National Development Agency & Central Drug Authority Annual Reports 2008/09, Auditor-Generals' briefing on Department audits

Social Development

10 November 2009
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Meeting Summary

The Deputy Minister Ms Bathabile Dlamini was in attendance at the meeting. The Auditor-General South Africa provided the Committee with an overview of the 2008/09 Audit of the Department of Social Development. The Department of Social Development, the National Development Agency and the South African Social Security Agency had all received unqualified audits. The Committee expressed disappointment at the timing of the news that the South African Social Security Agency was shifting to a new financial system. The Committee questioned the high vacancy rate at the National Development Agency and the South African Social Security Agency. Members asked if there were any strategies in place to recover funds from debtors. The Department of Social Development was questioned by the Committee as to the lateness of the submission of the report. There seemed to be some confusion regarding tabling in Parliament and submission to the Auditor General. Although Members wished to question the unfilled and unfunded posts in the SASSA, this Agency was not present to answer questions as it was not aware that its audit report was being discussed.

The Central Drug Authority (CDA) briefed the Committee on its Annual Report. Emphasis was laid on the need to change the focus in dealing with the problem of substance abuse, and the 3-tier approach strategy was outlined, which involved demand reduction, supply reduction and a new approach of harm reduction. CDA emphasised that the new Act, when implemented, would address many of the problems regarding the governance of substance abuse entities. It was further emphasised that implementation could only be effective if the Regulations were in place and this process had not been completed. The presentation highlighted the National Drug Master Plan as a Cabinet-approved blueprint to combat substance abuse. Members asked for an explanation for the lateness of the submission of the Annual Report of the Central Drug Authority, which was outlined, and it appeared that permission had been obtained to table the report only in the Fourth parliament. Members also raised questions on the provision of a database of unregistered drug treatment centres, and the registration of unregistered rehabilitation centres. The Committee asked about the cannabis Report and obtained a commitment from the CDA to circulate this Report after consultation with the nine provinces had taken place, raised questions about hemp in South Africa and the growing and distribution of the Somali stimulant Khat. Members were concerned that the capacity of the Central Drug Authority was limited and therefore hampered progress with regard to dealing with substance abuse, and asked for guidance on how the challenges should be addressed.

The National Development Agency presented its report, focusing on the supported sectors, the re-aligning of organisational resources, and the core function to create self-reliance in communities and to strengthen institutional capacities through the funding and support of projects. It was noted that a recommendation on the appointment of a permanent CEO had been made to the Minister, and the CFO’s position was also being filled. The Board then discussed the question of whether it was legally constituted, noting that a legal opinion had been sought that held that the composition of the Board was correct and valid. This assertion was questioned by Members. They also raised the recovery of the Right-Backs money, and registered their concerns about the  'Acting' CEO and CFO positions. They questioned how projects were funded and identified discrepancies in the Report regarding the number of projects funded in the Eastern Cape. The Request for Proposals Approach and the Programme Formulation Approach was outlined to Members, with the emphasis on the phasing out of the Request for Proposals Approach. Members asked for an explanation regarding the irregular expenditure of R2.5million, and received an assurance that a new procurement policy would be submitted to the Board on Friday, and a report would be submitted detailing the R2.5million irregular expenditure. The Committee emphasised the importance of compliance and suggested measures for the NDA to ensure that it operated within the legal boundaries of its mandate. The Committee also questioned what would happen to the smaller funds, including the High School Voorentoe Disaster Fund.

Meeting report

Briefing by Auditor-General South Africa on the Department of Social Development
Mr Musa Hlongwane, Business Executive, and Mr Abrie Adendorff, Senior Manager, Auditor-General South Africa, briefed the Committee on the overview of the 2008/09 audit. The role of the Auditor-General, the scope of the audit and the findings were explained to the Committee. Mr Hlongwane provided a detailed account of the Department of Social Development (DSD or the Department), the South African Social Security Agency (SASSA), the National Development Agency (NDA), and the five funds responsible for relief when disasters occurred, all of which were audited by the Auditor-General South Africa (AGSA).

Mr Adendorff explained the audit outcomes and noted that the Department of Social Development had received an unqualified audit, but he noted the emphasis in respect of some paragraphs. Dual accountability was emphasised as an important matter as grant expenditure reported in the annual financial statements for 2008/09, reflected that the relationship between the Department of Social Development and SASSA had a negative impact on the audit report. Auditors were placed in a difficult position as SASSA was spending the grants but not taking responsibility for the expenses. SASSA also received an unqualified audit report. A major concern, however, was the asset register reporting. This had a major impact on the accrual base accounting system as this would require a physical stock-take of all assets before 31 March 2010.

The National Development Agency (NDA) received an unqualified audit report. However, the Auditor-General noted irregular expenditure in the amount of R2.5million, as proper compliance procedures had not been followed. The challenge was that the Chief Executive Officer and Chief Financial Officer posts at the NDA were still vacant. This was considered a risk for audits if these positions were not filled in the required three to six months.

The Relief Funds had all received unqualified audit reports with no matters of emphasis. The Department hoped to combine all these funds into one Relief Fund. (see document).

Ms H Lamoela (DA) said that it was impossible to do proper justice to the report, as it was received by Members late. Ms Lamoela expressed concerned about the report received from the South African Social Security Agency (SASSA) and asked why they were shifting to a new financial system, and why only now was it brought to light that the financial system it had been using was not working.

Mr Hlongwane said that AGSA shared the concerns raised by Members regarding the change of the financial system used by SASSA. The new system would enable SASSA to comply with the generally accepted accounting practices, so they basically had been compelled to change, to enable them to report as a public entity.

Ms M Kenye (ANC) said that according to the staff establishment of SASSA, only 7 000 posts were filled. She asked if that made any difference to the fact that the supply chain management system was not performing well.

Mr Adendorff replied that currently 7800 posts were filled. It was a major challenge to SASSA to get all the posts filled.

Ms Kenye said that the National Development Agency (NDA) organogram had not been shown. She asked what were the reasons for so many vacancies in the SASSA and the NDA.
Mr Hlongwane said that there were currently 10 000 vacancies at SASSA, but this situation showed itself in all departments. The DSD was better positioned to provide an explanation.

Mr Adendorff said that the NDA would respond to questions about their organogram.

Ms H Makhuba (IFP) asked if the surpluses were due to overspending, or whether the budget was not sufficient.

Mr Adendorff said that the figures in the presentation showed that the NDA and SASSA had over spent, since not all grants were given out as projected. The Department of Social Development (DSD) had also under spent but not to a great extent.
Ms Makhuba asked what systems were in place to make sure that funds were recovered from grant debtors.
Mr Adendorff replied that debtors were a challenge for most people. SASSA had held a workshop in August 2009 with all the nine provinces, where an action plan was presented to show how it was going to address the debtors' systems in the nine provinces.

The Chairperson said that SASSA had made a presentation last week, so these questions might be unfair.

Mr Vusi Madonsela, Director-General, Department of Social Development, said that a representative from SASSA was not present as SASSA had not been aware that AGSA was invited. These questions should be directed to the entities, not to AGSA.

The Chairperson asked that these questions be held back until the entities were present.

Ms H Malgas (ANC) asked if SASSA was going to do performance information in the next year and whether this would affect the staff of SASSA.

Mr Adendorff said the filling of posts should be linked to performance information, because as posts were being filled there was performance information recorded, and the execution of the roles would also be made more effective.

Ms Malgas asked if the surplus issue was a concern, and if these figures were supposed to be baseline figures.

Mr Addendorff replied that the NDA could report on this matter.

Ms S Kopane (DA) asked if reasons were going to be given regarding the fact that the Annual Report was not submitted.

Mr Hlongwane replied that an Annual Report was not submitted for consideration prior to the issuing of the Auditor's Report. The Auditor's Report was issued, in accordance with the Public Finance Management Act (PFMA) by 31 July, and at that time the Department had not submitted because it was not ready.

Mr Madonsela said that Mr Hlongwane had made the point that by the time of the report on 31 July, the Department was not ready with its Annual Report. This statement might create the impression that the Department was in violation of the law. Perhaps what the speaker omitted to mention was that the deadline for completion of the Annual Report was not consistent with the deadline by which the reports had to be completed. The Department was well within the timelines for submission of the Annual Report, whose deadline was 30 September.

Mr Hlongwane said that he would not like to debate on this issue, but the date that Mr Madonsela was talking about was the date of presentation of the Annual Report in Parliament. By the time it was presented, the financial statements, included in that Annual Report, must have been audited. This meant that there was a need to submit to the Auditor-General before the September date.

 Ms Kopane asked if the situation regarding the dormant account from 2007, which was presently at about R1.3 billion, was being managed, and if there was an attempt being made to monitor the situation from that period to the present.

Mr Adendorff said that AGSA did not have the details regarding the dormant account. He would contact the audit manager and report to the Committee.
Ms N Gcume (COPE) asked for clarity regarding the posts that were not funded but were part of the approved establishment of SASSA.

The Chairperson said that SASSA was an approved establishment and every Department had to send an organogram. According to the budget processes, SASSA had even included unfunded or unfilled posts in its Annual Report. This then had an impact on the filled posts, because the percentage of unfilled posts was quite high. The question should have been posed to SASSA as to why it was not listing and including only those posts that it could afford in terms of its budget.

Mr Madonsela said that there was an unwritten rule that the approved staff establishment should be drawn on the basis of available resources to fill those posts. The Department followed this rule, and it would seem that the NDA also followed a similar rule. Even in that instance, there would still be a few unfilled posts at the end of the financial year, for reasons other than the fact that there was no funding to fill those posts. This was more for reasons related to the fact that the processes of recruitment in the public sector were onerous, because it often took no less than 3 months to fill posts. There were requirements in terms of the law, with regard to how many days advertisements for certain levels of posts must be run, and the kind of medium that should be used. The shortlisting and interviewing processes also took time, especially for people at senior levels. People also had to give one month’s notice at their place of employment, which meant that even if there were funded posts, it was

conceivable that the end of the financial year could arrive without posts being filled. It was preferable not to expand the staff establishment if the Department was aware that there were not enough funds to fill those posts

Mr Zane Dangor, Chief Operating Officer, DSD, said that the Department was engaging with SASSA around whether it was necessary to have a staff complement of 18 000 people. In discussions with the Minister, it was agreed that a thorough business process review of SASSA was going to be carried out, to ascertain what was the optimal institutional size. The Department believed that an organisation could be efficient without necessarily having a staff component of close to 20 000, because it was expensive. The Department was also engaging with SASSA around restructuring the way its work was being done.

The Chairperson asked if AGSA was satisfied with the role of the Audit Committee.

Mr Adendorff said that he was satisfied with all three entities and the accompanying Audit Committees, as their Chairpersons were dedicated and a good relationship existed between the committees.

Central Drug Authority (CDA) briefing on Annual Report 2008/09
Mr David Bayever, Deputy Chairperson, Central Drug Authority, presented the Annual Report to the Committee. Emphasis was laid on the need to change the focus in dealing with the problem of substance abuse, and the 3-tier approach strategy of the Central Drug Authority (CDA) was outlined in this regard. This 3-tier strategy involved demand reduction, supply reduction and a new approach of harm reduction. The presentation highlighted the National Drug Master Plan as a Cabinet-approved blueprint to combat substance abuse (see attached document).

The Chairperson asked if there was any apology or explanation for the late tabling of the CDA Annual Report.

Mr Bayever replied that the Department of Social Development would deal with this matter.
Ms Lana Peterson, Parliamentary Liaison Officer, Ministry of Social Development, replied that on 8 June, in the Announcements, Tablings and Committee Reports (ATC) No. 9, the Department had tabled the 2007/08 Annual Report. Just before the elections former Minister of Social Development, Mr Skweyiya, drafted a letter to the former Speaker, and advised her of the potential late tabling of the report, and requested permission to table it officially in the Fourth Parliament. The report was ready, but the timing was not optimal, because the Report would have been referred, but there would not have been a Committee to deal with the report technically.

After the new Fourth Parliament had been convened, the Department then tabled the 2007/08 report, on 8 June 2009, together with a letter of explanation signed by the new Minister. These documents would be tabled this afternoon. Ms Peterson said that she was not in a position to table the explanation without the bulk of the copies of the Annual Report. Hence the Annual Report of the CDA 2008/09 would be tabled on 11 November 2009. The reasons for the explanation would be published in full in the ATCs of Parliament. The Secretary of the Committee had been given a copy of the letter for the Committee's information. The Department could explain the reasons for the delays.

Dr Maria Mabetoa, Deputy Director General, DSD, replied that the delays were due to financial constraints, and because designers in the Department and the Communications section of the Department had to finalise the report. Within the CDA and the Secretariat, the report was also quite late for final preparation and editing.

The Chairperson cautioned the Committee regarding timeous tabling of documents in Parliament, as this was obviously non-compliance.

The Committee recognised the presence of the Honourable Deputy Minister Ms Bathabile Dlamini

The Chairperson asked if the CDA was going to compile a database of unregistered drug treatment centres.

Mr Bayever replied that the CDA was in the process of also creating a tool whereby the appropriate questions could be asked in order to get the information for the database, so as to incorporate this into the Annual Report. This was why the database was so important, especially with regard to provincial Local Drug Action Committees. This would also assist in reducing the number of non-submission of reports by departments.

With regard to the registration of unregistered rehabilitation centres, Mr Bayever made reference to the new Act that, when implemented, would address many of the problems. However, in order for the problems to be addressed, the Regulations had to be in place. This was why the issue of the Regulations was raised as a matter of urgency. The CDA would ideally like to do its own audits of these centres, to ensure that the abuse that took place at some of the centres was exposed. This required that the Regulations be completed and an offer had been made to the CDA from some experts to assist with the completion of the Regulations.

The Chairperson asked about the relationship of the CDA with the Noupoort Treatment centre, and if the CDA had discussed the issue of Noupoort practices and the impact this was having on patients.

Mr Bayever replied that Noupoort had been identified as being a problem area, and this was being addressed by the Department. It was being continuously investigated and the current Act still needed to be implemented. It would, however, be preferable if the Department answered this question.

Mr Bayever added that the CDA did not have a relationship with Noupoort, because the mandate of the CDA did not allow it to undertake the necessary investigations.

The Chairperson indicated that the Committee would be keen to see the Cannabis Report.

Mr Bayever said that once consultation with the nine provinces had occurred, the paper on cannabis would be presented to the Committee. Cannabis grown in South Africa had a far higher content of the active ingredient that caused all the problems. In South Africa, the THC content was 10% to 15% higher than that of the rest of the world. South Africa needed its own paper on Cannabis in order to deal with the country's particular needs.

The Chairperson asked what the CDA's position was on hemp in the country.
Mr Bayever said that hemp needed more investigation in terms of the active ingredients associated with it. There was a need to have something with which to replace the industry use of hemp. The different types of hemp were very similar to Cannabis, and this was why it would be difficult to monitor.

The Chairperson asked what the CDA's position was on Khat, the Somali drug, that was now being manufactured and sold in South Africa.
Mr Bayever said that the use and production of Khat was expanding at an alarming rate. The plant was being grown in South Africa now. Mr Bayever said he did not know if the law could recognise and eradicate it. Farmers were now cultivating the plant and growing it to propogate the use of Khat as an amphetamine type substance and stimulant. The fact that it was being grown here was causing concern. It had to be grown in the place of sale to maintain its freshness. This situation had emphasised the need for more research and education programmes in order to capacitate people entrusted with enforcing supply and demand reduction, to deal with the problem appropriately. This situation also impacted on the CDA, in terms of the capacity required to deal with the problem further.

The Chairperson noted that the government did not seem to be committed to building treatment centres, as the Northern Cape had no treatment centres and the Eastern Cape and Gauteng were struggling with the burden of those who needed treatment.

Ms Kenya asked if there were there any permanent counselling centres and social workers to lead rehabilitation programmes.

Mr Bayever replied that, with regard to the education of social workers and counselling centres, the new Act would also regulate the type of people being employed and the need for them to be recognised as experts within the field. The new Act would allow for formal standards to be applied, which were appropriately recognised. Ex-drug users could not just get involved without fulfilling the requirements regulated in the new Act.

Ms Lamoela asked if the CDA agreed that the main reasons for drug abuse were poverty, lack of education and unemployment.

Mr Bayever said that there was a need to look at this matter as a multi-faceted and multi- sectoral bio-psychosomatic problem. It involved a range of issues, including the environment, social issues, the person, the psyche of the person, all of which must be dealt with appropriately. Crime was a social issue and often led to the need to fund a substance abuse habit. The size of industry and the impact on the Gross Domestic Product (GDP) were also factors to consider when attempting to deal with substance abuse problems. GDP was being wasted when trying to deal with huge social problems, because, for example, poor people often became poorer because of their involvement in substance abuse, which they would turn to in order to deal with their problems.

Ms Lamoela asked about the challenges in the rural areas, especially with regard to the lack of capacity and the need for social workers.

Mr Bayever said that in the new Act there was a requirement for the establishment of at least one rehabilitation centre in each province, rather than the concentration of several centres in one province. There was a need to ensure that the Act became operative as soon as possible. With regard to capacity building, the CDA had taken its roadshows to as many areas as possible, to address the matter at the lowest possible level.

Ms Kopane asked if there were any plans to rectify the challenges mentioned in the Report.

Ms Kenye asked what mechanisms were in place to discipline members lacking in commitment, and what corrective measures were in place to allow for uniformity of reporting.
Mr Bayever answered that both these questions were referenced by the challenges in the Annual Report. The people appointed by various government departments did not have the necessary mandates from their own departments to deal with all the issues and did not have the capacity to be policy makers. They could only report back in the hope that their department would adopt some of recommendations from the CDA. Fortunately, the new Act did address some of the problems as well, in terms of strengthening what the different roles were, the reporting mechanisms that had to be used for reporting, the dates, the deadlines and the issue of non-compliance of some the departments. At present the departmental presence within the CDA was from a sub-directorate level and this needed to be addressed in order to make it more effective.

Ms P Tshwete (ANC) asked what was done when departments did not submit reports, as this made it difficult to maintain a database of affected persons.

Mr Bayever replied that the CDA sent out numerous requests to various departments and would also appeal to the departments’ representatives who sat on the CDA to make sure that the reports were ready in time. Unfortunately this was still a problem. The CDA intended to deal with the problem by asking the Minister to issue a directive to other Ministers to ensure that the necessary reporting took place. The new Act also did prescribe the time frame required for reporting from departments, which had been lacking from the existing Act.

Ms Tshwete asked about the composition of the Board and their terms of office, as this would assist with the submission of reports.

Mr Bayever said that representatives from NGOs were appointed on five year basis, and could be re-appointed only once. With regard to different government departments, their appointment was at the discretion of their Minister who had appointed them.

Ms Tshwete asked for clarity regarding Local Drug Action Committees and their establishment, as an organogram existed but did not show the presence of Local Drug Action Committees.

Mr Bayever said that 182 Local Drug Action Committees existed and the CDA had asked that there be a Local Drug Action Committee in each of the municipalities. The number of Local Drug Action Committees was growing all the time, but required the commitment of local government to fund them. There was a problem in the understanding of who to fund, but the new Act would address this matter as well.

Ms N Gcume (COPE) said that the organogram did not adequately reflect the presence of Non-governmental Organisations (NGOs) and that it was important for women in communities to be involved.

Mr Bayever said that public input was encouraged and attempts were being made to structure this into the process. The taking of public input was considered a major priority and the CDA was always cognisant of the needs of NGOs operating at the lower level.

Ms Gcume noted that rehabilitation centres were not well known in the rural areas.

Mr Bayever said that there was a new approach being investigated, regarding rehabilitation centres in rural areas, where communities themselves would become part of the whole process rather than people being taken out of their workplace and then being rehabilitated. This approach required that the structures within the community be adapted to deal with and assist those people.

Ms Gcume said that the Board was mostly composed of experts and that NGOs should be part of them because they were working at grassroots level.

Ms Makhuba (IFP) asked if the Local Drug Action Committees were supposed to be implementing at the local level, and if so, asked if there were any problems with regard to schools, where most of the problems were located.

Mr Bayever said that there was a need to have the assistance of the Departments of Education in order to be able to deal with the problem of substance abuse at schools. The CDA did not have the capacity, resources, or the funding and manpower to deal with the problem. This was why the roles of various government departments needed to be identified in order for them to provide assistance.

The Chairperson asked the CDA to clarify its role in relation to the line functions.

Mr Bayever replied that there were 12 representatives appointed as experts. They were drawn from NGOs, academia, or grassroots level. Of those 12 experts, the majority were representatives from communities and members of NGOs, recognised and appointed to the CDA. The 12 representatives were unfortunately all sitting in a part-time capacity and had other jobs. The people from government departments represented on the CDA also had their own separate mandates.

Dr Mabetoa said that the original understanding of the CDA was that the Secretariat supporting the CDA would be located within the Chief Directorate for Social Crime Prevention, with the support of the Chief Director. However, a request was received from the CDA that a new structure for it be established, and the positioning of the CDA within the Department be reconsidered as an option. The Exco of the Department decided that an evaluation be done of the work of the CDA. A service provider has been appointed to do this evaluation, and there was a hope that by the end of the year the Department would have the report and proceed from there. Another challenge was funding, because there was a request that a person at the level of Chief Director to be appointed to head the CDA Secretariat in the Department. The Department did not have the funding at that time to create such a post.

Three Members raised a number of questions, but there was not sufficient time to answer them.

Ms Lamoela asked for the CDA's opinion regarding drug abuse and the World Cup, whether there were any projects in farming areas, and what had been the reason for not appointing a full time CEO.

Ms P Tshwete asked if local Drug Action Committees had people on Board with experience in dealing with children taking drugs.

Ms Kopane asked if any research was done on the impact of drugs in South Africa. She noted that there was no indication of the funding situation in the Report, and therefore asked how all the work of the CDA was managed.

Briefing by the National Development Agency (NDA)
Ms Rashida Issel, Acting Chief Executive Officer, Mr Reuben Mogano, Executive Director, and Mr Solly Shingange, Acting Chief Financial Officer, from the National Development Agency (NDA) presented the Annual Report of the NDA to the Committee. The briefing shed light on the supported sectors of the NDA and the re-aligning of organisational resources. The core function of the NDA was presented as funding projects to create self-reliance in communities and to strengthen institutional capacities (see attached document).

Ms Marcia Manong, Deputy Chairperson and Board Member, NDA, said that a recommendation on the appointment of a permanent CEO had been made to the Minister, and a response was awaited.
Regarding the comment made by the AGSA on whether or not the Board of the NDA was constituted legally, Ms Manong said that there was a difference in interpretation between the NDA and AGSA. This difference in interpretation related to the fact that some positions were filled by people appointed from government, and there were some people appointed by the previous Minister. Some of these people had left their posts in government and there was an issue as to whether or not they remained on the Board as government appointees. The NDA had sought legal opinion, which confirmed that the NDA was constituted correctly. This matter had been brought to the attention of the Department.

Mr Mogano said that with regard to the recovery of the Right-Backs money, the NDA had engaged the Special Investigations Unit around cases where there had been a clear misappropriation of funding. Right-Backs in themselves were not necessarily bad, because money was given to implement projects. However, because certain conflicts had arisen, the NDA felt it was unable to continue to risk public money, and so the funding was then stopped. The money that had already been given had to be accounted for.

Ms M Mafolo (ANC) asked for clarity regarding the CEO and CFO posts, and if there was any plan to  advertise these posts.
Ms Issel said that the NDA was in possession of the former CEO's exit report and this would be forwarded to the Chairperson and the Committee. The probation of the CFO had not been confirmed.

Ms Issel said that the NDA had a staff complement of 107 members. 97 of these posts were filled, and there were eight vacancies which included frozen posts. An advertisement had been placed in the Mail and Guardian for the CFO’s position.
Ms Tshwete noted that in the breakdown of Provincial Grant Commitments, it was reported that seven projects from the Eastern Cape were approved, but in the Request for Proposals section of the Report it was stated that four projects were approved. This had been four out of 90 grant applications. She asked what the NDA was looking for when approving a project, how projects were funded and why a total amount of R15 073 260million had been approved for the seven projects.

Mr Mogano replied that there were two approaches to community enterprises accessing NDA funding. The first one was a Request for Proposals and the second one was the Programme Formulation Approach. The NDA was moving away from the Request for Proposals approach because this favoured the more established organisations. Instead, it was moving progressively and incrementally towards the Programme Formulation approach. This approach involved going into communities, identifying their needs and assisting them to set up structures, with a view to providing them with funding support. The reasons why the figures were so low for the Eastern Cape for example, had to do with the capacity of civil society organisations in the Eastern Cape with regard to Programme Formulation. If one looked at the whole portfolio of projects in the NDA, the Eastern Cape would not have less than 65 active projects, hence the seven projects listed were not a full reflection of the entire portfolio of projects. The NDA would provide the Committee with a list of names, locations and numbers of all 320 projects.

Ms Kopane asked what was being done with the money, if projects were making money.

Mr Mogano said that if projects made money, then the money belonged to the projects, so they would have to use their own money. The current funding model took the form of a grant. It had as yet not been discussed with the Executive Authority what form the funding would take. For now the money remained with projects. The NDA was encouraging the projects to save as much as possible so that after the NDA grant, they would be able to sustain themselves.

Ms Kopane asked why the amount for Irregular Expenditure, at R2.5 million was so high, and what the NDA was going to do to minimise wasteful expenditure.

Ms Issel said that this was a procurement problem, which had been resolved, and the new procurement policy was due for submission to Board on Friday.

Ms Kopane asked what benefits Board Members received and if they were given a cell phone allowance.

Ms Issel said that Board members were not paid cellphone allowances and this was a problem with regard to procurement. After investigations were carried out, the procurement issue was resolved, and the current figure would be reduced to R1.8 million, the amount for which procurement procedure was not followed. The NDA had just received documentation which stated that it had followed the procurement procedure, and the procurement policy was going to the Board for approval on Friday. The NDA would then have new  procurement policy in place. The NDA also now had a database that was nearly completed, which used the ERP system and was therefore easier given its electronic functionality.

Chairperson asked if the NDA could submit to the Committee a detailed background of how the R2.5 million was made up.

The Chairperson asked if the situation mentioned by the AGSA, that proper procurement measures had not been followed, had been remedied for the supply chain management processes.

Ms Issel explained that a new procurement policy would be submitted to the Board on Friday.

The Chairperson said that the NDA should take the issue of non-compliance raised by AGSA very seriously as it was reported that Board Members did not represent government in accordance with the NDA Act.

Ms Issel said that the NDA was in the process of consulting with the DSD with regard to the issue of non-compliance.
The Chairperson said that the issue of the Acting CFO and CEO posts should be resolved as soon as possible, even though the Committee had noted that the CEO post was a Ministerial appointment.

Ms Gcume expressed concern that no contact names, or persons for NDA projects were provided and said the Committee needed this information for its oversight work to check if these projects still existed.

The Chairperson said that a list of contact names for projects had been provided.

Ms Kenye said that the Annual Report mentioned that 9 645 individuals had been trained, and asked at what level this training was provided and if it was at a National level. She asked further how the allocations for training were made.

Ms Kenye asked if it was sufficient for the NDA to do its profiling through the two publications: The Turning Point and the CSI Kaelo handbook, and if the NDA was sure that those publications would reach all the necessary places.

Ms Issel said that the Annual Report only mentioned a small sample but the NDA had in fact done a lot more. It must be remembered that it did cost a lot of money, and the NDA had a small budget and targetted specific profiling in local newspapers.

Mr Mogano said that most of the profiling of the NDA was not done by the NDA itself, but done by government departments. For example, the Department of Agriculture placed a full page advertisement for end year projects that the NDA was co-funding. The NDA had a very small communications budget, but most of the stories told were done by other people talking about the work of the NDA.

Ms Kopane asked what had happened to the Accounts Clerk who had misappropriated funds to the value of R2.7 million, as she had heard that charges were laid and a disciplinary hearing was held.

Ms Issel replied that the Accounts Clerk was currently in jail.

Ms Kopane asked if there was a way to minimise the use of consultants.

Ms Issel said that the NDA decided strategically whether to outsource or not in an attempt to keep the structure small. The NDA was trying to reduce the number of consultants by looking at defining what a consultant was for the NDA. The choice for the NDA was either to increase the organogram or outsource the work.

The Chairperson asked the NDA to explain the situation with regard to staff and personal loans.

Ms Issel said that R54 000 was spent on staff loans. The NDA now had a policy in place that no longer allowed staff loans. The loan system was stopped last year August or September. One person had left without the money being repaid, although it was subsequently collected. With regard to bursaries, one person had left and the NDA had not initially retrieved the bursary money. However this situation was remedied after negotiations and the NDA got this money back.

Ms Kopane asked if catering was done for the Board Members and for people coming to the NDA to do presentations.

Ms Issel said that catering was done for Board Members. The NDA had many dialogue sessions, where people came to present project proposals and they were therefore catered for. When people came from rural areas they were also catered for as they often travelled long distances.

Ms Bathabile Dlamini , Deputy Minister of Social Development, provided assurance about the two issues of concern, namely the interpretation of AGSA on who should serve in the Board, and the issue of the CEO. The matter regarding the AGSA was being taken very seriously, and the Department would ensure discussions between the AGSA and themselves took place. Regarding the CEO, the Minister was very concerned about situation, and had ensured that a response would be made to the Committee as soon as was possible, maybe before the end of this financial year.

The Chairperson said that with regard to the financial statements and the R2.5 million of irregular expenditure, the NDA needed to sort out management processes, do risk assessment, and look at having some internal audit procedures in place to ensure full compliance.

The Chairperson asked the Director-General what the plans of the Department were with regard to the small funds that existed, and for example the high school Voorentoe.

Mr Madonsela said that a few weeks ago Cabinet had approved a Bill together with a policy on Social Relief, and it would shortly be brought to Parliament for consideration. This Bill combined the aims and objectives of the various funds, including the Social Relief of Distress Fund, which was currently housed under the Social Assistance Act. Members would also participate in the process of shaping a new dispensation on a combined set of relief programmes of government, which were combined into one, and would cover all those funds referred to.

The Chairperson asked if the smaller funds referred to by the AGSA would still be operated, or whether these – including the High School Voorentoe Disaster Fund  - would be closed down.

Mr Madonsela replied that the smaller funds would definitely be closed down, including the High School Voorentoe Disaster Fund.

The meeting was adjourned.

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