Welfare payments secure despite Post Office liquidation

Welfare payments will be secure despite the provisional liquidation of the South African Post Office, where many beneficiaries accessed their monthly government stipends.

Postbank, which was spun out of the embattled state-owned Post Office in 2019, will be able to continue disbursing funds, Bongani Diako, spokesman for the lender, said by phone on Wednesday.

Instead of going to the nearest Post Office, beneficiaries’ social grants can be paid at any outlet, such as retailers and commercial banks, linked to the National Payment System, according to Diako.

About 18 million people receive at least one welfare payment a month in South Africa.

If the temporary Social Relief of Distress grant, which was first introduced to cushion the vulnerable during the coronavirus pandemic, is included, about half of the country’s population is on some sort of government payout program.

The Postbank will continue to monitor developments at the Post Office “to inform our strategy and evaluate any possible risks of services access,” Diako said.

Looming Elections

South Africa expects to spend R254 billion, or 3.6% of the gross domestic product, on social support, mostly child support and pensions, in the fiscal year through March.

The ruling African National Congress’s welfare initiative is the single biggest program instituted by the post-apartheid government to alleviate poverty.

A sustained payment interruption could undermine the party’s support in national elections next year.

The Post Office was placed under provisional liquidation after a creditor took it to court to recover unpaid rent money.

It has until June 1 to make a case against the provisional order and avert liquidation, its joint provisional liquidators said in a statement on Wednesday. Johannesburg-based Business Day newspaper was the first to report on the Post Office’s provisional liquidation.