A week before the contract between the South African Social Security Agency (Sassa) and Cash Paymaster Services (CPS) is meant to end, officials at the agency are warning of a complete collapse. There is no backup plan — only last-minute piecemeal agreements.
Last week, Communications Minister Nomvula Mokonyane, speaking on behalf of the Cabinet, came out in support of Sassa, going so far as to claim that the Cabinet is satisfied that social grant beneficiaries will be paid come April 1.
Two weeks ago, Sassa asked the Constitutional Court to extend the invalid CPS contract because a phase-in and phase-out process was needed. At the time, Sassa didn’t mention it had no contingency plan if the court ruled against an extension — in essence, forcing the judges into a corner.
The parliamentary portfolio committee on social development was told last week that there was no contingency plan that would be ready before April 1. Although Sassa acting chief executive Pearl Bhengu has said there is a backup plan, she sheepishly confirmed that it would only be ready by July.
Though government believes there should be no panic, those at Sassa are frustrated that there is no plan and that basic questions have not been asked by the Cabinet or MPs.
Senior officials at Sassa are in a frenzy and have spoken to the Mail & Guardian to state that, aside from back-to-back meetings and talking in circles, there is no contingency plan, just proposals for how grants could be paid in April.
“We’ve been wanting to see the plan in black-and-white but everyone around here is talking about frameworks and ideas,” said one source.
This is backed up by the latest submission to the Constitutional Court last week by advocacy group Freedom Under Law, which tore into the backup plan story.
“Sassa admits that it was only after the court hearing that it urgently began searching for a contingency plan,” read the papers.
Freedom Under Law argues that, if the Constitutional Court rules against extending the CPS contract, Sassa expects the public to understand that the so-called contingency plan is not ready to be implemented.
“The ‘plan’ itself has not been costed and properly evaluated. Needless to say, it has not been meaningfully discussed with the panel of experts nor with the IMC [interministerial committee on social security],” Freedom Under Law states in its papers.
It is astounding, then, that Cabinet and the portfolio committee can be satisfied with the progress made by the agency.
There are 10.7‑million grant recipients, about two million of whom have their own accounts with commercial banks and will not be affected by the looming payment crisis.
But 5.7‑million recipients are paid through Grindrod Bank, which uses Net1’s technology to do so. CPS is a subsidiary of Net1. Come April 1, even the extension of the already invalid contract with CPS will come to an end, meaning that Grindrod will no longer be able to pay out social grants. This, in turn, means a new agreement has to be signed.
Sassa wrote to the Reserve Bank only on Tuesday, a senior official said, to tell it that Sassa would be paying the grant allocations directly to Grindrod Bank, and only because a payment file — the information needed to allow banks to pay grant beneficiaries — will have to be prepared next week.
“Whatever we do now is going to be irregular because we don’t have an agreement with Grindrod, and to get that done we have to use a deviation [from normal procedures]. This is a nightmare. There is no other strategy and we have to make this work,” said the source.
But according to Sassa’s submission to the court, all 5.7‑million beneficiaries with Grindrod will be moved to a Sassa or South African Post Office (Sapo) card.
“The beneficiaries would need to present themselves at [a] Sassa/Sapo outlet, where they will be biometrically verified before a card swap,” it reads.
In this submission, there is no plan for how these beneficiaries will be paid before the card swapping is done and how long this process will take. As it stands, Grindrod Bank will remain central to the payment process come April 1.
Considering the fluctuating numbers that Sassa gives in reports, which don’t correlate with those quoted by the Cabinet, it is difficult to say how many cash recipients must be accommodated.
The Cabinet claimed there are 780 000 people who will need cash payments from April 1. Sassa claims there are 880 000 recipients — significantly fewer than the 2.8‑million listed in previous reports submitted to the Constitutional Court.
Sassa officials said none of these numbers have been tested. “There is no confidence about how sure are we about these numbers. If we are going to say that the problem is only with the 880 000, why would we want to go out on a cash tender for over two million people?” said the source.
“We have known all along that we are going to have to cut ties with CPS, yet we didn’t give people PINs, which they can easily get from our local offices. We never attempted to do that.”
But Sassa told the Constitutional Court that it has a plan to bring in the security cluster.
“We have finalised the necessary logistic arrangements with the security cluster forming part of the IMC [interministerial committee] to ensure the cash payments are securely and timeously distributed, and have made arrangements to ensure the safety of beneficiaries at the various cash collection points,” reads the agency’s submission.
Nowhere is it mentioned how the “security cluster” is meant to package the money, find cash dispensing machines and pay the grants.
Said another Sassa source: “The security cluster can’t pay the grants; maybe they can escort whoever is going to pay but they themselves can’t pay. There must still be a service provider to dispense the money at the cash pay points, which we do not have right now.
“We haven’t told the court how the security cluster is going to help pay the money, unless they are going to travel with money in bags to the pay points.”