Department of Social Development (South Africa)

Social assistance is provided in the form of:

• a child support grant;
• older person's grant (a pension);
• disability grant;
• war veteran’s grant;
• care dependency grant, for caring for a child with severe disability;
• foster child grant;
• grant-in-aid, for those who need a full-time caregiver; and/or
• social relief of distress, a temporary measure for people in dire need, in the form of parcels or vouchers. Steyn pledged R 320 000 000.00 to assist the coronavirus relief.[9]

Previously, all nine (9) provincial governments were responsible for the administration of social grants, but this created serious social delivery challenges especially the delay in the approval and payments of grants, possible fraud and corruption in the system, inhumane pay points facilities and huge administration costs in delivering social grants.

In 2015, of the R155.3 billion given in social welfare, R53.5 billion went to pensioners; R47,8 billion to child support grants; R20.2 billion to disability grants; and R8.5 billion for other grants; with the remainder going toward management and administration.[9]

In January 2012, Cash Paymaster Services (CPS), a subsidiary of Net1 UEPS Technologies, was awarded a five-year, R10 billion tender to distribute social grants on behalf of SASSA from February 2012.[9][10] A rival bidder, AllPay, challenged the procurement process in court; in 2014 the Constitutional Court found that irregular processes had been followed, and consequently declared the tender invalid, but suspended the order in order not to interrupt grant payments, and to allow SASSA an opportunity to initiate a new tender process.[11][12]

Each month, the National Treasury deposits the total amount to be paid out into a Nedbank trust account. Interest earned during this period goes to the state. All beneficiary accounts are held at Grindrod Bank.[9]

A grant recipient can withdraw their grant from any SASSA paypoint across the country, which carries no withdrawal charge, and which Net1 CEO Serge Belamont claims is more secure because of the biometric security checks on fingerprints; or from designated retailers such as Pick n Pay, which work with EasyPay, another company owned by Net1, to allow these withdrawals; or from ATMs.[9]

Moneyline, another Net1 company, provides loans to grant recipients. Umoya Manje, also another company owned by Net1, allows grant beneficiaries to buy cellphone airtime on credit.[9]

In December 2014, a ministerial task team concluded that SASSA itself should take over the paying out of grants.[13] In 2015, SASSA issued a new tender but did not award it,[9] opting instead to insource the disbursement of grants by 2017.[8]

In the 2015/2016 financial year, SASSA recorded additional, irregular expenditure on the CPS contract for the re-registration of grant beneficiaries because legal requirements had been circumvented.[14]

The then Finance Minister, Pravin Gordhan advised the Minister of Social Development Bathabile Dlamini to award a new contract to commercial South African banks and the South African Post Office (SAPO),[8] and forego biometric identification, which contract requirement disadvantaged others bidders against CPS. However, this proposal was rejected on the grounds that the biometric system had eliminated fraudulent claims amounting to R2 billion annually;[15] that further work to remove duplicate entries could save another R2 billion annually; and that SAPO did not have a banking licence, nor enough post offices to properly distribute grants.[11][14] Dlamini expressed a desire to remain with CPS until SASSA was capable to take over, reasoning that this posed the least risk of SASSA defaulting on grant payments.[12] She claimed that the process to distribute grants through SASSA was well underway, insisting that the Department was halfway through a four-phase plan which would culminate in 2019 with the handing over of the responsibility to SASSA.[13]

Dlamini claimed in 2017 that she had only become aware in October 2016 that SASSA was likely to be unable to take over grants payments from April 2017.[14]

SASSA estimated it would pay CPS about R3.5 billion annually under a renewed contract, between 52% and 59% more than it already did. SASSA later denied that it had done such estimation, and then claimed that it was a simple inflation-related adjustment, which was not true.[16][17]

Dlamini had been advised in October 2016 that the DSD was obliged to engage in competitive tendering, and could therefore not sign a contract with CPS; she was informed that the grants crisis was also not a justification to continue using CPS, since the emergency had been self-created; and she also received a legal opinion from senior counsel Wim Trengove that the extant CPS contract could not be legally extended since it had already been ruled invalid by the Constitutional Court.[16]

In December 2016, SASSA was also advised to inform the Constitutional Court of its predicament, "that it faced the highly irregular prospect of going into contract for another year with [CPS]". The Agency waited until 28 February 2017 to lodge a plea, which it immediately withdrew the next day, using a letter dated the previous day.[17]

In February 2017, SASSA told Parliament's social development portfolio committee it had come up short in attempts to find working solutions to pay social grants, and claimed that the only way to make social grant payments from April was to stick with the service provider whose contract had been declared invalid.[8][18]

SASSA's Zodwa Mvulane told Parliament at the start of March 2017 that legal complexities beyond its control had left the Agency with too little time to phase out CPS, stating that they "only had a year, from September 2015, to prepare for being a paymaster". However, SASSA only began to prepare for a post-CPS solution in December, "doing little or nothing until then"; a committee advising it had until then been ignored for years. While SASSA told Parliament it had not had enough time, it had also claimed before the Constitutional Court that it would not need CPS a year after the 2017/2018 financial year—contradicting a letter by Dlamini, sent on 2 February, that stated CPS would no longer be needed at the end of 2019, and another letter sent a week later by SASSA chief executive Thokozani Magwaza, which claimed that the contract with CPS would only last until November 2018—both longer than a year.[17]

The Black Sash Trust, through representation by the Centre for Applied Legal Studies, launched an application to the Constitutional Court, asking it to compel Dlamini and SASSA to take necessary measures to ensure the social grants system and its beneficiaries were protected when the CPS contract ended on 31 March.[10] On 6 March 2017, the contract with Cash Paymaster Services was renewed, and the Constitutional Court's order of invalidity with regard to that contract again suspended, for another year. The Court held that no party had “any claim to profit from the threatened invasion of people’s rights” but also understood that CPS could not be expected to deliver grants at a loss; it therefore ordered CPS to continue to deliver social grants at the same price it had contracted for in 2012.[19]

The Constitutional Court found that "the responsible functionaries of SASSA" had been aware from April 2016 that they could not comply with their undertaking to the Court previously that they would be able to pay social grants from 1 April 2017.[19] The Constitutional Court held Dlamini primarily responsible for the crisis,[20] with Chief Justice Mogoeng Mogoeng saying there was no explanation for the incompetence displayed by her and SASSA.[21] According to constitutional scholar Pierre de Vos, the Constitutional Court had concluded that SASSA and Dlamini could not be trusted to do their constitutionally mandated job to ensure delivery of social grants, and could not be trusted not to lie to the courts in the future.[19]

Between 2013 and 2017, the DSD spent R30 million on the costs of legal appeals involving SASSA.[22]

In 2004, the DSD amended the Social Assistance Act in order to disallow anyone other than the beneficiary to deduct money from their account.[10][14]

However, 10,262 complaints about deductions were made between April 2015 and March 2016, and the DSD itself claimed "for the past two to three years" to have been fighting illegal deducations from social grants.[23] Many of the unauthorised deductions were claimed by CPS to be repayment of non-existent Moneyline loans,[4][24] and sales of airtime and electricity.[23]

In June 2016, SASSA, the Black Sash, and the Association of Community Advice Office (ACAOSA) laid criminal charges against the directors of CPS and Grindrod Bank, claiming that the two companies were not implementing amended regulations under the Social Assistance Act, which amendments compelled companies not to deduct money from social grant beneficiary accounts for financial services.[23] The criminal charges were frozen until October, when Net1 was to receive clarity from a High Court as to regulations.[25] In a founding affidavit lodged with the North Gauteng High Court, Black Sash asked the court to ring-fence social grant accounts in order to protect grant beneficiaries from exploitation or abuse, and to prevent companies from soliciting beneficiaries around SASSA paypoints[26]—practices which Black Sash and the DSD accused Net1 and its subsidiaries of encouraging.[27]