Ricochet News

Govt has less than 48 hours to conclude agreement or no social grants on 1 April: CPS

MARCH 15, 2017
Govt has less than 48 hours to conclude agreement or no social grants on 1 April: CPS

An agreement has to be reached within 48 hours or 17 million South Africans, who depend on government's social grants, will not get their money on the 1st of April, contractor, Cash Paymaster Services (CPS), has warned government.

CPS Chief Executive Officer, Serge Belamant, was speaking in an interview on the Breakfast with Xolani Gwala hosted on Radio 702. According to Belamant, CPS needs at least 12 days to prepare for the payment of grants.

“On Thursday we need to have that process in place and working, because if the process falls behind time, then to be honest, regardless of whether we want to pay grants on 1 April, we simply won’t be able to do it.”

Government adamant social grants will be paid come 1 April

His warning comes a day after Finance Minister, Pravin Gordhan, told Parliament that government would like to remove any uncertainty and assure South Africans that social grants will be paid on 1 April. 

The Minister also said that a new Ministerial Task Team has been established to resolve the impasse over the payment of social grants.

The Minister said this when he appeared before the Standing Committee on Public Accounts (SCOPA) in Parliament, on Tuesday, to give clarity on the status of the payment of social grants after the contract between the South Africa Social Security Agency (SASSA) and CPS was outlawed by a 2014 court ruling.

His remarks come as government is working around the clock to ensure that 17 million beneficiaries receive their grants beyond the month of March.

“… We have both the Constitutional responsibility to obey the law but at the same time, given the current circumstances, both in respect of SASSA and ourselves, there is what one senior counsel called a higher duty and that higher duty is how do we ensure that people receive their social grants on the 1st of April,” he said.  

SASSA’s current contract with Cash Paymaster Services, which currently pays social grants to almost 17 million beneficiaries, is set to expire at the end of the month.

The Constitutional Court had previously made a ruling that the contract between SASSA and Cash Paymaster Services was invalid and ordered a re-run of the tender process.

But Cash Paymaster was allowed to continue to fulfil its contractual obligations so that social grants payments would not be disrupted.

“… and I want to say very categorically that everything that we are doing at the moment is directed at ensuring within legal bounds and where flexibility is required – the court must determine that flexibility, how grants are to be paid on the 1st of April and I am fairly confident that grants will be paid on the 1st of April,” Minister Gordhan said.

A Court process is currently underway after the Constitutional Court requested more information from SASSA regarding the payment of social grants.

New Ministerial Task Team set up to facilitate social grants payment issue

The Minister’s briefing to SCOPA comes after Social Development Minister Bathabile Dlamini appeared before the same panel of MPs at the Old Assembly last week to brief them on the update over the payment of grants.

Prior to her appearing before SCOPA, Minister Dlamini told journalists during a media briefing that social grants would be paid on 1 April and that a series of meetings had taken place.

On Tuesday, Minister Gordhan said a new Ministerial Task Team, headed by Minister in the Presidency responsible for Planning, Monitoring and Evaluation, Jeff Radebe, has been established to resolve all social grant related matters.

The Ministerial Task Team, in turn, set up a technical Task Team that will comprise Director-Generals from various departments.

“In terms of current discussions, as we saw in the media, I am not sure what was said a week ago here, there were discussions between SASSA, the Department of Social Development delegation and CPS as a company and that was prior to a deviation being obtained.

“Those discussions have been declared void, or null and void, by a Ministerial Task Team appointed last week and a new technical task team has been appointed by the Ministerial Task Team and their responsibility is to take these negotiations further to consider any obstacles that there might be to grants being paid out on the 1st  of April.

“Importantly, it is also to look at options for a future roadmap – how far has the SASSA development of systems gone, what can the Post Office put forward as a proposition, what other options are there and in the next month or two come up with some conclusions in this regard.

“So our role was firstly in relation to as far as the Cabinet process, government process and budgeting, to ensure that Parliament appropriates money for administrative purposes and for the purposes of paying the grants; secondly to ensure that our guardianship of the procurement laws is properly conducted and that the laws and regulations are followed.”

The Minister also said it was important for the National Treasury to play an oversight role to ensure that money is being spent in the right kind of way.

He said the Department of Social Development has been allocated a budget of R151.6 billion for the 2017/18 financial year.

Questions raised over bank interest charges

Earlier during the briefing, the Minister said three working days before beneficiaries are to be paid, money is transferred by the National Treasury to Social Development – which is held at the Reserve Bank.

He said on the same day, Social Development then transfers the monies to nine provincial social development accounts – also held at the Reserve Bank – and each of those provincial accounts then transfer the funds to a Nedbank account of CPS/Net 1.

The Minister said CPS/ Net 1 then pays the money into their Grindrod Bank account, and that from the first of each month, Grindrod Bank pays beneficiaries in various forms.

“Those payments, those pay points, that you have seen on television, they are merchants outlets, they are retailers that provide services and who are facilities that SASSA has provided.

“And approximately four million recipients get their grants at pay points and merchants outlets.

“Then there are payments made directly into bank accounts of recipients – that’s 1.6 million people that receive their grants in that way and another 4.9 million recipients who also have Grindrod Bank accounts, they receive their grants by going to ATMs of any bank that has ATMs … and that withdrawals from ATMs attracts bank charges and those bank charges are actually paid by the grant recipients.

“What’s important in this whole process, remember the first four or so transfers all take place on one day and then the money sits in the Grindrod account for anything up to five days on average.

“For five days, presumably, that money is attracting interest. So we are talking about R11.2 billion … at some interest rate, where does that interest go? It should actually go back to government because it is money owned by government.”

–additional reporting SAnews.gov.za