DUE DILIGENCE RED FLAG OP-ED
Social grant payments by Postbank and the SA Post Office – where is the oversight?
Since at least the end of 2019, the oversight mechanisms between Sassa and the SA Post Office have not been functioning. The implication is that one of the largest social grant payment systems in the world is apparently operating unchecked.
South Africa has one of the largest social grant payment systems in the world.
The South African Social Security Agency (Sassa) is legally responsible for administering social assistance in terms of the Sassa Act. This includes administering the information necessary to pay social grants and managing the transfer of funds, in a national database, of all beneficiaries.
Yet the mechanisms necessary to pay social grants efficiently are not currently functioning. The result is that the system’s operation and any changes there to appear to be occurring in a reactive manner without due diligence.
On 9 February 2023, Open Secrets and Black Sash published an op-ed in Daily Maverick on the crisis in the management and payment of social grants. Here, we expand on the status of that crisis, particularly the extent to which the social grant payment system appears to lack any form of effective oversight.
We all witnessed the 2017 social grants crisis, when Sassa appointed a private entity to administer the payment of grants, and when beneficiaries experienced unlawful deductions from their grants, which led to a successful constitutional challenge by the Black Sash.
When Sassa did not have the capacity to insource the payment of grants, it was granted an approval from National Treasury to deviate from the usual supply chain management processes and to arrange for the South African Post Office (Sapo) to take over the payments.
In 2018, Sassa and Sapo concluded a master service agreement (MSA) and service-level agreement (SLA) to govern their relationship in the management and payment of social grants. The SLA was later reviewed and a revised SLA was effective from April 2021.
Due to capacity challenges, Sapo ceded its obligations to Sassa to the South African Postbank SOC Limited, a subsidiary of Sapo, in 2022. The public was only informed of this development a month after the cession agreement had already been concluded.
Oversight of the Sassa/Sapo and Postbank relationship
There are three primary levels of internal oversight applied to the social grant payment system and any related changes made to that relationship must be reviewed through these mechanisms.
The first level of oversight is a steering committee established in terms of the MSA to oversee the relationship between Sassa and Sapo and their implementation of the MSA with regular meetings. The steering committee was replaced by a National Payment Oversight Committee in early 2021.
The second level of oversight is by way of monthly, annual and three-yearly review reports which are to be submitted to the steering committee – but no review reports have been made available by Sassa when requested under the Promotion of Access to Information Act 2 of 2000 (Paia).
Read more in Daily Maverick: Social grant payments are a mess – and the public needs answers from Sassa, Sapo and Postbank
The third level of oversight is by way of an implementation protocol, which serves to ensure the smooth operation of any joint provision of services by different organs of state. The protocol is to be overseen by the Interministerial Committee on Comprehensive Social Security for the Payment of Social Grants.
The reality on the ground
Unfortunately, it appears that since at least the end of 2019, these oversight mechanisms provided for in both the MSA and SLA are not functioning. The recent changes to the MSA and SLA between Sassa, Sapo and Postbank thus appear not to have been substantially monitored – if at all – through these oversight mechanisms. The implication of this is that one of the largest social grant payment systems in the world is apparently operating unchecked.
This information was obtained through various requests for information to Sassa submitted by the Centre for Applied Legal Studies (Cals), acting on behalf of the Black Sash, under the Paia between December 2021 and March 2023.
The interministerial committee: No longer operating?
In a December 2021 Paia request to Sassa, Cals requested access to any written reports on the progress of the implementation protocol which were submitted to the interministerial committee. Sassa responded that “the implementation protocol report is not available” but did not provide reasons for that unavailability.
Cals followed up on this in May 2022, and Sassa advised that “the implementation protocol was implemented” and provided a report to the Constitutional Court from the end of 2017 in support thereof.
It can thus be deduced that the interministerial committee has not sat to oversee the implementation protocol or the management and payment of social grants since 2018. This level of oversight therefore effectively no longer exists.
The review process of the MSA and SLA: A never-ending review?
The December 2021 Paia request to Sassa further sought access to the annual review reports of the SLA submitted to the steering committee. In response, Sassa advised that “annual review reports are not available; instead change orders were signed, implemented during the period, and are still valid until the MSA review process is concluded and approved”.
It is nevertheless apparent that the SLA was reviewed in 2020 and a revised version was concluded and effective from April 2021.
Cals also requested the three-year review report/s of the MSA submitted to the steering committee. In response, Sassa advised that:
“The [MSA] is currently being reviewed – review sessions between Sassa and Sapo have commenced and this shall form part of the elements that are re-looked. As part of the MSA review, a Reporting Framework with guidelines regarding various types of reports and templates will be prepared and communicated between Sassa and Sapo…”
“The MSA review process is in progress, not yet concluded… The process is ongoing, the timeline depends on the service fee pricing structure negotiation process being concluded. Two meetings held so far and the parties did not agree on the requested fees. The teams are busy reassessing their task to Sassa.”
In October 2022, Cals again followed up with Sassa on the progress of the MSA review process, and was advised that: “The MSA [review] is not yet finalised. It is anticipated to be finalised by the end of December 2022… The SLA will be reviewed after conclusion of MSA review.”
Read more in Daily Maverick: How Postbank came to the brink of a social grant payment meltdown
Despite this advice being transmitted almost a month after Sapo had ceded its obligations to Postbank, Sassa made no mention of the cession or any impact of such cession on the MSA review process.
After a further follow-up query from Cals to Sassa in December 2022 as to the progress of the MSA review process, Sassa confirmed that: “The MSA review process is in progress. The initial time line was 90 days (October-December 2022). Due to unforeseen circumstances the due date is extended to the end of February 2022.”
The second addendum to the cession agreement stipulated in clause 2 that the parties shall conclude a review of the MSA and SLA by 28 February 2023.
Finally, Cals queried this progress again in March 2023, and Sassa advised that “parties have not agreed as yet and as a result the negotiations are still taking place. The period has further been extended to 30 April 2023.”
Sassa has in addition confirmed that the revised MSA shall be implemented in the 2023/24 financial year. A three-year MSA review which was supposed to have been undertaken in September 2021 is thus ongoing until at least April 2023, more than 18 months late.
The steering committee/National Payment Oversight Committee: Suspended since November 2019
In response to Cals’ request for access to steering committee meeting minutes, Sassa advised in June 2022 that these meetings had been suspended since November 2019. Apparently the steering committee had decided in November 2019 “to take the contract back into project mode, given the numerous challenges and instability in the system and payment environment as a whole”.
The steering committee was thus “deemed to be redundant” and effectively replaced with both “a high-level strategic structure” led by the ministers of social development and communications and digital technologies, and a “high-level technical committee” led by the directors-general of social development and of posts and telecommunications.
In October 2022, Cals followed up with a request for Sassa to provide a detailed timeline of all of the meetings of both the high-level strategic structure and the high-level technical committee, and the minutes of such meetings. In response, Sassa advised that: “The joint committee did not sit due to instability of social grants payment. [The Sassa memorandum of November 2019] clearly indicated that this particular committee will sit once the payment of social grants is stable… Currently meetings related to SLA or MSA discussions are not held by the high-level structures.”
There is accordingly neither a steering committee/National Payment Oversight Committee nor any high-level strategic or technical structures currently in operation. It is unclear who – if anyone – is overseeing the ongoing management and payment of social grants.
This failure of oversight and management of the social grants system is deeply concerning, given the ongoing difficulties that many grant recipients have faced in accessing the full cash value of their grants timeously since Postbank started paying grants in November 2022.
It should also be seen in the context of the secretive decision to appoint Postbank to manage the social grants system, a decision which appears to have been taken without a proper assessment of whether Postbank has the capacity, expertise and technical infrastructure to conduct its duties.
Viewed together, the above raises the following urgent questions:
- Which body, if any, is currently overseeing the performance of the obligations under the MSA and SLA?
- Where issues are being experienced in the performance of those obligations, where are those issues being raised?
- Which body, if any, is overseeing the MSA/SLA review process?
- Who raised the issues regarding the management and payment of social grants which presumably led to the cession of the obligations from Sapo to Postbank; and
- Who – if anyone – is overseeing the ongoing management and payment of social grants?
These questions must be given attention and answered. The lack of oversight on the payments of social grants means we lose the ability to instil practices of accountability among the service providers paid to ensure that millions of South Africans get their grants. The risk of this cannot be allowed to fester.
In light thereof, Black Sash has written to the parliamentary Portfolio Committee on Social Development, highlighting these concerns and requesting their urgent intervention. We await their response. DM
Ariella Scher is head of Business and Human Rights, Centre for Applied Legal Studies, Wits University. Abby May is Investigator, Open Secrets. Hoodah Abrahams-Fayker is National Advocacy Manager, Black Sash.