Second Special Appropriation Bill: Department of Social Development briefing, with Minister

Meeting report

Opening remarks
The Chairperson announced that the Minister of Social Development was attending a Cabinet lekgotla but would be present for the majority of the meeting. She would introduce the Social Development interest in the Second Special Appropriation Bill [B17-2021] which was intended to facilitate interventions by government to address the consequences of the July unrest in Gauteng and KwaZulu-Natal and the impact of Covid-19 on the most vulnerable sector of society. The Bill proposed that R26.2 billion should go to the Department.

Remarks by the Minister of Social Development
Minister Lindiwe Zulu assured the Committee that the Department and the entities, the South African Social Security Agency (SASSA) and the National Development Agency (NDA), were working closely on their commitment to social development by connecting, communicating and planning with each other so that all activities would speak to the mandate of the Department. At a previous meeting with the Portfolio Committee, the Department had re-committed to responding to the needs of people and being conscious of what was happening to the people at any given moment. DSD was then able to respond as quickly as it could. The response was not only in the purview of the Department of Social Development but with government overall and so the Department took advantage of other governmental interventions and did not work in isolation. The DSD also committed to fulfilling its constitutional aspirations and devising innovative ways of employing social service professionals while strengthening the capacity of civil society organisations as an extension of the state. DSD spent a large amount of money on NPOs and saw the NPOs as an extension of what the Department needed to do as most of the NPOs were closer to the people.

She noted that the Committee had requested a report on what the Department would do with the allocation of R26.2 billion towards social relief of distress; a comprehensive report on the proposed allocation of R500 million for SASSA data and payment management system enhancements; a detailed report on uptake, distribution and challenges faced by SASSA in the rollout of the Covid-19 Social Relief of Distress (SRD) Grant; an appraisal of how the Department had dealt with the social and the economic impact of Covid-19 as well as the recent unrest in the KwaZulu-Natal and Gauteng provinces.

Regarding the enhancement of the SASSA data and payment management system, the Minister stated that SA had a well-developed social assistance framework that was adjusted from time to time to target specific populations amongst the poor. The phasing in of the child support grant was a case in point of how it was possible. SASSA paid just over 18 million people via the legacy social grant payment system called SOCPEN. There was a need to change the technology in order to be responsive to the current needs and to utilise the latest technology. An upgrade of technology would ensure greater and speedier responsive to the reality of population needs and ensure higher efficiencies with a rigorous grant application process that would improve the lives of the poor and reach each and every beneficiary. To respond to the incidents of violence and social unrest in Gauteng and KwaZulu-Natal, and with the support of a partner, the United Nation Children’s Fund (UNICEF), DSD had conducted a rapid assessment on the impact of those developments on social development services using the real-time monitoring tool (RTMT). The report was available. The Minister thanked the UN for being agile enough to respond immediately and to assist the Department. The tool found that people and a number of services had been adversely affected, particularly in two districts of KwaZulu-Natal. Food security, economic participation and child protection deteriorated significantly.

The brief episode of destruction of social fibre would worsen the long-term reconstruction and recovery efforts if it were not urgently prioritised. Within the already unbearable conditions that Covid-19 had brought into the lives of people, those incidents had deepened the experiences of hunger, abuse and neglect, post-traumatic stress disorder and economic exclusion across the population. She emphasised that the post-traumatic stress disorder and the economic exclusion had especially impacted on the black communities because even the middle class had been adversely affected.

The Minister stated that the experience of the Department with the RTMT had reinforced its call for investment in data management and infrastructure that would bring government to the people according to their needs. Digitisation and improved case management as well as the monitoring and evaluation of social development was imperative for fast tracking interventions at the coalface.

The Department had responded by invoking its social protection mandate, taking social development services to the people, providing food to the affected individuals and vulnerable households, rendering psycho-social support services, and implementing social development vouchers and grants. Child protection services were provided and communities were mobilised towards restoring their infrastructure and livelihood.
It was not just the responsibility of government to do that. Government had to create a conducive environment to enable the people to mobilise themselves and to rebuild. That was a reminder of how the fatal and disabling pre-democracy conflicts had moulded the commitment of the people to protect their common interests. It was particularly relevant in September, heritage month.

The Department and its entities would present a detailed, value proposition that would support those interventions that offered practical opportunities and meaning in the lives of the people.

The Chairperson asked when the position of DG of Social Development would be filled.

The Minister responded that she had started by filling the Deputy Directors-General positions and then she would fill the DG’s post. It would not take long, although she could not give a specific date for filling the position but the process was underway.

The Chairperson stated that it was problematic when the senior officials in the Department were acting.

Briefing by Department of Social Development

Mr Linton Mchunu, Acting Director General, DSD,  stated that the pandemic had come at a time when the country was grappling with high levels of food insecurity; severe hunger had increased from 4.3% when the lockdown started, to 7.0%  according to StatsSA – translating to approximately 13.7 million people in the country without adequate access to food. About 70% of those who had lost their employment were in grant-receiving households. The number of people receiving no-income increased from 5.2% before the lockdown to around 15.4% in the 6th week of the National lockdown; and thus amplified vulnerability and food insecurity in many communities.

Mr Fanie Esterhuizen, CFO, DSD, presented the allocations proposed by National Treasury that were contained in the Appropriation Bill:
- provision of social grants, including the top-up, the R350 Special Grant from 01 September 2021 to 31 March 2022 at an amount of R26.2 billion;
-R500 million towards the South African Social Security Agency (SASSA) for system enhancements

The proposal also included the continuation of the Presidential Employment Stimulus in 2021/22 financial year, i.e. the extension of the volunteer programme NDA has been providing up to March 2022 (R 30m);
the early Childhood Development Grant: ECD Employment Stimulus Relief Fund Provision of shelter (R178 m); and provision for the extension of Social Workers (R120 m) which would be allocated to Provincial Equitable Share. 

Mr Tsakeriwa Chauke, General Manager: Finance /CFO, SASSA, stated that the data management system, SOCPEN, had been used for many, many years and had many weaknesses. An innovative solution was necessary to meet the demand being placed on the system by SASSA’s SRD programme and the new SRD Grant. External services were acquired to develop a web-service for applicants to apply for the grant, to ensure the integration with the USSD and GovChat application channels, to perform a deduplication service,
develop and implement the application programming interface for the validation of the grant against various databases and provide the outcome of grants in terms of being approved or declined. He added that the majority, or R 332.8 million, of the proposed R500 million would be to pay for the over the counter services of the PO as most beneficiaries used the Post Office for DSD services while R28.3 million would be put aside for system enhancement, R35 million for communication and R42 million for intervention and the extended call centre.

Mr Mchunu briefed the Committee on key interventions during the Covid-19 pandemic and the Department’s response to the incidents in KwaZulu-Natal and Gauteng during July 2021. Key interventions related to the social protection mandate. The areas most severely affected in Gauteng and KwaZulu-Natal had resulted in DSD and SASSA losing offices, vehicles, infrastructure, computers, furniture, equipment and PPE that were vandalised or stolen, and many documents were destroyed. That had impacted on services which were severely disrupted. The estimated costs of damages to the Department’s Offices alone stood at almost R600m.

He recommended that the Standing Committee on Appropriations noted the continued challenges the pandemic was having on the economy and that there might well be a need for further income support measures beyond March 2022, especially for those aged between 18-60, notwithstanding the need to link working age recipients to economic opportunities through active labour market programmes that included job placement and skilling, and creating more sustainable livelihoods;

Ms Totsie Memela-Khambula, CEO, SASSA, stated that SASSA had ensured that women and caregivers were included when  looking at grant applications. SASSA was looking at solutions, especially for the youth who were in the majority of those receiving benefits.

Ms Thamo Mzobe, CEO, NDA, said that the NDA had worked with SASSA in the rural areas and had taken care of people there. Dialogue was important because many solutions actually lay in the community. The NDA wanted to empower the volunteers who were doing sterling work in rebuilding the fabric of society.

Mr Mchunu spoke of the shocking statistics of the number of applicants who had not completed school. He added that 50% had obtained Matric but still could not find employment. He added that the Auditor-General had raised the challenge of alignment across government as some people accessed support through several government sources, resulting in extensive fraudulent activities. DSD was also trying to find ways in which people could spend money closer to home.

Mr Brenton van Vrede, Acting DDG:  Comprehensive Social Security, DSD, stated that poverty had been positively addressed by government and had been reducing until 2015 when poverty had again begun to increase. Inequality was simply getting more extensive. Addressing poverty in the country had been at its best during the height of Covid in June 2020 when poverty came down from 20% to 18%. Inequality had also been reduced but unemployment had kept climbing.

He stated that there were 66 vacant posts in the Department, a ratio of 7% to 9% vacancies. The vacancies occurred at various levels and were partly due to the number of people retiring.

Ms Memela-Khambula said that SASSA had negotiated with stakeholders to get good value for money when it came to service providers. The technology was old but with newer technology, SASSA could do better at planning and supporting government.

The Chairperson thanked the Minister in absentia, the Department and the entities.

Discussion
Mr O Mathafa (ANC) said that the R26 billion was important to deal with unemployment and poverty but he asked about the capacity of the organisations to undertake distribution of the funds. He asked about the impact of vacancies in the Department on its ability to function. What was the rate of vacancies in SASSA, which was the organisation that touched beneficiaries directly? What was the owner profile of the service providers who had been given contracts? It was well-known that Black people, mainly women and youth, remained poor.

Was the total allocation to cater for up to 9.4 million people in distress the target of the Department or how had the figure of 9.4 million been reached? Would the allocation be sufficient to cover unexpected increases in the number of people in distress? How would any increase in the uptake of beneficiaries be addressed?

Mr A Sarupen (DA) stated that people who were not entitled to the grants had been able to get through the vetting system. How had that happened? How had civil servants and people in full-time employment obtained grants? What measures were in place to recover those monies? Perhaps DSD could provide a high level picture of what was going on there. What mechanisms were in place to ensure that there was no fraud?

He noted that DSD had published a Green Paper but had then withdrawn it. Considering the macro-economic environment and considering that the country was in a very constrained situation where the focus had to be on recovery, why had the Department issued the Paper at that time when it knew there would be complaints and that it would erode trust in the state? What lessons had been learnt from that exercise and how would the Department go about introducing such things in the future? How did the Department intend coordinating with National Treasury on social security reform?

Mr X Qayiso (ANC) reminded the Department that the National Development Plan was to reduce poverty by 6% by 2030. Was that achievable? If not, what would DSD propose? He noted that people around the country stood in queues to get the grant, especially since the current registrations in September. Had some people not given up trying to get a grant after registering for the grant in the phase one?

Referring to applicants for grants, Mr Qayiso had heard the Acting DG say that 50% of the beneficiaries had not completed school and 40% made the list of the unemployed. Looking at the 2nd quarter unemployment figures, it was obvious that SA was struggling with a high rate of unemployment not seen before. When DSD had calculated the figures, had it considered the StatsSA unemployment figures? How did the figures of the Department align to StatsSA statistics? When the Committee considered its recommendation, it should be considered that the grant could go beyond 2022, given the distress in society and the crisis in the economy. Even before Covid-19, the economy was in crisis. Something had to be done to address the crisis, even if it was a basic income grant. Grants had to be closely considered because poverty, especially amongst the youth, was a ticking timebomb.

The Chairperson asked how prevalent malfeasance had been in respect of the first round of paying out R350 and what had been done about it? Regarding the reference to SAPO and the banks, what was the nature of the relations between SASSA and the SAPO and between SASSA and the banks? How would SASSA rate the service that that SASSA was getting from SAPO and the banks and what kind of response was seen from the beneficiaries regarding SAPO and the banks? Were there any challenges with the Post Office and the banks?

He asked if the call centres were outsourced. If so, why were they not in-sourced? During first wave of Covid-19, civil society and businesses had been mobilised to intervene, especially in relation to the food parcels. It seemed that there was no longer a focus on food parcels. Was that correct? If so, why and could it be changed? Food parcels should be a civil society concern as well, and not just an issue for DSD.

Mr Mchunu could not initially respond as a result of technical difficulties.

Ms Memela-Khambula responded to Mr Mathafa’s question about capacity in SASSA as a result of the vacancies. She highlighted the fact that the SASSA budget had been cut, as had those of all other departments. SASSA also had to adhere to the agreement with unions in respect of salaries and that had absorbed some of the personnel allocation. The vacancy rate stood at 5% and SASSA had set up a structure to identify key and critical posts in each region to ensure that there was capacity in all offices. The payment of the R350 grant was largely a digital operation and highly skilled people were required but not large numbers. Skills were needed on the data analytical side and in cyber security. It was those skills that had to be developed so that future capacity could be built. It meant looking at doing things differently. SASSA did not have the funds to do everything, especially as the entity had lost R350 million on the cost of employees in that year alone. She did not want to fill jobs and then not be able to pay the people.

Ms Memela-Khambula also responded to the question of why SASSA had presented a figure of 9.4 million people in distress. Having engaged with stakeholders, SASSA had come to a projection of 9.4 million. If that figure was exceeded, SASSA would have a challenge and would have to go back to the structures. Previously, in phase one, the grant was paid to 6 million people. Regarding public servants that had accessed grants, she pointed out that in its haste to pay people the grant, and because SASSA did not have access to Persal which showed public servant employees or to the database showing people who were in prison, the checks were not effective but, having since signed a number of service level agreements, the entity was receiving refreshed databases on a monthly basis from different institutions and that had improved the vetting process.

She said that SASSA was engaging banks to see if bank accounts could be checked before a grant was paid to ensure that only people in need received the grant. That would eliminate inclusion errors. SASSA worked closely with institutions that had fraud systems and people picked up in those systems were not given the grants. Those were the people who were complaining the loudest about not receiving grants.

Ms Memela-Khambula told the Chairperson that, in terms of the normal grants, 70% of the beneficiaries obtained their payment via the SAPO, although the beneficiaries did not all physically go into a post office. They were able to collect the grant from other structures such as various retailers and banks. About 500 000 clients went into a post office and 200 000 clients collected their payments from SASSA pay points, which was the most expensive model of payment. SASSA was looking at how to address that issue.

The Chairperson asked for clarity about the how the 70% of clients with SAPO accounts obtained their grant money.

Ms Memela-Khambula explained that 70% of clients had a SAPO account but the majority drew their money from other mechanisms and did not physically go into a post office to collect their money. Clients drew their money from ATMs or retailers, depending on what was convenient. The card gave them wider options of accessing the funds.

The Chairperson asked at what rate SASSA paid SAPO and how other providers were compensated. He asked if SASSA was using the most effective way of making pay-outs. Did SASSA contract with the payer?

Ms Memela-Khambula explained that SASSA was the payer and SAPO was the distributor.

The Chairperson asked who paid the transaction costs.

Ms Memela-Khambula stated that SASSA paid the transaction costs. Costs were higher for over the counter costs and lower for other platforms. Clients that banked with the banks carried the cost of transactions themselves. The new beneficiaries had been given a choice of bank and the majority had selected a bank and not SAPO because they did not want to queue at the post office. However, SAPO had also come up with alternative mechanisms to over-the-counter pay-outs in the light of the queues and the dangers of Covid-19.

She stated that SASSA’s relationship with all distributors was excellent. SASSA engaged with banks, retailers, SAPO and cash distributors before a payment run to ensure there were no glitches. During the riots in KwaZulu-Natal and Gauteng, the support from the banks was excellent and they had ensured that there was enough money to pay clients through ATMs and the retailers.

She stated that reducing poverty reduction by 6% was going to be very difficult under the current circumstances but it was a government strategy and would have to be worked on.

Mr Peter Netshipale, Deputy Director-General, Community Development, DSD, responded to the question about the provision of food and donor fatigue. The Department had a system where food was provided to people that had been profiled. However, due to the violence, the need was too great and had depleted the Department’s funds. The Department would approach donors to be able to cover the areas where there was a need. DSD was working with several civil society organisations. In Gauteng, the donors had provided food at all of the DSD distribution centres. When funding came in from donors, the numbers of food parcels would increase. The food relief budget had to be increased because some people had lost their jobs and poverty would increase but not everyone would qualify for the R350. Extra money was necessary for food. The number of poor was higher. It was necessary to look at both approaches: the R350 grant plus extra food parcels.

Mr van Vrede provided information on the data used to cost the grant. There had initially been no data available to show the impact of Covid which had changed the picture as it had existed in the country. The Department had to simulate what was happening and had used the National Income Dynamics 2017 Survey and the StatsSA Quarterly Labour Force survey and updated the surveys to 2020. For 2021, the data was updated with the data from the last quarter 2020 survey and simulated the data. That created a simulation of what DSD thought was happening in the country, but there was a huge amount of risk as assumptions were being made on assumptions on assumptions. Even the 9.4% people in need was an assumption and the range ran to 11.4%, so there was a risk that the applications would be higher than 9.4% and that the budget would be insufficient. 12 million applications had been received but only 8 million had been approved to date. In the previous round, there had been 8 million applications and 6 million had been approved. 

He stated that DSD would definitely be in the safe zone in the first month and the savings could be rolled over until towards the end of the period but the flow of funds would be very closely monitored. It was hoped that National Treasury would assist if there was a need for more money. National Treasury had allowed DSD to use some creative accounting at the end of the previous financial year. DSD had some experience in managing the situation and would track the cashflow very closely and keep National Treasury updated. It was a ticking time bomb and the unrest in July was part of the consequence of stopping the grant. There was probably a need to extend the grant for a minimum of three years as there had been a challenge even before Covid. The grant was having a very positive effect on poverty and inequality. It was hoped that the economic recovery and reconstruction plan would increase employment. The plan had been to create 700 000 jobs in the first round and was intended to create 1 million jobs in the second round, but it could never create sufficient jobs to include all the unemployed and so social relief remained important.
The DG said that a longer term solution with a phased in income grant was important as it would address the issues of poverty in a very short space of time. It would have a massive impact on the reduction in poverty. The DSD advocated very strongly for creating opportunities for getting people actively involved in the economy. That would encourage self-sustainability.

He said that the call centre had used a bot-enabled technology in the first session because that prevented dropped calls and ensured that all calls were responded to. However, he would take up the concept of in-sourcing calls. 

Mr Mchunu said that he had been wrong to focus on education levels and challenges in the economy. There was not a good correlation between education levels and employment. He should have focussed on the fact that certain districts had extremely high numbers of beneficiaries. In one district in the Northern Cape between 80% and 90% of inhabitants in the district were grant recipients. Zooming in on those statistics could indicate which areas needed economic growth.

He stated that the Green Paper had been intended to provide clarity, particularly around the national security funds, and there was public discourse but some areas of the paper were not as clear as they should have been and other areas were open to interpretation, hence the withdrawal of the Green Paper.

Was there donor fatigue? The DG thought that South Africans were a giving people and keen to help. A lot of support was still coming in. Clergy, NGO, private sector and individuals were all contributing. The hard work done by so many people had to be appreciated. In a way, the country was building a social contract of caring for each other and ensuring that no one went to bed hungry.

Mr Mchunu appreciated the guidance and wisdom offered by the Committee and the Department would consider how to respond. He would also attend to some of the issues raised by Committee Members.

The Chairperson asked if any prisoners had tried to access the grant.

Ms Memela-Khambula said that over 200 prisoners had applied for the grant and some were approved before SASSA had obtained the Correctional Services database but because, in the first iteration, recipients of the grant had to go physically to the Post Office to collect the payment, those prisoners had not been able to access the money. In response to the question as to whether people gave up trying to claim their grant because of the queues and difficulties in getting to the Post Office, she agreed that it could be the case as 500 000 grants had not been collected. SASSA would try to pay those to the recipients, if that was possible and approved by National Treasury.

Regarding call centres, she said that SASSA had a few people in regional offices who worked on the phones and 35 people worked in the call centre but there were not enough people to provide support to all beneficiaries as the number had now doubled. Currently, SASSA was working on a strategy so that it could provide support to all beneficiaries. As that structure grew, it would be able to provide support for the rest of government. Robots could be used to respond to basic questions but that might be built into the strategy. The call centre had been insourced and employed 300 people.

The DG responded to the matter of prisoners receiving grants. In discussion with the Auditor-General, the Department had been given a sense of where the Auditor-General could verify grants against data sets. DSD now knew against which data sets the Department should be checking and those checks would really assist the Department to pay only those needing and qualifying for the grant. There was still a challenge with some data sets which had to be accessed by DSD or cleaned up before they could be used for verification process. The process was being undertaken as rapidly as possible.

The Chairperson thanked Mr Mchunu for a fruitful discussion. It was important that government stood by those who did not have food to eat and they were not allowed to suffer alone. His Committee was the first to say that the funding was not enough but it was what could be provided in the current circumstances. Government had tried to intervene, despite the constraints.

He thanked the Department and its entities which were in the forefront of the fight against poverty. He had heard the argument about the money being thrown away, but stated that the money was getting into the local economy and taking the money into the economy increased the disposable income which, in turn, again boosted the economy.

The Chairperson held the agenda item on minutes over until the next meeting.

Concluding remarks
The Committee would meet with the Department of Trade, Industry and Competition on the Bill the following day.

The meeting was adjourned.