Business News 15.11.2017 07:54 am

The greatest threat to social stability

Grant payments should be declared a national priority before it becomes a national disaster.

The chronology of the carefully crafted and expertly executed #StateCapture strategy as described by Jacques Pauw in The President’s Keepers is sickening to the core.

It is one of the most depressing reads of the year, particularly if you are a proud South African who wants to see their country flourish. Adriaan Basson and Pieter du Toit’s Enemy of the People: How Jacob Zuma stole South Africa and how the people fought back is next on the list, but I fear it will be more of the same.

From Pauw’s book and other revelations, it is clear that Zuma is one of the most cunning and streetwise politicians this country has seen since the dawn of democracy and it is a pity he did not use his skills to build a better South Africa, because if he had, the country would have made great strides forward.

But he didn’t. On the contrary, he has corrupted virtually every state institution set up to protect our democracy. As a colleague remarked, despite the revelations by the media and various authors, the president continues to loot unabated.

The fact that Zuma could fire Pravin Gordhan and instill Malusi Gigaba without losing sleep is proof of the absolute control he wields over the ANC.

Rock bottom

Twenty years in journalism has taught me never to proclaim that something has hit rock bottom. We live in a wonderful country where most websites and newspapers can solve any novelist’s writers block, and any ‘the end is nigh’ declaration always seems to come back to haunt you.

But there is an event on the horizon that may plunge South Africa into a dark abyss from which it could take a very long time to recover.

It is neither the ANC’s presidential race nor a surprise nuclear deal.

It is the possible non-payment of around 17 million social grants in April next year.

A lot has been written about South Africa’s social grants. It represents a major expense to the fiscus, around R150 billion this year. Many argue it is not sustainable, but in a 40% unemployment scenario these monthly payments are the foundation of South Africa’s social stability. Apart from putting food on the table, these payments sustain economic activity, especially in rural areas.

Read:

ConCourt ups ante on Sassa’s social grants payment plan

National Treasury steps in over Sassa and Sapo scrap

In fact, within the context of the current looting, corruption and dysfunction of state organs, these grant payments could be the most productive money government spends on the economy, but that is probably a debate for another day.

The SA Post Office

April 1 2018 is D-Day. It is the day the South Africa Social Security Agency (Sassa) takes responsibility for payments from the current service provider, Net1-owned Cash Paymaster Systems (CPS). By all accounts, CPS provides a world class service, despite winning the tender fraudulently. (Yes, we live in a wonderful country.)

On D-Day a new entity will have to make the payments, and from last week’s various parliamentary presentations it is quite evident that Sassa will not be able to do it.

Not even close.

There was one remark during one of the presentations that sent the longest and coldest shiver down my spine. It was a statement from minister Jeff Radebe, head of the inter-ministerial committee tasked with fixing this mess. He said, almost matter-of-factly, that the SA Post Office will develop a new IT system to pay the grants. I hope he oversimplified the status of this new payment system as it could take years to develop. It is impossible to do this in four-and-a-half months. Ask any IT engineer.

Such a system should be in a final testing phase if it is to be ready in April next year. If not, the non-payment of the grants looks like a real possibility.

The consequences will be devastating, and will pose a risk to social stability. It will make the current spate of service delivery protests seem like birthday parties.

ANC self-destruct

In some ways, it is good for democracy to see the ANC in self-destruct mode. It seems inevitable that the ANC will split. But the opportunity cost could be incredibly high. Hopefully, some sanity will prevail to declare the Sassa payments contract a national priority before it becomes a national disaster. I am not too optimistic though, as Pauw’s book clearly shows that the president has several agendas, none of which includes social stability.

Interestingly, the only ‘out-of-the-box’ solution would be for Sassa to acquire CPS from Net1, as this system has proven to work. This would be a tricky transaction to negotiate because as another Moneyweb colleague remarked… it will not come at a Black Friday price….

But luckily, we have a president that is a negotiator par excellence.

Brought to you by Moneyweb 


hot tips of the day
BEST BET

RACE 4 NO 3 Hidden Thought

VALUE BET

RACE 9 NO 6 Aznerak

RACE MEETING

13 December Greyville

hot tips of the day

poll

today in print