Sassa and Post Office secure social grants deal

The South African Social Security Agency (Sassa) and the South African Post Office have reached a "landmark" agreement to ensure social grant beneficiaries continue to receive their payments after Sassa’s contract with Cash Paymaster Services (CPS) ends on March 31, Minister in the Presidency Jeff Radebe announced on Sunday morning.

In a setback to the ambitions of Sapo CEO Mark Barnes, who had hoped Sapo’s Postbank would be the sole service provider, it is to be just one of four payment channels available to social grant recipients. The hybrid model the parties agreed to will also enable beneficiaries to receive their monthly payments via bank accounts at commercial banks, merchants in large retail shops, and a "second tier" of merchants that includes village banks, general dealers, small retail outlets, and spaza shops. The hybrid model will be phased in over five years.

"One of the primary objectives of this phasing in is to fundamentally reduce cash payments for security, efficiency and cost-saving purposes," said Radebe, who chairs the interministerial committee on social security (IMC).

The hybrid model aims to increase the role of financial institutions to migrate beneficiaries away from costly cash pay points, he said. Approximately 5-million grant recipients who receive their grants through electronic means — for example at a retailer, or using a PIN number at an ATM — would be eligible for this low cost account, he said.

"The Banking Association of South Africa, Reserve Bank and some other banks have met with the IMC’s Technical Committee … to discuss the establishment of a special disbursement account which will be more affordable than normal bank accounts with respect to transaction fees," he said.

The 2-million beneficiaries who currently receive their grants in their bank accounts via CPS would from January receive their payments directly from Sassa, he said.

Sapo would provide cash disbursements through its branch network, particularly in locations close enough to replace existing cash pay points, he said. At present 2.9-million, a little less than a third (29%) of all grant beneficiaries, receive cash payments.

Radebe said the partnership between Sassa and Sapo was founded on the principle of building capabilities of the state.

"The build, operate and transfer model allows the investment made to Sapo to directly benefit and be transferred to Sassa at the end of the five-year period (and) allows government to effectively monitor the payment of social grants," he said.

He assured beneficiaries that their grants would continue to be paid, as directed by the Constitution.

kahnt@businesslive.co.za