The success or otherwise of President Cyril Ramaphosa’s R500 billion stimulus package will largely be determined by five key role players – the banks, grocery retailers, the South African Revenue Service (Sars), the Unemployment Insurance Fund (UIF) and the South African Social Security Agency (Sassa).
The banks are not only on the frontline for giving effect to the R200 billion loan guarantee, they are also relied upon for payment of around 60% of monthly social grants, a system that is about to be significantly ramped up. Retailers account for a further 30%-plus of grant payments.
That’s mainly good news – the package is well designed to get support to where it is needed, with as little involvement of political ‘go-betweens’ as possible.
But there is inevitably a bit of bad news, and it relates mainly to the capacity of institutions such as Sars, UIF and Sassa to deal with crisis conditions that could never have been anticipated.
One political analyst has suggested the president may have felt these capacity problems presented considerably less threat than the prospect of layers of politicians taking a slice off food and other relief packages.
While Sars and the UIF have already been put under the spotlight, the first big test for Sassa will come in just under two weeks’ time when it is due to roll out the May social grant payments. For the first time ever, distribution of the grants will be split – with older and disabled persons being paid from the 4th, and all others paid from the 6th.
Sassa’s plan to split the payments in April failed, as there had not been enough time to adjust the electronic payment instructions to pay points to ensure that only older and disabled persons could receive their grants on March 30. As a result, the child support beneficiaries who descended upon pay points as early as March 30 were able to crowd out the more frail recipients.
“In response to this unpleasant experience, Sassa started consulting role players such as National Treasury, South African Post Office, the banking association, retailers and the consumer goods council among others,” Sassa said in a media statement in mid-April.
It acknowledged that the aged and people with disabilities need to be protected, and that the best way to do this is to stagger the payments.
“To effect this Sassa will make use of two payment files: the first one will cover the aged and the disabled while the second payment file will cover all other grant types.” This means that anyone attempting to collect child support grants on May 4 will be unsuccessful and will have to return on the 6th.
The good news for the 12 million recipients (who collect grants on behalf of 18 million beneficiaries) is that in May they will all be receiving an additional coronavirus grant.
Child support grant beneficiaries will get an extra R300 in May, and from June to October this will be increased to R500 a month.
All other grant beneficiaries will get an extra R250 a month for the next six months.
This means a substantial chunk of Ramaphosa’s rescue package will end up in the hands of the most vulnerable within just two weeks of his announcement.
Mark Barnes, former CEO of the SA Post Office, says he has little doubt Sassa will be able to cope with the additional payments. “The system can easily accommodate increasing the rand payments,” says Barnes, who worked with National Treasury and Sassa to create a closed system after Net1 subsidiary Cash Paymaster Services was forced to give up its lapsed distribution contract.
An additional benefit is that the closed system makes it easier for Treasury to track all the payments, says Barnes.
What is certain to be far less easy is accommodating an entirely new category of social grant.
Ramaphosa’s stimulus package includes provision for a special Social Relief of Distress grant of R350 a month – essential a basic income grant.
It is to be made available for the next six months for those unemployed and not receiving other forms of grants or UIF payments. Barnes would not comment on what challenges this might present to Sassa.
The agency did not respond to a request for comment, but a Twitter message from an alleged Sassa official urged hopeful recipients not to apply for the grant yet. “Allow us to please finalise and test our systems for this new grant,” said the message. “We’ll announce the method of application and a clear criteria very soon.”
Easy access is a must
Lynette Maart, national director of Black Sash, which has monitored Sassa’s social grant distribution system for several years, believes the agency could roll something out for the new social grant category in six to eight weeks.
In a media statement, Maart called on government to ensure the new grant application process would not be an administrative burden for potential beneficiaries.
“The required documentation must be limited to an identity number, the required documents for refugees and permanent residents and contact details and/or bank account details.” She said Sassa should use government’s existing databases including those at the Department of Home Affairs, the UIF, Sars and the National Student Financial Aid Scheme (NSFAS) rather than place an unnecessary burden on applicants.
Maart also called on all the banks to permanently waive all banking fees for all social grant beneficiaries so they can benefit from the full cash value of their social grants.