Contracts: Many problems plague the agency responsible for social grants
The panel of experts brought in to ensure the South African Social Security Agency can pay social grants on April 1 is so concerned about the mess Sassa is in that it has suggested taking this function away from Sassa and giving it to the treasury.
The panel and the auditor general filed their third report to the Constitutional Court this week on the progress made by the agency in ensuring that the grant payment system is seamlessly handed over from Cash Paymaster Services (CPS) to the South African Post Office and Sassa.
But it seems that even with help and supervision, Sassa won’t be able get its act together in time.
The panel has flagged many concerns, alleging that Sassa is dragging its feet and is not adequately addressing how and where beneficiaries will be paid come April.
The panel has also considered proposing legislative changes to restructure the agency. It recommended that the court should instruct the department of planning, monitoring and evaluation to investigate ways in which Sassa and its chief executive could be more autonomous and whether having a board would lead to a better governance structure.
This comes in the light of Social Development Minister Bathabile Dlamini’s alleged meddling in the agency, which contributed to the grant crisis last year. During an inquiry last week, she testified that she has overarching powers to hire and fire executives and that all decisions need to be sanctioned by her.
But the panel’s most startling recommendation, which comes just two months before the April deadline, is that the investigation would also look into whether Sassa should continue paying grants.
“DPME [the department of planning, monitoring and evaluation] should investigate and consider the desirability of moving the payment function of social grants to the national treasury, leaving the registration, verification and administration of social grant beneficiaries with Sassa or the department of social development,” reads the report.
The expert panel wants the planning, monitoring and evaluation director general to submit a report on this recommendation within six months, after receiving direction from the Constitutional Court.
Though the payment of grants is the core function of Sassa, it has been an uphill battle since the agency was established 13 years ago.
Other Sassa shortfalls flagged by the experts include:
- The current system of recourse and redress for beneficiaries who experience problems with their payments is inadequate;
- Sassa reports to the court are vague on timelines and on the extent of actions to be taken to ensure grants are paid come April 1; and
- There are still no service-level agreements in place with the Post Office, and the agreements that do exist are not enough to ensure that the agency is adequately protected and money is not wasted.
“Sassa has complied with the court’s directive with regards to a communication plan to be developed by the government communication information services, but the panel has concerns regarding its effectiveness,” reads the report.
It also raises the possibility that Net1’s partner, Grindrod Bank, could continue servicing many grant beneficiaries; it is still marketing its Easy Pay Everywhere (EPE) bank accounts to them. CPS is a Net1 subsidiary.
Two weeks ago, Sassa told the panel that it was concerned that CPS and Grindrod were aggressively rolling out bank accounts to beneficiaries and the agency was trying to take steps to address this problem.
But according to the panel’s report, Sassa has been ineffective in informing the beneficiaries that they can choose any bank through which to receive their grants. Grant recipients could find themselves in contracts that they can’t easily get out of.
“The panel remains concerned about Sassa’s seeming inability to stem the misinformation about the EPE card as the new Sassa card, and to investigate and take action.”
The Grindrod bank accounts are also a major source of complaints about illegal deductions and financial products that beneficiaries claim they did not purchase.
“Opening an EPE account is a prerequisite for applying for a loan from Net1 and, once opened, beneficiaries can no longer use their Sassa cards to access their grants,” the panel noted.
It said grant recipients are finding it difficult to close their Grindrod accounts and Sassa has not properly explained the process to them. Two weeks ago, the Mail & Guardian reported that Sassa intended to ask the Constitutional Court for the invalid CPS contract to be extended for another six months. This has still not been done.
It was also reported that a tender for cash payment services was advertised in December. The contract would be for five years, servicing more than 2.5‑million beneficiaries, with Sassa hoping to take over thereafter. This process was meant to be completed by July 2, but with the constant setbacks, more delays are expected.
The lack of progress in the tender process concerns the panel as it jeopardises the continuation of cash payments to beneficiaries.
“In addition, any delay in the proposed evaluation of tenders and awarding of a contract to a new service provider will delay even further the date a new service provider can take over fully.
“While Sassa acknowledges these risks, it does not appear to have a firm contingency plan,” said the experts.
They are also concerned about the costs that the agency does not seem to have taken into account.
“Sassa has no immediate plan to properly audit the number and locations of cash pay points in the near future, and has seemingly no intention of limiting the costs by restricting cash payments at pay points.”
The Constitutional Court is expected to make a determination on the recommendations shortly.
‘Sassa can still be saved’
The South African Social Security Agency’s (Sassa) only job is to distribute social grants on behalf of the department of social development and the state. It has not managed to fulfil this role, and a panel of experts wants this to be looked into.
Sassa was established to take the grants function away from the provinces, which were beset by delays in approving payments, fraud, corruption and the inhumane conditions beneficiaries had to endure at pay centres. The financial burden was huge and Sassa was meant to assist by centralising the process.
The problem, said Dr Mashupye Maserumule of the Tshwane University of Technology, is that the Act that established Sassa had given the agency huge responsibility and very little power and autonomy.
“Sassa was deliberately created as an agency which would optimise the grant payment system. But due to how it was structured, it has ended up outsourcing the only function it has to a private entity. This question should have been addressed ages ago: How can a government agency outsource a constitutional duty to a private company?” said Maserumule.
He says Sassa’s structural arrangement may be flawed but believes “the agency can be saved and it can do the job it was established to do”. — Athandiwe Saba