SA BANKING SYSTEM WITH SAPO TICKS ALL THE BOXES FOR SOCIAL GRANT DISTRIBUTION
Publication Date: 13/02/2018
The distribution of social grants to the most vulnerable in South Africa continues to be at risk of disruption because of the slow progress in implementing the Constitutional Court ruling that a new payment system be put in place by 1 April 2018. This is not necessary.
In July last year, on the instruction of its board, The Banking Association South Africa (BASA), indicated to the Department of Social Development (DSD) and the South African Social Security Agency (SASSA) that the country’s banking infrastructure is available to assist with the payment of grants.
Subsequently, in numerous meetings over many months – with the department, SASSA, the National Treasury and the Panel of Experts appointed by the Constitutional Court – banks collectively and individually, indicated:
That a significant number of the 6.7 million grant recipients with SASSA cards, also have personal accounts with commercial banks. If SASSA provides banks with the details of all its beneficiaries, banks would be able to identify which recipients already have accounts, into which the agency can immediately pay grants, using existing bank infrastructure. BankservAfrica is ready to act as a central data clearing house. BASA is ready to facilitate this process with its members and embark on a joint awareness exercise to inform beneficiaries. To date, this sharing of information has not happened, despite the Information Regulator giving assurance that such an exercise falls within the ambit of the Information Act and can be conducted securely.
That they are keenly aware of SASSA concerns that beneficiaries and their accounts should not be abused to cross-sell credit, insurance or other products; or be subjected to unauthorised debit orders; and be secure. BASA pointed out that banks can address this concern through their existing infrastructure and there are already strict market conduct regulations in place. Banks also undertook to work with SASSA to provide beneficiaries with information about consumer protection measures that are already in place.
That they are keenly aware that grants must be delivered to beneficiaries at the lowest possible cost. BASA pointed out that from the start banks participating in efforts to assist with the payment of grants were doing it in the national interest, and without any intention to profit. Banks only requested that existing subsidies, paid by SASSA towards the maintenance of beneficiary accounts, continue to be paid towards accounts or products chosen by recipients. SASSA has proposed the creation of a single, standardised account, for all banks, into which grants will be paid. The subsidy would only be available to this account, which will not be ready for the foreseeable future.
Individual banks have continued to engage with SASSA about the cost and specifications of their products that are appropriate for social grants and which can be made available to beneficiaries in a short time.
That because of cost and competition regulations, banks are not able to meet SASSA’s request for a single, standardised account, with the specifications set out by the agency, in time to meet the Constitutional Court deadline for a new grant payment contract. The “Mzansi” experience of a standardized account took three years from conception until the account was ready for market. Banks will be able to meet this requirement, if it is to the benefit of grant recipients, in the medium term.
However, for now, there are a number of digital and other products, like electronic wallets, that are low cost and more appropriate than formal bank accounts, for the payment of grants. These financial services are available now and in many respects provide better functionality and security than existing SASSA methods of payment. These services can also be adjusted to better meet some of SASSA’s requirements.
The Panel of Experts, appointed by the Constitutional Court to report on the work of SASSA, has recommended in its latest report, that the agency:
Pursue the creation of a standardised account with the banking industry as a second phase project. Banks have agreed to this.
Specify to the banking industry product requirements (like the ability to check balances and received funds securely) rather than product specifications (a bank account).
Engage individually with each registered commercial bank on products that can be used to meet SASSA’s requirements. BASA has facilitated meetings between SASSA and those commercial banks willing and able to participate in this project. Not all BASA’s members have appropriate products or are able to assist with the payment of grants, for example: the local offices of international banks. Eight BASA members – ABSA, Standard Bank, Nedbank, FNB, Capitec, Grindrod, Sasfin and Finbond – which service the overwhelming majority of South Africans, have met with SASSA.
Share the information of all beneficiaries with banks to ensure a comprehensive analysis of existing account holders; via BankservAfrica to maintain confidentiality across the system.
As indicated, SASSA has still not provided the information.
There is no doubt that the South African banking system, with the South Africa Post Office (SAPO), has the capacity and technology to meet – and surpass – most of the requirements of SASSA, its beneficiaries and the Constitutional Court. There is no need to continue with the current inefficient and costly mechanisms.
However, this requires that SASSA, the department and all relevant stakeholders be willing, enthusiastic and efficient partners in a national effort to act in the interests of the most vulnerable South Africans.
We urge SASSA to accept the bona fides of banks, as we accept theirs. The bottom line is that existing banking infrastructure and products can cost-effectively, securely and without abuse deliver social grants from 1 April 2018. We are ready to work with SAPO to deliver this service.
SASSA, as the client with the administrative responsibility to deliver social grants, must take the lead and contract banks and SAPO to deliver social grants to the most vulnerable in our society, efficiently and within the deadline set by the Constitutional Court.
South African banks have demonstrated, by acting with earnestness and transparency, their willingness to put self-interest aside, in the service of vulnerable South Africans. We urge all stakeholders to do the same.