SASSA progress report on implementation of Constitutional Court order

Social Development

14 February 2018
Chairperson: Ms R Capa (ANC)
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Meeting Summary

The purpose of meeting with the Department of Social Development and SASSA had been to report on progress in implementing the Constitutional Court Order but media statements by the Minister's spokesperson and the media statement that SASSA had applied to the court to extend the Cash Paymaster Services contract for six months became the focus of the meeting. The political uncertainty of the day and the President's interview on television proved to be a somewhat disruptive element.

The Chairperson informed the Department of Social Development and SASSA that the Committee had, in principle, to approve the steps that SASSA and its partners wished to take. It was wrong for the Portfolio Committee to hear of significant developments via the media. Several Members were vociferous in their agreement with the Chairperson. The Committee had not seen the proposed contract with CPS and that the six months might well spill over into another six months after September. A Member was of the opinion that the Committee needed to recommend a parliamentary inquiry into CPS and Net1 about the dodgy deals and illegal deductions. Her analysis was that someone was benefitting from CPS. The Committee needed to get to the bottom of the matter.

The second matter that the Chairperson raised was the open animosity of SASSA and the South African Post Office towards each other, which had also spilled over into the public domain. The working relationship between SASSA and SAPO was untenable. They were saying nasty things about each other in the media, and she did not think it boded well for operations.

The Department of Social Development explained that Members would find that SASSA had not asked for an extension per se. It was a process of phasing in the new service provider and phasing out the current service provider, but the Constitutional Court had referred to it as an extension.

The presentation from SASSA introduced the Agency's change program, engagement with the banks, SASSA and SAPO engagement, fraud and risk management, SASSA ownership and the emergency plan. The CEO explained that the Expert Panel appointed by the Constitutional Court believed that it would be cheaper for the fiscus, and more efficient, to pay through banking accounts. SASSA was not happy with that instruction as the banks charged relatively high fees for beneficiaries who were not really bankable. SASSA had achieved a milestone when in February the Agency had paid nearly two million beneficiaries through its Paymaster General account, testing payment to those who drew money from ATMs using pin numbers.

On the SAPO partnership, SASSA explained that SAPO would provide a corporate holding account for depositing the money for beneficiaries for five years. Accounts would be opened for new beneficiaries and fingerprints would be taken so that SASSA could store biometric identification of beneficiaries. SAPO was also responsible for the development of software.

On the appointment of the new work streams, SASSA explained that SASSA had not costed the process with SAPO because SAPO was also a government entity, but the Expert Panel had wanted the cost of the process. SASSA had an in-house document, but they had needed something that was credible and had been properly researched. However, National Treasury had not approved the appointment of work streams and no payments had been made. Treasury would assist SASSA to do the costing and to develop a strategic document.

SASSA had asked for CPS to be involved for six months while the two systems ran parallel as not all beneficiaries would have received the cards for the new system and SASSA wanted to have the back-up of the CPS system while the new system was being tested. SASSA explained that it had not been able to begin developing specifications for the cards until SASSA and SAPO had signed the Service Level Agreement in December 2017. After that, National Treasury had imposed a suspension on the upload of specifications by all departments for a month. Finally, at the briefing with bidders for the tender in January, bidders had requested that the closing date for the tender be extended from 2 February to 28 February 2018, which SASSA had done. All of those factors had delayed the changeover to the new system.

SASSA explained that the services of CPS were needed to continue the cash payments until a new provider had been appointed and set up. The tender for the new provider related to only cash payments, which was the most expensive way of distributing grants. The R16.44 per beneficiary previously paid to CPS had included both electronic and cash payments. Electronic payments heavily subsidized the cash payments. The new tender had given a specification of R55.60 per beneficiary for cash payments. SASSA had chosen a worst-case scenario for cash payments and it expected bids to come in lower than that. It did not have a specific answer as to why the fee of R55.60 had not been capped.

Members remained dissatisfied with the involvement of CPS, which SASSA could have avoided if it had begun work more expeditiously. There was concern about how funeral deductions were going to be handled; the messages that beneficiaries were getting, which was confusing them, especially the rural and old people; as well as the extensive involvement of commercial banks. They recalled that part of the reason for giving the work to the Post Office was to empower state entities. The aim had been to obtain efficiency and capacity in the State. Was it the fault of the Post Office that the cards were not ready in time? The Expert Panel did not understand their people and was viewing the beneficiaries as bankable when, in fact, the grant simply helped them to sustain their lives.

The Chairperson determined that the Committee would meet on its own to discuss concerns raised by the Members. The Committee would also evaluate whether the SASSA Act should be amended as some areas of the Act made it weak.

Meeting report

The Chairperson said that the Committee was sitting because Members had to deal with urgent issues concerning SASSA.

Ms L van der Merwe (IFP) informed the Committee that President Zuma was speaking on the radio.

The Chairperson proposed postponing the meeting so that Members could listen to the President's presentation so that they were not left behind in respect of any news.

The Committee agreed to the proposal.

After 30 minutes, the Chairperson suggested that the President could carry on speaking for a long time. She said that people had flights to catch. The meeting was re-convened.

The Chairperson said that Members had received the relevant documents so that they could read them beforehand and had made up their minds as to what clarity questions they wished to ask. The Chairperson informed the Committee that she could have postponed the meeting because of the uncertainty of the political environment, but there was a need to respond to the South African people who had heard and seen conflicting reports about SASSA in the media. The poor and marginalised people were dependent on the Committee to ensure that the SASSA programme delivered. She also wished to inform the Committee that she had had to respond to questions from the media over the weekend about the pronouncement by the spokesperson of the Minister, Lumka Olifant. The Chairperson stated that she had consistently had one political message and that was that SASSA had not informed the Portfolio Committee about the extension or the content of that application. She stated that, because the matter was in the hands of the court, SASSA had probably been consulting the court.

The Committee had, in principle, to approve the steps to be taken by SASSA and its partners, the South African Post Office (SAPO) and the Inter-Ministerial Committee (IMC), as well as the Department of Social Development (DSD). SASSA had provided the Committee with a guide as to what the Agency was going to do on a monthly basis. Those who had read the guide would know whether SASSA was following it or not. The intention of the meeting was to receive a report on what the Agency had done. It was about the big picture and not the detail. They had all read in the media of about what had been done. Those were the challenges that they would be looking at.

The Committee needed to know what type of application SASSA had made, what the content was of that application, and how SASSA had intended taking the Committee onboard. What had led to the application and the issues of SAPO being ready, and the Committee not being informed about? That was the gist of the discussions and not the detailed document that had been presented. The question of SAPO's readiness was an important one. The Portfolio Committee Members were the ones to whom SASSA reported. SASSA and the Department of Social Development accounted to the Portfolio Committee on Social Development. It was the obligation of the Committee to ensure that SASSA complied with court prescriptions. If it was not possible for SASSA to comply, the Committee had to be made aware that SASSA was developing other strategies.

The Chairperson announced that she would allow the Members to respond to the matter of the guide and whether it left out critical information.

Dr Z Madlopha (ANC) said that SASSA officials and the Department were in attendance at the meeting. However, SAPO was not there, when it would have been good to meet with them to find out from them what the story was. The Committee was clear on the IMC. They also knew that they would be getting a progress report from the Panel of Experts. Being with SASSA alone was a problem. She asked the Committee to remember that they could not have meetings without SAPO because the Post Office had signed the contract. SAPO was part of the Committee and had to be there because one heard so many things. It would be transparent to have SAPO there because many things were coming out of the papers and they did not know what the truth was. Each party involved in social grants should represent itself before the Committee. She had looked at the Report from SASSA, and it was empty. It concluded with the recommendation that the meeting should note the progress made to date – but whose progress? It was only from SASSA's side. SAPO had to speak for itself.

Ms V Mogotsi (ANC) said that when the Committee had to look at the timelines, was very difficult for the Members to get a complete understanding of what was happening if SAPO was not there. She made that comment because, in the media, SAPO said that it was ready and on the other side it was announced that SAPO was not ready. Now that SASSA was there those officials had to report. SASSA talked about SAPO as their client. When they did not get things right, the Committee could call SAPO. There were timelines for both SASSA and SAPO that they needed to action. The SASSA progress report was appreciated, but it was incomplete because it did not include the service providers, especially SAPO, which had to indicate its readiness in respect of the court judgement. She suggested that the Committee needed to have SAPO and the IMC at the meeting with SASSA as they had all been there when the agreement had been made.

The Chairperson interrupted Ms Mogotsi, stating that she was going into the detail of the meeting and the Committee was not at that point yet. Her recommendation should be made at the end of the meeting because SAPO accounted to its own Portfolio Committee. The role of the Social Development Portfolio Committee was that of oversight and the compliance of SASSA and DSD. What the Members were talking about could only be taken on-board after that the Committee had heard from DSD and SASSA. She suggested that the Committee gave them an opportunity to present their story and that afterwards, the Committee could do a critical analysis of what was lacking and what was not lacking. Members could then comment.

Ms B Masango (DA) said that seeing as SASSA was there, SASSA should present. When SASSA spoke of SAPO, the Agency spoke of the client, and it seemed that when the DSD and the Agency came to report on progress regarding the court order, they would talk about the service providers that they had brought on board. It was when they were getting conflicting views; the Committee would do as it had in the past and require so-and-so to appear before the Committee. She, therefore, believed that the meeting should go ahead. She was confident that SASSA would say something about SAPO and only if the Committee could not get things right, would they say that they needed SAPO at a meeting.

Ms H Malgas (ANC) thought that it was important to do it the way the Chairperson had suggested, so she agreed. The Committee should conduct its oversight of SASSA and the DSD and allow them to give a briefing. At the end of the meeting, when the Chairperson had seen all of the shortcomings, she would tell the Committee what the conclusion was.

The Chairperson stated that her earlier request was that the presenters should not be going into detail because the Committee had the documents. The presenters should target grey areas that the Committee needed to engage with and to get clarity so that the Committee could give proper instructions to them.

The Chairperson was waiting for a presentation. She stated that the Members had gone into the content already. Her recommendation was to take those matters at the end of the meeting. SAPO reported to their own Portfolio Committee so they should not look for SAPO. The presenters needed to make it clear why they had made an application to the court.

Introduction by Department of Social Development

Ms Neliswe Vilakazi, Acting Director General at the Department of Social Development, explained that the CEO would give a high-level overview of the situation. She explained that Members would find that SASSA had not asked for an extension per se. It was a process of phasing-in and phasing-out the current service provider, but the Court had called it an extension. The CEO of SASSA would take the members through the presentation.

Ms Mogotsi asked for the CEO to elaborate on her point about the extension as she did not get the point.

The Chairperson stated that the Acting DG had indicated that the CEO of SASSA would discuss the detail with Members. However, Members were asking for the DG to repeat what she had said so she instructed the Acting DG to explain clearly.

The DG pointed out that the matter would be explicitly covered in the CEO's presentation. What she was saying was that was that there would be six months for the phasing-in of the new service provider and the phasing-out of the old one. DSD and SASSA understood it as the phasing-in and phasing-out period, but legally it was an extension. The CEO would be clarifying the matter in the presentation, and so she asked for Members to wait until the CEO had made her presentation to them.

The Chairperson stated that the most challenging thing was that Members were sitting with the statements issued by Ms Olifant, the spokesperson, who had reported that SASSA had known for a long time that there would be an extension. That was not what the Committee had been told, and so they had been concerned when the reading the media reports.

Ms Masango stated that she wanted to be clear. The Committee had always known about phasing-in and phasing-out. The extension was a new thing. It was different from the phasing-in and phasing-out spoken about in the past financial year. The phasing-in and phasing-out was expected. It could take a long time, but the extension was not acceptable.

The Chairperson reiterated that the CEO would deal in detail with the so-called extension and then if they were not satisfied with that, the Members could decide what to do.

Ms Mogotsi said that at the same time the previous year, SASSA had said that it would do the phasing-in and phasing-out. They had never been told that CPS would do the phasing-in and phasing-out after 1 April 2018. If it was something new, SASSA had to inform the Committee.

The Acting DG asked that SASSA present as all the information was contained in the presentation and it would also show what SASSA was doing, as SASSA itself, to make payments.

SASSA Progress Report on the Payment of Social Grants

Ms Pearl Bengu, CEO at SASSA, pointed out that the presentation was about SASSA's change program, engagement with the banks, SASSA and SAPO engagement, fraud and risk management, SASSA ownership and the emergency plan. She indicated that when she got to the point about the involvement of SAPO, she would go slowly and add the details, where necessary. SASSA had analysed the channels through which payment was made to beneficiaries to enable SASSA to determine where payment was needed. A breakdown was presented to the Committee.

SASSA could pay directly into bank accounts. Testing had taken place in January when beneficiaries were paid through the PMG account at the Reserve Bank. In February SASSA had paid nearly 2 million beneficiaries through the PMG account. That was one milestone achieved. SASSA had tested payment to those who drew money from ATMs using pins. 100 beneficiaries were involved in the test and all in February. Those beneficiaries did not have bank accounts but could use ATMs. There had been some migration to the banks.

The cash payment tender had been advertised. That was the part that was too cumbersome for SAPO. Those beneficiaries were, generally, deep rural, older and disabled.

National Treasury had allowed SASSA to do a simulation to see whether funeral covers would go through. The data had been analysed against the regulations. The amount of funeral cover could not be more than 10% of the benefit and beneficiaries were allowed only one funeral cover policy. Here, there were quite a few irregularities that had to be addressed. SASSA would take responsibility for the deductions and ensure that there were no irregularities in funeral covers and other deductions. Technical teams from SASSA and SAPO had been working daily on technicalities of the biometric enrolment.

Reports had gone to the Panel of Experts as required and that what the Panel recommended came back to SASSA as court directions. The Expert Panel appointed by the Constitutional Court believed that it would be cheaper for the fiscus, and more efficient, to pay through banking accounts. The monthly reports showed the progress regarding the move to bank accounts. They needed to plan for migrating the younger ones who used pay points to the banks. Older people and disabled people were the bulk of the cash payments.

The Chairperson stated that Members had to take note of the fact that services had to be accessible to rural and poor communities. She mentioned that, initially, the Expert Panel had declared that the beneficiaries were not bankable, but now the Panel was insisting that all beneficiaries should use the bank. That had to be noted.

The CEO stated that SASSA had given beneficiaries the option to go with a bank. The Payments Association of South Africa (PASA) and the Banking Association South Africa (BASA) were involved as SASSA had to be careful of collusion in the light of the Competition Commission. SASSA had given directions regarding the type of bank account for beneficiaries. The SASSA card would be swopped with the new SASSA/SAPO card. Cooperatives and financial institutions would also become pay points for beneficiaries.

SASSA had issued an instruction that there was to be no marketing at the SASSA pay points.

A communication system had been set up to keep beneficiaries informed as to what was happening. They would be told about the card swap once the new cards were available.

An implementation agreement had been signed between SAPO and SASSA the previous year while a Service Level Agreement was signed in December 2017. For five years, SAPO would provide a corporate account for depositing the money for beneficiaries. Accounts would be opened for new beneficiaries and fingerprints would be taken so that SASSA could store biometric identification of beneficiaries. SAPO was also responsible for the development of software.

The IMC had indicated that it expected one presentation from both SASSA and SAPO on how the takeover would take place in compliance with the Constitutional Court Judgement. SASSA/SAPO technical teams reported every Friday. Because of the expenditure freeze by National Treasury over December/January, the new SASSA cards would not be ready until mid-March. It would take several months to swop the old card for the new one. With CPS, the process had taken 18 months, but it had included the taking of biometrics. By 1 April not all cards would have been issued, so, at the moment, the new system and the old system would have to run in parallel to facilitate the change-over process. SASSA had asked for six months for the two systems to run parallel as not all cards had been issued and the Agency wanted to have the back-up of the CPS system while the new system was being tested.

The Chairperson said that SASSA was getting on to the critical issue of the extension that SASSA had applied for. She enquired of the members whether they wish to ask questions at that point or whether they would prefer SASSA to complete the presentation and then ask questions.

Dr Madlopha suggested that it would be best if the CEO completed the presentation

Ms Masango agreed.

The CEO informed the Committee that SASSA had complied with the Constitutional Court judgement. Payments had taken place since 1 April 2017 without disruption. There had been ongoing engagement with the Panel of Experts. IMC engagements had been ongoing. Quarterly reports had been submitted timeously. Monthly reports were required for the last quarter. In December 2017, SASSA had reported the need to retain the services of Cash Paymaster Services (CPS) to allow for the phasing-in and phasing-out of the old and new systems. A letter was submitted to the Court on 18 December 2017, and a formal application lodged on 7 February 2018. The Court had explained that because the Court extension of the CPS contract would expire on 31 March 2018, even a phasing-in/phasing-out period would be considered an extension.


Ms van der Merwe appreciated the presentation. She heard the argument about phasing-in and phasing-out, but she had several problems. The first problem was that the previous year, the Portfolio Committee had, on numerous occasions, asked whether there would still be a CPS in SASSA come1 April 2018. The Committee was not fighting and, of course, it wanted grants to be paid, but Members found themselves in the situation where CPS would pay grants after 1 April. How could the Committee be assured that Cash Paymaster Services be leaving after six months? SASSA could ask for another extension after September. SASSA had misled Parliament in respect of working with CPS beyond 1 April 2018. Had the work been begun expeditiously, there would have been no need to have the extension.

Ms van der Merwe asked about the relationship between SASSA and SAPO. She had been in a Portfolio Committee for Telecommunications and Postal Services meeting, and there seemed to be a lot of animosity between SASSA and SAPO. They were saying nasty things about each other in the media, and she did not think that that boded well for operations. Were they working well together, or was there a lot of animosity? She wanted clarity on the fact that CPS was suing SASSA for almost R800 million in damages. She wanted to know about the workstream that had been appointed on 4 January 2018 in the form of Range Wave. It was concerning in the light of the problems caused by the previous work streams. What were they doing? Had National Treasury given SASSA the go-ahead to appoint the work stream?

Ms B Abrahams (ANC) was concerned about the phase-in and phase-out extension. Regarding the funeral and other deductions, she had seen in the media that SASSA had been invited to an event with the Black Sash about deductions and irregularities. The CEO had talked about the banks getting involved and how they would be allowed to market, but Grindrod Bank would not be allowed to market. Did Grindrod Bank charge more than the other four banks? How was SASSA going to avoid the unnecessary burden of administration once there was more than one deduction on old peoples' grants? More than one deduction on a person's account would create an administrative burden.

She said that she learnt more in the newspaper than in the Committee meetings. She had read in the newspaper that SAPO was ready to take over on 1 April. Was that true? She had to ask SASSA as SAPO did not attend Social Development meetings. Ms Abrahams was concerned about the SASSA cards as beneficiaries did not have a clue about the difference between SASSA cards and Grindrod cards. Why did SASSA not just stop the Grindrod cards?

Dr Madlopha appreciated the presentation. She agreed that there were challenges in finalising the payment on 1 April 2018. She had heard about the many banks that would take over. Government had said that SAPO should take over to give capacity to the state, but if the services were going to the well-established banks, was SASSA still empowering or giving capacity to the institutions of the State? If SAPO was slow, would they still get clients for their bank? The aim had been to get efficiency and capacity in the State. It was no longer SASSA and SAPO that were being empowered.

Secondly, her understanding was that because of the problems with media briefings, the IMC, SAPO, SASSA and the Department had determined that IMC was the only one who could talk to the media and communicate decisions. Why were different people talking to the media? What had happened to that strategy? The Committee had agreed that there should be only one message, not different messages that created confusion in the community at large. Lastly, in SASSA's provision of electronic payments, SAPO was supposed to hand over the SASSA/SAPO cards on 2 February, but now it had been shifted to 16 March. Was that the reason for SASSA requesting an extension? Had SAPO not provided the cards timeously? Had SAPO had not met its timeframes? As indicated by the Chairperson, Members did not know the real reason for the request for an extension. She regretted that SAPO was not there to respond. There were timelines, and if SAPO was not ready to meet the deadlines, the matter had to be addressed. SAPO had said that they were ready. Had SASSA given SAPO an extension? Why had SASSA asked for an extension?

The Chairperson stated that the issue of the experts wanting to involve commercial banks was a problem. They were taking the people as bankable when, in fact, the grant simply helped them to sustain their lives. The Expert Panel did not understand their people. They were not looking for accumulated interest or property, but just for a channel to receive their grants. The bank for beneficiaries had to be separate from those banks where one put one's money for the growth of the economy. It had to be where the people went to receive their money. As Parliamentarians, the Members thought that there was a violation as far as the SASSA Act was concerned.

Ms Masango specified that her question related to communication. What had happened in the media was that there was some clumsiness, which would cause some beneficiaries to fall between the cracks because there were so many options available. She appreciated that the CEO explained that people would be free to choose, as required by the Constitutional Court. The Committee wanted that. It was good that the beneficiaries had a choice, but they were getting so many messages that they were confused. She was worried about it. Beneficiaries were worried that they would not get paid on 1 April because they should be doing specific things which they were not sure about. Beneficiaries were old, illiterate.

Regarding the delays, the CEO had said that SAPO would not make cash payments because it was cumbersome. What was the reason for SAPO saying that? She had read in the newspaper that the delays had been on SASSA's side and so SAPO could not take cash payments on board at that late stage. Had SASSA not learnt from previous times that SASSA could not afford delays? She did not want to come with issues that had been discussed in another Portfolio Committee, but the previous day, she had heard about people waiting for stuff that simply did not come. SASSA was the one to give information, and SASSA was the one that she had to believe. She had heard about issues that were still outstanding from SASSA's side. It was embarrassing for her to get her information from the media about the Department for which she had oversight. She understood that there had been holidays, but why was it that SAPO could not make cash payments? She also wanted clarity on the communication strategy. SASSA had given timeframes to GCIS on when things would happen. Was the GCIS Communication strategy not working, and, if so, what was she doing about it?

Ms P Sonti (EFF) spoke in her vernacular language.

Ms S Tsoleli (ANC) was adamant that the Committee had to get to a stage where it could understand what CPS was all about; that the Department was so passionate about. The Committee needed to recommend an inquiry into CPS. Listening to the discussions, she believed that someone was benefitting from CPS. That was her analysis, and she said it without fear or favour. The Committee needed to get to the bottom of the matter. It had been an illegal contract for three years; it was extended for a year, and again they want to extend it for six months. A lot was being lost to South Africans. The contract did not benefit South Africa. It benefitted certain individuals. An inquiry might assist the Committee to get to the bottom of it.

The second issue of concern to Ms Tsoleli was that when she received a report, she did not know what to believe because when the Department got to the media, it was a different story. Who was supposed to be privileged with the information: the Portfolio Committee of Parliament or the media? She had gone back to the previous tender which said that SASSA would pay R16.44 cost per beneficiary and it was a capped amount. It was a good move to cap the amount because it meant that government was saving. When SASSA advertised in January, it was stated that the cost should not exceed R55.60, and it was not a capped amount. The fiscus in the country was under stress with the problems in the markets. Regarding the tender, Members would remember that there had been a lot of news the previous year about someone who had been earmarked to get the tender, which was why SASSA was pushing SAPO and demonising SAPO. It was because there was someone who was supposed to get the tender. Why was that tender not capped when the other one was? The previous capping had saved the country a lot of money, but now, when the purse was under stress, it was not. She did not know how much the government would have paid by the end of the tender. What would it cost by the end of the contract? Why was the tender different? Could the Committee get the reason?

She would have loved SASSA to provide the Portfolio Committee with the terms of the extension. The Committee needed a thorough presentation on what, exactly, was entailed in the extension. What was CPS going to do that others could not do? Lastly, there was the issue of getting all of them in one room. SAPO was the Committee's. SAPO had to come to the Committee and tell them the story. She did not like the fighting in the media. Every time SASSA would come in to demonise SAPO, forgetting that SAPO was also government and SASSA had a mandate from the ANC and that mandate was to build capacity. One could see that SASSA did not want to build capacity in SAPO. The next time that there was a Committee meeting, the Post Office should be there. People who did not want to work should leave. They should not hinder the processes of government services. The grant payment was the baby, the policy, of the ANC and the Committee could not sit back and see the grant being undermined.

Ms van der Merwe asked about the letter received from SAPO when the two entities had first started engaging one another. There was a point in the letter which said that SASSA should look for a service provider to provide for the cash payments and that was agreed in June/July. She asked whether there was a move in SASSA and Social Development to delay so that they could keep Cash Paymaster Services. What had happened over December? She read a statement made by SASSA that said, in dealing with SAPO, SASSA was dealing with people who were largely motivated by self-interest. The working relationship between SASSA and SAPO was untenable. Delays were being created unduly to keep Cash Paymaster Services. If that was the case, the Committee needed the answer that day. The fact of the matter was that the Committee would walk out of the meeting having approved the extension and in six months' time, Members would be told that another extension was required. She wanted to know what SAPO said about the provisioning of cash in the original letter and why nothing had been done expeditiously. CPS had to be laughing all the way to the bank. Some of the comments about the Post Office were not good and not the way things had to be done. The Portfolio Committee had to learn about things first – they should not learn about things from the media.

She had to put on record that some of the comments being made in the media about the Post Office, especially by the Minister's spokesperson, were not truthful and not nice and everyone should desist from the open-ended war playing out in the media. It had to stop that Parliamentarians had to learn about developments through the media. SASSA and Social Development had had such a terrible time at SCOPA the previous year because information just was not forthcoming. Whenever any application went to the Constitutional Court, it had to go to the Chairperson first so that she could inform Members.

Dr Madlopha said that SASSA had its own communications officer but the person who was speaking about the issue was not the SASSA communications officer. It was for the third or fourth time that this had happened. The Chairperson should write a letter to the Minister because the spokesperson seemed to be representing the Committee, but she was not a Member of Parliament and could not talk on their behalf.

The extension of CPS could not just come as an agenda item that SASSA was informing the Committee. She did not want to go to jail. Her recommendation was that the Committee not be part of the CPS extension. The Committee rejects the extension of CPS. The Members were not kids. SASSA had to present a document with the timelines. The Committee needed to see the contract and the risks, including the R70 million. The Committee wanted to do its own oversight. It did not want SCOPA to have to do it for the Committee. CPS had an unlawful contract. SASSA could not come to the Committee saying that they were extending it. Officials had to be open. The Committee did not want to go to jail. She saw what was happening to the Guptas and she did not want to be part of that.

The Chairperson said that she could not have called SAPO to the meeting as the Committee did not have oversight over SAPO. SASSA had to account and talk about it. The Committee had to hear SASSA's story and then would go its own way of meeting with any other entity. The law allowed the Committee to do so, but it would have been unfair to call another entity when they had not heard from SASSA. She understood that the Committee needed a meeting with SAPO. The Committee also needed a meeting with the IMC to give an update. She agreed that there should not be an extension. There could not an extension of an extension.

She told the DG that it was Lumka Olifant who had addressed the nation through Morning Live on the CPS extension. That was why there were different interpretations and different views. It was because Ms Olifant had spoken on Morning Live. The message was that a wrong decision had been taken and that was why there had to be an extension. They could talk about everything, but the Committee could not agree to an extension. She knew that Social Development had established SASSA and made the appointments but SASSA was an adult and should state what the Agency was supposed to be doing. The mess was a result of Social Development speaking on behalf of SASSA. She did not know whether Ms Olifant was a spokesperson of the Minister or the Department. Who was Ms Olifant? She was not only arrogant to Members, but to the entire country. The Committee had raised it many times, and there was a hell of a panic. She reminded the meeting that there was a big, big issue because Ms Olifant had arranged a paid media interview. She was clumsy in articulating what had to be done.

The Committee had complained to the Minister because the woman was vulgar and had described women in the worst, most vulgar terms. She had used language that was not used in the Chairperson's community where people were poor and uneducated. The community did not talk about women as drunk and prostitutes. The phase-in and phase-out was fine, but they could not talk about extension. The change in terminology had caused confusion. SASSA could not talk about extension as it was insensitive and had changed the meaning. SASSA had to explain the extension properly. The Committee had agreed that SASSA would work with SAPO. Ms Olifant was not helping the country when she talked badly about SAPO. If SAPO did not have capacity, the government should help SAPO.

The competition of CPS was unfair and needed to be investigated. CPS had the best opportunity as it was working inside with SASSA. She stated that CPS was holding meetings and changing SASSA cards for Net1 cards. There had been SASSA employees in those meeting, so traditional leaders and councillors had thought that the promotion of the Net1 cards was approved. CPS had to stop that immediately. Now that there was going to be competition, the company was using its inside position to prey on the people. CPS had to stop the meetings immediately. If something was not done, those pay points would belong to CPS because CPS had used its position on the inside. That was why she did not want extension.

Ms Tsoleli agreed. She wanted to know if the CEO knew about the changing of cards. Did she know about the meetings with SASSA officials in attendance? Were officials working with the service provider to change cards to Grindrod cards?

Ms van der Merwe reiterated that the Committee had reached the point where they needed to ask Parliament to allow a parliamentary inquiry, similar to the Eskom and SABC one, into CPS and Net1 and all issues such as dodgy deals and making illegal deductions.

The Chairperson said that they should craft their own agenda.


The CEO stated that CPS had gone to court because the company wanted to be part of the payment for the cash tender. SASSA had opposed the court application and asked that Grindrod deal with SASSA directly. However, she emphasised that what happened was dependent on the Court. The Court had instructed SASSA to find a service provider other than Grindrod Bank but Grindrod was filing a complaint in terms of Section 217 of the Constitution which allowed everyone to participate. She hoped that Black Sash would also go to court as they had good arguments. She reminded the Committee that when grant deductions went to court, the court ruled in favour of Grindrod.

SASSA had a strategy of communication. Officials had spoken on radio stations to tell people not to swop cards. She and the Minister would speak on eNCA because people were very worried about the situation. Soon there would also be joint communication between SASSA and SAPO, and she would explain the situation together with the CEO of SAPO. The message was that people would be getting their money but not yet. Once SASSA and SAPO started changing the cards, there would be an aggressive communication strategy.

She did not want to talk on behalf of SAPO. SAPO had been given the integrated solution which SASSA had understood SAPO would be doing in house, but it seemed that they did not have the capacity and had gone out on tender. The Committee had to know whether the SAPO tenders were ready. SAPO had advertised for the card production, the biometrics and the integrated solution. How soon would SAPO be able to adjudicate and award the tenders? The number of beneficiaries was huge, and it would take a long time to issue the cards. They would not be able to complete the task by 1 April 2018.

The other banks had come in because the Expert Panel had pressurised SASSA. After the third report, SASSA had been heavily criticised by the Panel because SASSA had not gone all out to persuade people to go to the banks. The insistence on using banks had changed the whole strategy of SASSA. Banks charged fees that were too high for grant recipients. SASSA would be happy if the banks had a product that was similar to SASSA’s card. The problem was that SASSA did not want to allow debt orders on the cards because then no one could take their money and that would stop people preying on beneficiaries. SAPO cards would not allow debit orders. Those beneficiaries who had selected the banks would find that they were paying substantial fees. Beneficiaries went to an ATM and first checked their balance before they drew money, and it could cost up to R8 at an ATM just to check how much money a beneficiary had. SASSA had a problem with the banks because they did not all offer a similar product. SASSA was willing to pay bank fees but it could not pay different amounts to different banks.

She had noted the remarks on the phasing-in and phasing-out, but SAPO needed a plan giving dates on which things would be done. SASSA would work with them. When they had a plan, the Committee would be able to see that the phasing-in and phasing-out would not take more than six months. Because of all the talk about SASSA and CPS, the Agency really wanted to end the partnership. That was why SASSA had gone to court to oppose the infinity application. SASSA had written to CPS saying that the Agency was going out on tender but would not appoint CPS even if they responded to the tender, which was why Grindrod Bank had gone to court. The court judgement could have huge implications for SASSA.

As regards the SASSA working teams, they were working every day, and they made presentations and gave reports every Friday. On the coming Friday, there was to be a big workshop between SASSA, SAPO and CPS to discuss the phase-in and phase-out. At that point, the CEO would know which systems would be used etc. SASSA had told CPS to complete the phase-in and phase-out in three months so that if the company went beyond that, it would be four months and not more than six months.

The IMC said that only the IMC would be responsible for communication. The GCIS CEO had indicated that he would assist with the programmes.

SASSA had had a problem with the letter from SAPO, and SASSA had to take it back to resolve the issue. The IMC had resolved that matter. There were problems with funeral cover. SASSA could not just stop paying as the policies would then lapse. SASSA was making efforts to engage with all of those people who had more than one funeral policy. The officials would go to the beneficiaries and ensure that they signed a consent form for any changes.

Commercial banks came as a Court order. When it was a Constitutional Court order, SASSA had to respect the Court. The Panel was not happy that SASSA had not moved all beneficiaries to the banks.

The Chairperson agreed that the Committee needed to have more oversight but requested that Committee Members raise only issues that required responses from SASSA or the Department at the meeting. She would arrange another opportunity for Members to discuss those things that applied only to Parliamentarians and the Committee could discuss those issues and possible plans of action at that time. The Committee needed to evaluate whether the SASSA Act should be amended by addressing some of the areas that made the Act weak.

The CEO responded to questions on the appointment and the work of the work streams.

She referred to the SASSA Roadmap which contained the strategy as to how SASSA was going to make the payments for the next five years. When SASSA had started meeting with SAPO, both agencies had said that they would need technical help. She gave an example: If biometrics were included in the card, the card would need a larger chip as biometrics required many Gigabytes. That was too technical for them to handle in-house. The SASSA card had been extended remotely, and that was a feature that SASSA wanted to retain. Previously SASSA had given five options to the Panel, but the Panel had complained that SASSA had not given the costing of the five options, and how the Agency had therefore chosen SAPO. The CEO stated that SASSA had had the costing, but because it was SAPO, i.e. government to government and the IMC had instructed SASSA to work with SAPO, they had not done the costing analysis. That meant that SASSA had to do a cost analysis. SASSA needed to know what they would have after five years as technology became outdated very quickly. SASSA had to ultimately pay all benefits so the Agency needed a proper plan which showed how SASSA could involve all other departments and the systems that they were using. They had an in-house document, but they needed something that was credible and had been properly researched. SASSA had budgeted for R11 million, and the work streams were to be paid at DPSA rates. But National Treasury had not agreed with the budget and, because of the publicity, those people had left SASSA. The work streams had not completed any deliverables, so they were not paid. Subsequently, SASSA asked National Treasury to assist in developing a plan with strategy and costing. National Treasury had responded with an offer to help. She would then be able to give everyone a copy of their plan and way forward.

SASSA CFO, Mr Tsakeriwa Chauke, responded to the matter of the tender in which cash payments were to cost R55.60. It was, at that time, an estimation. But he explained that the payment of grants had two main streams and the one cross-subsidized the other. The elements that were cheaper subsidized the elements that were more expensive. Payments through the Automatic Clearing Bureau (ACB) were much cheaper to administer. Beneficiaries could go to the ATM, or to merchants, and draw their money without the active involvement of the service provider. Only the back-office work had to be paid for, so that meant money was cheaper to provide. As the cost was minimal, the savings were moved to the portion of the business that paid in hard cash. Together the two forms of payment had averaged R16.44. It was expensive to make cash payments, regardless of how many people were paid at a site. Costs included counting money, trucks, staff, insurance, security and a physical environment, etc. SASSA had R2.3 billion to pay for the payments for 2018/19. If the Agency contracted SAPO, who would SAPO contract to make the cash pay points? SASSA needed information on the number of people who wanted cash and the places where it would be delivered. When the Agency separated the two forms of payment, it had looked at the cost of cash payments without subsidization. In 2011, before CPS had been appointed, the tenders had come in at about R30 to R35 per beneficiary. The Agency had considered inflation from 2011 to 2018 and determined that, as a worst-case scenario, the cost would be R55. If a tender came in at R55, it would be within their budget. SASSA understood that it could not necessarily cap the amount, so the Agency had looked at the increase in the number of beneficiaries over the years to ensure that SASSA would come within budget. It had been a simulation that SASSA had made to ensure that they could stay within budget. The extension for CPS was for the cash element only for six months because there was no infrastructure in the villages. Even if they concluded the tender now, there would not be enough time for the service provider to acquire the cars and everything to be able to take money into the rural areas. That was a contingency plan for the cash element while SASSA was finalising the rest of the payments. The country was losing out in the amount of money for cash but, at the time, SASSA did not have another way of paying those beneficiaries.

Dr Madlopha said that she would have liked to ask questions, but it was new information and she needed to do some research before she could ask questions.

Ms Zodwa Mvulane, Executive Manager at SASSA, wanted to explain the delay. She stated that the procurement process between SASSA and SAPO had only ended in the first week in October. SASSA and SAPO had signed the agreement on 17 October 2017. After SASSA and SAPO were forced into one room to come to an agreement, the protocol had been signed on 17 November 2018. Only then was SASSA able to begin to understand what SAPO could and could not offer. Only after 12 December, when the Service Level Agreement had been signed, did SASSA then start working on the specifications for cash delivery. That had caused the delay. Furthermore, National Treasury had put a freeze on the loading of specifications during the holiday break from 15 December 2017 to 15 January 2018. Only once the specifications had been uploaded on 12 January 2018, could SASSA hold a briefing with potential bidders. In that session, the potential bidders asked for an extension of the closing date – from 2 February to 28 February. SASSA had agreed. That, on its own, had put the program four weeks behind schedule. The plan was to start paying in June but to test beforehand. SASSA expected the new service provider to be appointed in the first week of April and had given them two months to set up and to start to make the cash payments in June. The current service provider had to be there in case there was a glitch when SASSA and the service provider did the testing in May and June. The new service provider had to start paying in July.

SASSA would be using two cards until all the new cards had been issued to beneficiaries and the cards were working. If SASSA could cut the relationship earlier, that would be a bonus, but SASSA would be meeting with CPS to develop a rollout program, including timeframes to ensure everything happened within six months.

The CEO stated that she had answered all the questions and asked the DG, Ms Vilakazi, to wrap up. The DG confirmed that the IMC had to communicate the matters relating to SASSA to the public. GCIS was assisting as part of the IMC.

The Chairperson stated that the Committee had a problem with Ms Lumka Olifant and she would be writing to the office of the DG of Social Development about her. She was creating chaos and havoc in the country and might not be aware of that. Furthermore, she created a lot of extra work because everyone had to respond when she made statements.

The Chairperson said that the Committee had not finalised all issues that they had been raising. She would craft an agenda, and the Committee could meet to suggest a way forward. She said that there were pressing issues as political parties were supposed to be working to resolve the problems.

Meeting adjourned.

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