Post Office-Sassa deal will cost the same as CPS - CEO

2017-12-10 13:30
Post Office in Parliament. (Duncan Alfreds, News24)

Post Office in Parliament. (Duncan Alfreds, News24)

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Cape Town - South African Post Office CEO Mark Barnes says government's new hybrid model for the social grants scheme will cost the same as the current deal with Cash Paymaster Services.

The inter-ministerial committee on social security, headed by Minister Jeff Radebe, announced on Sunday that a "landmark" deal had been signed with SAPO 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.

"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 at the press conference.

"The way it is worked out is to take the total cost over the 5 years and divide that per year, so you have a flat rate for the period."

News24 has seen the signed deal with the Post Office, which will cost roughly R2.2bn per 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 will pay for its own capitalisation, which will be recouped over the five years.

Cash Paymaster Services

The IMC was led by Radebe's department of planning and monitoring and evaluation (DPME).

One aspect of the grants scheme that will not be fully transferable before the April 1, 2018 deadline will be cash payments at pay points.

Around 2.9 million people still collect their grants via cash, which equates to 29% of the scheme.

DPME director general Mpumi Mpofu stressed that CPS will have no part to play in the cash payment portion of the scheme under current terms beyond the deadline.

Sassa will 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.

Sassa's 10 000 outlets will also be taken over by the Post Office, and be used in conjunction with SAPO's existing 2000 outlets.

A mapping exercise will take place to minimise duplication of outlets in given areas.

Beneficiary data

In summary, there will be four key channels through which grants will be paid under the hybrid model:

- direct payments into commercial bank accounts for 2 million beneficiaries;
- payments into new or existing Post Office bank accounts;
- payments through merchants in large, retail shops; and
- payments at second tier vendors, such as (legally-recognised) Spaza shops, general dealers, village banks and small retailers.

The 5 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 Sassa is still ongoing, and there is no indication yet if CPS has been ordered to destroy its database upon completion.

The issue of legal deductions, which sparked the court challenge against the CPS deal by NGO Black Sash, is currently before the High Court in Pretoria.

Sassa indicated in May it intended to appeal the court's ruling that deductions were still commercially legal.

Read more on:    sassa  |  cash paymaster services  |  social grants  |  sassa crisis

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