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.