South Africa’s social grant clean-up saves billions

7 February 2014

South Africa’s move to modernise its administration of social grants, involving the live certification and re-registration of grant beneficiaries and the introduction of a biometric card payment system, is saving the country hundreds of millions of rands annually, says South Africa Social Security Agency (Sassa) CEO Virginia Peterson.

Presenting the agency’s 2012/13 annual report to the National Council of Provinces’ (NCOP’s) select committee on social services in Cape Town on Thursday, Peterson said that over 150 000 grants had been voluntarily cancelled between June 2012, when the re-registration process began, and June 2013, amounting to an annual saving of R150-million.

The number of voluntary grant cancellations had since increased to 299 837, she said.

Interviewed by Business Day following the NCOP briefing, Peterson said that in total more than 650 000 social grant recipients had been removed from the grants register, saving the fiscus almost R2-billion, while an additional R800-million in service fees had been saved in this financial year alone.

Electronic grant payments, biometric cards

Sassa’s new system aims to minimise fraudulent grant applications and collections and reduce administration costs by distributing grant payments electronically. It involves the mass collection of data of existing and new beneficiaries, children receiving grants, and procurators.

The Sassa grant card’s biometric functionality identifies grant recipients using unique identifiers such as fingerprints, voice and other personal information, which means that the cards cannot be used by any person other than the approved beneficiary.

“A total of 18.9-million people were successfully re-registered onto the new system by end of the financial year,” Peterson told the NCOP committee. “The number has since increased to 20.7-million.”

She noted that the biometric payment cards allowed beneficiaries to access their grants through various payment gateways, including ATMs, pay point stations and retail points of sale – effectively incorporating beneficiaries, many of whom were previously “unbanked”, into the country’s banking community.

At the same time, she said, the new payment system almost halved the cost to the agency of each transaction, from an average of R30 to R16.44 per transaction – while giving Sassa, for the first time, automated intelligence on all payment activities.

Sassa is currently paying approximately 16-million social grant benefits monthly to approximately 9.5-million recipients.

Fraud: focus shifts to agency staff

Peterson told the committee that, in its fight against fraud, Sassa’s focus had shifted from grant beneficiaries to agency staff members who colluded with beneficiaries and crime syndicates to defraud the system.

Against a target of investigating at least 50% of fraud cases identified, she said, 78% of cases identified to date had been investigated, with 98% of suspicious grants verified as valid.

“Efforts to clamp down on corruption in specific regions resulted in arrests and convictions of 10 current agency officials, three former agency officials and 15 agents,” Petersen said. “Fifty-two Sassa officials were suspended from duty, 25 dismissed, and seven resigned prior to the completion of their disciplinary cases. The monetary value related to cases finalised amounts to R59.4-million.”

Other successes, she said, included the arrest of 50 individuals in the Mahlabathini area within the Ulundi District who were found to be in possession of 127 unregistered Sassa cards, three CPS registration machines and R47 000 in cash. Five of these suspects remain in custody.

Petersen said that money lending had also became a focus, with 29 individuals arrested and 1 008 agency cards and R82 156 in cash confiscated.

She acknowledged that the implementation of its fraud management strategy was one of the challenges facing Sassa, adding that the agency had had to “close-out some offices due to the number of officials that were implicated in fraudulent activities.”

SAnews.gov.za and SAinfo reporter