After months of negotiations, Social Development Minister Bathabile Dlamini on Monday ruled out giving the South African Post Office more than a limited role in paying out welfare grants and said government would over the next four months look for other companies who could do the bulk of the work.
In a statement, Dlamini said SAPO fell short on three of four key functions needed to pay out grants to some 12 million recipients every month.
“The outcome of the adjudication processes revealed that SAPO can only provide one of the four services, namely the provision of an integrated payment system,” she said.
It could not print the required 4.2 million beneficiary cards per annum that were required, or vouch for a sub-contractor who would do so, she said.
Neither could it provide a full-scale banking service that includes a disbursement account linked to a card with biometric verification data and assure that cards were compliant with all existing ATM machines.
The lack of infrastructure would force grant recipients to travel to receive their payouts and put their safety at risk, she suggested.
It would also have a negative impact on the informal trading that has sprung up around pay points and therefore on micro economies.
“The SAPO infrastructure consists of approximately 2,700 points of service, of which more than 500 are agencies within retail stores. More than 1,200 have less than 100 square metres of operating space and this makes it impossible to expect this infrastructure to service millions of people, even if they were to be staggered.”
The minister said Sassa believed the post office could play a role in grant distribution by “supplementing the current distribution infrastructure with the SAPO brick and mortar”.
“This can be achieved in a very short space of time, through the deployment of ATMs and point of sale devices that provide cash back. Authentication and verification can be achieved through biometric and the testing of biometric enrollment should start in February 2018.
“This will assist the SAPO to revive its closed outlets, in particular, the ones that are based in rural areas and townships so that employment is also created.”
According to her statement, SAPO had until last Wednesday to accept the offer of a reduced contract, and had to provide proof of its financial reserves and accept negotiations on the quoted price.
Dlamini said the South African Social Development Agency (Sassa) would therefore initiate a new procurement process for service providers to handle those functions SAPO cannot.
The procurement process will conclude on February 28, 2018.
This is a month before the deadline imposed by the Constitutional Court for a new contract to replace the current one with Cash Paymaster Services (CPS) expires.
Dlamini’s critics have in recent months accused the minister of seeking to manufacture another welfare payout crisis, and extend the deal with CPS.
She made the announcement a day before she was expected to appear before Parliament’s Standing Committee on Public Finances to explain delays in reaching an agreement with SAPO. The minister infuriated the watchdog committee last week when she failed to appear to report back on negotiations which were clearly in danger of stalling.
On Friday, Scopa chairman Themba Godi threatened to call for a vote of no confidence in the minister if she did not report substantive progress in talks with the post office.
He pointed out that SAPO CEO Mark Barnes had stressed that it would take five months to prepare to take over grant payment from April.
Further delays created the impression that the minister was dragging her feet and engineering a repeat of the crisis the country faced this year when the CPS contract was due to expire with no other suitable service provider signed up.
CPS’s contract was declared invalid several years ago but has twice been allowed to run, so as not to compromise South Africans who rely on social grants. According to Dlamini, Sassa was ready to insource some aspects of grant payment, though the agency remained years away from fully taking over the function itself.
– African News Agency (ANA)
– African News Agency (ANA)