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

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