Western Cape High Court Declares NSFAS Payment Contracts Invalid

Posted 14 June 2026 Written by Acts Online
Category Public Procurement

Brought to you by SAnews: The Western Cape High Court has ruled that the procurement processes and service level agreements (SLAs) entered into by the National Student Financial Aid Scheme (NSFAS) for its student funding payment system are unconstitutional, unlawful, and invalid.

In the matter of eZaga Holdings (Pty) Ltd v NSFAS and Others (Case No. 9526/2024), the Western Cape High Court upheld contentions regarding severe procurement irregularities. The court affirmed that NSFAS has a constitutional duty under section 217 of the Constitution of the Republic of South Africa, 1996, to address and rectify procurement failures that do not comply with fair, equitable, transparent, competitive, and cost-effective public procurement standards.

The court identified several critical administrative and procurement failures in the tender process, including:

  • Improper cancellations of prior tenders;
  • Irregular drafting and approval of bid documents;
  • Non-compliance with mandatory public procurement requirements; and
  • Inadequate internal financial and administrative controls.

The ruling invalidates the SLAs concluded between NSFAS and the following service providers:

  • eZaga Holdings (Pty) Ltd;
  • Coinvest Africa (Pty) Ltd;
  • Noracco Corporation (Pty) Ltd; and
  • Tenet Technology (Pty) Ltd.

Despite declaring the contracts invalid, the court found no evidence linking the appointed service providers to maladministration, corruption, or other improprieties. Consequently, the court ordered just and equitable compensation, permitting the affected service providers to claim reasonable expenses and profits demonstrably incurred under the now-invalidated SLAs. These claims will be subjected to independent verification and strict auditing scrutiny.

What this means for you, your business, or your clients

  • For yourself: No direct individual compliance obligations; professional awareness of judicial remedies regarding public procurement invalidation is advised.
  • For your business: Advisory firms representing public sector suppliers must note that even where a tender is set aside for state-side administrative irregularities, courts may grant just and equitable compensation for expenses demonstrably incurred if no supplier-side fraud is proven.
  • For your clients: Public sector contractors and bidders must ensure strict compliance with tender specifications, as public entities have a constitutional duty to self-review and set aside non-compliant awards, risking contract cancellation despite lack of supplier-side fault.

Originally published at https://www.sanews.gov.za/south-africa/nsfas-siu-welcome-ruling-student-funding-payment-contracts

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