The R120 billion contract to distribute social welfare grants to beneficiaries has been a bone of contention for months.
Parliament – Finance Minister Pravin Gordhan on Wednesday issued a statement to deny reports that he was heading for conflict with Social Development Minister Bathabile Dlamini over the crisis threatening welfare grant payments to the poor. 

Gordhan said National Treasury was committed to assist the department of social development and the South African Social Security Agency (SASSA) "by any legal means possible to ensure the payment of grants to South Africans relying on such grants".

Media reports of "a looming war" between National Treasury and Dlamini were wholly misplaced, he said.

The statement followed a newspaper report that a letter from Gordhan to Dlamini a fortnight ago set the stage for a showdown between the two ministers.

In it, he reportedly argued that Cash Payment Services (CPS), the current service provider, should not be part of the options considered for the distribution of social grants to 17 million recipients from April 1.

The Star quoted the finance minister as pleading for a new contract to be awarded to commercial banks and the SA Post Office (Sapo), but it should “exclude biometric verification, which will favour CPS and discriminate against other potential bidders”.

A further extension of CPS's R120 billion a year contract would expose government to legal challenges, he is said to have warned. The Constitutional Court in 2013 set aside Sassa's awarding of the contract to CPS because it was unlawful. 

In a subsequent order it suspended the declaration of invalidity to allow grant payments to continue while Sassa re-runs the tender process. 

But with that extension expiring on March 31, an alternative solution has yet to be found to ensure payments to almost 18 million recipients continues beyond the deadline.

On Wednesday, Dlamini declined to comment, while her spokeswoman Lumka Oliphant said the minister had yet to make a decision on whether to ask the Constitutional Court to maintain the suspension to allow a year-long extension of Sassa's contract with CPS.

“That decision must come from the minister and the minister has not yet taken a decision,” Oliphant said. “But rest assured that grants will be paid on April 1.”

A meeting of Parliament's portfolio committee on social development on Wednesday to discuss the looming crisis, was cancelled. A note sent to committee members appeared to lay the blame for this the door of Treasury, saying the meeting could not go ahead as the ministry was not available.

However, a letter sent to the committee by Gordhan to tender National Treasury’s apology made plain that the payment of grants was not the responsibility of his department.

“Payments of social grants does not fall within the mandate of the National Treasury,” Gordhan said.

“This is the statutory responsibility of my colleague, Minister Bathabile Dlamini. Therefore the South African Social Security Agency (Sassa), the Department of Social Development (DSD) and the relevant Executive Authority have the responsibility to account to the committee on this matter. He added that National Treasury would nonetheless advise and support the department and Sassa to ensure that the payment of grants was managed within “the correct legal and financial framework”.

Insiders and the opposition said the meeting should have gone ahead as Gordhan was correct in noting that his role was purely an advisory one.

“For us it would have been of no consequence that Treasury could not be there, the meeting should have gone ahead because at the end of the day, the responsibility is that of the department and Sassa,” said Democratic Alliance spokeswoman Bridget Masango.

“But the minister and Sassa have been unable to do anything for the past three years,” she added.

Oliphant took a different view, saying National Treasury was “a very important stakeholder here” and the whole purpose of the meeting had been to hear from it. “We cannot do anything without them,” she added.

Masango, speaking in the debate on Zuma’s State of the Nation Address, said she believed the crisis had willfully been left to escalate to force an extension of the contract with CPS.

“Sassa never had any real intention of meeting the 01 April 2017 deadline for taking over of the distribution of social grants. We believe Sassa wilfully manufactured an emergency that would leave them with no choice but to extend the current invalid contract with CPS."

CPS is a subsidiary of American company Net1, which has been accused of being responsible for illegal deductions from the grants of beneficiaries.