SA scrambles as R140bn welfare threatened

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Published Jan 19, 2017

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Johannesburg - South Africa’s government, set to miss a deadline to

appoint a new distributor of welfare grants worth about $10.3 billion a

year to more than 17 million people, asked aspirant bidders to an information

session as the end of a contract with Net 1 UEPS Technologies looms.

The South African Social Security Agency, which oversees the monthly

payment system, took the first step toward appointing a new distributor at the

session in Pretoria on January 13. It’s likely to take several more months to

choose a winner, which will then have to put the necessary payment systems in

place. The South African Post Office said it plans to bid.

“The tender briefing was about a request for information,” Kgomotso

Diseko, a spokesman for the agency, said by by phone. “Some of the content

we are just finalising and then we will issue a statement. We are not ready

yet” to select a bidder.

While the Constitutional Court ruled in November 2013 that the process of

awarding the contract to Net 1, which expires at the end of March, was flawed

and the tender should be issued afresh, the process was delayed by legal

wrangling. The welfare system has helped bolster support for the ruling African

National Congress and interrupting the payment of the grants - the only form of

income for many poor families - could spark protests and wouldn’t be

politically palatable.

Sassa has said it won’t be ready to take over the distribution itself.

Barclays Africa Group declined to comment on whether it was bidding for

the contract, while Standard Bank Group, Nedbank Group and FirstRand’s First

National Bank, the country’s other biggest lenders, didn’t immediately respond

to questions. The Post Office said it’s best-placed to distribute grants.

“We have the largest footprint by far and the reach in rural areas,” said

Mark Barnes, the Post Office’s CEO, who attended the January 13 briefing.

“There will be a transition period for a new service provider to take over. I

think July or August would be a realistic timeline. It could even be awarded to

multiple service providers, but it should include the Post Office.”

Read also:  Net1 subsidiary retains Sassa contract by default

Net 1 CEO Serge Belamant wasn’t available to comment and didn’t

immediately respond to e-mailed questions. Lumka Oliphant, a spokeswoman for Social

Development Minister Bathabile Dlamini, didn’t answer her mobile phone. If need

be, the Net 1 contract will be extended, the Social Development Department said

in December.

The Democratic Alliance, the main opposition party, said Dlamini had

intentionally stalled the bid process and that the livelihood of some of the

country’s poorest people was being placed at risk.

“There is still no clarity as to who will perform this crucial task,”

Lindy Wilson, the DA’s shadow deputy minister for social development, said in

an e-mailed statement. The minister “should stop the pretense, come clean and

admit that her department and the South African Social Security Agency have

already renewed their invalid multi-billion rand contract with Net 1.”

BLOOMBERG

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