The South African Social Security Agency (SASSA) and South African Post Office (SAPO) have refuted reports that the latter is bleeding R60 million a month due to the distribution of social grants.
The organisations issued a joint statement yesterday following a City Press report on Sunday alleging SAPO is losing at least R60 million a month from distributing social grants to millions of citizens, who rely on government’s welfare net for survival.
It added the situation is so dire that the post office is considering shutting down many cash pay points around the country.
However, in their statement, SASSA and SAPO assure social grant beneficiaries and the general public of South Africa that recipients will continue to be paid their money on time every month.
At the height of the social grants crisis, SAPO was gazetted as the preferred payment channel for all SASSA grants in a government-led initiative.
This meant CPS, the entity that distributed payments on behalf of SASSA, ceased to be the social grants paymaster.
SASSA had relied on the services of the Net1 UEPS Technologies subsidiary to pay millions of beneficiaries through cash payments, direct deposits and electronic payments.
“The weekend media reports suggesting the post office may not be able to process social grants payments are incorrect. We assure everyone that social grant payments to all the more than 11 million SASSA beneficiaries will not be disrupted,” SASSA and SAPO say.
On Sunday, SASSA tweeted: “Grants will continue to be paid directly by SASSA and not the post office as the article incorrectly suggests; save us the hysteria ‒ the grants system isn't in crisis mode.”
Direct deposits
They note the beneficiary funds are directly deposited into social grant beneficiaries’ accounts by SASSA, and SAPO serves as a distribution agent of the grants which are deposited into the Post Bank SASSA/SAPO gold card accounts.
The SASSA/SAPO gold card accounts are opened and managed in accordance with the contract between SASSA and SAPO, the organisations explain. They add that social grant beneficiaries then have a choice as to where they wish to access the funds, and this may be through any bank ATMs, merchant point-of-sale devices, post offices or at one of the remaining SASSA cash points.
The SASSA/SAPO gold card can also be used everywhere where VISA cards are accepted for the purchase of goods, as it is a fully-fledged debit card.
“There is no requirement for SAPO funds to be utilised to pay grant beneficiaries. Therefore, the weekend media reports are inaccurate to state the beneficiaries might not get paid because of SAPO.
“The reports that SAPO is considering closing grant payments pay points are also inaccurate and misleading.”
According to the entities, there are 1 740 cash pay points throughout the country which are serviced monthly. They are located mostly in rural areas where there is no national payment infrastructure. SASSA has the sole prerogative to determine these pay points not SAPO, say the organisations.
“SAPO wishes to reiterate that the reports in the media, which are based on an internal discussion document expressing the views of an individual, that it is losing R60 million on the SASSA grants payment contract are inaccurate.”
Turnaround strategy
City Press had also reported that SAPO’s group chief information officer, Refilwe Kekana, had warned: “The post office finds itself in a financial and operational situation that requires an urgent and focused turnaround strategy that must be implemented by 1 April 2020. To date, the previous board and management have not focused on revenue-generating initiatives that would take the post office into its new vision and beyond the separation with Post Bank.”
According to City Press, Kekana added: “The SASSA project won by the post office has proved to be a loss-making initiative that the post office continues to subsidise at its own risk of financial viability, going concern and reckless trading.”
In the statement, SAPO and SASSA say the R60 million cited in the report actually reflects a SAPO cost figure that is associated with the grants payment contract and not a loss. On the contrary, the SASSA contract presents a necessary revenue stream for SAPO, they note.
“The point of discussion in that document which has obviously been reported out of context was in relation to the manner in which SAPO is able to structure a number of its cost fundamentals to better the financials of the SASSA payments contract.
“SAPO’s current business turnaround efforts, and pursuit for additional revenue streams, have no bearing on its grants payments relationship with SASSA, which is a long-term contract.”
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