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ConCourt extends social grants contract

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CPS will continue to provide payment services to SASSA.
CPS will continue to provide payment services to SASSA.

The Constitutional Court (ConCourt) has once again had to extend the Cash Paymaster Services (CPS) social grants contract to avert a payments disaster.

This afternoon, the ConCourt granted the extension of the CPS contract with the South African Social Security Agency (SASSA) for another six months.

The court's decision follows a request made by SASSA to have the contract extended while it phased out CPS and phased in South African Post Office (SAPO) as new service provider.

CPS, a Net1 subsidiary, helps distribute payments to 10.8 million SASSA beneficiaries through cash payments, direct deposits and electronic payments. Using vehicles equipped with biometrics, CPS distributes cash payments to 2.8 million of the recipients at pay points.

Earlier this month, SASSA and SAPO announced their readiness to commence the payment of social grants to more than 5.7 million social grant beneficiaries from 1 April. However, the agency said it would still need payment support for the 2.8 million beneficiaries at cash pay points. Neither SASSA nor SAPO were able to come up with a solution that would ensure these payments are administered.

With payments of more than two million recipients in limbo, the ConCourt ordered that for the period of six months from 1 April 2018, SASSA and CPS are under a constitutional obligation to ensure payment of social grants to beneficiaries who are paid in cash.

"SASSA and CPS must ensure that for the period of six months from 1 April 2018 payment of social grants is made to beneficiaries who are paid in cash on the same terms and conditions as those in the current contract between them.

"CPS may in writing request National Treasury during the six month period to investigate and make a recommendation regarding the price to be paid for the service it is to render," according to the court order.

In a statement, the Net1 CEO Herman Kotze said: "We are relieved that the court has provided guidance for the payment of grants after March 31, 2018."

"We understand the critical importance of uninterrupted service delivery to the country's most vulnerable citizens and we will continue to provide the same reliable service in accordance with our track record over the last six years. All Grindrod Bank or SASSA accounts, including those utilised by beneficiaries to receive their grants electronically, will remain functional after April 1, 2018 and will continue to be administered by Net1 and Grindrod Bank."

Meanwhile, Eyewitness News reports that CPS will have to pay back the R316 million it received from the SASSA almost four years ago.

According to EWN, CPS was paid the money to re-register beneficiaries but Corruption Watch challenged the payment in court. Corruption Watch approached the court in 2015, arguing that it was unlawful for SASSA to make the payment to CPS, given that the ConCourt had already found the original contract to have been invalid.

The EWN report notes that the court has also ordered CPS to repay the money with interest from June 2014 and to pay costs in the matter.

"This demonstrates the importance of civil society taking action where this sort of illegal and unlawful conduct occurs," Eyewitness News quoted Corruption Watch's David Lewis.

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