Sapo’s bid to hike grant fees blasted

‘UNNECESSARILY HIGH’: PANEL OBJECTS, CITES PROFIT

The increase is 20% higher than the amount currently paid to CPS – panel.

Afew days before the SA Post Office (Sapo) starts playing a major role in administering social grant payments to beneficiaries, the monthly fees it’ll charge the SA Social Security Agency (Sassa) for this function have come under fire for being exorbitant.

Sapo is at loggerheads with a Constitutional Court-appointed panel of experts which, in a September 14 report to the court, said some of Sapo’s fees were higher than Cash Paymaster Services (CPS), whose contract to distribute a portion of social grants expires at month-end.

The court appointed the panel in 2017 to oversee the process of phasing out the CPS contract. From October 1, Sapo will be mainly responsible for administering cash payments to over six million social grants beneficiaries. The proposed fee changes:

The panel has accused Sapo of inflating its monthly fees after it agreed with Sassa and Treasury on its preferred fees.

These fees relate to maintaining the bank accounts social grant beneficiaries will use to access their money, process over-thecounter payments and physical cash payments at Sapo branches.

In August, Sapo proposed almost doubling its monthly account servicing fee – to R13 from the R6.71 agreed to in December 2017.

“Sapo is requesting these increases only eight months after its original fees were negotiated.

“This suggests that Sapo significantly understated the costs it would incur in providing payment services to beneficiaries,” the panel’s report read.

Although Sapo is proposing reducing its cash payment fee from R55.60 per beneficiary to R51.77, the panel said it was still above the R51 Treasury recommended for CPS.

If Treasury accepts the fee increases, Sassa will pay about R1.5 billion per annum to Sapo – an average monthly fee of about R19.50 per beneficiary.

“This is nearly 20% higher than the current fee paid to CPS of R16.44 [per beneficiary],” said the panel.

“This will have adverse budgetary impacts on Sassa and may affect the long-term service delivery at Sassa offices in the absence of additional funding from National Treasury.”

The panel warned there was no mechanism in place to stop Sapo from “repeating such increases in the next fiscal cycle”.

Sapo said it must make new investments to expand its payment capacity to more beneficiaries than initially anticipated, hence the proposed fee increases.

Over the five years, Sapo was expected to generate operating profits of R2.4 billion, which the panel said was more than CPS generated over five years.