Presentation to the Portfolio Committee on Social Development

Presentation to the Portfolio Committee on Social Development Annual Report 2014/15

Purpose of the Presentation • The purpose of this presentation is to present to the Portfolio Committee on Social Development SASSA 2014/15 Annual Report; focusing on: – Performance Information; – Budget and Expenditure 2014/15; and – Audit outcomes. 2

Presentation Outline • Overview • Programme Performance Information - Achievements against 2014/15 Strategic Priorities • Budget and Expenditure for 2014/15 • Summary of Audit Outcomes; and • Challenges 3

Overview 4

VISION “A leader in the delivery of social security services” MISSION To administer quality customer-centric social security services to eligible and potential beneficiaries. SASSA’s Slogan Paying the right social grant, to the right person, at the right time and place. NJALO! 5

STRATEGIC OUTCOME ORIENTED GOAL OF SASSA STRATEGIC OUTCOME ORIENTED GOAL Expand access to social assistance and creating a platform for future payment of social security benefits. GOAL STATEMENT To render social assistance to eligible beneficiaries 6

Key priorities for 2014/15 - 2018/19 • The primary focus of SASSA will be on: – Reducing income poverty by providing social assistance to eligible individuals – Improving service delivery – Improving internal efficiency – Institutionalising social grants payment system within SASSA 7

Strategic Objectives • Strategic Objectives for SASSA for the reporting period were: – to ensure that eligible beneficiaries receive benefits due to them; – to improve the quality of service delivery to our customers; – to achieve a fully integrated and automated social assistance service; and – to ensure that the Agency is optimally capacitated for optimal service delivery. 8

PERFORMANCE INFORMATION PERFORMANCE AGAINST THE 2014/15 PRIORITIES 9

Implementation of the Social Assistance Programme Objective Planned Targets Achieved • To provide social assistance to qualifying/eligible beneficiaries • Target is to reach at least 1. 1 m new beneficiaries p. a • Total annual progress achieved : ü The total number of applications processed from April 2014 to March 2015 was 1 379 253 (125% of the annual target); ü 1 302 745 (94. 5%) were approved; ü 70 557 (5. 1%) were rejected; and ü 5 951 (0. 4%) were outstanding. 10

Implementation of Social Assistance Programme Objective • To provide social assistance to qualifying/eligible beneficiaries. Planned Target • To increase the number of grants in payment from 15 932 473 to 16 052 000 by the end of 2014/15. Achieved • 16 642 643 social assistance benefits were in payment as at end of financial year ü 12 329 716 are children’s grants; ü 3 200 264 are older person’s grants; ü 1 112 663 disability grants; • There was a 4. 46% increase in the growth of social grants • Lapsed Grants: A total of 1 299 499 social grants were lapsed between April 2014 to March 2015. 11

Social Grants Trends Number of grant benefits and percentage growth over a nine year period by grant type Grant Type Old Age War Veteran Disability Grant in Aid Care Dependen cy Foster Child Support Total Annual Growth 2006/07 2013/14 2014/15 2 195 018 2 229 550 2 390 543 2 546 657 2 678 554 2 750 857 2 873 197 2 969 933 3 086 851 2 340 2007/08 1 9 24 2008/09 1 500 2009/10 1 216 2010/11 958 2011/12 753 2012/13 587 429 326 1 422 808 1 408 456 1 286 883 1 264 477 1 200 898 1 198 131 1 164 192 1 120 419 1 112 663 31 918 37 343 46 069 53 237 58 413 66 493 73 719 83 059 113 087 98 631 102 292 107 065 110 731 112 185 114 993 120 268 120 632 126 777 400 503 454 199 474 759 510 760 512 874 536 747 532 159 512 055 499 774 7 863 841 8 189 975 8 765 354 9 570 287 10 371 950 14 935 832 6. 20% 10 927 731 15 595 705 4. 42% 11 341 988 16 106 110 3. 27% 11 125 946 15 932 473 -1. 08% 11 703 165 16 642 643 4. 46% 12 059 12 423 739 13 072 173 14 057 365 7. 50% 12

Social Grants trends conti… Social Grant Expenditure per Grant type over nine-year period Grant Type Old Age War Veteran Disability Foster Child Care Dependen cy Child Support Grant in Aid SRD Total 2006/7 R’ 000 21 222 000 25 000 2007/8 R‘ 000 22 803 047 21 845 2013/14 R’ 000 44 064 239 7 657 2014/15 R’ 000 49 039 940 6 157 14 261 15 281 403 16 473 425 16 566 681 16 840 182 17 375 021 000 2 851 000 3 414 315 3 934 756 4 434 346 4 616 442 5 010 915 17 636 17 768 631 570 5 335 049 5 332 093 18 741 885 1 006 000 1 877 412 1 132 102 2008/09 R’ 000 25 933 971 19 692 1 292 470 2009/10 R’ 000 29 826 420 16 644 1 434 143 2010/11 R’ 000 33 750 600 13 976 1 586 452 2011/12 R’ 000 37 129 812 11 848 1 736 431 17 559 19 625 983 22 348 556 26 669 761 30 341 465 34 319 636 000 2012/13 R’ 000 40 475 021 9 543 5 413 209 1 993 084 2 211 583 38 087 39 623 748 990 43 718 425 67 000 87 000 90 000 146 295 170 052 204 026 237 974 274 092 371 121 41 000 106 244 623 012 165 458 173 737 185 298 239 289 533 047 455 718 R 57 032 000 R 62 471 939 R 70 715 885 R 79 259 748 R 87 492 906 R 95 972 987 103 898 845 R 109 596 591 R 119 958 041 13

Social Grants Trends: growth rates (2013/14 vs. 2014/15) Region Eastern Cape Free State Gauteng Kwazulu-Natal Limpopo Mpumalanga North West Northern Cape Western Cape Total 2013/14 2, 620, 284 934, 766 2, 184, 193 3, 761, 662 2, 222, 730 1, 325, 217 1, 120, 034 2014/15 Difference/Change % Growth 2, 718, 472 98, 188 3. 75% 960, 774 26, 008 2. 78% 2, 317, 903 133, 710 6. 12% 3, 886, 115 124, 453 3. 31% 2, 315, 499 92, 769 4. 17% 1, 389, 054 63, 837 4. 82% 1, 170, 505 50, 471 4. 51% 424, 815 446, 260 21, 445 5. 05% 1, 338, 772 15, 932, 473 1, 438, 061 16, 642, 643 99, 289 710, 170 7. 42% 4. 46% GP and WC had the highest growth due to intensified campaigns to reach excluded children 14

Social Grants Trends cont… Number of grant benefits by grant type and region as at 31 March 2015 Region OAG WVG DG GIA CDG FCG CSG Total % of total EC 528 291 47 182 479 16 391 19 165 115 849 1 856 250 2 718 472 16. 30% FS 182 314 5 75 526 2 095 6 385 37 985 656 464 960 774 5. 80% GP 482 168 89 106 015 2 989 16 170 53 411 1 657 061 2 317 903 13. 90% KZN 631 713 38 284 574 39 333 36 471 118 505 2 775 481 3 886 115 23. 40% LP 430 368 21 93 428 21 228 13 266 57 694 1 699 494 2 315 499 13. 90% MP 226 625 14 78 487 5 154 9 572 34 260 1 034 942 1 389 054 8. 30% NW 233 547 11 85 517 7 217 8 940 37 984 797 289 1 170 505 7. 00% NC 79 080 9 50 787 6 587 4 787 14 513 290 497 446 260 2. 70% WC 292 745 92 155 850 12 093 12 021 29 573 935 687 1 438 061 8. 60% 113 087 126 777 499 774 11 703 165 16 642 643 100% 0. 68% 0. 76% 3. 00% 70. 32% 100% Total % total 3 086 851 18. 55% 326 1 112 663 0. 00% 6. 69% 15

Implementation of the Social Assistance Programme Objective • Provide Social Relief of Distress to families experiencing hardship and thus require immediate interventions. Planned Targets • 160 000 SRD applications will be processed per annum over the next three years. Achieved • 353 678 SRD applications were awarded against the annual target of 160 000, which represents 121% over achievement. ü Cash – 11 231 ü Food parcels – 186 067 ü Vouchers – 146 225 ü Other – 10 155 • Total Expenditure stands at R 461 million. Additional budget was allocated to this programme due to increased demand emanating from disasters, increase in numbers of children with malnutrition and others forms of distress 16

Implementation of the Social Assistance Programme Objective Reduction of inclusion and exclusion errors in the social assistance programme Planned Activities • To reach 70% of the children age between 0 -1 who are eligible fro CSG. Achieved • Total number of childrens’ grants (0 -1) in payment was 597 459. This represents 51% of the children in this age category. • There was an increase of 138 632 from the 2013/14 financial year as a result of the ICROP programme. • The breakdown of children’s grants in payment for 0 -1 are: CSG 596, 920; CDG 324; FCG 215. 17

Service Delivery Improvement Objective Improving conditions under which beneficiaries are served Annual • Progressively reducing the turnaround time for Targets processing grants to an average of 10 days by 2016 Achieved • Turnaround time for processing of grants applications is on average 21 days. ü 99. 68% (1 373 768 out 1 379 350) applications were processed within 21 days. A significant number of this applications were processed within 1 day. ü 0. 32% of the applications were processed after 21 days (mainly disability grants). 18

Improvement of Service Delivery Objective Planned Target Taking service delivery to the people • ICROP/ Mikondzo: Target was to conduct 420 outreach programmes inclusive of Mikondzo Achieved • 714 outreach programmes inclusive of Mikondzo were conducted and services were provided. • This represents a 70% over achievement against the annual target as SASSA was targeting exclusion per UNICEF Report. 19

Payment System Objective Improvement in the Payment of Social Grants Planned Targets Implementation of the Payment Tender Achieved • The payment tender was processed in line with the Constitutional Court ruling. • There were further court challenges during the implementation process, which led to an amendment of the revised RFP and extension of the bid deadline. 20

Payment System Objective Improvement in the Payment of Social Grants Planned Targets Planning for SASSA is to take total responsibility for the payment of social grants in 2017/19. Achieved • Ministerial Advisory Committee report recommended the insourcing of the payment system in SASSA. • Feasibility report on the technology solutions required for insourcing has been completed. • Situation analysis of the payment process focusing on broader SASSA CPS arrangement and the extent to which it fits in the SA payments sector. • Workstreams have been proposed to facilitate implementation of the recommendations by the Advisory Committee. 21

Improved Administration: Automation Planned Targets • Improvement of ICT Infrastructure Achieved • 98% of local offices are equipped with computers, printers and network connectivity to speed up processing of social grants. • A strategic Architecture and ICT 5 year road map was developed. ü The road-map provides an integrated secure end-to-end solution, enable automation of business services and provide optimal on-going support to the organisation. • The SOCPEN system was continuously enhanced to improve the effectiveness and efficiency of the administration of social assistance. • A Business Intelligence solution was procured to enhance the management of information and reporting within SASSA. • During the period under review SASSA has initiated the process 22 for the automation of its records management.

Improved Fraud management Planned Targets • 60% of reported fraud and corruption cases investigated Achieved • Out of 1 328 reported fraud and corruption cases received, 950 were investigated which represents 72% achievement against the annual target of 60%. • The focal areas were grant administration, information and communication technology and supply chain management. • A total of 266 officials were suspended and 53 dismissed as at 31 March 2015. 23

Improved Fraud management (cont…) Planned Targets • 60% of reported fraud and corruption cases investigated Achieved Law enforcement agencies referrals and arrests • 11 cases were referred to Law Enforcement Agencies and 5 officials were convicted • 94 money-lending cases were reported, implicating 64 suspects who were in possession of 350 SASSA cards and R 586 486 in cash. • 16 private persons including three CPS officials with 280 SASSA cards were apprehended. A speed-point machine and a laptop (linked to 2 separate robbery incidents at the SASSA offices in KZN) were recovered. • 13 private persons turned state witness. Convictions • 2 CPS officials were sentenced to 15 years each, 1 out fined R 8 000 (R 2 000 paid and R 6 000 suspended for 5 years), while 1 CPS official is still on trial. • 3 SASSA officials were arrested and dismissed, their case is still under investigation for having created 55 ghost beneficiaries, amounting to R 752 460. 00. 24

Implementation of the Legal Services Model A total of 143 litigation cases handled. These include grant related litigation, labour disputes, contractual claims, motor vehicle accidents and procurement related matters OFFICE 2013/2014 Number R Value 2014/2015 Number R Value Total Difference Number R Value -2 041 615. 96 1 356 480. 13 9 -314 375. 18 2 171 138. 24 14 SASSA: HO 1 3 398 096. 09 10 Eastern Cape 43 2 485 513. 42 57 Free State 1 18 582. 39 0 31 208. 15 -1 12 625. 76 Gauteng Kwa. Zulu-Natal 1 12 22 7 439. 41 1 381 155. 06 1 72 273 536. 79 224 834. 76 0 60 46 097. 38 -1 156320. 3 Limpopo 1 22 430. 00 0 0. 00 -1 -22 430. 00 Mpumalanga 0 0. 00 2 0. 00 Northern Cape 0 0. 00 North West 2 20 517. 57 0 397 451. 11 -2 376 933. 54 Western Cape 1 131 850. 31 7 685 584. 25 1 315 374. 24 4 770 023. 42 0 81 183 523. 93 Total 62 143 25 -2 915560. 83

Improved Human Resources Management Objective • Effective Human Resource Management Planned Targets • Reduction of funded vacant posts Achieved • A total of 10 742 posts were filled as at the end of the period under review. • 1 953 Appointments ü 315 new appointments ü 471 contract appointments ü 1 055 EPWP workers and 112 interns were appointed § Of these appointments 356 were internal promotions • 1. 1% (117 out of a target of 215) people with disabilities are employed within the agency 26

Human Resource Management • SASSA further experienced the following challenges affecting key positions during the period under review: ü The Regional Executive Manager of the Northern Cape region retired in March 2015. ü The Regional Executive Manager of Limpopo was transferred to the Gauteng region in April 2014. This was necessary to ensure the stability of the Gauteng region as it is one of SASSA’s biggest regions. ü At the end of the financial year, the Agency was in the process of filling the following key positions: The CFO, CIO , and REM (LP and NC) • As at 01 April 2015 the agency had 650 vacant funded posts with an estimated salary bill of R 213 million. 27

Improved Human Resources Management Objective • Effective Human Resource Management Planned Targets • 100 % labour relations cases initiated within prescribed times Achieved • A total of 445 labour relations cases were initiated within prescribed times • Outcomes: ü 195 verbal warning ü 100 written warning ü 90 final written warning ü 60 Dismissals 28

Improved Financial Management Objective • Effective Financial Management Planned Targets • 100% of suppliers paid within 30 days • 50% Reduction in irregular expenditure Achieved • 82 % (5 137 out of 6 216) suppliers were paid within 30 days • 42% reduction in irregular expenditure 29

Improved Financial Management Objective • Effective Financial Management Planned Targets • 10 % of social assistance debts recovered Achieved • 12. 65 (R 32. 5 m out of R 257 m) of social assistance debt recovered and/or written off. ü R 26 m write off ü R 5. 7 m debt recovery • 11% (R 272 756) of ex-staff debt was recovered out of a target of 50% (R 1. 1 m). 30

FINANCIAL INFORMATION 2014/15 AUDITED FINANCIAL OUTCOMES 31

0% 2% % Share of budget per economic classification: 2014/15 40% Compensation of employees Goods and services Transfers and subsidies Assets / CAPEX 58% 32

Expenditure per economic classification 33

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Notes to the level of spending • Compensation of employees – A number of vacant funded posts were not filled at financial year-end that resulted in 4% underspending that included time delayed savings in filling of posts. – These include senior management posts such as the posts of Chief Financial Officer, Chief Information Officer, Regional Executive Manager: Limpopo and NC etc. – Some of the posts were at various stages of the recruitment process. As at 01 April 2015 the agency had 650 vacant funded posts with an estimated salary bill of R 213 million. • Goods and services: The under spending was mainly on: – – Communication due to the telephone management system efficiencies Cash handling fees due to the reduced cost of disbursing grant monies Leases due to offices that were in the process of being occupied Travel and subsistence due to spin-offs from cost containment measures

Auditor-General Report and Comments

Auditor General Report and Comments • AGSA’s opinion – Unqualified Audit. The AG found that: – SASSA’s financial statements present fairly the financial position of the Agency as at 31 March 2015 except for few adjusted misstatements – SASSA’s financial performance and cash flows for the year were in accordance with SA Standards of GRAP, PFMA and SASSA Act requirements • Predetermined objectives – Reliability of information: The has been significant improvement on the report on predetermined objectives concerning the usefulness and reliability of the information. 40

Other audit matters • Misstatements in terms of operating leases commitments disclosed • Shortcomings identified with the reimbursement of costs (R 316 million) incurred towards Cash Paymaster Services in respect of additional resources procured for the re-registration project. • Poor turnaround time to finalize financial or possible financial misconduct cases 41

CHALLENGES

Challenges Mitigation Unauthorised Deductions Short term: Beneficiary Support Plan & Dispute Resolution Mechanism Long Term: New Tender prohibits any form of deduction other than Regulation 26 (A) Impact of Load Shedding on All SASSA offices have been instructed to purchase connectivity of Systems generators SRD – high demand resulting in high budget pressures • Short term ü reduced the value of the SRD; ü utilising savings from other low spending grants • Long term ü Motivated for additional allocation Ongoing court challenge – Payment Tender ü The process will be finalised by the 15 October 2015 43

Recommendations It is recommended that the Portfolio Committee on Social Development note and support – SASSA 2014/15 Annual Performance Report; – SASSA financial statements for 2014/15; and – Challenges and the mitigation strategies that the Agency is implementing. 44

Thank you 45 45