Public Protector to investigate CPS loan scheme

27 May 2013

Following a request by the DA, the Public Protector, Thuli Madonsela, has confirmed that she will conduct a preliminary investigation into allegations that the company entrusted with the distribution of social grants in South Africa, Cash Paymaster Services (CPS), has been operating an illegal loan scheme targeting social grant beneficiaries.

CPS won a multimillion-rand tender last year to administrate and distribute South African Social Security Agency (SASSA) grants across the country. However, according to media reports, CPS has also been operating a loan scheme targeting grant beneficiaries. 

In the scheme, it is alleged that CPS officials offer and provide certain beneficiaries ‘interest-free' microloans with repayments automatically deducted from their social grants. Media reports suggest that the interest rates on some of these loans are actually as high as 50%. 

These practices are not only a contravention of the Social Assistance Act, but a blatant manipulation of some of the most vulnerable members of our society. 

Social grants are a necessary safety net to assist poor South Africans. The fact that some of our most vulnerable citizens, who are in desperate need of assistance, are being treated this way leaves me angered. 

There must be a full-scale investigation into these allegations so that we can ensure that every step is taken to guarantee that recipients of social grants are protected from unscrupulous loan sharks and mashonisas, and that all such practices are brought to an end.

Unemployed South Africans must be able to rest assured that everything is being done to protect their rights.

Statement issued by Mike Waters MP, DA Shadow Minister of Social Development, May 27 2013

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