25/05/2018 15:25 SAST | Updated 25/05/2018 15:25 SAST

Social Grants At Risk – CPS Claims To Have Received No Payment

CPS only has cash reserves to last until May 31, which parties were made aware of in February, the company claims.


Cash Paymaster Services (CPS) has asked the Constitutional Court to order National Treasury to negotiate a monthly "floor fee" for the remainder of its contract with the South African Social Security Agency (Sassa).

In March, the Constitutional Court ordered Sassa and CPS to continue its invalid contract to distribute the cash portion of the social grants system in rural areas for another six months.

The cash portion of the system services roughly 2.5-million people, less than 30 percent of those who receive Sassa grants.

On Wednesday, CPS filed a letter with the court, saying it has not been able to successfully invoice Sassa since April 1 for various reasons, and has therefore received no new payments from Sassa through National Treasury.

It has used cash reserves to continue to operate the cash portion of the grants system in the interim, it claimed, while it waited for National Treasury to recommend a new payment structure for the remainder of the contract.

CPS only has cash reserves to last until May 31, which parties were made aware of in February, according to the letter from CPS's lawyers, Smit Sewgoolam Inc.

"Our instructions are that CPS requires cash income urgently to sustain its operations for the month of June. Preparations for the June payment cycle will commence on May 27 2018.

"We accordingly respectfully request the Chief Justice to issue the directions that CPS sought in its affidavit of May 11 2018, alternatively to advise CPS whether it must bring an urgent formal application in respect of any of these directions," the letter added.

In the May 11 affidavit, Herman Kotze, CEO of CPS's parent company Net1, argued that Treasury's recommendation, combined with the continued migration of Sassa beneficiaries to other options, was causing CPS to operate at a loss.

On April 30, Treasury recommended a price of R44.35 per beneficiary for cash payments for the remainder of the contract until September.

"CPS can only deliver a reliable and uninterrupted service if it operates a sustainable business," Kotze's affidavit reads.

"For the reasons set out below, Treasury's recommendation does not protect CPS from operating at a considerable loss, which it cannot reasonably be expected to do."

Kotze also said that Treasury's recommendation did not allow for the possibility of a "floor fee" to help CPS cover its operational costs while beneficiaries are being migrated.

"This is highly problematic, because it makes no provision for Sassa's announced intention to dramatically reduce the number of beneficiaries being serviced by CPS."

Their current operating costs are R147-million a month to deliver cash to rural areas, and they are still servicing the 10,000 cash paypoints.

The company asked that the court order Treasury to recommend a minimum monthly fee payable to CPS, to serve as a floor limit, within 14 days.

In the interim, CPS wants to "invoice Sassa according to Treasury's recommendation of April 30" and wants any shortfall or overpayment made to CPS for the services provided in April this year to be corrected upon final determination by the court.

Sassa spokesperson Kgomotso Diseko told News24 that it would await the court's intervention, as the negotiations had always been handled between National Treasury and CPS.

National Treasury's communications office asked that a formal media request be sent via email.

– News24