Dispensing social grants gives Post Office R1.9bn boost
The post office, which has been struggling for several years, is under pressure to generate revenue.
It has faced tough competition in the industry. In its audited results presented to Parliament, Sapo said it would make make money from the grants.
This followed the Constitutional Court’s decision last year that Cash Paymaster Services must stop paying social grants because their contract was invalid.
“The Post Office signed a contract with Sassa for the payment of social grants to approximately 11 million beneficiaries. Based on the current forecasts, gross revenue expected from this project is R1.9bn per annum,” said Sapo in the report.
It said despite its depressed financial position, it was able to get the cash injection from the state during the last financial year.
“During the 2018/19 mid-term budget adjustment, the Post Office was further allocated R2.9bn to fund future capital expenditure with more than R1.8bn liquid assets at year end,” the report said.
Sapo said it planned to cut costs by reducing the number of branches. It said this would cut down on the amount it paid for rent.
Acting managing director of the Postbank Hannes van der Merwe stated in the report that they had been delivering on the Sassa contract.
“Postbank expended a great deal of effort in the past year in delivering on the Sassa contract. The initial contract concluded with Sassa on December 8, 2017, required the Post Office and Postbank to start migrating Sassa beneficiaries from the old Sassa card to the new Postbank card by March 31, 2019 (less than four months from the date of the signing of the contract),” said Van Der Merwe.
“This deadline was extremely tight and despite the many challenges experienced, Postbank accomplished a number of key achievements with respect to the implementation of the Sassa project,” he said.
Van der Merwe said they have been able to pay millions of beneficiaries since taking over the payment of social grants.
The National Treasury disburses more than R10bn a month for social grants.
Sapo also said the South African Reserve Bank had recently granted Postbank its licence to operate as a bank.
They had applied for the licence in 2013.
A new board for Postbank had been appointed.