Hands off our grants: Background and Timeline

BACKGROUND

The South African Social Security Agency (SASSA), established in terms of Act no 9 of 2004, is legally responsible and must:

  • administer social assistance in terms of the Social Security Act of 2004 and perform any function delegated to it under the Act;
  • collect, collate, maintain and administer such information as is necessary for the payment of social security, as well as for the central reconciliation and management of payment of transfer funds, in a national data base of all applicants for and beneficiaries of social assistance;
  • establish a compliance and fraud mechanism to ensure that the integrity of the social security system is maintained;
  • promote and protect the human dignity of applicants for and beneficiaries of social security;
  • protect confidential information held by the Agency as contemplated in Section 16.

Furthermore, according to the Social Assistance Act 13 of 2004 Regulations (26A Regulation 2 Notice R591 of 2009 - Circumstances under which deductions may be made directly from social assistance grants):

(1) The Agency may allow deductions for funeral insurance or scheme to be made directly from a social grant where the beneficiary of the social grant requests such deduction in writing from the Agency.

(2) Subject to the provisions of sub regulation (1), the Agency may only allow deductions to be made directly from a social grant where the insurance company requiring such deduction or to whom the money resulting from the deduction is paid, is a financial services provider as defined in section 1 of the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002) and authorised to act as a financial services provider in terms of section 7 of that Act.

(3) Notwithstanding the provisions of sub-regulation (1), the Agency may only authorise one deduction for a funeral insurance or for a funeral scheme not exceeding ten percent (10%) of the value of the beneficiary's social grant.

TIMELINE

4 August 2011:        

The CEO of the South African Social Security Agency (SASSA) and senior representatives of the Black Sash met. The meeting considered:

    1. concerns about the unauthorised, undocumented and irregular third party debit deductions from the accounts of grant beneficiaries;
    2. the dangers of paying social grants via tender and outsourcing from a third party;
    3. the introduction of a SASSA Paymaster;
    4. the establishment of a long awaited Department of Social Development Inspectorate to be established by February 2013.

While there were follow-up meetings until late 2013, the Department of Social Development and SASSA have to date not adequately addressed any of these concerns raised in the August 2011 meeting.

18 August 2011:     

In a letter from the Black Sash, signed by Ratula Beukman, to SASSA CEO, Ms Virginia Petersen, we expressed our concern about the “imminent renewal of SLAs and the new tender process, ...highlighting the loophole which allows Cash Paymaster Services (CPS) to advance loans to grant beneficiaries. As the Minister pointed out then, this is against the provisions of the Social Assistance Act.”

April 2012 - 2013: 

Rights education material in the form of a flyer titled “You and Your Rights: Lawful Deductions from your Grants” was developed in workshops with our partners including advice offices and widely distributed. The flyer summarises the Social Assistance Act and the manner in which grant payments must be managed by SASSA and service providers such as Cash Paymaster Services.

From October 2012:              

We started a process of collecting evidence of debit deductions from SASSA grant beneficiaries using a standard questionnaire template. This process is undertaken in collaboration with a range of partners including the Legal Resources Centre, KatoliekeOntwikkelingOranjerivier (KOOR), CMAP and other partners in the Limpopo, Free State and Eastern Cape provinces. To date more than 120 cases have been collected. The process of collecting evidence continues. The evidence shows “loan” deductions being made from social grants. The loans are from a large variety of micro lenders including companies affiliated to Net1-CPS. The evidence also shows that many of the loans are not authorised as required by law.

19 June 2013:

Meeting with SASSA CEO and the Legal Resources Centre (LRC) to discuss the large scale, unprecedented deductions from social grants by money lenders as well CPS’s practice of selling airtime to grant beneficiaries. SASSA undertook to address these concerns and close the loopholes in the existing service level agreement. To date this has not been done.

18 November 2013:               

Meeting between the Black Sash, the LRC and CPS/NET1. The purpose of the meeting was to gather information on the direct debits to social grants and to discuss some of the concerns that the LRC and the Black Sash have regarding this practice.

21 November 2013:              

Black Sash released a Media Statement titled “Closing Pandora’s Box” and warned against the erosion of the social grant system. See www.blacksash.org.za/index.php/media-and-publications/media-statements/1439-closing-pandora-s-box-black-sash-warns-against-erosion-of-social-grants-system.

October and November 2013:            

Black Sash launched the "Stop SASSA-CPS Debits Campaign" and sought support from a range of strategic partners. We have to date received support and endorsement from the Treatment Action Campaign (TAC), Section 27, UCT Community Legal Services, UWC Community Law Centre, Parliamentary Liaison Office, and the Association of Community Advice Offices of South Africa (ACAOSA).

4 November 2013:

An urgent request was sent to the Reserve Bank of South Africa to act in the public interest and issue a written directive in terms of Section 12 of the National Payment Systems Act (1998) to demand that Payments Association of South Africa (PASA), BankServ and Grindrod immediately refrain from implementing debits from the bank accounts into which social grants are paid by Cash Paymaster Services. A letter was also sent to the Department of Social Development with a request that it take steps to prevent Cash Paymaster Services and Grindrod Bank from processing debit deductions from the accounts of grant beneficiaries. We are yet to receive a reply from the Department of Social Development. A link to these letters can be found below.

29 November 2013:                

The Constitutional Court ruled the CPS/ SASSA tender constitutionally invalid. The judgement is in the case of the AllPay Consolidated Investment Holdings (Pty) Ltd and Others vs Chief Executive Officer of the South African Social Security Agency and Others. The court held that SASSA did not give due regard to the importance of black economic empowerment in procurement, and was procedurally unfair in aspects of the tender process due to vagueness and uncertainty in a bidder’s notice. It declared the decision to award the tender to CPS constitutionally invalid. The court said that it will be a serious disruption to stop the payment of social grants if the tender is set aside. The court suspended the declaration of invalidity pending the determination of a just and equitable remedy. A hearing to determine the remedy is scheduled for 11 February 2014. The Black Sash is concerned that a renewal of the contract to either CPS or any other party will not prevent the massive abuse of social grant beneficiaries and the large scale deductions from grants. The Black Sash believes that SASSA must take steps to place itself in a position to pay out social grants and not to put this process in the hands of unscrupulous service providers.

In a recent advertisement in the City Press (December 2013) and flighted on SABC 3, SASSA indicates that it has been swamped by calls  from the public and beneficiaries concerning offers of financial service products working with or endorsed by SASSA.  It warns that it has no relation to any company offering micro loans, cell phone airtime, insurance products including life or funeral cover, and clothing accounts and  warn beneficiaries "against falling prey to these scams and other ambush marketing strategies".