South Africa's Social Grants Agency Cancels Payments Tender

(Bloomberg) -- The South African Social Security Agency canceled its tender for a service provider to handle the cash payment of welfare grants to millions of poor people, according to Social Development Minister Susan Shabangu.

South Africa is seeking a new distributor of social security payments that cost the government more than 150 billion rand ($11.9 billion) annually, after the Constitutional Court ruled in 2014 that the contract with Net1 UEPS Technologies Inc. was unconstitutional because correct processes weren’t followed. Not all payments are made in cash.

The deal with Net1’s Cash Paymaster Services unit was last year extended until 2018 to ensure grant payments didn’t stop after the welfare department failed to comply with a court ruling, and the Constitutional Court extended CPS’s contract for six months on March 23.

Shabangu is aware of a decision contained in a report by Sassa’s acting chief executive officer on May 15, stating that he decided to cancel the bid, the minister said in an affidavit filed at the Constitutional Court on Friday.

Her department will establish a technical committee to explore and recommend alternatives to the cash payment of social grants, she said. It will also advise on the transition from CPS to a new service provider for the distribution of welfare payments.

The ruling African National Congress’s welfare initiative is the single biggest program instituted by the post-apartheid government to alleviate poverty in one of the world’s most unequal nations. An interruption in the processing of payments could undermine the party’s support in national elections next year.

To contact the reporters on this story: Amogelang Mbatha in Johannesburg at ambatha@bloomberg.net;Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, Liezel Hill, Renee Bonorchis

©2018 Bloomberg L.P.