Govt saves ‘hundreds of millions’ by curbing dodgy grant payments

2010-04-23 12:04

The social development department would save “hundreds of millions

of rands” after scrutinising “tens of thousands” of social grants paid into

dormant bank accounts, minister Edna Molewa has told Parliament.

“We have scrutinised hundreds of thousands of dormant bank accounts

of beneficiaries to assess their eligibility,” Molewa said during her budget

speech. “We will make an announcement on the outcome in due course. Suffice it

to say we will save hundreds of millions of rands.”

Molewa said leakage in the social assistance programme was an

“affront” and she pledged to eradicate corruption.

“We will uproot fraud, eradicate corruption and spare no effort to

bring to justice those who compromise the integrity of the grants system,” she


The department had found there was a need to change the model of

paying 80% of social-grant recipients through the cash payment contractors’


“This method is inefficient, ineffective and not financially

sustainable,” Molewa said. “The public demands a system that is transparent and

where the costs of providing such a key service are reduced. As government, we

are obliged to source cost-effective and perhaps more developmental means of

providing these services.”

Too many previously employed people fell into poverty because South

Africa did not have a mandatory retirement system, she said.

“Millions of workers do not insure against disability and millions

more bread-winners do not save to ensure that their surviving dependants have

income in the event of death.”

“Many employed people are also not covered for unemployment

insurance and the system of compensation for work-related injuries is

fragmented. Consequently, millions of former employees become dependent on the

social assistance system.”

The department had developed detailed social security reforms that

related to setting up a mandatory system of social insurance with disability

provisions and benefits for surviving dependants in the event of the death of

the bread-winner, Molewa said.

“The minister of finance will provide details on the reform of the

private pension funds, but I dare say we will take on the big insurance

companies and the bureaucracies to bring down the costs of retirement and

healthcare savings, to remove the opacity of products and to improve the

governance of funds.”

Social development’s expenditure grew from R61.7 billion in 2006/07

to R86.5 billion in 2009/10. Social grants take 93% of the budget in the current

financial year. The social assistance programme covers 14 million people.

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