Grants body wants old paymaster back

SASSA: EXTEND CPS CONTRACT, ACTING CEO ASKS COURT

Elderly, disabled need cash, which Post Office, banks can’t handle, she claims. Moneyweb

The South African Social Security Agency (Sassa) wants to extend the invalid contract of Cash Paymaster Services (CPS) for the payment of social grants for another six months from April 1.

This emerged from Sassa’s affidavit that was filed by the agency’s acting CEO Pearl Bhengu at the Constitutional Court yesterday, confirming what many observers had expected.

In court papers, Bhengu said CPS will not assume the function of paying all 10.7 million social grants beneficiaries but the company will be required to only pay 2.5 million elderly and disabled beneficiaries until September.

In justifying CPS’ involvement in the social grant payment network, despite its contract being declared invalid by the Constitutional Court in 2014 as it didn’t go through proper tender processes, Bhengu said Sassa has been unable to find an alternative service provider to pay elderly and disabled beneficiaries.

These beneficiaries are “unbanked” – in other words, do not have bank accounts – and are unable to register with financial institutions, but access their social grants in physical cash at pay points kitted with CPS’ software and technology, said Bhengu.

The remaining eight million beneficiaries access their social grants via ATMs or retail points.

CPS, a subsidiary of JSE-listed Net1, is responsible for the distribution of 17 million grants, worth R140 billion per month.

Sassa’s advocates on December 18, 2017, wrote a letter to Chief Justice Mogoeng Mogoeng, asking the court to extend CPS’ contract for another year ending March 31. The court agreed.

By April 1, the South African Post Office and commercial banks were meant to take over the full payment of social grants from CPS, including payments to elderly and disabled beneficiaries. But Bhengu said the Post Office and banks currently don’t have the capacity to disburse cash payments.

Two Sassa insiders said Post Office CEO Mark Barnes has complained to Bhengu about the agency frustrating his efforts to discuss the state-owned entity’s role.

Sassa is yet to define the role of the Post Office in the payment network and commercial banks –Nedbank, Standard Bank and FNB – are yet to be contracted.

The delays, largely caused by impetuous Social Development Minister Bathabile Dlamini, were intended to pave the way for CPS to swoop in again at the last minute to help Sassa avoid a crisis.

CPS is not in favour of an extended contract. In a letter to Benghu by Net1 CEO Herman Kotzé on December 27, Kotzé said an extension will “attract further criticism” towards the company.