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SASSA's R6bn price-tag to take over payments

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 11 May 2017
Social development minister Bathabile Dlamini.
Social development minister Bathabile Dlamini.

The SA Social Security Agency's (SASSA) intentions to take over payments of social grants in the near future is attached to a hefty cost of about R6 billion.

Business Day reports social development minister Bathabile Dlamini made the revelation to the portfolio committee on social development in Parliament yesterday.

According to the newspaper, Dlamini told the committee the R6 billion should be seen as an investment, and it would take about five years to finalise the takeover process.

Dlamini pointed out SASSA does "not have the necessary expertise to undertake grant payments, for example, in biometrics, payments, costing, modelling and cyber risk assessment. This lack of skill had to be taken into consideration," reports Business Day.

Revived business

Before the extension of the invalid contract with Cash Paymaster Services (CPS), a Net1 UEPS Technologies subsidiary, SASSA planned on being the distributor of social grants.

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, after it emerged that irregular tendering processes were followed in awarding it.

SASSA was ordered to initiate a new tender process for the payment of social grants.

In 2015, the agency issued a new tender contract, but did not award it, opting to move the payment of social grants in-house.

However, as stated by the agency, it underestimated the mammoth task of taking control of social grant payments and came up short to find working solutions to pay social grants.

The issue caused whirlwind confusion in SA, as worries persisted that the most vulnerable citizens would be left stranded on 1 April.

The potential social grants payments disaster was averted as a result of the intervention by the ConCourt, which permitted the extension of the invalid social grants payments contract for another 12 months.

Blow to poor

Meanwhile, this week, the North Gauteng High Court ruling - which allows deductions from social grants to continue - has been described as a blow to the poor.

According to the court, amendments to a section of the regulations of the Social Assistance Act of 2004 should not restrict deductions from the bank accounts of social grant recipients.

Last year, the Department of Social Development introduced amendments to the Act to inhibit deductions from beneficiaries' accounts. The decision was motivated by complaints from beneficiaries, who said airtime, electricity, funeral policy and insurance payments were being recouped before their social grants were paid out, according to the department.

Net1 sought a declaratory order with the High Court, requesting certainty on the interpretation of the regulations in the Social Assistance Act.

Veteran human rights organisation, the Black Sash Trust, also filed an application requesting the intervention of the High Court in the case over deductions.

The court ordered that recipients may continue to initiate debit order instructions? with any service provider and initiate debit order instructions? with any service provider, including Net1 and its subsidiaries, against their bank accounts for the payment of goods and services.

It also refused the Black Sash application to intervene in the matter.

In a statement, the human rights organisation describes the court's ruling as a "hollow victory for Net 1 and its subsidiaries".

Lynette Maart, Black Sash national director, expressed her deep disappointed that the judgment will have ongoing negative consequences for grant recipients who, she argued, should be entitled to receive their grants without deductions, including via debit orders.

"It is disturbing that commercial interests seem to take precedence over protecting the Section 27 rights of the poorest and most vulnerable in our society to receive their grants in full," she said.

The Black Sash statement points out regulation 26(A) of the Act was intended to protect recipients from these deductions, but this ruling technically argues that when the grant has been transferred into the bank account, it is deemed to have been paid.

The statement reads: "The reality for many grant beneficiaries is that deductions and debit orders often go off before they have received their grants, leaving people with insufficient funds to care for themselves or their families for the rest of the month, which perpetuates the cycle of indebtedness.

"These financial institutions that appear to have captured a portion of the social grants budget have no qualms in continuing to sell financial products to the poor, as their repayments are basically guaranteed, irrespective of the undue hardship this creates."

"The Black Sash will certainly not give up in our quest to make human rights real and is strongly considering joining the process to appeal the judgement," concludes Maart.

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