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The landmark deal concluded between the South African Social Security Agency and the South African Post Office on December 7 brings to an end a period of heightened anxieties about the payment of social grants.
The parties signed an agreement for a payment model proclaiming the Post Office as the primary source for the disbursement of social grants from April 1 2018.
This follows a Constitutional Court judgment of March 17, which ordered the social security agency and the social development department to identify “an entity other than CPS to pay social grants or take the function over itself”. The current contract with CPS was declared invalid by the Constitutional Court in 2014, thus bringing to finality a legal battle that dates as far back as 2012.
The new agreement will ensure that there is a seamless transition and uninterrupted payment of social grants as directed by the Constitutional Court when the social security agency’s contract with CPS ends on March 31 2018. The Constitutional Court ruled that the contract between the social security agency and CPS was invalid but suspended its invalidity for 12 months to allow the social security agency to find another service provider.
In our quest to find a solution to this impasse, President Jacob Zuma appointed the inter-ministerial committee on comprehensive social security, of which I am honoured to be the chair. The committee comprises ministers whose portfolios include services related to social assistance or social security.
The role of the committee is to act with political authority to guide and direct efficient and expeditious implementation of the Constitutional Court order. It was on the basis of these comprehensive directives that the committee committed to align its work to the Constitutional Court reporting requirements, given the similar timeframes and expectations of the dedicated period between now and April 2018.
The committee illustrated political commitment at its joint meeting with Parliament’s standing committee on public accounts and the portfolio committee on social development on November 8.
Subsequent to the discussions that ensued, the social security agency working in close collaboration with the inter-ministerial committee, considered various options for the replacement of service providers. The most viable option was to adopt an approach that would guarantee insourcing of the grant system within government as well as a seamless hand-over within a period not exceeding five years. the social security agency resolved to collaborate with the Post Office to ensure a seamless phasing out of CPS in compliance with the court order in the Black Sash matter dated March 17.
This agreement gives effect to the implementation of the phasing in of the Post Office and the Postbank as a service provider and also as one of the key channels through which grants will be paid. The partnership between the social security agency and the Post Office is founded on the principle of building the capability of the state, through services to be provided by the Post Office to the social security agency. This new system will make allowance for the participation of other partners such as enterprises and commercial banks in the payment of social grants.
One of the primary objectives of this phasing is to significantly reduce cash payments for security, efficiency and cost-saving purposes. In its response to the Constitutional Court, the inter-ministerial committee confirmed the adoption by government of a state-led hybrid model and increasing the role of the banks and merchants and reducing the role of cash payment for social grants. The social security agency has obtained the details of the two million beneficiaries who receive their grants through their bank accounts, and the funds will be paid directly into their accounts in January 2018. The rest of the beneficiaries will continue to be paid by CPS until the contract with the social security agency ends on March 31 2018.
The hybrid model envisages increasing the role of financial institutions through a migration plan over the five-year period and beyond. The Banking Association of South Africa, Reserve Bank and some banks have met with the inter-ministerial committee’s technical subcommittee on a financial model to discuss the establishment of a special disbursement account, which will be more affordable than normal bank accounts with respect to transaction fees.
To ensure that there are no problems as beneficiaries move from their current payment points to the new commercial bank, the current the social security agency card held by Grinrod Bank will be valid until the end of December 2018. It is important to note that the current card will remain valid beyond the current validity date of December 2017.
This also provides sufficient time for beneficiaries to understand the implications of the transition and obtain their new cards timeously. Social grants will continue to be paid as directed by the Constitution and through existing channels until April 1 2018.
Social grants remain an essential part of the government’s social protection programme, which protects the poor and vulnerable.
More than 17 million people receive financial assistance through social grants as their primary source of income. It is with this in mind that we worked around the clock to find a solution to the impasse. Now that the deal has finally been signed, government will embark on a massive communication and education programme aimed at giving information on the choice of payment channels to be made available as well as specific requirements of beneficiaries to enrol in new channels.
As the inter-ministerial committee, we have been working tirelessly to ensure that an agreement is reached. The agreement concluded between the social security agency and the Post Office is the most viable model to ensure that there is no interruption in the payment of grant beneficiaries. We want to allay the anxieties of grant beneficiaries. The social grants will be paid in January 2018.
• Jeff Radebe is minister in the presidency
