Post Office to pay out grants
The Supreme Court of Appeal will save government almost R2?billion per year by ruling that the Post Office, and not a private company, will pay out social grants in future.
The court on Friday upheld an appeal by the South African Social Security Agency (Sassa), which administers state grants and pensions, and the Post Office, against a judgment by the Johannesburg High Court.
The high court ruled in favour of Cash Paymaster Services, the company that has been paying social grants since 2006, that the agency had to go on tender instead of appointing the Post Office.
But this was overturned by the Supreme Court, which ruled that it was in the interest of the poor for the Post Office to administer grant payments.
The judgment has been welcomed by the advocacy group the Black Sash, which said that reduced administration costs meant there would be more money available to pay beneficiaries.
“We are encouraged by the court’s decision. We would like to see the Post Office becoming an efficient vehicle for the payment of grants to poor people,” said Black Sash’s Ratula Beukman.
Since April 2006, Sassa has been using Cash Paymaster Services to administer pensions and grants to 3.6 million beneficiaries in five provinces.
In July 2009, Sassa signed a “letter of agreement” with the Post Office in terms of which they would help beneficiaries open Postbank accounts and pay their grants into them.
The Post Office also agreed to provide beneficiaries with additional services including a free mini-statement, an Mzansi bank card and two free ATM withdrawals each month.
Cash Paymaster, however, went to court to stop the deal, arguing that it was illegal for Sassa to sign an agreement with the Post Office without a competitive process.
The Post Office system, according to Judge Zukisa Tshiqi’s judgment handed down on behalf of a full bench, was much cheaper.
Sassa contributed more than R900 000 to the Post Office’s startup costs, R13.68 for each new account and a monthly fee of R14.98 per beneficiary.
Describing the financial benefit to Sassa of the shift as “substantial”, Tshiqi said Cash Paymaster and other contractors charged Sassa R32.11 per transaction, more than double the Post Office fee.
The Cash Paymaster system, she said, costs R3.6 billion per year for nine million beneficiaries, “more than double” the Post Office fee.
Tshiqi added that she was “unfortunately left with a lingering impression” that Cash Paymaster challenged the deal to “perpetuate the expensive cash payment system” and not to compete with the Post Office.