Here’s how the Post Office social grants deal works

Social grant recipients finally have a deal that ensures they are paid without their personal information being shared, according to the longanticipated contract between the South African Social Security Agency (Sassa) and the South African Post Office (Sapo).

The service agreement was signed in Pretoria last week and follows a year of discussions between Sapo and Sassa. These had to be guided by Parliament, the Constitutional Court and an interministerial committee on social security to ensure Social Development Minister Bathabile Dlamini and her department do not plunge grant beneficiaries into another crisis that forces the state to continue using Cash Paymaster Services (CPS).

Under the agreement, Sapo will score just over R2.2-billion a year.

The agreement details the obligations of each party and how much it will cost for each beneficiary to transact.

But the Black Sash’s national director, Lynette Maart, is concerned that the agreement lacks detail and many elements remain up in the air.

The Black Sash has been instrumental in ensuring that the Constitutional Court has oversight of how Sassa structures a new deal to ensure a smooth transition from the CPS contract, which was extended for another year in April 2017. “We have come to learn that the devil is in the detail,” Maart said, referring to how CPS had operated.

The agreement will commence in April and run for a period of five years to end on March 31 2023. The Post Office has costed the work at R2 250 261 437.

The cost to Sassa per beneficiary is broken down as follows:

The beneficiaries are also likely to have three free merchant withdrawals, one mini statement and at least one card replacement, among other banking perks.

Post Office head Mark Barnes said the overall annual cost could be lower than the current estimate.

“There are various channels grants will be paid through. There are two million people who are already part of the banking system who have bank accounts. Then you have 5.7-million who have bank accounts with Grindrod Bank and the Post Office will take over those accounts.

“Then there are 2.8-million people who are paid at cash pay points, which are serviced by cash-in-transit trucks. These carry the highest cost because of the enormous risk that goes with it,” said Barnes.

And just over one million people are within 5km of a Postbank. Barnes said this lowers the number of beneficiaries receiving cash at pay points.

He argues that the more people move away from using cash pay points, the lower the total cost will be to distribute grants.

Maart said that although the agreement does deal with the disbursement of grants using cash-in-transit vans, it’s not clear whether Sapo or another service provider will provide the vans.

“This may affect over two million beneficiaries and, without a clear indication, we may be sitting with the same problem that landed us here. Sassa may decide to go on tender to find a provider and because the process has still not been ironed out we may have big problems of who will be that provider,” she said.

But all parties seem satisfied with the level of protection of beneficiaries’ confidential data.

Unlike the deal with CPS, which used social grant beneficiaries’ information to sell them such things as funeral schemes and then make deductions from their grants, resulting in people being left with little money, the new agreement has a clause to protect beneficiaries’ data.

“Sapo and its subcontractors will keep beneficiary data, received from Sassa or otherwise collected from the beneficiaries, private and may not use or cause the use of data for any purpose other than payment of grants,” reads the agreement.

Nor will Sapo and its subcontractors be allowed to invite beneficiaries to “opt-in” to the sharing of their confidential information for the marketing of goods and services.

CPS is still in the process of migrating beneficiaries’ information back to Sassa after the agency received more than 130 000 complaints about unauthorised deductions, mostly for airtime.

The costs Sapo has charged under the agreement will stay the same for the five years the services will be rendered and Sassa is expected to pay the Post Office no more than 30 days after each invoice has been submitted.

“This is the best deal for the state and we have proved that. Whatever the price is, we are paying ourselves. The state is paying itself and whatever Sassa pays to the Post Office, it’s just one arm of government paying another arm and the economics are all retained in the state, ” said Barnes.

As of April 1, Sapo will provide electronic banking services, including opening accounts and issuing cards at local Sassa offices and at Sapo outlets. The Post Office will also develop biometrics as required by Sassa.

But software that will replace the Net1/CPS payment system still needs to be developed, which the agreement states will be done in conjunction with the State Information Technology Agency and the Council for Scientific and Industrial Research.

To ensure that Sassa has the capacity to take over the payment system one day the agency and Sapo have agreed to recruit the necessary staff and ensure that employees are trained.

“This is the best deal for the state and we have proved that. Whatever the price is, we are paying ourselves”