MENU
 Registered users can save articles to their personal articles list. Login here or sign up here
  Author profile
 
  7 COMMENTS

  Great T-shirts. Social security also involves social responsibility....  

 Registered users can save articles to their personal articles list. Login here or sign up here

Sassa and CPS contract extended for another year

ConCourt judgement scathing of Bathabile Dlamini, orders minister to submit affidavit.

The Constitutional Court has ordered that the contract between Net1’s social grant distribution subsidiary Cash Paymaster Services (CPS) and the South African Social Security Agency (Sassa) should be extended for 12 months.

On Friday, the court ruled that Sassa and CPS are under a constitutional obligation to make sure that social grants are paid come April 1 and failure of do so will “breach the rights of beneficiaries”.

The judgement, majority written by Justice Johan Froneman, paves the way for CPS to continue with social grant payments even though the company’s contract expires in March 31.

The ruling is critical as the payment to grant recipients, which many depend on for survival, are due in two weeks’ time.

The court ruled that the invalidity of CPS contract, which was granted five years ago, will be suspended for the duration of the extended contract. In 2014, the court ruled that the social grant contract between Sassa and CPS was invalid, resulting in a new tender process for the payment of social grants.

On the pricing of CPS’ 12-month extended contract, the court ordered that the company may ask the National Treasury in writing for a recommendation.

CPS proposed a new social grant distribution fixed fee of R194 million per month (VAT inclusive) for a period of two years, equating to R4.6 billion in total (starting April 1 through to March 31 2019). In the past year, CPS had a fixed fee of R171.6 million per month. The new fee is based on an inflationary increase of 6.6% per annum, per cardholder paid.

Read: CPS unveils proposed pricing model

Within 30 days of the expiry of the extended contract, the court ordered that CPS must file submissions of its expenses incurred, the income received and the net profit earned under the contract.

The court ordered CPS not to use confidential and personal information of more than 10 million Sassa beneficiaries to market its products such as loans, prepaid electricity, water and airtime.

Human rights organisation Black Sash, which urgently asked the Constitutional Court to supervise a new contract to ensure that grants are paid on April 1 in a legal way, has documented many complaints of unauthorised deductions from Sassa beneficiaries’ accounts for products allegedly sold by CPS and other Net1 subsidiaries.

Black Sash’s regional manager in Gauteng Thandiwe Zulu welcomed the judgement, saying it’s a vindication for its cause in making sure that there won’t be a disruption to the grant payment process.  Listen to Zulu below. 

Mark Barnes, CEO of the South African Post Office, which supported Black Sash’s application as a friend of the court, says the company still has the capacity to takeover grant payments when CPS’ contract expires in 12 months’ time. Barnes adds that it will use the 12-month period to prepare its existing infrastructure to be able to disburse social grants. Listen to Barnes below. 

Minister Bathabile Dlamini

The judgement was scathing of Social Development Minister Bathabile Dlamini. Justice Froneman ordered that Dlamini explain in an affidavit, to be submitted by March 31, why she should not be added in the matter in her personal capacity and why she should not “pay costs of the application from her own pocket”. The costs in the matter have been reserved until the conclusion of this process.

Dlamini and Sassa have been ordered to file affidavits every three months starting from Friday, explaining how they plan to ensure the payment of social grants after the expiry of the 12-month CPS contract, including what steps they have taken, with the supervision of the Auditor General  or an institution appointed by the court. 

Earlier this week, Chief Justice Mogoeng Mogoeng described the handling of the Sassa matter by Dlamini as a “crisis” which was denied by President Jacob Zuma in his question and answer session in Parliament yesterday. 

More stories from Moneyweb
Jaco Joubert

Jaco Joubert

PSG Wealth Sandton
Moneyweb Click an Advisor
   7 comments

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up here

corruption, the winner again!

How so?

the minister/SASSA responsible for this fiasco ( and the man responsible for appointing these incompetent people ) are again scot free.
This man will be laughing again in our faces at the end of the month.

sorry but MW doesn’t want to place my reply

Good luck to the Post Office. I sent a large envelope overseas and it too 15 min to capture then they didn’t have the change.

Great T-shirts. Social security also involves social responsibility.

Latest Currencies

ZAR / USD
ZAR / GBP
ZAR / Euro

MONEYWEB NEWSLETTERS

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Podcasts

Moneyweb Investor Issue 25

If the world's best investment managers, who came together at a recent CFA conference, cannot figure whether a crash or correction is looming, ordinary investors can be forgiven for their hesitation. Thus the June issue of The Moneyweb Investor does its best to fill the gaps. With 17 stories and a podcast, you wouldn't want to miss it.

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2