Red flags over Sapo
REVIEW: POST OFFICE CHARGES FAR MORE THAN CASH PAYMASTER SERVICES
Selecting Sapo as the sole service provider has been ‘the primary failing of Sassa’, says ConCourt panel.
Barely a month since the SA Post Office (Sapo) started distributing social grants and it’s already facing accusations of holding the SA Social Security Agency (Sassa) “hostage” in terms of its fees.
A Constitutional Court-appointed expert panel has repeated its concerns about Sapo being a dominant player in the social grants system. It wants to review the decision by Sassa and the department of social development to source all social grant payment services from Sapo.
“It is highly unlikely that this decision [to source Sapo’s services] will result in the best use of taxpayers’ money,” the panel said.
It believes selecting Sapo as the sole service provider has been “the primary failing of Sassa” as its decision was “contrary to the principles of the government’s supply chain framework and sound procurement practices”.
In fact, selecting Sapo was “flawed” as there was no competition from other bidders, the process was not “open and transparent” and Sassa didn’t consider affordable payment technologies, like mobile money, the panel said.
Its concerns around Sapo mirror those that dogged former grants distributor Cash Paymaster Services (CPS).
CPS enjoyed repeated last-minute extensions to its contract with Sassa to distribute social grants to 10.5 million beneficiaries, despite the contract being declared invalid by the court in 2012 for not going through proper tender processes.
From October 1, this function is now played by Sapo, which distributes social grants to over six million beneficiaries by processing electronic and physical cash payments at its branches.
At the centre of the panel’s concerns are the monthly fees Sapo charges Sassa to distribute social grants, which are mostly higher than the fees CPS charged.
Sapo entered into an initial agreement with Sassa in December 2017 to distribute social grants and has now increased two of its three monthly fees between 89% and 93%.
See the table above Sapo chief operating officer Lindiwe Kwele recently defended the fee increases, telling Moneyweb the parastatal was now required to process payments to more beneficiaries than initially agreed with Sassa in December 2017.
Kwele said Sapo has had to increase its monthly fees to cover the cost of new investments in its payments systems that will now be processing payments to more beneficiaries.
It has a five-year capital expenditure budget of R3.5 billion, which will be deployed in upgrading its payment technology infrastructure and security to protect beneficiaries at its branches.
The panel isn’t convinced.