ATC140303: Report of the Portfolio Committee on Social Development on the 2012/13 Annual Report of the South African Social Security Agency (SASSA), dated 18 February 2014
REPORT OF THE PORTFOLIO COMMITTEE ON SOCIAL DEVELOPMENT ON THE 2012/13
ANNUAL REPORT OF THE SOUTH AFRICAN SOCIAL SECURITY AGENCY (SASSA), dated 18
The Portfolio Committee on
Social Development deliberated on the 2012/13 Annual Report of the South
African Social Security Agency (hereafter referred to as SASSA or the Agency)
on 22 October 2013. This report presents some of the key achievements as well
as challenges encountered by SASSA. The report will also highlight matters of
concern raised by the Committee and recommendations made.
1. Presentation by SASSA on its 2012/13 Annual Report
Ms V Peterson, the Chief
Executive Officer of SASSA, explained to the Committee that the aim of the
presentation was to provide an overview of the performance of the Agency for 2012/13
financial year and also to highlight some of the financial and service delivery
For 2012/13 financial year, SASSA set to achieve
the following key priorities: Customer Care-centred Benefits Administration and
Management System; systems integrity and increased access to social security
services. To address the challenges it had encountered in the past, the Agency had
identified key strategic objectives, which are:
to ensure that eligible beneficiaries receive
benefits due to them;
to improve the quality of service delivery to SASSA
to achieve a fully integrated and automated
social assistance service; and
ensure that the Agency is optimally capacitated for optimal service delivery.
During the period under
review SASSA had continued on its path of improving the lives of the poor and
At the end of the financial year, a total of 16 106
110 grants were in payment. The re-registration project was the flagship and
largest project that the Agency embarked on during this financial year.
The presenter also reported
that a decision was taken to slow down on some of the planned targets, such as
the reviews and to concentrate on the available resources on re-registration. As
a result the Agency achieved only 69% of its annual targets
Programme Performance Information
2.1 Implementation of the
Social Assistant Programme
objective of this programme is to improve the Agencys outreach services to
qualifying/eligible social assistant beneficiaries. For the year under review
the Agency set a target to reach at least 1.2 million new beneficiaries and
increase the number of grants in payment from 15 595 to 16 069 007.
It was reported that a total number of 1 280 818 new
applications were processed.
A total number of 16 106
110 social assistance benefits were in payment as follows:
994 415 were childrens grants;
873 197 were older persons grants;
164 192 were people with disabilities grants;
were war veteran grants; and
719 were grant-in aid recipients
More than 863 689 grants
lapsed due to death, voluntary cancellations and reviews. The table below shows
the increase in grant payments between 2011 and 2013:
1: Social Grants Trends: growth rates (2011/12 vs. 2012/13)
2 750 857
2 873 197
1 198 131
1 164 192
Grant in Aid
10 927 731
11 341 988
15 595 705
16 106 110
Social Grants Trends
The following was reported:
Overall, grant benefits uptake increased by
3.27% between 2011/12 and 2012/2013. There was an increase in all but three
grant types, i.e. War Veteran Grants, Disability Grants and Foster Child Grants
to attrition rates and effective reviews
4.45%, Old Age Grant had shown a more than normal growth rate of 2%
year-on-year. This was due to the increase in the threshold criteria for
the means test, which resulted in many beneficiaries coming into the
number of Disability Grants decreased due to the improved management of
temporary disability and more stringent screening and assessment of
had increased due to the improved awareness campaigns.
Improvements in the Grants application
Agency had embarked on a process of ensuring standardisation of business
processes at all local offices and service points.
target for the processing of new social grant applications was to have 90% applications
processed within 21 days. It managed to achieve 91% (1.167 million) of all new
applications processed within 21 days.
The Agency also embarked on
a process of implementing the standardised 4-step process for social grant
applications. Complete standardisation processes were implemented in all local
offices, with the exception of three offices, which were still undergoing
renovations as part of the Local Office Improvement Project.
Local Office and Service Points
SASSA set a strategic objective to
improve the conditions
under which it serves the beneficiaries and
to ensure that all customers
experience the same business processes. It set target to have 72 local offices
and 400 pay points upgraded to suit the new standardised application processes.
A total of 95 local offices were improved, which was 23 more than the
annual target. This brought the number of upgraded offices to 259 since 2011. Six
hundred and ninety-two (692) pay points were upgraded at a cost of R18 776 416.
The Agency surpassed its target by 292. The improvements implemented included
procurement of shelters such as tents, ablution facilities, upgrading and/or
repairs of existing structures, provision of chairs as well as construction of
facilities for the disabled and frail, such as ramps and toilets.
Improvements in the Payment Process
re-registration project was the largest data integrity and beneficiary
authentication project ever to be embarked upon. It entailed the mass
re-registration of existing beneficiaries, children receiving grants and
procurators. The overall objective was to re-register 22 million beneficiaries,
recipients and procurators. A total of 18.9 million people were successfully
re-registered onto the new system. This resulted in over 150 000 social grants
being cancelled voluntarily, leading to a saving of R150 million per annum. During
the implementation of the project 8 000 jobs were created for unemployed youth,
3 000 of whom were placed in permanent positions.
A SASSA smart payment card
Bank, endorsed by MasterCard
was issued to more than 10 million social grants recipients. The card contains
both the pin and the biometric capability and thus recipients can use it to
access payment anywhere, anytime, using multiple payment channels.
introduction of the Benefits of the Current Payment System yielded broad
positive benefits to both SASSA and beneficiaries, and to a large extent to the
South African Economy. This new payment system absorbed the previously unbanked
beneficiaries and incorporated them into the banking community. Almost 60% of
cash beneficiaries had migrated from pay points and they had a preference to
receive their social grants either at their convenient payment vendor or at the
ATMs (at ATMs normal bank charges apply). Beneficiaries also had an opportunity
to use the increased payment channels to access their social grants within the
first seven calendar days of the month. Another benefit of the new system was
that it significantly reduced the costs for transacting from the average of R30
to R16.44 per transaction.
Integrated Community Registration
Outreach Programme (ICROP)
ICROP was established to
improve access to and equity in services to beneficiaries in rural and
semi-rural areas. The success of ICROP could be attributed to the partnerships
with the key stakeholders, such as government departments, non-governmental
organisations, faith-based organisations, traditional leaders and ward
councillors. In the year under review the ICROP targeted 40 poverty wards for
the provision of social assistance. The target was met and surpassed as 390
poverty wards benefitted through the special ICROP requests. A total of 61 110
beneficiaries in 430 wards had access to social assistance through the ICROP.
The target of 60 000 beneficiaries for the period under review was therefore
The Agency embarked in a
process of seeking to achieve a fully automated system through a fully secured,
integrated and automated end-to-end system in order to improve the
administration of the social assistance programme by 2016. In line with this,
the Agency established a baseline of its environment and developed an ICT
vision for the future that supports its strategic objectives through the
Enterprise Architecture project. The strategic architecture, known as the
Digital Beneficiary Services Platform (DBSP), was developed.
continued to implement its zero tolerance approach to fraud and
The target was to
investigate 50% of fraud cases identified: Seventy eight percent (78%) of fraud
cases were investigated (i.e., 4 000 out of 5 134). Ninety eight percent (98%) of
suspicious grants were verified for validity (i.e. 29 780 suspicious social
grants were verified for validity). The focus of the Agencys fraud management
had shifted from only focusing on beneficiaries to focus on its own staff
members who had colluded with beneficiaries and other organs of State,
including the crime syndicates. Efforts to clamp down on syndicates in specific
regions resulted in the arrest and conviction of ten Agency officials, three
former Agency officials and 15 agents/touts.
52 of the Agencys officials were suspended from duty, 25 were dismissed and seven
resigned prior to the completion of their disciplinary. A total of 7 734
fraud/corruption cases were registered; 2 747 cases were finalised; 1 272 cases
were closed; and 3 715 cases were still in progress at the time of reporting. The
monetary value related to the cases finalised amounted to R59.4 million. Other
successes included the arrest of 50 individuals in the
area within the Ulundi District, who were found to be in possession of 127
unregistered SASSA cards, 3 CPS registration machines and R47 000 in cash. Five
of these suspects remain in custody.
Money lending also became a
focus of the multi-disciplinary approach of the Agency. Successful operations
included a total of 29 individuals arrested and 1 008 Agency cards and R 82
156.00 cash confiscated.
of the Legal Services Model
The legal risks that the
Agency was exposed to in its day-to-day operations were mitigated to a great
extent. A total number of litigation cases decreased from 249 in 2011/12 to 89
in 2012/13. The total amount of litigation costs (liability) as at the 2012/13
financial year was R10 683 420.74. This amount included the amount for the
costs incurred in respect of the matters which were dealt with in the previous
financial years; however, the bills for the costs were only submitted during
the current financial year.
of the Agencys priorities for the year under review was to improve its
organisational capacity, particularly at service delivery. To this end, a total
of 931 positions were filled to augment the capacity, especially in the core
business. This increased the staff complement to 8 496 permanent staff members
and 530 contract staff.
ensure the welfare of its workforce, the Agency continued to implement various
programmes as part of its Employee Wellness Programme. Fifty nine (59) Wellness
Champions were trained to ensure effective implementation of the programme. Psychological
support was provided to employees, including those affected and infected by
human immunodeficiency virus (HIV) and acquired immune deficiency syndrome
Budget and Expenditure for 2012/13
Overview of the budget
It was reported that the spending and the strategic
focus of the Agency remained on the administration and payment of social grants.
A significant achievement was achieved in
turning around the Agencys financial position whereby an accumulated overdraft
of R839.4 million was dealt with. Cost containment measures played a key part
of the intervention.
majority of the budget (34%) was spent on the compensation of employees,
followed by the cash handling fees (32%), while the balance was spent on operational
expenses such as office accommodation, cleaning, security, travel and
communication. The Head Office accounted for the 50% of the budget due to the
cash handling fees budget while the other 50% was spent at the nine regional
offices. The KwaZulu-Natal and the Eastern Cape regions accounted for the
majority of the regional share of the budget respectively. The 2012/13 budget
was adjusted (reduced) from R6, 200,270 billion to R6, 119,770 billion by an
amount of R80, 500 million during the adjustment budget process.
Commentary on spending trends
The following were reported as spending trends of
Compensation of employees:
Some of the vacant funded posts remained unfilled at
the regions and head office while some were in the process of being filled at
financial year-end, contributing to an under spending on this item.
Goods and Services:
The expenditure trend on this item was
influenced by the following key items:
Expenditure reached 101% of the budget
allocation due to the communication drive related to the mass beneficiary
re-registration project. The project had a significant impact on the
76%. The under spending was due to the delayed biometrics system project
and the less than anticipated expenditure on Grants Business Automation
The majority of the overall saving was realised on this item as a result
of the reduced tariff on cash handling fees and reduced transactions in the
disbursement of grant monies. This was as a result of the implementation of the
new payment contract.
However an amount of R140 million was
shifted to CAPEX for the purchase of motor vehicles.
reached 108%, however there were regions that had realised a saving due to the
buildings that were budgeted for and were not occupied by the financial
year-end due to the lengthy Department of Public Works processes.
Spending reached 100% and was in line with the projected spending for
: R140 million was shifted to this item for the purpose of purchasing
motor vehicles. However due to issues with the contract the purchase delayed
until the financial year-end, leading to under spending on this item.
4. Findings of the Auditor General South Africa (AGSA)
The AGSA found that SASSAs financial statements
presented fairly the financial position of the Agency as at 31 March 2013. SASSAs
financial performance and cash flows for the year were in accordance with the South
African Standards of GRAP and the requirements of the Public Finance Management
Act (PFMA) and the South African Social Security Agency Act, 2004.
Emphasis of matter:
Pending Litigation Case
Agency was involved in a pending litigation with the ALLPAY Consolidated
Investment Holdings (Pty) regarding the awarding of the Social Grant Payment
Tender to Cash Paymaster Services. Subsequent to the Supreme Court of Appeal
delivering judgment in the ALLPAY/SASSA and CPS matter (applicant for the
review and setting aside of the award pursuant to the payment tender) in favour
of SASSA, ALLPAY had filed an application for leave to appeal at the
Report on other Legal and Regulatory
AGSA made the following findings relevant to the performance against the predetermined
objectives, compliance with laws and regulations and internal control:
Reliability of information:
There were no material findings on the report on predetermined objectives
concerning the usefulness and reliability of the information.
of planned targets:
Agency had a total of
80 planned targets. Out of that number 25 targets
(31%) were not achieved during the year under review. This was mainly due to
the fact that indicators and targets were not suitably developed during the
strategic planning process and the Agency did not consider relevant systems and
evidential requirements during the annual strategic planning process.
laws and regulations
did not identify any instances of material non compliance with specific matters
in key applicable laws and regulations as set out in the
issued in terms of the PAA
Annual Financial Statements
The financial statements
submitted for auditing were not supported by full and proper records as
required by section 55(1) (a
b) of the PFMA, for
example, leases and commitments. The material misstatements of commitments and
disclosure items identified by the auditors in the submitted financial
statements were subsequently corrected, resulting in the financial statements
receiving an unqualified audit opinion.
with regards to the following were found:
Lack of review and oversight regarding
approved and communicated policies and procedures to enable and support
understanding of internal control activities to ensure complete and
accurate financial reporting of commitments, disclosure items and
Financial and performance management
Proper record keeping and review processes were
not implemented in a timely manner to ensure that there was complete,
relevant and accurate financial reporting on commitments, disclosure
items and performance reporting.
Procedures to ensure compliance with Treasury
Regulations 27.2.7(a) were not in place
It was reported that investigations
with regard to non-compliance to the supply chain management policy and
procedures were in progress, which could result in possible fraudulent actions
and possible irregular expenditure.
It was reported that the
Agency encountered the following challenges when delivering its services:
Payment Tender pending court case;
Complaints regarding on-going deductions on the
In the implementation of fraud Management
strategy, the Agency had to close-out some offices due to the number of
officials that were implicated in fraudulent activities.
6. Committees Observations
The Committee expressed a
concern over the high number and costs of litigation cases especially in the
Eastern Cape. It advised the Agency to develop a strategy to reduce these
also expressed serious concerns over the fact that SASSA managed to achieve
only 69% of its planned targets, meaning 31% targets were not achieved. It
requested SASSA to provide it with a plan to improve achievement of its targets.
The Committee commended the
work done by SASSA through the ICROP and its commitment to continue expanding
its roll out to especially reach the 2 million children who were not in the
social assistance system. It also welcomed the Agencys future planning and for
organising its business processes accordingly.
Having considered and
deliberated on the annual report and performance of SASSA, the Committee made
the following recommendations:
should present to the Committee the plan it had submitted to the office of
the Auditor General detailing how it would address the matters of emphasis
raised by the AG office. The plan should include corrective measures that
will be implemented in all the regions.
Minister of Social Development should ensure that SASSA has a balanced
gender representation in regional manager level, as currently there are
only three (3) females and six (6) males.
should provide the Committee with a list of all SASSA offices and
pay-points that had been upgraded.
should present its risk plan to the Committee in the next financial year.
should ensure that that the Agency develops a strategy that will address
the issue of traffic fines incurred by its officials.
to be considered.
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