Payment of social grants a priority
Government is working hard to ensure that social grants are paid with minimum disruptions
As the South African Post Office (SAPO) continues with its preparations to facilitate the electronic payment of social grants, the Constitutional Court has granted an extension to Cash Paymasters Services (CPS) in respect of cash payments.
In a judgment handed down on 23 March 2018, the Court granted an order extending the declaration of invalidity of the contract between CPS and the South Africa Social Security Agency (SASSA) a further six months from 1 April 2018 in respect of the cash payments of social grants only.
The Court also ordered that SASSA and CPS have a constitutional obligation to ensure payment of social grants to grant beneficiaries.
Last year the Constitutional
Court ordered that SASSA and the Department of Social Development find an alternative service provider to CPS.The contract with CPS for the payment of social grants was declared invalid by the Constitutional Court in 2014 bring-
ing 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. Following the Black
Sash court action 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 DSD and SASSA to find a permanent solution to the payment of social grants to all beneficiaries.
A new system
A landmark agreement was then reached between SAPO and the SASSA to 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.
The service agreement signed between SASSA and SAPO in December 2017 enabled SAPO to partner with SASSA in the payment of social grants, ushering in a public sector-led and efficient grants payment hybrid model.
Recently, Postal Services Minister Siyabonga Cwele revealed that the South African Post Office (SAPO) has met the obligations in its role for the readiness of the electronic payment option for social grants.
The preparations include a process of swapping existing cards with newer products.
“As you would expect with a project of this magnitude and scale, we would require a phasing in and phasing out period,” Minister Cwele said.
He said the Postbank will be able to play its role in the payment of social grants even though it does not have a banking license.
SAPO CEO Mark Barnes said SASSA will use its Paymaster General (PMG) account at the South African Reserve Bank to facilitate direct transfers into the Special Disbursement Account (SDA) via Bankserv.
“The SDA product has been created in Postbank's core banking system and is ready. Individual accounts will be opened during on-boarding of new beneficiaries commencing 3 April 2018 at all SASSA offices and card-swop of existing beneficiaries will commence at all SAPO branches on 16 April 2018 and at all identified community halls and other venues from 30 April to be completed by 30 September 2018,” said Barnes.
The Postbank has received the first batch of 250 000 cards which have been certified by Visa. These are currently being tested by the Payment Association of SA (PASA) and local banks for approval.
“It would take the Postbank 43 working days to deliver all the required cards from the day of certification by the PASA and local banks.
“It is important to note that the current Cash Paymaster Services (CPS)/SASSA cards that were expiring last year were extended and are still valid until December 2018 or until replaced by a new card issued by SASSA and SAPO,” Barnes stressed.
As of 3 April 2018, the Postbank will issue new beneficiaries with Mzansi cards if the new SASSA cards are not available.
These will be swopped with new cards as they become available.
Minister Cwele said the Inter Ministerial Committee (IMC) on Comprehensive Social Security has instructed its technical team to mobilise all government departments necessary to ensure that the social grant payments
take place peacefully and with minimum disruptions.
“We are mobilising our municipalities and councillors to ensure that they also communicate the message that government is ready and committed to paying social grants,” said Minister Cwele.
Commitment to pay social grants
The Minister reaffirmed government's commitment to ensuring that social grants are paid with minimum disruption as possible.
“Some of the public debate on this process has led to the perception that Government does not care for the poor.
I would like to dispel such a perception, because our government cares about the poor and will ensure that the grant recipients will continue receiving their grants without hindrance or disruption as we implement and comply with the court decision,” Minister Cwele said.
He added that the IMC is working very hard to ensure that social grants beneficiaries get paid.
This commitment is highlighted by the submission of the Fourth Quarterly Report to the Constitutional Court in fulfilment of the Court's order.
Minister Cwele said government is trying to reduce the number of beneficiaries who receive their payments in cash because it is the riskiest and most expensive delivery model.
“There are currently about 2.8 million beneficiaries that get paid in cash at pay points. SASSA is communicating directly to young and able bodied beneficiaries to encourage them to opt for receiving their grants via electronic means,” Minister Cwele said.
SASSA making progress
SASSA has reactivated the PMG account and is using this to manage the money for the direct transfers. This means that the money is not paid over to a private contractor in advance, but remains within the government environment until deposited into the social grant beneficiary accounts.
In addition, SASSA has successfully implemented pilot projects since January 2018 by directly paying beneficiaries who receive grants via commercial banks, including Postbank.
Direct payments were made to more than 2.3 million beneficiaries in March 2018 and this number is expected to increase further in April 2018.
The testing for direct payment for beneficiaries receiving their money through the SASSA payment card was completed for
100 000 beneficiaries for the March 2018 payment period.
In April, 5.7 million beneficiaries transacting through the SASSA Payment Card will be paid directly by SASSA without the assistance of CPS.
SASSA also intends on depositing money into the cards for those beneficiaries who receive their social grants in cash from pay points.
The only support that will be required for these approximately 2.8 million beneficiaries is the distribution of cash at the pay points.
SASSA Acting CEO Pearl Bhengu and SAPO CEO Mark Barnes.