Banks still willing to help distribute grants

The Banking Association SA says it will soon meet the Constitutional Court’s expert panel to present practical recommendations from the banking sector on the future of the beleaguered social grants payment system.

The Banking Association SA (Basa) says it will soon meet the Constitutional Court’s expert panel to present practical recommendations from the banking sector on the future of the social grants payment system.

“As a sector, we remain willing to play a role to support the distribution of social grants. We met with the minister on August 25 where we indicated our willingness to assist,” a Basa representative said on Friday.

Basa was commenting on the panel’s recently released report, which recommends that the South African Social Security Agency (Sassa) promote the use of commercial bank accounts, including the South African Post Office’s Postbank, for the payment of social grants. The panel envisages introducing a Sassa beneficiary banking product similar to the Mzansi account but flags the need to ensure that bank charges are controlled.

The panel said the increased use of bank accounts could present an achievable and costeffective goal for Sassa. It would avoid the R6.4bn Sassa has claimed would be needed to fund its insourcing proposal. It would also reduce the R2bn in annual fees that would have to be paid for cash distribution.

At present, 7-million of the 11million beneficiaries are able to receive their payment through banking channels. The panel goes as far as suggesting that new regulations would make use of a bank account mandatory for payment to beneficiaries in urban or semi-urban areas.

The report, handed over to the court on September 12, paints a grim picture of Sassa’s readiness to meet the March 31 deadline in 2018, when the extended contract with Cash Paymaster Services expires.

The report also casts considerable doubt on the ability of the South African Post Office (Sapo) to play a meaningful role from April 2018. It says that while communication between Sassa and Sapo suggested the appointment of Sapo was a done deal, there was still no evidence a due diligence had been done.

Given the strained financial position of Sapo, the panel questioned whether the Sassa contract was regarded as a way of bailing it out. “Does this put the payment of grants at risk? Is the objective to ensure reliable and secure social grant payments or profitability for Sapo?” asked the panel.

Sapo CEO Mark Barnes said he met with the panel only on October 17, weeks after the report had been completed.

He believes the next report, due in December, will contain a more favourable view of Sapo’s potential role following this meeting. He said Sapo was continuing talks with Sassa and that there had been no developments since Social Development Minister Bathabile Dlamini said last week that Sassa had given Sapo an offer.

In its report, the panel urges Sassa to establish the needs and preferences of social grant recipients regarding the manner in which grants are paid out.

It recommends that Sassa develop a focused communication plan to inform social grant recipients “of the benefits of receiving their social grants via bank accounts provided by a commercial bank or financial institution of their choice, including Sapo’s Postbank”.

INCREASED USE OF BANK ACCOUNTS COULD PRESENT AN ACHIEVABLE GOAL FOR SASSA.