EDITORIAL: The looming pensions crisis
There’s no evidence Sassa is ready with the complex systems and infrastructure needed to disburse R140bn each month, on time, to the right people
Just last month, the Department of Social Development tabled its long-awaited and sweeping proposals for comprehensive social security reforms. Whether SA can afford these is far from clear and they need robust debate.
But it seems frighteningly ironic that the department can make such far-reaching policy proposals when it is clear it cannot guarantee 17-million poor South Africans that they will continue to receive their monthly social grants come April 2017. That is when the controversial contract with a private sector provider to pay the monthly grants expires – and when the department’s own in-house agency claims it will take over the task.
There has been no evidence that the South African Social Security Agency (Sassa) is ready with the complex systems and infrastructure needed to ensure that the annual grant money of R140bn is paid out each month, on time, in the right amounts, to the right beneficiaries, even in SA’s remotest rural areas. And the recent highly unsatisfactory parliamentary engagements on the subject by Social Development Minister Bathabile Dlamini and her team have raised deep concerns.
The government’s existing policy of social protection for the most vulnerable citizens — the elderly, children and disabled people — has been far and away its most successful intervention to combat poverty and reduce inequality in the democratic era. The grants are the largest single item of government spending, accounting for 3.2% of SA’s GDP and more than one-eighth of the government’s noninterest expenditure. They have been growing ahead of inflation at about 8% a year, enabling millions of households to buy bread, pay for schooling and transport, and generally stay alive despite high levels of unemployment and working poverty in the country.
SA’s social protection system, which has a far greater redistributional effect than those of most other emerging markets, should continue to be a source of pride to all of us and equally a source of stability for the country. But that depends on a successful payment system.
The existing contract with service provider Cash Paymaster Services has a long and turgid history going back to the early days of democracy when the government successfully outsourced the task of paying the grants to three service providers in the different provinces.
It then centralised the system in Sassa and went out to tender for new providers, attracting some innovative and impressive bids from a number of consortiums that included most of SA’s big banking groups. That didn’t seem to be good enough for Sassa, which instead ended up awarding the contract to Cash Paymaster Services amid question marks about alleged corruption and impropriety.
After the Constitutional Court threw out that contract and mandated Sassa to go out to tender again, imposing strict conditions, Sassa proved unable to pursue the process with any effectiveness, extending Cash Paymaster Services’ contract and ultimately deciding it would do the job itself.
Just what possessed a government agency with a less than impressive track record to think it could take on so mammoth and complex a task — in which one of SA’s big banks and other private sector players would once have been quite willing to invest — is a mystery. Why Parliament permitted this absurdity is a puzzle too.
At this stage, though, the challenge is to ensure that 17-million people continue to receive their money. A first step is to get honest answers out of Sassa about how far it is with the process and whether it even understands the challenges. Parliament should continue to press hard, but firm intervention is surely also needed from the top of the government itself.