CPS willing to provide cash grants for six months - but at increased cost

15 February 2018 - 16:09 By Ernest Mabuza
Image: South African Gov‏ via Twitter

Cash Paymaster Services (CPS) has asked the Constitutional Court for an order authorising it to make representations to the National Treasury on a reasonable fee for its continued provision of cash payment services from April 1 to September 30.

CPS made this submission on Thursday as it responded to an application by the South African Social Security Agency (Sassa) earlier this month that CPS continue to provide the payment of social grants through cash withdrawal at Sassa’s designated pay points after March 31.

The contract Sassa currently has with CPS was declared invalid by the Constitutional Court in 2014.

However in March last year‚ the court extended the invalid CPS contract to the end of March this year after the agency failed to find a new contractor to pay social grants from April 1 last year.

In its application‚ Sassa said it had managed to make arrangements for three of the four categories of beneficiaries of social grants to be serviced by entities other than CPS.

“In respect of the fourth category dealing with cash payments made to some 2.5-million beneficiaries‚ Sassa has been unable to procure an alternative methodology to secure timeous payments to such beneficiaries at this stage‚” Sassa said in its application for extension.

Sassa said this category was comprised of those who were illiterate‚ elderly and the disabled‚ who did not use banks and receive their grants physically.

“It is in respect of these beneficiaries that Sassa requires an order of this court to enable CPS to continue this service for the period commencing April 1 2018 to the end of September 2018‚” Sassa acting CEO Pearl Bengu said in her founding affidavit.

In its affidavit‚ CPS said while it preferred not to provide any payment services beyond March 31 2018 until its position was regularised by a lawful tender process‚ it remained willing and able to provide whatever payment services to ensure the uninterrupted payment of grants.

In his answering affidavit‚ CPS director Nunthakumarin Pillay said providing the cash payment services at the current price would cause CPS to incur a considerable loss over the six month period.

“The majority of operational costs incurred are fixed or non-variable costs – in other words‚ they are costs that are incurred regardless of the volume of beneficiaries paid.

He said some of the major fixed-cost components for CPS were salaries for about 2‚000 employees‚ security costs for cash-in-transit vehicles and guards at depots and paypoints‚ rental and operating costs of the 62 depots across the country‚ travel and accommodation costs and bank fees.

“For these reasons‚ CPS does not consider the current fee of R16.44 per beneficiary paid to be a reasonable and fair fee for the cash payment services it is now required to provide‚” Pillay said.