A year later, SASSA still desperately scrambling

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New social development minister Susan Shabangu has less than a month to ensure SASSA averts a social grants disaster. (Photo source: GCIS)
New social development minister Susan Shabangu has less than a month to ensure SASSA averts a social grants disaster. (Photo source: GCIS)

It was this time last year that the South African Social Security Agency (SASSA) scrambled for answers to avert a social grants disaster, and it appears the country is in for a roller-coaster ride yet again.

SASSA has tried to reassure Parliament, beneficiaries and the public that social grant payments will go ahead uninterrupted on 1 April. However, the agency has failed to outline a concrete plan that is not dependent on the intervention of the Constitutional Court (ConCourt) to ensure millions of beneficiaries are paid.

Instead, this week, SASSA acting CEO Pearl Bhengu told Parliament's Portfolio Committee on Social Development that the agency is "developing a contingency plan in the event the Constitutional Court does not extend the Cash Paymaster Services (CPS) contract by six months".

According to Bhengu, SASSA's executive committee met recently and resolved to draft a contingency plan on how it can handle the transition, should the ConCourt reject the application. The CEO provided no further detail on the nature of the so-called "contingency plan".

Trusted ally

Despite the ConCourt order that SASSA must find an alternative grants distributor and promises made by former social development minister Bathabile Dlamini that it will cut ties with CPS, the agency is seemingly still relying on the paymaster to ensure millions of beneficiaries receive their grants next month.

CPS, a subsidiary of Net1 UEPS Technologies, has been distributing SASSA grants to 10.8 million beneficiaries on behalf of government after it was awarded the contract in 2012. The CPS contract, which was declared invalid, would have come to an end last March, but the ConCourt suspended the order of invalidity and ordered its extension until 31 March 2018.

As the distributor of South African social grants, CPS has faced a slew of allegations that it authorises deductions on beneficiaries' accounts. The paymaster has refuted these claims.

In extending the contract, the ConCourt sought to not only avert a national payments crisis but also allow SASSA enough time to usher in a new services provider.

Last month, SASSA filed an affidavit with the highest court in the land requesting permission to continue using CPS services for another six months.

CPS has said it is willing to extend its services for social grant payments beyond 31 March, but as long as the process is in the right framework and with the right terms and conditions.

The ConCourt is set to rule on SASSA's application on 6 March.

Government intervention

As the social grants fiasco unfolded, government designated the South African Post Office (SAPO) as the preferred entity to take over the payments function from the Net1 subsidiary.

SASSA and SAPO reached an agreement in December regarding the future of social grants payments. The government entities agreed to implement a hybrid payment model that will increase the role of the banks and merchants, and reduce the role of cash payment for social grants.

The social security agency previously stated it is in negotiations with the banking industry to develop a low-cost banking account which it will subsidise so that beneficiaries get the full value of their grants without paying bank charges.

This week, minister Susan Shabangu was deployed to head up the social development department. Newly-minted Shabangu has a tough task ahead as she has less than a month to ensure social grant payments go ahead uninterrupted on 1 April.

Insourced payments

Meanwhile, SASSA issued a statement yesterday saying it is making strides towards insourcing social grant payments.

According to the agency, one of its key goals is to manage and pay social grants without the use of a third-party contractor as is currently the case.

"SASSA is on course to achieving this goal of ensuring payment of social grants is insourced. It has already made direct transfers into approximately 2.4 million personal bank accounts for the month of March 2018. This file is processed for payment through National Treasury to Bankserv for payment from SASSA's own paymaster general account.

"In March, SASSA paid an amount of over R2.6 billion to those beneficiaries who receive their grants from their commercial bank accounts. The beneficiaries involved in this exercise are about 2.4 million and are paid directly without using CPS infrastructure after the function was taken over from CPS. The rest of the remaining 8.4 million beneficiaries will be paid through the various outlets using ATMs, point-of-sale devices and in cash at SASSA paypoints."

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