Legal View

SASSA fumbles to ensure social grant payments

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SASSA will meet with Net1 to discuss the future of social grant payments.
SASSA will meet with Net1 to discuss the future of social grant payments.

Net1 UEPS Technologies has agreed to a meeting with the South African Social Security Agency (SASSA) to discuss the future of social grants when the current payments contact expires on 31 March.

In a SENS statement this morning, the Nasdaq- and Johannesburg Stock Exchange-listed company revealed it received a letter from SASSA requesting the urgent meeting with the payments distributor.

SASSA is preparing to take over the mammoth task of administering 17 million social grants, and the agency is trying to find any solution to avoid the catastrophic situation that will negatively affect the millions of beneficiaries.

The country's social grants are currently administered and distributed by Cash Paymaster Services (CPS), a Net1 subsidiary, after it was awarded a five-year, R10 billion tender in January 2012.

However, the tender was declared invalid by the Constitutional Court (ConCourt) in November 2013, and SASSA was instructed to initiate a new tender process. In 2015, SASSA issued a new tender contract for social grant payments but Net1 did not participate.

Net1 says it has formally responded to SASSA indicating its willingness to convene an urgent meeting as requested.

"It is not clear if our contract could be extended under the Public Finance Management Act or if a new transition contract would be required."

According to Net1, it received SASSA's letter on 9 February. The letter stated: "After much deliberation and following due process, SASSA is now in a position to formally express its intentions to hold an exploratory meeting with CPS on probabilities to assist in the transition of SASSA operations (while ensuring grant payment continuity) towards a new service model that must be subject to a regular procurement process.

"Based on the above stated fact, SASSA requires a principle confirmation from CPS that it is amenable to agree to the proposed meeting to explore the possibilities to avail the company's services as an interim arrangement regarding the payment of social grants for the period extending from 31 March 2017."

Back to court

Last week, SASSA briefed the social development portfolio committee in Parliament on its state of readiness to manage the payments of social grants when the contract with CPS expires.

After dodging questions on its preparedness, SASSA admitted to members of the portfolio committee it had come up short.

SASSA informed the meeting that it will not be ready to assume the payment function on 1 April. The agency expressed its intention to approach the ConCourt this week, to obtain permission to extend the contract with CPS for a brief period.

However, SASSA has now said it will approach the ConCourt next week, according to reports.

Eyewitness News reported SASSA had planned to approach the highest court in the land on 8 February, but realised it was not ready to submit a report, as some details were still missing.

Net1 says in the SENS announcement that it cannot predict when or if SASSA will approach the ConCourt, what the outcome of such an approach would be, or what the terms and conditions of any agreement between SASSA would be.

"We are fully aware of the critical nature of the services we provide to millions of South Africans and the need for uninterrupted service delivery and we remain committed to assist our social grant recipients, SASSA and the South African government within the ambit of all the relevant laws and regulations."

SASSA's spokesperson did not respond to questions by the time of publication.

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