Business

Ray Mahlaka
4 minute read
6 Feb 2018
7:47 am

CPS might still be the social grants paymaster

Ray Mahlaka

Despite its invalid contract with Sassa, CPS might still pay social grants for another 6 months.

Incumbent social grants distributor Cash Paymaster Services (CPS) might swoop in again at the last minute to help the South African Social Security Agency (Sassa) avoid a crisis that would place the livelihoods of SA’s most vulnerable citizens in jeopardy.

Arguably, this was already suspected and feared by many observers due to Sassa’s self-imposed delays and missed deadlines to find another service provider to pay 17 million social grants from April 1 2018.

And with less than two months to go before CPS’s contract to pay social grants expires, the likelihood of the company still being part of the payment system is high.

In a third report to the Constitutional Court, a panel of experts said they were informed that the services of CPS would still be required for another six months after the April 1 2018, deadline.

Sassa’s lawyers wrote a letter to Constitutional Court Chief Justice Mogoeng Mogoeng on December 18 2017, asking the court to suspend the invalidity of CPS’s contract and extend it until September 2018.

This request is a major concession as Sassa’s five-year contract with CPS, which began in February 2012, was declared invalid by the court in 2014 as it didn’t go through proper tender processes.

It also brings more questions as to why embattled Social Development Minister Bathabile Dlamini is determined to keep CPS, which is a subsidiary of US Nasdaq-listed Net1 UEPS, in the social grants payments system.

Sassa told the panel of experts that it “had not yet launched an application in this regard [to ask for an extension] but was still waiting for guidance from its counsel”.

If the court agrees to Sassa’s request, it would be the second time CPS’ invalid contract is extended, as in 2017, the court extended it for a year ending March 31 2018, to avert a crisis.

The panel of experts said in the report that Sassa’s letter states that the agency “has not procured a service provider” for recipients receiving their social grants in cash and that a “further directive was being awaited from the court”.

The panel of experts – appointed by the court to oversee the process to phase out the CPS contract – includes the Auditor-General Kimi Makwetu, Anthony Felet, Gill Marcus, Tim Masela, Heinz Weilert, Angela Bester, Werner Krull, Mavuso Msimang, Doris Tshepe, Mmamolatelo Mathekga and Barend Taute. They are supported by secretariat Marissa Bezuidenhout assisted by Walter Bhengu and Paklo Leung.

It’s the second time that the panel of experts has warned about no end to the CPS and Sassa contract. In their first report in October, they said it’s possible that CPS may still be required for the payment of social grants given the failure of Sassa to meet its key deadlines.

Another possibility is that Net1 might establish a new company with black empowerment partners that could bid on a Sassa contract.

It was agreed – through a last-minute intervention by an inter-ministerial task team led by Minister in the Presidency Jeff Radebe in December 2017 – that the Post Office would collaborate with commercial banks in order to distribute social grants from April 1 2018. Recipients are expected to access their social grants through Post Office branches and bank ATMs using low-cost bank accounts.

However, two Sassa insiders have told Moneyweb that the agency is yet to define the respective roles of the Post Office and commercial banks in the social grants payment system. The banks – mainly Nedbank, Standard Bank and FNB – are yet to be contracted by Sassa, a process that might add more delays, paving the way for CPS to continue being the paymaster.

Sassa is expected to complete the evaluation of tender bids by February 2018, sources told Moneyweb.

Dlamini’s affinity for CPS was questioned during a Constitutional Court-mandated inquiry, which is tasked with determining whether she should be held personally liable for the Sassa fiasco and pay legal costs.

In his testimony at the inquiry, Zane Dangor, a former Social Development DG, accused Dlamini of creating delays in finding another social grants distributor for CPS to continue being the paymaster.

At the heart of the inquiry is Sassa’s controversial work streams, a parallel function that had been established in July 2016 comprising of Dlamini’s handpicked advisors to investigate Sassa’s capacity to take over social grant payments from CPS.

The work streams failed to make progress on its mandate and more than R30 million was spent on them which the National Treasury has recorded as irregular expenditure.

On Friday, Dangor said Dlamini and her established work streams had a “lack of urgency” when looking for legal options that would allow Sassa to take over social grant payments from CPS. “The delay was to ensure that CPS continues [to pay social grants], despite it being illegal,” Dangor said.

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