One goverment agency paying R133,000 for a single parking space over 5 years

The National Student Financial Aid Scheme (NSFAS) is paying R18.6 million over five years for parking bays at its offices in Cape Town.  

This was revealed following written questions in Parliament, asking the Minister of Higher Education about parking bays. 

The minister explained that NSFAS would spend R4 million this year leasing 140 parking bays at its high-end head office in Cape Town, which costs R2,431 per bay each month.

By the end of the five-year lease agreement, which began in February 2022 and will expire on January 31, 2027, NSFAS will have paid a total of R18.6 million for these parking bays.

This amount means the cost per parking space over the five-year period is approximately R133,000.

Additionally, NSFAS is currently paying R2.5 million per month to occupy five floors in The Halyard building located in the city centre.

This rental agreement includes views of the ocean and Table Mountain, as well as the lease for the 140 parking bays.

Despite the issue of leasing offices in a premium city building, the cost of parking spaces is not unheard of in Cape Town. 

This is according to Rob Kane, CEO of the Boxwood Property Fund, which has invested R1.4 billion in buildings in the Cape Town city centre.

Speaking to CapeTalk, Kane said that Boxwood owns a lot of parking in the city centre and conducts regular surveys to determine whether its rentals are market-related.

The cost of indoor parking, of course, decreases the further one moves towards the periphery of the city.

“We’re finding rentals anywhere from R1,800, and we recently saw new builds at R2,400 per bay per month.”

He added that parking is actually expensive to build and that a new-build bay should be rented out for closer to R3,000 to recoup the cost of all the concrete you’ve just built.

Despite this, political parties have stated that the main issue is the decision to rent a premium office in Cape Town, considering the significant financial challenges that NSFAS faces.

Wasteful and at the expense of students

NSFAS is currently grappling with significant funding and operational challenges that adversely impact students across South Africa.

A notable issue is the student accommodation crisis, stemming from inadequate planning and risk assessment in a pilot project initiated in 2022/23. 

This oversight resulted in payment delays for over 3,800 accommodation providers, affecting more than 100,000 students. 

Consequently, many students faced eviction threats and were forced to secure housing independently, often in substandard conditions.

Additionally, R5 billion is expected to be cut from NSFAS funding by 2026/27, with higher education spending expected to drop from 2% to 1.78% of GDP. 

This has caused delays in tuition and living allowance disbursements, as noted by the Durban University of Technology. 

As a result, some universities have had to use their budgets to support students while waiting for NSFAS reimbursement.

According to the lease agreement seen by News24, the total cost of the office rental over five years is R166.9 million. NSFAS was also liable for so-called “fit-out” costs, an additional R33.3 million. 

In light of this, the DA said the Cape Town office rental was an extravagant waste of students’ money and should never have been allowed to happen in the first place.

The EFF also commented on the issue and asked why millions were being paid to have offices in Cape Town when there are acceptable buildings in Johannesburg and Pretoria that they could have used. 

The Special Investigating Unit (SIU) has now confirmed irregularities in the lease procurement process. It is currently in the process of applying to the Special Tribunal to set aside the lease agreement. 

In response to this development, NSFAS stated that it was also concerned about the costs associated with the rental and would join the SIU as a co-applicant to set aside the contract. 

A spokesperson said that while the arrangement pre-dates the appointment of the current NSFAS board, it acknowledges that R18.6 million over five years represents a significant expenditure.

“The NSFAS board fully supports the Minister of Higher Education’s decision that NSFAS must be decentralised and its head office relocated to a cost-effective location. That is why NSFAS supports the SIU process to terminate the current head office lease.”

The spokesperson added that NSFAS had developed contingency plans for relocation for an immediate lease termination, focusing on ensuring minimal disruption to operations and staff.

“NSFAS remains committed to implementing its turnaround strategy and ensuring transparency and accountability in all its operations,” they said.