The high-level panel headed by Auditor-General Kimi Makwetu overseeing the distribution of social grants has warned that the new payment system expected in October may not function effectively, efficiently and economically.
The SA Social Security Agency (Sassa) has also admitted that it will not succeed as planned in swopping all beneficiaries by the end of September, when Cash Paymaster Services’ (CPS) unlawful contract, which was extended by six month, ends.
And the panel is concerned that there is a slim possibility that CPS’s services may still be required after September, despite assurances from Sassa and the SA Post Office(Sapo).
The panel warned that the Sapo take-over of the cash payment of social grants would create an unnecessary burden on the public fiscus.
In the first year, the transition to social grant payments by Sapo is expected to cost about R3.2 billion, which will fund branch infrastructure upgrades, dignity services, security and cash-in-transit services.
No details are available on the required investment in subsequent years.
In its latest monthly report to the Constitutional Court, which appointed the panel last year, the panel asks: “Can the panel give the Concourt an assurance that the new payment system will function effectively, efficiently and economically, thereby respectfully recommending that the court relinquish its supervisory jurisdiction over the implementation of the court order, and finalise the matter?”
The panel answers the question: “Regrettably, at this point in time, no.”
According to the report, which is dated August 15, the panel noted that although there is a possibility that the new payment system may do what is required, too many loose ends still need to be tied up before it is comfortable to pronounce on the probability of the new system succeeding.
The panel, which includes the ANC’s Mavuso Msimang and ex-Reserve Bank governor Gill Marcus, said Sassa had a lot to do in the remaining six weeks before the transition to the new payment system.
The panel said it was concerned that no detailed study had been undertaken by the inter-ministerial committee set up to deal with the social grants crisis, Sassa and Social Development Minister Susan Shabangu to determine what the total cost of transferring full responsibility for cash payment services to Sapo.
It accused the technical committee set up by Shabangu to oversee payments of social grants and the governance of Sassa of making blanket statements and ignoring the significant investments needed at Sapo branches.
The committee had claimed that “payment migration from CPS to the Post Office will have obvious cost savings, reducing inefficiencies and expensive transfer costs”.
The panel is also unhappy that the committee has not conducted an assessment of whether the required funding will represent the most effective use of public funds.
“The panel believes that the total transfer of responsibility for cash payments to Sapo will create an unnecessary burden on the fiscus, particularly as there are likely to be more cost-effective cash payment solutions from potential service providers making use of existing rolled-out infrastructure,” reads the report.
It has recommended that Shabangu and Sassa urgently provide a comprehensive cost analysis and a three-year budget that reflect expenditure to date, extraordinary expenditure, capital costs and future expenditure.
The panel has recommended that Sapo and Sassa run tests on the system before next month’s payment system as there will be a large increase in the number of beneficiaries paid through the PostBank. It has also told Sapo to stop requiring social grants beneficiaries to have a minimum of R10 left in their bank accounts despite having claimed that they can withdraw the full amounts.
“This will need to be resolved soon to ensure that beneficiaries are not prejudiced and can withdraw all their social grants when visiting a Sapo branch,” said the panel.
Other key issues identified during this month’s payment cycle were the late arrival of cash at post offices and other pay points and beneficiaries arriving at decommissioned pay points.