Ten years ago this week, the Constitutional Court delivered its seminal judgment on the Sassa-CPS case, declaring the contract for the payments of social grants awarded to Cash Paymaster Services (CPS) to be unlawful.
Rather than order an immediate termination of the contract, the court initiated an extraordinary process of condoning the continuation of the contract while the SA Social Security Agency (Sassa) embarked on a new process to find an alternative supplier.
The logic underpinning this move was the realisation that in spite of the obvious flaws inherent in the awarding of the contract, and the shenanigans relating to subsequent variations that netted CPS even more money, ordering an immediate cancellation of the contract would have had multiple negative consequences.
As the primary conduit for paying grants to more than 15-million beneficiaries, CPS’s systems and processes were fundamental to Sassa’s ability to deliver on its constitutional mandate.
The technical complexities associated with running a social grants system — from cash movements to biometrics, access to state data on beneficiaries, and fraud detection and prevention — represented the sum of capabilities Sassa simply did not have. This reliance on CPS meant that the process of migrating to a new contract provider would take time, and the court was generous enough to give Sassa 36 months to fix the mess.
What the court could not have envisaged was that even a Constitutional Court directive was no match for Sassa’s institutionalised incompetence. Three years later, as the deadline loomed, it confessed that it was still incapable of insourcing the grants or appointing another contractor.
This horror story of institutionalised incompetence forcing the continuation of dubious contracts was revived exactly 10 years later as the National Student Financial Aid Scheme (NSFAS) indicated that the four service providers appointed in 2023 in dubious circumstances to process student allowances are still fully embedded in the process. In the investigations commissioned last year, their appointment was flagged for the irregularities and inconsistencies that have become common features of public procurement processes. The involvement of the then NSFAS CEO, Andile Nongogo, was deemed problematic enough for him to suffer the rare distinction of being fired.
Bizarrely, rather than that being the end of the story it became the opening salvo of counterallegations and countersurveillance involving the chair of the board, Ernest Khosa. In recordings obtained by the Organisation Undoing Tax Abuse (Outa), Khosa was purported to have discussed the mess with some of the service providers and explained how everyone had their hands in the till and he would preside over the process of investigations to achieve more accommodating outcomes.
The leaked recordings were damning enough to persuade Khosa to take the even more rare step of stepping aside while yet another investigation was carried out. Through it all the impression many laboured under was that the contracts of the service providers would be terminated, as recommended by the report by law firm Werksmans that accounted for Nongogo’s head.
Yet, six months later all four companies are still deeply embedded in the payments processed at NSFAS, which says that even though the declaration of dubious conduct and the commitment to terminate were made in 2023, the organisation has to follow due process and respect the law before finalising the termination process.
While that process labours on at a glacial pace, the sum of other challenges relating to NSFAS was finally overwhelming enough for higher education minister Blade Nzimande to dissolve the entire board immediately after Khosa had indicated he would be resigning after all.
The problem with the evolution of the payments processes at NSFAS is that it is a journey so complicated that it will take many more months to create enough institutional capacity to take over the process.
Until then, the four service providers will continue to enjoy the fruits of the poisoned tree, a reflection of the state’s inability to create internal capacity at critical institutions.
• Sithole (@coruscakhaya) is an accountant, academic and activist.
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