Internal Memo 

Annexure E - NSFAS Presentation: FAPSA Conference 2025 

Annexure F - Spreadsheet Beds and Payments 

Annexure G - Spreadsheet: Total Beds 

Annexure H - Offtake Successful Applicants 

Annexure I - Letter Example Successful Bidder 

Annexure J - Letter Example Unsuccessful Bidder 

Annexure K - OTP 27 Davies Street 

Soundclips are available here in

English

Afrikaans and 

Zulu