Social Development Minister Bathabile Dlamini has rejected Finance Minister Pravin Gordhan’s proposal for banks and the Post Office to distribute social grants to 17-million beneficiaries.

She said the treasury’s proposal to distribute R10-billion in monthly grants was impractical and “not thought through carefully”.

Dlamini said beneficiaries would be at risk of not receiving their grants when the Cash Paymaster Services (CPS) contract ends on March 31.

The minister has had since 2014 to deal with the crisis and now has only 43 days in which to ensure the 17-billion beneficiaries get their grants.  

In 2014 the Constitutional Court declared the contract with CPS invalid but suspended the invalidity order until March 31 so that Dlamini had adequate time to find a new distributor to take over the grant system.

“Any attempt to implement it may result in the state’s failure to pay social grants on April 1, which would be disastrous.
It is a risk my ministry is not prepared to take,” Dlamini said.

Dlamini is to report back to the Constitutional Court on Thursday and plead for an extension of the CPS contract.

Gordhan wrote to Dlamini on February 1 and said continuing with CPS’s services would expose government to legal challenges, according to The Star.

He proposed that CPS should not be part of the service providers to be considered for the distribution of grants and that the tender be given to banks and the Post Office instead.

Dlamini responded in writing on February 8, saying her department was in charge of the payments of grants and that interactions with the treasury as part of a joint technical team were not to map out the future of social grants, but to merely analyse available options.

The treasury, Reserve Bank and the South African Social Security Agency (Sassa), which the social development department is responsible for, have been meeting to find a solution as the April 1 Constitutional Court deadline looms for Sassa to take over the payment system.

Dlamini said banks do not have the biometric system which has eliminated fraud from the grants system. She said they are only driven by profits, which are gained through opening new bank accounts and transaction fees.

Beneficiaries should not lose part of their grants to exorbitant banking fees, she said.

She wants the biometric system to be an essential part of the distribution system, arguing that it has saved the state R2-billion, with more work underway to remove duplicate entries which could amount to a further saving of R2-billion.

Sassa’s biometric system includes fingerprinting for proof of life and to ensure that grants are paid to the right people.

She also argues that using a traditional bank card and pin code puts beneficiaries at risk of abuse by micro lenders, who would keep the cards and deduct money owed on payday.

She said not only does the Post Office not have a banking licence, or the necessary technology and expertise, but it also does not have enough offices, especially in rural areas, to distribute the money.

Dlamini is insisting that continuing with the CPS contract until Sassa is able to take over the payment function itself is the only viable solution.

“The first option [keeping CPS] will ensure that there are no disruptions to the payment of the social grants beyond March 31, until CPS is phased out and a new service provider is appointed to take over the payment of social grants, up to the point where Sassa is able to take over the payment function itself,” Dlamini told Gordhan.

On December 9 2016 Sassa advertised a request for information for payment and banking services. On January 13 this year 74 companies attended the briefing session.

The closing date for bids was February 10. Only 18 bids have been received, including three banks and CPS. – News24