Extending Net 1 social welfare contract would be unlawful, says Pravin Gordhan

Finance Minister Pravin Gordhan. (Kopano Tlape, M&G)

Finance Minister Pravin Gordhan. (Kopano Tlape, M&G)

Finance Minister Pravin Gordhan told Social Development Minister Bathabile Dlamini that her plan to extend a contract with a unit of Net 1 UEPS Technologies would be “unlawful”, a letter seen by Bloomberg shows.

On February 1, the South African Social Security Agency (Sassa) told Parliament that the only viable option to ensure that 17.2-million people keep getting their payments in April in the R139.5-billion a year programme would be to extend the Net 1 contract that expires at the end of March. That contract has been declared invalid by the Constitutional Court over concerns of how it was awarded and extending it would need the court to overturn its 2013 decision.

“Sassa’s proposed interim agreement with Cash Paymaster Services will not be lawful,” Gordhan said in a letter to Dlamini dated February 1. 

“The options proposed by the Sassa team cannot be supported unless the Constitutional Court were to approve such an option.” 

Cash Paymaster is owned by Net 1.

‘Legal challenges’
Dhruv Chopra, head of investor relations at Net1 wasn’t immediately available for comment outside of usual office hours.

Gordhan said that should Sassa press ahead with its plan, it would open up government to “legal challenges” and pointed out that Sassa had asked that national treasury approval for its proposal be waived.

The national treasury proposes that a service provider be appointed for distribution of payments to welfare recipients through cash points or bank accounts, he said.

Government failure
“National treasury has been engaging Sassa for months and we are still open to engagement,” the department’s spokesperson, Yolisa Tyantsi, said. She declined to comment on the letter while confirming it had been sent.

Elements of the letter were earlier reported by The Star newspaper.

Almost 23 years after it was democratically elected into power, the ANC government should have built internal capacity for Sassa to distribute welfare payments and cannot resort to illegalities to avoid an impending crisis, according to Ndangwa Noyoo, an associate professor at the University of Johannesburg’s social work department.

“Its ridiculous to even champion or propagate for an illegal avenue,” Noyoo said on Wednesday. 

“The national treasury is very clear that it operates on laws and legislative policies.
If the millions of South Africans who are grant recipients are not paid, it would be a catastrophe and an indictment of the ANC government that sees itself as a caring government.” — Bloomberg

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