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The Congress of South African Trade Unions (COSATU) has strongly criticised the South African Social Security Agency (SASSA) for its decision to end its long-standing service agreement with the Postbank. The labour federation warned that the move could expose millions of vulnerable social grant recipients to high banking fees from commercial banks.
SASSA, which manages the country’s social grant system, announced earlier this year that it had terminated its Master Service Agreement (MSA) with Postbank. The agency explained that the contract had outlived its original purpose and was no longer suitable for its operations. But the decision has generated public debate, particularly because of its possible impact on over 27 million South Africans who rely on grants to survive.
COSATU issued a statement warning that the withdrawal of Postbank services could leave poor citizens at the mercy of private banks. According to the union, many beneficiaries may now be forced to pay as much as R10 per R1,000 withdrawal, charges that Postbank had previously not deducted. COSATU’s Parliamentary Coordinator, Mathew Parks, said such deductions would place additional strain on already struggling households.
“When social grant recipients receive so little and the cost of living is continuously rising, they should be protected from fee deductions to fund the profit margins of private banks,” Parks said. He further urged SASSA to hold talks with commercial banks to negotiate a waiver of banking fees for all social grant recipients.
South Africa’s social grants are a lifeline for millions of households, including the elderly, children, and people living with disabilities. The payments have been credited with reducing extreme poverty and supporting consumption in low-income communities. Any disruption or reduction in the value of these grants through fees could therefore have far-reaching social consequences.
Parks also accused the government of undermining its own state-owned financial institution. He said Postbank was specifically created to serve disadvantaged and rural communities who often face exclusion from mainstream banking services. “If the Postbank is to be placed on a sustainable path and to fulfil its legislative mandate, then government, in particular SASSA, needs to provide it the space and support to do so,” he said.
The COSATU official further expressed anger at what he called the exploitation of the poor by commercial banks and their executives. “When 27 million social grant recipients are struggling to make ends meet, then they should be protected from being fleeced of their little funds by banks and their overpaid CEOs,” he added.
Earlier this week, SASSA dismissed reports suggesting that the termination of the Postbank agreement was a strategy to favour commercial banks. The agency insisted that social grant payments would not be interrupted. Minister of Social Development, Sisisi Tolashe, also reassured citizens that the government was committed to ensuring smooth and secure payments of grants despite the change.
The dispute highlights the tension between the need for efficiency in delivering social grants and the importance of protecting vulnerable citizens from additional costs. Analysts say while commercial banks have the infrastructure to handle large-scale transactions, their fees remain a concern in a country grappling with rising unemployment, high inflation, and economic inequality.
For COSATU, the issue goes beyond fees. The union believes that government should be empowering Postbank to become a strong state-owned bank capable of delivering services to the poorest communities. Instead, the end of the partnership with SASSA risks weakening Postbank’s position at a time when it needs institutional support.
The debate is likely to continue as stakeholders push for a balance between cost, efficiency, and social protection. For now, millions of South Africans are waiting to see how the decision will affect their monthly grants and whether commercial banks will indeed impose new charges.
