Meeting report

Ms L Arries (EFF) recommended that the Committee amend the meeting agenda and have an opportunity to question the Department of Social Development (DSD) about the social grants issues. The Committee supported her proposal.

DSD on delayed September grant payments

Mr Linton Mchunu, Acting Director-General, DSD, provided an update on the payment of social grants. Since the challenge emerged in September, a significant number of beneficiaries have struggled to get access to money because of the switch situation that Postbank had changed.

Mr Mchunu said that the DSD executive had been meeting daily with the team to troubleshoot the challenge and ensure that every grant recipient got all their money. Furthermore, members of the public had been informed of the various communication channels put in place to offer swift assistance, including WhatsApp lines, email lines, and other communication channels where people could reach the Department or Postbank to try and resolve these issues. The DSD had also ensured that staff, both at the South African Social Security Agency (SASSA) and Postbank, were on the ground, engaging members of the public, getting a sense of the challenges, and addressing them immediately. He confirmed that all the matters about the financial challenges experienced had been resolved. All the money had been put into every recipient's account.

The Department was appreciative of the guidance that Postbank had provided in resolving the challenge. The merchants, the banks, and all the other stakeholders in the payment cycle, had been very useful because they served as the key contacts between the grant recipients and the DSD. He therefore appreciated the staff from SASSA, Postbank and the DSD who had worked around the clock to try and ensure that the challenge was resolved.  

Mr Mchunu highlighted that the Department would be ramping up its communication across the country to ensure that everybody understood that the issue was now resolved. If there were any unresolved cases, the public should know the channels through which to report these issues.

Postbank on delays

Ms Nikki Mbengashe, Chief Executive Officer (CEO), Postbank, started by stating that Postbank regretted the delays that had resulted in beneficiaries of SASSA being unable to receive their money on time.

Regarding the incident that happened on 5 September 2023, she said that the root cause of the matter was that Postbank had been on a programme based on the variation notice received from the South African Reserve Bank (SARB) to ensure compliance with the Banking Act, including regulatory compliance. Therefore, to ensure compliance, major changes needed to be made, including upgrading the bank’s information communication technology (ICT). These changes had impacted Postbank’s technology infrastructure.

When the changes happened in mid-August, Postbank had started with bigger volumes of payments, and on the morning of 5 September, it was noticed that there were timeouts in the communication between the switch and the automated teller machines (ATMs). The issue was fixed at around 4 p.m. on the same day. However, the impact of the timeout was that some SASSA beneficiaries were impacted in a way that the system showed that they had withdrawn their money, yet they had not, and that was the reason the reversals had to be done. Unfortunately, Postbank did not have an auto reversal system like other banks at the time. A manual reversal process was then initiated and completed the following week. Although some beneficiaries were still presenting with enquiries, all the cases from 5 September had been sorted out.

Postbank was working on a few things to ensure the next payment run. This included working with the vendor to ensure that they had increased capacity. This was primarily because one of the issues that resulted in delayed payments on 5 September had been a glitch in the vendor's system.

The bank was also dealing with fraudulent cases, where people had indicated that they had not received their social grants, yet the system indicated that they had withdrawn the money at various intervals or at specific locations.

See attached for full presentation

Discussion

Ms Arries started by mentioning that the presentation from Postbank should have been handed to the Members of the Committee before the meeting. This would have shown that the Department handled the SASSA issue seriously.

South Africans had lost faith in SASSA. The issue with social grants was not new. She therefore, wanted to know how the resignation of Postbank's board would influence future payments. Postbank had to give the Committee an assurance that grant payment issues would not be experienced in the future.

The SASSA cards were soon going to expire. Therefore, SASSA must assure the Committee that grant beneficiaries would not be stranded during the December festive season without their grants when the cards expire.

Would the Postbank take responsibility for the bank charges that grant beneficiaries had incurred while trying to use their cards to access their money from automatic teller machines (ATMs) and other outlets?

How would Postbank deal with situations where the bank's system showed that someone had received their social grant, but it was found that the person had not received any social grant?

SASSA and the DSD had initiated robust communication channels, but how was communication transmitted in rural areas, where people did not have access to emails, WhatsApp or television?

It was untrue that 100% of the grant payment issues had been resolved. She had received calls from people indicating they still had not received their payments from SASSA. This was completely unacceptable.

Ms L van de Merwe (IFP) requested that the acting Director-General give clarity concerning the widespread media reports that the DSD had returned R15 billion to the Treasury that was supposed to have been used for grant payments.

She drew attention to the social grant payment crisis, and the shocking scenes which had unfolded on television, or reported in the news media. Vulnerable people were queuing in the cold and rain. In some instances, people were left starving, so during this payment crisis, what were the DSD's interventions to assist the most vulnerable in society, such as offering food vouchers or other types of assistance while waiting for their social grants to be paid?

During the payment crisis, the Minister of Social Development had commented that Postbank had a declaimer for no less than two years. The Minister had also said that no serious-minded nation could allow a financial institution to operate or tolerate this. So, from the perspective of the DSD and SASSA, was the Minister considering an alternative service provider to replace Postbank?

In a previous meeting, it had been mentioned that the DSD, SASSA, Postbank and the Department of Communications and Digital Technologies (DCDT) had a task team that met regularly. Since it was known what caused the technical glitch resulting in delayed social grant payments, it was sensible to assume that the crisis should have been anticipated. Why was it not anticipated and planned for properly?

One of the interventions Postbank was looking at was bringing Standard Bank on board to assist with the switch. She therefore requested that Postbank take the Committee to its confidence that the payment glitch would not be experienced again in October.

How would the resignation of some members of the board and the general instability of the leadership at Postbank affect the future stability of SASSA as a service provider?

When had the new system been tested before it went live?

Ms B Masango (DA) said that since the crisis ensued on 5 September until recently, she had been communicating with the CEO of Postbank, forwarding unpaid grant requests. She appreciated the CEO for coming on board to ensure that these issues were addressed with the level of urgency that they needed. This was good, because once the Members were involved in these issues, it was easier for information to be circulated by the Committee to reach the people who were concerned. However,  it was unacceptable that these glitches were continuous, and that grant beneficiaries were subjected to what had occurred.

Ms Masango wanted to know if it would be possible to have a specific date when grant beneficiaries would receive their payments so that they could make proper arrangements.

Ms A Abrahams (DA) requested an explanation regarding short payments, as there had been reports that some individuals had access to only about R200 in their accounts.

On the matter of fraud, she asked if it was a manual system that was being used to correct everything. How certain was Postbank that some of the fraud was perhaps not coming from within the entities involved in the social grants?

There was already panic about the renewal of the social grant cards, so would Postbank and SASSA be able to meet the South African Reserve Bank's (SARB's) deadline for renewing the grant cards?

Could an easier way be adopted by SASSA, where application forms could be collected and dropped off by a representative in bulk instead of putting senior citizens through the strain of standing in long lines at the local offices to merely drop off a document?

Who was the information technology (IT) vendor mentioned in the presentation? The presentation also mentioned that there had been a quest to bring in extra resources to ensure stability. Was this coming at an additional cost to the Postbank and SASSA? If so, what were the costs involved?

How had Standard Bank been selected to be the bank that was now going to hold the switch? Was the entity open to other banks? In the absence of a Postbank board, how had Standard Bank been chosen, especially since there had been a service provider who was responsible for the switch?

Why could all social grant beneficiaries not be paid on the same day every month?

Ms A Hlongo (ANC) asked if SASSA and Postbank were prepared if such a payment crisis happened in the next payment.

Ms P Marais (EFF) said this issue was quite frustrating, as the SASSA beneficiaries affected by the payment glitch had not received their payments at the right time. There had been no proper communication with the people affected by the delay in the social grant payments.

She said it was concerning that the DSD had still insisted on signing a contract with Postbank, despite the various financial and governance challenges that the bank faced. It was unacceptable that vulnerable people had been subjected to such conditions.

Ms K Bilankulu (ANC) said that the Department should have prioritised the issue of unpaid grants in the agenda, without waiting for the Committee to request that the agenda be changed. This was something that had been on national news and should have been a priority of the Department when preparing to appear before the Committee.

The Committee should only agree with the presentation's assertion that everything had been sorted out once no phone calls were being received, indicating that people were still awaiting their grant payments.

In cases where beneficiaries did not receive their payments in full, when would they receive such payments? Who was responsible for the bank charges incurred by beneficiaries who used their ATM cards to access money that was not even paid?

If systems were already in place, why did Postbank, SASSA and the DSD not see this threat coming and make proper planning?

Ms J Manganye (ANC) asked if the beneficiaries who got their money at the post office would get their money. Did SASSA use the correct data to track the people getting their grant payments from Postbank? She was asking this because if this information was not corrected, such payment glitches were going to occur continuously.

Would Postbank pay the transport costs for the people who had travelled to get to an ATM to access money that was not available?

She asked for the communication streams to be improved, because even if there were payment glitches, proper communication would make a meaningful difference.

Mr D Stock (ANC) agreed with all the sentiments that the Committee had expressed on the delayed grant payments, which had had a devastating effect on the livelihoods of ordinary people who benefit from SASSA grants. He appreciated the progress made so far to resolve these issues.

Referring to the alleged R15 billion underspending that had been widely reported in the media, he said that without taking any sides, it appeared that the journalist who wrote the article did not capture, or attempt to capture, the perspective of DSD on the matter. However, the Department should clarify the matter for the Committee.

He proposed that there should be a joint ministerial briefing or press conference to iron out these issues within the public forum. This would ensure a robust dissemination of the information so there were no gaps in what the public heard from the entities responsible for the social grants.

The Chairperson supported the suggestion that the issue of communication should be looked at closely. The DSD should use local stations that reach people in rural areas to ensure the proper dissemination of information regarding the challenges in social grant payments.

The Chairperson asked how long it would take for the Postbank board to be replaced. What functions were being impacted regarding the payment of social grants if there was no sitting board?

Responses

Ms Mbengashe responded that Postbank was not creating a new partnership with Standard Bank. Due to the variation notice, the SARB had appointed Standard Bank as a sponsor, and Postbank had to rely on it to get help if needed. The variation notice specified what kind of help Postbank was allowed to seek from Standard Bank, and ensured that this fell within the regulatory framework and ensured compliance, and that it did not violate any of those compliance requirements. For example, Postbank could reach out to Standard Bank to access resources, and so far, it has reached out to Standard Bank regarding the vacant IT roles. These were not permanent appointments, but Postbank had requested the IT personnel ensure everything was in place for the next grant payment cycle. Postbank was therefore not skipping the supply management process or entering into a preferential relationship with Standard Bank. This was a relationship that was guided by SARB’s regulatory framework, and Postbank was continually engaging SARB to ensure that there was compliance.

Ms Mbengashe informed the Committee that the Post Office and Postbank were separate entities. Postbank was financially viable -- it was the Post Office that was going through a rescue process.

Concerning the board, she acknowledged that Postbank indeed did not have a board. However, there was an administrator who had assumed the role of the board, so if there were any decisions that needed to be made, the administrator signed and made the decisions. There was nothing operationally that Postbank could not do, as structures were in place.

On the question of whether Postbank could trust the data to identify issues of fraud, she said that the switch and the data processes were different things. The switch ensured that there was communication between Postbank and the switches of other banks, including other ATMs, so the switch did not contain the data of the customer. There was a different data centre from another supplier that contained the data of the customer. Therefore, Postbank could confirm whether a customer's account had money or had been used, without having to use the information from the switch.

On the issue of the Treasury moratorium that had been extended, Ms Mbengashe said that a provision in the moratorium stated that if an appointment had already been signed off and the offer was already put in place, then the moratorium did not apply. However, the moratorium allowed that if the entity was certain that there were critical roles, then a motivation could be put through. The latter was what Postbank was doing, motivating to the Treasury regarding the critical roles where offers had not been made.

Ms Busisiwe Memela, Chief Executive Officer (CEO), SASSA, apologised to the Committee and the clients for the continued inconvenience with the payment of social grants. SASSA agreed with the Portfolio Committee raising the issue of robust communication, and was working much more closely with Postbank to ensure the use of community radio stations. It was going to be working on a joint and collective plan to include all relevant stakeholders to ensure that the communities were reached. This should be an intentional effort, especially given that the time to renew the cards was near, and SASSA beneficiaries needed to know what needed to be done.

On the question of why the payment dates had been staggered, she said that in the past, SASSA used to pay social grants at cash pay points staggered across the month. It had then moved that up to the beginning of the month, but there had been a request from the cash industry to pay the social grants on a staggered basis, and not to pay all the grants on the same day. This was because of the volume of people being paid, and the volume of cash that needed to be made available within the payment systems, would cause the payment systems to collapse.

Mr Mchunu returned to thank the Committee for the proposals that the Members had put forward. A joint conference would be held to respond to questions people might have, but also to inform the public about the progress on SASSA's social grant payments. This would include guidance on dignity services such as electricity, water, waiting chairs and the like.

He emphasised that the DSD did not take the Committee for granted. The Department had not missed any meetings, and always provided presentations timeously while ensuring proper engagement with the Committee on every single matter, whether within the conference of the Committee or outside.

He condemned the fraud that was taking place, where people were trying to exploit the system. The Department was working closely with its stakeholders to ensure that those committing these crimes were dealt with.

DSD's first quarter report for 2023/24

Mr Mchunu said the Department had achieved 84% of its set targets, compared to the 80% achievement of 2022/23. The Department continued to build from the lessons learnt in the previous reporting periods, and were being made to improve from the areas where they had been lagging in their previous year's performance to ensure that annual targets were achieved.

Parliamentary processes were underway on the Older Persons Amendment Bill B11-2022, and public hearings by the Portfolio Committee on Social Development had been conducted. The DSD continued hosting a series of public hearings on the draft policy on social development services to persons with disabilities to solicit public comments. In this regard, it partnered with the provincial DSDs and their districts to mobilise non-governmental organisations (NGOs), persons with disabilities, and other stakeholders. To date, 21 of 28 public hearings have already been conducted in eight provinces.

While significant progress had been made in various areas, the set targets and objectives that were not fully realised at the end of the first quarter were human capital management; social assistance; comprehensive social security; professional social services and older persons; social crime prevention and anti-substance abuse; poverty alleviation, sustainable livelihoods and food security; and services to persons with disabilities.

Programme 1: Administration.

The plan was a quarterly implementation of the entity oversight framework. So far, a two-day workshop with the Central Drug Authority has been convened to develop plans for the Provincial Substance Abuse Forums (PSAFs). An interface meeting was also held with the South African Council for Social Service Professions (SACSSP) to deal with the reclassification of the Council, which was currently underway.

Regarding stakeholder management and donor coordination, a stakeholder engagement session was arranged and hosted on 6 June in Cape Town. The session facilitated a panel discussion focusing on the banking, retail and corporate sectors in general and developmental institutions. Some of the outcomes of the panel discussions pointed to the need to build a society that was not reliant on grants, and for the government to create jobs. The government needed to go to the people and implement the great policies and strategies that were in place, and to innovatively mobilise social partners with a view to ensuring that issues of social and economic security became a societal responsibility.

A pilot report on the electronic monitoring and evaluation system for the Department was completed. Furthermore, a draft concept document on the social welfare index was completed.

The annual financial statement (AFS) for the 2022/23 financial year was submitted to the Auditor General of South Africa (AGSA) for auditing, and to the National Treasury (NT) for consolidation on 31 May.

In the field of information management systems and technology, the DSD's Social Development Integrated Case Management System (SDICMS) was successfully configured and ready for the National Integrated Protection Information System (NISPIS). There was successful integration with the Department of Home Affairs (DHA) of the personal identification protection (PIP) policy.

The SASSA Amendment had been submitted to the Office of the Chief State Law Adviser. Preliminary certification had not yet been received, pending a response to comments made earlier during the last quarter of the previous financial year. The National Development Agency (NDA) Amendment Bill had been refined, based on the turnaround strategy the Agency had developed.

Programme 2: Social Assistance

R63 billion was transferred in social grants between April and June. The monthly breakdown was April - R20.9 billion; May - R21 billion; and June - R21 billion.

Programme 3: Social security policy and administration

Several policies and legislation were at different phases of development within social security. These policies and legislation were part of the targeted outcome to reduce levels of poverty, inequality, vulnerability, and social ills. They included the policy on integrating children’s grant beneficiaries with government services, a proposal on income support to 18 to 59-year-olds, the Social Security Bill, a draft policy on voluntary cover for retirement and risk benefits for atypical and informal sector workers, and the draft White Paper on Comprehensive Social Security. So far, manuscripts for Social Security Review Volume 2 have been submitted.

Programme 4: Welfare services policy development and implementation support

15% of the sector workforce (1 101 of 7 395) was capacitated on the Children's Act. The target was exceeded due to the high turnover of participants during the virtual capacity-building sessions. In addition, different directorates had strong collaboration and coordination efforts towards achieving this target. Stakeholders had been capacitated on the teenage parent programme in two districts -- Lejweleputswa and Mangaung. uMgungundlovu and Eden Karoo districts were also capacitated on guidelines for Social Service Practitioners: Enabling Access to HIV Services.

Programme 5: Social policy and integrated service delivery.

Data had been sourced to inform an update of the "State of the People of South Africa" report, which would provide an analysis of bridging the gap between the economic situation and communities' social needs.

The Department was developing policies and frameworks to ensure coherence and harmonisation of the practice of community development across government, NGOs and the private sector. This included the draft National Community Development policy and the finalised Community Mobilisation and Empowerment framework. A monitoring report on the implementation of the DSD Youth Development policy has been produced.

See attached for full presentation

Discussion

Ms Abrahams enquired when the SASSA toll-free line would be available to the public.

What were the reasons for the June social grants being captured late?

The presentation indicated that there was about a 7.7% higher allocation for the compensation of employees in the first quarter. Was that increase solely for the increase of salaries to existing staff, or were any positions filled which contributed to that increase?

What was the progress on the permanent appointment of a Chief Director for Social Welfare?

How did the DSD plan to implement some of the amendments in the Older Persons Amendment Bill without having appointed a director for older persons – a position that had been vacant for several years?

The presentation indicated that there was violence among the youth on the ground. What was the Department using to measure its anti-gang strategy? At what point would the strategy be reviewed to ensure that it was effective?

The Victims Support Bill went for public comment a while ago, and was not well received. When would the revised Bill be available for another round of public consultation, and why was it taking so long to pass Cabinet and be introduced to Parliament?

On the registration of non-profit organisations (NPOs), Ms Abrahams said that DSD had a deregistration campaign for non-compliant NPOs. What was the status of this campaign, and what had been the Department's findings?

She was concerned that the annual briefing of the NDA showed that 69% of its budget was for compensation of employees, and only 8% was allocated for the development of civil society organisations (CSOs). The presentation also indicated that there had been a transfer payment of about R132 million to the NDA. Why was such a transfer made, and what was it being spent on?

Ms Masango highlighted that a part of the presentation had mentioned the importance of a family system for the well-being of society. She asked if the programme that the Department was running also targeted child and child-headed households.

What was the status of the NPOs that were not compliant? How were the people expecting to receive services from the non-compliant NPOs affected, as the Department was not disbursing funds to these NPOs? Was the Department assisting non-compliant NPOs to ensure they were compliant without compromising the services offered to the people?

Ms Arries said that the Department had to provide the Committee with a detailed report on all NPOs that were getting funding from DSD, including the NPOs that had been deregistered because of non-compliance. What systems had been put in place to monitor the work being done by the NPOs?

What programmes were in place to curb bullying in schools?

She said the country was losing its youths to substance abuse and gangsterism. Although the implementation of policies was good, the battle was being lost in the absence of rehabilitation.   

The Department had to step up its efforts to attend to the issues of people living with disabilities. People living with disabilities should not be treated as though they do not belong in this country.

The Department should be honest about whether the current administration had the time to analyse the Older Persons Amendment Bill.

DSD's response

The Department responded that the anti-gangsterism strategy had been implemented for a while now. The strategy aimed to have a society free of gangs and gang violence. However, it was important to continue implementing the strategy to expand its reach. This would assist the Department to have a wide scope of the strategy’s impact, including being able to identify and close any gaps.

There were various other programmes, apart from the anti-gang strategy, that were being implemented in schools. These programmes were not only being implemented by the DSD, but by other government departments as well. For example, the integrated school health programme was one of the programmes that focused on the holistic issues faced by young people, especially within the school environment, and bullying was one of the issues that were being looked at. The DSD had initiated a plan that included working together with various stakeholders to deal with issues that were affecting young people. This plan was being monitored in the different provinces.

Regarding the inclusion of children and child-headed households in the Department’s programmes, the Department's programmes were comprehensive and inclusive in nature, thus catering for child-headed households, and orphans and vulnerable children (OVC).

The Department acknowledged that the issue of rehabilitation for those abusing substances was an important matter. That was the reason 13 government-run centres had been established. However, this was not enough to meet the demand. That was the reason the Department had partnered with NGOs which were being subsidised to run rehabilitation programmes.

When the Victim Support Service Bill was tabled, several comments had been received. Currently, the Department was working on a Cabinet memo, and the Bill would be in Cabinet shortly. The public would have sight of the Bill in the third quarter -- any time between October and December. The SASSA Bill was also taking a long time because the Department was still waiting for the final certification from the state law advisors before it could be submitted to the Cabinet.

The Department informed the Committee that the SASSA-Telkom issue over invoices had been resolved.

Since April, the DSD had not filled one position, so the difference between what had been projected was exactly the actual cost of living increase. The current estimates showed that there would be a R30 million shortfall in this financial year because of the wage agreement.

Concerning the question about social assistance -- the difference between the R63.2 billion and the R62 billion that was paid -- the Department said there was no shortfall. Allocations had been finalised and social grants were paid.

The funds transferred to the NDA were based on the agreement that the DSD had with the NDA, where 60% was transferred in the first quarter of the year and 40% was transferred only in the third quarter. The Department was with the NDA on the issues around the allocation of the budget, and the NDA would provide feedback.

The Department had a database that was used to monitor NPOs and their compliance. In the NPO registration and compliance monitoring, those registered had to report annually on their work, and if they did not report to the Department, they were contravening the Non-profit Organisations Act 71 of 1997. Last year, there had been 55.6% compliance. Currently, the compliance rate was at 41.7%, but this was largely because the year had not ended for NPOs to submit their annual reports. Compared to the compliance rate at this time last year, this year's compliance was higher.

It was easier to keep track of the compliance of NPOs funded by the DSD because they were required to meet the Department’s officials every quarter. However, sometimes, these meetings were delayed by the NPOs, which then resulted in a delay in the transfer of their funding.

Committee matters

Report of the Portfolio Committee on Social Development on the Fourth Quarter Performance and Expenditure Report for 2022/23 of the Department of Social Development (DSD),

The report was considered and adopted along with the minutes of the 31 May meeting.

The meeting was adjourned.