Covid-19 poses problems for social grant payments

Payments of social grants at the beginning of April are likely to contravene many of the crowd-related prohibitions introduced by President Cyril Ramaphosa in his coronavirus ‘state of disaster’ speech on Sunday.

Experts say the South African Social Security Agency (Sassa), which is responsible for distributing social grants to around 18 million beneficiaries on behalf of the Department of Social Development, will not be able to put the necessary measures in place to avoid the usual long queues of pensioners collecting their grants at Shoprite, Spar and Pick n Pay stores in early April.

This could lead to widespread disruptions at malls across the country in the first week of April.

However, attempts to deal with the president’s prohibitions might see the introduction of staggered payments – something retailers have been requesting for several years.

Read: Three ticks on the social grants front

Around 4m recipients affected

About a third of the 12 million recipients (who collect grants on behalf of the 18 million beneficiaries) continue to rely on the retailers to pay out their grants each month. This figure has not changed since 2018 when the South African Post Office took over the management role previously played by Net1 subsidiary Cash Paymaster Services (CPS).

Read: Net1 accused of overstating financial losses in Sassa fee negotiation

This means millions of pensioners, who are more vulnerable to Covid-19, risk being turned away by malls and retailers that are now obliged to control crowd sizes.

There are also the pensioners who live in rural areas no longer served by local paypoints. They are forced to make a return trip to a retailer.

These trips are not only expensive but involve additional “domestic travel” that the president has discouraged.

Sassa does have a plan but, judging by the Black Sash’s response, it comes nowhere close to addressing the problem.

Flaws

The plan was announced by Sassa on Thursday morning following a directive from Social Development Minister Lindiwe Zulu, who said protective measures must be enforced to prevent local Covid-19 transmission.

Its obvious flaws are that it deals only with the 5% of recipients who collect their grants from Sassa or a post office, and is largely based on exhorting grant recipients to change their behaviour.

Sassa’s plan, which focuses on grant payment at pay points and post offices, calls on pensioners to “avoid collecting their grants on the first day of payment due to the higher pedestrian [activity] at shopping malls and other outlets”. It says once money has been paid into a beneficiary’s account it will stay there and can be accessed on any day of the month.

Sassa also exhorts beneficiaries to access their grants through banks, which is a costly option for many.

It says it will work closely with the Post Office to ensure that “the number of clients being serviced at a time does not exceed the national set number of 100 people”.

Black Sash national director Lynette Maart points out that only 5% of grant beneficiaries make use of pay points and post offices. “Located outside of the minister’s scope is approximately 95% of the 12 million grant recipients who collect their grants at ATMs [61%] and retailers [34%].”

Cost burden of being turned away

She calls on government to ensure that beneficiaries, who spend a huge amount of their grants on transportation costs and bank charges, do not have to face further costs when turned back from commercial spaces “due to the prohibition of gatherings of more than 100 people”.

The retailers, which allow three free cash disbursements a month, are currently talking to government about the coronavirus-related concerns. They are hopeful the talks will lead to the introduction of a payment system that would be staggered throughout the month.

“They’re talking about staggering the payments based on birth date or ID number,” a Sassa source told Moneyweb. “But the payment file has already been sent out for the April grants, so nothing is going to change in April.”

Security silver lining for retailers?

Despite the benefit of millions of social grant recipients coming into their stores every month to pick up their cash, there have been signs retailers are taking considerable strain.

Security has become a significant issue with armed robberies spiking on payout days.

Shoprite CEO Pieter Engelbrecht previously told the media that since 2012 retailers have been trying to persuade the government to spread the payments throughout the month. The payment process was changed in 2012 to accommodate Net1/CPS when it took over grant distribution.

For the retailers handling huge amounts of cash on site on key days is not only dangerous, it is also an expensive challenge.