1. Establishment of the Agency Presentation to the Portfolio Committee 7 September 2005

2. OUTLINE OF PRESENTATION Background Institutional challenges and constraints The new Service Delivery Model Process Map towards Agency Establishment Agency business plan; and Progress

3. BACKGROUND Providing social assistance grants is a key government poverty alleviation program, ensuring income support to over 9.8 million vulnerable individuals. The budget this year is in excess of R55 billion, and will grow to more than R60 billion/annum during the MTEF Despite the successes in coverage, major service delivery problems have been experienced over the years, resulting in significant fraud, indignity for the poor, etc. Government has therefore, decided to shift the function to the national sphere and the administration to a specialist, focused Agency

4. INSTITUTIONAL CHALLENGES The grants system has been facing a number of challenges, including: Fragmented institutional arrangements Lack of uniformity across provinces and inefficient processes Unequal distribution and development of human resources high transaction costs, with high levels of fraud Poor quality of service delivery, with long distances that some must travel to access services for some, hours in the queues These problems often constrain access to social assistance, yet access should be a Constitutional guarantee for eligible persons.

5. CONSTRAINTS OF CURRENT MODEL The problems experienced are intrinsic in the current delivery model, which displays the following features: Delivery is through a fragmented institutional structure There is a lack of dedicated, focused corporate support functions Resource competencies/skills not geared toward the specialized nature of the service - variable staffing standards; Disintegrated and inefficient business processes, duplication and non- value adding procedures; Inadequate financial acumen given the transaction nature; and Inefficient, insufficient, inequitable distribution of infrastructure Less than desirable communication strategies and modes

6. NEW SERVICE DELIVERY MODEL

7. FEATURES OF THE NEW MODEL Strategic imperatives Processes & Systems How? Performance Management

8. Pillars of New Service Delivery Model The New Delivery Model was developed, and the key pillars are: Clear accountability framework (see additional slide) Simplified Grants admin. processes that are customer focused Integrated delivery, one stop services Human resource competencies fitting the Agency strategy Financial efficiency Accessibility, at lower costs Communication strategies and modes that are proactive I will give a very brief insight into the key pillars with more detailed slides at the end of the presentation.

9. Business process changes To this From this Fewer steps Less people involved Technology enabled Faster Standardised Easily verified The Grants Admin processes will be reengineered

10. Human resources and Financial efficiency Human Resources: A culture change to a customer-centric focus is key Staff structures will be aligned to services: A front office with multi- skilled, customer friendly staff and a back office ensuring compliance Staff development will be service delivery focused and performance linked to norms and standards for delivery Financial Management: The Agency will reduce the current operational costs of 6,3%, using economies of scale, using Post Office and banks Ensuring Compliance to regulations, business rules will be explicit and current initiatives to reduce fraud will be given extra impetus through regular reviews of all grants Building an effective off-ramp will be an explicit Agency focus

11. Infrastructure and Communication Physical Infrastructure People travel long distances, exceeding 50km, waiting far too long at pay points. The Agency will focus on: Implementing an optimal model - making use of all current infrastructure closer to government services, e.g Home Affairs Ensuring equal access within 5–7 km of each individual IT: Agency will exploit the use of Information and Communication Technology: capturing, verifying and approval online. Various methods of accessing the system such as call centres, the internet, voice recognition technology, etc. will be implemented Communication: Internal communication will be less complicated with less red-tape and bureaucracy To beneficiaries we’re saying ”Don’t to call us, we’ll find you” More detail on the above also provided at the end

12. The Journey Map Three distinct phases constitute the journey map: Initial phase: prior to April 2005 and was concluded with MOU signing and introduction of the conditional grants - completed Transitional Phase: started April 2005, ending April 2006. Involves making the Agency operational and prepare for function transfer Optimisation phase: Full operationalisation follows the transfer of the social grants function to the Agency and implementing the new delivery model with radical improvements in the quality of delivery Process is well underway to have the Agency fully operational The next slide outlines the envisaged state of fully operational; and The slides thereafter details the progress in the different areas.

13. Envisaged State by April 2006 1.Governance framework in place in terms of relevant laws 2.Agency top management and staff must be appointed 3.Reporting and accountability framework established 4.Functions ringfenced/separated in provinces and national 5.Entity must have its own financial system and policies 6.Agency human resources separated, with policies in place 7.Communication internally and externally operational 8.Information technology infrastructure in place 9.Physical infrastructure available for use

14. Governance Framework In terms of the governance arrangements, progress includes: The Agency Act is operational, Social Assistance Act will be in force by March 2006. MOU governs the transitional period, but a Business Partnership Agreement was drafted for post April 2006. Reporting framework in terms of Agency Act and the relevant PFMA sections will be finalised by end of September In the absence of a Board, an Advisory Panel was constituted of high level government and industry leaders to advise CEO. National Department in the process of rolling out structures and staff for oversight responsibility.

15. Management, staff and accountability Interviews are underway to appoint executive management and process will be complete by end of September Advertisements of remainder of management and staff posts will be out in next week An organizational alignment framework developed that defines reporting and accountability framework CEO will appoint regional or provincial managers by October to establish that line of accountability Operational ringfencing document is currently being completed to assess reporting at the lower levels in provinces

16. Ringfencing and financial systems Ringfencing social security from social development services is is critical in setting up the Agency function and All Provinces have undertaken financial ringfencing to identify budgets, assets, liabilities and staff for social grants function Operational ringfencing is now underway in provinces, and will give a clear indication of what is in each province after separation to constitute a separate Agency province or entity The Agency financial systems model have been agreed upon, and system will be in place at national soon and tested and rolled out in provinces by January 2006 Financial management and administration function outsourced to complement Agency resources Bank account in place and awaiting PFMA listing

17. Human Resources and Communication Human resources staff for transfer were identified, but dispute with labour is a challenge. Human resources framework approved by DPSA, policies drafted and will be submitted for Minister’s approval by end of September Human resources function headed by a seconded senior manager and HR function was outsourced to support Agency staff with Human resource system, Persal being populated. Communication head seconded and strategy is being rolled out. Expertise for branding and corporate identity to be appointed soon. IT infrastructure for internal communication being rolled out Outstanding matters are communication policies and processes.

18. Information and Technology Infrastructure Information Technology infrastructure is being rolled out at national and will start in provinces soon, prioritizing NorthWest Province and Gauteng who are on different systems The design and development of an Enterprise Resource planning system that will integrate Finance, HR and with grants administration has been initiated Physical infrastructure: At national, the Agency head office refurbishment is well underway. Each of the provinces are procuring separate offices, some up to district level for movement of staff to new buildings

19. Conclusion The presentation outlined the current social grants challenges and the envisaged new service delivery model I have provided Members with an outline of the phases of the Agency establishment, the expected state by April and progress made to date. Additional information is submitted in the additional slides that follow.

20. End

21. INSTITUTIONAL ARRANGEMENTS: New, independent, specialist Agency: focused and motivated towards service delivery Communication lines between Agency and DoSD will remain open HOW THINGS WILL CHANGE

22. VALUE CHAIN AND CAPABILITIES THE VALUE CHAIN Strategic Goals Legislations and Institutional Arrangements Grants Administration & Payments Identify Potential Grant Beneficiaries Apply For Grant Approve Grant Pay Grant Review/ Renew Grant Corporate Services Finance Information Technology Strategy and Business Development CORE BUSINESS PROCESSES SASSA SUPPORT PROCESSES CAPABILITIES

23. HUMAN RESOURCE COMPETENCIES The Agency will ensure the following outputs ito the implementation of the Service Delivery Model: Staffing structures will be better aligned to core business (services to beneficiaries) Staff development will be in line with service delivery requirements (not generic) An effective performance monitoring system will be developed that is linked to norms and standards for delivery that inform the KPI’s A change in culture to a customer-centric focus.

24. BUILDING FINANCIAL ACUMEN The grants admin system distributes over R55 billion. This is a transaction based institution that requires financial acumen. The Agency will ensure the following outputs in terms of the implementation of the new Service Delivery Model: The Agency will endeavour to reduce the current operational costs and the high cost of transactions by building on economies of scale. An appropriate payment model that will redistribute pay points more optimally will be introduced. (Migration of people to banks where possible will be considered). Ensuring Compliance to regulations, business rules will be explicit. Recent initiatives to reduce fraud has indicated that with a minimal investment the returns are high and the Agency will keep the focus on fraud reduction. Data interrogation with the most sophisticated statically analysis tools would also be institutionalised

25. OPTIMAL USE OF INFRASTRUCTURE The findings indicate that some people still travel distances in access of 50km, and wait long at pay points. The Agency will focus on the following: Developing and implementing an efficient and optimal model (making use of all current infrastructure before investing in new ones) Ensuring equal access within 5 – 7 km of each individual Investment in infrastructure will be required to ensure beneficiaries are paid in dignity. The migration of significant number of beneficiaries to banks where available and generate efficiencies to pay for current infrastructure shortages

26. Enhancing Communication Current approaches to communication is limited, lack innovation and is reactive The Agency will utilize various and innovative means of reaching potential and active beneficiaries Within in year various mechanisms will be put in place to proactively go out and find beneficiaries before they come and apply, for example the biggest database of school going children has already been built up at the Agency, Using sms, email and a virtually integrated national call centre would facilitate applications Using voice recognition technology should enable regular reviews with burdening beneficiaries

27. SERVICE DELIVERY WORK STREAM The following was accomplished: Developed a new Service Delivery Model and three year Strategic plan covering implementation. Already initiated a range of integrity improvement initiatives to reduce risk of transferring ineligible beneficiaries and data to Agency. The Operational ring fencing template for national will be complete by September. Developed the optimal delivery network for future payments of grants based on infrastructure and service demands

28. HUMAN CAPITAL MANAGEMENT The following is finalised: Organisational structures National and Provincial finalised; The ring fencing of core personnel was completed (National and Provincial); The decision on support staff is still outstanding due to discussions between various stakeholders; Migration plans for the transfer of staff in December in process of finalisation; Service providers are appointed to assist with HCM operational matters (nationally) for 6 months; Permanent positions will be advertised and filled; Interim policies and procedures in process of finalisation

29. FINANCE WORK STREAM The following is finalised: Interim Funding Mechanism finalised (Conditional Grants to Provinces) Interim Systems in place at Head Office (Logis, Persal, BAS) Bank account was opened for SASSA Head Office Interim policies and procedures drafted Ring Fencing at National completed and ring fencing at Provinces in progress Costing Model developed Cash Flow for Provinces finalised

30. ICT, INFRASTRUCTURE & COMMUNICATIONS The following is finalised: The IT architecture plan has been developed for standardisation and service providers for communication networks are on standby. The tender for an ERP system was awarded and implementation will commence soon. The Agency Head Office is 70% complete (finalised end of October 2005) and the move to separate provincial Agency offices has already been completed in three of the nine provinces. A tender for Agency branding will be issued soon.