Magwaza axing may end Post Office deal
Former Sassa CEO reached an agreement Fears rise that way is clear for CPS to gain
The former CEO of the South African Social Security Agency (Sassa), Thokozani Magwaza, who was fired on Monday, sent a formal letter last week to South African Post Office (Sapo) CEO Mark Barnes with an offer of future collaboration between the two organisations on the payment of social grants.
Barnes is keen for the Post Office to play a vital role in taking over the social grants system when the contract with Cash Paymaster Services (CPS) expires in 2018, which he said would result in huge savings for the fiscus. The letter set out the requirements and conditions of the collaboration and what Sassa expected of the Post Ofice and its subsidiary, Postbank.
Barnes said in an interview on Tuesday that Magwaza’s letter “was essentially an agreement to collaborate towards a solution. We have not signed a contract as such, but it was a firm intention supported by National Treasury.
“It was serious, though not conclusive. But we would regard a letter from an incumbent chief executive as valid.”
Although Social Development Minister Bathabile Dlamini has given MPs an assurance that the Post Office would play some part in the distribution of grants, she has stood in the way of the contract being awarded to a new service provider.
Fears have again been raised that Magwaza’s removal will lead to more delays in setting up a new system from which CPS will again benefit.
Magwaza was a key driver in the takeover process and there has been speculation that his intention to co-operate with the Post Office was one of the reasons for his termination.
He also angered Dlamini by shutting down the workstreams that she had set up in parallel to the department and which reported to her. The Treasury informed Magwaza two weeks ago that the workstreams were appointed irregularly and had to be shut down.
Barnes said government entities working together could secure enormous savings to the
fiscus. “The understanding has always been that we would be an aggregator of the whole payment system on a build, operate, transfer model so that over a period of time, Sassa would be able to provide the service directly,” he said.
It could be, however, that over this transition period, the Post Office’s infrastructure is found to be the most economical and efficient, in which case, it could retain some of functions.
The Post Office has about 2,400 outlets throughout the country. Its operating bank, Postbank, has 5.8-million people with savings accounts holding about R5bn in deposits. “So, it would be very easy for us to onboard these [the Sassa beneficiaries] accounts,” Barnes said.
When Postbank receives its full banking licence, it will be able to lend money in addition to simply taking deposits as it does now.
The Black Sash expressed concern that Magwaza’s departure might affect Sassa’s ability to fulfil the mandate set by the Constitutional Court, which gave the agency one year to prepare for the takeover of the social grants system from CPS.
“South Africa and grant beneficiaries in particular should not have to experience a further extension of the invalid CPS contract, as was the case in March this year,” Black Sash national director Lynnette Maart said.
The Organisation Undoing Tax Abuse said it believed Magwaza had left because his work environment had become “unbearable” due to death threats, the tension with Dlamini, his closure of the workstreams and his attempts to get the Post Office to take over the social grants delivery.
Cosatu said Dlamini had become a liability to the department and the trade federation strongly condemned the intimidation tactics and death threats that have been directed against Magwaza.