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Dlamini rejects Treasury grants proposal

Publish date: 17 February 2017
Issue Number: 4170
Diary: Legalbrief Today
Category: General

Social Development Minister Bathabile Dlamini has rejected Finance Minister Pravin Gordhan’s proposal for banks and the Post Office to distribute social grants to 17m beneficiaries, describing it as impracticable 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 31 March. A News24 report points out the Minister has had since 2014 to deal with the crisis and now has only 43 days in which to ensure the beneficiaries get their grants. In 2014 the Constitutional Court declared the contract with CPS invalid but suspended the invalidity order until 31 March so that Dlamini had adequate time to find a new distributor to take over the system. ‘Any attempt to implement it (the Treasury plan) may result in the state’s failure to pay social grants on 1 April, which would be disastrous. It is a risk my Ministry is not prepared to take,’ Dlamini said.

Full News24 report

It would take the SA Social Security Agency (Sassa) ‘years rather than months’ to take over the distribution of social grants, according to a legal opinion Sassa obtained from Advocate Wim Trengove SC. The 13-page document, which Business Day says it has seen, was commissioned on the basis of exploring the legal minefield Sassa would have to navigate if it were to extend Cash Paymaster Services’ contract to distribute social grants. The Department of Social Development approached Trengove to advise it on the legality of extending the Net 1-UEPS subsidiary’s contract. Further complicating the situation is the fact that Serge Belamant, CEO of Net 1-UEPS, is adamant his company will not continue to distribute the social grants under the existing contract after 31 March, but a new contract will have to be drawn up. Sassa, though, has indicated it would petition the Constitutional Court for permission to extend CPS’ contract. ‘We do not have clarity on the reasons for Sassa’s inability to make the deadline. It seems prudent to assume, however, that Sassa has been remiss, either because its decision of October 2015 to go it alone after March 2017 was over optimistic in the first place, or because it has since then not been sufficiently vigorous in the implementation of the decision,’ reads the Trengove opinion.

Full Business Day report (subscription needed)