Re­tail­ers pay the price

With the Post Of­fice un­able to dis­pense so­cial grants, the big re­tail­ers are help­ing, but it is dan­ger­ous and Sassa is feck­less

Financial Mail - - BETWEEN THE CHAINS - Ann Crotty

It’s not just let­ter writ­ers who are aban­don­ing the SA Post Of­fice.

Just months af­ter it an­nounced its ad­vanced state of readi­ness to com­mence pay­ments on be­half of the SA So­cial Se­cu­rity Agency (Sassa), hun­dreds of thou­sands of so­cial grant re­cip­i­ents have also de­cided to give it a wide berth.

For re­cip­i­ents, many of whom had trav­elled hours to get to the clos­est post of­fice, the late ar­rival of cash — or run­ning out of cash — in Au­gust and Septem­ber was enough to de­stroy what­ever ini­tial faith they might have had in the Post Of­fice’s abil­ity to func­tion ef­fec­tively.

The dis­ap­point­ing, but hardly sur­pris­ing, per­for­mance of the Post Of­fice means the three ma­jor re­tail groups — Sho­prite, Pick n Pay and Spar — may have to play an even greater role in the monthly dis­tri­bu­tion of just over R6bn in so­cial grants to 10.9-mil­lion peo­ple in the months and years ahead. This may lead to the next big Sassa cri­sis.

De­spite the ben­e­fits of mil­lions of so­cial grant re­cip­i­ents com­ing into their stores ev­ery month to pick up their cash, there are signs of strain. Se­cu­rity has be­come a sig­nif­i­cant con­cern, with armed rob­beries spik­ing on pay­out days, prompt­ing CEO Richard Brasher to re­mark at the re­cent Pick n Pay re­sults pre­sen­ta­tion: “We’re gro­cers, we didn’t sign up for the army.”

Over at Sho­prite, CEO Pi­eter En­gel­brecht says that for the past seven years the re­tail­ers have been try­ing to per­suade the govern­ment to spread the pay­ments through­out the month in­stead of bunch­ing them in the first few days, which makes them ob­vi­ous tar­gets for armed rob­bers. (The pay­ment process was changed in 2012 to ac­com­mo­date NET1/CPS.)

En­sur­ing huge amounts of cash are on site on key days is not only dan­ger­ous, it’s also an ex­pen­sive chal­lenge for the re­tail­ers — one the Post Of­fice hasn’t got right yet, says the panel of ex­perts in its lat­est re­port to the Con­sti­tu­tional Court.

The panel’s 10th and fi­nal re­port de­liv­ered to the court in­cludes a damn­ing in­dict­ment of the Post Of­fice’s role in this huge monthly lo­gis­tics ex­er­cise and doesn’t hold out much hope for im­prove­ment.

The re­port con­tains a chill­ing warn­ing about the “ad­verse con­se­quences to both the fis­cus and the well­be­ing of ben­e­fi­cia­ries for years to come” of hav­ing the Post Of­fice as the sole en­tity dis­pens­ing the grants.

While the new Sassa/post­bank card was used by 6.7-mil­lion of the ben­e­fi­cia­ries to ex­tract their grants in Oc­to­ber, only 6% (654,000) ac­tu­ally picked up their grants from the Post Of­fice. This was down from a peak of 1.3-mil­lion ben­e­fi­cia­ries (12%) in Au­gust.

Over the same pe­riod the use of ATMS in­creased to 61% from 52% and use of re­tail­ers eased back to 33% from 36%. This means that of the to­tal R6bn paid by Oc­to­ber 3, R3.7bn was paid out through ATMS, R2bn by re­tail­ers and only R361m by the Post Of­fice. In line with the court’s rul­ing, CPS made no so­cial grant pay­ments in Oc­to­ber but as many as 2.1-mil­lion ben­e­fi­cia­ries were ap­par­ently us­ing CPS’S Easy­pay Ev­ery­where cards. (This may ex­plain the high ATM usage.)

Rather than in­cur the ex­pense and huge in­con­ve­nience of trav­el­ing to a post of­fice that does not have cash, it seems hun­dreds of thou­sands of ben­e­fi­cia­ries who queued at post of­fices in Au­gust and Septem­ber opted to ac­cess their grants from bank ATMS in Oc­to­ber; and pay the bank fee.

The panel says for the fore­see­able fu­ture, given all the prob­lems it is fac­ing, the Post Of­fice’s share of the pay­ments is likely to re­main rel­a­tively small.

Grant re­cip­i­ents liv­ing in ur­ban ar­eas are ex­pected to flock in in­creas­ing num­bers to the re­tail­ers, which al­low un­lim­ited and free with­drawals. Pick n Pay chair Gareth Ack­er­man says: “This is es­sen­tially a so­cial ser­vice, with no re­quire­ment that ben­e­fi­cia­ries spend in our stores” and it comes at an “enor­mous cost” to re­tail­ers. An­drew Mills, mar­ket­ing di­rec­tor at Pick n Pay’s Boxer divi­sion, says

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