Briefing to the Portfolio Committee 15 August 2018 Progress Report on the Implementation of the Constitutional Court Order Briefing to the Portfolio Committee 15 August 2018

Purpose The purpose of this presentation is to brief the Portfolio Committee of Social Development on Progress achieved with the payment of social grants (April – August 2018) Payment challenges experienced and remedial actions Progress on migration of beneficiaries from CPS Payment plans beyond September 2018

payments from April to August 2018

Summary of payments from April to August 2018 Payment channel No. of beneficiaries April May June July August Biometric CVM payments (CPS) 3 160 832 3 110 333 1 950 249   1 637 975 1 098 669 ACB Direct transfers 2 348 107 3 531 734 8 928 107 9 236 945 9 795 132 SASSA/ Grindrod Bank (Bilateral processing – old SASSA cards ) 5 342 376 4 221 999 Total 10 851 315 10 864 066 10 878 356 10 874 920 10 893 801

Payments to Beneficiaries Receiving Social Grants Through CPS The total number of beneficiaries that are paid by CPS in August is 1,098,669. SASSA managed to successfully reduce the number of beneficiaries paid by CPS by 2,062,163 from April 2018 (3 160 832) to August 2018 1,098,669. Since the issuance of the August pay-file, card swap continued and the number of cash beneficiaries was further reduced by approximately 196, 802 to 811 009 by 6 August 2018. The number continue to be reduced on daily basis through the daily card swap and, this net effect will only be reflected in the September payment file.

CPS Payment extraction (April - August 2018) Region April 2018 May 2018 June 2018 July 2018 August 2018 EC 494,869 482,713 288,629 242,530 158,477 FS 215,045 211,112 148,426 128,037 85,325 GP 384,760 380,905 189,767 153,918 109,399 KZN 695,883 683,528 427,901 376,822 260,382 LP 573,292 567,771 440,595 367,412 247,043 MP 287,473 284,227 191,737 155,562 100,406 NC 79,467 76,871 43,231 34,702 23,148 NW 227,951 223,535 145,229 122,974 83,407 WC 202,092 199,671 74,734 56,018 31,082 Total 3,160,832 3,110,333 1,950,249 1,637,975 1,098,669

Progress on Direct Transfers to Commercial Bank Accounts There has been a general increase in the number of beneficiaries choosing to be paid in their own bank accounts. Following the provision of information related to the payment options available to beneficiaries, SASSA received numerous requests for grant payments into personal bank accounts. The August payment file included 9,795,132 beneficiaries who were to receive their grant payments at different banks. The number of beneficiaries paid through other commercial bank accounts excluding Grindrod and SAPO is approximately 1 663 083 in August 2018.

Progress on Direct Transfers to Commercial Bank Accounts Payments to Grindrod (including old SASSA Cards) Of the 9.7 million ACB beneficiaries, 5,589,506 beneficiaries were paid through Grindrod Bank. This include beneficiaries who are still using the old SASSA card in the NPS. The number of beneficiaries using Grindrod bank accounts reduced by approximately 2,124,937 between June and August 2018. This decrease is largely due to card swap /migration of beneficiaries from the old SASSA card to the new SASSA/SAPO card. There were no major reported challenges with the payment of beneficiaries receiving grants through commercial bank accounts including the old SASSA card, except for those using the new SASSA/ SAPO card.

ACB Payment Extractions Banks Months 201802 201803 201804 201805 201806 201807 201808 ABSA BANK 29,680 56,667 88,180 119,007 165,646 211,358 249,934 AFRICAN BANK (Ubank) 97 419 1,047 2,583 5,800 9,225 12,023 ALBARAKA BANK 23 36 43 58 70 89 118 BANK OF ATHENS 90 596 1,419 2,637 3,534 5,069 6,447 BANK WINDHOEK 154 152 153 BIDVEST BANK 105 463 1,755 3,403 5,138 7,196 9,932 CAPITEC BANK 24,494 67,413 124,280 189,616 301,158 421,107 532,078 FINBOND MUTUAL 15 4,107 10,067 14,776 20,600 24,947 31,710 FIRSTRAND BANK 21,702 47,013 93,149 137,309 200,812 271,464 332,285 GRINDROD BANK 1,860,488 1,923,941 1,877,392 2,802,095 7,714,443 6,970,925 5,589,506 HBZ BANK 1 4 6 8 HSBC BANK 2 3 INVESTEC BANK 5 13 ITHALA 123 338 1,447 3,521 7,550 10,850 13,710 KZN FIN&INV (ITH

ACB Payment Extractions Banks Months 201802 201803 201804 201805 201806 201807 201808 MERCANTILE BANK 25 49 73 94 119 151 184 NBS 56 58 57 55 NEDBANK 2 4 6 3 NEDBANK EX PERM 1 NEDBANK INC. BOE 14 13 12 NEDBANK LIMITED 12,468 30,319 54,310 83,164 136,306 203,661 263,363 NEDBANK NAMIBIA 41 40 39 38 PEOPLES BANK POSTBANK 1,351 7,327 31,448 83,448 233,215 936,680 2,542,543 STANDARD NAMIBIA STANDARD SA 18,259 38,120 63,018 89,519 133,186 174,557 210,925 BANK OF INDIA VBS MUTUAL 144 208 225 250 189 80 HABIB OVERSEAS UNIBANK Grand Total 1,969,246 2,177,224 2,348,107 3,531,734 8,928,107 9,247,753 9,795,132

Progress on payments by SAPO through PostBank There were 936 680 beneficiaries in July who were to be paid through PostBank using both the SAPO Mzanzi accounts and the new SASSA/SAPO account holders. The number of beneficiaries paid through the PostBank increased to 2 542 543 in August 2018. The increase is due to intensified card swap programme aimed at migrating beneficiaries from the CPS payment platform to the new SASSA/SAPO card. SAPO/PostBank beneficiaries Month No of beneficiaries April 31,448 May 83,448 June 233,215 July 936,680 August 2 542 543

July payments challenges and Remedial actions There were payment challenges that were experienced during the first week of the July payment cycle affecting most of the 700 000 beneficiaries using the new SASSA/SAPO card In terms of the Bankserv report the transaction success rate for the new SASSA/SAPO card was at 25% and 50% for ATMs and POS respectively, on 30 June 2018 due to challenges in the system. Payment challenges affecting over 700 000 beneficiaries using the new SASSA/SAPO card. The root cause mostly related to the inability of the SAPO systems to process real-time large volumes of transactions generated by the SASSA beneficiaries transacting on the NPS. Major issues identified were as follows: Late processing of the payment file by SAPO. Failed transactions errors linked to transaction timeouts. Connectivity and capacity of payment link between SAPO and Bankserv Africa. Over the counter (OTC) limit of R1,600 forcing some beneficiaries to perform multiple transactions to withdrawn their full grant

July payments challenges and Remedial actions To address the challenges in preparation for the August pay run which was scheduled for 31 July through to the end of August 2018 payment cycle, SASSA, SAPO, Telkom/BCX, and SITA worked in collaboration with industry partners, such as Bankserv, PASA to : Upgrade and migrate the Integrated Grants payment System (IGPS) system to the Telkom enterprise hosted environment. (The current IGPS environment at SAPO Data centre will stay and serve as an Interim backup/ Failover environment). Better server host capacity as well as high availability on the server level resulted in improved capacity which provide capabilities for the IGPS system to process up to 200 transaction per second at peak time from the previous 15 TPS. Connectivity with Bankserv has been improved by replacing the Copper Diginet lines with high volume high speed Fibre dedicated links which can scale on demand. This addresses issues of slow response and throughput. New upgraded links were used for connectivity for the end user devices. The splitting of the card issuing function from the transaction processing function on the IGPS system was completed on 12 July 2018. The splitting will allow for better load balancing between the two processes.

Further Remedial actions Subsequent to the implemented interventions, by 06 July 2018, the situation had improved and the transaction success rate was 99% for both ATMs and POS. Mid-month report was submitted to CC on 12 July 2018, to report the challenges and remedial action The IMC held a press conference to brief the public about progress regarding the transition and to apologise for the inconvenience caused by challenges experienced during the July payment run. Furthermore, the Minister, the Acting CEO of SASSA, and the CEO of SAPO, have been on various news media to allay beneficiary fears. Workshop was held with payment industry: banking sector under the auspices of the Banking Association of South Africa (BASA) and the retail sector under the auspices of the consumer goods council of South Africa (CGCSA).

August Payments CPS is paying 1,098,669 at all cash paypoints (8000) except for 1000 that have been decommissioned 7,252,589 received payments using own bank account This include approximately 3 million beneficiaries who are still using the old SASSA card in the NPS system 2,542,543 beneficiaries payments were deposited through the Post Bank accounts cards SAPO will also pilot the cash payment solution at 18 sites across the country involving 4201 beneficiaries

Plans to support payments : August SASSA activated staff to support payments Presence at every decommissioned pay point to redirect any beneficiaries who may arrive Presence at post offices, major merchants and ATMs to support, respond to questions and assist beneficiaries Help desk at cash pay points still serviced by CPS Card swap desks at existing cash pay points to ensure balance are issued with new cards Roving teams to move to smaller pay points for monitoring Dignity interventions on demand where queues are not moving

New SASSA Card August Payment Transactions July/ August POS Txns POS Value ATM Txns ATM Value Branch (OTC) Txns Branch Value Grand Total Txns Grand Total Value 30-Jul 15,483 R8,471,506.17 53,585 R49,330,880.00 1790 R2,228,580 70,858 R60,030,966.17 31-Jul 99,203 R68,604,096.77 245,532 R254,015,030.00 15455 R20,327,900 360,190 R342,947,026.77 1-Aug 408,911 R384,928,377.20 557,115 R580,598,114.00 67,826 R93,258,260 1,033,852 1,058,784,751.20 2-Aug 224,820 R187,279,523.78 283,484 R262,539,149.00 48,313 R63,209,030.00 556,617 513,027,702.78 3-Aug 139,377 R103,020,563.82 170,955 R150,806,770.00 36,617 R46,851,480.00 346,949 300,678,813.82 4-Aug 91,932 R59,108,963.09 109,377 85,664,894.00 9,464 R10,831,290.00 210,773 155,605,147.09 5-Aug 33,858 R16,406,378.32 38,526 R24,217,649.00 13 R10,780.00 72,397 40,634,807.32 6-Aug 71,976 R47,124,324.08 86,560 R73,128,934.00 22,586 R28,678,380.00 181,122 148,931,638.08 7-Aug 53,459 R31,410,266.06 62,231 R50,173,820.00 15,252 R19,217,260.00 130,942 R100,801,346.06

Summary of August Payment challenges Generally there were no major challenges during the first week of August. There were however a number of incidences relating to: IGPS - The majority of challenges received related to the IGPS system being slow in the morning hours. Late arrival of Cash - The late arrival of CIT affected some of the Post Office Outlets. Decommissioned pay points A number of reports were received of beneficiaries arriving at decommissioned pay points and CPS paying beneficiaries. SASSA officials were not allowed into the halls PIN resets: In a number of Regions beneficiaries had challenges with regard to PIN resets (both old SASSA card and new) as Information on the location of PIN reset sites was not easily accessible or available at local or national level. Deductions, beneficiaries receiving less than their grant. SAPO and SASSA are investigating the cases and Bankserv has been requested to assist Limited services Post Office outlets – not all SAPO outlets were paying or doing card swap - In most cases this was as a result of the system being down/ offline or no money having being delivered to the Post Office.

Cash payments plans: August 2018

Cash Payment file reductions Since mid-May 2018, SASSA and SAPO have been swapping social grants beneficiaries’ CPS/Grindrod cards for the SASSA/SAPO card. As of 07 August 2018, at least 3,683,078 beneficiaries had been transferred from old SASSA card to the new SASSA/SAPO card. The card swap process has reduced the total number of cash recipients of social grants, for whom the Constitutional Court made a ruling on from approximately 3.1 m to 811 009 as of 6 August 2018. The plan is to finalise the migration of remaining cash beneficiaries in August and September 2018 Cash Beneficiaries Province August Pay-file (23/07/18) Balance of Cash File as at 06 August 2018 Eastern Cape 158,477 118,218 Free State 85,325 57,960 Gauteng 109,399 89,412 Kwazulu Natal 260,382 188,005 Limpopo 247,043 169,540 Mpumalanga 100,406 77,439 Northern Cape 23,148 18,858 Northwest 83,407 67,939 Western Cape 31,082 23,638 Grand Total 1,098,669 811,009

Interventions for cash beneficiaries in remote areas Interventions to service the residual number of beneficiaries in difficult to reach rural areas: SAPO will utilise its point of sale solution supported by CIT and guarding services to pay beneficiaries at the remaining pay-point The solution is piloted at 18 sites during the August cycle (8 NW; 2 EC and KZN, 1 for each of the remaining provinces) 60% of cash beneficiaries at the residual sites will be migrated to SAPO in August in preparation for payment at those pay points from September 2018 All remaining cash beneficiaries in will be migrated in September and paid from October Continuous interaction with Retailers & Banks to included their infrastructure as alternative channels Transport plan is also being finalised to support the SAPO strategy

Pilot Sites paid by SAPO in August 2018 Payment Date Province Paypoint name Number of Beneficiaries 1-Aug-18 North West Molatedi  - Mabeskraal 285 Gauteng Poortjie – Sebokeng Post Office 392 2-Aug-18 Tshidilamolomo 245 Matloding 495 Moshawane 279 Logageng 560 KZN Thafamazi 152 3-Aug-18 Mamerotse 122 Tantanana 254 Serutube 60 7-Aug-18 Mpumalanga Platrand, Lekwa local office, Gert Sibande 148 14-Aug-18 Eastern Cape Mtonjeni Café Elliotdale 200 Northern Cape Camden 434 Limpopo Shakadza A – Northern Limpopo, Mutale 102 Shakadza B – Northern Limpopo, 135 15-Aug-18 Gcwagcwini A/A , Idutywa 44 Western Cape Agter Witzenberg (Worcester district) 267 16-Aug-18 Free State Verkeerdevlei, Welkom office 237 Maphinick 142 17-Aug-18 Bangizwe, Mbazwana local office (Deep rural) 174

Plan to support pilot sites Staff deployed to support Socpen enquiries available Beneficiaries with SASSA/SAPO card – direct to pay station “Manual” payments – off card but using biometrics Beneficiaries with “old” SASSA card directed to card swap and then transported to cash payment site in vicinity Beneficiaries informed of payment options for next months

Progress report on the work of the Panel of Experts and its budget allocation The Constitutional Court appointed the Auditor-General of South Africa and 10 independent legal and technical experts to evaluate SASSA’s implementation of the Court’s orders of 17 March 2017 and 23 March 2018 respectively. The Court directed that SASSA would be responsible for the reasonable remuneration of the Panel. The panel of experts reports to the Constitutional Court in accordance with paragraphs 8 of the Court order dated 23 March 2018. The panel of experts have so far released 7 reports SASSA engages with the panel of experts monthly. In July, following the payment challenges experienced by beneficiaries using the new SASSA Card, the Panel invited both SASSA and SAPO to a workshop to deliberate on issues and the measures implemented.

Progress report on the work of the Panel of Experts and its budget allocation SASSA also ensures that matters raised in the Panel’s reports are addressed in the monthly reports to Court. Budget and Expenditure: In 2018/19 it is estimated that the panel will work an average of 35hrs per expert per month translating into a total hours of 2,423hrs.The table below shoes budget and spending.

RISKS AND MITIGATION

RISKS RISKS/ ISSUES MITIGATION PROGRESS Failure to swop all cash beneficiaries by 30 September 2018. Focus all efforts to swop cash beneficiary during August 2018. Robust communication to encourage beneficiaries to go to swop their cards. Card swop process has been extended to take place over weekends.   Conduct door-to-door to identify those who require home visits. Labour disputes and strikes Engage with Labour through existing government structures Recruitment process The use of PIN in the NPS might be a challenge for older persons and people with disabilities. utilise Auxiliary Social Workers (ASW) to conduct home visits and advise families on the option of using procurators for the frail and people with disabilities and assist them with the application process. Process to recruit Auxiliary Social workers being undertaken (7/08/2018)

RISKS RISKS/ ISSUES MITIGATION PROGRESS Insufficient cash at retailers to respond to the demands of the beneficiaries. Information on beneficiary numbers per pay point to be shared with retailers and banks. Communication and information sharing with banks is on-going Migration of beneficiaries to SAPO outlets, banks and merchants may increase the risk of robberies, including robberies of retailers and merchants. The SAPS to provide support by increasing visibility around merchants and banks during the payment period. Engagement with NATJOC is on-going and a security plan will be jointly developed between SASSA, SAPO and NATJOC. Migration of beneficiaries from a pay point to either a SAPO outlet or alternative electronic payment infrastructure could result in overcrowding at these facilities. SASSA is considering the possibility of staggering payments to ensure that beneficiaries do not all receive their grants on the same day. This will be done in consultations with beneficiaries

Recommendation It is recommended that the Portfolio Committee of Social Development note and support Progress achieved with the payment of social grants (April – August 2018) Payment Challenges experienced and remedial actions Progress on migration of beneficiaries from CPS Payment plans beyond September 2018

Thank you