Up to four-million South Africans who receive their state social grants in cash
NEWS ANALYSIS
In coming weeks the South African Social Security Agency (Sassa) will put a gun to the head of the Constitutional Court. The court, Sassa will say, has no option but to condone its plan to extend, by another year, a contract that has already been unlawful for two years, because failure to do so would imperil the payment of life-line social grants to some 17‑million people.
But Sassa’s gun will not be loaded. On Wednesday the agency’s chief executive, Thokozani Magwaza, all but said that Sassa would go ahead and extend the illegal contract anyway, because there is no other option.
“If we got to choose between paying the grants and irregular [expenditure], and if the country is going to burn on April 1 or irregular [expenditure], I choose irregular,” he told a parliamentary portfolio committee.
Although that course of action removes the risk of riots on the streets, it will put the government in knowing, direct violation of the law, flouting the rules intended to protect the public purse.
If the Constitutional Court were to put its foot down it would be painted as the villain, ready to see people suffer for the sake of the law in a situation where those responsible are desperately seeking to duck responsibility.
Sassa has known since at least October 2015 that it must take over the payment of social grants on April 1 this year, when its contract with Cash Paymaster Services (CPS) ends. The Constitutional Court confirmed in 2014 that the contract had been awarded irregularly, but allowed it to continue to run while Sassa built replacement infrastructure so as not to interrupt grant payments.
For 13 months Sassa made no tangible move towards meeting that insourcing obligation. Then, in December last year, it started to scramble to collect information that would allow it to issue a tender.
On Wednesday, after ducking questions for months, it admitted for the first time that it would not be ready — less than two months before the deadline.
“We need to come and acknow-ledge that, yes, we have failed,” Sassa executive manager Raphaahle Ramokgopa told Parliament’s social development committee.
But nobody could be held responsible for that failure, it seems. Both he and the predecessor he replaced in November had done their jobs, said Magwaza, and he could think of nobody who could be considered culpable for the delays.
And it would be unfair to criticise the politician responsible for Sassa, Social Development Minister Bathabile Dlamini, in her absence, said committee chair Rosemary Capa.
At various other points during a meeting she abruptly ended, Capa also held that there was no need for Dlamini to attend such a meeting and that it was playing at politics to demand that she be summoned.
Dlamini, who is also the ANC Women’s League’s president, and social development director general Zane Dangor were apparently attending a Cabinet lekgotla on Wednesday, amid rumours of a looming reshuffle of ministers.
Whereas the Democratic Alliance and Inkatha Freedom Party reacted with shock and outrage, ANC members of the committee closed ranks around Dlamini and Sassa.
“I am comforted,” said ANC MP Patrick Mabilo of Sassa’s declaration that all will be well come April 1, with all payments to be handled by CPS — even though the agency had no legal permission to go that route and had not yet started any negotiations with CPS.
None of the MPs asked Sassa any of the burning questions that arose from its presentation, instead spending the time bickering about issues such as whether Dlamini had been on ANC or women’s league business when she had not attended their meeting the prior week.
Sassa answered very few questions from journalists. Despite repeated promises of a press conference on the grant payment system, Magwaza said further questions would have to be submitted in writing.
The man with all the cards
The South African Social Security Agency (Sassa) has
less than two months left to negotiate terms with the provider of social grant payments or up to four million people who receive cash payments stand to lose access to their monthly cash, the agency said on Wednesday.
The man it has to negotiate with is the chief executive of Net1 UEPS Technologies, Serge Belamant, who has been described in Parliament as a crook and by Sassa as unsavoury. And Belamant holds all the cards.
On Wednesday, Sassa told a parliamentary committee that the biometric cards used to identify social grant recipients at pay points will no longer work come April.
It said three to four million people make use of this system, and won’t be able to use it if they don’t have the alternative PIN (personal identification number) activated on their card.
“These encryption keys can be extended automatically over the next few months when beneficiaries draw their cash; however, an agreement needs to be reached with CPS as their proprietary system is used for these payments,” the agency said.
CPS, or Cash Paymaster Services, is owned by Net1. So are several other companies that have made deductions from social grant recipients for supposed benefits, such as funeral policies, that they say they never authorised.
Only CPS has the infrastructure needed to make cash payments, as was made clear in response to questions about potential service providers that Sassa published last week.
Sassa owns no part of the platform being used to pay social grants, those answers showed. “All software, hardware and related IP [intellectual property] used to provide the service belongs to the service provider.”
Though Sassa is supposed to be bringing grant payments in-house, it has instead sought information that would help it to put together tenders for the individual components of the contract CPS currently holds, giving it an ecosystem of providers that it manages rather than a single outsourced provider.
To replace the entire CPS system, Sassa said, its new ecosystem of providers would need to manufacture and distribute 12‑million payment cards and be ready to issue about 150 000 more every month as new beneficiaries were enrolled or cards were lost. Sassa data also shows that the 9 917 pay points it operates require a staff complement of 59 502, based on the six people it needs at each point.
Net1 chief executive Belamant has hinted to the shareholders of his listed company that CPS would only continue with grant payments after March 31 on profitable terms. In an interview with Bloomberg this week, he said he would be happy to sell CPS to the government.