With a deal announced over the weekend by Jeff Radebe, minister in the presidency, there is a new system for the payment of social grants.
The Post Office will be the key player, but not the only player.
Banks will also be part of the distribution system, as will retailers – from large stores to spaza shops.
The agreememt between the Post Office and the SA Social Security Agency has taken a long time to reach, and follows legal action and concerns about the hefty profits made by Cash Paymaster Services, a division of Net1, which previously managed the distribution.
Work is underway to set up low-cost bank accounts for those of the 17m social benefit recipients who wish to use this channel for payment.
Cash Paymaster Services will bow out by 1 April.
Said Radebe: “The Constitutional Court on the 17th March 2017 ordered the South African Social Security Agency (SASSA) and the Department of Social Development (DSD) to find an alternative service-provider to Cash Paymaster Services (CPS).
“The current contract with CPS for the payment of social grants was declared invalid by the Constitutional Court in 2014 bringing 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 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.”
He described the new agreement with the Post Office as a “landmark agreement.”
He added: “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.”
Radebe said the new system recognises “the need for a significant improvement in the overall service delivery to beneficiaries, including the delivery of such services in an effective and efficient manner…the reduction of fraud, corruption and leakage…and reducing the cost to both SASSA and the beneficiaries, which also saves the country’s fiscus significant amounts.”
OUTA gave a cautious welcome to the announcement.
“We are eagerly waiting to see the details, to ensure that all bases are covered and that the plan is feasible at a reasonable cost. Our main concern is that the recipients MUST receive their grants without fail,” said Dominique Msibi, OUTA portfolio manager for special projects.
“Parliament and the IMC should review the agreement without delay to ensure its feasibility, especially the timelines and the confirmation that it will indeed be implemented come 1 April 2018,” says Msibi.
“At this point we cautiously applaud the signing of the agreement, but we need to see proof and success.
“The signing of this agreement has been long overdue and we are relieved that it seems that the Minister’s attempts to sabotage this process have failed.
“The welfare of millions of the neediest South Africans was compromised, while the Minister tried all she could to hang on to Cash Paymaster Services.”