Over to you, Postbank

The Inter-Ministerial Committee (IMC) on Comprehensive Social Security led by the Department of Social Development outlined the progress being made to transfer the payment of social grants to a new provider by April 1 2018 on Friday.

The committee was formed on the instruction of President Jacob Zuma in March this year to give effect to the order by the Constitutional Court (Concourt) that the administration and payment of social grants be transferred from Cash Paymaster Services (CPS) to another supplier to relieve both parties from a contract that the court deemed was invalid.

The press briefing was led by Minister Bathabile Dlamini from the Department of Social Development under whose responsibility Sassa falls, but also included the Minister of Postal and Telecommunications, Siyabonga Cwele, as well as the Minister of Home Affairs, Professor Hlengiwe Mkhize.

Here is what we learnt:

1. Over a five year period, Sassa will take full responsibility for the payment and administration of social grants. This means that it must develop all of the skills and capacity inhouse to manage the roughly 17 million grants that are currently paid each month. The use of the South African Post Bank will be an interim measure to give effect to the Concourt order.
2. The IMC instructed Sassa to undertake a comprehensive due diligence of the South African Post Bank. This has just been completed by the Council of Scientific and Industrial Research (CSIR), and it will in turn present its findings to the Bid Evaluation Committee on September 20.
3. Sassa will seek greater oversight of the transfers made by CPS through the reactivation of the paymaster general account with the South African Reserve Bank.
4. From next month, Sassa will be insourcing the management of Regulation 26A deductions, which are those earmarked for funeral policies. The deductions for these policies can only come off of adult grants, and cannot be more than 10% of the value of the grant.
5. Sassa began developing biometric identity and access capability from July, and plans to implement it over a three-year period. Biometric identification is key to detecting and preventing fraud in the social grants system.
6. By the end of September, CPS will provide a list of some two million beneficiaries whose grants are paid into commercial bank accounts. At the same time, Sassa is re-establishing its link to Bankserv (the electronic architecture supporting the national payments system) to allow Sassa to begin making these transfers.
7. While there are serious concerns over the financial viability of the South African Post Office, “the South African Post Bank is very well capitalised,” says minister Cwele.
8. According to Sassa’s data, 45% of the 10.7 million grant beneficiaries utilise the “offline” infrastructure provided by CPS in the form of 10 000 paypoints and ATMs. The briefing did not give any indication how this infrastructure would be replaced or developed by Sassa.

Sassa has six months to go before the deadline. The public will be keen to understand the findings of the due diligence into the Post Bank because that will be the vehicle that ultimately has to deliver in the short amount of time left. While the Post Bank already has a network of branches, being able to replace the 10 000 contact points and the logistics capability behind that sounds like a big ask in the space of just six months.

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