Banks weigh grant options
Basa, ConCourt expert panel to scrutinise role
THE Banking Association South Africa (Basa) says it will soon hold a meeting with the Constitutional Court’s expert panel to present 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 spokesperson told Business Day at the weekend.
Basa was responding to the panel’s recently released report in which it recommends the South African Social Security Agency (Sassa) promote the use of commercial bank accounts, including the South African Post Office Postbank, for the payment of social grants. The panel envisages the creation of a Sassa beneficiary banking product similar to the Mzansi account, but flags the need to ensure bank charges are controlled.
The panel said the increased use of bank accounts could present an achievable and costeffective goal for Sassa as it would avoid the R6.4-billion the agency has claimed would be needed to fund its insourcing proposal. It would also reduce the R2-billion annual fees that would have to be paid for cash distribution.
Seven million of the 11-million beneficiaries receive their payment through banking channels. The panel goes as far as suggesting that new regulations would make the use of a bank account mandatory for beneficiaries in urban or semiurban areas.
The report, which was handed to the court on September 12, paints a grim picture of Sassa’s state of readiness for the March 31 2018 deadline. The extended contract with Cash Paymaster Services is due to expire on that date. The report also casts considerable doubt on the ability of the Post Office to play a meaningful role from April 2018. It says while communication between Sassa and the Post Office suggested the postal service’s appointment was a done deal, there was still no evidence a due diligence had been done.
Given the Post Office’s strained financial position, 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 [South Africa Post Office]?” asked the panel.
Post Office chief executive Mark Barnes said he had only met the panel on October 17, weeks after the report had been finalised. He believes the next report, due in December, will contain a more favourable view of the Post Office’s potential role following this meeting. He said the postal service was continuing discussions with Sassa and that there had been no developments since Social Development Minister Bathabile Dlamini said last week that Sassa had given the Post Office an offer.
In its report the panel urges Sassa to establish the needs and preferences of social grant recipients in respect to the manner in which the grants are paid out.
It recommends that Sassa, in collaboration with the Government Communication and Information System, develop a focused communication plan to inform recipients “of the benefits of receiving their social grants via bank accounts”.
The experts slammed Sassa’s longer-term insourcing proposal, saying there was little information backing its plan to incrementally own, operate and deliver a “one-stop” grant administration and payment system. — BDLive