Social grants must be paid on 1 April - Gordhan

Johannesburg – It is a priority to remove the sense of uncertainty regarding the payments of grants to 17 million beneficiaries by April 1, said Finance Minister Pravin Gordhan.

Gordhan told Parliament on Tuesday that it is important to assure the public that the process at hand for the payments of grants is under control.

“We are not involved in child’s play, 17 million people depend on grants daily for their own welfare and wellbeing,” said Gordhan.

He added that the payments should be executed within the framework of the law, and if this framework is constraining then courts should agree to “temporary measures” to be put in place to ensure payments take place on April 1.

“The first objective is to pay grants by April,” he said.

Thereafter there will be time to conduct further investigations on the crisis embroiling the South African Social Services Agency (Sassa) and the department of social development.

However this process does not fall within Treasury’s mandate, Gordhan explained.

Thereafter the ministerial and technical task teams can begin negotiating to determine the most appropriate model to adopt for the future distribution of grants. 

Among the possibilities include extending the existing tender, establishing a new tender, and having banks which comply with Sassa to distribute payments. The Post Office is another option as well as cash paypoint services.

READ: Sassa: Gordhan cautions politicians to steer clear of procurement

The extension of the existing tender with Cash Paymaster Services (CPS) has been ruled as unlawful. But Gordhan said that a hearing at the Constitutional Court this week will determine if such an extension of the services can be temporary, until a competitive tendering process is established.

“It should not generate panic at all,” said Gordhan. The judicial processes along with administrative and political processes will ensure grants are paid on April 1. It must be done as transparently as possible.

An environment of certainty that people will receive grants must be created first and then other options following the temporary judgement can be considered, he explained. 

Money flow

It takes three working days for money to be paid out from Treasury to the social development department’s accounts at the South African Reserve Bank (SARB), Gordhan explained. Thereafter the monies are transferred to provincial social development accounts. They are then transferred to the Grindrod Bank account, where it is held for five days said Gordhan.

Presumably this money is earning interest, and if that is the case, this money should go to the government, said Gordhan. He added that he was not making "assertions", but if interest is being earned then it should be accounted for. 

Grindrod then pays beneficiaries in various forms, through either merchants and retailers. About 4 million people get grants from paypoints at the merchant office. Some money is paid to the bank accounts of 1.6 million recipients. Some withdraw from ATMs, which incurs bank charges to recipients, he cautioned. 

Gordhan emphasised this flow of money to explain there is no shortage of money in the system.