ATC210818: Report of the Portfolio Committee on Social Development on the Third Quarter Performance and Expenditure Report for 2020/21 Of The Department of the South African Social Security Agency (Sassa) and the National Development Agency (Nda), Dated 18 August 2021

Social Development

REPORT OF THE PORTFOLIO COMMITTEE ON SOCIAL DEVELOPMENT ON THE THIRD QUARTER PERFORMANCE AND EXPENDITURE REPORT FOR 2020/21 OF THE DEPARTMENT OF THE SOUTH AFRICAN SOCIAL SECURITY AGENCY (SASSA) AND THE NATIONAL DEVELOPMENT AGENCY (NDA), DATED 18 AUGUST 2021

 

The Portfolio Committee on Social Development (hereinafter referred to as the Committee) having examined the Third Quarter Performance and Expenditure Report for 2020/21 of the South African Social Security Agency (hereinafter referred to as SASSA or the Agency) and the National Development Agency (hereafter referred to as the NDA or the Agency) on 16 April 2021, reports as follows:

 

1.INTRODUCTION

 

 

Mandate of theCommittee

 

 

The Committee’s mandate as prescribed by the Constitution of South Africa and the Rules of Parliament is to build an oversight process that ensures a quality process of scrutinising and overseeing the department’s action. It is to conduct oversight that is driven by the ideal of realising a better quality of life for all people of South Africa. The Committee is also required to facilitate public participation, monitoring and oversight over the legislative processes relating to social development. In doing this, it also confers with relevant governmental and civil society organs on social development matters.

 

The Committee also enhances and develops the capacity of its members to exercise effective oversight over the Executive Authority in social development. It monitors whether the Department of Social Development fulfils its mandate according to priorities.

 

It also has a mandate to perform the following:

1. Considers legislation referred to it;
2. Conducts oversight of any organ (s) of the state and constitutional institution(s) falling within its portfolio;
3. Facilitates appointment of candidates to entities;
4. Considers international agreements; and
5. Considers budget of department and entities falling within its portfolio.

 

 

For the current medium term (2019 – 2024), the Committee’s oversight focuses on the department and its entities performance with regard to the implementation of the priorities set in the National Development Plan and in the Medium Term Strategic Framework.

 

2.SOUTH AFRICAN SOCIAL SECURITY AGENCY

 

 

Mandate of the South African Social SecurityAgency

 

 

The mandate for the South African Social Security Agency (SASSA) is to ensure the provision of comprehensive social security services against vulnerability and poverty within the constitutional and legislative framework. As per this mandate, SASSA is primarily responsible for implementing the Medium Term Strategic Framework’s (2020 – 2025) Priority 3: Consolidating the Social Wage through Reliable and Quality Basic Services. It also contributes towards the achievement of the following government’s medium term outcomes:

• Reduced levels of poverty, inequality, vulnerability and social ills.
• Empowered, resilient individuals, families and sustainable communities.
• Functional, efficient and integrated sector.

As an administrator for the payment of social assistance grants, SASSA had to implement the special Covid 19 interventions announced by President Cyril Ramaphosa in April 2020 for the introduction of additional R250 to the social grants (older persons grant, foster care grant, disability grant and care dependency grant), a once off R300 top up to the Child Support Grant per child for the month of May and a R500 payment to caregivers from June - October 2020. It also had to implement the announcement for a

new Special Relief of Distress Grant (SRD) of R350 to be paid to the unemployed people who are not benefitting from any other government provisions.

 

 

SASSA also administers the payment of the Social Relief of Distress (SRD) in the form of either food parcels or cash vouchers to provide temporary relief to families experiencing undue hardship due disasters, fires or death of provider. The Agency had to significantly scale up the roll out of food parcels to respond to the high demand of food due to the impact of the nationwide lockdown which resulted in some workers losing their employment. These changes necessitated for SASSA to draw up a revised budget and amend the originally tabled 2020/2021 Annual Performance Plan.

 

 

Furthermore, SASSA has a critical role to play in implementing the annual priorities identified in the State of the Nation Addresses (SONA). For the year under review (2020/2021), SONA identified the following priorities that have implications on the work of SASSA:

 

• Job Creation: Government is committed to finding solutions to the unemployment crisis and to removing blockages and driving interventions that will save and create jobs.
• Persons with disabilities: Government has established the Presidential Working Group on Disability to advise the President’s office on measures to advance the empowerment of persons with disabilities as government plans, budgets and implements programmes.
• Poverty and inequality: Government remains committed to the strategic objective of our National Development Plan (NDP) to eliminate poverty and reduce inequality by 2030.

 

SASSA also has a role to play in the implementation of the National Development Plan (NDP) priorities for the social sector. It implements the following priorities:

• Eliminating income poverty by reducing the proportion of households with a monthly income below R419 per person (in 2009 prices) from 39 percent to zero. To achieve this goal, the Plan identified these milestones:

 

• Ensure household food and nutrition security.
• Entrench a social security system covering all working people, with social protection for the poor and other groups in need, such as children and people with disabilities.
• Realise a developmental, capable and ethical state that treats citizens with dignity.
• Creating a comprehensive social protection system that includes social security grants, mandatory retirement savings, risk benefits (such as unemployment, death and disability benefits) and voluntary retirement savings. Measures to achieve this goal were identified as follows:

 

• Expand public employment, with a focus on youth and women.
• The retirement savings and risk benefit gap should be closed through reforms, including mandatory contributions, with consideration given to subsidising these contributions for low-income or periodic workers.
• Developing a capable and developmental state.

 

 

The analysis of SASSA’s quarterly performance will assess how the NDP priorities, MTSF outcomes and SONA priorities are responded to or implemented.

 

 

2. OVERALL FINANCIAL PERFORMANCE AND NON-FINANCIAL PERFORMANCE FOR THIRD QUARTER OF 2020/21

 

The overall budget of SASSA for the current financial year was R7 718 421 billion. The actual expenditure for the third quarter was R5 305 623 billion (69%) compared to R3

372 186 (44%) billion in the second quarter. The expenditure of the Agency was reported as follows:

• Compensation of Employees: it had an expenditure of R 267,573,218 for the current reporting period. This was 8% below the expected level of spending due to the vacant funded posts which are not filled. It excluded the cost of living adjustments (salary increases) for levels 1-12 which have not yet been implemented.
• Goods and Services: Overall spending on goods and services was 9% below the expected level of spending. This was attributed to the following reasons:
  • Cash handling fees: The current trend shows that approximately 90% of the clients who access their grants through the SASSA / SAPO card do so using the National Payment System (NPS) network, while 6% use the Post Office infrastructure and 4% still access their money at the remaining cash pay points. The NPS is a cheaper payment method. This scenario would lead to a saving but however the additional charges for the Special COVID-19 SRD grant will result in a possible over expenditure on this item. Final reconciliations are still outstanding for both Special SRD and Social Assistance benefits.
  • Bank charges: The budget on this item caters for normal bank charges by commercial banks which has an allocation of R5.7 million and expenditure amounting R4.9 million, charges related to the disbursement of grant monies with an allocation of R327.9 million and expenditure of R174.2 million, and for the payment of the Special COVID-19 SRD grant with an allocation of R89.8 million and expenditure of R25.6 million. Some funds will be reduced on the allocation for the payment of grants to give effect to the National Treasury’s budget adjustment of R229.6 million. The mobile payments were not rolled out as initially envisaged due to risk involved
  • Advertising and marketing: Expenditure reached 52%. The budget on this item was increased by an amount of R6 million which was reprioritised from other items to cater for the communication costs related to the implementation of the Special COVID-19 SRD grant. The expenditure had not yet been significant during the reporting period thus contributing to the underspending.

A service provider was appointed to augment the marketing and communication services

• Communication: The underspending on this item is on the allocation made towards the USSD costs which were expected to be incurred when qualifying citizens apply for the Special COVID-19 SRD grants. The costs came lower than anticipated. There is also an allocation of R14.9 million for television and radio which forms part of the communication related to the Special COVID-19 SRD grant. Expenditure recorded during the reporting period on this allocation  amounts to only R640 000 and a commitment of only R123 375.
• Consultants: The allocation for fraud investigations amounts to R49.8 million of which R37.6 million is on this account. The reported expenditure of R13,2 million is towards the SIU. Other internal activities were impacted upon by the COVID- 19 pandemic. However, certain amounts were allocated to the regions for work to be done pertaining to fraud investigations. It is expected that there will be expenditure in the latter part of the financial year although a saving is expected on this allocation as a result of the impact of the COVID-19 as investigations involves travel.
• Outsourced services: Although still low expenditure on medical assessments increased in comparison to the other reporting periods as it now reached 30%. The underspending is due to the current pandemic which affected the assessments. The budget for medical assessments was adjusted downward by 20% in order for the funds to be reprioritized towards funding the administration costs of the Special COVID-19 SRD grant. Regions made further adjustments to cater for the procurement of PPE. A special project will be undertaken during the 4th quarter to addressed the lapsed TDGs and CDGs (approximately 2000 00)
• Fleet: Expenditure on this item has been affected by the regulations on COVID- 19 and thus low for the reporting period as it reached 54%.
• Leases: The underspending on this item is due to the budget allocated for leases in progress that have not been occupied.
• Property payments: At the time of budget allocation some of the region’s contracts had expired while some were due to expire in 2020. Therefore, the

allocation for the regions whose contracts had expired or were due to expire in 2020 was increased by 7% over the 2019/20 financial year. The increase was aimed at accommodating the possible increases when new contracts are awarded during the course of the 2020/21 financial year and to also cater for the month- month extensions before the new contracts are awarded. The SCM process is still underway and new contracts still to be concluded and thus the underspending.

• Travel: The underspending on this item is due to the national lockdown restrictions. The underspending is mainly on accommodation and air travel. However, there has been an increased and significant spending on the kilometres travelled item indicating that more travel is by own motor vehicles and thus more claims by officials.
• Training and development: The expenditure on training has also been affected by lockdown. An amount of R3.8 million has been spent from a total of R20.3 million, which is only 9% spending.

 

With regard to non-financial performance, the Agency had set to achieve 47 targets for the third quarter and managed to achieve 35 (74%), which was an improvement compared to39% and 71% in quarter 1 and 2.

 

 

4.PERFORMANCE INFORMATION BY PROGRAMME

 

 

The Agency functions through two main programmes, namely, Programme 1: Administration and Programme 2: Benefits Administration and Support.

 

Programme 1: Administration

 

 

The purpose of this programme is to provide leadership, management and support services to SASSA. This programme mainly contributes towards SASSA’s implementation of the NDPs priority of development of a capable and developmental state.

Under this programme SASSA managed to achieve 76% of its planned targets and related to this NDP priority for this quarter. They are as follows:

 

• SASSA managed to achieve 94.2% (925 429 of 982 497) of its 95% target of processing new grant applications within 10 days.
• It achieved its target of developing and implementing the online grant application solution at district offices. It piloted solution in at least 28 districts. More than 9 499 grant applications were received through this channel. At least 842 grants administration officials were trained on how to use the online grants application solution. Those trained included 440 capturers, 332 verification officials, and 70 Customer Care officials.
• It also achieved its target to develop an integrated validation database with government datasets.
• It further achieved its target to implement the biometric identity access management system for SOCPEN users. The scanning solution  was  developed and staff were trained on the new solution. The solution is being implemented in 231 local offices.
• It also investigated 81% (198 of 243) reported fraud, theft and corruption cases. The target was to investigate 50%.

 

Programme 2: Benefits Administration and Administration and Support

 

 

The purpose of this programme is to provide a grant administration service and ensures that operations within SASSA are integrated. It also ensures implementation of the full value chain of grants administration.

 

This programme is responsible for the implementation of the core business of SASSA, that of administering the payment of social grants. It is the programme that was mainly affected by the changes in the budget for payment of social grants and introduction of the Special Relief of Distress Grant. Accordingly, it had eight  (8) new targets added to it. It also significantly contributes towards the achievement of most of the NDP priorities, SONA priorities and MSTF priorities listed above.

 

 

Under this programme SASSA managed to achieve 72% of its planned targets and related to this NDP priority for this quarter.

 

Linking the achievements of targets to these priorities, SASSA performed as  follows:

 

·Reducing income poverty by providing social assistance to eligible individuals:

 

• SASSA facilitated the take up and payments of new entrants, of which the target was 1,2 million. A total of 344 323 new social grant applications were approved and paid in the 3rd Quarter. This brought together a total of 931 474 social grant applications approved over the 9 months.
• It paid over 18 million social grants monthly to approximately 11.3 recipients. The total paid in was R183, billion over the nine month. The 11.3 million recipients were paid into their bank accounts across 24 banks including Post Bank. Overall transaction that were successfully processed has been 99% per month.
• It paid a total of R15.6 billion was paid to eligible applicants to COVID-19 special relief grant (approximately 6 million beneficiaries per month) in receipt. Overall 98% of approved beneficiaries were paid by the end of December 2020.
• It also paid approximately R30 billion on the top-ups of existing social grants until October 2020.

 

·Empowered, resilient individuals, families and sustainable communities

 

Two targets were set to achieve this priority, namely:

 

 

• In addition to Covid-19 measures, SASSA issued 124 801 Social Relief of Distress to individuals and families under distress. The total amount spent was R164 million. The priority was given to Covid-19 SRD grant.
• In line with the commitment to contribute towards empowerment of SMMEs and cooperatives, 45% (183,219,968 million) of total SRD rand value (R407 million) was awarded through cooperatives and SMMEs. A total of R7,954,403 was awarded to cooperatives and R175,265,565 SMMEs.

 

5.OVERALL ANALYSIS OF SASSA’S QUARTERLY PERFORMANCE AGAINST GOVERNMENT PRIORITIES

 

SASSA as an entity of the Department of Social Development has a critical role to play towards the achievement of government priorities indicated above. Targets set  in the Agency’s APP demonstrated their alignment to these priorities. However, analysis of  the Agency’s quarterly performance report to the Committee revealed  that a big portion of these targets were not reported on, which possibly imply that they were not achieved.

 

6.NATIONAL DEVELOPMENT AGENCY

 

 

6.1 Mandate of the National Development Agency

 

 

The National Development Agency (NDA) has a two-fold legislative mandate consisting of a primary mandate and a secondary mandate.

 

Its primary mandate is to contribute towards the eradication of poverty  and  its causes by granting funds to civil society organisations (CSOs) for carrying out projects or programmes aimed at meeting development needs of poor communities and strengthening the institutional capacity of CSOs involved in direct service provision to poor communities. Whereas the secondary mandate is to promote consultation, dialogue and sharing of development experience between CSOs and relevant organs of state; debate on development policy; and undertake research and publications aimed at providing the basis for development

The above-mentioned mandates in the main contribute towards the eradication of poverty and its causes. This is achieved through granting of funds to CSOs to enable them to implement development projects in poor communities. The NDA is also entrusted with strengthening the institutional capacity of CSOs, which provide services to poor communities.

 

7.OVERALL         FINANCIAL           PERFORMANCE            AND       NON-FINANCIAL PERFORMANCE FOR THE THIRD QUARTER 2020/21

 

• performance

 

 

Being a Schedule 3A entity, as defined by the Public Finance Management Act, Act No. 1 of 1999 (PFMA), the running of the NDA is driven principally by government grants. The budget of the NDA is made up of transfer from DSD to the value of R224.4 million (97 per cent), interests of R2.3 million (0.1%), and R4.0 million (1.7%) from other income. In total, the NDA had an operational budget of R230.8 million for 2020/21 financial year compared to R215.3 million it received  in 2019/20 financial year.

 

The NDA did not receive any additional funding from the DSD during the supplementary budget allocations to deal with the impact of COVID-19. It however reprioritised on its budget allocations and allocated R95 million for Covid 19 related responses. When taking the R95 million into consideration, the budget of the NDA was R325.9 million.

 

According to the NDA, the revenue received was made up of the following:

• About 60 per cent of the 2020/21 transfer allocation from DSD amounting to R134.7 million, received in May 2020.
• Management fees received for implementation of the CARA project to the value of R5.7 million, which has been recognised in full, as  the  CARA project is expected to fully disburse within the current financial year.
• Third Party Funds received for the CARA project amounting to R45 million (adjusted by R22.5 million); and
• Interest income of R1.4 million.

 

As at the end of the third quarter, the Agency spent a total a total amount of R177,7 million (51%) compared to 39% in the previous quarter. This excluded the remaining Criminal Assets Recovery Account (CARA) budget of R71 003 million. Out of the  total CARA budget of R95.5 million, the Agency had spent R24.5 million by the end of December 2020, which translated to only 26%.

 

Programme Performance

 

 

The budget of the NDA is spent amongst three programmes. These are:

 

 

• Programme 1: Governance and Administration – responsible for promoting and maintaining organisational excellence and sustainability through effective and efficient administration that includes performance, employee well-being, cost containment and brand recognition.
• Programme 2: Civil Society Organisations – provides a comprehensive  package that aims at developing CSOs to their full potential, to  ensure  that CSOs, especially those operating in poor communities, have capabilities to provide quality services to the communities they are serving.
• Programme 3: Research – focuses on action research and impact evaluative studies that will be used to inform programme planning, implementation and management of NDA CSOs development Programmes.

 

The total number of target set was 38 across all programmes. The set targets per programme were as follows: Programme 1 (seven targets), Programme 2 (seven targets), and Programme 3 (five targets).

It should be noted that during the special adjustment budgets there were no changes implemented to Programmes 1 and 3. The following notable changes were implemented in Programme 2. These include:

 

 

• Targets for Work opportunities created has been increased due to the implementation of the Volunteer Support Programme.
• Capacity Building Programme along with other NDA programmes will be digitised and targets have been adjusted accordingly.

 

Expenditure per programme was reported as follows:

 

 

• Programme 1:  spent 57% of its full year budget, and had 43% remaining   for implementation. There had been underspending on consulting and professional fees, IT costs, audit fees, and travel.
• Programme 2: spent 48% of its full year adjusted budget (including 19-20 commitments), and has 52% of the budget remaining  for  implementation over the last 3 months. This excluded the CARA project.
• Programme 3: spent 51% of its full year budget, as at the end of December 2020. There has been underspending on research studies, and monitoring and evaluation.

 

Table 1 below provides target performance of the NDA as at third quarter of the 2020/21 financial year:

 

Table 1: Target performance of the NDA as at quarter 2 of 2020/21

 

Programme	No.            of Targets	No. of Targets achieved	No.       Targets not achieved	% of targets achieved
Programme 1	7	2	5	28.8%
Programme 2	7	2	5	33%
Programme 3	5	4	1	80%
Total	19	7	12	63%

The NDA achieved only twelve (12) out of the 19 planned targets for the third quarter of the 2020/21 financial year. This translated into 63% achievement rate compared to 39% in the previous quarter. The following were the achieved targets:

 

• A total 55% (31 cases) of irregular expenditure were identified and they are in various stages of implementation as follows: 3 Write-offs recommended; 7 Recoveries Recommended; 1 Offer to pay in instalments received; 1 Case to be absorbed by TWF; 7 verbal warnings issued by Supervisors and 1 Written warning issued in Finance. It issued 4 recovery notices and was at the time of reporting assessing 4 cases of Fruitless and Wasteful expenditure relating to interest. The target was to process 60% of cases received.
• Achieved 100% procurement of services and goods from the prioritized organizations that fall within the BBBEE Levels 1, 2, 3 and 4. However, 89% of the services and goods were sourced from organizations falling with Levels 2.
• It funded only R12 million out of the target of R75 million towards CSO development interventions.
• It created 2 061 work opportunities through the NDA Covid-19 Volunteer Programme. The work opportunities were created equitably across the 9 province and with focus being placed on vulnerable and economically challenged communities. The programme was implemented through the CSOs that have been supported through the NDA capacity building programme.
• It concluded 4 research studies, these studies were on the following research areas:

• Behaviour change and modification in the wake of COVID-19 – Policy implications for the Social Development Portfolio Strategies
• Requirements for transforming the civil society sector in South Africa
• Analysis of best practices in ECD centres in the Eastern Cape Province in the context of legislation and policy
• Creating capacities and building capabilities for the civil society sector in South Africa.

 

 

8.Committee deliberations

 

South African Social Security Agency

 

• The Committee observed with concern what seems to be a trend of delays caused by National Treasury, particularly with regard to prolonged delays to grant condonations, roll over of funds from 2020/2021 for payment of SRD grants as well payments for ECD Stimulus Package. The Committee was particularly concerned over the non-payment of SRD grant for March 2021. SASSA explained that this was due to the transition from 2020/2021 to 2021/2022 financial year as well as the January 2021 announcement of the grant’s extension until end April 2021. The transition from one financial year to the other affected the rollover of funds as National Treasury had to first grant permission. With regard to the extension of the SRD grant, SASSA had to reactivate its payment systems and that caused a delay.

 

SASSA also explained that the reasons for delays from National Treasury on approving condonation was due to the number of requests it receives from various departments and levels of details. Of the 116 cases SASSA had forwarded to National Treasury, 94 cases were condoned, 24 cases would be reported on in the fourth quarter. There are no timeframes given to National Treasury on when approvals should be made.

 

• The Committee was also concerned that R6 million in debt collection had not changed and wanted to know the reasons for that.
• It also wanted to know progress made on the Temporary Disability Grant assessments and payments as the deadline was end March 2021.
• It noted the implementation of an online application system and impact it has had in making application processes easier but requested that the system should be manned to assist challenges that may be encountered by the public.
• It also noted that financial problems at the South African Post Office will not impact the payment of social grants.

National Development Agency

 

• The Committee observed that the Agency’s attempt of aligning its quarterly reporting with the result based management principles. It however, noted that there was a weakness on understanding and reporting on  the  object  of change, which is the main interest of the Committee. The object of change relates to changes brought by services (or targets) on the lives of people who are the object of change. It  is the main interest of the Committee to make sure that programmes implemented by the social development portfolio bring changes to the lives of people.
• The Committee wanted to know the value and the impact of the research project the NDA commissioned to the University of Fort Hare. The NDA explained that the research was a longitudinal study whose objective was to test effective implementation of the ECD policy in rural areas looking at infrastructural requirements, quality of ECD centres and quality of teaching and learning programmes. This would inform the Department and the NDA  on how to implement the policy across the country.

 

9.General observation

 

• The Committee noted that the reporting format has improved, particularly of the NDA to align with the principles of results based management.

 

14.Committee Resolution

• SASSA to forward a comprehensive progress report on the assessment and payment of the Temporary Disability Grant.

 

 

 

 

Report to be noted