Potential Discontinuation of Sassa Grant Payments at Post Offices. If business rescue practitioners succeed in their efforts, the South African Post Office (SAPO) may cease its role in distributing social grants, raising concerns among millions of financially vulnerable recipients who depend on the extensive network of Post Office branches for grant collections.
Social Grants Overview
The South African Social Security Agency (Sassa) extends monthly social grants to around 19 million financially vulnerable individuals, encompassing various permanent grants such as the Older Persons pension grant, Disability grant, War Veterans grant, Care Dependency grant, Foster Child grant, Child Support grant, Child Support grant Top-Up, and Grant-in-aid.
Dependence on Post Office
A significant portion of grant beneficiaries relies on Post Office branches as the primary and sometimes only accessible means to retrieve their financial assistance.
Financial Struggles of SAPO
Facing a critical financial crisis, SAPO was placed under Business Rescue by the High Court in July 2023. The organization has experienced persistent financial challenges, with costs consistently exceeding 200% of revenue since the fiscal year 2022. Employee costs alone constitute 150% of revenue, necessitating urgent and comprehensive restructuring.
Business Rescue Plan
The Joint Business Rescue Practitioners have proposed a multi-faceted Business Rescue Plan aimed at reducing costs, streamlining the workforce, and enhancing leadership and technical expertise. The plan advocates for the retrenchment of approximately 6,000 out of 11,083 SAPO employees and the elimination of non-profitable revenue streams, including Over Counter (‘OTC’) payment services, which encompass SASSA and cash pay points (‘CPP”) payments.
Implications for Social Grant Payments
If the Business Rescue Plan is approved, SAPO will no longer be involved in the distribution of social grants, impacting millions of beneficiaries who rely on its services.
Voting on the Business Rescue Plan
Creditors will play a crucial role in deciding the fate of the Business Rescue Plan. A 75% majority vote in favor of the Plan is required for adoption, and the voting is scheduled for December 7, 2023, in accordance with the Companies Act, 2008.
Alternative Grant Distribution Channels
In the event of SAPO’s withdrawal, permanent grant beneficiaries have the option to receive their grants directly deposited into their bank accounts, providing flexibility in fund access. Sassa grants are also distributed through various retail outlets such as Pick n Pay, Shoprite, Boxer, Usave, and Checkers. Additionally, mobile cash pay points offer an alternative, albeit with limited flexibility, allowing fund collection during specific hours in the grant payment cycle.