Social Development Minister Bathabile Dlamini told Parliament on Wednesday that the South African Social Security Agency (Sassa) would rely on negotiations with Cash Paymaster Services (CPS) to meet April 1 grant payments, despite the Constitutional Court ruling that Sassa’s existing contract with CPS is unlawful.
Dlamini appeared before Parliament to explain how Sassa intended to pay grants to beneficiaries from April 1. Sassa’s contract with CPS expires on March 31. The minister, who has been accused of negligence in the matter, said that Sassa would be depending on “good faith” in negotiations with CPS.
“What we have been trying to do is to negotiate in good faith and therefore if you negotiate in good faith you do get most of the time what you want,” Dlamini said.
Sassa’s programme manager for an payment system within the agency, Zodwa Mvulane, said that although letters have been exchanged between Sassa and CPS, negotiations with CPS had not begun despite the looming crisis. If Sassa is unable to find a payment system for grants, 17-million South Africans who receive grants will not be paid on April 1.
Dlamini admitted that there was no clear back-up plan in the event that negotiations with CPS fail.
“We are going there with our plan, we’re going to negotiate and if we think the conditions that are put are compromising and unreasonable we’ll have to go back to the drawing board and see how we deal with that,” the minister said.
When asked how much it would cost to extend Sassa’s contract with CPS, Dlamini simply said “that would be pre-empting our negotiations”. According to investigative journalism unit Amabhugane, CPS has asked for R1.3-billion to extend the contract.
Delay to file Concourt papers
In 2014, the Constitutional Court ruled that the tender Sassa awarded to CPS is unlawful and the contract invalid. It was only in October 2016, however, that Sassa began doing its due diligence on CPS.
With time running out, Sassa was meant to file papers to the Concourt in February, but to this day they have not done so. Mvulane said that they would file on March 31 – the day Sassa’s contract with CPS expires – but they would not be filing for an extension.
“We are not going to court to ask for an extension. We are going to court to file a supplementary report in relation to the progress that we have made and as it has been indicated also including a plan on the Sassa way forward,” Mvulane said.
According to Sassa, the treasury will only agree to the extension of the CPS contract if the Concourt approves Sassa’s request. Mvulane said Sassa was in contact with the treasury and the South African Reserve Bank in case the CPS negotiations fall apart. While reports have suggested that Dlamini’s rejection of Gordhan’s proposal that the Post Office and the banks distribute grants signifies animosity between the two, Dlamini issued a statement that no such animosity exists.
CPS released a statement saying that while it was committed to continue distributing grants, it had no knowledge of when Sassa intended to approach the Concourt, or what the terms and conditions of Sassa’s new contract would be.
The Inkatha Freedom Party’s Liezl van der Merwe said on Wednesday that of great concern is the department of social development’s “disregard” of the ConCourt. She said Dlamini was responsible for the crisis and her response has resulted in the “buck being passed to treasury”.
The other options
Sassa says it has rejected five other options and that CPS is the lowest risk option that the state has. According Mvulane, about 1.3-million South Africans use their own bank accounts to receive payments, while the majority of beneficiaries receive payments in cash.
Mvulane said Sassa’s long-term plan is to be able to distribute grant payments itself within the next five years. To this, Mvulane said Sassa requires increased investment to build information technology infrastructure and hire more staff. The hope is that Sassa will have its own cards instead of relying on the outsourced services of third parties such as CPS.
That’s in five years’ time. It is the present is that matters, given that 17-million are waiting for April 1 to see if their grants will be paid. What it rests on is the extension of a contract with CPS that Sassa, with only 37 days to go, cannot guarantee.