South Africa plans welfare change

Social Development Minister Bathabile Dlamini. Picture: Masi Losi

Social Development Minister Bathabile Dlamini. Picture: Masi Losi

Published Mar 6, 2017

Share

Cape Town - South Africa’s Social Development Minister

Bathabile Dlamini said she plans to bring in a new welfare system over the next

two years as calls for her resignation mounted with an interruption to payments

to more than 17 million people threatened next month.

The minister said on Sunday that while government is yet

to sign an interim contract with Net 1 UEPS Technologies to ensure the payments

continue next month after the existing contract expires payments will be made.

Net 1 CEO Serge Belamant said in an interview with Johannesburg’s 702 Talk Radio

that the terms of the deal have been agreed, without giving further detail.

The department and the South African Social Security

Agency, or Sassa, are scrambling to ensure beneficiaries continue to get their

money next month. The payments of more than R140 billion a year are a signature

policy of South Africa’s ruling African National Congress, which says the

grants are an important measure to reduce inequality in the nation 23 years

after the end of white-minority rule. In previous election campaigns, its

officials have told rallies that if another party came to power, the payments

may end.

“On 1 April, Sassa begins a new era,” Dlamini said,

adding that a “transition” phase would end in March 2019 with a new arrangement

then put in place. “As has been the case in the past, no one will go unpaid.”

Invalid contract

While the current contract with Net 1 was ruled invalid

by the Constitutional Court in 2014, the welfare agency hasn’t complied with an

order to hold a tender to find a new service provider. Negotiating a new

contract with Net 1 could potentially be circumvent the court ruling. It would

also be against the advice of the finance ministry which, along with the

country’s central bank and the national Post Office, has proposed alternatives

to using Net 1.

“This is an own goal scored by Minister

Dlamini,” Karima Brown, an independent political analyst, said on

broadcaster eNCA. “She should do the honourable thing and resign.”

The Congress of South African Trade Unions, the country’s

biggest labor group and an ally of the ruling African National Congress, has

called for Dlamini to quit as has the main opposition party, the Democratic

Alliance. The Sunday Times, South Africa’s biggest weekend newspaper, ran an

editorial calling for her resignation.

Read also:  Treasury distances itself from welfare talks

Dlamini is also head of the ANC Women’s League, a strong

supporter of President Jacob Zuma.

Cash Paymaster Services, a unit of Net 1, will continue

making payments while new social-grants arrangements are implemented, Dlamini

told reporters in Pretoria. The welfare department is negotiating a new deal

with the company, according to Dumisile Ndlovu, the department’s acting

executive manager for corporate services.

Refuses questions

Dlamini refused to take questions about the resignation

of Zane Dangor, the head of the social development department, or about her

working relationship with Sassa Chief Executive Officer Thokozani Magwaza,

who is on sick leave. President Jacob Zuma on Saturday called Dlamini and

Finance Minister Pravin Gordhan to a meeting and ordered them to ensure the

payments are made.

A new contract will cost the government more than the

current deal. A letter filed as part of a Constitutional Court application last

week showed the fee Net 1 will charge per beneficiary under a new or extended

contract may rise to R22 to R25, from R16.44 currently. Belamant said that the

amount was less than R25 per beneficiary.

“We’re a reputable company and we have worked out what we

believe is a fair and equitable increase, nowhere near R25,” he said.

Over the next two years, the welfare department will work

with the Department of Home Affairs to help authenticate recipients and the

government will at some stage use the Post Office to help distribute the money,

Dlamini said.

BLOOMBERG

The Black Sash Trust, a Human Rights group, last week

applied to the Constitutional Court to demand that the court have oversight of

any agreement with Net 1 and that Dlamini report regularly to it. The

Democratic Alliance has joined that case.

 

Related Topics: