Arthur Christopher

Sassa headed for a conveniently imperfect solution

2017-03-01 10:44
Social Development Minister Bathabile Dlamini (Netwerk24)

Social Development Minister Bathabile Dlamini (Netwerk24)

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There appear to be only three explanations why Minister of Social Development Bathabile Dlamini has so consistently evaded Parliament and unconscionably delayed the formation of a viable plan that her department and Sassa would be able to adopt in order to assume responsibility of the payment of social grants from current provider Cash Paymaster Services (CPS) next month. 

And all are extremely concerning. 

The first is the most obvious, and this is that the current contract with CPS, which is a subsidiary of US-based Net 1, has provided (and may still provide) lucrative kickbacks for members of the current political elite and there is therefore a strong political desire to have it extended. 

Indeed, the irregular manner in which the tender to CPS was awarded in 2012 is the reason the Constitutional Court ordered in 2014 that it be terminated upon its completion. Last year amaBhungane revealed how Net 1 CEO Serge Belamant had secured the Sassa contract by using a “thinly veiled black front” before he “quietly dumped these black partners and used irregularly derived Sassa funds to sign on and pay off a businessman who regularly consorts with a close friend of social development minister Bathabile Dlamini”. 

As in 2012 when the initial tender was awarded, President Zuma’s lawyer Michael Hulley appears recently to have re-entered the fray, allegedly prodding Sassa to negotiate a new contract with CPS despite the obvious challenges this presents. 

Seen through this lens it was crushingly predictable that the department and Sassa, both of which have routinely avoided Parliament in recent months and refused to endorse viable grant payment alternatives (such as that from National Treasury which recommended that post offices and banks be used), would announce that they had no option but to request the Constitutional Court to “suspend the invalidity” of the contract with CPS, allowing it to be extended for an additional year. (*This application was withdrawn on Wednesday, with the department saying it will be relodged later.)

For Net 1 this presents an ideal opportunity to sweat government for the increases that Belamant has publicly demanded. Indeed, in Parliament this week Sassa project manager Zodwa Mvulane admitted that Sassa’s CEO Thokozani Magwaza (who was last week suddenly booked off on sick leave for “hypertension”) had written to Treasury alerting it to the fact that it may have to pay up to 30% more to Net 1 when it negotiates a new contract this month. 

Currently CPS charges an “administrative fee” for the payment of each grant of R16.44 - though Sassa expects (based on inflation since the 2012 tender was awarded) that this amount could increase to R25, which would increase the cost to government by around R1.3 billion. 

Further, with negotiations set to start this week Sassa will have little leverage now in pushing back against Net 1’s demand that it retain its ability to market its add-on services to grant beneficiaries, including insurance products, air-time and loans in order to elevate the profitability of administering payments. 

Indeed, in court affidavits last year the SARB outlined how fees to companies within the Net 1 stable (such as Moneyline) have been unlawfully deducted from grants prior to them being paid into beneficiary accounts – at times without the permission of the recipients. And in addition to the weakness of government’s bargaining, there is a lack of transparency over the “extensive” engagements Belamant is reported to have stated to shareholders last month that he has already had with the SASSA on the same.  

This brings us to the second potential explanation for the self-imposed crisis that Sassa and government now face, and this is that Minister Dlamini is using the process to paint Treasury into an impossible corner, and elevate the persistent claims that its fiscal approach is anti-poor, or defensive of “white monopoly capital” – a rhetorical position which is now robustly driven by, amongst others, Progressive Professionals Forum head Mzwanele Manyi. 

Indeed, as a result of the limited time that remains before the CPS contract expires, normal tender processes will need to be subverted, which requires approval from Treasury. 

This, as the DA’s Tim Brauteseth has stated, is akin to putting a “gun to their (Treasury’s) heads”, and is aimed at attempting to peg any grant payment failure on Treasury’s unwillingness to bend its requirements to adapt to the emergency that has been so wilfully created. 

The laying of blame at Treasury’s door is of course ludicrous, but so too are the attacks that Minister Gordhan and his senior team continue to face from those in the ANC bent on undermining the institution’s independence and carving a path through which they will be able to remove its rigorous approach to fiscal probity and procurement sense. 

Dlamini was one of the four cabinet members who refused to stand and applaud Gordhan’s Budget Speech last week – a profound show of defiance at a time when the ANC is demanding institutional unity as a means through which to address its burning factional malaise. 

Treasury’s riposte to these attacks will likely be fairly straightforward: if the extension of the CPS contract is deemed unlawful by the Constitutional Court then those that pursue such an avenue must, in the words of Treasury’s Solly Tshitangano, “face the consequences”. 

But it should also be acknowledged that there is unlikely to be much space for rational debate should grant payments fail: those affected will be justifiably livid, and many may be deliberately prodded to believe that Treasury is to blame. 

The third explanation is that Sassa and the department of social development are simply too inept, or too bloated by political complacency, to have bothered to engage with this issue with the requisite urgency. 

Sent to Parliament this week to report back to hostile MPs at the SCOPA, Mvulane claimed that the crisis that they now face is only “50%” down to its own institutional shortcomings, with the remainder as a result of the tardiness of the work streams that have been established (by Sassa, it should be noted) in order to advise them on the viability of the various alternatives to CPS that have been put forward. 

Though elements of this may be at play, this is the least plausible explanation for the current situation – at least as far as it may serve to clarify the behaviour of Dlamini, who has been deliberately rather than neglectfully absent in Parliament and appears to have directly suppressed the alternative payment options put forward by the Sassa work streams (some of which were championed by its CEO Magwaza, which asks questions of his sudden booking off for health reasons). 

Weaved throughout this saga is a worrying disrespect for the ruling of the Constitutional Court, as well as the persistent disregard for Parliament shown by Dlamini in particular. 

Further, though the president’s silence on the matter may be unsurprising, it is no less unacceptable. Social grants are a vital tool in combating poverty and reducing inequality; it is reprehensible that their delivery would be in any way jeopardised to serve the narrow political and patronage interests of those charged with overseeing their implementation. 

A solution may well still be patched together, but it will be a deeply imperfect one which will serve to perpetuate concerns that the ANC is incapable of addressing the profound institutional problems that it knows to exist within the party and state, and that it knows are to blame for its recent loss of electoral support. 

For this political theatre, or as Craig McKune recently wrote for amaBhungane in the Daily Maverick, this “game of chicken”, to be played out at the potential expense of the livelihoods of the country’s poor is a staggering expression of how far some in the ANC have drifted from the party’s basic underlying ethic. 

- Arthur Christopher is a political analyst, a defiantly liberal corporate apparatchik and a part-time offensive midfielder.

Disclaimer: News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24.

Read more on:    bathabile dlamini  |  social development department  |  sassa
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