Presentation of 2006/7 Annual Report to the Portfolio Committee on Social Development

21 November 2007

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Outline of the PresentationThe presentation covers the following:

Part 1:2006/07 Overview of Strategic and Operational Dynamics of

SASSA Part 2:

Progress Against 2006/07 Strategic PrioritiesPart 3:

Budget and Expenditure for 2006/07 (Financials)Part 4:

Auditor-General Report and CommentsPart 5:

Concluding Remarks on 2006/07

2006/07 Strategic and Operational Matters

Part 1

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2006/07 Background and Context• 2005/06 Social Grants Administration and Payment Services was

managed by provincial Departments of Social Development • Funding mechanism during period were two (2) conditional grants

transferred via the national Department of Social Development to provincial Departments

• 2006/07 Social Grants Administration funds transferred to the SASSA for its overall management in relation to service delivery and management requirements

• 2006/07 Social Grants Payment still with provinces to ensure payments and transfers to service providers (Cash Payment Contractors)

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2006/07 Background and ContextImplications of the institutional; funding and management

arrangements

– Only the social assistance administration was transferred to SASSA by the end of March 2006, which included:

– All personnel working within the grants administration system, that is, from application to payment services were migrated to SASSA

– All systems and mechanisms related to the social grants administration systems migrated and transferred to the SASSA

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2006/07 Background and ContextImplications of the institutional; funding and management arrangements

– Exclude Corporate Services which comprise legal services; human capital management; financial administration and management; information communication technology; and other corporate communications;

– No corporate support services capacity provided within the SASSA both at national and regions (Head and Regional Offices)

– SASSA given its management, financial and administrative responsibilities on the social assistance programme had to request provincial and national departments to:

• Provide strategic and operational wholly corporate services support

• Quantify the nature and extent of corporate services that must be provided against the social assistance administration and payment services

• Cost these services to the SASSA against a Service Level Agreement between the national and provincial Departments of Social Development and the SASSA

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2006/07 Background and ContextImplications of the institutional; funding and management arrangements

– Service Level Agreement signed between Minister and Members of the Executive Councils (political level) and the Heads of Departments and the Chief Executive Officer of the SASSA (technical and administrative level);

– The level of corporate services provided by provinces entirely dependent on the availability of resource capacities within the provincial departments, that is, staffing; systems and procedures

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2006/07 Background and Context

Complex operational environment as a result of:Establishment and Operationalisation; Standardization of systems; processes; and

procedures on finances, corporate services and grants administration

Establishment of offices; Recruitment of personnel; andHigh expectations of beneficiaries.

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Legislation Mandate of SASSA

The Legislative Mandate of SASSA is derived from SOCIAL ASSISTANCE ACT, 2004 and the SOUTH AFRICAN SOCIAL SECURITY AGENCY ACT, 2004:

To provide for the administration of social assistance and payment of social grants through the effective management; administration and payment of social assistance

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SASSA Strategic Intent

To ensure the provision of a comprehensive social security

service against vulnerability and poverty within the

constitutional and legislative framework

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Key Strategic Objectives

Ensure a High Performance Institution;

Service Delivery Improvement;

Improvement of Operational Excellence; and

Good Governance.

Progress Against 2006/07 Strategic Priorities

Part 2

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Summary of Key Achievements for 2006/07

The Agency had during the year under review achieved the following: 80% of resource effort was spent on establishment,

operationalisation and integration of the social assistance administration and payment services;

Functional separation from DSD at district and local levels commenced;

Head office and nine regional offices established; and Transferred more than 6 246 grant administration staff from the

National and the nine Provincial Departments of Social Development to SASSA;

Shareholder’s Compact signed between the Minister and the CEO.

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Summary of Key Achievements for 2006/07 Cont…

To increase access in rural areas, plan to purchase 40 mobile units finalised

The review of the Service Delivery Model was started with the view to standardise the delivery of services across regions;

Standardised the social assistance administration and payment services;

Criminal proceedings have been instituted against 2 300 of the 12 000 public servants believed to have unlawfully accessed social grants;

SASSA terminated payment to 12 000 public servants.

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Summary of Key Achievements for 2006/07 Cont…

Key finance and HCM (Human Capital Management) policies were developed;

Initial finance and HCM delegations of authority approved and implemented.

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Summary of Service Delivery Achievements for 2006/07

The following tables indicate:

Growth trends in number of beneficiaries

per grant type; and Growth trends in number of beneficiaries per

region.

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NUMBER OF BENEFICIARIES PER GRANT TYPE

GRANT TYPE1 April 2005 - 31

MARCH 20061 April 2006 - 31

MARCH 2007

Increase in Number of

Beneficiaries

Annual Growth

Rate

Care Dependancy 90 112 98 631 8 519 9.45%

Child Support 7 075 266 7 863 841 788 575 11.15%

Foster Care 317 434 400 503 83 069 26.17%

Grant in Aid 26 960 31 918 4 958 18.39%

Old Age 2 146 344 2 195 018 48 674 2.27%

Total Disability 1 315 143 1 422 808 107 665 8.19%

Permanent Disability 1 104 318 1 142 440 38 122 3.45%

Temporary Disability 210 825 280 368 69 543 32.99%

War Veteran 2 817 2 340 - 477 -16.93%

Total 10 974 076 12 015 059 1 040 983 9.49%

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TOTAL NUMBER OF BENEFICIARIES PER GRANT TYPE

Total number of beneficiaries have increased by 1 040 983 from 1 April 2006 to 1 April 2007

This represents an annual growth rate of 9.49%

Contributing to the growth rate of 9.49% is

CSG grew by 788 578

DG grew by 107 665

FCG grew by 83 069

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NUMBER OF BENEFICIARIES PER REGION

PROVINCE1 April 2005 - 31

MARCH 20061 April 2006 - 31

MARCH 2007

Increase in number of

Beneficiaries

Average Annual Growth

Rate

Eastern Cape 2 104 830 2 249 327 144 497 6.87%

Free State 680 292 724 371 44 079 6.48%

Gauteng 1 317 076 1 407 003 89 927 6.83%

KZN 2 516 847 2 942 380 425 533 16.91%

Limpopo 1 643 449 1 754 453 111 004 6.75%

Mpumalanga 834 813 902 120 67 307 8.06%

North West 904 771 1 003 256 98 485 10.89%

Northern Cape 218 020 234 594 16 574 7.60%

Western Cape 753 978 797 555 43 577 5.78%

Total 10 974 076 12 015 059 1 040 983 9.49%

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Total number of beneficiaries per regions Greatest increase in no. of beneficiaries-KZN at 425 533.

Represents 16.91% growth rate;

Eastern Cape-second largest increase-144 497 beneficiaries. Represents a growth rate of 6.87%;

North West, however, represents the second largest increase in percentage terms at 10.89%;

The Northern Cape represents the smallest increase in number of beneficiaries-16574; and

Western Cape represents the lowest growth in percentage terms at 5.78%

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Achievements for the programme: Customer Services

Function:

To provide a coordinated and integrated grant administration and payment service.

Achievements: Implementation of Improved Grants Administration Process (IGAP) in Eastern Cape,

Mpumalanga, Western Cape and KwaZulu-Natal regions;

Implementation of IGAP integrated with MIS in Free State and Eastern Cape;

Customer Charter was developed and implemented-Informs beneficiaries of their rights and quality of service;

Access to services improved in some rural areas through outreach programmes; and

Grant Application Forms standardised throughout the Agency.

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Achievements for the programme:Internal Audit & Risk Management

Function:

To provide internal auditing services and to ensure compliance with policy and prescripts.

Achievements

A Risk and Fraud Strategy was developed and implemented;

2 300 public servants prosecuted for grant fraud;

257 files handed over to provincial departments for disciplinary action;

1 150 acknowledgments of debt signed to the tune of R6 132 382; and

About R5 million recovered thus far.

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Achievements for the programme: Corporate Services

Function:

To provide corporate support services.

Achievements

Transferred more than 6 246 grant administration staff from the National and the nine Provincial Departments of Social Development to SASSA;

Most senior managers positions filled;

Implemented HR policies and procedure manuals;

Skills Audit conducted at Head Office and regions;

300 staff recruited and appointed, to capacitate support functions.

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Achievements for the programme:

Communication and Marketing Function:

To provide strategic communication and marketing services to SASSA.

Achievements

Developed and implemented a Communication Strategy;

All Parliamentary questions replied to timeously;

Participated in Government Izimbizo;

Produced and distributed promotional materials;

SASSA newsletters were produced and distributed at head office and regions.

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Achievements cont…

Public education of SASSA’s services through adverts and interviews via electronic and print media;

SASSA media launch hosted on 30 March 2007;

National Call Centre tender finalised; and

Marketing material uniformly branded.

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Achievements for the programme:Finance

Function:

To provide financial management services by ensuring integrated budget planning, expenditure monitoring and revenue management.

Achievements

Single Budget established through the integration & consolidation of provincial budgets;

A Bid Committee established and functional;

Basic Accounting System implemented in SASSA;

Implementation of PERSAL in all regions; and

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Achievements for the programme: ICT

Function:

To provide information and communication technology services.

Achievements:

Transversal ICT Systems including SOCPEN, BAS, LOGIS, PERSAL and Home Based Electronic Document Management systems implemented;

ICT infrastructure established at Head Office and in all 9 regional offices, including some districts; and

The first phase of the MIS project completed with 100% of all beneficiary files processed.

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Achievements for the programme: Strategy & Business Development

Function:

To develop innovative strategies and mechanisms to improve service delivery. Achievements:

Overall responsible for the complex and daunting separation and integration of provincial social grants administration into SASSA Regional, District and Local Office Levels through:

Design of separation, ring-fencing and integration policy, processes, systems and tools;

Responsible for finalising and tabling of SASSA’s second Strategic Plan 2007/8 – 2009/10; and

Facilitated the accounts configuration and funds flow between Agency and DSD.

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Achievements Cont…

Facilitated the national review of the service delivery macro-value chain comprising:

applications management;

approval management;

payments management;

beneficiary maintenance; and

stakeholder management.

Budget and Expenditure for 2006/07 (Financials)

Part 3

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Expenditure for 2006/07 in terms of Economic Classification

FUND ALLOCATED BUDGET AUDITED YTD

  2006/07. 2006/07. EXPENDITURE

  R'000 R'000 AS A %

Compensation of Employees

880,707

710,683 81%

Contractor Payments

2,015,056

2,245,250 111%

Other Goods & Services

994,993

699,435 70%

Transfers & Subsidies

100,693

101,537 101%

Payment for Capital Assets

200,923

62,276 31%

Revenue Transfers

4,192,372

3,819,181 91%

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Explanation on Expenditure for 2006/7 Compensation of Employees:

Budget was R881 million; Expenditure amounted to approximately R711 million (which is 81%); Under spending is attributed to slow recruitment process which the

Agency experienced throughout the financial year; and As at 31/03/2007 less than 70 % of the critical positions were filled;

Contract Payments:

Budget allocation was R2.0 billion; Expenditure amounted to R2,2 billion (which is 111%); This is resulted in an over-expenditure of R200 million; The number of beneficiaries increased by 10,7% during 2006/07; and This is close to 100,000 beneficiaries per month.

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Explanation on Expenditure for 2006/7

Goods and Services: Budget was R995 million;

Expenditure was at R699 million; a spending level of 70%;

The under spending was due to:• Invoices received after financial year end;

• Invoices that were received but remained unpaid by the end of the 2006/07 financial year; and

This contributed to projected expenditure accruals and commitments amounting to R278 million which has not yet been paid.

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Explanation on Expenditure for 2006/7 cont..

Transfers and Subsidies: Budget was R101 million ; and Expenditure is R102 million , which represents 101%.

Payment for Capital Assets: Budget was R201 million ;Expenditure is R62 million, which represents 31%; Provision was made for acquisition of furniture and

ICT equipments for staff; andDue to the slow recruitment process the budget was

not fully utilised.

Auditor-General Report and Comments

Part 4

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Report of the Auditor-General

Basis for qualified opinion:Scope limitation on the audit; andFraud investigation.

Emphasis of matters:Basis of accounting (departures and deviations).

Other matters: Identified weaknesses in internal controls;Material non-compliance with applicable legislation; Material corrections on the financial statements.

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Report of the Auditor-General

Addressing the Auditor-General Concerns through the establishment and implementation of a financial management plan

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Challenges

Completion of the roll-out of SASSA infrastructure, recruitment of personnel and finalisation of all policies and procedures;

Rooting out fraud and corruption;

Increasing accessibility of services: rural and semi-rural;

Creating an enabling environment for current and potential beneficiaries; and

Reducing the number of grant application appeals.

Concluding Remarks on 2006/07 Financial Year

Part 5

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Concluding Remarks

SASSA is an emerging organisation (administration), which comprises 9 different provincial grants administration and the grants administration in national department;

There are still a number of complex challenges that need to be addressed regarding systems, processes and resourcing; and

With dedication and commitment SASSA will definitely become a “world class organisation”.

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