Business News 10.11.2017 07:26 am

Pending deal shows Sassa – Post Office crisis engineered

Social Development Minister Bathabile Dlamini.

Social Development Minister Bathabile Dlamini.

After wasting ten months, Sassa revisits original social grants payment plan.

It took a last-minute intervention by Jeff Radebe, Minister in the Presidency, to fast-track a yet-to-be-announced social grant payment plan between the South African Social Security Agency (Sassa) and the South African Post Office (Sapo).

Read: Jeff Radebe: Post Office and Sassa deal is still on the cards

After months of delays and dithering on the part of Sassa, a deal with Sapo that will also include commercial banks is expected to be announced on November 17.

This has been heralded as a positive step for phasing out the social grant payment contract of incumbent Cash Paymaster Services (CPS) in the next five months.

However, the payment model proposed by Radebe underscores how the crisis, which could jeopardise the livelihoods of 17-million social grant beneficiaries, appears to have been engineered by Social Development Minister Bathabile Dlamini.

Radebe, who heads the inter-ministerial committee (IMC) on social security, will lead the process of phasing out the invalid CPS contract come March 31 2018. Earlier this year, at the eleventh hour, the Constitutional Court extended CPS’ contract for another year as Sassa failed to find another service provider.

The proposed payment model for Sapo’s collaboration with other commercial banks to distribute social grants is not new, as papers recently submitted to the court reveal.

The proposed intervention of the Sapo and banks in Sassa’s payment system, which is called an Open Architecture model and endorsed by National Treasury, was initially mooted in January 2017 by a technical team. The team included former Social Development DG Zane Dangor, former Treasury DG Lungisa Fuzile, deputy governor of the Reserve Bank Francois Groepe and Sassa project manager Zodwa Mvulane.

The IMC’s intervention means that after wasting ten months in a vain attempt to find another service provider, Sassa is now reverting to the original Open Architecture model proposed by the technical team.

According to Dangor’s affidavit, the technical team met with the Banking Association of SA (Basa) and Master Card to gauge whether banks could be part of the Sassa payment system.

Dangor resigned in March after a breakdown in his relationship with Dlamini, who was instrumental in frustrating the efforts of the technical team. In 2016, Dlamini initiated work streams, a parallel process comprising her handpicked advisers, that pushed to extend CPS’ contract for another two years and excluded Sassa and department officials in this process.

The work streams were canceled in July 2017 and the more than R30 million spent on them will be recorded as irregular expenditure.

Although there are no details yet on what the actual social grant payment plan will look like until the payment proposal is presented to Parliament on November 21, IMC, which includes Radebe, the Department of Home Affairs and State Security and Treasury, would probably have to relook negotiations with Basa and Master Card.

In fact, Sassa, Sapo, the Reserve Bank and Treasury are scheduled to meet with Basa and the Payment Association of SA on Friday.

Sapo, Sassa deadlock

An impasse ensued between Sassa and Sapo because Sassa argued that Sapo could not – through its banking services and existing infrastructure –  become the social grant paymaster. Sassa relied on the opinion of its bid evaluation committee that assessed Sapo’s request for proposal (or tender application).

Dlamini said Sapo could only provide one of the four required social grant payment services – the provision of an integrated payment system.

The other three required services were: providing banking services (offering a prepaid debit card with a biometric data verification solution in line with the Payment Association of SA), card production capacity for social grant beneficiaries (Sassa requires a minimum requirement of 4.2 million cards per annum) and the option of cash payments at pay points.

Sapo was disqualified from being awarded a full contract.

A damning letter by Treasury Director-General Dondo Mogojane sent to Sassa’s acting CEO Pearl Bhengu on Tuesday said the agency’s bid evaluation committee should not have disqualified Sapo from three possible services in the social grants scheme.

Read National Treasury Letter to Sassa: NT Letter to Sassa

“Sassa should not have approved the disqualification of Sapo on three areas but [should] rather [have] sought to engage and explore options on possible ways to close the capacity gap or seek the intervention of the inter-ministerial committee,” the letter said.

Mogojane also found that various assessments of Sapo by Sassa’s bid evaluation committee were “unfair” as the state-owned enterprise was not engaged on some of its short-comings.

Dlamini has been accused of trying to muscle out Sapo, paving the way for an external party to continue being responsible for social grant payments. A party like CPS.

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