06/03/2017 20:25 SAST | Updated 06/03/2017 20:38 SAST

We've Got A New Social Grants Deal, Says Cash Paymaster Services

It's a 2-year contract at a fixed price based on inflation, says CPS.

Gallo Images / Sowetan / Sandile Ndlovu

The SA Social Security Agency (Sassa) has struck a two-year deal with Cash Paymaster Services (CPS) for the payment of millions of social grants, according to Serge Belamant, chief executive of CPS parent company Net1. This is in spite of Sassa's commitment to the Constitutional Court that the new contract would not be longer than a year.

Belamant told GroundUp today that the deal was done.

He said the contract was for two years at a fixed price based on the inflation rate.

But in papers submitted last week to the Concourt, Sassa asked for permission to sign a new contract with CPS for a year. "Sassa seeks to engage CPS for a year to continue paying social grants", said Sassa CEO Thokozani Magwaza in the court application. "Sassa requires a period of one year to be in a position where it will make payments of social grants utilising the National Payment System and in isolated selected areas the services of a cash service provider."

The papers were withdrawn the same day, with Director-General of Social Development Zane Dangor telling Parliament last week that the papers would be filed again after changes had been made.

Dangor has since resigned, just three months after taking up the position.

At the current year-on-year inflation rate of 6.6 percent in January, the administration fee paid to CPS would go up from R16.44 per beneficiary to R17.52. According to the papers filed to the court by Magwaza, current fees to CPS for the payment of grants amount to R2.236 billion. A 6.6 percent increase would lift this to R2.384 billion.

SASSA had budgeted for R2.6 billion for the social grants payment contract in the 2017/18 year, Magwaza said. He is currently on sick leave.

When contacted by GroundUp, Sassa spokesperson Kgomoco Diseko confirmed that a new contract would be signed, but would not give further details.

Sassa is expected to appear before two Parliamentary committees this week to give an update on the payment of social grants after April 1, 2017, with civil society groups and Cosatu calling for the resignation of Social Development Minister Bathabile Dlamini.

The five-year contract with CPS, which began in February 2012, was declared invalid by the Concourt in 2014, but the court suspended the invalidity until March 31, 2017 so that grants could continue to be paid.

Sassa submitted a plan to the Concourt in 2014 to take over the payment of grants itself when the CPS contract ends on March 31. But last month SASSA acknowledged its failure to meet this deadline.

At the last minute, the agency suggested extending its contract with CPS as the "safest option" to ensure beneficiaries are paid on April 1. National Treasury and Minister of Finance Pravin Gordhan have warned Sassa that unless it is approved by the Constitutional Court, extending the contract with CPS would be unlawful. In a letter to Magwaza on February 8 filed with the Sassa court papers, the Treasury's Solly Tshitangano said the Treasury did not support the extension of the invalid contract and would only do so if the Concourt extended the suspension of its invalidity beyond March 31.

In response, Sassa official Zodwa Mvulane last week said the new contract would be negotiated as an "emergency procurement" under the Public Finance Management Act.

The Black Sash has also filed an application at the Concourt, asking the court to take back its oversight role and to rule that Dlamini must safeguard beneficiaries against unauthorised deductions when renegotiating a new contract with CPS. On Monday, the Black Sash announced that the Democratic Alliance had joined their application.

According to a directive from the court on Friday March 3, opposing parties had until close of business that day to oppose the application, but a court clerk told GroundUp that one of the parties had asked for an extension until close of business on Monday. The matter will be heard on March 15.

Dlamini held a press briefing on Sunday where she again assured the public that there would be no disruptions to grant payments from April 1. Dlamini added that the payment of R140 billion a year for grants was essential in reducing inequality in South Africa. She said that Sassa's "transition" included having its own payment system in place by April 2019. "As has been the case in the past, no one will go unpaid," she said.