There is a lot of concern over what will happen with social grant payments come 1 April, when the contract with the current distribution provider is terminated. The contract with Cash Paymaster Services (CPS) was deemed illegal in 2014 following apparent wrongdoing in the awarding of the tender. This contract comes to an end on 31 March, and a new service provider to facilitate the payment of grants has not yet been identified.
However, Elroy Paulus, national advocacy manager for the Black Sash Trust, highlighted that grant beneficiaries do not need to worry, as they are constitutionally entitled to the grant money they are approved to receive.
“It’s not just an Act that says that grant beneficiaries that qualify will get a grant, it is a Constitutional promise. Section 27 of our Constitution says everyone has the right of access to food and health and emergency care, but it also says the right of access to social security, [and] if people are unable to help themselves, the right to social assistance. Seventeen million beneficiaries, that is one in three South Africans, are dependent on these grants, and there have been situations many years ago, it was more than ten years ago, where a province failed to pay beneficiaries, and the court then ruled that the grants must be paid and back-pay for the payments missed with interest. They don’t have the option of not paying the grant, because the money is allocated, it’s just how you are going to get it to the beneficiary. And of course in terms of the law social grant beneficiaries have recourse if their grants are not paid on 1 April. They are owed that money by government,” explained Paulus.
On Tuesday, SASSA approached the Constitutional Court (ConCourt) seeking to have the contract with CPS extended as no appropriate arrangements had as yet been made to replace them as the service provider. According to Business Day, “Sassa has also ruled out all other options to distribute the social grants, including roping in the country’s major banks, insisting that only a Cash Paymaster Systems (CPS) contract extension will do.”
However, on Wednesday morning, SASSA reportedly withdrew its application. Paulus noted that Black Sash has been involved in a number of meetings with the key government role players involved in this issue. On Wednesday at a meeting with the portfolio committee on social development, the Reserve Bank of South Africa was in attendance. In a statement issued to parliament, the alleged withdrawal by SASSA of the application to the ConCourt was to amend it and include a supplementary affidavit and they will then file two reports with the ConCourt.
Why was the CPS contract continued if it was invalid?
In November 2013 the contract between CPS and SASSA happened was ruled invalid and unconstitutional. However, Paulus explained that the courts “suspended the declaration of invalidity.”
He elaborated: “The court realised that if you tell the contractee to walk away and have someone else, then the grants won’t be paid. It’s the equivalent of, go stand in a corner until we figure out how to [dish] out adequate punishment. That suspension on the declaration of invalidity allowed several things to happen, still within control of SASSA. They said, you are going to reissue the tender, or if there isn’t an appropriate service provider to run the grants, they [need to continue grant payments to the existing service provider the current/invalid service provider CPS] until the contract ends, which is now, 31 March 2017.”
No tender for a new service provider has been issued as of yet. Paulus clarified that there was a request for information (RIS) issued for companies interested in bidding for elements of the payment system. They were asked to submit their information to be screened before the request for proposals, which is yet to happen, is tabled. The RIS process opened in December 2016. Paulus stressed that this was not a tender or even a request for proposals, but simply a request for information.
There were also options presented to parliament in terms of the actions that could be taken, however, Paulus highlighted that the later you leave it (as SASSA did), the more likely you are to favour current service providers.
According to Paulus, from the meeting on Wednesday, the two options currently being looked at are: continuing with CPS as the service provider, dependent on whether the ConCourt approves it and if National Treasury will endorse it and it is within budget. The second option is the possible use of PostBank or commercial banks to facilitate the payment of grants.
The final decision as to who will facilitate grant payments from 1 April will depend on the ruling of the ConCourt.