Expert panel red-flags Post Office’s bid to pay grants because of high cost
The proposal by the South African Post Office (SAPO) to pay social grant recipients would cost more than the amount charged by the current provider‚ Cash Paymaster Services (CPS).
This was because the South African Social Security Agency (Sassa) had not opened the tender for competitive bids.
This is the view of the panel of experts and the Auditor General‚ who were appointed by the Constitutional Court in March to investigate the grants payment debacle.
The panel made this observation in its report to the court this week as an agreement between Sassa and SAPO for the payment of grants is expected to be signed soon.
Jeff Radebe‚ the Minister in the Presidency and chairman of the interministerial committee (IMC) for Comprehensive Social Security‚ told Parliament on Tuesday that Sassa and SAPO had signed an implementation protocol.
Radebe said the protocol would allow the Post Office to provide services to Sassa‚ subject to “cost effectiveness”.
The panel said future service providers for the payment of social grants should be able to execute these services at a lower cost than that charged by CPS.
CPS‚ which currently provides the service until April next year‚ is presently charging R14.42 plus vat for each transaction.
The panel said‚ contrary to its expectations‚ the Post Office proposed a markedly higher price of R21.50 plus VAT‚ a 49% increase from current levels.
It said most of SAPO’s projected costs related to the acquisition of new Postbank ATMs‚ cash point infrastructure and point of sale devices.
In addition‚ the Post Office is proposing a 6% per annum increase from this base price for years two to five.
The panel said by the fifth year‚ the proposed price would be R28.77 plus VAT‚ a 100% increase from current levels.
SAPO claimed it offered better services than those offered by CPS‚ including free cash withdrawals.
“Nonetheless‚ the Panel believes these proposed price increases are opportunistic and made only possible by the lack of competing bids‚” the panel said in its submission to court.
The panel said future service providers could charge less because the CPS price was based on a much higher percentage of beneficiaries receiving grants at cash pay points rather than electronically through the banking system.
In its submissions‚ the panel said 80% of 10.6 million grant recipients could be paid by the banks.
Last month‚ the court directed Sassa to file a report with the court on December 8 on its plan to effect the uninterrupted payment of grants.
The Black Sash has also raised questions about how Sassa will solve the grant payment crisis.
The Black Sash said the plan presented by Radebe lacked significant details.
The Black Sash said the IMC report identified implementation stages without clear milestones and time frames including the handover from the current service provider to SAPO or new service providers.