Status Update on SASSA Project to the Portfolio Committee on Telecommunications and Postal - PowerPoint Presentation

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Status Update on SASSA Project to the Portfolio Committee on Telecommunications and Postal Services 13 February 2018

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Background 22016-12-09: SASSA Issued Request for Information for ‘Social Grant Payment and Banking Services’

2017-02-10: The Post Office (SAPO) responded to

the Request for

Information

2017-02-15: Letter from SASSA CEO, Mr

Magwaza

requested urgent discussions with SAPO regarding various options and SAPO’s willingness to support SASSA

2017-04-18: Initial meeting with SASSA’s team on SASSA capabilities and expectations

2017-05-17: SAPO attended workshop with SASSA Executive Committee (

Exco

) in Cape Town on solutions

2017-06-12: Presentation to the Technical Committee of the IMC on the readiness of SAPO to delivery the payment of SASSA grants

2017-07-14: SAPO received letter* from Mr

Magwaza

confirming SASSA’s intention to appoint SAPO as a Service Aggregator to pay social grants on a Build, Operate, Transfer model

* Letter accompanied by letter from National Treasury supporting SASSA’s request for deviation for normal procurement processes in the appointment of SAPO

2017-07-25: SAPO receives (hand delivered) copy of

Request for Proposal to bid

for the provision of Payment Services and Systems for Social Assistance

grants

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Conclusion and Critical Steps: IMC Presentation: 12 June 20173

SAPO needs to

have been

contracted by

SASSA by latest 30 September 2017 to meet the April 2018 deadline

SAPO to involve

SASSA in the contract negotiations with suppliers, to ensure all technical requirements are

satisfied SAPO and SASSA to engage in transparent pricing modelling and negotiation processes (on an open book basis, ensuring a fair but not excessive return)SASSA to share critical information on pay-point locations, eg GIS co-ordinates Combined SASSA and SAPO Technical and Business work teams to be formed Develop detailed project plans with clear deliverables, timelines and costing will be prepared by the joint SASSA/SAPO project team

The critical next step is for SASSA to contract SAPO by 30 September 2017 to ensure service continuity

SASSA Presentation: SAPO state of readiness for social grants 12 JUNE 2017

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Background 42017-07-28: SAPO GCEO letter to SASSA A/CEO accepting the appointment as per Mr

Magwaza’s

letter

2017-08-07: SAPO submitted BID for the provision of Payment Services and Systems for Social Assistance grants in response to the RFP

2017-10-18: SAPO received letter of ‘award’ from SASSA A/CEO, Ms Pearl

Bengu

informing SAPO of the award of:

* SASSA payment platform development:* Beneficiary Biometric enrolment; and* Biometric proof of life2017-10-20: SAPO GCEO accepted award on condition that SAPO also be awarded the Card Production and Banking Services2017-10-24: SASSA presentation to combined Social Development Portfolio Committee and the Standing Committee on Public Accounts (SCOPA)2017-10-31: SAPO and SASSA invited to joint briefing to SCOPA 2017-10-31: SAPO and SASSA invited for a joint presentation to IMC2017-11-14: Inter-Ministerial Committee (IMC) intervention at Sea Point

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IMC Intervention: Sea Point Resolution 14 November 2017 5

Services that

can

be provided by SAPO by 1 April 2018

(Based on Postbank’s existing core banking capabilities)

Services that

may be provided by SAPO by 1 April 2018 pending cost evaluationServices that cannot be provided by SAPO by 1 April 2018 and which SASSA can outsourceElectronic Banking Services, including:Corporate Control Account (Holding Account)Special Disbursement AccountsCard DistributionIntegrated Grant Payment SystemOn-boarding of new beneficiaries (Instant Account Opening & Card Issuance at SASSA Branches)Biometric authentication of beneficiariesCard Body ProductionCash in Transit (CIT)Guard Services

Cash Payment Services (Due to time constraints):

Cash Dispensing infrastructure and equipmentVehicle Fleet

Human Resources

This was considered

do-able pending price

comparison by SASSA

based on their market

research

SAPO considered

t

he risk to high to

d

eliver this within the

available time before

1 April 2018

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Subsequent Agreed Services6

Confirmed Services as per the

Services Agreement that was signed on 8 December 2017

Electronic Banking Services, including:

Corporate Control Account (Holding Account)

Special Disbursement Accounts

Card Distribution

Integrated Grant Payment SystemOn-boarding of new beneficiaries (Instant Account Opening & Card Issuance at SASSA Branches)Biometric authentication of beneficiariesCard Body Production

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Quick Win Mapping of SAPO branch locations against SASSA pay-points in order to commence leveraging of this footprint to supplement the existing cash pay-points for the payment of grants.

7

Based on the adopted ‘hybrid’ model, this was considered

a

quick win to tap into the existing beneficiary customer base to

convert them to either Postbank account or to convert them from being

a

strictly ‘Cash’ recipient to withdrawing cash at SAPO branches

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8

Post Offices

Retail Post Office Agencies

SASSA Offices

SASSA Pay points

SASSA / SAPO SITES

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Pay Points for Cash DistributionSAPO branches currently has 5 000 counters that are classified as ‘ATMs’ and provide banking experience to its customers. In relation to SASSA pay-points, SAPO’s footprint detail is

as

follows;

53.5% of the branches are within the 5 km radius

17.6% are between 5 & 10 km

20.9% between 10 & 20 km

8% are outside the 20 km radius

As a quick win, SASSA will explore the options of utilising some of these Branches for cash distribution only after suitability assessment (as per SASSA’s norms and Standards) has been conducted and:They could be designated as additional pay points; orThey could replace the existing pay points. 9

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Key Interventions10Under the leadership of the

Inter-Ministerial

Committee on Comprehensive Social Security (IMC), an Implementation Protocol was signed

between SASSA and SAPO on

17 November 2017 and a Service Agreement

only signed on

8 December

2017 (Due to time delays, lost procurement time). In terms of the Agreements, SAPO will provide the following services to SASSA for a period of 5 years: Electronic banking services, including:Corporate Control Account (Holding Account)Special Disbursement Accounts‘On-boarding’ of new beneficiariesInstant Account Opening and card issuance at SASSA local offices and SAPO outletsBiometric Authentication of beneficiariesDevelopment of software (in conjunction with such other state capabilities, including State Information Technology Agency (SITA) and the Council for Scientific and Industrial Research (CSIR) as may be required, of the software solution to replace Net1/CPS in the incumbent disbursement model) SASSA and SAPO will agree and implement the necessary recruitment and training of human resources

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Key Contract Clause ito Migration11

In terms of the agreed time to deliver it’s obligations, it is important to note the following clause:

‘The parties acknowledge that the social grant payment services are currently rendered by Cash Paymaster Services in accordance with an order of the Constitutional Court dated 17 march 2017. In terms of this Order a new service provider must assume responsibility for the payment of social grants from

01 April 2018

. The Parties will ensure that SAPO is able to execute the payment of social grants seamlessly, implement a phase-in/phase-out process thirty (30) days prior to 1 April 2018, which process will include the phased migration of the required Services between CPS and SAPO which will be completed by

30 September 2018

.’

It is therefore important to note that SAPO’s responsibility is to commence the take-over of grant payment Services and not to have completed the migration process by 1 April 2018. It is assumed that the contract between SASSA and CPS includes an exit /termination clause to cover the continued delivery of Services during the phase-in/phase-out period

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Project Governance & Subcommittees Joint Operation Centre (JOC) set up & Staff identified (2017-12-18)

The

following Functional Area Groups were

Established 2017-12-18

Technology, Banking & Info Security

Grants Administration, Physical Infrastructure &

Physical

SecurityHuman CapacityLegal Finance, ProcurementChange & Communication ManagementAudit, Risk Management & Compliance Terms of Reference (TOR) for JOC adopted by both entities (2018-01-15)Weekly SAPO Steering Committee established (every Thursday)Weekly Joint SASSA/SAPO Steering Committee (every Friday)12

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Joint Operations Structure13

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Card Body Production Status14RFP issued on 27 December 2017 for the provision of 10,6 million EMV compliant SASSA branded cards

Card specification – Sign-off on the card technical specifications was provided by SASSA on 19 December 2017.

Card design (look and feel) was signed off by SASSA on 1 February 2018 and Visa approval initiated.

RFP [RFP40/2017/8] for card body production closed

on

22 January 2018

.

Due diligence and bid evaluation completedBid Adjudication completed and preferred bidder selected.Award letter to be issued followed by contracting by 15 February 2018Purchase order to be issued by 16 February 2018Scheduled delivery date of 1st batch of 2 million cards is 16 March 2018.

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Holding and Special Disbursement Account Status15

The Corporate Holding Account will be opened immediately

upon receipt of the required

account opening documents

from

SASSA (

which is still outstanding)

The opening of the Special Disbursement Accounts (SDA) will only occur upon commencement of the service in April 2018In the unlikely event that the new Integrated Grant Payment Platform is not ready by 1 April 2018 to commence On-boarding of beneficiaries the following contingencies has been prepared by SAPO/PostbankAn interim Mzansi-like Account with a web-service facility has been created to enable on-boarding of new beneficiaries at SASSA offices by 26 February 2018. This solution will require SASSA officials to perform a ‘light’ account opening and for the beneficiaries to collect their interim (Mzansi) cards at SAPO branches. All such cards will be replaced with the new SASSA card during the phase-in/phase-out at no cost to SASSA or the beneficiary.Postbank is developing the Special Disbursement Account structure on its core banking platform that can be used, with the new SASSA EMV card, until the new Integrated Grant Payment Solution has been developed

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Benefits of new SASSA Special Disbursement Accounts (SDA)Free initial biometrically enabled EMV compliant card issued to beneficiaries at On-boarding

One free payment card replacement p.a.

3 Free merchant withdrawals

1 Free balance enquiry p.m.

1 Free mini-statement p.m.

1 full statement of 3 months p.m.

1 Pin reset p.a.

16

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Integrated Grant Payment Platform and Biometric EngineIn response to the RFP and various early workshops and engagements with SASSA around the electronic payment platform, SAPO indicated its intention to use its Core Banking Platform

During a workshop on 14 December 2017, SASSA rejected this option because

it would not be compliant with the Build-Operate-Transfer (BOT)

model

As a result, SAPO had to change its solution to meet SASSA’s requirements by building a ring-fenced payment solution that is transferrable after 5

years

SAPO

completed the specifications for the relevant solutions as required by SASSA on 18 December 2017 and issued and RFP on 27 December 2017 with a closing date of 22 January 2018Both RFP’s are currently being evaluatedAs a contingency, Postbank will use its Core Banking Platform as an interim solution until the new Integrated Grant Payment Platform is operational17

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SAPO will provide support and assistance to SASSA with the establishment of the following IT solutions:Management Information Solution (MIS) and Data warehousePOS Hardware Call Centre Hardware (Laptops/PC, Headphones, Share No etc., Data and Voice)

Biometric Backend System

Biometric Storage and Database

Trust Centre /HANIS Hardware

Systems Integration

Interfaces (SAPO <--> Postbank <--> SASSA <--> SITA

SASSA Staging Area (File Delivery and Processing EFT’s)

System Enhancement / DevelopmentOther IT Support to SASSA18

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Revenue for Post Office19Monthly Fee R12.41 (

Excluding VAT) from

SASSA:

1 million of cash beneficiaries will be migrated from cash pay points to selected post office branches for grant

payments

Included also are

ongoing

new beneficiaries estimated at 10% of new enrolment that will be paid at the selected post office branches The following transactions will be recovered using the transfer pricing rates New enrolmentfull 3 months bank statement Card pin reset Card replacement

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Summary of SAPO Readiness20

Output

Status

Corporate Holding Account

Will be opened immediately

once required documents has been received from SASSA - dependency Accountant General at National Treasury

Special Disbursement Accounts (SDA)

Accounts will only be opened during phase-in-phase outIntegrated Payment Platform Solution (IGPS)RFP issued for Integrated Grant Payment Platform issued on 27 December 2017 with closing date 22 January 2018Bid Adjudication Committee (BAC) scheduled for Friday, 16 February 2018Contracting concluded by, Friday, 23 February 2018Solution to be commissioned by 19 March 2018Contingency: If required, Postbank will be able to use its core banking platform (FCUBS) as an interim solution until the IGPS is available. Beneficiaries can then be migrated from FCUBS to the new IGPS solution seamlessly and without any impact to SASSA or inconvenience to the Beneficiaries

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Summary of SAPO Readiness21

Output

Status

Biometric

Engine for biometric on-boarding of new and existing beneficiaries and biometric authentication of beneficiaries

RFP issued for Biometric Engine on 27 December 2017 with closing date of 22 January 2018

BAC scheduled for Tuesday, 13 February 2018

Contracting concluded by, Friday, 16 February 2018Solution to be commissioned by 14 March 2018Card body productionRFP issued for SASSA EMV cards on 29 December 2017 with closing date of 22 January 2018BAC approved preferred bidder on 7 January 2018Contracting to be concluded and purchase order issued by, Friday, 16 February 2018First 2 million cards to be delivered on 16 March 2018Thereafter 2 million cards every 3 weeks with the total order of 10.6million cards delivered by 8 June 2018Card distributionPostbank will continue to use its current card distribution process and service to distribute the SASSA cards via the local post office branches

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Other relevant mattersSAPO is compliant with the terms and conditions of the Service Agreement signed on the 8th December 2017

SAPO has the capacity to deliver on its mandate or obligations

SAPO/Postbank does have necessary funding to implement the project

Aggressive Communications and Marketing campaign underway

FAGs meet regularly supported by a Joint Steering Committee held every Friday

Network upgrade is underway and the designated Grant payment pay points are prioritised

Branch infrastructure upgrade at these branches is underway

Risk register compiled and monitored regularly All specifications have been signed off by SASSA SASSA and NT have been invited as observers in Bid Committees on Grant payment related tenders to ensure transparency and fairnessSystem changes have been made to allow any beneficiary to withdraw cash at a SAPO branch, irrespective of the bank card that they have (SASWITCH)22

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23Video:

Mamelodi

, 8 February 2018

Migration of beneficiaries to Postbank accounts have

commenced and is being prioritised and monitored weekly

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24Thank you – Questions?