SASSA’s Report to the Portfolio Committee 31 May 2017

Purpose The purpose of this report is to provide feedback to the Portfolio Committee on the outcome of the SASSA & SAPO’s workshop as part of the initiative to explore Government to Government Collaboration for the payment of social grants

Introduction The in-sourcing plan is premised on the principle of Build, Operate and Transfer with the aim to: Build the system and processes towards the institutionalisation of the payment function Minimise SASSA’s dependence on external parties for the execution of its constitutional mandate Minimise the risk of illegal sharing of beneficiary data, and thus protect them from abuse Minimise duplication of Government infrastructure Ensure that the payment functions within SASSA is incubated and offered specialist support for development and implementation of industry approved systems

Summary of requirements Following the engagement with SAPO, SASSA EXCO agreed that the following requirements could possible be met by SAPO: While SASSA is building its capacity the processing of payments will be done through existing banking, SAPO and SASSA infrastructure Develop and host technology to capture and authenticate biometric fingerprint images in a secure environment Develop and host technology required to implement and operate the Control and Special accounts back office

SAPO OFFERING SAPO indicated its readiness to offer its services to SASSA: As an SOE In compliance with the ICT White Paper which was approved by Cabinet In an orderly transition in compliance with SASSA’s mandate. SAPO has extensive fixed branch infrastructure With the ability to expand its reach even further into rural areas To provide grant recipients a choice of payment options To provide SASSA full access to the National Payment System through its Postbank division

SAPO OFFERING Postbank is a designated participant in the National Payment System, performing its own interbank transaction clearing, potentially providing all grant recipients full inter-operable access to all ATM’s, retailers and POS purchases Full member of the Payment Association (PASA),Banking Association of South Africa (BASA) and the South African Banking Risk Information Centre (SABRIC) Full member of VISA and Mastercard Currently Postbank has 5.7 million customer accounts

Summary of Discussion SAPO’s capabilities were found to be as follows: Already established pay channels and effecting payment Has known experience as a payment provider of social assistance Has experience of operating as a bank Beneficiary data will be secured as it will be managed within Government Reliable and trusted TELKOM support on technology and connectivity

Summary of Discussion SAPO’s capabilities (continued): Government will be investing in its own infrastructure through this collaboration thereby supporting the broader state infrastructure development plan An opportunity to mobilise within government for support e.g. SITA, CSIR, GPW etc. to increase their capacity for the greater good for all government It has sophisticated payment infrastructure A letter of Agreement with the Agency is in place which provides opportunities for collaboration

Identified functions which SASSA will manage Through extensive discussions, SASSA identified 3 key aspects which it will control directly during the course of the 2017/18 financial year: Control (corporate) bank account Definition of special beneficiary accounts (ring fenced, limited use) Regulation 26A deductions

Progress made to date Management of Regulation 26A deductions for funeral policy premiums: Approval given for procurement process Project plan developed – time lines is September payment file for management to be under SASSA’s control Initial engagement with company already contracted to SASSA to undertake pay roll deductions Specifications for interface underway Business rules defined

Way Forward Now that SASSA & SAPO’s initial engagement has been concluded, the procurement process will ensue: The Bid Specification document will be processed as per the procurement policy followed by; Evaluation & technical due diligence Awarding Expected time frame for this is to have a new service provider on board by November 2017 SASSA to continue working on those areas for which it will take direct control

Thank you 12