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Grants will be paid, Sassa promises

File picture: David Ritchie

File picture: David Ritchie

Published Feb 2, 2017


Parliament - South African Social Security Agency (Sassa) chief executive Thokozani Magwaza on Wednesday put his head on a block, promising that the country almost 18 million grant beneficiaries will receive their payments come April 1."On the first of April everybody will be paid...I'm sticking to that," Magwaza told journalists after he and his team briefed Parliament's portfolio committee on social development on what it had achieved since the 2013 Constitutional Court ruling which declared the R10 billion contract with Cash Paymaster Services (CPS) invalid.

The court suspended the order until the contract to pay social grants was put out to tender and a new service provider was found.

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Sassa, which had to regularly report back to the Constitutional Court, in 2015 said it would take over payments of the grants. It later emerged they would not be able to achieve this before April 1.

Magwaza said SAASA had already appointed a legal team to approach the Constitutional Court asking it to allow CPS to continue to pay out grants for another year from April 1.

"We are going to be writing a report to them [Constitutional Court judges] and asking for the extension of the suspension of invalidity," he said.

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Asked if there was a plan B if the Constitutional Court turned down its request, which is highly unlikely, Magwaza said: "I said that we are consulting our legal team, then we will come back to you on what will happen if that happens." 

Read also:  SA may extend Net 1's welfare contract

Magwaza was only appointed in November last year, but said he had been with the social services department for many years and had monitored the situation.

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He insisted SAASA did not drag its feet.

"First of all we were asked to go out on a tender and we went out on a tender on time and we reported that and we've been doing other things...It's not that the people that were there were sitting on their laurels."


A SAASA official had earlier conceded to MPs that they "we have failed".

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Raphaahle Ramokgopa, the executive manager for strategy and businesss development at SASSA, told MPs a task team had considered six options – option one being that the CPS contract be extended – an option which National Treasury would consider irregular expenditure in light of the contract being illegal. 

The other options were procuring the services from Grindrod Bank which services the majority of social grant beneficiaries; procuring the services from all banks “wishing to comply with SASSA requirements”; procuring the services of all banks and using CPS to pay around 4 million recipients who receive their grants in cash; procuring the services of the South African Post Office; and option six being appointing a new service provider for cash payouts and using the the bank accounts of so-called “banked beneficiaries” to distribute the money.

Banks had indicated they needed at least six months to prepare for paying out grants, meaning grant beneficiaries would not get paid on April 1.

The option of using the South African Post Office was also ruled out in the short term since it did not have branches in deep rural areas, but SAASA was already speaking to the post office, negotiating the possibility of using its 2 700 branches in the medium- to long-term. 

Read also:  SA scrambles as R140bn welfare threatened

National Treasury was strongly in favour of awarding a tender to a new service provider to distribute grants to around four million cash beneficiaries, while those with bank accounts would have the money deposited into their accounts.

Ramokgopa said this option could cause “panic among beneficiaries” and that it would take a new service provider time to set up the infrastructure for cash payments, meaning they would miss the April 1 deadline when the contract with CPS ends.

Only option

In the end SASSA, found that option one was the most feasible to ensure grant beneficiaries get their much needed payouts on April 1.

Ramokgopa said, if the Constitutional Court grants it an extension, the contract would still be considered invalid by Treasury, meaning it would have to approach the chief procurement officer and ask for permission to deviate from normal supply chain management processes. 

In addition, it would appoint a negotiating team to approach CPS to discuss the extension of their contract for one year, but with “favourable conditions”. 

CPS is a subsidiary of American company Net 1, which has been accused of being responsible for illegal deductions from the grants of beneficiaries. 

The briefing left ANC MPs satisfied but they lashed out at opposition MPs who were left unimpressed with SAASA and suggested Social Development Minister Bathabile Dlamini should be held accountable for the mess.

"Leave our minister, leave our president of women's league out of this," a clearly angry Pulani Mogotsi of the ANC said. 


Earlier, Inkatha Freedom Party MP Liezl van der Merwe had referred to the SAASA debacle as a "national crisis, and also said: "It boils down to leadership of the minister."

She criticised Sassa, insisting it had achieved very little progress since the Constitutional Court ruling.

"You are now handing CPS, an American company for all intensive purposes, a bunch of crooks, another lifeline....they have stolen money from the poorest of the poor," she said in relation to the illegal deductions being made from grant beneficiaries' accounts.

"Did you bow to any political pressure to extend the contract of these American crooks?" she asked. 

Magwaza took exception, denying that he or others at Sassa were under political duress to extend the contract with CPS.

"I'm the one that pushed for Net1 to be on earth can I bow to political pressure?

"The fact is a decision needs to be taken. Come first of April we need to pay."

Democratic Alliance MP Evelyn Wilson accused SAASA of "pulling the wool over our eyes", adding that the agency had manufactured an emergency to enable CPS to continue benefiting financially from a deal with government.

"You have forced an emergency knowing full well the Constitutional Court must agree because if they don't grants won't be paid," she said. 

Wilson also referenced Net 1 chief executive Serge Bellamant's comments in the media that he was sure SAASA would not terminate the contract with its subsidiary, CPS.

"He is arrogant but its right because he knew...that you would not be able to deliver. Why has it taken so long to go to court...I find it unbelievable that this had not yet been done," said Wilson.


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