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No end in sight for social grant crisis

Finance minister Pravin Gordhan appeared before Parliament's public accounts watchdog this morning.

Finance minister Pravin Gordhan appeared before Parliament's public accounts watchdog this morning.

As the issue of the social grants debacle continues to unfold, finance minister Pravin Gordhan appeared before the Standing Committee on Public Accounts (Scopa) in Parliament this morning, to speak on National Treasury's role as accounting authority of state entities.

With less than three weeks before the contract with the current payments distributor reaches its sell-by date, there is still no clarity on how social grants will be paid, nor is there an agreement in the pipeline with an entity to take over these payments, despite echoes that payments will be made on 1 April.

Last week, Serge Belamant, chairman and CEO of Net1, said Cash Paymaster Services (CPS) had locked in a new contract deal with the SA Social Security Agency (SASSA). Belamant's comment followed a statement issued by the Department of Social Development, saying SASSA and CPS had reached an agreement.

CPS, a subsidiary of Net1, currently distributes and administers payments to 17 million social grant beneficiaries, but that contract expires at the end of this month.

Today's meeting included Gordhan, deputy finance minister Mcebisi Jonas, the director-general, National Treasury officials, the SA Reserve Bank, as well as SASSA CEO Thokozani Magwaza.   

During the meeting, Scopa chairperson Themba Godi noted once more that no service agreement has been reached with CPS, but there is intention to continue doing business with the current service provider. 

Gordhan confirmed the negotiations and discussions between SASSA and CPS have been "declared void" by a ministerial task team because they took place without a deviation application.

The finance minister explained in terms of the Public Finance Management Act, all tenders must be advertised to encourage competitive processes. It is only in exceptional cases, such as natural disasters, that consideration for a deviation process can be followed.

According to Gordhan, a new technical team has been appointed to oversee that negotiations between SASSA and CPS start afresh to ensure social grants are paid on 1 April, as well as look at a future roadmap for payments.

He reiterated social development minister Bathabile Dlamini's sentiments that 17 million beneficiaries will receive social grants at the beginning of next month.

In terms of judicial, administrative and political processes, the mandate of the technical task team is to remove the sense of crisis and uncertainty, said Gordhan. "The ministerial task team is initiated purely on a legal basis of the procurement processes within government and application for deviation."

He added absolute certainty in terms of the future of social grants will be known in the next five to six days.

Unlawful extension

During his presentation, Gordhan provided background information on the discussions between Treasury, the department and SASSA to find a solution for the payment of social grants moving forward.

The finance minister noted that extending the CPS tender would have been unlawful, especially given the fact that the contract was declared invalid by the Constitutional Court (ConCourt) in 2014 after it emerged irregular tendering processes were followed.

Upon realising SASSA would not be able to administer social grants, the agency came up with six short- and long-term options that would lead to a takeover of the function of grant payment, which include procuring services from the current service provider (CPS).

Earlier this month, SASSA conceded the current social grants distributor is the best candidate to ensure beneficiaries receive social grants and submitted a report to the ConCourt requesting the CPS contract be extended.

Breaking rules

Although the social development minister and SASSA were specifically instructed by the chief justice of the ConCourt, Mogoeng Mogoeng, to submit responses to the court relating to the agreement reached with the current payments master by 4pm yesterday, Dlamini missed this deadline.

The ConCourt's request for answers on the social grants issue was motivated by the department and its agency's decision to enter into a new deal with the current paymaster.

Acting on behalf of the court, Mogoeng is looking to determine if a new deal between CPS and SASSA has been entered into and the full details if such an agreement has been reached.

In his directive, the chief justice is also seeking knowledge for the date when SASSA first became aware it would not be able to pay grants itself and the reason the ConCourt was not immediately informed the agency would not be able to make social grants payments.

According to reports, the minister filed answers to the ConCourt on the social grants issue after 10pm last night.

Eyewitness News reports the minister failed to answer the questions put forward by the ConCourt and that the papers filed last night were responding to opposing parties.

In the filed court papers, the minister says she doesn't want the ConCourt to oversee a new social grants payment deal, adding she rather wants the auditor-general (AG) and public protector to monitor a new deal, according to Eyewitness News.

"SASSA says the public protector and AG should evaluate an interim contract with CPS because it is of the opinion that it can legally sign an emergency contract with the company, as long as Treasury condones it and the contract is no longer than absolutely required to ensure the payment of social grants."

Meanwhile, the ConCourt has issued another directive to the minister and acting SASSA CEO, requesting affidavits by 3pm today explaining why the Monday deadline was missed.


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