NSFAS Accommodation Scandal: $1 Billion Lost

Outrageous Fraud at South Africas NSFAS: A Billion Rand Lost to Flawed Contracts and Ghost Students

A new investigation by the Organization Undoing Tax Abuse has uncovered major issues at South Africas National Student Financial Aid Scheme (NSFAS). Outsourcing student housing management has resulted in a staggering loss of up to one billion rand for taxpayers. The problems stem from flawed contracts and weak oversight during the tenure of former CEO Andile Nongogo and ex-chairperson Ernest Khosa.

NSFAS signed five-year deals with four tech firms in 2023 to manage an online accommodation portal. These companies charged a five percent fee from landlord payments, keeping eighty percent of the cut, which amounted to hundreds of millions over time. Landlords have complained about delayed or short payments, with one provider receiving just one thousand one hundred seventy-five rand per student instead of over three thousand.

The situation worsened when thirty-nine accreditation agents skipped proper inspections, certifying inflated bed counts for ghost students. Outa flagged ten thousand suspicious listings out of two hundred fifty thousand beds, including a small house in Richards Bay certified for two hundred residents based on bogus checks.

NSFAS has terminated its contracts with the four providers and is working with probes, including the Special Investigating Unit, to address the issues. The organization is also reviewing Outas recommendations to fix the accommodation chaos.

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