South African Social Security Agency 2008/09 Annual Report: Deputy Minister & Department briefings

Social Development

02 November 2009
Chairperson: Ms Y Botha (ANC)
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Meeting Summary

The Deputy Minister of Social Development, Bathabile Dlamini, and the Department of Social Development and South African Social Security Agency (SASSA) briefed the Committee on the SASSA Annual Report for 2008/09. The mandate and mission were outlined, and the achievements were briefly stated. SASSA had paid social grants to 13 million people, of whom 9 million were children, 2.9 million were senior citizens and 1.28 million were people with disabilities. The number of people receiving disability grants had decreased, due to the changed definition of what constituted a disability. The number of grants issued grew by 5.2%. There was a process under way to pay old age pensions to all men aged over 60. Child support grants were also reaching more people. SASSA’s major priorities were to improve the quality of service delivery, organizational capacity, payments services, to enhance the integrity of the grant process, and to improve financial management and mimimise fraud. It was noted that SASSA had an unqualified audit report, but certain matters of emphasis were raised. The challenges were outlined in the attached presentation document.

Members asked who had taken the decision to raise the age for the child support grants, whether recipients were reluctant to be paid electronically because of bank charges, and what the Department was doing to address this, and whether the losses were picked up by the Auditor-General rather than SASSA. Several questions were raised around the mobile trucks, with Members noting that since they were not being used or maintained, there had apparently been fruitless expenditure on them. Members questioned the reasons behind the decrease in the numbers of disability grants. The Minister and Department conceded that there were still problems around the definition of disability and noted that the Department was also proposing policy options on how to deal with people with chronic illnesses, including the possible introduction of food vouchers rather than a grant. Members were interested to hear how the Agency had managed to reduce litigation cases, asked about the status of and interest accruing on dormant accounts, and how the Agency and Department were planning to ensure that the food parcels and assistance were actually reaching the recipients. Members also asked what had been done to address the fraud by staff, what disciplinary steps had been taken against them, whether the money defrauded would be recovered, and questioned why certain officials still were in positions. The vacancies were also examined, and Members noted the comment that a longer term process would be to assess whether SASSA was optimally configured. Members also questioned the payment of agents, what monitoring and evaluation was done, why there had not been evaluation of the quality of the system, and why management partnerships had not been established as they should have been, whether compliance inspections were being carried out and what timeframes were attached to implementing a stakeholder management strategy. Members also asked for figures on fraud to be forwarded for all provinces. The Chairperson commented that although SASSA had some good initiatives, it needed to go further in its audit response plan, pursuing asset registers, implementation of the code of conduct and getting a balance between the budget and its obligations to assist needy people. The “savings” were explained.

Meeting report

South African Social Security Agency (SASSA) Annual Report 2008/09
The Chairperson welcomed the Deputy Minister of Social Development, Ms Bathabile Dlamini, to the meeting, as well as the team from the Department of Social Development (DSD).

Mr Vusi Madonsela, Director General, Department of Social Development, noted that he was in attendance firstly to answer questions of policy that might arise, and secondly because the DSD performed the function of oversight over the South African Social Security Agency (SASSA)

Mr Coceko Pakade, Acting Chief Executive Officer for SASSA (permanent Chief Financial Officer, DSD), presented the 2008/09 Annual Report of SASSA to the Committee (see attached document).He said that SASSA was a fairly new organisation and that it had some successes and some challenges. He explained that the presentation was divided into five parts, which he outlined briefly.

SASSA derived its mandate from the Constitution and the Social Assistance Act No 13 of 2004 (the Act). Its mission was to pay the right social grant, to the right person, at the right time and place. He outlined the  achievements, and compared these to the stated 2008/09 strategic priorities. 13 million people had received grants, of whom 9 million were children, 2.9 million were senior citizens and 1.28 million were people with disabilities. The number of people receiving disability grants had decreased, due to the changed definition of what constituted a disability. The number of grants issued grew by 5.2%. There was a process under way to pay old age pensions to all men aged over 60. Child support grants were also reaching more people, as a result of extension of the grant to older children. The amounts had also increased.

The first major priority was to improve the quality of service delivery. The second was to improve organisational capacity. The third was to improve payment services. The fourth priority was to enhance the integrity of the grant process, and the fifth priority was to improve financial management. The sixth priority related to minimization of fraud.

The core values of the SASSA were stated as confidentiality, integrity, fairness, transparency and equitability.

The financial statements were set out in part three of the report (see attached document), together with the Auditor-General’s report. SASSA had achieved an unqualified audit report with matters of emphasis.

Finally, Mr Pakade outlined the challenges (see attached document for details).

Discussion
Mr V Magagula (ANC) asked where and who the people were who took the decision to raise the age at which children would still qualify for a child support grant.

Ms Bathabile Dlamini, Deputy Minister of Social Development, replied that the age was extended gradually, as the Department was being allocated more money for this purpose. It would eventually be extended to 18 years.

Mr Magagula asked whether the grant recipients' awareness of bank charges did not deter them from migrating from being paid in cash to receiving electronic payments.

Ms M Mafolo (ANC) asked why SASSA did not standardise the method of payment.

Mr Pakade answered that SASSA and the Department were in discussions with the Banking Council and National Treasury around the issue of bank service charges. The Mzanzi Account was meant to be an account without service charges. The discussions aimed to minimise the burden to the account holder.

Mr Magagula asked why the Auditor-General (AG) had to discover most of the losses, and why this was not picked up by SASSA itself, by means of internal monitoring.

Mr Pakade answered that SASSA itself had informed the AG of the discrepancies. As losses or instances of fruitless expenditure were discovered, they were recorded in a register, in terms of the rules of the Public Finance Management Act (PFMA). It was then the AG`s duty to reflect all these in his report.

Mr Magagula asked why the mobile trucks were considered fruitless expenditure, if they were fully equipped.

Ms T Kenye (ANC) said that the report referred to mobile units that were going to be reduced. She wanted to know how SASSA was going to reach the outlying rural areas in the absence of these mobile units.

Ms N Gcume (COPE) did not understand why the mobile units were stationary. When she enquired at the local offices, she was given the answer that the trucks needed maintenance. The mobile units were a planned project and there was a budget attached to them. In that case, she asked why now there was apparently no budget to  maintain the trucks. They were standing all over the country and they were being vandalised. She urged SASSA to find out what was happening to these trucks.

Ms H Lamoela (DA) also asked why only ten out of forty trucks were operational, and asked if there was a  survey done beforehand to determine how many were needed. She enquired who bore the running and maintenance cost of the trucks.
 
Ms P Tshwete (ANC) wanted measurable achievements to be indicated due to the use of the trucks.

The Deputy Minister replied that she understood that the trucks had caused a lot of frustration, but it was still unfair to say that the results of using these trucks were not measurable. According to the report, SASSA was reaching 5.2 % people more than it had done in the last financial year. This clearly indicated that the trucks had made a measurable difference. She added that the use of the trucks was a short term solution to a problem and was never meant to be a permanent feature. The Department was looking at other ways to still service those areas, using other methods and technologies, like Information Technology, which was cheaper and sustainable

Mr Pakade explained that when SASSA decided to use the trucks, this was at the time that SASSA was rolling out the child support grant to children between 8 and 14 years. Huge numbers of children had to be registered in remote rural areas, and in many instances the roads were inaccessible by ordinary car. The trucks were a practical response to the needs of that period. Conditions had changed. There was a need to do a cost-benefit analysis, to see whether these trucks were still needed and to what extent.

Ms H Malgas (ANC) noted that there was a decrease in disability grants. She wanted to know which other factors caused the decrease in addition to the redefinition of disability.

Mr Bandile Maqetuka, Executive Manager: Customer Services, SASSA,  replied that temporary disability grants were not discontinued when they should have been in the past. The decline was also attributable to the fact that they had now been discontinued. In the past, there were also nine provincial administrations dealing with disability grants, each in a different way. SASSA had trained doctors to assess clients to determine whether they were suffering from something that properly constituted a disability. Now that there was one central administration and one method of assessment, this also resulted in the decline of numbers.

Ms H Malgas (ANC) raised a policy question. According to the current policy, only people with full-blown AIDS qualified for a social grant. She asked what had been SASSA's input when the policy was formulated.
 
Deputy-Minister Dlamini replied that there was a challenge in defining what disability was. Cabinet had decided on a definition of disability. However, there were still challenges on the implementation level, which would have to be worked through.

Mr Thabo Rakoloti, Chief Director: Social Assistance, DSD, replied that the Department of Social Development was asked to develop policy options on how to deal with people with chronic illnesses. The Deputy Minister had stated that Cabinet had approved a common definition of disability, and that definition excluded a number of people with chronic illnesses. The Department of Social Development presented the policy options to the Social Transformation Committee of the ANC. It felt that perhaps there was a need for a special chronic illness grant, or, as another option, the provision of food vouchers by the Department of Health. The DSD felt that these should ideally be handled by the Department of Health, and that they would not be regarded as a standard grant. These policy options were also presented to the Social Protection and Community Development Cluster, in which Mr Madonsela took part, and that committee had referred the matter to the Integrated Food and Nutrition Task Team, which would be developing options for presentation to Cabinet shortly.

Ms Malgas asked how the Agency managed to reduce litigation from 41 500 cases in the financial year 2007/08 to 453 in 2008/09.

Mr Pakade replied that litigation against SASSA had dropped dramatically. Many of these cases had been due to delays in the approval of grants to applicants, resulting in applicants suing government. SASSA’s head office was working closely with the regional offices, especially the Legal Services Units, to resolve pending cases. It was also working closely with the legal services units on appeal issues. Because turnaround response times had improved tremendously, there was much less litigation. It aimed to eliminate litigation altogether.

Ms Malgas asked what the status of dormant accounts was. She also asked how far these stretched back. She also commented on the fact that the money in those accounts was collecting interest and asked whether the interest would eventually come back to SASSA.

Mr Pakade replied that interest would be calculated on the money in dormant accounts and the right amount would be paid out to SASSA.

Ms Kenye referred to the information on Social Relief of Distress (SRD).Under the heading targets reached, the last two entries noted that cash payments were made to 35 679 recipients, and there were 32 013 other recipients. She wanted to know the difference between recipients and other recipients.

Ms Kenye asked whether, in the light of the findings by the AG, anyone had been appointed to make sure that the past discrepancies in the delivery of SRD did not recur.

Ms M Mafolo (ANC) said that the AG's report proved that the food parcels were intercepted by staff instead of getting to the poor people for whom they were intended. She insisted that SASSA must ensure that the correct recipients were receiving the parcels.

Mr Pakade replied that there were a number of initiatives. SASSA was investigating a better way for delivering SRD. The distribution of food vouchers, for example, offered fewer loopholes for fraudulent activity than pre-packed food parcels, and these were also safer than cash. The DSD would finalise a policy on how to deliver the SRD function.

Ms Lamoela asked whether a breakdown could be made available for the Western Cape to show how and to whom school uniforms, food parcels and food vouchers were distributed.

Mr Pakade replied that more detailed reports on SRD interventions were possible. Region by region breakdowns were also possible. The information would be forwarded at a later stage. He noted that R52 million was unspent in the SRD budget. The money was supposed to go back to National Treasury. SASSA asked for a rollover of that money, in other words, to keep the money to pay off commitments, which was granted.

Ms N Gcume (COPE) raised a question about the dissemination of information. She felt that local offices were not made aware of new developments around operations. She also said that the Annual Report had noted that documents were lost by SASSA staff at local offices. She asked how that was possible and why staff were not held accountable.

Mr Pakade replied that there were officials who were employed by the Agency, but who were also doing business with the Agency. Initiatives were being put in place to counter this. Officials would be asked to agree to the Integrity Policy being put in place. SASSA would be putting in more internal control measures on information, especially the custody of payment vouchers. People would be held accountable to fulfil their responsibilities.

Ms Lamoela raised the issue of critical posts, and questioned whether these should not be filled as a matter of priority. She enquired if there was a strategy to fast-track the filling of critical posts, and to retain critical skills.
 
Mr Pakade replied that a decision had been taken to identify all critical posts. There were financial challenges attached, but it was agreed that all posts related to grant application processing should be prioritised. These posts must be motivated for and would be screened by a committee consisting of very senior management, who would then decide which posts would be filled. This was linked to a more important and longer term process of assessing whether the organisation was configured to function optimally in terms of its mandate. It would probably necessitate a process of organisational re-engineering, in terms of people, processes and systems. This was, of course, money related. Currently there were other projects like the Gautrain, and stadiums that were placing pressure on National Treasury and it was also recognised that there was a global recession, which was the reason why this could not happen immediately.

Ms Lamoela asked what percentage of the budget was spent on paying agents, and whether this was increasing or decreasing.

Mr Pakade replied that the handling fee had gone down. It was initially R3 billion, and now was R2.6 billion. A further R1.8 billion could still be saved with the implementation of the new strategy.

Ms S Kopane (DA) asked a question on monitoring and evaluation. SASSA was supposed to conduct a survey on the quality of the social security administration system. This had apparently never happened, and she questioned why not.

Ms Kopane also asked about a management partnership that SASSA had to establish with local, provincial and national government, as well as private sector entities, on social security administration. She wanted to know why this did not occur. She also asked what timeframe was attached to the development and implementation of a stakeholder-management strategy. She further asked what strategies were adopted to prevent non delivery. She also enquired whether compliance inspections were conducted in all regions, and, if not, when SASSA planned to roll these out to all regions.

Mr Pakade answered that these questions all related to the failure to reach targets and lack of efficient delivery. In the next financial year SASSA would work in a more integrated way with government. It would position itself as performing a social security function.

Ms Tshwete asked why and since when the CEO had been appointed to act. An Acting CEO could not take management decisions.

Mr Pakade answered that he was appointed on 17 July 2009.

Mr Madonsela amplified that Mr Pakade was acting because the CEO was on special leave for four months.

Ms P Tshwete wanted timeframes attached to the conviction of fraudsters as none were indicated in the report.

Ms S Molau (COPE) wanted to know why the North West Province was singled out in terms of the prevalence of fraud. She wanted figures for all provinces.

Ms Lamoela asked whether SASSA's staff were amongst those who committed fraud. If so, she asked if they had been expelled, or allowed to pay off the debt while continuing to work.

Ms Gcume asked whether any money was recovered from the staff who had defrauded the Department.

Mr Pakade replied that some staff were dismissed, and some received warnings, depending on the mitigating circumstances. All those who admitted to fraud had to sign an acknowledgement of debt and had to repay the amounts defrauded.

Ms Mafolo said that some SASSA staff, who had admitted that they had been defrauding the agency, were still receiving the grants. She asked that SASSA follow it up.

Ms Raphaahle Ramokgopa, Acting Executive Manager: Strategy and Business Development, SASSA asked Ms Mafolo to provide details of cases of this kind, so that SASSA could investigate them.

The Chairperson commented that SASSA had signed a Service Level Agreement but clearly did not adhere to, nor monitor it, resulting in fruitless and wasteful expenditure incurred by the use of the trucks. She regarded this as a grave oversight.

The Chairperson commented that in regard to Asset Management, the Audit Response Plan was a good point of departure. However she felt that SASSA had to go further in terms of instituting repercussions for the managers who caused the losses. She said that appointing Asset Managers for each region was a positive move, because it made them accountable, but it was almost too late in the light of the losses that had already occurred. The provinces that failed to submit proper asset registers should be identified to the Committee, because all provinces had signed Service Level Agreements more than five years ago.

The Chairperson commented that SASSA’s development of a code of conduct was a positive step. She wanted to know whether SASSA was going to implement it. She noted that one manager could cause the agency to receive a qualified audit report from the AG, due to not fulfilling his/her duty.

Mr Pakade said that every asset bought had to be bar coded and entered into the register. It must be accounted for by the custodian of that asset. The new financial management system that was implemented would force officials to do asset stock-takes every month, as part of the financial balance sheet for the month. Training was under way for staff to learn to use these systems efficiently.

The Chairperson asked where the saved money went, and stated that she was aware that it was a complex situation, because SASSA was dealing with debt collection, rights and deceased estates at the same time. She asked if it would go back to National Treasury as part of Revenue Collection.
 
The Chairperson also asked how the Department balanced staying within the limit of its budget with paying a social grant to anybody that qualified for it. She wanted to know whether DSD moved money and targets around regionally to balance out the needs and deficits. She wanted to know what the legal consequences would be if SASSA decided that it could not overspend its budget.

Ms Malgas asked how the deficit had affected the financial year 2008/09. She said that according to the report, R245 million was saved. She wanted a full explanation on this.

Ms Tshwete asked why money was saved when it was supposed to be used for a specific purpose.
 
Mr Pakade replied that the domain account had been dealt with by the Chairperson. Unspent money would not necessarily come to SASSA. In some instances the provincial revenue funds were claiming the money because of the period (period A, B C or D). Savings of R245 million represented money not spent on grants. Everywhere in the world, governments had to rely on forecasts, estimates and projections when deciding on budgets for social welfare, because it was impossible to predict exactly how much money would be needed. R245 million unspent out of a budget of R70 billion, made this a fairly accurate prediction.

The Deputy Minister said that it was good that Committee Members were raising these questions, because they had an oversight function over SASSA. She noted that the DSD was trying very hard to balance all its different obligations with the central one of distributing grants to everybody who needed them.. She mentioned that this function was previously scattered over the country, and commended the previous Minister of Social Development in succeeding in centralising everything. Against the background of centralisation, she said that the DSD had instituted conventions and systems to fight corruption. There was an effort to standardise operations and there was also a movement towards proper running of the Agency.

Ms Lamoela asked whether medical assessors had been trained for the rural areas as well, and how many were trained for the Western Cape.

This question was not answered directly.

The meeting was adjourned.

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