MPs demand Postbank explain ‘persistent and unacceptable’ problems with social grant payments

15 Oct 2024

Beneficiaries with gold cards have been struggling to access their grants after migration to the new black cards.

Social Development Minister Sisisi Tolashe has called for an urgent meeting with Postbank and the Reserve Bank to sort out “persistent” issues with grant payments.

Tolashe was addressing Parliament’s Portfolio Committee on Social Development on Friday, 11 October 2024 when MPs expressed serious concerns about beneficiaries struggling to access their social grants through Postbank.

The meeting included officials from the Social Security Agency of South Africa (Sassa) and the National Development Agency.

Postbank recently announced that it would replace the Sassa Gold Card with the new Postbank Black Card, set to expire on 31 December. Postbank assured beneficiaries at the start of the year that their gold cards would meanwhile remain valid. But chair of the portfolio committee, Bridget Masango (DA), said gold card users were struggling to access their grants during the migration from the gold to the new black card.

Immediate action

“Older persons went to collect their grants but could not due to the migration of one card to another. We received several messages from beneficiaries about this. I contacted Sassa’s CEO, who took immediate action, but there are still people who haven’t received their money on the day they were supposed to,” said Masango.

Tolashe acknowledged the ongoing issues.

“The problems you have with Postbank are also the problems we have with them,” she said.

Tolashe said that when they were notified about the issue, the Department of Social Development met with the minister of communications and Postbank, and “thought that the matter was resolved”.

“But with time we realised there were persistent and new issues we were not aware of.”

Tolashe said a meeting was planned with the Reserve Bank “to bring everyone to the table” and sort out the “the problem in its entirety” once and for all.

“The migration system, as we were confidently informed, was not supposed to affect the clients, but they were affected. Although it was on a minimal scale, it’s still too much.

“From one grant, 13 family members benefit. If one grant is not processed, it means 13 people are going to bed hungry,” said Tolashe.

Postbank to answer

Tshilidzi Bethuel Munyai (ANC) called for accountability from Postbank. “The real culprit here is Postbank. The auditor-general’s report indicated that some officials within Postbank are misappropriating funds intended for beneficiaries. We need to request that Postbank appear before this committee to explain the issues with the gold cards.”

Munyai also called for improved communication from Sassa and the Department of Social Development.

“If we don’t have a clear communication strategy, people won’t know what’s happening,” he said.

He added that persistent challenges at Postbank must be resolved to ensure effective grant disbursement.

Alexandra Abrahams (DA) criticised the department for signing a service-level agreement with Postbank.

“Postbank and the South African Post Office’s financial woes didn’t start in 2022 when the service-level agreement was signed. The writing was on the wall before that. Yet the department and Sassa still went ahead and signed it. We cautioned them that they were trying to breathe life into a dead horse,” she said.

Fraud

MPs asked Sassa about its fraud prevention measures. Sassa CEO Busisiwe Memela-Khambula said that applicants often provided incorrect information. To address this, she said Sassa checked bank accounts, similar to the R370 grants process, and was developing systems to integrate with other government departments.

“For us to go and ask for information and then validate it, takes time. If we only rely on the clients, they will come with bank statements from one bank, knowing they have money with another bank,” said Memela-Khambula.

She emphasised the importance of real-time technology for verification to reduce fraud at the entry point. She said Sassa’s investigations could reveal fraudulent claims from applicants, but “then we go to them to collect the money only to find that the person doesn’t have money to pay us back. Then it just increases our debtor’s book,” she said.

Memela-Khambula added that some individuals, facing hardship, may attempt to defraud the system by providing false information to access benefits they didn’t qualify for.

“Once we discover you, that’s when we demand government money back.”

Nearly half the population on grants

According to Memela-Khambula, about 45% of the country’s population received social grants. She said Sassa disbursed about 28 million grants (census 2022 has the population at 60 million) for the 2023/24 financial year. The budget was R251-billion for social assistance.

The majority of the grants were the child support grant (13.2-million), the Social Relief of Distress grant (nine million) and the older persons grant (four million).

The auditor-general previously raised concerns about Sassa’s irregular expenditure, noting a closing balance of R84.2-million.

Sassa’s Chief Financial Officer Tsakeriwa Chauke attributed the bulk of this balance to a R74-million payment made to Cash Paymaster Services for services not rendered. He said the agency was awaiting the outcome of the commission of inquiry’s investigation into the Cash Paymaster Services liquidation process. DM

First published by GroundUp.

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Immediate action

Postbank to answer

Fraud

Nearly half the population on grants