/ 24 November 2017

Social grants crisis looms in 2018, experts warn ConCourt

The cheap and legal delivery of most grants can be achieved by simply using banks and ATMs.
The cheap and legal delivery of most grants can be achieved by simply using banks and ATMs.

Social grant payments will proceed smoothly in April 2018 and in compliance with a Constitutional Court order that the system of payment must be legalised, Minister in the Presidency Jeff Radebe assured Parliament this week.

But a report by a group of experts set up by the Constitutional Court after both government and Parliament failed on that score in 2017 — and after similar assurances from Social Development Minister Bathabile Dlamini last November, which proved false — says otherwise.

Repeated failures to take decisions and action since March “make a smooth transition by 1 April 2018 virtually impossible”, the court’s experts warned last week.

As a result, the suspension of public finance laws under which grants are currently being paid may have to continue beyond that April deadline, and much-maligned outsourced partner Cash Paymaster Services (CPS) will probably have to retain some involvement in the process too.

Radebe heads up an interministerial committee on social security that was hastily assembled in the face of the 2017 grants payments crisis. Yet that committee is “without any statutory or other formal functions or powers”, the expert panel said. In law and in fact, it is the South African Social Security Agency (Sassa) that is responsible for paying more than R12‑billion in social grants every month — and Sassa is in a mess.

With a few exceptions, Sassa’s senior leaders do not “seem to have the required knowledge, experience, skills — or even the will — to execute the Sassa mandate”, the panel said.

“The situation is exacerbated by the apparent exclusion of competent employees from decision-making structures within Sassa.”

There is a danger that Sassa, “possibly under pressure from political principals”, will now make hasty decisions, with consequences that could be expensive or disastrous, the expert panel said.

It also noted that Sassa does not have proper institutional governance, capacity or oversight.

The tender awarded to the United States-owned CPS in 2012 was unlawful, the Constitutional Court ruled. Then, despite repeated interventions from the highest court, Sassa failed to award a new tender and subsequently failed to create the in-house infrastructure needed to pay 17.4‑million social grants in September.

Sassa still cannot run a proper tender process, the experts said.

In its negotiations for the Post Office to take over the payments, Sassa issued a request for a proposal that would not give it the system it was looking for. It then asked the Council for Scientific and Industrial Research to evaluate the proposal but made decisions before hearing back from the CSIR, and then misused and misinterpreted what the CSIR had to say, they said.

Faced with a tight deadline, it took Sassa 12 days to deliver an already signed letter crucial to the process. It never explained why, just as it has never explained other delays, the panel maintained.

In light of such inability, the panel asked the Constitutional Court to order the government to hold meetings to deal with the situation, even providing a list of organisations that should attend and the agenda.

This, it said, is necessary to avoid “a national crisis” in the future payment of social grants.

Earlier this year, Sassa warned that “the country will burn” if social grant payments are interrupted.

Sassa says it needs the 10 000 cash pay points that CPS operates to ensure that grant recipients with no access to electronic channels such as ATMs can be paid. One such pay point is located in the Pretoria City Hall, the office of the Tshwane mayor, to which “the general public has no access”, the panel noted.

Sassa has also insisted that it must have a system of biometric identification for grant recipients similar to the proprietary technology used by CPS, for which CPS pays its parent company R200‑million a year in patent and licence fees before calculating its own profits.

It is not clear why Sassa’s push for biometrics includes duplicating the job of the department of home affairs in tracking which citizens are alive and which are dead, the panel said.

Stripped of such embellishments and provided there is political will, the cheap and legal delivery of social grants to 80% of recipients can be achieved by April simply by using existing banks and their ATMs, the panel said. Banks have offered to provide grant beneficiaries with special accounts at a cost of R5 a month, and few South Africans live more than 5km from an ATM.

With most recipients assured of payment through existing infrastructure, the focus of emergency planning can shift to distributing cash grants to deep rural areas with no financial infrastructure, the experts said.