21 November 2017

South Africa: Expert Panel Proposes Alternative 'Direct' Grants Scheme

As if the social grants saga was not complicated enough, an expert panel reporting to the Constitutional Court has proposed a late, alternative scheme to deliver social grants.

The expert panel, set up in June by the South African Social Security Agency and NGO Black Sash by order of the Constitutional Court, recently submitted its second feedback report on the pending Sassa saga.

Among the recommendations in the report, including that the National Treasury probe errant Sassa employees with a view to prosecution, is an alternative suggestion to deliver grants before the April 1 2018 deadline.

It would rely on South Africa's well-developed and regulated electronic payment systems.

Read: Panel asks Treasury to probe Sassa officials

"South Africa has an efficient and secure National Payment System (NPS) with well-developed regulations and inter-operability standards," the report reads.

"Of the approximately 15 million social grant-related transactions per month, about 79% is processed through the NPS".

This meant that two million beneficiaries receive their grants via cash - the more costly of the operations.

The panel suggested that Sassa deposit grants from its bank account directly to beneficiaries' bank accounts at commercial banks.

"About 43% of beneficiaries are believed to already have their own bank accounts at a bank of their choice".

Subsidised bank accounts

Sassa could subsidise the opening of new accounts for beneficiaries who do not have commercial bank accounts.

"The benefit of such a solution is that it would make use of an existing high-quality, properly-regulated NPS infrastructure, with significant cost savings".

Currently, electronic payments are all made through Grindrod Bank, using special Sassa cards, which "closes out competition" and creates a "winner-take-all" scenario for service providers.

Switching the system could be implemented in "a very short space of time", and would only require a license from the Reserve Bank.

"The detailed planning and implementation of this proposal can commence virtually immediately to address the needs of nearly 80% of social grants beneficiaries by April 1 2018, provided all relevant roleplayers co-operate".

Sassa can also make use of new technologies, such as e-wallets and money transfers.

What about cash payments?

As for beneficiaries who use cash payments, the panel suggested extending the invalid Cash Paymaster Services contract for six months as a last resort.

This could be done to ensure a new competitive bidding process can commence to find a cash-only service provider within the six-month time frame.

"The panel recommends that the court instructs Sassa to immediately provide it with any reasons why the alternative... is not feasible... before the April 1 deadline".

Sassa will next meet the Constitutional Court on December 8 to discuss its progress in the social grants scheme matter.

Ensure plan works

On Tuesday, MPs heard that the South African Post Office was finally given first rights to provide core functions and services in a new hybrid social grants scheme system, provided it was cost effective.

A provisional "implementation protocol" has been signed by Cabinet's inter-ministerial committee to ensure the Post Office can provide core banking functions for the scheme.

All that remains is to determine the "cost effectiveness" of the Post Office's capabilities.

IMC chairperson Jeff Radebe assured MPs that the Cabinet was determined to ensure the plan works as there was "no plan B".

Source: News24

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