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Don’t judge us on CPS standards, pleads Post Office

Paymaster-in-waiting faces litmus test in the next three months – if successful, grant payments will be exclusively in the state’s hands.
A panel of experts appointed by the Constitutional Court is concerned about the cost implications of having the Post Office as the exclusive service provider. Picture: Supplied

Lindiwe Kwele, second-in-charge at the South African Post Office, is astonished at suggestions that the state organ will flounder in taking on the mammoth role of paying all 17 million social grant beneficiaries over the next three months.

As the Post Office’s chief operating officer, Kwele has taken umbrage with observers likening its services to that of current social grant distributor Cash Paymaster Services (CPS), a subsidiary of tech giant Net1 UEPS.

“If you are going to judge our ability to deliver grants based on what CPS did, then I wonder who said the CPS solution is the be all and end all,” Kwele tells Moneyweb. “People expect us to replicate the CPS model of payment because that’s what they are used to. It’s not fair.”

The Post Office is already the social grants distributor, having taken over a large portion of grant payments from CPS in April 2018. The state organ is now primed to administer cash payments to 2.5 million remaining beneficiaries when CPS’s contract with the South African Social Security Agency (Sassa) expires on August 31, 2018.

These are elderly and disabled beneficiaries who don’t own bank accounts but access their grants in a physical cash at CPS vehicles kitted with its biometric technology – cash-in-transit style. If the Post Office successfully becomes the paymaster, it means the role of grant payments would exclusively be in the state’s hands.

Arguably, concerns about the Post Office’s readiness are warranted given how Sassa’s own efforts to phase out CPS’s contract is beset by controversy. The Constitutional Court was forced to extend CPS’s illegally awarded contract twice; former Social Development Minister Bathabile Dlamini left Sassa in ruins, and commercial banks were deliberately excluded from Sassa contracts. These are just a few scandals bedevilling Sassa.

Post Office progress

“We are confident that we will take over grant payments,” says Kwele. “Most people didn’t know that we could pay grants. They are basing their judgement on our ability to deliver mail.”

She says a new service agreement between the Post Office and Sassa was signed on June 19 to reflect the former’s new task of administering cash payments to an additional two million beneficiaries.

Under the agreement, the beneficiaries will be issued with new Post Office/Sassa branded cards, which will replace the currently used Sassa/Grindrod Bank (a partner of Net1) cards. The rebranded ones can be used by beneficiaries to withdraw their grants over the counter at 856 Post Office branches across SA, any of its merchants (such as Shoprite) or agents, and ATMs run by commercial banks.

If beneficiaries are unable to access any of the Post Office branches they can use the 1 070 banking infrastructure (ATMs) or 1 638 merchants in the National Payment System. “We are opting for electronic payments as opposed to paying beneficiaries with physical cash and having armoured vehicles transporting cash,” says Kwele.

Criticism

A panel of experts appointed by the Constitutional Court to monitor Sassa’s progress in phasing out CPS’s contract is fiercely critical of the Post Office. The panel members include, among others, Auditor General Kimi Makwetu and former Reserve Bank governor Gill Marcus.

In its sixth report submitted to the court on June 14, the panel flagged concerns about the Post Office missing key targets, adding that parts of its services might not be ready as early as July 2018.

It’s also concerned about the cost implications of having the Post Office as the exclusive service provider.

“The Post Office might in future hold Sassa hostage – so to speak – by extracting as much revenue as possible from rendering services to Sassa, unless a clause in the [service] agreement requires a regular independent review of the technological options and cost effectiveness of the Post Office service,” the report reads.

It adds that the Post Office will require a R541 million pre-investment from Sassa in year one of paying social grants. The pre-investment might increase substantially as the Post Office is still waiting for its full banking licence from the Reserve Bank, the panel warns. In the interim, the Post Office is piggybacking off Standard Bank’s licence and services.  

Kwele says further pre-investments from Sassa are required as the Post Office agreed to take on more grant beneficiaries than it initially anticipated – thus, its original grant payment system investment of R1 billion wouldn’t suffice. “We have to recover any additional infrastructure costs to accommodate more beneficiaries.”

The panel doubts that the Post Office will meet its targets of replacing Sassa/Grindrod branded cards with Post Office/Sassa cards. Sassa and the Post Office failed to meet their card replacement/swap target of 214 520 for May 2018, as only 85 118 cards were actually replaced during the month (see below).

“We have acknowledged that this is a huge project,” says Kwele. “It took CPS 18 months to do this and we are expected to do this in four months.”

So far in June, the Post Office has already replaced over 500 000 cards. The stakes are high if the Post Office doesn’t meet its targets. The worst-case scenario is that CPS’s contract might be extended again – for the third time.

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Litmus test—How many of you CONSTANTLY get other peoples mail in your box or at home?? They can’t even run a post office and you are going to put them in charge of money.What brainiac came up with this idea?????????

Haha… getting other peoples mail used to happen to me but now I get NO mail.

Could this be in preparation for the grant delivery just stop delivering mail.

You’re getting mail? I mean, even just anyone’s?
Are you supposed to forward or deliver these?

Let us remember the lengthy times the Post Office was on strike. It is still often the case that mail takes forever to reach out overpriced post boxes we pay for to ensure speedy and safe delivery. Anything that resembles a birthday card never reaches its destination in case there is cash in the envelope.

But, the lights are still on at most post offices so there may be some cash around somewhere keeping the GPO going.

Ha!Ha! Alberton main Post office hasn’t had a light on for years. The birds are nesting in light fittings already. The printer that is used for printing vehicle licenses, was stolen in December 2017 and has still not been replaced. Good luck Mark Barnes.

Been waiting for more than 16 months for the investigation into my stolen parcel to yield any results whatsover so yes I have doubts about their ability to execute

I sincerely hope this injection of cash will mean the post office can start turning itself around, because the quality of its service has sunk to truly appalling depths.

If you can’t even deliver a package on time – especially seeing as most regular ‘snail mail’ has gone the way of the dinosaur – what business do you have even calling yourself a post office?

I don’t get why so many are still unbanked. At minimum a plain old post office savings or transmission account must be multiples cheaper and less risky for both sides than distributing cash from vehicles?

Do these people have cel phones? Lots possible on that front also for banking.

In many developing countries, notably in Africa (I’ve been to many), all financial transactions are done by phone. Like M-Pesa in Kenya. Hardly anyone uses bank cards there, just phones. Even when paying for drinks at the local drinking hole on a Friday evening.

I just hope they have separate queues for Social Grants, because as it is one stands in a post office for half an hour to 45 minutes minimum just to renew a vehicle license; collect a package; or send a registered letter. (This is when they have ink for the printer, when the system is online, and all the stars align perfectly, the other times one has to leave without any success.)

South Africans will discover (again) that SOE’s cannot deliver a service as efficiently as free enterprise. Who in their right mind would think that this a solution?

The “poorest of the poor” will now be paid at the behest of SAPWU.

Corruption Watch and Black Sash will have a lot to answer for when the penny drops.

I’m befuddled by the stupidity of the Black Sash. They attack CPS for several years. Now CPS leaves. Now the poor will suffer from SAPO taking over services. Did Black Sash not see this coming? Does the Black Sash hate the poor?

Fair enough.

No need to judge you by CPS standard. But judging by past PO service and queues, disaster awaits.

Disaster awaits – there is NO way the post office will meet the standards set by CPS. This is just another adventure for the tax payer to be robbed when this excercise fails…
At least with a public company controlling the funds, the grants could not be used as a personal bank account by those in charge…like our municipalities!
More theft, fraud and no one gets punished.

“We are confident that we will take over grant payments,” says Kwele. “Most people didn’t know that we could pay grants. They are basing their judgement on our ability to deliver mail.”

Comedic gold right here.

End of comments.

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