Banks avoid contract:
• Agency could face dilemma if court declines extension
Most of the four largest banks opted not to participate in the South African Social Security Agency’s (Sassa’s) last-ditch attempt to appoint someone to distribute social grants to 17-million recipients after being put off by agency requirements.
The new tender was meant to replace incumbent Cash Paymaster Services (CPS), whose contract with Sassa was ruled invalid in the Constitutional Court three years ago.
This means the agency will have its work cut out finding a replacement if the court declines to approve an extension of the CPS contract.
Sassa issued a “request for information” in December 2016 that closed on January 24.
At least two major banks — First National Bank (FNB) and Nedbank — considered the request, which proposed breaking up the agency’s service-level agreement with Net 1 UEPS’s CPS into six agreements. These agreements encompassed producing and distributing beneficiary cards, issuing them, bankaccount management, “card acquiring”, cash distribution through “biometrically enabled paypoints” and providing proof of life through biometric systems. Sassa proposed handling the latter two agreements itself, together with partners such as the Department of Home Affairs.
In its briefing session for the tender, Sassa said banks would manage account-management and card-acquiring.
It failed to explain what card acquiring was, but required any bank with which it signed the account management agreement to provide “reloadable prepaid cards”.
It banned debit and stop orders as well as other transactions on beneficiary accounts, except for the receipt of social grants. Cross- and up-selling of other financial services were also banned.
The December request for information followed a failed request for proposals that the agency first issued in 2014.
FNB had attended the briefing session at the Sassa head office in Pretoria on January 13, said Kgosi Ledimo, its business head of public sector banking.
“The bank has duly considered all the tender requirements and is unfortunately not in a position to submit a response to Sassa at this stage,” he said.
Kedibone Molopyane of Nedbank said the bank had received the request.
“Like all other tenders, we evaluated it,” she said. “Nedbank has, however, not submitted documents for the tender.”
Standard Bank did not respond to requests for comment, but Business Day has reported it was one of three unsuccessful bidders for the 2014 tender and was not engaging with anyone around the 2017 request for information.
Absa, whose AllPay subsidiary distributed grants in a number of provinces before CPS controversially won the right to distribute all over the country, said it had not participated in either request.
“Absa has always been willing to be part of the solution in ensuring that grants are distributed,” said a spokesman for the bank, who chose not to be named in line with the company’s policy.
“As a financial services organisation with a footprint across the country, we have always been ready and willing to, indirectly, enable a third party to deliver this critical service to those who need it,” he said.