The South African Social Security Agency has scrapped the advisory groups that were set up to plan for the future of the country’s more than R140bn of annual welfare payments.
Letters were sent to the so-called “work streams” last week informing them of their termination, Sassa CEO Thokozani Magwaza said on Monday.
Magwaza said he had informed social development minister Bathabile Dlamini of the decision and hasn’t yet received a response. The advisory groups reported directly to the minister, effectively creating parallel structures to the agency’s management.
The government is pushing to find a new system to pay welfare grants to more than 17m recipients after the constitutional court in March allowed for a 12-month extension to the contract with Net1 UEPS Technologies, after earlier finding the deal was invalid. Any interruption to the programme could spark protests in poor communities where many households have no other income, and may hurt the ruling ANC ahead of 2019 elections.
The groups, appointed by the Dlamini two years ago, failed to find solutions and the agency was unable to take over welfare distribution by April this year, according to Magwaza. National treasury had found that the setting up of the “work streams” was irregular.
The welfare agency plans to start phasing in a new contractor in November to comply with the court order, Dlamini told lawmakers in May. The minister’s spokeswoman asked for e-mailed questions.
The treasury last week authorised Sassa to engage with the Post Office as the operator of the welfare payment system, Magwaza said. While the Post office has said it’s willing, and has the capacity, to take over the payments, Sassa will still have to make sure the company can comply with the requirements, he said.
“National treasury has agreed that Sassa engages the Post Office as the sole bidder,” Sassa spokesman Paseka Letsatsi said by phone. “For government to appoint anybody, there must be a formal tender process followed, but this time treasury is saying we are giving you a deviation to engage with the Post Office. If that doesn’t work out, we can engage other bidders.”
The Post Office’s Postbank obtained a provisional banking licence in 2016 and has applied for a formal permit. If the Post Office fails to meet the full requirements, Magwaza said “any company except Net1” will be considered, complying with the order by the constitutional court. Mark Barnes, the Post Office’s CEO, said by phone that he hasn’t received official confirmation from treasury. — Reported by Thembisile Dzonzi, (c) 2017 Bloomberg LP