How Sapo will pay grants in April
AFTER MONTHS OF DELAYS, IN-FIGHTING: DEAL IS FINALLY SIGNED WITH SASSA TO START IN APRIL 2018 Post Office plans capital investments to bolster its reach for distribution of grants.
It’s crunch time for Sassa after it signed an agreement with the SA Post Office to distribute over 10 million social grants.
It’s crunch time for the South African Social Security Agency (Sassa) after it finally signed an agreement with the SA Post Office (Sapo) to play a core function in distributing social grants to over 10 million beneficiaries.
A hybrid model that will see Sapo collaborating with commercial banks to distribute grants will replace the contract with Cash Paymaster Services (CPS), when it expires on March 31, 2018.
The hybrid model isn’t new: a technical team initially mooted it in January. After wasting 11 months in a vain attempt to find another service provider, Sassa is reverting to the hybrid model. The announcement of the deal with Sapo has drawn speculation again on whether the stateowned entity has the capacity to be the paymaster in less than four months. “It will be difficult, even impossible, for Sapo to take over a complicated payment system from CPS by April next year,” said an expert, who asked not to be named.
Sassa’s sticking to its tight February 2018 deadline to phase out CPS’ contract, which the Constitutional Court declared invalid in March.
It’s also set a March 18, 2018, deadline for the mammoth task of transferring social beneficiaries’ personal data to Sapo, enrolling their biometric data, producing new cards that beneficiaries will use to access their grants, and merging Sapo’s branches across SA with Sassa pay points.
Sapo won’t have the exclusive right to distribute grants, according to the service agreement it signed on December 7 with Sassa. Under the agreement, Sapo’s expected to offer banking services through its branches for grant payments until 2023.
Sapo’s main functions would include producing and issuing new payment cards, conducting biometric authentication of beneficiaries and developing social grant payment software with the State Information Technology Agency and the Council for Scientific and Industrial Research. Sassa is paying CPS R14.42 plus Vat per social grant recipient, while Sapo has proposed a R12.41 plus Vat fee for its branch services.
Sapo is planning capital investments to bolster its reach across SA for the distribution of grants, including acquiring new Post Bank ATMs, cash pay points and branch infrastructure and pointof-service devices.
Under the new service agreement, commercial banks will play a support services role. Sassa plans to encourage all commercial banks to establish low-cost bank accounts that beneficiaries can use at ATMs or retail outlets to withdraw grants.
Minister in the Presidency Jeff Radebe has argued that directly depositing grants into commercial bank accounts would make Sapo’s systems less burdened. Sassa must still convince commercial banks to be part of the grant payment system.