ATC120228: Report 2010/11 Annual Report of The South African Social Security Agency (Sassa), dated 28 February 2012

Social Development



1.        Introduction


The Portfolio Committee on Social Development deliberated on the 2010/11 Annual Report of the South African Social Security Agency (SASSA). This report presents some of the key achievements as well as challenges encountered by SASSA (the Agency). The report will also highlight matters of concern raised by the Committee.


2.        Presentation by SASSA on its 2010/11 Annual Report


Ms V Petersen, Chief Executive Officer of SASSA, indicated that the aim of the presentation was to provide an overview of the performance of the Agency for 2010/11.  She noted, as background information, that since the establishment of the Agency there has been a steady increase in the demand for SASSA services and subsequently this resulted in the increase in the workload of its staff.  In 2006, the number of benefits stood at 10 975 076 and in March 2011, it had increased to 14 935 832 million. This has had negative impact on the quality of service delivery. 


She informed the Committee that the increase in the demand for services had been exacerbated by the marginal growth in number of employees dealing directly with grants administration versus the significant growth in the demand for services.  The presentation also noted that Agency’s social assistance system has remained largely manual and lacks integration. 


The key strategic priorities for 2010/11 were reported as follows:


·          Customer Care-centred Benefits Administration and Management System;

·          Improved Organisational Capacity and;

·          Comprehensive and Integrated Social Security Administration and Management Services.


3.        Priority 1: Customer Care-centred Benefits Administration and Management System


Some of the key projects identified under this priority include Improved Grant Application Process (IGAP), the Agency’s payment system, automated core business system and disability management.


The number of social assistance benefits increased from 14 057 365 in 2009/10 financial year to 14 935 832 in 2010/11.  This constitutes an increase of 6.2 over the previous financial year.




Table 1: Number of grant benefits and growth rate for financial years 2009/10 vs 2010/11



Grant type




% Growth Rate

Old Age

2 546 657

  2 678 554

131 897


War veterans

       1 216




Disability Grant

1 264 477

  1 200 898

 -63 579



     53 237

       58 413

    5 176


Foster Child

   510 760

     512 874

    2 114


Care Dependency

   110 731

     112 185

    1 454


Child Support

9 570 287

10 371 950

 801 663




14 057 365

14 935 832

 874 467



The table above shows that all grants benefits uptake had increased with the exception of War Veteran Grant which decreased by 21.2%, and the Disability Grant which decreased by 5.0% over the period under review.


The Child Support Grant increased by 8.4%, Old Age Grant by 5.2% and Care Dependency Grant increased by 1.3%.  Foster Child Grant had the lowest growth of 0.4%.


3.1      The Agency’s Payment System


The grant payments are still largely cash based and there is a significant progress made on migration of migration of beneficiaries from cash payment to Automated Clearing Bureaus (ACBs).  In the year under review, a total of 47.33% of payments were made through ACBs or banks, translating into a 16.08% increase.  The cost of administering social assistance grants through the cash payment contractors was reduced to R30.53 from R33.52 resulting in a saving of almost 9%.  Over the Medium Term Expenditure Framework (MTEF) period, the Agency aims to review the current system and develop a new payment strategy.


3.2      Improved Grant Application Process (IGAP)


The IGAP intended to reduce turnaround time for social grant applications was piloted in one of the districts in the Free State and it was still being reviewed for its effectiveness. In addition. the Agency achieved on average a turnaround time of nine days, which was an improvement from the previous 21 days turnaround time for processing of new social grant applications. This was made possible by the implementation of a three step model comprising of immediate capturing and verification of applications on-site, followed by the issuing of a letter on the outcome to the applicant before leaving the Agency offices.  KwaZulu-Natal and Gautengregions recorded the highest number of social grants applications that were processed within 30 days whilst the Northern Cape recorded the lowest of applications processed within the same period.

3.3 Disability Management Model


The Disability Management Model was developed to standardise the medical assessment process in all the regions.  The Agency managed to undertake 112 363 medical review assessments against a set target of 298 752 over the MTEF.  All doctors contracted to the Agency were trained and accredited by the Agency to conduct disability medical assessments.  In addition, the Agency implemented the standardised medical assessment forms in all regions, excluding the Eastern Cape as the serialised medical forms were not in sync with the MIS workflow medical from issuance system.  The Agency continues to monitor and evaluate the effectiveness of the prioritised elements of the disability management model.  The Agency has also entered into Memorandum of Understandings (MOUs) with some of the Provincial Health Departments for assistance in conducting disability assessments.


4.        Priority 2: Improved Systems Integrity


This priority is intended to transform the Agency’s culture and enhance people’s capabilities.  The key projects under this priority are the following:


4.1      Change Management (Organisational Culture Reform)


The Agency had undertaken change management initiatives to improve skills, competencies and professional conduct.  The ethics audit conducted within the Agency revealed a significant decrease in the number of grievances relating to job descriptions and performance management including staff development.  The Agency made progress in inculcating the understanding between performance expectation and actual performance.  In addition, the ethics training was provided to 3 165 staff members across the regions.  The training served to communicate the vision, mission and expected conduct as well as the responsibility of staff members to report incidents of breach of the Code of Conduct and Ethics.


4.2      Integrity Model Implemented


The Agency responded proactively to fraud and corruption by implementing the Integrity Model.  The integrity model introduced a paradigm shift, from focusing on detection and investigations to validation of the eligibility of beneficiaries for social grants including life verification and to confirm the existence of the beneficiaries.  A total of 132 603 beneficiaries were verified for eligibility and existence, with a total of 7 133 found to be fraudulent.  The Agency, through the Special Investigations Unit (SIU) continued with investigating and prosecuting persons found to have defrauded the system.  A total of 2 828 persons were brought before the courts in the year under review bringing the total convictions to 17 477 since the inception of the project in June 2005.  In addition, 6 368 people signed acknowledgement of debts (AODs) valued at R56.7 million in repayment of fraudulent grants.


Legal Services Model Implemented


The Agency, through the implementation of the Legal Services Model drafted and vetted 101 contracts and Service Level Agreements in accordance with processes contained in the Framework for Contract Management.  It managed to reduce the number of litigation matters from 2 744 to 1 944 during the 2010/11 financial year.  Liability costs on litigation matters were also reduced from R43 254 321.12 to R12 164 381.08 in the reporting period translating into 71.8% decrease.


However, there are still some challenges that need to be addressed.  These include the lack of human capacity in the Contract Management Unit to advise on proper management of contracts, which had resulted in the rise of poorly managed contracts. 


5.        Priority 3: Increased Access to Social Security


5.1          Integrated Community Registration Outreach Programme (ICROP)


To increase access and ensure equity to social assistance services especially in rural and semi-rural areas, the Integrated Community Registration Outreach Programme (ICROP) was implemented. A total number of 675 outreach programmes were conducted in 121 municipalities across the country during the period under review. Seventy Two Thousand Four Hundred and Twenty Five (72 425) new beneficiaries registered through ICROP. The implementation of ICROP had not only increased the accessibility of social grants but also led to a significant increase in Social Relief of Distress (SRD) assistance to poor households.  An estimated 3 766 households that experienced undue hardships were issued with temporary relief measures in the form of vouchers, food parcels and assistance with other material needs.  The success of ICROP can be attributed to effective partnership with the Departments of Social Development, Home Affairs, Health and, South African Police Service (SAPS) for integrated service delivery.  Regions such as the North West also established 11 satellite offices in an effort to improve access to the Agency’s services.


5.2          Human Capital Reforms


5.2.1        Leadership


The Auditor-General South Africa (AGSA) report for 2009/10, reported weaknesses in leadership within the Agency, which contributed to a disclaimer audit opinion. Subsequently, the Agency focused on providing targeted skills development initiatives to enhance the leadership skills in different employee categories. This entailed the implementation of various leadership programmes which included the following:


·     Emerging Management Development Programme (levels 1-8);

·     Advanced Management Development Programme (levels 9-12); and the

·     Executive Leadership Development Programme (levels 13-14).


5.2.2        Skills Development

A staffing analysis on the posts within the Grants Administration Value Chain was conducted. This unit represents 70% of the total employee capacity within the entire Agency. The staffing analysis identified service delivery requirements and capacity gaps. An Integrated Talent Management Strategy focusing primarily on workshop optimisation was developed to serve as an integral part of a broader organisational enhancement strategy.


6.        Key Policy Developments and Legislative changes


On 16 September 2010, the Social Assistance Amendment Act (No. 5 of 2010) came into effect. This was to enable applicants and beneficiaries who disagreed with the decision of the Agency to request it to reconsider its decision. An amendment to the Regulations of the Social Assistance Act, 2004 was published in the Government Gazette No. 34120 No.R232 dated 15 March 2011, applicable retrospectively from 01 December 2010. This amendment deals with the eligibility of Social Relief of Distress to a person who has been affected by a disaster as defined in the Fund-raising Act, 1978 (Act No.107 of 1978) or the Disaster Management Act, 2002 (Act No.57 of 2002). Another interesting development in the year under review was the recognition of the Agency’s Bargaining Forum as per Resolution 1 of 2006.


7.        The Agency’s revenue and expenditure


The Agency’s total revenue for the period under review which is mainly transfers from Department of Social Development including its own revenue amounted to R5. 6 billion while total expenditure amounted to R5. 2 billion or 91% of the budget.  This leaves a total budget savings of R462. 7 million.  The bulk of the administration budget is allocated to cash contractors’ fees and that is where the majority of the saving is derived. In this regard, the Agency during the period under review realised a reduction on the expenditure related to the payment of cash payment contractor’s fees.  This was as a result of the negotiations between the Agency and the contractors on fees paid to them for the disbursement of grants to beneficiaries. At the beginning of the period under review, the Agency had an accumulated budget deficit of R884 million. This results from the budgetary constraints experienced by the Agency since the 2007/08 financial year.  In an effort to deal effectively with budget constraints, the Agency had to put in place measures that ensured efficient spending such as scaling down on unnecessary expenditure. This was done by continuing to implement cost containment measures as part of the broader cash stabilisation strategy.  The cash stabilisation strategy comprises the following pillars which are briefly explained hereunder:


7.1            Implementation o Austerity measures across the Agency


Although cost containment measures were implemented, the positive impact and gains that would have been derived from implementing the measures was negatively impacted upon by budget adjustments or funds shifts to items which were targeted to derive savings or incur less expenditure such as communication, travel and subsistence.  Travel and subsistence expenses were incurred mainly due to extensive travel arising from audit activities.  Austerity measured played a major role in and underpinned the approach to the allocation process.


Migration of beneficiaries to banks with a view to reduce exorbitant disbursement fees charged by Cash Payment Contractors


The Agency initiated the process of accelerating efficiencies in its operations in particular with the disbursement of social grants by encouraging beneficiaries to shift to other cost saving payment methods.  In the year under review, a total of 47. 33% payments were made through ACBs or banks whereas during 2009, 31. 25% was paid through the ACBs or banks.  This translated into a 16.08% increase. This number is envisaged to increase as beneficiaries, especially those residing in urban areas, are becoming more aware of the better option on transacting through the banks.  The banking infrastructure in rural areas is also improving and expanding.


7.3      Recovery of grants monies paid into dormant beneficiary accounts


The aim of this pillar is to recover grant monies from beneficiaries who were found ineligible to receive the grant.  The Agency collaborated with the law enforcement agencies in ensuring that authority is granted to recover these monies.  An amount of R106 896.52 was recovered from dormant beneficiaries’ accounts. First National Bank and Postbank are still to provide data on the recoveries.  A total of 2 000 deceased beneficiaries with dormant accounts were identified as being overpaid and a process had been initiated to recover these overpayments


8.        Findings of the Auditor General


The Auditor General issued an unqualified audit opinion to SASSA for the 2010/11 financial year.  The Agency had a disclaimer audit opinion for 2009/10 financial year and had an unqualified audit opinion for the 2008/09 financial year.


Matters of emphasis included:


The audit finding included matters of emphasis that was brought to the attention of the users that various financial statement items were restated due to the correction of prior period errors.  It was further emphasised that SASSA had material impairments of debtors to the amount of R3 774 287 (2009/10 – R63 922 862).  The prior year impairment was done as part of the restatement of corresponding figures.


Predetermined objectives included:


·     Reliability of information

·     Validity: Actual reported performance had occurred and pertained to the entity.

9.      For the reported target: grant beneficiaries on SOCPEN, that were material by nature and amount, the validity of the reported target could not be established as sufficient appropriate audit evidence and/or relevant source documentation could not be provided. Grants beneficiaries were audited based on a statistical sample and it could not be confirmed for 1.52% of the sample audited that the beneficiary qualified for the grant.

Measures to address challenges

To address challenges that the Agency had encountered, it was reported that the Budget Performance Review would be important for designing the most appropriate structure for SASSA. SASSA had implemented various steps to improve service delivery. It had optimised business processes, and had standardised the Grant Payment System. It had developed a new payment model to improve its costs efficiencies, whilst the implementation of austerity measures also had a bearing on the new envisaged innovations and projects. The moratorium on the filling of posts remained a major challenge in respect of its human resource (HR) capacity, and that had an effect on overall performance of SASSA.

10.      Committee’s Observations


The Committee commended SASSA for the unqualified audit report. However, it drew attention to the Auditor-General’s remarks that a number of grant beneficiary files requested from SASSA were not presented for audit purposes. Furthermore, numerous files presented by SASSA did not contain the necessary information that is required to form the basis for a valid grant payment.


The Committee noted with concern the existing dual accountability between the department and SASSA over the flow of funds (transfers and subsidies), which resulted in the department receiving an qualified audit report in 2009/10 and 2010/11 financial years.


The Committee further noted that the department will strengthen its oversight over SASSA by developing internal audit processes and financial inspections. This is critical to ensure that the department strengthens its governance over its entities.


The Committee expressed its satisfaction for the improvement of SASSA’s audit report from a disclaimer to unqualified audit opinion.


11.            Recommendations


The Committee recommends the following:


  • The issue of dual accountability between the department and SASSA should be addressed so as to clarify the problem of accountability over the flow of funds (through transfers and subsidies) to SASSA. 


·         The audit committees of the department and SASSA should meet regularly to monitor, review and recommend improvements with regards to internal controls and systems.

The department and SASSA should ensure that there should be skills transfer from contractors to SASSA employees so that there would be sustained effective functioning of SASSA.


  • The Committee noted that SASSA had been paying the Special Investigating Unit (SIU) R3 million monthly since its inception to conduct investigation on fraud and corruption with regards to social grants. This is very costly.  It therefore, recommends that the department should fast track and finalise the establishment of the Inspectorate for Social Security provided for in the Social Assistance Act (N0. 13 of 2004), so that SASSA can conduct its own investigations to save costs.




Report to be considered.


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