Why Net1’s CPS remains the paymaster

South Africa Social Security Agency (Sassa) CEO Thokozani Magwaza has blown the lid on why Net1’s Cash Paymaster Service (CPS) has emerged as the distributor of social grants in SA, inferring that Social Development Minister Bathabile Dlamini had a helping hand.

Magwaza, in his affidavit filed on Friday at the Constitutional Court, revealed that Dlamini was against the solution of local banks and the South African Post Office taking over social grant payments when CPS’ contract expired on March 31 2017.

Another option when CPS’ contract expired was for Sassa to process payments in house.

“In retrospect, it was the minister who was determined that an internal solution will not be found,” Magwaza said in court papers.

The contract between Sassa and CPS, which was concluded in 2012, was declared invalid three years ago by the Constitutional Court as it didn’t go through proper tender processes.

Sassa was given three years to find an alternative solution to process grant payments to 10.6 million social grant cardholders after CPS’ contract expired. It had to either conduct a new tender process or take over the grant payments itself.

From October 2015, Sassa began to develop a plan to take over grant payments but realised by April 2016 that it didn’t have the capacity to process payments.

At the eleventh hour, a tender process was launched in December 2016 and closed in January 2017. Dlamini, in her affidavit that explained to the court why she should not be held personally responsible for the Sassa crisis, said a new tender process was held but there were “ultimately no compliant bids”.

Most of the big four banks, which already have the biometric technology that could identify and verify social grant recipients, were put off by the onerous tender requirements.

The Post Office has already put its hand up to take over grant payments, maintaining that it has the “best government-owned infrastructure” and payment solutions.

Magwaza said since being appointed as Sassa CEO in November 2016, the National Treasury and the Reserve Bank indicated (through his engagements with the institutions) that Sassa was able to utilise local banks for social grant payments.

“I utilised December 2016 and January 2017 to familiarise myself with legal opinions that had been obtained and to date, I have difficulty understanding why the minister was adamant that CPS be used [for grant payments],” he said in court papers.

He added that there was no record of Dlamini engaging with Sassa to consider available options and solutions to ensure that grants were paid after CPS’ contract expired.

Dlamini has maintained that the extension of CPS’ contract “was a least risky option to ensure uninterrupted payment of social grants”.

She got her wish, as the Constitutional Court has ordered that the contract between CPS and Sassa should be extended for 12 months, effective from April 1.

Magwaza asked to set the record straight by filing an affidavit after Dlamini blamed him for the social grants crisis.

He claimed that Dlamini had lied in her affidavit, adding that she knew as early as July 2015 about the inability of Sassa to take over social grant payments as she was “in control of the process and knew or ought to have known of all developments in this important process and matter”.

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