Social grant payment challenge resolved
The South African Social Security Agency and the South African Post Office have found a solution to the issues related to the payment of social grants.
The South African Social Security Agency (SASSA) and the South African Post Office (SAPO) have signed a landmark deal which government hopes will bring to life a new grants payment system.
“This new system while drawing on the resources and capabilities of the South African democratic state, will also make allowance for the participation of other partners such as enterprises and commercial banks in the payment of social grants to beneficiaries,” explained Minister in The Presidency for Planning Monitoring and Evaluation Jeff Radebe. He is chair of the Inter-Ministerial Committee on Social Security.
The agreement gives effect to the implementation of the phasing in of SAPO and the Postbank as a service provider and also as one of the key channels through which grants will be paid.
The Constitutional Court had given SASSA a deadline of 8 December 2017 to deliver a comprehensive plan to the court, detailing how it will pay more than 17 million grant recipients.
Hybrid model
The agreement gives an emphasis to the “hybrid” nature of the new model, with the SAPO providing services such as electronic banking services, including the provision of a central holding account and special disbursement accounts, on-boarding of new beneficiaries and the biometric authentication of beneficiaries.
SAPO will also be responsible for the development of the required software solution to replace the incumbent systems as well as provide cash pay points at its outlets.
“SAPO will also provide cash disbursement through its branch network, particularly in locations close enough to replace existing cash pay-points. SAPO may develop a competitive alternative to the current cash in transit pay-point service, subject to the approval of SASSA,” Min-
ister Radebe said. SAPO does not have exclusive rights over the new system.
Minister Radebe said the hybrid nature of the system will see an increased role for commercial banks and retailers to give beneficiaries more choice.
It identifies the role of “second economy” merchants such as general dealers, corner shops, spaza shops, village banks and cooperatives in the townships and rural areas outside of the 5km radius, which are legally registered and locally owned.
The new system will also lead to a wider network of outlets, greater accessibility for beneficiaries within rural villages and townships and eliminate transport costs to banks and town centres.
SASSA’s role in the deal will be to: Manage and oversee SAPO’S performance. Monitor the quality of the services. Convene meetings with SAPO. Assist SAPO, where reasonable and necessary. SASSA has adopted a five-year phased-in plan which includes: Phase 1: Payment of Social Grants as from April 2018 and Cash Paymaster Services exit (year one).
• Phase 2: Implementation of hybrid model that addresses the Constitutional Court directives (year two and three).
• Phase 3: Development of SASSA insourcing infrastructure (year four and five)
No interruption in grants
The new deal will ensure that 17 million beneficiaries continue receiving grants beyond April 2018, which is the Constitutional Court’s deadline for SASSA to take over social grant payments from Cash Paymaster Services.
SASSA has received the details of the bank accounts for the about two million beneficiaries who receive their grants through bank accounts and has confirmed them. From 1 January 2018 the grants of these beneficiaries will be paid directly into a bank account by SASSA.
A special, low-cost bank account is also being developed for those who want to move over to the banking sector, rather than rely on the post office or cash payments.
“More than five million South Africans who receive their grants at the moment through electronic means – that is using a PIN number at an ATM, a retailer or other pay point – will be eligible for this special, low-cost account,” said the Minister.
The current SASSA card, provided by Grindrod Bank, has been extended by one year, and will not expire in December 2017.
“Let me emphasise this to ensure that there are no problems as beneficiaries move from their current payment point to the new commercial bank – the current SASSA card held by Grindrod Bank will be valid until the end of December 2018,” stressed Minister Radebe.
In the rural areas 2.9 million people will continue to use the current cash payment method which beneficiaries access at the more than 10 000 cash points across the country.
Incumbent service provider Cash Paymaster Services will not have direct control over this process from 1 April 2018.
SASSA will go out on a tender to find a new service provider to handle the cash payments portion of the grant system.
On 17 March 2017 the Constitutional Court ordered SASSA and the Department of Social Development to find an alternative service provider to Cash Paymaster Services.The current contract with CPS for the payment of social grants was declared invalid by the Constitutional Court in 2014 bringing finality to a legal battle that began in 2012.
The declaration of invalidity was suspended until the end of the contract period to enable SASSA to “insource” the payment of grants.
In March 2017, the court further suspended the declaration of invalidity of the CPS contract for another year, to March 2018.
This was to allow the department and SASSA to find a permanent solution to the payment of social grants to all beneficiaries.