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SASSA backs itself into a corner

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 23 Feb 2017
Social development minister Bathabile Dlamini. (Photo source: GCIS)
Social development minister Bathabile Dlamini. (Photo source: GCIS)

Cash Paymaster Services (CPS), a subsidiary of US-based Net1 UEPS Technologies, will have the upper hand to negotiate for a bigger slice of the pie following an admission by social development minister Bathibile Dlamini that government is in talks to extend the current social grant payments contract.

It is reported that CPS has demanded an additional R1.3 billion to extend the tender.

According to Business Day, Serge Belamant, CEO of Net1 UEPS Technologies, has said he will look to secure higher payment for any new contract on the grounds that CPS's fees have been fixed for the past five years.

The issue of social grant payments has caused whirlwind confusion in SA, as worries persist that the most vulnerable citizens will be left stranded come 1 April.

Social grant payments are administered and distributed by CPS after it was awarded a five-year, R10 billion tender in January 2012.

The tender was declared invalid by the Constitutional Court (ConCourt) in 2013, and the South African Social Security Agency (SASSA) was ordered to initiate a new tender process for the payment of social grants.

In 2015, SASSA issued a new tender contract but did not award the tender, opting to move the payment of social grants in-house. The agency has admitted it has come up short to find working solutions to pay social grants.

Since then, there has been little to no clarity from the Department of Social Development and SASSA on which service provider will take over when the payments contract servicing 17 million beneficiaries expires at the end of March.

After failing to appear in front of the social development portfolio committee in Parliament on several occasions, Dlamini finally showed her face yesterday.

She admitted her department and SASSA are in the process of negotiating with the current service provider.

Dlamini told the committee: "We've been working in a very united manner; we've agreed to disagree where there are disagreements. We have also agreed that as SASSA, we are taking the process forward, and we are very clear that on the 1st of April we are going to pay grant recipients."

Last-minute scramble

It would appear the CPS contract extension is a last-ditch move to avert social payment disaster, particularly as over the years, SASSA's relationship with the Net1 subsidiary soured as allegations of unlawful dealings and corruption persisted.

The social development department, SASSA and Net1 have been at odds, following complaints from beneficiaries that deductions were carried out on their bank accounts before grants were paid out.

Serge Belamant, CEO of Net1 UEPS Technologies.
Serge Belamant, CEO of Net1 UEPS Technologies.

This resulted in the department making amendments to the Social Assistance Act of 2004, whereby nobody is allowed to deduct money from a social grant beneficiary's account.

The department's decision to regulate the accounts of social grant recipients was not received well by financial service providers, including Net1.

Following the introduction of the amendments, in June, Net1 filed for a declaratory order with the North Gauteng High Court requesting certainty on "the interpretation of the Social Assistance Act of 2004 and recent regulations promulgated in terms thereof".

SASSA followed suit and filed criminal charges against CPS for failing to comply with the newly amended regulations in the Social Assistance Act.

According to SASSA, deductions made from social grant beneficiaries' money are illegal and Net1 abused its position as the contractor handling social grant payments.

ConCourt to the rescue

When SASSA officials appeared in Parliament on 1 February, they told the portfolio committee members they will ask the ConCourt to extend the unlawful tender contract.

SASSA was expected to submit a progress report with the ConCourt explaining why it requires the contract to be extended on three different occasions, but failed to do so.

Last week, social development spokesperson Lumka Oliphant could not confirm when SASSA or the department will file an application with the ConCourt to have the contract extended.

The department will issue a statement once it has filed its application with the ConCourt, she said.

Reports have since emerged that the minister plans to approach the ConCourt by 31 March and will seek the approval of National Treasury to ensure social grant beneficiaries are paid on 1 April.

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