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Social Grant Payment Costs Drop by R143-Million – Fact or Fiction?


Kgomoco Diseko is the Sassa National Spokesperson and writes in his personal capacity.

The more Sassa pays beneficiaries through bank transfers, the more the cost of social grant payments will be reduced by cutting out middleman agencies.

I woke up one morning asking myself the what if question. What if the state eliminated all social ills in the country – would we still need social security? What if the economy grew to a point where social grant beneficiaries were halved? What if the South African Social Security Agency (Sassa) successfully awarded the social grants tender to a successor of Cash Paymaster Services (CPS).

Without a deep analysis of the situation I concluded that the realisation of the first two “what ifs” could turn South Africa into the elusive country that South Africans have always dreamed of. Before you throw the antithesis at me, let me admit that, of course , I didn’t find time to inspect the co-relation between economic growth and job creation – it’s just a subject of another discussion. So at this stage don’t ask me the detail of how economic growth can create jobs, thereby reducing social grant beneficiaries by half.

The replacement of CPS by another company on the other hand could have come with a whole new set of problems for government’s fight against poverty. It would make the delivery of social security come at an even bigger price.

It would also delay the realisation of the government’s intention to insource the payment of social grants, which is the main reason Sassa was set up. Insourcing this service would result in huge savings for the government and the money could be redirected to other government priorities.

The pertinent question of how far Sassa has moved towards realising self-reliance will be attended to later.

It’s common cause that Sassa has been the target of “lawfare” in the past 10 or so years. The appointment of CPS in 2012 saw an intensification of this lawfare that has characterised Sassa’s history. Allpay, the losing bidder in the 2012 tender won by CPS filed papers in the North Gauteng High Court challenging the awarding of the tender to CPS. Recently G4S raised questions about the 2018 cash payment tender.

This lawfare I alluded to is usually attributed to the huge value of the Sassa contract. By the way, in December 2018 Sassa paid CPS service fees for about R10.7-million recipients at a cost of R16.44 per transaction. The total cost in service fees just for December 2017 was R176-million.

Now listen to this – in May 2018 only a service fee of R33-million was paid at a rate of R14.42 per transaction. What this shows is that the cost of paying social grants has been reduced by R143-million a month if you compare December 2017 and May 2018.

This is a consequence of Sassa starting to pay a huge chunk of grants through bank transfers without the help of a service provider. It goes without saying that more cost reductions will be realised each time a beneficiary switches to the new Sassa card.

Beneficiaries simply have to visit a service point with their ID and collect their new Sassa cards. Alternatively they can arrange for their grants to be paid directly into their bank accounts. The heeding of this call will ensure better and more services are provided by the government.

Part of the CPS responsibility has been largely taken over by the South African Post Office (Sapo), which is a state agency. Yes, “e fitlhile”, the new Sassa card is here – courtesy of Sapo.

The card is magic and comes with a range of benefits for the beneficiary, including that illegal deductions can’t go through it. The success of this government-to-government collaboration will have a ripple effect on other areas in government and the economy. I can safely predict that such a success will change a number of policies to the benefit of the poor.

CPS only pays about 1.9 million cash beneficiaries at this stage and that’s only up to the end of September 2018 when its contract ends. What always eludes the headlines is the fact that Sassa has insourced the function of paying beneficiaries who receive their grants directly and conveniently through their personal bank accounts.

Sassa will decommission the old card after September 2018 and its call to action is for beneficiaries to start acquiring the new Sassa card. In fact, Sassa will no longer deposit money into the old Sassa payment cards after September 2018.

Clearly huge strides have been made to ensure that the government pays social grants without the use of a contractor, and it’s amazing that this turn around has been achieved in such a short period.

It seemed like such a tough ask in the past but I can tell you that by the end of September, government will pay all social grants in-house without contracting a third party through a tender process and we’ll see the back of the lawfare I alluded to.

Blame it on the infectious spirit of our new dawn and the vision of Social Development Minister Susan Shabangu if you like. She is resolute that the Constitutional Court will soon be excused from the Sassa responsibility and I can add that it will henceforth do strictly what it does best.

I want to be there when the state fills the void created by market failure and sustains the needy through a self-sufficient comprehensive social security system! DM

Kgomoco Diseko is the Sassa National Spokesperson and writes in his personal capacity.


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