ConCourt ups ante on Sassa’s social grants payment plan

The court is no longer taking chances with Sassa, asking it to regularly report its progress on phasing out CPS.
The Constitutional Court imposes new reporting requirements for the South African Social Security Agency's plan over the payment of social grants. Picture: Moneyweb

The Constitutional Court has ordered the South African Social Security Agency (Sassa) to provide a progress plan on phasing out the contract of social grants distributor Cash Paymaster Services (CPS) to avert a crisis that could place the livelihoods of 17-million vulnerable South Africans at risk.

The court has issued directions to Sassa, ordering the agency to provide a credible progress plan by December 8 on finding another service provider to pay social grants from April 1, 2018.

The plan must include details of the uninterrupted payment of social grants worth more than R130 billion annually, precise timelines, and risk-mitigation measures for a smooth exit of CPS, the subsidiary of US-listed Net1 UEPS.

After providing a progress plan in December, Sassa must submit monthly reports on its progress of phasing out the CPS contract.

The court is taking no chances after Sassa officials and Social Development Minister Bathabile Dlamini missed key self-imposed deadlines and engineered delays over the last seven months in contracting the South African Post Office (Sapo) to take over payments from CPS.

In March, the court extended the invalid CPS contract for a year, giving Sassa time for its preparations to take over the payment of grants or find another service provider. At the time, the court also ordered Sassa to submit progress reports, with set deadlines, but the agency ended up missing some. CPS’s contract was declared invalid as it didn’t go through proper tender processes more than five years ago. 

Sapo, a state-owned enterprise, has been favoured by members of parliament to be the social grants payer, arguing it would be affordable for the fiscus if a state entity was included in Sassa’s payment system.

An impasse ensued between Sassa and Sapo because Sassa argued that Sapo does not have the capacity – through its banking services of Post Bank with more than 2 500 outlets across SA and 5.8 million active clients – to distribute social grants.

Read: Jeff Radebe: Post Office and Sassa deal is still on the cards

It took a last-minute intervention by Jeff Radebe, the Minister in the Presidency and head of the inter-ministerial committee (IMC) on social security, to fast-track a yet-to-be-announced social grant payment plan between the Sassa and Sapo.

The proposed payment model is for Sapo to collaborate with other commercial banks to distribute social grants. This deal is expected to be concluded on November 17 and presented to parliament on November 21.

The court has also ordered Sassa to give a panel of experts access to information regarding the process undertaken by Sassa in finding another service provider, and its pending deal with Sapo by November 17.

The panel of experts, which have been appointed by the court to oversee the process to phase out the CPS contract, includes 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.
The first report to the court in September found that Sassa had repeatedly failed to provide timeous access to information relating to Sapo’s proposal to pay social grants, the cost structures involved, and Sassa’s stated objectives of providing adequate risk management when CPS exits.

The expert panel had scathing words for Sassa officials. “The failure, for whatever reason, to provide the relevant information calls into question the integrity and competence of Sassa, which must reflect on its ability to execute its responsibilities.”

Read: No end in sight to CPS/Sassa contract, expert panel warns.

The experts warned that given the failure of Sassa to meet its deadlines, it’s possible that CPS may still be required for the payment of social grants or might be indirectly involved in 2018.

Sassa must inform the public about the transition from CPS to another service provider.

“Sassa is directed to request that the Government Communication and Information System develop and implement a focused communication plan to inform current and potential beneficiaries of social grants on implications of the transition and of the benefits of receiving their social grants via bank accounts provided by a commercial bank or financial institution of their choice,” the court said in its papers.

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