Doubts about Sassa’s sincerity in taking over paying the 17-million social grants
Every month, 17-million social grants are paid out across the country, directly into bank accounts or at giant jamborees where cash is distributed. The problem is that this mammoth exercise happens through a tender that the Constitutional Court has declared invalid.
The South African Social Security Agency (Sassa) is meant to be taking over the distribution job from April 1 next year. But last week it revealed to the parliamentary committee on social development that it was hopelessly ill-prepared to do so.
Let that sink in for a moment. About 17-million people, the most vulnerable in South African society, face considerable risk to the smooth payment of their grants every month. Apart from the obvious social distress a disruption may cause, there is also the effect it might have on our already precarious social stability.
Unless, of course, Sassa already knows that there won’t be any disruption or problems with distribution. It might know that if it already has a plan to abandon the task of distributing grants itself, and leave it in the hands of the incumbent.
It is either that, or Sassa is shockingly risking the wellbeing of millions of South Africans through sheer incompetence.
If it is planning to extend the existing contract, however, it will be in contempt of the Constitutional Court.
The grant tender has been through almost a decade of allegations of corruption and litigation. All along, Sassa has dragged its feet in taking any action that would lead to anyone other than Cash Paymaster Services (CPS), a subsidiary of the Americanlisted company Net1 UEPS, taking on the task.
The Constitutional Court ordered Sassa to conduct a new tender for the work in 2014, but in October 2015 the agency declared that none of the bids it received was compliant with the conditions it set and therefore Net1 should continue with its contract.
Sassa said at the time that when Net1’s existing contract expired at the end of March 2017, it would take over the distribution of grants itself and set out a timetable for five phases in doing so.
It is hard to believe that Sassa has ever taken seriously the prospect of taking on grant distribution. When Social Development Minister Bathabile Dlamini, who is also president of the ANC Women’s League, and the senior leadership of Sassa appeared in Parliament last week, they were heavily grilled by the cross-party committee.
The Daily Maverick quoted ANC member Solomon Mabilo as describing the officials’ presentation as “an insult to us”.
Not only did they reveal themselves hopelessly behind on the programme to take over grant distribution, they also had few explanations for more than R1bn in fruitless and wasteful expenditure that the agency incurred last year. The nongovernmental organisation Corruption Watch has taken Sassa to court over R316m of this, which was paid to Net1, a payment which Corruption Watch alleges was illegal.
It is hard to understand just why Sassa is so disposed to directing business to Net1. It is certainly profitable work – Net1 made R739m in operating profit on revenue of R3bn from grants distribution in 2016. But it also makes at least as much again from other services it sells to grant recipients that arguably depend on maintaining the distribution contract.
The relationship between Net1 and Sassa has been in some respects rather rocky. The two have frequently faced off in court on various aspects of the contract. The one issue that does animate Sassa is deductions from grant recipients’ accounts for everything from airtime to the repayment of micro loans.
It has tried to pass regulations forbidding the practice, but those are now before a court with Net1 seeking an order that it should be entitled to make such deductions. Sassa looks set to declare an emergency, allowing it to escape the tough provisions set down by the Constitutional Court as well as general procurement regulations. That would ensure Net1 can continue with its very profitable work. Of course, an emergency that you have planned to happen is not really an emergency at all.
Apart from Net1 shareholders, no one is particularly pleased about that prospect. The nongovernmental organisation Black Sash is promising to “mobilise the masses on the ground in protest” should CPS be granted an extension of its existing contract.
The Black Sash alleges that CPS and its subsidiary companies raid the bank accounts of social grant beneficiaries for all sorts of illegal deductions. Net1 has consistently denied this, along with the allegations of corruption that have hung over the tender like a bad stench.
The whole sorry mess is likely to end up in front of the Constitutional Court yet again, with the judges forced again to set out some very basic steps for Sassa to do its job.
I have little hope that Sassa itself will ever be able to distribute the grants itself, and pretending it can is merely a way to keep the business in the hands of Net1.
What is needed is a clean and competent tender process to choose providers who can deliver with integrity and competence.