Dlamini gets grant bloody nose

Back in the 1970s, my maternal grandmother used to receive her state pension from the British government. She would dutifully take her pension book down to the local post office, tear out the coupon, hand it to the cashier and receive her pension in cash.

Of course, this was a contributory pension, paid for over many decades of full time employment, but nevertheless it serves to illustrate the point that in the developed world, paying out pensions has been running like clockwork for many decades, at least since the inception of the British welfare state in the late 1940s. Today, the procedure is much more automated and pensioners receive their pensions monthly, paid directly into their bank accounts.

Now fast forward to South Africa in 2017. Pensions and other state benefits are non-contributory in this country; they are social grants. Charity by any other name. But they are paid for a reason – to ensure social unrest is contained and, by extension, to help soothe the awfulness of being unemployed or indigent in this country.

Up to now, social grants have been paid out by Cash Paymasters Services (CPS) a subsidiary of Net-1 on behalf of the SA Social Security Agency (Sassa). Net-1 is a Nasdaq-listed electronic payments company that started life in the late 1990s in SA as a company called Aplitec. The indigent individuals who receive social grants in SA invariably don’t have bank accounts, which is why CPS comes into the picture. CPS issues grant recipients with a debit card which gets loaded with cash on a monthly basis and which can then be used to pay for a variety of items, including airtime, loans and insurance. Although CPS and Grindrod Bank deny “mining” the date relating to the accounts of these individuals, they undoubtedly make money from this rather labyrinthine operation.

Deadlines extended for CPS

In 2014 the constitutional court ruled that the contract between Sassa and CPS was invalid and that Sassa would be required to find a new technology partner that could fulfil the basic requirements of disbursing social grants. The court allowed a grace period to permit social grants to be paid in the interim but that came to end on 31 March 2017. CPS gained a stay of execution for purely pragmatic reasons, as Sassa had been dragging its heels badly on the issue and had not found an alternative technology partner. The deadline has been extended to March 31 2018.

Enter the South African Post Office (SAPO). Although still a highly dysfunctional organization, it is slowly but surely being resuscitated by CEO Mark Barnes. Postbank, SAPO’s banking subsidiary, is profitable and, according to Barnes, would not only be able to handle social grants payments but would be able to do so cheaper and more efficiently than the current system with CPS and Grindrod Bank. Postbank has a vast reach in SA, with almost 2 500 branches around the country.

In evidence to a parliamentary committee at end October, Social Development Minister Bathabile Dlamini crossed swords with Barnes, stating unequivocally that Postbank did not have the capacity to handle social grants payments. Dlamini has been conspicuous by her absence in recent times, preferring to dodge the issues rather than confront them in public. A known confidante of President Jacob Zuma, she obviously believes she can count on support from uBaba.

But on Wednesday 8 November, events took an unexpected turn. Minister in the Office of the Presidency Jeff Radebe, announced that by November 17, Sassa, SAPO, Home Affairs and the State Security Agency will have signed a contract for the payment of the 17 million social grants. Events will be monitored closely to ensure that as few hiccups as possible are encountered before this consortium takes over fully on 1 April next year.

Dlamini has treated parliament and the social grant recipients with contempt. Under normal circumstances, she would have been fired long ago and replaced with a competent individual. Time is running out for Dlamini and her ilk and her delinquent behaviour is unlikely to be tolerated much longer.

Disbursing grants is not rocket science, but it requires stamina and adherence to basic business principles. Hopefully, over time, this latest development will result in a significantly streamlined method of paying social grants to the poorest of the poor in society. It should also result in the status of Postbank being elevated considerably, paving the way for what would effectively become a state bank. At a time when the fiscus is under relentless pressure, this can surely only be a win-win situation.

Chris Gilmour is an investment analyst 

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