The Democratic Alliance (DA) has criticised Cash Paymaster Services (CPS) after the company told the Constitutional Court that it won‘t be able to help distribute cash social grants from June unless it received more money.
CPS filed an affidavit at the court on Wednesday this week, asking it to order Treasury to negotiate a monthly “floor fee” for the remainder of its contract with the South African Social Security Agency (Sassa) before May 31.
It has been using cash reserves to continue to operate the cash portion of the social grants system since April 1 but will run out of those reserves on May 31.
The company could not yet reach an agreement with National Treasury on an adequate payment scheme with Sassa to keep the company on board for the remainder of its contract, which expires in September.
“Essentially, CPS is attempting to create yet another crisis, risking the well-being of 2.8 million social grant recipients, to force government‘s hand to pay them more money,” DA MP Bridget Masango said in a statement on Friday.
“By threatening to not pay cash grants, CPS is clearly holding the Department of Social Development, the Constitutional Court and the beneficiaries to ransom.
“This is further proof of CPS‘ parasitic nature and that they are willing to toy with the livelihoods of the poor and vulnerable for their own financial gain.”
Masango also called on President Cyril Ramaphosa to personally intervene in the “fiasco”.
She pleaded with him to not protect new Social Development Minister Susan Shabangu “the way [former] president Jacob Zuma protected [former] minister Bathabile Dlamini.”
“This ongoing crisis must be dealt with urgently once and for all, for the sake of the millions who rely on social grants just to get by,” she said.
‘Operating at a loss‘
CPS has, however, argued in its court papers, both in its affidavit and papers filed on May 11, that it simply could not continue coughing up the money required for its operational costs until the fee was agreed.
It has not invoiced Sassa since April 1 due to the impasse and has therefore received no payment.
Herman Kotze, CEO of CPS‘ parent company Net1, argued that Treasury‘s new recommendation of R44.53 per beneficiary, combined with the continued migration of Sassa beneficiaries to other options, was causing CPS to operate at a loss.
“CPS can only deliver a reliable and uninterrupted service if it operates a sustainable business,” Kotze‘s affidavit reads.
“For the reasons set out below, Treasury‘s recommendation does not protect CPS from operating at a considerable loss, which it cannot reasonably be expected to do.”
Treasury‘s recommendation needed to consider the possibility of a “floor fee” to help CPS cover its operational costs of R147m a month, while beneficiaries are migrated away for the next three months.
‘Treasury does not make payments, Sassa does‘
In the interim, it has asked the court if it can “invoice Sassa according to Treasury‘s recommendation” so long, and that any shortfall or overpayment made to CPS for the services provided since April be corrected upon final determination by the court.
Sassa spokesperson Kgomotso Diseko told News24 earlier on Friday, that it would wait for the court‘s intervention as the negotiations have always been handled between National Treasury and CPS.
Treasury‘s communications office told News24 on Friday that it does not make payments to CPS; Sassa does.
“Treasury has as required by the Constitutional Court investigated and made recommendations to the Court. Various other parties have made submissions.
“The Court will consider the Treasury’s and other submissions and rule on the payments to be made to CPS in due course.”