Parliament – Social Development Minister Bathabile Dlamini has yet to decide whether to seek an order from the Constitutional Court that would allow Cash Paymaster Services to continue paying welfare grants after April 1.
"That decision must come from the minister and the minister has not yet taken a decision," her spokeswoman Lumka Oliphant said on Wednesday. "But rest assured that grants will be paid on April 1."
Dlamini, when asked directly, refused to say how she planned to resolve the impasse that is threatening the continued payment of grants to almost 18 million beneficiaries once the Constitutional Court's suspension of the invalidity of the contract with GPS expires on March 31.
The ministry spoke after a meeting of Parliament's portfolio committee on social development on Wednesday was cancelled, the second meeting on the crisis this year to be scrapped.
The cancellation notice appeared to lay the blame at 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 Finance Minister Pravin 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.
Oliphant dismissed reports that Dlamini and Sassa would on Wednesday approach the Constitutional Court to allow the contract with CPJ run for another year.
Two weeks ago, Sassa said it planned to take this route at a portfolio committee meeting where Raphaahle Ramokgopa, the agency’s executive manager for strategy and business development, conceded that it had yet to find a response to the looming crisis. Ramokgopa said Sassa had considered six options – option one being that the CPS contract be extended.
However, National Treasury has warned that this would be irregular expenditure since the Constitutional Court ruled in 2013 that the contract was illegal and invalid. The other options included procuring the services of banks or the South African Post Office.
But banks have said they needed at least six months to prepare for paying out grants, meaning grant beneficiaries would not get paid on April 1. Resorting to the post office was also ruled out since it lacks branches in deep rural areas.
The DA has asked President Jacob Zuma to issue a proclamation giving Gordhan the lead role in the contractual negotiations with CPS and the appointment of a new service provider, terming Dlamini’s handling of the matter “negligent”. It also took aim at her in January when a meeting of the portfolio committee was cancelled because she was due to attend an African National Congress National Executive Committee lekgotla.
National Treasury has proposed awarding the tender to pay grants to a new service provider to distribute grants to cash beneficiaries, while beneficiaries with bank accounts would have the money deposited into their accounts. But Ramokgopa is on record as saying 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.
Sassa therefore indicated it would approach the Constitutional Court.
However, Ramokgopa acknowledged that if Sassa and the department got the go ahead from the court, “any expenditure incurred would be irregular” and essentially illegal.
She said they would therefore approach the chief procurement officer for permission to deviate from normal supply-chain management processes.
In addition, they would appoint a negotiating team to approach CPS to discuss the extension of their contract with “favourable conditions”. CPS is a subsidiary of American company Net1, which has been accused of being responsible for illegal deductions from the grants of beneficiaries.