SAPO Presentation to Portfolio Committee on Telecommunications and Postal Services - PowerPoint Presentation

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

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

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Summary of payments from April to August 20183

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

0

0

0

Total

10 851 315

10 864 066

10 878 356

10 874 920

10 893

801

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Card Swap Daily Stats4

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Technical System Performance Remedies5

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July payments challenges and Remedial actionsTo 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.

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7IGPS: Migration to Telkom Cybernest Milestone &Timelines

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Summary of Payments8

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August PaymentsCPS is paying 1,098,669 at all cash pay-points except for those that have been decommissioned7,252,589 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

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July/August Payments10

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July/August Payments11

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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 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

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Summary of August Payment challengesThere 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

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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.

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Progress on ACB payments

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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 1 663 083 in August 2018. 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.

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Cash Payment file reduction

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

811,009687,428

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

559 067

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

304 642

cash beneficiaries.

All the remaining cash beneficiaries will be migrated to SAPO during September in preparation for October payments

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RISKS AND MITIGATION

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RISKS19

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

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RISKS20

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.

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INTERNAL FUNDS TRANSFER21

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Internal Funds TransferPostbank 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

R

atio 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

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OPERATIONAL UPDATE23

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24Executive Summary

Carryover

Summary

Improved service delivery standards from 76% -87,5% delivery standards

The National carryover on the

23

rd

August 2018 is at 53.2 Million. The following 3 areas is mainly affected:

The Wits Region carryover on the

23

rd

August 2018 is at 30 Million

The Northern Region carryover on the

23

rd

August 8.2 Million

The International Business carryover on the

23

rd

August is 9 Million

Customer that did not mail during the strike are now logging at Witspos and Capemail 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

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25International

The International Business carryover on the

23

rd

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

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FINANCIAL POSITION 26

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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

Highlights for the year ended 31 March 2018

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SUSTAINABILITY/ FUTURE FUNDING28

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Sustainability Funding requirements have been submitted:- Interim budget adjustment (Sassa)MTEFPublic 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

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30Network Upgrade

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Network Upgrade Tender for network upgrade opened on 22 March 2016 and closed in 20 May 2016Tender 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

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32Thank you – Questions?