The Department of Social Development (DSD) is adamant that grants will be paid come April 1 but the department has not explained how this will happen or which company will do the work.
"Minister Dlamini wishes to assure all social grant beneficiaries that there will be no disruption to the payment of their grants and that their social grants will be paid on April 1, 2017," department spokesperson Lumka Oliphant said.
The department is sitting on a ticking time bomb as it struggles to find a suitable entity to replace Cash Paymaster Services (CPS) which has been administering payments. IT Web reported that the tender awarded to CPS, a subsidiary of US-based Net1 UEPS Technologies in 2012 was declared invalid. The Constitutional Court ruled in 2013 that the process to award the five-year R10 billion tender should be restarted. In 2015, the South African Social Security Agency (Sassa), the government's grants agency, issued a new tender contract but did not award the tender, opting to move the payment of social grants in-house.
The department is now scrambling to find a solution to the problem that could affect more than 17 million people.
The Star reported that Gordhan wrote to Dlamini on February 1, 2017, and said CPS should not be one of the service providers considered for the distribution of social grants. It was reported that Gordhan wanted a new contract to be awarded to the commercial banks and Sapo, but it should "exclude biometric verification which will favour CPS and discriminate against other potential bidders".
According to Gordhan, he was informed that Sassa wants the CPS contract to be extended. "If this route is taken it will certainly expose the government to legal challenges. Our only interest at this stage is to help Sassa and yourself, to ensure social grants are paid out on April 1, 2017," he was quoted as saying. Dlamini's office has rejected Gordhan's proposal.
Oliphant said the department and Sassa intend approaching the Constitutional Court and that no formal negotiations have started with CPS. "It is also essential to mention that the inclusion of biometric verification is a prerequisite and any solution will have to include it. Biometric verification is integral to the grant application and payment administration," she said.
Oliphant said biometric verification was used for validation and to eliminate duplication of beneficiaries, eliminating fraud and corruption and providing proof of life to ensure payment is effected to the right beneficiaries.
The two departments have maintained that there is no bad blood between them.
"The Minister wishes to put on record that such allegations are malicious and are intended to wedge a division between herself and the Minister who is a colleague in a collective cabinet led by the ANC, which deployed both of them to serve the people of South Africa. Minister rebuts reports that she rejected Minister Gordhan's option," she said.
Treasury spokesperson Yolisa Tyantsi said they acknowledged that the Minister of Social Development has sole and primary responsibility for the function of paying social grants and that Sassa, as the responsible authority for paying social grants, must take a final decision on the matter.
She said Treasury's involvement in the matter of the payment of grants beyond the 31 March 2017 was at the behest of the DSD and Sassa. "Accordingly, National Treasury explored and analysed the pros and cons of a range of payment options and provided expert inputs in areas of procurement, public finance, financial sector policy, banking and other related matters. However, it is up to Sassa as to which option to choose taking into account all relevant facts, laws, and regulations. This includes the relevant decision of the courts in the same matter. National Treasury stands ready to assist DSD and Sassa by any legal means possible to achieve the goal of paying grants to deserving South Africans relying on such grants," she said.