Department of Sport and Recreation on the 2009/10 Annual Report

Meeting report

Briefing by the Department of Sport and Recreation (SRSA) on the 2009/10 Annual Report
The Department of Sport and Recreation was represented by Deputy Minister Mr Gert Oosthuizen, Mr Vernie Petersen (Director-General), Ms Sumayya Khan (Chief Operations Officer), Mr Makoto Matlala (Chief Financial Officer), Ms Lulu Sizani (Chief Director: Corporate Services), Dr Bernardus Van Der Spuy (Chief Director: Strategic and Executive Support), Ms Rohini Naidoo (Director: School Sport), Ms Noma Kotelo (Director) and Ms Thokozile Mkhonto (Director).

Mr Oosthuizen advised that Minister Stofile was unable to attend the meeting as he was on a visit to Egypt. He said that the Department was contributing to transformation by employing more females, as was evident by the number of females in the delegation.

The 2010 FIFA Soccer World Cup had contributed greatly towards nation-building in South Africa. Prior to the tournament, the Department had monitored the progress made in the construction of the stadiums. The Department had facilitated the training of volunteers and had held road shows. A key area of responsibility of the Department was to oversee that the 17 government guarantees provided for 24 projects. Reports in the media reports had claimed that the World Cup stadiums would become white elephants. He disagreed with the assumption as there were too many South Africans in need of such facilities. The Sports and Cities Nations Guide listed the leading sports cities of the world and Johannesburg was ranked as number 4. South Africa was ranked fourth in the ranking of leading sports nations. South Africa had been correctly branded and the tournament had been a success.

Mr Oosthuizen provided some statistics of consumables sold at the stadiums during the World Cup.  For example, 771,000 litres of beer, 1.2 million bottles of soft drinks, 390,000 hot dogs and 139,000 boerewors rolls were sold. The average amount spent per person on consumables was R32.35. The World Cup was just the beginning and there was a need to build on the legacy projects. South Africa hosted the first United Nations World Tourism Organisation International Summit on Tourism, Sport and Mega-Events on 24-26 February 2010. The Department had worked closely with the Department of Tourism on the conference. The growth in tourism was mainly attributed to sports tourism. Other events would to be hosted by South Africa. The Department was considering ways to use sports and recreation to achieve the country’s millennium goals.

Discussion
Mr W Faber (DA, Northern Cape) agreed that the World Cup had been a success and applauded the Department for its hard work. One of the negative consequences was however the problem of the upkeep of stadiums. FIFA had given the South African Federation millions of Rands and he asked why these funds were not used to maintain the stadiums. Rugby had structures in place at the school and club levels and he asked why soccer did not have similar structures in place.  He referred to the Commonwealth Games that was recently hosted by India in New Delhi and asked why South Africa had sent only 8 athletes to the Games. He asked if the problem was a lack of available funding. He was concerned that South African athletics was ‘going down the drain’ but in general, sport in South Africa was in good condition.

Mr J Gunda (ID, Northern Cape) agreed that the World Cup had been a huge success. He conceded that mistakes were made but overall, the good had outweighed the bad.

Mr Oosthuizen said that Government and FIFA had agreed on 10 stadiums for the 2010 FIFA World Cup. The host cities were the owners of the stadiums. He said that one should not listen to the prophets of doom. In order for the stadiums to be financially viable, it was necessary to have 25 events per venue per year. If the available figures were correct, that target was being reached. The stadiums must be managed by the people. He was glad that Stade France had handed the Greenpoint Stadium back to the City of Cape Town. He acknowledged that work needed to be done on soccer and that the conflicts between the Premier Soccer League (PSL), South African Football Association (SAFA) and the South African Schools Football Association (SASFA) had to be resolved.  The athletes taking part in the Commonwealth Games had to qualify in order to be allowed to compete. The team was chosen accordingly. Discussions concerning athletics were being held with the South African Sports Confederation and Olympic Committee (SASCOC).

2009/10 Annual Report of the Department of Sport and Recreation
Mr Petersen presented the briefing on the annual report (see attached document). The aim of SRSA was to improve on the quality of life of all South Africans by promoting participation in sport and recreation and the participation of South Africans sports persons and teams in international sporting events. The Department worked with the Department of Education on school sport, had a working relationship with SASCOC and was represented on the forums of national sporting federations.

The office accommodation of SRSA was inadequate. A new organisational structure was developed by the Human Resources division to bring SRSA in line with the strategic plan. The grant allocated to SRSA in terms of the Division of Revenue Act (DoRA) had been significantly increased. The grant provided funding for projects in the provinces. However, the effective monitoring of these projects remained a challenge for the Department due to limited capacity. The management of the Lotteries Sport and Distribution Agency continued to pose a serious challenge and the allocation of Lotto funding to sport, without any input from SRSA, remained a matter of serious concern. Discussions regarding the revision of the criteria applied were being held. The delivery of sport at a regional level needed urgent attention. Transformation continued to be a challenge because of the lack of adequate funding. The need to build capacity in both the Governmental and Non-Governmental Organisation (NGO) sport sectors remained an important component in the process of sports development. SRSA needed to do much more regarding marketing and communication of projects.

Ms Khan presented an overview of the performance of the Department’s programmes. With regard to sport support services, the SRSA supported 55 national federations both financially and logistically. 99.55% of funds available were transferred to clients. Service level agreements and memoranda of understanding for transfer payments were signed with clients. For club development, a total of 858 sports clubs were supported, as opposed to the target of 600. Concerning education and training, 1878 persons were trained as sports event volunteers. The quality management system for education and training development was reviewed. Eight learning programmes were developed and updated. The register for accredited training service providers was updated. The SRSA had provided support for scientific research. 308 new junior athletes were supported to participate in international competitions. 1041 elite athletes were supported as well. Talent identification and development guidelines were completed. The reasons why the target of 1157 elite athletes to be supported was not met were because of financial constraints and the increased need to provide support for new junior athletes.

The SRSA had a programme for community participation. 13959 persons were trained as coaches, administrators, technical officials and facility managers. The target of 13500 was surpassed. 4,546,800 persons were participating in the mass participation programme. The Department contributed to HIV and AIDS awareness initiatives through the Heroes Walk project. More than 1440 older persons participated in diverse activities, ranging from soccer to egg-and-spoon races.

With regard to the school sport programme, only 50% of the school sport regulatory framework was completed. Completion of the framework required that extensive consultation took place. Twelve DoRA monthly reports were submitted, eleven DoRA monthly meetings were held and 180 DoRA school monitoring visits had been undertaken. The annual programme of school sports events was 75% completed. Financial constraints hampered the completion of this programme. A total of 5657 schools were mobilised for the 2010 mass mobilisation programme. 75% of memoranda of understanding with provinces for the delivery of national programmes on behalf of SRSA were completed. Five national school sport championships were facilitated and co-ordinated in accordance with the memoranda of understanding.

Mr Makoto presented an overview of the Department’s budget and expenditure trends. The Department had spent 99.4% of the budget for the 2009/10 financial year. A breakdown of the expenditure per programme and per economic classification was provided. Expenditure per economic classification indicated under-spending of 17%. Details of the funding provided to provinces for the mass participation projects and to the 2010 FIFA Soccer World Cup were given.

The under-spending in the Administration programme was caused by the inability to fill vacant posts, especially senior management positions. Under-spending in International Liaison and Events was due to the African Legacy projects not being rolled out as planned. Under-spending in Facilities Co-ordination resulted from the rescheduling of workshops due to the poor response received from co-ordinators in municipalities.

The SRSA achieved an unqualified audit report for the 2009/10 financial year. The Department had received qualified reports from the Audit-r-General in the three prior years.  The Auditor General had commented on irregular expenditure of R38.4 million during the prior year and R3 million during the current year.  The irregular expenditure was incurred due to non compliance with National Treasury Regulations. Unauthorised expenditure of R704,620 was related to the payment made to the SDASA youth conference. Fruitless and wasteful expenditure of R7.2 million was incurred, of which R5 million related to the prior year and R2.2 million related to the current year.  The expenditure item was for double hotel bookings and the payment made for a venue that was not utilised. Other matters raised by the Auditor-General were that the DoRA financial reports from three provinces were not submitted on time. Six provinces did not surrender unspent funds. The business plans of four provinces were approved late. The Human Resource Plan was not in place for the financial year under review. The plan of action developed by SRSA to address the Auditor-General’s comments included holding the heads of departments accountable for the timeous submission of reports, the withholding of funds to provinces who failed to comply and the adjustment of deadlines to ensure that the Treasury deadlines were met.

Discussion
The Chairperson said that the responsibility of the Committee was to conduct oversight over the Department.  She asked which provinces had failed to submit the DoRA financial reports on time. The SRSA had to evaluate its procurement processes to avoid the occurrence of double hotel bookings.

Ms D Rantho (ANC, Eastern Cape) asked what the challenge was in the monitoring of projects. She asked if the problem was a lack of skills or financial constraints. She noted that municipalities displayed a reluctance to develop sport. She asked if there was a problem with the co-ordination of provincial programmes. She asked if the SRSA monitored how the funding provided was applied. She asked at what frequency monitoring took place. She was pleased to see that the SRSA had set guidelines for indigenous games.

Ms Mkhonto replied that the initial grant for community sport was R20 million. The current grant amounted to R426 million. Although the amount of funding had been increased, the capacity of the SRSA had not.  The Department suggested that a percentage of the grant should be used for monitoring purposes but the National Treasury had turned down the suggestion and said that the all the funds had to be transferred to the provinces. Without additional capacity, monitoring would remain a challenge. It was difficult to monitor and evaluate all the schools in the country and the Department could only attend to a sample.  

Mr M De Villiers (DA, Western Cape) referred to the inadequate office accommodation and asked what the Department planned to do about solving the problem. He wanted to know what action was taken to recover the unspent funds provided to provinces.  He asked which provinces had not submitted the quarterly financial reports required.

Ms Mkhonto replied that Mpumalanga, North West Province and the Northern Cape Province had submitted their reports late.  The late submissions were because certain technicalities had to be met. She suggested that the National Treasury asked the provincial treasuries to sign off the provincial business plans on time.

Ms Sizani explained that the current office space occupied by the SRSA was leased.  The lease expired at the end of October 2011. At the time the lease was signed, the staff complement of the SRSA was only 67 persons. In December 2005, the staff complement was increased to 187 people. There was currently no space available to house interns. Additional space was also needed for cleaners and security staff. The building currently occupied was not disability-friendly. The current office space was totally inadequate to accommodate the new structure of the SRSA. The Department had identified new office space but would have to continue to rent premises as the SRSA did not own any land on which offices could be built.

Ms R Rasmeni (ANC, North West) asked what plans were in place to maintain the infrastructure that had been built for the World Cup. She asked for further elaboration on the governance issues and sponsorship problems experienced by Boxing South Africa. She asked when the investigation into supply-chain corruption had commenced and when it would be completed. She asked what the Department was doing to develop school sport and how the rural and township schools would benefit from the schools programme. She asked how the South African Rugby Board identified future players to play in the national rugby team. She asked if the Rugby Board developed young players.  The briefing did not cover cricket.

Mr Petersen replied that R13 billion was transferred to the host cities for the construction of stadiums. The host cities had to submit maintenance and sustainability plans for the stadiums. The requirement for the plans had been met but there were challenges.  The challenges were however being addressed. The investigation into the supply-chain corruption allegations had been completed.  An official of the Department had been suspended pending the investigation. The Committee would be informed on the outcome of the investigations.  The role of the SRSA was to regulate and co-ordinate sport-related programmes.  The actual work was done by the delivery agents because SRSA lacked the capacity to do implement the projects.  The Department intervened when mistakes were made. Lessons had been learnt and the SRSA was putting better systems in place to ensure that delivery by the provinces was improved. The sport federations received funding from the Department and were expected to deliver the required results.  Certain programmes were implemented by SRSA, even though the available capacity was limited.

Ms Naidoo advised that SRSA attempted to apply scientific criteria to identify and support learners with sports potential. Coaching and training was done to assist school sports. With the help of sports federations, school athletes were placed in centres of excellence. This was included in the service level agreements with the federations. The school sports programmes were intended for all the schools in South Africa, including the schools in rural and township areas. Intra-schools sports formed part of basic education. The sports federations acted as the agents for delivery of the Department’s programmes. There was focus on development in the rural areas and the SRSA was considering increasing delivery through sports clubs. DoRA focused on capacity building, attire and developing leagues. A proposal was made to the Lotteries Board to ring-fence funding for facilities.

Ms Kotelo advised that a boxing convention was held in April 2010. A resolution had been passed concerning governance. Three board members of Boxing South Africa had resigned and the vacant posts had subsequently been filled. Issues of governance at Boxing South Africa had since improved.
 
Mr Gunda asked why SRSA reported a challenge with preparing the provinces to take over the conditional grants in 2012. He asked when the discussions regarding the management of the Lotteries Board would be concluded. He asked how SRSA monitored the implementation of plans and programmes throughout the country. Referring to the funding provided for mass participation programmes in the provinces, he noted that the Northern Cape had spent all the funds allocated. He asked what the funds were spent on.  He asked for details of the fruitless and wasteful expenditure. He asked for details of the allegations of nepotism that had been made against the Department.  He pointed out that many previously disadvantaged schools in the Northern Cape did not have sports facilities.  Soccer was not offered as a sport by previously advantaged schools with non-white learners.

Ms Mkhonto explained that the provinces did not currently have systems in place to manage conditional grants. The provinces had to put proper systems in place before the grants were paid to them directly. The Department hoped that funds would be ring-fenced for the mass participation of communities.

Ms Naidoo responded that soccer promotion was part of the programmes offered by the federations. The SRSA was monitoring what was happening at the school level. The monitoring of more than 29000 schools remained a challenge for the Department.

Mr Petersen observed that one needed to distinguish between the roles and responsibilities of different structures. Facilities at schools were provided by the Department of Basic Education. The Department of Basic Education should be given a conditional grant for sports facilities at schools. He proposed that a model was developed whereby well-resourced schools in a region could be used as a resource by other schools in the region that lacked facilities. Ways should be found to provide schools with at least basic sports equipment. Poor schools often could not access funding from the Lotteries Board as they could not comply with all the requirements. This was not necessarily a fault on their part as they simply lacked capacity. The SRSA had suggested that other organisations, such as the sports federations, applied on behalf of poor schools for sports funding. The federations would identify talent, establish clubs, develop athletes and expose the athletes to competitions.

Mr Petersen confirmed that KPMG had conducted an investigation into the allegations of nepotism.  The investigation was in the process of being concluded.

Mr Gunda said that the sports federations had failed to deliver in the Northern Cape. He was concerned how the SRSA monitored the funds provided to the federations.

Mr Petersen pointed out that the Northern Cape had spent all the funds provided.  This was a good sign but the question was whether value for money was obtained.

The Chairperson said that the Committee approved the budget vote of the Department. Members of the Committee represented provinces. The SRSA was expected to implement its strategic plans. Policies were in place to monitor progress. Even though the SRSA had obtained an unqualified audit report, she was concerned over the Auditor-General’s comments on irregular expenditure and on fruitless and wasteful expenditure. She did not understand why the provinces that did not spend all the funds provided did not return the unspent funds. The failure of provinces to submit quarterly financial reports should not be tolerated. Perhaps the SRSA was not strict enough. She gave the assurance that the Committee would assist the SRSA if necessary.

Mr Petersen replied that the report of the Auditor-General tended to focus on what was done wrong. The SRSA would attempt to improve financial controls. It was necessary to change legislation in order to deal with the issue of past irregular expenditure that recurred in the financial reports of subsequent years.

Ms Mkhonto explained that the business plans of the provinces dealing with community sport had been approved late. The business plan had to first be submitted to the provincial treasury. The problem was that the provincial treasury delayed the approval of business plans.

Mr Makoto explained that the irregular expenditure was incurred by a service provider and not by an individual in the Department. The process should have been by public tender but because it was a school programme, the public tender process was not used.  The fruitless expenditure item occurred when two persons booked the accommodation at a hotel. The Department used the services of a travel agency as well as its own supply-chain processes.  In this case, an official had been replaced by another person.  One person had made the booking through the travel agent and the other person made the same booking by using the supply-chain processes. Currently, only the supply-chain processes were used to make bookings for accommodation.

Ms Khan added that there were guidelines on performance information. Systems were in place to prevent the double booking scenario from recurring.

Ms Sizani pointed out that there were policies and guidelines in terms of DoRA that specified when the provinces had to submit financial reports.

The Chairperson said that improved monitoring by SRSA was needed. She asked if any unpaid debts were carried over to the current financial year.

Mr Makoto confirmed that there were no unpaid debts.

The meeting was adjourned.