Sector Education and Training Authority Annual Reports 2008/09: FIETA, HWSETA, ISETT SETA, INSETA, LGSETA, MAPP-SETA, MQA and merSETA

Meeting report

Presentation by Forestry Industries Education and Training Authority (FIETA)
The Chief Executive Officer of FIETA. Mr Mkhwanazi, noted that this SETA was comprised of four sub-sectors of Furniture, Wood Products, Pulp and Paper and Forestry. The Board consisted of, Business, Government and Congress of South African Trade Union (COSATU)-affiliated Labour representatives, an Executive Committee as well as sub-committees. The sub-committees were made up of the various sectors that made up the Forestry industry. The Audit Committee was headed by an independent Chairperson and was governed by FIETA's Internal Audit Charter. FIETA had a three-year risk coverage plan based on risk profiles, which were updated annually, as well fraud prevention and response policies. In terms of mandatory grants, employers had to implement at least 50% of the Workplace Skills Plan (WSP) they submitted the previous year. Verification of employers' WSP programme implementation was undertaken by FIETA. In relation to discretionary grants, project interventions were managed through Service Level Agreements (SLAs) which stated the purpose of the intervention, the indeed result, the role of parties, the number of beneficiaries involved and the duration of the intervention. FIETA had a database of the approximately 5 000 learners it had traced.

Mr M Truelock, Board Chairperson, added that FIETA was running 96 projects across all four of its sectors. These projects included both learnerships and skills programmes. Its Vulamathuba project was based on three-year qualifications. The targets it had set in relation to this project were mostly not met. Issues related to stipends and the fact that certain learners were doing distance learning, which made completing the course within three years slightly more difficult, contributed to its targets not being met.

Mr Mkhwanazi said that a major challenge for FIETA was that, as employers often viewed artisans as expensive, learners who had qualified as artisans were often first to be retrenched when companies decided to cut down on costs. There were also incidents of learners being injured, if they had not followed correct health and safety procedures. The fact that FIETA's learners were given smaller stipends had also led to a high drop-out rate.

Ms J Molony, Member of the Board, FIETA, added that FIETA had been developing vocational training qualification model for school-leavers. These would allow students to go straight into vocational training at Further Education and Training (FET) Colleges. FIETA also provided support to students who did not achieve good mathematics and science grades through its maths, science and technology programmes. It was also involved in protech programmes.

Mr Mkhwanazi added that, as most young people were not drawn to the forestry industry, FIETA actively promoted the industry as one in which they could build their careers. It had also set aside an amount of R8 million to assist companies that were in distress. Some of these funds would be extended to employees who had been retrenched. It had also been proactive in reaching out to such employees.

Ms A Lakhoo, Chief Financial Officer, added that FIETA had reported a very good financial year. Though it had recorded a deficit, this was considered a positive development within the Public Sector as this meant that all funds made available to it - as well as reserve funding - had been used during the relevant financial year. It had also received its ninth unqualified Audit Report in succession. Its mandatory grant payout percentage had increased from 61% to 73.32%. 90% of its discretionary funding had also been committed to projects that would help the sector.

Discussion
Ms H Makhuba (IFP) asked whether Labour unions not affiliated to Cosatu were deliberately excluded from working with FIETA.

Mr Mkhwanazi said that FIETA had Cosatu non-affiliates which it worked together with. This matter depended largely on how the unions were organised in a particular sector.

Ms Khumalo asked whether there was a plan in place to assist people who had been retrenched.

Mr Mkhwanazi said it had a plan of extending funds to retrenched workers as well as in assisting them through training to acquire skills and assisting those who wished to start their own businesses.

Presentation by Health and Welfare Sector Education and Training Authority (HWSETA)
Mr C Smit, Chief Executive Officer, HWSETA, said that HWSETA's companies were to be found across all nine provinces (though most were Gauteng-based). Of their employers, 18 000 focused on the area of Doctors and Specialists. The SETA's National Skills Development Strategy (NSDS) had been rated as having “exceeded expectations” by the Department of Labour, with 14 of the 19 indicators scoring either four or five.

Ms E Brass, Chief Financial Officer, added that HWSETA's Audit Committee consisted of an independent Chairperson, three external independent members, two Board members, the Chief Executive Officer, the Chief Financial Officer, internal auditors and the Auditor-General. The Audit Committee found that in the 2008/09 financial year, the SETA had an effective, efficient and transparent internal control system in place. In addition, the SETA had addressed all the Auditor-General's concerns for the 2007/08 period. It was also given an unqualified Audit Report for 2008/09 and had also improved significantly with regards to both governance and compliance issues since 2005/06. The SETA had a R48 million surplus from operations (R38.9million related to mandatory grants and R9.3 million related to administration under-expenditure). Its spending on administration fell within the allowed limits and had also maintained compliance with the Public Finance Management Act (PFMA). Its Skills Development Levy (SDL) income had also increased over the period. The grants it paid out had increased significantly since the 2006/07 financial year. As it had paid out 61% of mandatory grants (down from 64% in the preceding year) it had embarked on various capacity-building workshops in order to achieve greater participation from the sector.

Mr Smit continued by saying that the SETA had R194 million committed to various discretionary projects. The HWSETA Board had approved R16 million for its Training Lay-off Scheme. Though it was actively creating awareness, it was not expecting many applications in this regard, due to the current skills shortage in the sector.

Information Systems, Electronics and Telecommunications Technologies Sector Education and Training Authority (ISETT SETA) Presentation
Mr O Mopaki, Chief Executive Officer, said the ISETT SETA had 2 428 companies (128 large-, 240 medium and 2 060 small-sized) within its sector who employed a total of 141 929 employees. For the year under review, the number of employees in each of its sub-sectors stood as follows: Telecoms had 45 449, Electronics had 21 196 and IT had 75 284. 

The SETA had achieved - and often exceeded - the targets it had set itself within the year under review. One of the challenges it faced was a lack of auditing capacity when it came to employer WSPs. This made monitoring employers' performance in this regard harder. Joint responsibility needed to be taken between employers and the SETA in order to assess what impact the utilised NSL funds had had on training. The SETA was also moving towards skills development in this sector being employer-led. To this end it had asked employers to submit proposals to train learners in learnerships and graduate internship programmes. The SETA found challenges, since proposals were received mid-way through the financial year, which made it difficult to spend the R60million it had set aside specifically for this before the completion of the financial year. Although the SETA worked together with municipalities to address the issue of e-Government, it found it challenging to meet the requirement of placing 70% of unemployed learners trained in employment positions. This had affected perceptions around the SETAs’ performance. To address this, a balance needed to be struck between the requirement to train learners for employment and the requirement to train in order to build a critical mass. The SETA had, however, worked successfully with FET Colleges.

He added that, for the 2008/09 financial year, the SETA's Skills Development Levies stood at R321million, an increase of 15% from the previous year. Its investment income had also increased by 61% from the previous year. Although the SETA had been given an unqualified Audit Report, the Auditor-General had noted fruitless and wasteful Expenditure of R341 000. This was due to a burglary in which various desktop computers were stolen. This loss resulted in the further loss of payroll data. In addition, an outstanding amount of PAYE was identified in the current year and subsequently paid to SARS. This resulted in additional penalties and interest being paid. Mechanisms to prevent such issues from arising again had subsequently been put in place.

Another concern raised by the Auditor-General was a breakdown in some internal controls. At year-end, however, these controls were found to be working.

The SETAs had not received any applications from ICT companies with regard to its Training Lay-Off Scheme.

Discussion
Ms H Makhuba (IFP) asked whether there was a programme that sought to address the challenge of not being able to evaluate the level or quality of training offered by employers.

Mr Mopaki responded that what most SETAs referred to as WSPs were merely basic templates for reporting numbers to SETAs. The skills development facilitators (SDFs) often did not have Human Resource Development Strategy nor Skills Development strategies in place. There needed to be better communication between top management and SDFs. It was therefore difficult to assess whether the WSPs submitted were quality plans. A solution to this problem should be sought by all the relevant social partners.

Ms Makhubele asked why there had been such a disparity between the different number of learners in the various provinces.

Mr Mopaki replied that this SETA had been confronted with serious challenges in Mpumalanga in the Eastern Cape after learners started their learnerships. The main challenge was poor training, even though these providers had been accredited. There was also an absence of ICT companies in rural provinces. This made it especially difficult as the SETA preferred training to be employer-led. To negate this, it had negotiated with municipalities around training unemployed youth in end-user computer training.

Insurance Sector Education and Training Authority (INSETA) Presentation
Ms S Dunne, Chief Executive Officer, said that the Insurance sector employed in excess of 137 00 people. Although INSETA had, over the past nine years, received unqualified Audit Reports, there had been one investigation over the last financial year. This matter had been resolved. Its Council and management were committed to ensuring that the SETA continued to operate at the highest levels of integrity and also met the needs of its stakeholders.

Mr M Gerber, Chief Financial Officer, INSETA, added that INSETA's Levy income had increased by 14% from the previous year. Its administration surplus of R2.5million would be used for spending on discretionary grants. Mandatory grant payouts remained high at 88%. It had allocated R126vmilion to projects while its actual spend on approved projects stood at R49 million.

Ms Dunne continued by mentioning that INSETA had broadened its presence throughout the provinces through the appointment of Regional Advisors in the major regions. This had allowed it to harness relationships and partnerships with numerous stakeholders and service providers.

In addition to this, three recipients had received Institute of Sectoral Excellence (ISOE) Grants. This brought the number of institutions who had been supported to date up to eight. In terms of quality assurance, 1 962 learners had been accredited for the achievement of full qualifications, while 2 240 unit standards were achieved through short skills programmes. Provider accreditation, monitoring and auditing were strong focus areas for the SETA. INSETA had also engaged with the South African Qualifications Authority (SAQA) for the development of unit standards and qualifications for the sector. Five new qualifications had been registered, which brought the total number of qualifications that INSETA was accredited to quality assure to 36 in total.

The SETA had exceeded its targets for learners with disabilities by 299% through learnerships and had also seen 348 high-potential black graduates completing the Wealth Management NQF Level 5 Learnership. Learnership funding for the year under review stood at R19.5 million, while bursaries to the value of R5.1million had been approved. With regards to its Financial and Advisory Services Fit & Proper Project, 8 999 financial advisors passed the assessments. INSETA had also approved and funded nine projects during the year to the value of R66 million. With regards to employment equity, the beneficiaries of its learning programmes were broken down into 4 313 women, 5 718 black learners and 213 people with disabilities. With regard to its Training Lay-Off Scheme, it had commissioned a research report in order to provide it with information on the sector. It had also allocated R8 million towards a bursary fund in order to fund possible lay-offs.

Discussion
Mr Nyekembe asked whether the 8 999 learners who passed the Recognition of Prior Learning (RPL) assessment had been placed in positions of employ. He enquired what had happened to those who had entered but not completed the assessment.

Ms Dunne answered that the project was for people who were already employed in the industry. Those learners who did not pass the assessment were already in the system and would therefore be assessed again. A service provider had been appointed to oversee this project to its completion.

The Chairperson asked why, in relation to its Training Lay-Off Scheme, so much was spent on intelligence gathering.

Ms Dunne answered that research was being conducted into companies that might be in distress.

Local Government Sector Education and Training Authority (LGSETA) Presentation
Mr L Mofokeng, Chief Executive Officer, LGSETA, said that LGSETA serviced 283 municipalities. It focused on five key areas which included municipal financial viability, infrastructure and service delivery, community-based participation and planning, management and leadership. LGSETA noted participation of municipalities at 86%, though none were exempt from paying levies. In terms of mandatory grants, LGSETA encouraged municipalities to link skills development of employee requirements to the municipal IDPs. All discretionary grants it funded were linked to its five key focus areas. Some of the Government Departments with whom LGSETA worked included: the Department of Water and Environmental Affairs, the National House of Traditional Leaders, National Treasury, SALGA and the Department of Public Works. A particular highlight was the National Skills Audit that it funded. LGSETA had also assisted municipalities in the implementation of the Property Valuation Act, in addition to training 3 600 Ward Committees. One its highlights for the year under review was its work on improving the finance and accounting aspects of municipalities.

Ms N Nkosi, Chief Financial Officer, said that the SETA had disbursed R122 million which accounted for 94% of its mandatory grant fund. In terms of its mandatory grant disbursements per province, Gauteng was the highest while Northern Cape came in at the lowest. In terms of discretionary grants, it had disbursed R62 million on projects for the year under review. As this was an increase from the previous year, the SETA saw this as an indication of improvements in this regard. The Auditor-General had noted fruitless and wasteful expenditure of R11 000 (which arose from technicalities issues around lease agreement) as well as non-compliance with regard to some of its investments. It had subsequently initiated processes to address this. The Auditor-General also noted issues around its cash management performance. This had however been cleared with National Treasury.

Mr Mofokeng continued that the Auditor-General had noted two more issues, which were investigations into possible financial misconduct and the validity of qualifications. These matters were being finalised. On the whole, LGSETA had received an unqualified audit opinion.

Discussion
Ms N Mnisi (ANC) asked LGSETA whether its Ward Committee training would be rolled out to other provinces. She enquired as to the difference between those Committees who had received training and those who had not.

Mr Mofokeng answered that, as it was a pilot project, the SETA was only currently doing a review of it.

Media, Advertising, Publishing, Printing and Packaging Sector Education Training Authority (MAPP-SETA) Presentation
Mr B Zulu, Chief Executive Officer, MAPP-SETA, said that MAPP-SETA's Accounting Authority, which was established in July 2008, had put in mechanisms for good corporate governance. An Executive Management team had then been appointed and a strategic plan developed in order to curb over-expenditure, improve performance and enhance compliance.

In terms of its achievements, it had maintained compliance with the Auditor-General, Department of Labour (DOL) and South African Qualifications Authority (SAQA) requirements. It had also seen positive results with regard to financial controls on over-expenditure, the eradication of mandatory grant payment backlogs, provider accreditation and learner achievement. R28.5 million had also been disbursed against pre-2008/09 projects.

Though it had under-performed in the areas of Skills Development Facilitators and support of BEE Firms and Cooperatives, it had exceeded its targets in relation to Adult Basic Education and Training (ABET) and employed learners.

Mr K Keys, Chief Financial Officer, added that, in terms of the SETA's financial performance, it had dispensed R132 million of its total revenue of R184 million to beneficiaries. An area of concern for the SETA was administration, in which it spent 138% of its revenue. Though the grant disbursement percentage (79%) was lower than the previous year, it was addressing this issue through encouraging participation with the SETA. The Accounting Authority's decision to limit discretionary grant allocations in order to facilitate the correction of over-commitments during prior periods had led to poor expenditure of revenue.

The audit findings included inaccuracies of records maintained during 2007/08, inadequate handover of the MAPP-SETA affairs from the Administrator to SETA Management and initial staff instability during the appointment of the new Accounting Authority. The SETA had managed to bring the irregular expenditure, noted in its Audit Report, down to manageable proportions. In moving toward its goal of providing its stakeholders with information around its progress, it held a successful Annual General Meeting.

Mr Zulu continued that some of the challenges the SETA faced included communication, restoring its image, its limited revenue, its Board and staff complement, apprenticeship management, the review of trades and qualifications and certification backlog.

Ms M Sekgana, Chief Operations Officer, said that the SETA had committed R5 million to its Training Lay-Off Scheme (TLS). A project team had been appointed and a project plan was put in place. A Board TLS Task Team had also been appointed to serve as a sounding board for the Project Team. Service providers had also been appointed to assist in capacity building as well as in the general implementation of the Scheme. The SETA had maintained a very good working relationship with both the National Skills Fund and the Commission for Conciliation, Mediation and Arbitration (CCMA), the latter providing weekly reports around companies who were in distress. To date it had had no applications from such companies. It had however conducted its own research to identify companies in distress.

Mr Zulu noted the SETA's impact, since 3 850 learners had been certified since 2005. Newly funded projects were on course to deliver more learner results in future.

Discussion
Mr Nyekembe asked what the SETA's Board had done in relation to the over-expenditure in administration, and why the 10% limit for administration was so far exceeded.

Mr Zulu answered that the 38% over-expenditure was directly attributed to the administration of the SETA. Consultants were brought on, and there had been staff retrenchments and audit fees.

Mining Qualifications Authority (MQA) Presentation
Mr L Namgubela, Chief Executive Officer, MQA,  said that, in terms of governance, the MQA had achieved an unqualified Audit Report. Its total income was R542 million with expenditure at R479 million. It had also noted an 84% participation rate in terms of its mandatory grants. It accumulated a surplus at the end of the year stood at R275 million, R200 million of which was set aside for commitments. The number of women in the sector had been increased as a result of MQA learnerships. As most of its employees were technicians and trade workers, learnerships were particularly driven towards this group.

In terms of its achievements, 84% of its mandatory grant levy income was claimed, with a total of 491 organisations having submitted their WSPs and Annual Training Reports (ATRs). Of these, 417 were approved. It had also compiled a scarce and critical skills guide for the sector as well as having conducted and approved research into retrenchment in the sector. Its Training Lay-off Scheme had been planned through the CCMA. It had also registered 30 new qualifications and associated unit standards, as well as developing 30 learnerships and 10 skills programmes. It had exceeded its targets around employed learners entering and completing learnerships. A total of 10 331 learners had completed ABET programmes. In relation to the Department of Labour scorecard, it had performed very well. Some of the challenges it faced included a decrease in income, despite retrenchments and the recession, a revenue increase of 20%, as a result of salary increases and stability of employment, the low learner uptake rate, challenges around ABET and the re-establishment of SETAs to the Department of Higher Education and Training.

Discussion
Mr Nyekembe asked why employers said that the scheme had come to them too late when it came about as a result of National Economic and Development Labour Council (NEDLAC)  processes.

Mr Namgubela responded that when the Training Lay-Off Scheme came about the mining industry had already been obligated to take care of retrenched employees. This, however, did not mean that the industry was unwilling to implement the TLS. Those who wished to participate in the Scheme were welcome to do so. The Board had also allocated R30 million towards the TLS.

Manufacturing, Engineering and Related services Sector Education and Training Authority (merSETA) Presentation
Ms J Esterhuizen, Board Chairperson, merSETA, said that merSETA was made up of five different sub-sectors, being metal and engineering, auto manufacturing, motor retail and component manufacturing, tyre manufacturing and the plastics industries. These five sectors comprised around 44 000 companies, which employed around 600 000 workers. It had received an unqualified Audit Report.

Dr R Patel, Chief Executive Officer, merSETA,  added that the economic meltdown had affected this sector the hardest, with it having shed more than 40 000 jobs. The levy income for the year under review was R697 million and additional income brought its total revenue to R817 million. Levies rose, despite the number of levy-paying companies decreasing to 11 913. Its Voucher Implementation Project (VIP) entered its second phase in the 2008/09 financial year. Slight changes were approved by the Board in order to address shortfalls. Since the inception of this programme, 6 700 Small and Micro Enterprises (SMEs) had managed their affairs through the SETA's intervention. A Recognition of Prior Learning (RPL) service provider had been appointed by the SETA to develop and implement the RPL Pilot Project. This project resulted in an increased awareness by its stakeholders of the complexities associated with RPL. More than 21 000 beneficiaries had been reached through its learnerships, apprenticeships, bursaries and experiential learning. Another highlight was the SARS Partnership Road Show which focused on the new tax allowances introduced by the National Treasury. Another one of the SETA's key projects was the Accelerated Artisan Programme, which had received the sanction of institutions such as SA National Defence Force (SANDF) and the SA Navy. It also introduced the Accelerated ABET, Business ABET and Occupational ABET programmes. The SETA had also moved away from a reliance on consultants. It had also maximised its discretionary grants. 92% of learners trained by merSETA were taken up into employment positions.

In terms of its National Skills Development Strategy (NSDS) targets, the two areas in which it did not reach its targets were ABET and assistance in workplace experience.

Ms B Dzirum, Chief Financial Officer,  said that the SETA's investment income had increased by 55%. This was due to the higher interest rates which were in effect for most of the year as well the high cash balances it held. Greater employer awareness had resulted in greater participation with regards to WSPs. Project costs had increased significantly due to the number of pilot projects initiated, while administration costs remained within the required 10% limit. The SETA had also made strides in reducing its net surplus.

Discussion
Ms Mnisi asked what the SETA had done towards rural development.

Dr Patel answered that merSETA had offices in seven provinces and had started placing stronger focus on rural provinces such as the Free State, Northern and Eastern Capes. To this end it had signed a partnership agreement with the Eastern Cape local government.

Mr Nyekembe asked whether its Retrenchment Assessment Plan was separate from the Department of Labour's project. She also asked what it was doing with regard to workers who had lost their jobs. She enquired if it was looking only at the automotive industry when it stated that the RPL project was running smoothly.

Dr Patel answered that the Board had made R20 million available in order to deal with the issue of retrenched workers. It also ran projects throughout the country to assist in this regard. It had not only looked at the automotive industry when assessing the success of its RPL programme. Based on the success of this project it was now rolling the project out even further.

The meeting was adjourned.