South African Social Security Agency 2017/18 Annual Report

Social Development

11 October 2018
Chairperson: Ms S Tsoleli (ANC) (Acting)
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Meeting Summary

Annual Reports 2017/18

The purpose of the meeting was to receive the findings on the 2017/18 annual report of the South African Social Security Agency (SASSA), and for the Agency to provide a progress report on the integration between the South African Post Office (SAPO) and SASSA, to ensure the payment of social grants was going smoothly.

SASSA said that following the new contract arrangement with SAPO, the payment of social grants was happening on a legitimate basis for the first time. The Cash Paymaster Services contract had been dissolved, and SASSA had not used CPS since the end of September. The Constitutional Court deadline had been met. The payment of social grants was now fully under the administration of the Department of Social Development, SASSA and SAPO. Industrial action had ensued, based on the biometrics training required by the employees, and this issue was currently being addressed with all relevant stakeholders.

With the transition from the old SASSA card, there were 8.5 million beneficiaries to be swapped or migrated, and up till now 6.9 million had moved to the SAPO arrangement. The deadline for all beneficiaries to be migrated was 1 November 2018. It was reported that SAPO staff had been conducting awareness programmes to assist beneficiaries in assessing their payments. There were also a number of beneficiaries that still needed to be trained on using and protecting their pins. The long queues would be resolved over time, as the SAPO contract was still in its teething phase. Although the strike had been concluded, employees had raised the issue of lack of training, and this was being resolved.

The Committee Members were concerned about robberies at SAPO payment points, and wanted to know what urgent steps were in place to curb them. The cost of providing beneficiaries with transport was extremely high, and they wanted to know how sustainable the transport plan was. Were chairs being hired at cash dispensing facilities to assist those waiting in long queues? There were still concerns about people getting referred to SASSA offices from other facilities.

SASSA then discussed the financial statements of the entity, and reported that there was a qualification on the audit finding by the Auditor General (AG). The entity was told that the Committee had already been briefed on its financial performance by the AG, so discussion was focused mainly on the findings of irregular and wasteful expenditure, and the measures it would be implementing to avoid a qualified audit opinion for this financial year.

Meeting report

Opening Remarks

The acting Chairperson said that the matters relating to the court case should be presented to the Portfolio Committee on a date to be confirmed, and asked Members not raise issues on the case at this particular meeting. The Committee would be dealing with the annual report of the South African Social Security Agency (SASSA) for 2017/18, as well as a report on the progress of the integration between the South African Post Office (SAPO) and SASSA.

Cash payment system: SASSA/SAPO integration

Mr Abraham Mahlangu, Acting Chief Executive Officer (CEO): South African Social Security Agency (SASSA), outlined the highlights of progress with the integration with SAPO. The payment of social grants had happened through a legitimate and lawful contract for the first time. The Cash Paymaster Services (CPS) contract had been dissolved and SASSA had not used its services after the end of September 2018. The court deadline had been met by SASSA and for the first time in many years, it had managed to show the success of the South African Post Office in paying social grants. There had been a budget of R8.4 billion for SAPO to disburse grants to recipients, and 86% had already been paid, with 14% still to be disbursed, which was a good indication that government to government collaboration was happening. There had been industrial action that had ensued and created a disturbance in certain areas, but the strike was over for now.

Ms Raphaahle Ramokgopa, Executive Manager: Strategy and Business Development, SASSA, gave a brief synopsis on thee transition between SASSA and SAPO. She said that 8.5 million beneficiaries needed to be transferred to the SAPO system, and at this point 6.9 million had been moved to SAPO, over one million to other banks, and 600 000 old SASSA cards were still in circulation. However, SASSA was hoping that by 1 November all beneficiaries would have migrated to other banks or the SAPO.

Regarding compliance to the constitutional court ruling, by the end of September there had been 200 000 beneficiaries on the CPS system. This had since been resolved, and they had engaged CPS on the exit contract with some issues such as information of beneficiaries that needed to be removed from their system. The biometric payments done by CPS had been zero. In October, SASSA had paid 10.9 million beneficiaries, and of that number, 61% had been paid by SAPO, 2.1% by Grinrod, and 600 000 on the old SASSA card. By December, SASSA would not be dealing with the old cards.

Ms Ramokgopa said that beneficiaries had been migrated from the old card into the SAPO environment. The majority of the beneficiaries had gone to the automatic teller machines (ATMs). It should be noted that the SAPO environment was not intended for large volumes of people, but the Agency was working on infrastructure development to ensure that the post office could accommodate beneficiaries as well as the staggering of payments so that people did not collect the money on only one day. In September, SAPO had made payments at 1 740 pay points, and so far successful payment of beneficiaries had taken place. There was also a transport plan to assist beneficiaries as a temporary measure. SASSA had also re-aligned the pay points to the SAPO, and the estimated cost for transport, as a measure for now, was R27 million.

System challenges were no longer a concern, but there were still minor challenges of the biometric system that involved engagement with the Department of Home Affairs. At some of the cash pay points, money had arrived late. SASSA was still learning beneficiary behaviour, as some exercised their options to go to other areas and in some cases they rented cars to be able to collect their money.

The South African Post Office was still dispensing cash through dispensing machines, and its staff had been doing awareness programmes to assist beneficiaries in assessing their payments. There were also a number of beneficiaries who still needed to be trained on using and protecting their pins. The long queues would be resolved over time, as the SAPO contract was still in its teething phase and over time SASSA would be able to stabilize the payment environment.

Ms Ramokgopa said there had also been reports of security concerns from beneficiaries on the first three days of the month. Robberies were on the increase and SASSA was engaging with the security cluster in this regard. A workshop had also been arranged to discuss this issue. The strategic focus was to deal with all related challenges beyond the CPS contract. The vendors had complained to say they could not obtain access to beneficiaries at SAPO offices, and would need to be informed of staggered payments, beyond the CPS contract.

SASSA was re-positioning SAPO as the primary grant dispenser. It was also working on decommissioning the old card and improving the beneficiary experience across the board.


Ms L van der Merwe (IFP) said the issue of robberies at SAPO points was very concerning, and wanted to know what urgent steps were in place. How many robberies had there been so far? The current strike over biometrics was a challenge -- what type of interventions was in place to address this? Regarding the 600 000 cards to be migrated, were there 600 000 new cards in circulation at the moment? This question was asked because elderly persons did not have clarity on some of the changes. There was also an infrastructure challenge within SAPO offices.

Ms B Abrahams (ANC) wanted to know how confident SASSA was that by 1 November, everyone would be on the system. The transport costs were high -- what were the criteria for providing transport, and how sustainable was the transport plan? Were chairs hired for use at cash dispensing facilities? There were still concerns that people got referred to SASSA offices from other facilities. What was the special remedy for Western Cape transport?

Ms B Masango (DA) congratulated SASSA on overcoming the teething challenges. She asked what effect the strike was having. Was the biometric system not meant to curb fraud? What was the position of SASSA on biometrics? How many people had been affected by the non-enrolment of some beneficiaries?

Ms A Khanyile (DA) wanted to know how transport was arranged at SASSA, as some people had to travel up to 50 km to get to SAPO centres. Would the pickup points be communicated? The issue of vendors was a concern, as they used to sell at previous grant distribution facilities, and currently SAPO was not offering vendors an opportunity to trade outside their offices. What could SASSA do to assist in this regard, to allow them to proceed with their businesses?

Ms V Mogotsi (ANC) conveyed congratulations to SASSA, as well as to the Portfolio Committee for having pushed SASSA to meet all its constitutional court rulings. The 54 million South Africans should know that the Committee was performing its oversight role. She asked SASSA about the biometrics issue and the relationship between the employer and the employees, especially the grant administrators? She said there was a post office at the Diepkloof Square, but there were no mobile toilets around that particular mall, and senior citizens were exposed due to the robberies taking place around cash distribution centres. Vendors should be able tocontinue to sell as a means of economic activity.

The Chairperson wanted to know how much had been saved through the SAPO/SASSA arrangement.

Mr Abraham Mahlangu, acting CEO: SASSA, said the savings curve would not be reflected now as the SAPO offices needed some infrastructural improvement, so the investment may be higher. However, in the long term, it would be able to show savings for SASSA. The cost of building infrastructure was high for now, but as SASSA went along it would be able to track the savings.

With regard to safety, SASSA had national and provincial joint information, and a SASSA firewall which tracks the movement of cash distribution services. There had been some improvement in the last month. They had solicited assistance in the security cluster and did their own risk assessment which limited the exposure of payment for social grants.

He acknowledged that the current strike had been concluded, but the employees had raised the issue of a lack of training, and SASSA was resolving the issues raised by the internal staff.. At the centre of the agreement was that the applicants could not be turned away because of the inability to register through biometrics, as according to law all citizens eligible for social grants should be able to access them. Regarding the 600 000 cards in circulation, he said there were enough cards in circulation at the moment to meet the demands of the beneficiaries.

The issue of prolonged waiting for service in queues was a concern. SASSA had given the SAPO the discretion to monitor the queues when the cash was being distributed. Chairs were being rented from service providers to improve the dignity of the services.

Mr Mahlangu said the transport plan was not a permanent solution. The government needed to broaden the areas where beneficiaries could receive their payments, as there was no permanent cash-receiving infrastructure. More educational programmes were needed to assist beneficiaries, but the transport plan was an intervention, not a permanent feature. Communication was happening locally to assess the beneficiary behaviour in regard to the regional transport arrangements.

He would give special attention to the Ennerdale case of SASSA applicants having to travel from their area to Alexandra. The issue needed to be resolved in an inclusive manner with the Public Service Association (PSA). There would be follow up meetings to continue discussions with the PSA on 23 October. The suspension of the biometric system was also highlighted, as it was intended for the detection of fraud, and for SASSA to render services for beneficiaries, the biometrics issue needed to be resolved. SASSA had agreed to prioritise a task team to ensure it was implemented in the shortest possible time.

SASSA had been keeping a good relationship with vendors and would continue to assist them. The safety of beneficiaries was a concern, and while SASSA did not have an immediate response on security measures for now, it would work with the security cluster to improve on security by looking at the trends currently on-going.

Regarding the 600 000 cards remaining, Ms Ramokgopa said that in September alone, SASSA had migrated 2.7 million beneficiaries through the card swap process. It was hoping that this would be completed by 1 November, and those wishing to go to the banking facilities of their choice could do so. However, there was also an auto migration facility to open automatic accounts and encourage beneficiaries to go to any SAPO facility within their area. If there was a pay point 50 km from a catchment area, SASSA would need to continue with assessments and analysis.

Ms Ramokgopa informed the Committee that this year SASSA would still be paying off CPS in respect of outstanding matters for this financial year. The investment trend would be steep, as they needed to adhere to the infrastructure programme of the government.

The Chairperson said SASSA had done well, although the Committee at times would be at odds with the entity over the provision of oversight to the Department of Social Development, as this was one of the most important programmes in addressing poverty alleviation. The programme was now back where it was supposed to be -- under government control.

SASSA: 2017/2018 Annual Report

Mr Mahlangu said that with the challenges faced by the Agency, it had not managed to get the desired audit outcome. There had been a qualification, and SASSA was addressing the issue and the remedial actions to be taken.

Ms Ramokgopa briefed the Members on the annual performance of the agency, focusing on performance information, budget and expenditure, audit outcomes and recommendations for approval by the Committee.

SASSA had 42 planned targets, and 27 had been achieved, which represented a 67% achievement rate. 82 fraud, theft and corruption awareness programmes had been conducted across nine regions, compared with 72 that were planned, and more than 3 300 officials had been reached. 88% (393 of 446) of reported fraud, theft and corruption cases had been investigated. The majority of the cases had involved child support grants, which were dominated by non-disclosure of income by the beneficiaries, and old age grants, which were dominated by fraudulent identity documents (IDs) implicating both foreign nationals and South Africans. There were also instances of disability grants being issued to people with no disabilities.

SASSA had managed to address 317 of 341 of corruption cases, with most investigations involving different provinces, as the syndicates operated mainly in KwaZulu-Natal (KZN), North West, the Eastern Cape and the Western Cape. It was planned to have an operational risk register in all branches except two, where the process was not fully completed within the financial year. The HR plan was to focus on the biometric system, and norms and standards had been developed for each activity in the biometric process. However, this issue was still in dispute, with labour negotiations still ongoing.

The entity’s capacity model had been reviewed to determine the number of posts/staff required at each local office, based on the standardised and improved business processes, and had been approved. 95% of funded posts had been filled, and SASSA had 8 800 employees at the end of March 2018.

One of the targets was to ensure the co-sourcing of record management centres was completed in Mpumalanga, Limpopo and Northern Cape. All work had been completed, and the appointment of cleaning companies and security companies had also beendone. The biometric solution for users was procured but instead of the focus being on staff, the system was rather used for beneficiaries.

Although the business case for an information communication technology (ICT) governance framework had been developed, implementation had not happened. SASSA had targeted upgraded connectivity infrastructure across the country, and the head office had had an upgrade, and there had been improvements at regional offices and record management centres. However, upgrades in some cases could not be done as they were dependent on a number of external parties, such as Telkom, landlords and municipalities. The data services had been implemented, and the NSFAS arrangement had assisted the entity as currently 14 177 beneficiaries received NSFAS bursaries. There had been an integration in the system, and SASSA could track the system to ensure learners who passed received bursaries.

Regarding back scanning solutions, these had been implemented in all the provinces except the Northern Cape, which had been done in the previous financial year. The 464 500 beneficiaries had been scanned to the ongoing solution, and the rest would be implemented at a later stage. The Enterprise Business Intelligence Solutions system had been implemented in all the branches. The integrated grant payment system had been procured and configured by SAPO as part of the agreement between SASSA and SAPO, using the same system. Almost all suppliers were paid within the stipulated time frame, and the balance had involved disputed invoices.

2 130 731 new social grant applications were processed, which was a 141% achievement against the target. There were now 17 523 737 social grants in payment, including grants-in-aid. The target was to have 500 000 Social Relief of Distress (SRD) applications processed, but 573 000 had been processed at a cost of R546 million. In processing applications for children 0-1, SASSA managed to reach 665 000 beneficiaries, which represented 119% of target.

Ms Ramokgopa said that SASSA had reviewed hospital grants and achieved 181 305 instead of 232 000. There was significant dependence on the Department of Social Development through the social workers, and only then could SASSA finalise the grant process. It had managed to visit 685 wards to engage with beneficiaries and process applications, and had planned 600 beneficiary education training programmes but managed to achieve only 544. There had been 42 service delivery interventions through the Mikondzo programme; 89% of enquiries were resolved within five days, in accordance with SASSA’s customer care charter. It had conducted 1 800 public awareness programmes – 800 more than had been planned.

One of the targets was to open a corporate account for the management of social grants. The Paymaster-General’s account in the SA Reserve Bank environment had been approved on 17 October 2017 by National Treasury, and was operational. The account had been used since January 2018 to process the Automatic Clearing Bureau (ACB) direct transfers. The CPS contract had ended, regulation 26A had been enforced and SAPO had begun with electronic payment. All the biometric data had been migrated to SASSA, except the cash beneficiaries, and more data would be coming at the end of the contract to monitor beneficiary behaviour.

The phase in and out plan had been developed and SAPO had participated fully. Quarterly reports were submitted to the Constitutional Court in compliance with Constitutional Court Order. In addition, the Constitutional Court gave two directives in November 2017 (which required SASSA to report on a monthly basis on the implementation. Accordingly, SASSA had filed affidavits on a monthly basis.

Mr Tsakeriwa Chauke, Chief Financial Officer (CFO), SASSA, then presented the spending for the year 2017/18, linked to the entity’s performance. In Programme 1 (Administration), the allocated R2.6 billion had been under-spent by R81 million. The compensation of employees had been about 5% under-spent due to positions not filled at the end of March 2018 -- there had been 1 102 staff lost with only 526 replacements. There were still positions within the executive that remained vacant and were occupied in an acting capacity. There had also been under-spending on consultants, as more work had been done on fraud and compliance issues internally. There was a telephone management system in place to monitor costs, and travelling costs which were high in the previous year had been curtailed.

The financial statements had been presented fairly in all respects with no material misstatements. However, a qualified audit opinion had been received from the AGSA.

The financial statement for 2017/2018 was to be presented, and the Chairperson interjected and asked the Members if the Committee would take the information which had been earlier presented by the Auditor General.

Ms Masango said SASSA should present its side of the story. The AG’s report had been presented at other entities as well.

Ms Mogotsi said that SASSA needed to reflect on what had transpired from the AG’s office and then follow up on the recommendations. The AG had already presented the report and provided SASSA with key areas to focus on in the new financial year.

The Chairperson commented that the financial outcomes of SASSA had already been presented by the AG, unless there were additions included by SASSA that had not been covered by the AG.

Ms Masango commented that the entities had been given a chance to present their reports.

Ms Abrahams said there would not be a need for the presentation to be repeated.

The Chairperson then requested SASSA not to deal with the AG’s report, as it had been presented to the Committee already.

Mr Chauke said the AG’s qualification had highlighted three elements to be addressed. Firstly, there was the need to deal with the completeness of the irregular expenditure register. The process was being updated electronically to eliminate any possible irregular expenditure in 2017/2018 so it could start from a clean slate. In terms of prevention, SASSA had started an awareness campaign in respect of supply chain management (SCM), making sure there was an SCM unit, with a dashboard and audit action plan. SASSA had received written notice to deal with condonations from the National Treasury, and these remedies would avoid further qualifications in future.


Ms Abrahams wanted to add a recommendation on the control measures, to include a system of monitoring and evaluation. She wanted to know if the internal fraud unit had been successful, as according to the AG’s report, 33% of cases at SASSA had not been investigated. What were the implications for not complying with the Performance Framework Management Act, where employees failed to disclose information on transactions, and what was the task of the consequence manager? It was stated that no adequate systems were in place to deal with irregular expenditure, so how would SASSA comply with all regulations? R1.72 billion had been reflected as irregular expenditure, and SASSA had overspent on its 2017/2018 budget. The internal controls deficiency had been the basis for the qualified finding, so what was the leadership doing to improve SASSA’s financial performance?

She asked about the investigations into corruption at the KZN branch, and how the entity was dealing with that situation. The performance reporting system on customer satisfaction was inadequate. How was it possible that there were so many irregularities in SASSA with the management in charge? When would the acting positions be filled, as it was costing SASSA a lot on annual expenditure?

The Chairperson asked SASSA to explain its organogram structure as well.

SASSA’s response

Mr Mahlangu said the qualified audit outcome was a serious concern, and there were now three focus areas to deal with, as highlighted by the AG. Most of the irregular actions had occurred in prior years, and there were cases that were in the legal process. However for the investigations, a forensic audit was required and the capacity was currently not available in the organization. Consequence management was a work in progress.

Regarding the internal fraud unit and the issue of non-compliance in KZN, the fraud unit needed to be fully capacitated, and beefed up to be able to track and administer cases. The KZN internal investigations were being concluded. Internal audit reports had been done and further investigations were continuing.

Mr Chauke said SASSA was currently validating all transactions to deal with irregular expenditure from April 2018. In the Western Cape and KZN, consequence management had been implemented, and had gone through the financial misconduct board and review processes at the Commission for Conciliation, Mediation and Arbitration (CCMA), where SASSA had lost some cases. This would take some time, as there were loads of administrative processes to deal with. The full disciplinary process would take some time to conclude. The existing transactions need to be validated, and about 1 300 transactions needed to be reviewed prior to the interim audit. An SCM unit had been established to provide oversight.

Mr Mahlangu said the performance evaluation system did effectively identify achievements against targets, and work on the system was currently on-going. Regarding the vacant positions, the new Minister wanted a review of the SASSA organogram, and most of the vacancies would be filled by March 2019.

Ms Masango referred to the root causes of irregular expenditure and the remedies that were in place to assist SASSA to get unqualified audit findings, and said R232 million had been returned to Treasury. She asked whether these things would not happen in future. Going back to a previous presentation, there had been a situation where ex-Minister Shabangu had said Grindrod Bank had taken R10 from beneficiaries, and that she would be challenging it -- how far was this process, as some people were complained that their money was not reflecting the correct amount. There was an issue of irregular expenditure in the Integrated Community Registration Outreach Programme (ICROP), and throughout the presentation of the AG, SASSA had been found wanting. It was a concern that much irregular expenditure was still under consideration. What was being done? The information on the SRD was confusing.

Mr Mahlangu referred to the Grindrod Bank issue, and said SASSA could not take the matter up on behalf of beneficiaries. However, the Black Sash had invited SASSA to be a friend of the court, and this case was still ongoing.

Mr Chauke said that the R232 million returned was based on guidelines from National Treasury for any written surplus received. The calculations had been changed, and this would not happen again. The long outstanding cases that were related to irregular expenditure were awaiting the conclusion of court processes. The R409 million security upgrades matter was under investigation, and if there were criminal violations, the SAPS would be informed accordingly.

The office upgrades issue was awaiting court action, and SASSA needed to present Treasury with a final report. The R16 million transaction was irregular, and a dedicated team had been appointed to look at the material case in terms of value, because it would increase if it was not dealt with, as it was a cumulative figure. In 2017/2018, irregular expenditure had been R1.7 billion, and SASSA could report to Committee that it was concluding engagements with National Treasury.

Mr A Mahlangu said the ICROP was under investigation in KZN, and they were defending the issue by suspending the contract in May 2018. SASSA was investigating the whole range of the value chain, as there could have been some misrepresentations.

The Chairperson emphasised that the issue of the contract with ICROP was a concern and encouraged SASSA to also disclose the name of the entity.

Ms Mogotsi had a concern over the Construction Industry Development Board (CIDB) clarification.

Ms Masango said that people were by-passing the system at SASSA and did as they pleased. This did not sit well with the Committee, as it was reflected as irregular expenditure, and the Committee needed to ensure that people were held accountable.

Mr Mahlangu said the company was called Azande Consulting, and SASSA had spent R277 million on the R400 million contract prior to it being terminated.

Ms Dianne Dunkerley, Executive Manager: SASSA said there was money for the social relief of distress (SRD) programme. It had been R600 million for last year, and R410 million in 2018. The Department did not manage the funds without reverting to SASSA. National Treasury was concerned about the budget being spent in provincial structures.

Ms Mogotsi asked why there was under-spending on human capital, as it was part of the organisation. SASSA should not focus all its energy on the grant payment system. The organisational structure needed to be detailed so that all branches could be identified. The number of people in the structure and support staff needed to be reflected for the organisation as a whole, and the Committee also needed to know the SASSA employment rate.

The Chairperson commented that the organogram needed to reflect the numbers and show where vacancies were located within the entity in order to prioritise posts that needed to be filled.

Mr Mahlangu said they would provide a more detailed organogram in future.

Ms Van der Merwe (IFP) was concerned about what the AG had said. The audit finding was damning and SASSA needed to do more work to address the findings. Members should be furnished with reports on where the investigations were so they could carry out their oversight role. Consequence management was a major concern. She asked about the performance bonuses and how the 2 292 people were identified, wanted to know how many people with disabilities were employed by SASSA, and how the bank costs issue was being addressed.

The Chairperson said the Committee needed to have the contact details of SASSA executives so that the matter of service delivery would be taken seriously. There should always be a SASSA official to assist elderly citizens by being efficient and effective. Members of Parliament should intervene where they could assist in speeding up service delivery to ensure that all citizens received assistance from the Department of Social Developmen. The new contract arrangement with SAPO needed to be supported by all stakeholders involved in the process.

Ms Masango said her worry was that there were many people who did not receive their social grants and were unaware of steps they needed to take to addressing their concerns.

Mr Mahlangu referred to the performance management bonuses, and said they were mostly of 13th cheque nature. Because of the challenges SASSA was facing, there had been no bonuses for SASSA senior management.

SASSA’s pre-occupation had been in dealing with the constitutional court orders, but in the next cycle of reporting all information pertaining to the cases would be presented to the Committee.

The number of people with disabilities was at 1.8%, which was just below the 2% target. There was an attempt to assist them more, and by working on the reorganisation of the call centre, more people would be hired in this regard.

The Chairperson said that SASSA should prioritise gender in their entity, and be able to bring in junior managers so that they could get to know what was happening in Parliament and the type of work that was currently unfolding..

She said she would not be allowing more questions from the Members, but there had been a clarity seeking question by Ms Van der Merwe about hotel “no shows” amounting to R490 000, and there was a need to name and shame people that wasted taxpayers’ money. There was a lot to be discussed on the matter of wasteful expenditure, and that this issue had raised at the meeting on the 10th, and would be presented to the Committee.

She concluded by saying that there would be a quarterly report on each of the findings by the AG. The Members had also requested a detailed report on the ICROP. The collaboration with SAPO was a new environment and worker issues needed to be resolved as soon as possible. The constitutional court reporting should continue.

The meeting was adjourned.

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