Sassa, Post Office agree to 'sit through the night' to thrash out deal

2017-10-31 13:11
Post Office CEO Mark Barnes. (Supplied)

Post Office CEO Mark Barnes. (Supplied)

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Cape Town - The South African Social Security Agency (Sassa) and the South African Post Office (SAPO) will "sit through the night" to thrash out a deal for the social grants scheme before 18:00 on Wednesday, MPs have heard.

The two entities, as well as Social Development Minister Bathabile Dlamini and Siyabonga Cwele, Minister of Telecommunications and Postal Services, appeared before a joint meeting in Parliament on Tuesday.

Dlamini told MPs that there was currently no agreement between Sassa and the Post Office.

The two entities have been attempting to sign an inter-government agreement over the nationwide grants scheme, but the deal reached a deadlock.

SASSA is only willing to offer SAPO one of four services, excluding all banking functions. The Post Office has countered, saying it makes no sense to separate the four functions.

READ MORE: Sassa opts for tender process after Post Office deal downscaled

But on Tuesday, Dlamini agreed that it was reasonable to let officials "sit through the night" in Cape Town on Tuesday to reach a consensus, after MPs were unhappy with the progress.

Her department was still committed to thrashing out a deal, and agreed "talking makes things better". SAPO acting board chairperson Comfort Ngidi made the proposal.

MPs applauded the consensus following a gruelling three-and-a-half hour meeting.

The joint meeting will reconvene again at 18:00 on Wednesday with a report back, chairperson Themba Godi said.

SAPO received '97% pass rate' in due diligence report - CEO

SAPO CEO Mark Barnes said his entity received the green light in 210 of 218 categories required to assist with the core functions of the social grants scheme.

This was according to a due diligence report into SAPO, compiled by the Council for Scientific and Industrial Research (CSIR) and requested by Sassa itself.

Despite this, Sassa on Monday announced it would opt for a tender process to find an alternative provider to carry out banking services, rather than offering it to Postbank through SAPO.

SAPO finally got its chance to publicly put forward its case to assist with the grants scheme in a joint meeting in Parliament on Tuesday.

Barnes disputed many aspects of Sassa's official reasons for collapsing the proposed deal with the Post Office.

Among the reasons was the issue that Postbank did not have a "fully-fledged" banking license, which Barnes described as "simply untrue".

Banking concerns

He said SAPO has been sponsored through Standard Bank and that's how they have been operating for years in handling 18 million transactions a year for 5.7 million customers.

"We are already licensed to do that by the Postbank Act. It is simply the accommodation of cash flows. So this is a systems capability, not a credit or risk capability.

"We do not need to register as a merchant. That disqualification is without substance."

Postbank has a net equity of R3bn, has the highest amount of physical outlets in the country outside of Sassa, and were full members of Visa and MasterCard.

Its 2 500 outlets could complement Sassa's already existing ten thousand. They were not there to replace anyone.

It had the highest capital asset value of all the banks in South Africa. It was a fully functioning autonomous division of the Post Office that handles its own finances.

Services par excellence

According to Barnes, of the eight areas of concern in the CSIR report, six of them they can upscale and have already costed the process.

"If SAPO can provide, we can provide services greater or better than everyone else."

In terms of their needs, R425m is needed to facilitate the production of new cards, which will be recouped over the five-year period of the contract.

They will spend R500m on upgrading their network, and then a further R50m a year on the network.

They will spend R6m to upgrade their call centres, another R90m and R79m on improving capital adequacy.

"All of those we have sufficient capital for and sufficient cash to spend."

It was also well below Social Development Minister Bathabile Dlamini's claims that it would require R6bn to take over the grants scheme.

In the spirit of collaboration, they would like to renegotiate, rather than enact a legally-binding letter of employment given to them in July by former Sassa CEO Thokozani Magwaza.

Dlamini wants proof

Dlamini, who was also present in the meeting, said she needs to be shown the supposed 97% figure, as the summary in her report only mentioned the upscaling recommendations.

She also could not say if Cash Paymaster Services had a banking license, after being asked by MP Tim Brauteseth.

No agreement has been signed since the initial offer was sent to SAPO, she said, and they were now at a deadlock.

Acting Sassa CEO Pearl Bengu said they can't change the outcome of the Bid Evaluation Committee's decision, as the procurement process had now been followed.

MPs were left exasperated by the seeming contradictions between Sassa's presentation last week before the committee, and the Post Office's presentation on Tuesday.

They also did not receive the full CSIR report because two sections were missing, or the initial request for proposal - both of which should have been provided by the department of social development.

"There is not one page in this CSIR report that says SAPO can't do the job. It says they just need to upscale, train and employ more staff," said Democratic Alliance MP Lindy Wilson.

Before the agreement, MPs debated whether they should call in the inter-ministerial committee to further the possibility of breaking the deadlock.

The Inkatha Freedom Party also threatened to ask for a motion requesting an ad hoc committee inquiry into the Sassa debacle.

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Read more on:    parliament  |  sassa  |  sapo  |  mark barnes  |  bathabile dlamini  |  politics  |  social grants

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