Molefe Seeletsa

By Molefe Seeletsa

Digital Journalist


Penalties, glitches: Post Office failed to deliver, says Sassa on social grant payments

Postbank has since taken over the responsibility to administer social grants.


Parliament on Wednesday heard how the South African Post Office (Sapo) failed to pay social grants on time before its contract ended.

The South African Social Security Agency (Sassa) and Postbank appeared before Parliament’s Portfolio Committee on Social Development to provide a status report on the payment of social grants.

Many beneficiaries have been left with serious difficulties in accessing grants due to technical glitches experienced by Postbank, a state-owned financial institution under the Post Office.

Postbank took over the administration of social grant payments from Sapo in October 2022, amid the Post Office’s financial challenges which has led to the closure of some of its branches.

Sapo suffered a R2.3 billion loss in 2020/2021 and is now pushing ahead with plans to retrench 6 000 workers, according to the Communications Worker Union (CWU).

The Post Office was appointed to manage the payment of social grants following the termination of Sassa’s with Cash Paymaster Services (CPS) in 2018.

Explaining its decision to cede the social grants contract to Postbank, Sassa told the committee that Sapo was not able to deliver on the service legal agreement (SLA).

“Just in this financial year, every month we were penalising them and it has pretty much being like that since the beginning. Sapo, as we know, is in a very difficult situation and we just felt it would be a bit risky having one entity that finds itself in the situation and not be able to rescue itself,” Brenton Van Vrede, who is an Executive Manager of Grants Administration at Sassa, said on Wednesday.

ALSO READ: ‘Bankrupt’ SA Post Office’s drive to cut costs

Van Vrede delivered a presentation to the committee which provided detailed information on Sassa’s contract with Sapo and Postbank.

According to the SLA, Sapo had to provide basic facilities such as seating and adequate shelter at all of its branches and cash pay points (CPP).

The contract stated that Sapo had ensure that downtime of its equipment like cash dispensing machines must not exceed more than an hour.

It also had to ensure there were alternative measures in place in the event of load shedding or power failure.

Watch the proceedings below:

A 5% penalty fee was included in the SLA for each time Sapo did not meet its requirements.

Van Vrede indicated that Sapo was penalised by Sassa every month in the 2022/2023 financial year, which began in April, until the contract between the two parties ended in September.

“The main reason for these penalties being activated was largely around dignity services. Many of the pay points still don’t have adequate equipment. In many instances as well, they did not adhere to time payment schedule,” he said.

Approximately 25 million people in South Africa receive grant benefits, most of which got their money straight to their bank account.

Most of these beneficiaries preferred to use ATMs to get their money alongside retailers and Sapo branches.

Postbank challenges

Neo Moja, who heads Postbank’s Project Management Office, also delivered a presentation to the committee outlining the financial institution’s challenges of paying out grants in the past few months.

Since taking over the contract, Moja said, Postbank has been experiencing connectivity or network challenges during payment runs leading to failed transactions at ATMs.

He pointed out that Postbank’s problems were compounded by Sapo’s decision to discontinue the use of its integrated grant payment system (IGPS) biometric pay system across multiple branches.

The system was reinstated in November and was migrated to a secure cloud environment.

READ MORE: Sassa owes millions in outstanding municipal bills

Moja also said the financial institution experiences a cyber-attack on its IT network early in December, which negatively impacted ATM payments.

“Postbank also experienced failure of reversals that impacted a number of customers and caused further customer unhappiness,” he said.

Most of these challenges have since been resolved, according to Moja.

The existing SLA and master service agreement (MSA) signed between Sapo and Sassa in 2018 applies to the Postbank as well.

Non-profit organisation (NPO) Black Sash previously raised concern over the cession of Sapo’s contract to Postbank, saying grant payment challenges still persisted despite Sassa having had three months to plan the migration.

SRD grant

Meanwhile, the committee was given an update on the payment of the Covid-19 social relief of distress (SRD) grant that was introduced in April 2020 during lockdown.

Social Development Minister, Lindiwe Zulu, revealed that Sassa has received over 13,5 million applications for the R350 grant as of the end of January.

Most of the SRD grant applicants are young people.

Zulu said between 7.4 million and 7.8 million applications were being approved every month.

“As far as payments is concerned, about 95% of approved applicants were paid for the early months. Subsequently, this coverage dropped to about 90% in August 2022. We experienced a further drop to 85% in the more recent months,” she said.

Van Vrede told the committee that Sassa has paid out 84% of the approved applications for January, while payments for February beneficiaries commenced on Monday.

He said Sassa was of the view that the R350 grant was not enough.

“We do acknowledge that the value of the of this grant is very little, and government should think of increasing the grant. We furthermore acknowledge that we could have communicated better with our clients in terms of the delays of grant payments,” Van Vrede said.

President Cyril Ramaphosa announced the extension of the grant for another year to counter the rising cost of living during his state of the nation address (Sona).

On Tuesday, Economic Freedom Fighters (EFF) leader Julius Malema called for the grant to be increased, while Black Sash has urged government to make it permanent as a basic income grant (BIG).

NOW READ: SRD grant extended but what happened to basic income grant (BIG)?