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Grindrod Bank: We need Net1 to ensure Sassa payments

Johannesburg - Financial services provider Grindrod Bank, which provides banking services for South Africa's 17 million welfare grant recipients, says it needs Net1 UEPS Technologies’ support to continue the welfare system.

According to the Grindrod Bank website it pays "17 million grants to 10.6 million distinct cardholders amounting to R11bn per month in close association with Cash Paymaster Services (CPS), which provides the card technology and manage the card programme on behalf of the government of South Africa".

CPS is a unit of Net1 UEPS Technologies. CPS, meanwhile, deploys its social grant distribution technology to distribute social welfare grants on a monthly basis.

Until this week, Grindrod Bank has been quiet as the Sassa debacle unfolded.

The bank has also not been cited as a respondent in Black Sash’s urgent court bid into the matter. But in an affidavit dated March 13 and drawn up by Grindrod managing director David Polkinghorne, he says that “in the spirit of cooperation and to address the urgency” around grants, the bank has had a “number of meetings” with the Department of Social Development, Sassa, National Treasury and the South African Reserve Bank (Sarb).

Grindrod's affidavit emerged as the South African Social Security Agency (Sassa) faces more and more questions over how it will continue with grant payments as its contract with CPS is set to expire on April 1.  

CPS won the deal to distribute grant payments in 2012 but in 2013 the Constitutional Court ruled that Sassa reissue the tender amid irregularities.

Polkinghorne said during the bank's meetings with the relevant authorities "various alternative options were raised including the option of creating an open banking solution”.

“At all times Grindrod Bank was clear on its reliance on the infrastructure and technology support provided by CPS and Net1, and that this support was required in any solution Grindrod Bank would be able to provide post 31 March 2017,” said Polkinghorne.

Sassa, at first, said it planned to take over the payment function, but it emerged this year that it couldn’t do so, sparking a crisis and calls for Social Development Minister Bathabile Dlamini to quit.

The crisis has come to a head on Wednesday in Johannesburg’s Constitutional Court, which is hearing an application by human rights organisation Black Sash for the court to exercise oversight over the process to find a new social grants payment provider.

Grindrod Bank, a registered financial services provider in South Africa, is part of JSE-listed Grindrod Limited, a logistics company, with a market capitalisation of just over R11bn.

Meanwhile, more drama hit South Africa’s social grants system on Tuesday when Net1 CEO Serge Belamant gave Sassa and Treasury a Thursday ultimatum for a new interim contract with CPS, otherwise it may not be able to pay more than 17 million beneficiaries on April 1.

This is because CPS needs at least 12 working days to ensure that all systems are ready come April 1, said Belamant.

"If you work backwards from the 1st day of April, we need to ensure that the process starts 12 days prior to that in order for us to, number one, have the money so we can put it into beneficiaries' bank accounts so they can withdraw it," Belamant told talk radio station 702.

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