Social grants issue gains clarity as parties ink a deal
The South African Social Security Agency (Sassa) and the South African Post Office (Sapo) have signed an agreement to ensure social grant beneficiaries continue to receive their payments after Sassa’s contract with Cash Paymaster Services (CPS) ends on March 31, government announced on Sunday.
The cost of the five-year plan, will be within the government’s current budget, if not cheaper, according to Sapo CEO Mark Barnes.
It entails a hybrid payment model that will provide SA’s 17-million social grant beneficiaries with the choice of four payment channels: Sapo’s Postbank, commercial bank accounts, merchants in large retail shops, or a "second tier" of merchants that includes village banks, general dealers, small retail outlets and spaza shops.
Minister in the Presidency Jeff Radebe, who chairs the interministerial committee (IMC) on social security, said one of the primary objectives of the plan was to reduce the number of beneficiaries who used cash pay-points, as they were expensive and posed security challenges. About 2.9-million people receive social grants in cash at 10,000 cash pay-points across SA.
Sapo and Sassa will determine which of these pay points can be migrated into Sapo’s infrastructure, which must be within a 5km radius of the existing cash pay-points,
said Radebe. The aim is to migrate 1-million people who receive their disbursements from cash pay-points into Sapo’s infrastructure.
"We want transactions through our system, to build capacity, so that one day Postbank can be a primary player in financial inclusion," Barnes said.
The hybrid model was intended to increase the role of financial institutions such as Postbank, and work was under way to establish a low-cost account expressly for receiving grants, Radebe said.
"The Banking Association of SA, Reserve Bank and some other banks have met with the IMC’s technical committee … to discuss the establishment of a special disbursement account which will be more affordable than normal bank accounts with respect to transaction fees," Radebe said.
Approximately 5-million grant recipients who collect their grants through electronic means — for example at a retailer, or use a PIN number at an ATM — would be eligible for such a low-cost account.
Sassa will go out on tender for a new service provider for the cash pay-points that were not migrated into Postbank, said the Department of Planning, Monitoring and Evaluation’s director-general Nompumelelo Mpofu. "There is no intention whatsoever to reappoint CPS because that would be illegal."
She said there would be a six-month handover period,
to ensure a smooth transition from CPS to Sapo and other service providers.