Business / Business News

Ray Mahlaka
3 minute read
11 May 2017
8:01 am

5 years and R6bn for Sassa to take over grant payments

Ray Mahlaka

‘Come 2018, there won’t be CPS’ – Sassa CEO, Thokozani Magwaza.

Minister of Social Development Bathabile Dlamini (pictured) has revealed that it will cost R6 billion for the South Africa Social Security Agency (Sassa) to take over social grant payments from Net1’s subsidiary Cash Paymaster Services (CPS).

This is the first time that a price tag was estimated for Sassa’s grandiose plan of being responsible for social grant payments to 10.5 million beneficiaries after Net1’s extended contract expires come April 1, 2018.

In a briefing to parliament’s social development committee on Wednesday, Dlamini said the “plus/minus” R6 billion figure should be seen as an investment for Sassa to build its social grant payment capacity. She added that it will be a five-year process for Sassa to finalise taking over grant payments as it does not have the expertise to manage the scheme on its own.

“We don’t have staff that understands biometrics at Sassa. We don’t have officials that understand banking. We don’t have staff for costing and modelling, as well as cyber risk assessment,” said Dlamini.

The contract between Sassa and CPS, which was concluded in 2012, was declared invalid three years ago by the Constitutional Court as it didn’t go through proper tender processes. At the eleventh hour, the court extended CPS’s contract in March for another year.

Members of parliament raised concerns that Dlamini’s comment on the five-year period meant that CPS’s contract might be extended beyond the prescribed 12 months.

In response to the concerns, Sassa CEO Thokozani Magwaza said CPS’s contract would be phased out in 12 months, as per the court’s ruling. “Come 2018, there won’t be CPS,” he said. Magwaza said Sassa is yet to tender out a new contract or consider the South African Post Office for taking over grants payments. “Where the post office lacks expertise, we can use the services of a third party.”

The third parties include the Department of Home Affairs being responsible for the verification of biometric data and an unnamed organisation that will be responsible for handling the personal information of grant recipients and issuing cards that recipients use to withdraw money.

This is not the first time that the post office was considered for grant payments. In November 2016, Sassa explored the option for SA’s major banks and the Post Office to take up responsibility for grant payments.

These options were explored in the work streams that were set up by Sassa in July 2016 and comprised of consultants led by its head of project office Zodwa Mvulane. The work streams were tasked with exploring alternative methods of social grant payments.

Read: Dlamini blamed for ‘self-created’ Sassa crisis… again

Dlamini rejected these options and was pushing for CPS’s soon-to-expire contract to be extended for two years.

On Sassa’s funding framework to take over payments, Mvulane said the National Treasury confirmed that it will be awarded R11 million this year. “Sassa needs a one-year short-term plan on funding the take over of grant payments and a long-term plan,” she said.

On the 17th day of every quarter, Sassa has to report back to the Constitutional Court to inform it on the steps taken to internalise grant payments and ensure that Net1’s subsidiaries no longer invite grant recipients to “opt-in” to sharing their personal and confidential information for the marketing of goods and services. It will report back to the court on June 17.

Mvulane said Sassa had already nominated internal experts and technical advisors, who would monitor its preparation to take over grant payments.

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