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With Bathabile Dlamini gone, banks can pay social grants

Banks launch an aggressive campaign to convince social grant beneficiaries to open low-cost bank accounts.

The relationship between large banks and the South African Social Services Agency (Sassa) has shifted to a positive note since Susan Shabangu was appointed as Minister of Social Development in February, replacing Bathabile Dlamini.

This is the view of Banking Association of SA (Basa) MD Cas Coovadia, as SA’s largest banks including FNB, Barclays Africa, Standard Bank and Nedbank are in the throes of devising a policy to help Sassa administer the payment of social grants.

“Our experience has been positive since Dlamini has been taken out of the department. And our relationship with Sassa has improved,” Coovadia told Moneyweb.

Dlamini is widely viewed as an incompetent and recalcitrant figure, who frustrated any efforts by banks to bid for Sassa contracts and ultimately become paymasters.

Sassa insiders said they were ordered by Dlamini to find dirt on commercial banks in order to disqualify them from being part of SA’s social grant payments system – paving the way for the contract of social grants distributor Cash Paymaster Services (CPS) to be extended. 

Read: Dlamini ordered former Sassa boss to ‘find dirt’ on SA banks

With Dlamini now shifted to the Women’s Ministry as part of President Cyril Rampahosa’s cabinet reshuffle in February, Coovadia said commercial banks are now able to revive talks with Sassa about their role in paying social grants.

“We didn’t make much progress until the change in the minister. After the change, things started to move quickly. The barriers have been removed. Sassa is now working with the banks to avail their services.”

Basa has been coordinating discussions between banks and Sassa.

Commercial banks were meant to collaborate with the South African Post Office and Sassa to administer the payment of grants to 10.5 million beneficiaries by availing their ATM infrastructure, payment processing systems and low-cost bank accounts to Sassa.

Essentially, this option would allow social grant beneficiaries to use a bank of their choice to access their money after CPS’s contract expired on March 31 2018 and the increased use of bank accounts would be cost-effective for the fiscus.

Accounts open

By April 1, banks were meant to be formally integrated into the social grants system. However, this initiative has been delayed by an absence of a policy to subsidise banks and no procurement process in place to contract banks.

Exacerbating the delays is that banks and Sassa are at loggerheads about the type of accounts beneficiaries would use to withdraw their grants.

Sassa asked larger banks to create standardised low-cost bank accounts. However, most of the four largest banks were unhappy about this request, saying the accounts would create problems with competition authorities. They also argued that they each have unique products that are appropriate for grant beneficiaries, hence standardised bank accounts wouldn’t work.

Coovadia said even without a policy to subsidise banks or procurement process for their services, banks are still helping grant beneficiaries. He said from April 1, banks opened and serviced 2.8 million low-cost bank accounts that Sassa recipients use to withdraw their social grants at ATMs across the country.

“We believe the number of accounts people use to access their grants will increase as banks will encourage beneficiaries to open low-cost bank accounts. The lack of policy around the subsidy won’t stop banks from continuing to approach customers.”

Civil rights group The Black Sash has already raised concerns about the involvement of banks, saying Sassa needs to ensure bank charges are controlled and the personal data of beneficiaries is protected to restrict the cross-selling of products such as prepaid electricity, airtime and funeral cover to beneficiaries.

“No bank is going to take chances and misuse these accounts for any other purposes,” said Coovadia.

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Dlamini was part and still is part of the Zuma Swamp creatures

All banks have to do is ensure that they use the system already created by CPS to transact. This way, everyone is happy, there is a common system ( ready to use) the banks can tweek this systeto sell other products ( loans, insurance, funeral policies etc) and the customer doesn’t have to learn a new system. So we come full circle and everyone is happy. Shareholders can share the happiness by investing in Net1 already supported by the PIC. Alternatively, Afrocentric will be the share to watch…in my opinion. The outcome is going to be interesting – one thing about South African economics…it’s not boring!

Dlamini should face the courts. She did do a lot of damage to SA’s image which resulted in the weakening of the rand, etc. Subsequently her incompetence impoverished all South Africans, but the impact would have hit the poor the hardest. Therefore good case to prosecute her and sending a strong message t oall our dear politicians.

I am sure the banks can each make a special bid for a cheap bank account, I remember while being a student I think my monthly bank fees where something like R21 PM? and that was just a few years ago and I could do as many ATM withdraws (at a FNB ATM of course) as I wanted for free and I even vaguely remember having debit orders on the account as well at no cost to me, as well as free electronic deposits

I am sure the banks can give a similar product today at a nice group buy price for SASSA at say R10 per account?
VS the I R17 they are paying CPS now.

Dlamini may be gone from SASSA but her special brand of incompetence and arrogance will not be forgotten in a hurry. Women in this country have never been insulted as much as having Dlamini as Minster of Women. With the country in desperate need of skilled and competent people in senior positions it is shocking that Dlamini is still around. Either we refuse to learn or are incapable of learning.

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