File picture: David Ritchie/Independent Media
Cape Town - Telecommunications and Postal Services Minister Siyabonga Cwele has told Parliament that the South African Post Office (Sapo) was ready to take over the payment of social grants from the South African Social Security Agency (Sassa).

Sassa and Social Development Minister Bathabile Dlamini were embroiled in a controversy after the Net1/Cash Paymaster Services (CPS) contract expired with no plan in place for a takeover.

CPS, a subsidiary of Net1 has the contract to distribute welfare grant payments to about 17 million beneficiaries.

Following a Constitutional Court ruling in March, CPS signed an addendum to its existing contract with Sassa, which extended the contract for 12 months to March 31, next year.

In its ruling on the matter, the Constitutional Court said it and a team of independent and technical advisers would closely monitor CPS and Sassa during the next 12 months. In 2014, the court had declared the contract invalid.

Dlamini and Sassa chief executive Thokozani Magwaza told Parliament last week that they were in negotiation with Sapo, but would only give details later on the nature of the contract. Magwaza said that they were still to decide whether Sapo would be the primary contractor or not.

Sassa will have to submit a progress report in the Constitutional Court next month on plans to pay social grants after the current Net1/CPS contract expires next year.

Cwele told Parliament, during his department’s budget vote, on Wednesday, that Sapo would be able to take over the grants payments.

His position contradicts that of Dlamini, who told the portfolio committee on social development two weeks ago, it would not be ready to take over grants for the next five years.

Read also: Net1 inks addendum with Sassa

She said it would need another R6 billion for the new grant contract of five years before Sassa is ready to take over.

Cwele said on Wednesday that Sapo was on a sound footing after it faced serious financial challenges. He said a new board has managed to stabilise Sapo.

“Sapo is ready to assist Sassa to take over the payment of social grants as directed by the court,” said Cwele.

Other parties also supported Cwele and said the involvement of Sapo was necessary.

Sibongile Nkomo of the IFP said they were happy that Sapo was showing stability.

She said they supported the full take-over of social grants by Sapo. They did not want another contract with Net1/CPS following the fiasco in the past few months.

Nkomo said that the contract to distribute grants should have been given to Sapo a long time ago, and not Net1/CPS.

Cwele also told Parliament that the work on data costs was continuing. He said Icasa had done work on the matter and the full results would be known in the next few years. He said Icasa agreed with the public that data prices were too high.

According to the Statistics South Africa report this year the ICT sector contributes 3 percent to the gross domestic product.

He said following his instruction to Icasa last year to investigate the data costs, it said it would finalise its work in the next two to three years.