The South African Post Office (Sapo) says it is on track to pay social grants on behalf of the South African Social Security Agency (Sassa) by April 1 2018.
An agreement was signed between Sassa and Sapo late in 2017 which will see the latter providing electronic banking services, including corporate control accounts, special disbursement accounts, on-boarding of new beneficiaries, and the biometric authentication of beneficiaries.
In 2014, the Constitutional Court ruled that the contract Sassa signed with Cash Paymasters Services (CPS) in 2012 was illegal and invalid. In 2017, the Court suspended its order until March 31 2018, to give the social development department and Sassa time to hire a new provider.
However, last week, Sassa approached the Court to request an extension of the suspension of invalidity of the CPS contract. "This is to allow Sassa to phase out CPS and phase in a new service provider. The reason for this development is that the contract with CPS ends at the end of March and a new service provider can only be appointed after the CPS contract ends," Sassa said.
The agency said that as from March 1 it will do direct transfers to about 5.7-million beneficiaries who use the Sassa card. This will bring about 80% of payment transactions under the control of Sassa by the end of March.
By April, the only beneficiaries whose payments won’t be falling under Sassa control will be the ones paid in cash at pay points. Sapo had already gone to the market for the cash payment category by way of advertising a tender. This represents just less than 3-million beneficiaries, Sassa said.
Sassa is currently negotiating with the banking industry to develop a low-cost banking account that will be subsidised by the agency so beneficiaries get the full value of their grants without paying bank charges. Such an account will not allow electronic debits and is intended to protect beneficiaries from unauthorised debit orders, which have been a problem in the past.
Briefing Parliament’s telecommunications and postal services portfolio committee on Tuesday, Sapo chief operating officer Lindiwe Kwele said the entity was on course to produce a total of 10.6-million Sassa-branded bank cards by June. Kwele said that migration of beneficiaries to Postbank accounts had commenced and is being prioritised and monitored weekly.
The Post Office also said it was important to note that its responsibility was to commence the take-over of grant payment services, but not to have completed the migration process, by April 1.
Jabu Mahlangu, the chairman of the portfolio committee, said: "It is comforting that Sapo has been able to give us assurance that come [April 1], all beneficiaries will receive their payments without a glitch. Nevertheless, the committee will monitor the project closely and be updated about achievements and challenges, starting with the production of the first 2-million cards by March 2018."
Cas Coovadia, the MD of the Banking Association of SA, said the distribution of social grants to the most vulnerable in the country continued to be unnecessarily under risk of disruption because of the slow progress in implementing the Constitutional Court ruling that a new payment system be put in place by April 1.
He also said banks had indicated that a significant number of the 6.7-million grant recipients with Sassa cards, also have personal accounts with commercial banks.
"If Sassa provides banks with the details of all its beneficiaries, banks would be able to identify which recipients already have accounts, into which the agency can immediately pay grants, using existing bank infrastructure. BankservAfrica is ready to act as a central data clearing house. [The Banking Association] is ready to facilitate this process with its members and embark on a joint awareness exercise to inform beneficiaries. To date, this sharing of information has not happened, despite the Information Regulator giving assurance that such an exercise falls within the ambit of the Information Act and can be conducted securely."
Coovadia added: "There is no doubt that the South African banking system, with the South African Post Office, has the capacity and technology to meet — and surpass — most of the requirements of Sassa, its beneficiaries, and the Constitutional Court. There is no need to continue with the current inefficient and costly mechanisms.
"However, this requires that Sassa, the department and all relevant stakeholders be willing, enthusiastic and efficient partners in a national effort to act in the interests of the most vulnerable South Africans.
"We urge Sassa to accept the bona fides of banks, as we accept theirs. The bottom line is that existing banking infrastructure and products can cost-effectively, securely and without abuse, deliver social grants from April 1. We are ready to work with Sapo to deliver this service."