Establishment of the AgencyEstablishment of the Agency

Presentation to the PortfolioPresentation to the Portfolio CommitteeCommittee

7 September 2005

OUTLINE OF PRESENTATIONOUTLINE OF PRESENTATION

BackgroundInstitutional challenges and constraintsThe new Service Delivery ModelProcess Map towards Agency Establishment Agency business plan; and Progress

BACKGROUNDBACKGROUND

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 MTEFDespite 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

INSTITUTIONAL CHALLENGESINSTITUTIONAL CHALLENGESThe grants system has been facing a number of challenges, including:

Fragmented institutional arrangementsLack of uniformity across provinces and inefficient processes Unequal distribution and development of human resourceshigh transaction costs, with high levels of fraudPoor 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.

CONSTRAINTS OF CURRENT MODELCONSTRAINTS OF CURRENT MODEL

The problems experienced are intrinsic in the current delivery model, which displays the following features:

Delivery is through a fragmented institutional structureThere 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; andInefficient, insufficient, inequitable distribution of infrastructure Less than desirable communication strategies and modes

NEW SERVICE DELIVERY MODELNEW SERVICE DELIVERY MODEL

FEATURES OF THE NEW MODELFEATURES OF THE NEW MODEL

Customers

Customers

Performance Management, Payment Contracts, Customer Services

Management Processes of Customer Care & Communications

Strategic Imperatives What Processes & Systems How

Process Applications:Increase channels, norms & standards -

Right culture and competencies

Delivery:Channels in place cater for customer

needs, meet the specific infrastructure &IT needs of the stakeholders

Review and Maintenance:Ensure right beneficiary gets the right

grant amount - right solutions,capabilities and competencies in place

Support Services:Capability building to support the

delivery of Business capabilities throughHR, Supply Chain, Contract

Management & Fraud Strategy

Core role ofSASSA &

Stakeholdersshared

Manageinvolvement of

SASSA

Focusedinvolvement of

SASSA

Primary roleshared

Perfo

rman

ceM

anag

emen

t

Imp

roved

Man

agem

ent

Cu

stom

erS

ervices

Lo

wer C

osts

Strategic imperatives

Processes & Systems

How?

Performance Management

Pillars of New Service Delivery Pillars of New Service Delivery ModelModel

The New Delivery Model was developed, and the key pillars are:

Clear accountability framework (see additional slide)Simplified Grants admin. processes that are customer focusedIntegrated delivery, one stop services Human resource competencies fitting the Agency strategyFinancial efficiencyAccessibility, at lower costsCommunication 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.

Business process changesBusiness process changesGrant Administration

Pay

men

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ervi

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Ca

ptu

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Ch

ecki

ng

Offi

cer

2nd

Att

estin

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1st

Atte

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ffice

rA

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End

Correctdocuments?

Apply for a grant

Conduct interviewwith applicant

Completeapplication form

manually

Verify supportingdocumentation

Producesupporting

documentation

Take complete setof fingerprints

Attest applicationform

Furnish applicantwith receipt

Calculate meanstest

Complete recordof application

Open file forapplication

Check applicationform and

supportingdocumentation

Fix official datestamp to

application

Make copies ofapplication formand supportingdocumentation

Send originalapplication form

plus documents tocapturing centre

File copies

Captureapplication form

electronically

Print letter ofrejection

Processapplication

Approved?

Print letter ofapproval

Enter into paymentrecord

Receive downloadof paymentinformation

Perform paymentPerform

reconciliation

NO

YES

NO

YES

Grant Administration To-be Process

Pay

men

tS

ervi

ceP

rovi

der

Sup

ervi

sor

Cus

tom

er C

are

Rep

rese

ntat

ive

App

lican

t

NO

Apply for a grantProduce

supportingdocumentation

Receive downloadof paymentinformation

End

Captureapplicationmanually

Perform payment

Scan documentsinto system

Electronicsystem

available?

Capture formelectronically

YES

Processapplication

Verifyinformationvia interfacewith other

govtsystems

Verificationcomplete?

Scan complete setof fingerprints into

system

Print rejectionreceipt

Systemapproved

application?

Print approvalreceipt

Verify information

Furnish applicantwith receipt or

send notificationletter

Enter intopaymentrecord

Reconciliation

End

YES YES

NO

NO

Furnish applicantwith receipt or

send notificationletter

To this

From this

• Fewer steps• Less people involved• Technology enabled• Faster• Standardised• Easily verified

The Grants Admin

processes will be

reengineered

Human resources and Financial Human resources and Financial efficiencyefficiency

Human Resources: A culture change to a customer-centric focus is keyStaff structures will be aligned to services: A front office with multi-skilled, customer friendly staff and a back office ensuring complianceStaff 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 grantsBuilding an effective off-ramp will be an explicit Agency focus

Infrastructure and CommunicationInfrastructure and CommunicationPhysical 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 AffairsEnsuring 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 bureaucracyTo beneficiaries we’re saying ”Don’t to call us, we’ll find you” More detail on the above also provided at the end

The Journey MapThe Journey MapThree distinct phases constitute the journey map:

Initial phase: prior to April 2005 and was concluded with MOU signing and introduction of the conditional grants - completedTransitional 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 operationalThe next slide outlines the envisaged state of fully operational; andThe slides thereafter details the progress in the different areas.

Envisaged State by April 2006Envisaged State by April 20061. Governance framework in place in terms of relevant laws2. Agency top management and staff must be appointed3. Reporting and accountability framework established 4. Functions ringfenced/separated in provinces and national5. Entity must have its own financial system and policies6. Agency human resources separated, with policies in place7. Communication internally and externally operational8. Information technology infrastructure in place9. Physical infrastructure available for use

Governance FrameworkGovernance 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 SeptemberIn 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.

Management, staff and Management, staff and accountabilityaccountability

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 weekAn organizational alignment framework developed that defines reporting and accountability framework CEO will appoint regional or provincial managers by October to establish that line of accountabilityOperational ringfencing document is currently being completed to assess reporting at the lower levels in provinces

Ringfencing and financial systemsRingfencing and financial systemsRingfencing 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 functionOperational 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 entityThe 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 resourcesBank account in place and awaiting PFMA listing

Human Resources and Human Resources and CommunicationCommunication

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 SeptemberHuman 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.

Information and Technology Information and Technology InfrastructureInfrastructureInformation Technology infrastructure is being rolled out at national and will start in provinces soon, prioritizing NorthWest Province and Gauteng who are on different systemsThe 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

ConclusionConclusion

The presentation outlined the current social grants challenges and the envisaged new service delivery modelI 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.

EndEnd

INSTITUTIONAL ARRANGEMENTS: INSTITUTIONAL ARRANGEMENTS:

Minister:National Dept of

Social Development

SASSA Head Office

SASSA Branch Head Office

SASSA Regional Office

SASSA District Office

Provincial DoSD

National DoSD

Minister:National Dept of

Social Development

SASSA Head Office

SASSA Branch Head Office

SASSA Regional Office

SASSA District Office

Provincial DoSD

National DoSD

New, independent, specialist Agency: focused and motivated towards service delivery

Communication lines between Agency and DoSD will remain open

HOW THINGS HOW THINGS WILL CHANGEWILL CHANGE

VALUE CHAIN AND CAPABILITIESVALUE CHAIN AND CAPABILITIESTHE VALUE CHAIN

StrategicGoals

Legislations and Institutional Arrangements

Grants Administration & Payments

IdentifyPotential

GrantBeneficiaries

ApplyFor

GrantApproveGrant

PayGrant

Review/RenewGrant

Corporate Services

Finance

Information Technology

Strategy and Business Development

CORE BUSINESS PROCESSES

SASSA SUPPORT PROCESSES

CA

PA

BIL

ITIE

S

HUMAN RESOURCE COMPETENCIESHUMAN 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’sA change in culture to a customer-centric focus.

BUILDING FINANCIAL ACUMENBUILDING FINANCIAL ACUMENThe 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

OPTIMAL USE OF INFRASTRUCTUREOPTIMAL USE OF INFRASTRUCTUREThe 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 individualInvestment 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

Enhancing CommunicationEnhancing CommunicationCurrent approaches to communication is limited, lack innovation and is reactiveThe Agency will utilize various and innovative means of reaching potential and active beneficiariesWithin 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 applicationsUsing voice recognition technology should enable regular reviews with burdening beneficiaries

SERVICE DELIVERY WORK STREAMSERVICE DELIVERY WORK STREAMThe 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

HUMAN CAPITAL MANAGEMENTHUMAN CAPITAL MANAGEMENTThe 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

FINANCE WORK STREAMFINANCE WORK STREAMThe 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 OfficeInterim policies and procedures draftedRing Fencing at National completed and ring fencing at Provinces in progressCosting Model developedCash Flow for Provinces finalised

ICT, INFRASTRUCTURE & ICT, INFRASTRUCTURE & COMMUNICATIONSCOMMUNICATIONS

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.