Queuing to collect government grants in Alexandra.
In 2012 the Absa-owned company AllPay went to war because it had lost a tender bid to handle the payment of government grants on behalf of the South African Social Security Agency (Sassa). Over the course of several very expensive years, AllPay ultimately proved that the Sassa contract had been unlawful, an argument it first launched because it had considered itself the rightful winner of a crucial contract.
Five years later, with Sassa slowly making its way towards a sequel tender expected to be worth more than R3-billion, Absa has not shown up.
“We will not be participating directly in the Sassa RFP [request for proposal],” an Absa spokesperson confirmed, when asked about the upcoming tender, or RFP.
Instead, like several other companies, Absa appears to be positioning itself to be a supplier to an eventual tender winner, keeping itself at a remove from Sassa. “However, as a financial services organisation with a footprint across the country we stand ready to assist in delivering this critical service to those who need it,” the spokesperson said.
Although it technically has an April 1 deadline to implement a new grant payment system, Sassa finally admitted in February that it may need as much as two years more before it can do so. It is now evaluating documents received during a request for information (RFI) process, documents that are supposed to inform the eventual RFP, which should lead to the awarding of a tender.
Sassa has made it clear that companies that do not participate in the RFI could be excluded from the RFP. Although such an exclusion will only be confirmed when the RFP is issued, that is a risk companies seldom take in major tenders.
Absa did not take part in the RFI. Nor did several other major financial services players and providers such as Vodacom, which participated in previous abortive tender processes.
Of the 18 organisations that responded to the RFI, putting themselves in line for an eventual tender, only two qualify as truly ubiquitous: the South African Post Office and Standard Bank.
The current service provider, Cash Paymaster Services (CPS), also submitted information. The remainder of the companies involved include some unusual contenders, with big and unusual claims.
“We came in representing the kingdom of Christ,” the founder of Ntuli Capital, Siyamvuyela Ntuli, told the Mail & Guardian about his Sassa RFI response. “There was not a single company that was representing the kingdom of God.”
Ntuli said his company’s primary aim is to secure the job of paying 17-million grant recipients every month. “We do have the financial capacity to handle such a massive project,” he said. “Also the technical expertise.” He would not disclose the source of that capacity, nor the address of his headquarters.
Ntuli Capital was registered last year. The 28-year-old founder, who has described himself online as a “self-made business magnate” and “philanthropist”, is the only director. Public records show that his last business venture involved attempting to charge R8 000 a head for training on how to trade instruments such as government bonds. At one point he claimed that this venture, trading out of a run-down office in Bloemfontein, was worth R1-billion. A few years later there is now no trace of it, nor of the 12 “bestselling books” Ntuli apparently authored.
Another of Sassa’s suitors is not only sure it can handle the job, but also says it can start doing so by the time the current outsourced contract ends in less than a month.
“We can sort out the April Fool’s scare,” Mpumalanga-based serial entrepreneur Frank Shilubane of Mojo Money told the M&G. “Most definitely we can handle that.”
Shilubane said Mojo was to be a “fintech platform” that would use biometrics to provide unsecured loans to street vendors in his home province and would eventually provide trade finance to small companies that won government tenders but needed capital to deliver.
“Nobody is going to give you R500 if you are a [small business] and say you have an order to supply stuff for R1 600,” Shilubane said of such small tender winners. “Everyone wants a banking track record. We don’t.”
His company had a strategic partnership with a major bank, but he could not name it because of a non-disclosure agreement. Nor could he provide details about the company’s size, revenue or track record.
Another respondent to the RFI, Pretoria-based Incatorque, is also unknown outside one sector, the bulk fuel industry. There traders recognise not Incatorque’s name, but that of its G-Pay service. In the bulk fuel industry, it is not unheard of for money stolen from bank accounts to be used to buy diesel to launder the money, or for buyers to later dispute that they collected fuel. The G-Pay system cross-confirms transactions by cellphone to avoid later disputes. Some of its systems offer biometric confirmation, similar to the fingerprint system used by Sassa to guarantee that the right person receives a grant — and giving it solid proof after the fact if necessary.
“We’re quite good at that, actually,” said Incatorque’s Nick Theron of de-risking in the fuel business.
G-Pay has developed a mobile wallet system, Theron said, which would allow the secure transfer of money to a cellphone and the ability to spend that money directly in stores or get cash from till points without another intermediary step. This, of course, requires partnerships with stores. Does Incatorque have such partnerships?
“We don’t want to disclose specifics at this stage as to whom and what,” Theron said. Then he deviated somewhat from the script used by other hopefuls. “Because we are part of the Christo Wiese group of companies, we have access to big retail-type environments.”
Incatorque, it turns out, is part of the stable of companies controlled by the richest man in South Africa (by a considerable margin), who achieved fame and fortune with mass-market retailers such as Pep and Shoprite.
That comes with its own complications in an environment in which black empowerment will be key to an eventual tender and politics, and claims of manipulation by “white monopoly capital” are already rife.
“We’re not really getting our hopes up,” said Theron of deciding to participate in the RFI process. “This was more to get the brand out there.”
Standard Bank and others did not respond to questions on their participation and companies that could have been expected to participate but did not were unresponsive.
What seems a general reluctance to do business with Sassa may, however, be explained by the experiences of companies in areas far removed from finance and grant payments.
“We have given up; we’re not going to bother to spend the time and money it takes to respond to a tender,” said an executive at a company with recent experience of a Sassa bid.
The last bid the company engaged in, the executive said, “was clearly highly political” with “many strange things” happening around it. The clincher was a late-night phone call, to a private cellphone number, before the identity of bidders was made public.
“There was this voice at the other end of the phone telling me: ‘Don’t bother to bid, these things [the winning bidders] are already decided,’” the executive said. “I don’t know if it was a threat, but I’m not going to find out.”