14/03/2018 16:16 SAST | Updated 14/03/2018 16:20 SAST

New Service Provider For Sassa Payments Delayed Till July

This leaves a three-month gap of uncertainty for the 2.8-million people who receive their social grants in cash.

The Times via Getty Images
Former social development minister Bathabile Dlamini, on whose watch the social-grants crisis developed.

The new service provider to assist the South African Social Security Agency (Sassa) with cash payments of social grants will only be in place by July, MPs have heard.

Sassa admitted in court papers filed on Monday that no feasible solution to assist around 2.8-million beneficiaries who receive their grants in cash – roughly 26 percent of recipients – would be in place before the April 1 deadline.

It asked the Constitutional Court last week to extend the invalid contract of current service provider Cash Paymaster Services (CPS) for a further six months, so that CPS could continue making cash payments.

On Wednesday, Sassa grants executive manager Dianne Dunkerley said the bidding period to find a replacement for CPS to deliver cash had finally closed on Monday.

"There are now tight time frames set, and the awarding and contracting will be completed by May 4," she told the Portfolio Committee on Social Development.

"A new service provider would be afforded an opportunity to set up and be ready to pay cash grants from July 1."

There had been a request from one of the bidders to extend the deadline to March 30, but this was declined, Dunkerley said.

CPS was one of the bidders for the new tender, she confirmed, after the Constitutional Court upheld its right to apply for future Sassa tenders.

The delayed date puts more pressure on the court to allow CPS to continue its relationship on current terms with the social grants scheme.

Sassa said it would pay the other 70 percent of beneficiaries, who receive their grants electronically or through merchants, on April 1 through its "PMG" account.

CPS raises 'risk' in plan to pay 5.7-million grants directly

Sassa was on course to transfer money directly to the 5.7-million beneficiaries who use the existing Grindrod Bank cards, Dunkerley said.

She added that a successful pilot test of 100,000 beneficiaries was conducted through the month of March.

CPS, however, whose technology is used in the transfer of funds to those Grindrod accounts, raised "systemic risks" to their system if Sassa were to upscale its transfers to all 5.7-million on April 1.

"So we are engaging them [CPS], as well as the Reserve Bank, over how the concerns can be addressed, so it doesn't impact on the payment of the beneficiaries at this stage."

The 5.7-million beneficiaries, meanwhile, would be the same ones who would be migrated to the new Sassa/SAPO card in mid-April, if they didn't opt to use their commercial accounts.

The card's rollout would be ready from April 3, and mass delivery would take place by April 30.

The Constitutional Court reprimanded Sassa on Thursday last week for telling the media that it had a contingency plan for cash payments, when the court had rejected its request for an extension.

'Contingency plan'

Acting chief executive Pearl Bhengu said the agency would need to find ways to help transport beneficiaries to other paypoints and furnish them with new PIN numbers to access the money on their cards.

But Dunkerley said the broad contingency plan was always to find a new service provider, which would now only be ready in July and not on April 1.

"So we are still sitting with a gap of a few months, and we need to say that is the reality we are facing now.

"If the court does not grant the request for extension, our question is: How are we going to manage that?"

An interministerial committee was discussing the details of the cash payment "contingency" simultaneously on Wednesday. New social development minister Susan Shabangu, project leader Zodwa Mvulane, and Bhengu attended the meeting to update Cabinet.

In court papers on Monday, Bhengu told the court that logistically, the "contingency" would not be ready by April 1, and had yet to be costed.

Her comments to the media, she insisted, were merely an acknowledgement of the broad needs of what would happen in the event that the court denied the request.

The court has not yet given a date for when it will make its ruling on another extension to the CPS contract.