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The deal between the South African Social Security Agency and the Post Office will “bring to an end to the uncertainty and anxiety of grant recipients”, says the Standing Committee on Public Accounts.
In a strongly worded statement on Monday, the committee said it felt “vindicated” that its “relentless persistence” had finally yielded a positive outcome.
It also “condemned” the state security agency’s “incompetence and obfuscation in this matter”, and noted that time was short.
“This means that the Post Office must work hard and quickly to ensure that there is a seamless transition, so that grant recipients receive their grants on time in 2018.”
An inter-ministerial committee on social security, headed by Minister Jeff Radebe, announced on Sunday that a “landmark” deal had been signed with the Post Office to handle core functions of a new system.
There would also be an increased role for commercial banks and retailers, to give beneficiaries more choice.
Post Office chief executive Mark Barnes said the government’s new hybrid model for the social grants scheme would cost the same as the current, “invalid” deal with Cash Paymaster Services.
“The cost to government is pretty much the same as it was before and is within the approved National Treasury budget for this service,” Barnes said yesterday.
“The way it is worked out is to take the total cost over the five years and divide that per year, so you have a flat rate for the period.”
The deal would cost roughly R2.2 billion a year, an equivalent amount to the CPS deal.
Barnes said the costs might also reduce in time, as the “expensive” cash payment portion of the grants system moves hands.
The Post Office would pay for its own capitalisation, which will be recouped over the five years.
One aspect of the grants scheme that would not be fully transferable before the April 1 2018 deadline will be cash payments at pay points. About 2.9 million people still collect their grants via cash, which equates to 29% of the scheme.
Department of planning, monitoring and evaluation director-general Mpumi Mpofu stressed that CPS would have no part to play in the cash payment portion of the scheme under current terms beyond the deadline. The social security agency would utilise the infrastructure set up by the current system to continue paying cash payments for six months after the April deadline, while it goes out on tender to find a new service provider.
Its 10 000 outlets would also be taken over by the Post Office, and be used in conjunction with its existing 2000 outlets. A mapping exercise would take place to minimise duplication of outlets in given areas.
How it works
In summary, there will be four key channels through which grants will be paid under the hybrid model:
1. Direct payments into commercial bank accounts for two million beneficiaries;
2. Payments into new or existing Post Office bank accounts;
3. Payments through merchants in large, retail shops; and
4. Payments at second-tier vendors, such as (legally recognised) spaza shops, general dealers, village banks and small retailers.
The five million beneficiaries who use Grindrod Bank accounts under the current system will be given the option of transferring to their commercial accounts or a Post Office account.
Questions still remain around the securing of beneficiary data. The migration of the data from CPS to the social security agency is still ongoing, and there is no indication yet if CPS has been ordered to destroy its database upon completion.
“The grant distribution debacle must be a lesson to all departments and Cabinet ministers that they cannot avoid accountability,” said the public accounts committee.
“This episode has once again proved that Parliament can achieve good results for all South Africans.” – News24
