1. SAPO Presentation to Portfolio Committee on Telecommunications and Postal Services
28 August 2018

2. SASSA Update
To brief the Portfolio Committee on Telecommunications & Postal Services
Progress achieved with the Card swap;
Technical System Performance Remedies
August payments;
Overall State of readiness

3. Summary of payments from April to August 2018
Payment channel
No. of beneficiaries
April
May
June
July August
Biometric CVM payments (CPS) 3 
3 110 333 1  1 
ACB Direct transfers 2  3  8  9 
SASSA/ Grindrod Bank (Bilateral processing – old SASSA cards ) 5 
Total
10 851 315
10 
10 
10 

4. Card Swap Daily Stats

5. Technical System Performance Remedies

6. 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 The splitting will allow for better load balancing between the two processes.

7. IGPS: Migration to Telkom Cybernest Milestone &Timelines

8. Summary of Payments

9. August Payments
CPS is paying 1,098,669 at all cash pay-points except for those 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 also piloted the cash payment solution at 18 sites across the country involving 4201 beneficiaries

10. July/August Payments

11. July/August Payments

12. August Pay Cycle preparedness
The War Room became operational at SASSA to monitor payment, trouble shoot and receive reports from pilot sites and other pay points.
Information was received through various channels such as , telephone, SMS and a WhatsApp “War Room” group
Other sources of information included other monitors on the ground and other structures such as NATJOC, retailers and BASA.
The reports received from the various channels were captured in a log format and any issues that required attention were actioned or referred for action
SASSA/ SAPO head office and regional staff deployed to pay points to assist to channel people and assist beneficiaries

13. Summary of August Payment challenges
There were no major payment challenges during the August payments, except for 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 NOT able to pay them as they were NOT on the cash payment file
SASSA officials were not allowed into the halls where pay points have been decommissioned

14. Summary of August Payment challenges (cont…)
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. The ability to withdrawn cash at SAPO branches wef Sept using ID and biometric will resolve this. Deductions, beneficiaries receiving less than their grant. New SASSA Card: SAPO and SASSA are still investigating the cases and Bankserv has been requested to assist. Old SASSA Card: CPS admitted that their system was responsible for this and they are refunding the beneficiaries Limited services Post Office outlets – not all SAPO outlets were paying or doing card swap. Some Post Offices do not have adequate facilities such as toilets, adequate shelter, chairs, etc. This matter is being addressed actively by SAPO.

15. Progress on ACB payments

16. Progress:Direct Transfers on Commercial 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 in August 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 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.

17. Cash Payment file reduction
Since mid-May 2018, SASSA and SAPO have been swapping social grants beneficiaries’ CPS/Grindrod cards for the SASSA/SAPO card.
The card swap process reduced the total number of cash recipients from approximately 3.1 m to as at 20 August 2018.
The indicative payment file for September payment cycle which will include full auto migration in 3 provinces indicates that CPS will be paying cash beneficiaries.
All the remaining cash beneficiaries will be migrated to SAPO during September in preparation for October payments
Cash Beneficiaries
Province
August Pay-file (23/07/18)
Balance of Cash File as at 06 August 2018
Balance of Cash File as at 14 August 2018
Eastern Cape
158,477
118,218
100,283
Free State
85,325
57,960
48,967
Gauteng
109,399
89,412
78,631
Kwazulu Natal
260,382
188,005
153,922
Limpopo
247,043
169,540
144,351
Mpumalanga
100,406
77,439
63,860
Northern Cape
23,148
18,858
17,277
Northwest
83,407
67,939
59,371
Western Cape
31,082
23,638
20,766
Grand Total
1,098,669
811,009
687,428

18. RISKS AND MITIGATION

19. 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.
Delays in the finalisation of the procurement of CIT and cash dispensing machines:
Assistance from the Security Cluster will be sought to secure the safety of staff, beneficiaries and money until the service provider(s) have been appointed
Labour disputes and strikes
Ongoing engagement with Labour through existing government structures

20. RISKS RISKS/ ISSUES MITIGATION PROGRESS
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.
Over the Counter services at SAPO branches will radiate this
Process to recruit Auxiliary Social workers being undertaken (7/08/2018)
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.

21. INTERNAL FUNDS TRANSFER

22. Internal Funds Transfer
Postbank SOC Limited is incorporated as a wholly owned subsidiary of SAPO in compliance and anticipation of the granting of the fully fledged banking licence
Postbank is currently a division of SAPO and the business, incorporating agreed assets and liabilities, will be transferred to Postbank SOC in due course in compliance with:
Capital Adequacy Ratio required by SARB (29,625%)
2005 MOU between MTPS and MF
Settlement of intercompany obligations
Funds transferred to settle critical SAPO obligations were surplus to Postbank compliance obligations and should not jeopardise the licence application in any way
Principle terms of agreement on the terms of these transfers has been signed between SAPO and Postbank Boards subsequent to which no further transfers have been made

23. OPERATIONAL UPDATE

24. Executive Summary Carryover Summary
Improved service delivery standards from 76% -87,5% delivery standards
The National carryover on the 23rd August 2018 is at 53.2 Million. The following 3 areas is mainly affected:
The Wits Region carryover on the 23rd August 2018 is at 30 Million
The Northern Region carryover on the 23rd August 8.2 Million
The International Business carryover on the 23rd August is 9 Million
Customer that did not mail during the strike are now logging at Witspos and Cap and this is affecting the reduction of the backlog. Current inflows of domestic mail is approximately 2.6 Million per day.
A large percentage of the Witspos carryover is outward mail which will still flow into other Mail Centres especially Tshwane Mail Centre

25. International
The International Business carryover on the 23rd August is 9 Million
Discussion with SARS to move to Cape Town and Durban International assessment sites
Moving unrecorded mail to other mail centres
EMS to Speed Services for delivery and to Post Office where possible
Requested international counterparts to make direct despatches to Cape Town and Durban
Operators that held back mail during the strike started to send mail increasing the initial backlogs
Staff working overtime over weekend

26. FINANCIAL POSITION

27. Highlights for the year ended 31 March 2018
Subject to AGSA and AGM signoff
Income Statement
Revenue declined by 3% from R4,6 billion to R4,4 billion
Expenses reduced by 7% from R5,6 billion to R5,2 billion
Loss for the year improved by R79 million (8%) from R987 million to R908 million
Statement of Financial Position
Net asset value improved from R901 million to R3,5 billion in 2018
R3,7 billion capital injection utilised to settle term loans
Anticipated Unqualified audit report

28. SUSTAINABILITY/ FUTURE FUNDING

29. Sustainability Funding requirements have been submitted:
- Interim budget adjustment (Sassa)
MTEF
Public Service Mandate
Capex for future revenue initiatives
SAPO branch upgrade for SASSA project underway
Labour
Agreement signed to end strike on 20 July 2018
6,5% increase backdated to April 2018
- Sec 189 process to commence

30. Network Upgrade

31. Network Upgrade
Tender for network upgrade opened on 22 March 2016 and closed in 20 May 2016
Tender cancelled due to unjustified financial viability and termination cost of existing contract at the time.
SAPO’s network reengaged in anticipation of Sassa mandate
Engagement with Telkom approved by NT

32. Thank you – Questions?