Universal Service & Access Agency of SA Strategic Plan 2010: bridging the digital divide

Meeting report

Mr Winile Lamani, Acting CEO USAASA, presented the amended business plan for the purpose of clarity as requested by the Committee. The presentation focused on areas where clarity had been requested by the Committee, namely; the project on the universal service strategy where there had been questions as to whether there was a breakdown to show the phases of expenditure of an amount of R2.7 million; the Project-Budget summary that had been circulated to the Committee in which a lot of issues had been referred to that had not been included in the initial presentation to the Committee. The approach was that they had drafted an executive summary of the projects to show what the budget allocation was going to achieve; the issue of the digital broadcasting migration to give an indication of the programme roll out and the role that USAASA would play and the identity of their stakeholders and other role players.

For further details please refer to the attached documents.

Discussion
An ANC member said there were 367 000 households that had been targeted. What would the role of the municipalities be in identifying needy households?

Mr Louis Moahlodi, Chairperson: USAASA, responded that for the new financial year, USAASA was going to receive a R180 million allocation which formed the basis of the figure of  367 000. USAASA had felt that for the first phase, and they were aware that there was another process of identifying the needy; they would use the current SABC database showing people who used concessionary licences. They were aware therefore that there would be more needy people and that some of them would be outside of that database. They were aware of the situation in South Africa’s rural areas. The municipalities would therefore definitely play a role in that regard.

Ms J Kilian (COPE) had reservations about USAASA’s capacity to manage this budget. She asked about the fact that this fund was identified as a fund and yet she was not 100% sure that it was a separate fund. What was the state of the fund was and had it been ring-fenced?

Ms Linda Ngcwembe, Acting Chief Finance Officer: USAASA, said staff costs were 38.2% of the total budget of R66.7 million. When one looked at the budget one could see that there were about 15 new positions that were being created at a lower level and in the provinces. This addressed the issue of capacity.

Mr Lamani stated that the Department of Communications played a big role as well as the South African Post Office and Postbank. USAASA’s role was to disburse the fund and to set up a project offices within the internal resources of USAASA to deal with the funding issues. They would be having discussions with service providers such as the Postbank who had a database from the SABC whereby they could then be able to mix and match. There would be a multi disciplinary team who would be responsible for deciding what was critical for USAASA in the first quarter in terms of the verification of households and communication to targeted communities. The key thing was whether the country would be ready by 2016 to make sure that all TV owning households would have completed digital migration. 

Ms Kilian asked if one looked at the contribution made by service providers to the fund, whether the fund had not been set up for a fixed purpose that is more for the electronic communications industry and not to expand universal access to the broadcasting industry. Apart from the capacity, the Committee also asked what the legal ramifications were, including Treasury regulations.

Mr Lamani said the fund had been telecommunications focused when it had been set up. It took a certain percentage of money (0.2 %) from the telecommunications operators over the past ten years. The legislation had been changed in this respect in terms of the Telecommunications Act because the idea had been to do a conversion between telecommunications and broadcasting. Conversion did not happen 100% and there were certain challenges. However, with the regulations that had come out in 2009 there had been a need for collaboration between USAASA and the NDDA in terms of how they collected the fund and the process of how they could spend the money. When they put money into USAASA it was put into the National Revenue Fund upon which it would be appropriated by Parliament. The law did not specifically state that such funds were to be ring fenced accordingly to be used in the Information and Communications Technology sector.

Mr Moahlodi responded to what would happen if the number out there exceeded the 367 000. He said it was unfortunate that there was always a challenge of insufficient resources. So they were constrained by an allocation of R180 million which could only accommodate a figure of 367 000. If real need was identified it would make it easier for USAASA in the second phase to identify those other people.

The Chairperson asked regarding the fund whether it was a sub-structure of USAASA in terms of legislation and whether the fund existed at present in a bank account or with National Treasury. He asked whether USAASA had a bank account where this money was deposited every month and was kept there or was it disbursed from National Treasury.

Mr Lamani said money was paid to the regulator that is ICASA from the 0.2% collected from telecommunications operators. ICASA in terms of its Act in section 15 was required to transfer all those monies to the National Revenue Fund and that is where the fund was at the moment. The fund was estimated at about R800 to R1 billion.

The Chairperson asked when the National Treasury transferred a R180 million to USAASA’s account in the current financial year. Was it legal in terms of the current legislative framework to use that money to include broadcasting specifically?

Mr Lamani said the Electronic Communications Act (ECA) stated that one had to talk about electronic communication network service providers and that also included broadcasting. This meant that the use of the fund in its current state could be spread to whatever industry. The technicality would be that it was not very clear in the law that if the money was in a fund it could not be used in a broader ICT spectrum.

The Chairperson asked whether the Minister had issued a policy directive which said that he was asking USAASA to use the fund for a defined purpose. He was aware that there had been some kind of announcement in a speech or somewhere but he enquired if he had issued a policy directive.

Mr Lamani said he was not aware of any policy directive by the Minister. There was a policy in place that had been implemented and there had been a cabinet decision that the fund would be used for the R2.5 billion. The current crafting of the ECA provided that the fund was under the direction of the Minister and it did not say “in a prescribed manner”.

The Chairperson explained that he was asking these questions because there had to be a lawful movement of funds and that is what the Committee was concerned about. They did not want a situation where they would have started implementation and then there was a legal challenge to disrupt everything.

Ms Ngcwembe said according to her understanding of the Public Finance Management Act (PFMA) if the fund was within the National Revenue Fund, the Minister of Finance could use it any way that he deemed fit.

Mr S Kholwane (ANC) felt that it would be necessary to speak with the Department of Communications to ascertain if there had been a Cabinet decision as past experiences had shown that it could later turn out that there had been no such decision by Cabinet.

The Chairperson asked where the Post Office and the Postbank fitted into the scheme of things with respect to the distribution of the fund.

Mr Lamani said whether USAASA was in a position to keep track was a matter still under discussion to finalise about the Postbank being the one possible area because it was a bank and could respond quicker to payment. When it came to actual revenues USAASA was the ultimate responsible party although they relied on the Post Office and Postbank as a management tool.

Ms R Morutoa (ANC) enquired about the issue of dependencies. When USAASA said one of their dependencies was for ICASA to declare the under-serviced area, she asked them to clarify this in terms of defining what was meant by under-serviced areas.

Mr Lamani said USAASA had conducted a study on under-serviced areas and at the time that they reported to the Minister, they had also recommended to ICASA what an under-serviced area was. That submission was with ICASA and they had been waiting for the Minister to declare formally, before they took the process forward. USAASA had not yet heard anything from ICASA as yet on the determination of an under-serviced area.

The meeting was adjourned.