"There is no evidence that public money was used to fund upgrades at the private residence of President Jacob Zuma in Nkandla," Nxesi told journalists in Pretoria on Sunday.
The minister, however, confirmed that over R200-million has been spent on beefing up security at the residence after it was declared a national key point in April 2010.
Nxesi was announcing the findings of a ministerial investigation into the upgrading of Zuma's rural homestead.
He was flanked by Justice Minister Jeff Radebe, State Security Minister Siyabonga Cwele and Police Minister Nathi Mthethwa.
The renovations at the president's rural residence became a bone of contention in 2012, when it was reported that over R250-million of public funds would be used for the upgrades.
The report instituted by Nxesi confirmed the state had paid R206-million for the security measures.
According to the report, R71-million was spent directly on security, while a further R135-million was spent on operational costs incurred by state departments involved in the upgrade.
Service providers 'questionable'
Nxesi said the choice of service providers for the upgrade was questionable.
"It's clear there were a number of irregularities with regards to appointment of service providers," he added.
The irregularities would be referred to the Special Investigations Unit, the auditor general and South African Police Service for investigation, he said.
Nxesi also claimed Zuma was not involved in the choice of service providers at the residence.
"President Zuma is not involved in this process whatsoever, the president is not involved at all. He could be informed about the upgrades, but not about the details,” he added.
Nxesi also defended the move to provide extensive security at the president's home, as it was declared a national key point.
"This is not the most expensive security upgrade carried out by the state, the issue is wherever the president is we need to make sure there is security," he added.
The Mail & Guardian reported last year that Zuma was indeed provided with exhaustive details about progress on the Nkandla security project in November 2010.
The documents, which refer euphemistically to the Nkandla expansion as "prestige project A", reveal how Zuma's supposed private contribution dwindled by half from more than R20-million to slightly more than R10-million, while the total costs more than doubled.
They also show that state funds were also spent on buildings for the personal use of the Zuma family and not only for new, adjoining security infrastructure, as claimed by the department of public works when first confronted about the R250-million spent on Nkandla.