Roles and Responsibilities in the system for the delivery of social grants

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Roles and Responsibilities in the system for
the delivery of social grants

• August 2006 National Treasury

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Purpose

• Information session
• Social grants gtR57 bn, representing 15 of the
  total annual budget
• Key poverty alleviation programme, reaching
  nearly 11 million beneficiaries
• Function shift involves intricate
  reconfiguration of grants delivery system

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Function Shift

• Between spheres of Government, from the
  Provincial to the National sphere, as of 1 April
  2005

Implications

• The Minister of Social Development is
  responsible and accountable for the entire
  social assistance function, i.e. policy,
  administration and payments services, monitoring,
  evaluation and reporting

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Transition Mechanism 2005/06

• National Department of Social Development
  (NDoSD) undertook the function using a
  conditional grant with provinces as implementing
  agents

End State

• One national organisation SASSA responsible
  for making social grant payments to all
  beneficiaries across the country.

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Newly Established Entities

• SA Social Security Agency (SASSA)
• Head Office Pretoria
• Regional Offices One in each of the nine
  provinces
• Operationally active since 1 April 2006
• Inspectorate for Social Assistance
• In process of being established
• Expected to be operational 1 April 2007

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Governing Legislation

• Social Assistance Act (59 of 1992)
• Social Assistance Act (13 of 2004)
• SA Social Security Agency Act (9 of 2004)
• Outstanding New Social Assistance Regulations
  compatible with Social Assistance Act, 2004

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Lines of Accountability
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Transition Social Assistance and Grants
Administration
2004/05 2005/06 2006/07 2007/08
Function Provincial National National National
Delivery of social grants (Execution) Provinces Provinces on behalf of NDOSD Provinces on behalf of SASSA SASSA
Applicable Legislation Social Assistance Act (1992) SASSA Act Social Assistance Act (1992) SASSA Act Social Assistance Act (2004) SASSA Act Social Assistance Act (2004)
Funding arrangement Provincial Budget CG Grants Administration National Budget (Transfers to SASSA) National Budget (Transfers to SASSA)
Funding arrangement Provincial Budget CG Social Assistance National Budget (Transfers to Households) National Budget (Transfers to Households)
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Relative roles in the system for the delivery of
social assistance
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Relative roles in the system for delivery of
social grants (contd.)
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Total funding available in 2006/07

• All funds (R61,5 bn) are allocated to the NDoSD
• Using the CGs in DORA 2005 as the baseline
• Social Assistance Transfers (R57,7 bn)
• Social Assistance Administration (R3,6 bn)
• Funds from the 2005 MTEF
• Grant Administration Integrity (R96 m)
• Funds from the 2006 MTEF
• SASSA funds (R135 m)
• Inspectorate (R10 m)

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Flow of funds prior to 2005/06
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Flow of funds2005/06
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Interim flow of funds2006/07
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Key Considerations for Future Flow of Funds

• Service delivery not hampered
• Optimal cash management of the R57bn
• Practicality of accountability and reporting
  arrangements on social assistance funds
• Capacity of SASSA to fully undertake the function
• Sufficient financial management capacity
• Accounting policies and procedures in place
• Completion of ring-fencing exercise
• Establishment of in-year cash management and
  monitoring processes
• Strategic intent for SASSA establishment in
  machinery of government (UIF, Compensation Funds,
  etc.)

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Options for Flow of Funds 2007/08

• Status quo remains
• Social assistance payments flow from NDoSD
  banking accounts to beneficiaries
• Payments process managed by SASSA
• DG of NDoSD retains accountability for cash flow
  to beneficiaries
• Earmark social assistance funds for transfer to
  SASSA
• Funds transferred to SASSA
• Social assistance payments flow from SASSA to
  beneficiary
• CEO SASSA takes complete accountability for cash
  flow to beneficiaries

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Strategic Intent for SASSA Establishment

• To improve the quality of services provided to
  beneficiaries
• To ensure that the minimum standards operate
  countrywide, for consistent and predictable
  service delivery
• Efficiency gains from centralisation
• Reducing cost of service delivery
• Minimising fraud

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Reducing Cost of Delivery

• Function of delivering grants to beneficiaries
  will be largely undertaken by payment contractors
  (85 of transactions), other 15 by direct bank
  transfer
• Range of grant transfer fees R30 to R15
• SASSA to issue new tender to market, and will
  award a payments contract for each province, as
  current contracts will expire end 2006
• Budget for these services (R2 bn per annum) are
  included in the Social Assistance Administration
  budget of SASSA

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Role of NDOSD in respect of social grants
delivery

• Research, formulate and revise policy as
  necessary to maintain a social security system in
  accordance with the Constitution and relevant
  Acts
• Receive national budgetary allocations as
  indicated on the previous slide
• Transfer operational funds (Soc Ass Admin, Grant
  Admin Integrity and SASSA funds) to SASSA in
  accordance with the payment schedule
• Transfer social assistance grants to households
  using SASSA as the agent for delivery in
  accordance with good financial management
  principles (PFMA), oversight and payments
  schedule
• Retain accountability to the Minister and
  Parliament for the national policy interest in
  social development, including social assistance.

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Role of SASSA

• To act, eventually, as the sole agent that will
  ensure the efficient and effective management,
  administration and payment of social assistance
• Serve as an agent for the prospective
  administration of social security and
• Render services related to such payments
• Primary Duties
• Administer social grants payment system
• Collect, collate, maintain and administer
  necessary information
• Establish a compliance and fraud mechanism
• Retain accountability for integrity of the grant
  payments system

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Role of the Inspectorate

• Conduct investigations to ensure the integrity of
  the social assistance frameworks and systems
• Execute internal financial audits and audits on
  compliance by the Agency with regulatory and
  policy measures and instruments
• Investigate fraud, corruption and other forms of
  financial and service mismanagement and criminal
  activity, within the Agency and in connection
  with its functions, duties and operations
• In general, do everything necessary to combat the
  abuse of social assistance
• Primary Duties
• Conduct investigations within the social grants
  payments system
• Perform internal audits on the Agency and
• Provide independent reports to the Minister of
  Social Development

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Role of the National Treasury

• Ensure compliance with PFMA and Treasury
  Regulations
• Review in-year monthly and quarterly reports
• Provide support and advice on financial
  management
• Ensure that key risks are managed in the
  transition, via task team
• Concurrency on Social Assistance Regulations

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Key interim matters SASSA

• SASSA to stabilise head office organisational
  structure and recruit people with requisite
  skills
• SASSA to assume full accountability for operation
  of the SOCPEN System
• SASSA to recruit requisite skills and people in
  regional offices, particularly finance staff
  which do not move over from provincial
  departments
• SASSA to complete ring-fencing process in
  collaboration with provincial departments by
  March 2007

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Key interim matters NDoSD

• NDoSD to hand over all activities, staff members,
  contracts and budgets associated with integrity
  of the payments system to SASSA
• NDoSD to ensure reconciliation of accounts
  relating to social grants and repatriation of
  funds outstanding from conditional grant payments
  made to provincial accounts during 2005/06,
  including interest earned on these funds
• NDoSD to ensure timely transfers made to SASSA
  for grants and administration
• NDoSD to drive establishment of the Inspectorate
• NDoSD to collate financial information and ensure
  in-year monitoring of funds transferred

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Key interim matters National Treasury

• Conclude flow of funds arrangements
• Finalise in-year reporting formats for the
  function
• Assist with clearing of historical suspense
  accounts
• Assist with outstanding financial management
  matters

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Key interim matters Provincial Departments of
Social Development

• Execution partner to SASSA
• Perform activities in accordance with Agency
  Agreements
• Perform activities to complete ring-fencing
  exercise
• Complete hand-over of operations to SASSA

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END

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