The landmark deal between the South African Social Security Agency and the South African Post Office brings to an end a period of anxiety about the payment of social grants.
The Post Office will begin disbursing grants from April 1.
This follows a Constitutional Court judgment that ordered Sassa and the Department of Social Development to identify "an entity other than CPS to pay social grants, or take the function over itself". The contract with Cash Paymaster Services was declared invalid by the court in 2014, ending a legal battle that dated back to 2012.
President Jacob Zuma appointed the interministerial committee on comprehensive social security, of which I am the chair, to find a solution after the court ruling. The committee's role was to implement the court order. The committee showed political commitment at its meeting with parliament's standing committee on public accounts and the portfolio committee on social development on November 8.Sassa, working closely with the interministerial committee, considered options for the replacement of service providers. The most viable option was to keep the grant system within government and arrange a seamless handover within five years. Sassa resolved to collaborate with the Post Office and phase out CPS and phase in the Post Office and Postbank as a service provider and one of the key channels through which grants will be paid.
The partnership between Sassa and the Post Office is founded on the principle of building the capability of the state. 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 is to significantly reduce cash payments for security, efficiency and cost-saving purposes. In its response to the Constitutional Court, the interministerial committee confirmed the adoption by government of a state-led hybrid model and to increase the role of the banks and merchants in reducing the role of cash payment for social grants.
Sassa has obtained the details of the two million beneficiaries who receive grants through their bank accounts. These funds will be paid directly into their accounts in January. The rest of the beneficiaries will be paid by CPS until its contract ends on March 31.The hybrid model envisages increasing the role of financial institutions through a migration plan over the five-year period and beyond. The Banking Association South Africa, the Reserve Bank and some banks have met the committee's technical subcommittee on financials to discuss a model for a special disbursement account which will be more affordable than normal bank accounts with respect to transaction fees.
To ensure there are no problems as beneficiaries move from their current payment points to the new commercial bank, the current Sassa card will be valid until the end of December 2018. This provides time to understand the implications of the transition and obtain new card.
Social grants will continue to be paid as directed by the constitution and through existing channels until April 1.
Social grants remain an essential part of the government's social protection programme, which protects the poor and vulnerable. Over 17million people receive grants as their primary source of income...