S. Africa’s Zuma Orders Ministers to Ensure Welfare Grants Paid

  • Zuma to meet social development, finance minister on Saturday
  • Meeting follows resignation of key social development official

South African President Jacob Zuma ordered the country’s social development and finance ministers to ensure that welfare payments are made to beneficiaries on April 1, the day after a distribution contract with Net 1 UEPS Technologies Inc. is due to expire.

Zuma held talks on Saturday with Department of Social Development Minister Bathabile Dlamini and Finance Minister Pravin Gordhan, the presidency said in a statement emailed from the capital, Pretoria. He directed the two ministries to “work on outstanding issues,” his office said, without elaborating.

Bathabile Dlamini

Photographer: City Press/Getty Images

The South African Social Security Agency, or Sassa, is scrambling to ensure more than 17 million people get their payments after Net 1’s contract ends on March 31. While that contract was ruled invalid by the Constitutional Court in 2014, the welfare agency hasn’t complied with an order to hold a tender to find a new service provider. Sassa officials said this week that the agency intends to negotiate a new contract with Net 1, potentially circumventing the earlier court ruling.

“The president is of the view that the matters are solvable,” the presidency said. “The ministers will keep the president briefed on progress.”

Signature Policy

The welfare payments of more than 140 billion rand ($10.7 billion) a year are a signature policy of South Africa’s ruling African National Congress, which says the grants are an important measure to reduce inequality in the nation almost 23 years after the end of white-minority rule. In previous election campaigns, its officials have told rallies that if another party came to power, the payments may end.

Earlier on Saturday, the director-general of the social development ministry, Zane Dangor, said he has resigned over differences with Dlamini about the Constitutional Court’s 2013 ruling.

Dlamini said in court documents seen by Bloomberg on Friday that while she took responsibility for the failure of the welfare department to comply with the ruling, she did not believe her ministry was obliged to consult the court about a plan to enter a new contract with Net 1.

“We had significant differences about what our responsibilities were in terms of management of the legal issues in relation to the Constitutional Court,” Dangor said in an interview with eNCA, a Johannesburg-based television station, broadcast on Saturday. “That is what led to the breakdown.”

Lawmakers Angered

Parliament’s Standing Committee on Public Accounts said it was angered by Dangor’s resignation and questioned “the capability of the minister to effectively run the department and discharge of her responsibilities,” according to a statement emailed on Saturday. Dangor was “an honest and hardworking civil servant,” it said.

“The minister must now take full responsibility for this,” the committee said before a meeting with Dlamini on March 7. “The department is clearly falling apart.”

Lumka Oliphant, Dlamini’s spokeswoman, didn’t answer calls to her mobile phone when Bloomberg sought comment.

Sassa has now concluded a new agreement with Net 1 and details will be released soon, Business Day reported on Friday, citing the social development ministry. That’s against the advice of the finance ministry which, along with the country’s central bank and the national Post Office, has proposed alternatives to using Net 1.

Court Oversight

Earlier this week, the Black Sash Trust human-rights group filed a case with the Constitutional Court demanding that any contract between Sassa and Net 1 have the court’s oversight and that Dlamini report to the court regularly. The Democratic Alliance, South Africa’s biggest opposition party, on Friday joined that case.

“In the circumstances relating to the payment of social grants, there has been abject failure by senior government officials and senior members of the executive, including at least one cabinet member, to satisfy the basic constitutional and legal principles,” the DA said in court papers. Dlamini “failed to show any leadership at all, let alone concern regarding Sassa’s true state of affairs,” it said.