A major showdown is looming between Finance Minister Pravin Gordhan and Social Development Minister Bathabile Dlamini over the distribution of social grants after the CPS contracts end on March 31.
The row between the two could be sparked by a letter Gordhan wrote to Dlamini on February 1, 2017, in which the finance minister said CPS (Cash Paymaster Services) should not be part of the service providers to be considered for the distribution of social grants to 17 million recipients, as from April 1.
Gordhan wants a new contract to be awarded to the commercial banks and Sapo, but it should “exclude biometric verification which will favour CPS and discriminate against other potential bidders”.
According to Gordhan, he was informed that Sassa, a social grant agency for the government, wants the CPS contracts to be extended.
“If this route is taken it will certainly expose the government to legal challenges. Our only interest at this stage is to help Sassa and yourself, to ensure social grants are paid out on April 1, 2017.”
According to Gordhan, reconsidering CPS was not an option. He says the government should instead appoint a service provider for cash distribution to grant recipients who were currently using the cash pay-points system.
He also said Social Development should utilise bank accounts to disburse grants through the banking sector to those with bank accounts.
“This will involve a communication campaign for beneficiaries to come forward with their bank accounts. ��Requirement must exclude biometric verification, which will favour CPS and discriminate against potential other bidders.”
However, insiders told Independent Newspapers that Gordhan’s proposal was likely to be rejected by Dlamini�.
“The Department of Social Development wants to create a conducive environment without excluding other service providers because the system of CPS was working better.
“�The department has used biometrics to eliminate fraud (double dipping) and for proof of life during the payment, as well as ensuring the 'paying of the right social grant to the right person,' the source said.
The sources further added in the 2012/2013 financial year Sassa managed to save the government R2 billion by eliminating fraudulent grant recipients during re-enrolment and registration of biometrics of all grant recipients and new applications.
They insisted that Dlamini was looking for a system that would eliminate fraud and corruption. “It will not be possible for banks to take over 6 million beneficiaries without re-issuing of cards and performing the Fica within a matter of two months,” one of the insiders said.
Insiders also said banks do not have footprints in all areas of the country, saying it would likely cause massive disruptions and panic to beneficiaries.
Dlamini spokesperson Lumka Oliphant said the minister was still studying the contents of Gordhan’s letter before she could comment.
While Gordhan’s opinion on CPS is known, another state institution, the South African Post Office, is in a massive scramble to rope-in CPS to help it secure the R10bn monthly social grant project.
Sapo and CPS have now �forged a joint bid, but that would not have the endorsement of Gordhan.
Independent Newspapers has seen correspondence between Dave de Beer and CPS boss Serge Belamant in which De Beer requested Belamant to consider joining a consortium, which included Sapo’s chief executive Mark Barnes.
De Beer, in his initial correspondence to Belamant, wrote that “members in my group have very close ties with top management in the Post Bank and Sapo and we are extremely well positioned to move them".
“Mark Barnes made it clear that the system is still required and that card replacement will be a problem for them.”
�In his next e-mail, De Beer wrote to Belamat saying: “Your confirmation that the Net 1 (Cash Paymaster Services) can/may be employed to facilitate the payments is the only factor that prohibits definite developments towards acceptance of our solution by the relevant parties.
"In fact, we are confident that we can make serious strides by this weekend if we (have) some conditional commitment.”
Belamat confirmed the existence of these e-mails and the request for his company to partner with Sapo. He, however, said no official confirmation has been made.
“I would partner with anyone for as long as the plan would serve the needs of the government and recipients receive their grants on time,” Belamat said.
De Beer denied authoring the e-mail but said Sapo was an ideal institution to distribute social grants. He, however, said they would need Belamat’s CPS technology to reach each out effectively to 17 million recipients of social grants.