SASSA's social grant contingency plan being presented to Cabinet

Wednesday, March 14, 2018

The South African Social Security Agency (SASSA) has a contingency plan to ensure that social grants are paid without any hiccups on 1 April 2018 in an event that the Constitutional Court does not extend the Cash Paymaster Services (CPS) contract by six months.  

The Constitutional Court has asked SASSA to clarify why its legal counsel said during a court hearing that the social grant agency did not have a contingency plan to manage the phase-in phase-out process for CPS to hand over the payment of social grants -- while at a media briefing, the SASSA Acting CEO reportedly said the opposite.

Dianne Dunkerly, the executive manager for grants administration, said the plan was being presented to the Inter-Ministerial Committee (IMC) on Comprehensive Social Security and to a Cabinet meeting that was underway in Cape Town on Wednesday. 

“SASSA has a contingency plan which covers the full spectrum of payments and in fact, that is what we have been implementing by taking responsibility progressively for the different aspects for the payment function,” Dunkerly said.

In her presentation to the Portfolio Committee on Social Development on Wednesday, Dunkerly said the contingency plan for cash payments was premised on a few aspects. This includes:

-       Direct deposits into the current SASSA cards;

-       The identification of post offices that can provide over the counter payments that are within a five kilometre radius of pay points;

-       Identification of banking infrastructure that can be used by cash beneficiaries;

-       Request by banks to provide mobile infrastructure in under- or un-serviced areas; and

-       The provision of transport to bus residual numbers of beneficiaries to the nearest infrastructure to access cash.

Dunkerly said the contingency plan was strengthened following the delays with the cash tender.

“All of that has been part of this broad contingency, where we did not have detail and we were still working on things now and it is being discussed currently at IMC and Cabinet so we are not able to give too much information until we have been consulted there…

“We have ideas and these were some of the ideas that were presented by the [Acting] CEO at the press briefing. The initial broad contingency plan was to confirm that we would follow an open tender process for the tender payment, which we have done.

“However, there was a delay so we know that the cash service provider is only going to be ready to start paying by 1 July [2018]. We are still sitting with a space of a few months so we needed to say that is the reality we are facing now (sic). 

“If the court does not grant the phase-in phase-out period, how are we going to manage that? And that is work that is being presented to the IMC and it is being discussed by Cabinet this morning and there is lots of work being done on that.” 

SASSA successfully effects direct payments to beneficiaries 

Meanwhile, Dunkerly said as part of the insourcing of social grant payments, SASSA initiated a process of effecting direct transfers, which are direct deposits that are paid into personal bank accounts, during the January payment cycle as a test. 

She said the testing has gone well for the January, February and March payment cycles. 

“We also did a pilot project with the February payment cycle to pay pay directly into a 100 000 SASSA card accounts. They come out of the 5.7 million who transact in the national payment system but we wanted to make sure that we would be able to do the direct deposits and that pilot has gone successfully.  

“We were able to deposit the money into the accounts and people were able to access their money so it opens the door for us to go ahead and do the direct deposits for the 5.7 million beneficiaries,” she said. 

She said the 5.7 million beneficiaries are those that would eventually be migrated to the new SASSA/SAPO card in terms of the agreement that has been signed in December. 

Dunkerly said, however, that beneficiaries still had a choice to choose to have their money paid into their personal bank accounts. 

“One of the concerns that we did obviously raise to the committee is that…our intention is to deposit directly into the accounts of 5.7 million beneficiaries from March but CPS has raised, and I understand that although these are Grindrod bank accounts, the technology that underpins them is provided by Net1, which is a holding company of CPS.

“Now CPS has alerted us to the fact that if we were to do all 5.7 million in one month, that we may be introducing a systemic risk into the transfers. So we are engaging with them as well as with the Reserve Bank to see how else this can be addressed so that it does not impact on any one of the beneficiaries.” 

SASSA ensures VBS curatorship matter won’t affect beneficiaries 

On Sunday, the South African Reserve Bank announced that VBS Mutual Bank would be placed under curatorship after the bank experienced liquidity challenges over the past 18 months. 

Dunkerly said SASSA was in consultation with the banking industry to ensure its beneficiaries are not affected by the development. 

“With the media reports about VBS Mutual Bank - where we have 155 beneficiaries who receive their money - being placed under curatorship, we actually did approach the Banking Association [of South Africa] just to make sure that that was not going to pose a threat to the beneficiaries who have accounts there. We have been assured that they are watching the situation closely and that there is no threat whatsoever to our beneficiaries.” –

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