Progress on Implementation of The Constitutional Court Order Presentation to Portfolio Committee on Social Development 6 June 2018 Out with the Old In with the New

Presentation Outline Purpose Background Current Payment Outlook Migration of beneficiaries from the current CPS/Grindrod card to the new SASSA/SAPO card Decommission pay-points in areas where there is payment infrastructure including SAPO branches; The cash payments reduction plan Alternative strategies for beneficiaries residing outside the 20km payment infrastructure Communication Risks and Mitigations

Purpose The purpose of this presentation is to brief the Portfolio Committee on: the plans to execute the migration of beneficiaries from the old SASSA/Grindrod card to the new SASSA/SAPO card through the card swap program. plans to decommission pay-points in areas where there is payment infrastructure including SAPO branches; The cash payments reduction plan Alternative strategies for beneficiaries residing outside the 20km payment infrastructure

Background SASSA approached the Constitutional Court on 6 February 2018, requesting further extension of the suspension of the declaration of invalidity of the contract with CPS in relation to the cash payment services, upon realising that it will not finalise the procurement of a new cash payment service provider. On 23 March 2018 the Court extended the suspension of the declaration of the invalidity of the contract between SASSA and CPS for a period of six (6) months – ending September 2018. The extension was only for cash payment services but in some areas SAPO was not ready to perform on-boarding of beneficiaries - CPS did some enrolment and card issuance There were a number of challenges with the new cash payment tender which led to review and subsequent cancellation of the cash payment tender

Background (cont…) Government took a decision to request the SAPO to extend the original agreement to include more than 2 500 000 beneficiaries that were previously earmarked for payments by the cash payment service provider; The current Service Agreement with SAPO is in the process of being amended to incorporate the additional services that SAPO will be rendering, subsequent to cancellation of the cash payment tender. Beneficiaries who choose to receive payments through their commercial accounts (in line with Regulation 21 (1) (a)) will also be supported

Current Social Grants Payment Outlook There are approximately 10.8 million (as at 04 June 2018) social grant beneficiaries who receive their grants through the hybrid model as follows: 1 995 986 beneficiaries receive their social grants using Biometric CVM at cash pay-points, merchants and ATMs. These payments are facilitated by CPS in line with Constitutional Court judgement of March 2018. The number decreased by 1 164 846 from 3 160 832 in April 2018 to 1 995 986 in June 2018 The SASSA/SAPO plan is to issue the new SASSA/SAPO payment card to these beneficiaries by end of July 2018 through the card swap programme (ideally SASSA would have preferred to complete the card swap by June, however there were technical clichés experienced, which slowed down the card swap process).

Current Social Grants Payment Outlook (cont…) Direct ACB Transfers in June 2018 1 213 664 beneficiaries received their social grants directly into their own Personal Bank Accounts (excluding Grindrod) There were 7.7 million Grindrod ACB payments Approximately 5.6 million of these payments were into the old SASSA payment card for beneficiaries using PIN. These beneficiaries will be issued with the new SASSA/SAPO payment card as SASSA seeks to decommission this card after September 2018 SASSA will not deposit grants into the old SASSA payment cards/ accounts beyond September 2018. SASSA’s is engaged in a process to ensure that all banked beneficiaries submit mandates authorising SASSA to pay into their bank accounts.

5 MONTHS PLAN

Guiding Principles: CPS payment services to be eliminated by September 2018 Cash payments reduced drastically (beneficiaries who stay in areas where there is developed national payment infrastructure will be migrated to electronic forms of payments) An alternative strategy developed to address the beneficiaries residing in remote areas New model positions SAPO as dominant player, with commercial banks merchants and retailers as secondary players in the value chain Critical driver is the expedited card production & intensified card swap programme supported by an offline solution to circumvent network and system congestion Decommission traditional pay-points in phases

Migration of beneficiaries from the old SASSA/Grindrod card to the new SASSA/SAPO card.

Card Swap Programme There are more than 7 million beneficiaries currently using the old SASSA/Grindrod payment card Approximately 2 million receive their grants using Biometric CVM at cash pay-points, merchants and CPS ATMs. Approximately 5. 5 million receive their grants using the old SASSA Payment Card using PIN SASSA plan is to migrate all these beneficiaries to the new SASSA/ SAPO card through the card swap programme by August 2018. Priority will be given to those beneficiaries receiving their social grants at pay points On receiving the new SASSA/SAPO cards, beneficiaries can access their grants through any of the following methods: SAPO outlets closest to them; through the use of the available banking infrastructure; existing retail merchants; and numerous point of sale devices in close proximity of their residential areas.

Card Production and Card swap Targets Period Card Body Production Capacity Actual No. Of Cards Produced Card Swap Target Card Swap (Actual 25 May) March ‘18 April ‘18 250 000 May ‘18 2 300 000 1 400 000 214 520 63 248 June ‘18 4 000 000 2 539 380 July ‘18 4 050 000 3 702 850 August ‘18 1 463 880 Total 10 600 000 1 650 000 7 920 632

CASH PAYMENTS REDUCTION PLAN

Cash Reduction Strategy Of the 3.1 million beneficiaries that received their social grants using Biometric CVM in April 2018, 2.2 million went to cash pay-points. SASSA has taken a decision to reduce the number of beneficiaries paid at the cash pay points due to the following: South Africa has fairly extensive and developed National Payment System. cash transportation and management has become increasingly risky and expensive Majority of the beneficiaries use multiple payment channels (i.e., they move between cash pay-points and merchants and biometric ATMs) The primary objective is to migrate majority of beneficiaries who are currently collecting their grants from the 8 086 cash pay points to alternative methods. Target is to reduce the number of beneficiaries paid at cash pay points from over 2.2 million to approximately 800 000 The end goal for SASSA is to completely do away with the cash payment component of social assistance services.

Cash Reduction Strategy (cont…) Critical to the cash reduction plan is the expedited card production and card swap programme Decommissioning of pay-points Upgrading infrastructure of SAPO branches to absorb the high volumes of beneficiaries On receiving the new SASSA/SAPO cards, beneficiaries can access their grants through any of the following methods: SAPO outlets closest to them; through the use of the available banking infrastructure; existing retail merchants; and numerous point of sale devices in close proximity of their residential areas.

Cash Payments Reduction Targets Target Date Est. No to be paid at cash pay-points Intervention strategy to reach the target April 2018 2 252 175 Beneficiaries with PINs encouraged to use electronic payment infrastructure May 2018 2 000 000 Decommissioning of SASSA pay points (259) June 2018 1 500 000 SAPO Card Swop capacity (214 520) in May Increased Reduction of payment file to exclude unlinked CSG in urban areas Decommissioning of SASSA pay points (1228) July 2018 1 200 000 SAPO June Card Swop capacity (2.5 million including Old SASSA card beneficiaries using electronic payment infrastructure)-Weekend campaigns-Commencing in Limpopo-Venda area (date tbc) Decommissioning of SASSA pay-points (1751) August 2018 789 984 SAPO July Card Swap capacity (3.7 million including Old SASSA card beneficiaries using electronic payment Decommissioning of SASSA pay-points (1700) September 2018 Residual beneficiaries using cash pay points in remote areas.

Decommissioning of Cash Paypoints Traditional pay-points in areas where there is national payment infrastructure and active SAPO outlets will be decommissioned. This intervention will reduce the number of cash pay- points from 8 086 to a projected 3 121 by the end of August 2018. The number of residual beneficiaries to be served at remaining cash pay-points is approximately 789 954. The table below summarises SASSA Plan to decommission identified pay-points:

Decommissioning of Cash Pay-points Region Total No. of pay points May June July Augu st No. to be    cl osed       Remaining No. of beneficiaries EC 2 590 - 512 513 134 1159 1431 260 694 FS 212 98 97 195 17 14 643 GP 144 87 44 131 13 2 411 KZN 1 700 449 469 271 1189 511 124 386 LP 1 839   433 991 1424 415 80 504 MP 386 38 113 151 235 92 361 NC 344 43 88 89 220 124 44 396 NW 609 81 174 268 341 144 574 WC 262 80 115 33 228 34 25 985 Total 8 086 1 282 1 878 1805 4 965 3 121 789 954

Beneficiaries residing >20km outside the national payment infrastructure

Beneficiaries residing outside 20km radius of NPS Region Remaining No. of beneficiaries EC 1431 260 694 FS 17 14 643 GP 13 2 411 KZN 511 124 386 LP 415 80 504 MP 235 92 361 NC 124 44 396 NW 341 144 574 WC 34 25 985 Total 3 121 789 954

Alternative Plan – Remote areas Total number of beneficiaries: *789 954 : No of pay-points: 3 121 Beneficiaries residing >20km outside the National Payment Infrastructure and outside of SAPO infrastructure coverage These beneficiaries will be issued with the new SASSA/SAPO card during the card swap scheduled for completion on 30 July 2018. Although social assistance will be deposited into the accounts of all these beneficiaries, the challenge of lack of payment infrastructure to allow these categories of beneficiaries to withdraw or access their monies remains. The primary intervention in this regard is that SAPO will procure mobile cash dispensing machines to service outlying locations by July 2018. SAPO has commenced with the procurement process for the portable cash dispensing machines and it is envisaged that they will be available before the end of September 2018. In addition, SAPO is in the process of extending the scope of its current Cash in Transit contract to accommodate the additional numbers and sites. Banks have also been engaged on the option of bringing mobile banking infrastructure in these areas

Alternative Plan – Remote areas (cont…) Beneficiaries who can migrate to banks of their choice, in particular the recipients of the Child Support Grants (CSG), are being encouraged to do so. For pay-points with smaller numbers, SASSA and SAPO, as a temporary measure will contract local transport industry to transport beneficiaries to nearest SAPO outlets or merchants or any available NPS Infrastructure on specific days of the month whilst SAPO is working on developing its payment infrastructure. Under extreme circumstance, SASSA and SAPO will enlist the support of the SANDF to go and pay grants in those areas that are still not fully covered by the various payment channels. Regulation 24 and 25 SASSA will continue to encourage beneficiaries who are unable to access their grants regularly due their old age, disability or frail conditions to use provisions of Regulation 24 and 25 of the Social Assistance Act, to appoint by way of a power of attorney, procurators or individuals or institutions to receive social assistance on their behalf. Currently there are 308 789 registered procurators who receive the social grants on behalf of beneficiaries, particularly older persons and people with disabilities.

Summary of Communication plan

Stakeholder engagements The successful implementation of this change programme lies in extensive stakeholder consultations and extensive communication Key Stakeholders to be engaged are: Traditional and community leaders (Consultation with the various Houses of Traditional leaders is also underway) Beneficiaries Auxiliary social workers are being appointed to conduct house visits Schools and teachers will be engaged as disseminators of information Targeted communication and marketing campaigns through various media platforms. Pamphlets and radio adverts have already commenced in most of the indigenous languages Weekend bulk card swap blitzes in community halls, traditional authority offices and other identified beneficiary catchment areas. Other media platform activities will commence in the month of June 2018. The procurement of specialist integrated communications and marketing service providers is underway.

Above The Line Tactical SABC 1,2,3, Mzansi, Skeemsam, squeeze backs Card swap Comms Plan National campaign TV SABC all languages, 702, kaya, Power Radio Billboards Strategic points of entry gantries nationally Lamppost Print ads Regional campaign Below The Line Tactical Radio Community Door2Door Mall Activations Posters TV Adverts & slots Stakeholder engagements Schools addresses May – Sep ‘18 June – Sep ‘18 June – Sep ‘18 April – Sep ‘18 June – Sep ‘18 May – Sep ‘18 June – Sep ‘18

Risk Management RISKS MITIGATIONS DEPENDANCIES Inadequate SAPO branch physical infrastructure Upgrade of SAPO branches to service additional cash beneficiaries Funding – see Financials for details Inadequate IT infrastructure in SAPO branches Upgrade SAPO IT and network infrastructure to service additional cash beneficiaries Inadequate Security, CIT and Guarding Increase capacity to service additional cash beneficiaries Possible partnership with SANDF Under capacitation of HR in SAPO branches Additional HR capacity to service additional cash beneficiaries Insufficient cash at branches Cash projections by SAPO branches Prefunding of SAPO branches CPS counter communication – confusing beneficiaries SASSA/SAPO communication plan implementation None System response – network and integration Increase system capacity and performance and consider off-line

Recommendations It is recommended that the Portfolio Committee note and support the plans to execute the migration of beneficiaries from the old SASSA/Grindrod card to the new SASSA/SAPO card through the card swap program. plans to decommission pay-points in areas where there is payment infrastructure including SAPO branches; The cash payments reduction plan Alternative strategies for beneficiaries residing outside the 20km payment infrastructure Out with the Old In with the New