Grant payment challenges and readiness: SA Post Office briefing; IKAMVA Bill: deliberations

Meeting report

Briefing by SA Post Office (SAPO)

Ms Lindiwe Kwele, Group COO, SAPO, briefed the Committee on the technical system performance remedies, August payments, and overall state of readiness. She reported that in addressing the challenges in preparation for the August pay run which was scheduled for 31 July 2018 through to the end of August 2018 payment cycle, SASSA, SAPO and SITA worked in collaboration with industry partners like Bankserve and PASA.

The Integrated Grants Payment System (IGPS) has been upgraded and migrated to the Telkom enterprise hosted environment. Connectivity with Bankserve has been improved by replacing the Copper diginet lines with high volume speed fibre dedicated links which could scale on demand. This addressed matters of slow response and throughput. The splitting of the card issuing function from the transaction processing function on the IGPS system was completed on 12 July 2018. The splitting would allow for better load balancing between two processes.

During August payments, 7,252,589 beneficiaries received payments using their own bank account. This includes 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

As part of the August 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 email, 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

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
• 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.

Ms Kwele informed the Committee the August payment file included 9 795 132 beneficiaries who were to receive their grant payments at different banks. There were no major reported challenges with payment of beneficiaries receiving grants through commercial bank accounts including the old SASSA card, except for those using the new SASSA/SAPO card. Since mid-May 2018, SASSA and SAPO have been swopping social grants beneficiaries’ CPS/Grindrod cards for the SASSA/SAPO card.  All the remaining cash beneficiaries would be migrated to SAPO during September in preparation for October payments.

In terms of risk elimination, she indicated that robust communication was being rolled out to encourage beneficiaries to swop their cards. The card-swop process has been extended to take place over weekends and to conduct door-to-door to identify those who require home visits. Assistance from the security cluster would be sought to secure the safety of staff, beneficiaries and money until the service providers have been appointed. Auxiliary Social Workers (ASW) would be utilised 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 would radiate this.

She also stated that service delivery standards have improved from 76% to 87%. The national carry-over on August was at 53.2 million. Customers that did not mail during the strike were now logging at Witspos and Capemail and this was affecting the reduction of the backlog. Current inflows of domestic mail were standing approximately at 2.6 million per day. A large percentage of the Witspos carryover was outward mail which would still flow into other mail centres, especially Tshwane Mail Centre.

Mr Mark Barnes, Group CEO, SAPO, said that the PostBank SOC Limited was incorporated as a wholly owned subsidiary of SAPO in compliance and anticipation of the granting of the fully fledged banking licence. The PostBank is, currently, a division of SAPO and the business would be transferred to Post Bank SOC in due course in compliance with:

• Capital Adequacy Ratio required by SARB (29,625%)
• 2005 MOU between Minister of Transport and Postal Services and Minister of Finance
• ettlement of intercompany obligations

He stated that funds transferred to settle critical SAPO obligations were a surplus to Post Bank compliance obligations and should not jeopardise the licence application in any way. The principle terms of agreement on the terms of these transfers have been signed between SAPO and Post Bank Boards subsequent to which no further transfers have been made.

Mr Jabulani Dlamuka, Acting CFO, SAPO, presented the financial highlights of the year ended 31 March 2018. Concerning the income statement, revenue declined by 3%  from R4.6 billion to R4.4 billion, expenses got reduced by 7% from R5.6 billion to R5.2 billion, and loss for the year  improved by R79 million (8%) from R987 million to R908 million. The statement of financial position indicated the net asset value improved from R901 million to R3.5 billion in 2018, and R3.7 billion capital injection was utilised to settle term loans. The entity was anticipating an unqualified audit report.

Funding requirements have been submitted: This will take into account the Interim budget adjustment (Sassa), Public Service Mandate, Capex for future revenue initiatives, SAPO branch upgrade for SASSA project underway and wage agreement with Labour.

Discussion

The Chairperson asked the parliamentary legal adviser and Department legal adviser to brief the Committee on the progress made regarding the amendments to the Bill.

Ms Fatima Ebrahim, Parliamentary Legal Adviser, reported she met with the Department’s legal adviser and found a number of policy issues that needed to be clarified in order to move forward. She was not comfortable with the responses from the Department in their previous engagement in the Committee. The responses needed to be researched. The target market for the Bill was not clearly defined. Inputs from the Department on other aspects were needed. For example, the view that the entity should be incorporated as a company made her uncomfortable. The Department had been asked what it actually wants from the Companies Act. Another thing was that there was no law that required the CoLabs to be audited and which looked at fiduciary duties. In order for her to proceed, more information was needed.

Mr Alf Wiltz, Chief Director: Telecommunications Policy, DTPS, informed the Committee that the Department was working towards the consolidation of work. The parliamentary legal adviser had some drafting to do on the constitution of the board. The issue of fiduciary duties has not been clearly explained in the Bill. The kind of dilemma they were having was to borrow from the Companies Act what they want. The Department still held the view the institute should be a company and this matter has been researched. Recommendations on the CoLabs have been relayed to the parliamentary legal adviser, and the Department agreed with the parliamentary legal adviser on the requirements between iNeSI and CoLabs. 90% of the policy matters have been addressed. The Department’s legal unit would be assisting the parliamentary legal adviser on the amendments.

Prof Walter Claassen, Chairperson, NEMISA, stated his team has not been working in the void and all the necessary regulations have been followed. Key matters would be resolved.

The Chairperson wanted to understand if a three-year term was reasonable for board members.

Ms Nomahlubi Simamane, SAPO Board Chairperson, said it was reasonable.

Mr Barnes stated that if the plan was executable within three years, then three years was a reasonable period.

The Chairperson pointed out he does not understand how long it would take for a person who sits on a board meeting once a quarter to grapple with the issues of the entity.

Prof Claassen stated the three-year term depended on the nature of the organisation. The digital space was moving very fast, and it would take time for board members understand that space.

Discussion on SAPO Presentation

Mr C Mackenzie (DA) asked for clarity on the R200m transfer from Postbank to SAPO which made a splash in the media and which alarmed the Minister. He further asked SAPO to assure the Committee grants would be paid in time because late payments had serious implications. He also wanted to know why the mail business was not given to another service provider if SAPO was not able to deliver on that service because people were complaining about the long time it takes to deliver mail. Lastly, he remarked people were not getting any response from SAPO when they have got problems.

Mr Barnes responded that the funds that got transferred were a speculative amount which has now been regularised.

Mr Barnes said that all beneficiaries had been paid. There was 100% transaction rate. The mail service was still generating the post office a lot of money. The service would not be stopped any time soon.

Ms Kwele admitted they tend to underestimate customer care. SAPO does not have a good customer care service process. She said investment would be done on CRM and there were institutional reforms that were happening internally.

Ms M Shinn (DA) wanted to establish what radical changes would happen for generating revenue because the Committee has received many presentations on alternatives. She also asked if the request for upgrades has been considered by the Department. She enquired if there has been any positive feedback from Treasury on the public service mandate.

Mr Barnes stated that sustainability was enjoying scrutiny. It’s a matter that is currently on the table. The public service mandate was another item that was being given attention.  The infrastructure upgrades were real. This was a once-off investment and the figures were publically known. The idea behind was this was to try to improve the service.

Ms Kwele added that branch infrastructure was being rolled-out to every branch and all vacancies in branches were being filled.

Ms N Ndongeni (ANC) wanted to find out if the entity had any plans to fight long lines at post offices, especially in rural areas. She asked if the entity has been paying its service providers in time, especially those it was renting space from. She further pointed out that communication about SASSA was inadequate and suggested the entity to use radio to communicate with people in rural areas.

Mr Barnes admitted that SAPO had problems with service providers that have not been paid. There was a point when they looked at their inadequate resources, but now all those issues have been resolved. SAPO has reached an agreement with service providers and were getting paid within 60 days. He further acknowledged communication was a big problem with them. The GCIS was now driving the campaign to better communicate of SASSA.

Ms Kwele added they were making use of PBS and community radio stations for the SASSA awareness campaign. On service providers, she said they have been working on contract managements. SAPO had to first deal with funding matters to ensure all the Ts were crossed. Concerning long lines, beneficiaries were encouraged to make use of SAPO services, especially those that have migrated to SAPO because on the 30th of every month their money gets deposited into their accounts. SAPO needed to make an awareness campaign to inform beneficiaries to come to the post office between the 1st and 20th of every month to get their money. Extensive communication would be done about the new card.

Ms D Tsotetsi (ANC) said radio remained the most effective medium for communicating with the majority of the people, especially those in rural areas. She asked what plans were in place for the elderly who were forgetting their pin numbers.

Ms Kwele explained that SAPO has been empowering branches to pay the elderly over the counter. She further noted their presentation was trying to show the Committee the August pay-run did not have the glitches. There was a team dedicated to monitor work on the glitches. All things have been adequately resolved.

Mr Mackenzie wanted to know how much money the post office was making from SASSA per month.

Mr Barnes said he was not at liberty to reveal the money they make from SASSA transactions. Out of ten million, plus minus four million beneficiaries migrated to SAPO. He said Mr Mackenzie could imagine what the figure was when each person was paying R5 or R20 per transaction.

Ms J Killian (ANC) commented that it was good to see SAPO having turned the corner because the Committee was witnessing a complete commitment. She also pointed out she was not convinced that mitigation plans would overcome cash-in-transit heists because they are the order of the day.

Consideration of minutes

The Committee considered six sets of minutes but they were not adopted because there was no quorum.

The meeting was adjourned.