Sector Education & Training Authorities: 2009/10 Annual Reports: THETA, CTFL-SETA

Meeting report

Opening remarks
Ms M Kubayi (ANC) was elected as Acting Chairperson. The Committee congratulated the former Chairperson, Mr M Fransman, on his appointment as Deputy Minister of International Relations.

Sector Education and Training Authorities (SETAs): Annual Reports 2009/10
Tourism, Hospitality and Sport Education and Training Authority (THETA) Annual Report
Mr Mike Tsotetsi, Chief Executive Officer, Tourism, Hospitality and Sport Education and Training Authority, presented the 2009/10 Annual Report of this Authority (THETA). THETA received an unqualified audit report from the Auditor-General. It had maintained its expenditure at 99%. THETA’s cash on hand was very low while sector challenges remained a huge issue. Performance information was given against the targets set. An updated and signed Sector Skills Plan was sent to the Department of Labour to support national and sectoral growth, development and equity priorities. THETA achieved 113% of its target for making available information on critical and scarce skills to learners. It had also exceeded targets, reaching 115% of the target for assisting companies with mandatory grants. At least 80% of large firms’ and 60% of medium firms’ employment equity targets were supported by skills development. Skills development in at least 40% of small levy paying firms was supported, and the impact of the support was measured at 56%. An increasing number of small black economic empowerment (BEE) companies and BEE cooperatives were, each year, supported by THETA, and the numbers supported by it were tabled (see attached presentation.

Mr Tsotetsi reported that by March 2010, 700 000 workers had achieved Adult Basic Education and Training (ABET) level 4. THETA had assisted 125 000 workers to enter learning programmes with a completion rate of 50%. For this financial year, 683 entered and 3 211 completed learning programmes, and he explained that the higher numbers completing programmes was due to the fact that some students completed programmes this year although they had entered the programmes in previous years.  THETA supported 154 non-levy paying enterprises. 436 unemployed people were assisted to enter learnership programmes, and so far 1 962 people had completed the learnership programmes that led to basic, intermediate and high level scarce skills entry. THETA was only able to enroll 7% of the target number of learners in the critical skills programmes covered by the sector agreement, from further education and training (FET) and higher educational and training (HET) institutions. The aim was that they gain work experience, but after this, THETA was unable to place anyone for employment, and had no new venture creation entries. THETA supported institutes of sectoral excellence, which was measured by the number of learners placed in the sector and employer satisfaction. The success rate for this was measured at 223%. It had assisted two (compared with the target of one) new venture training providers. The Education and Training Quality Assurance Body (ETQA) South African Qualifications Authority (SAQA) audit received 5 out of a possible 5.

Mr Tsotetsi summarised that therefore THETA in some instances had met or exceeded the targets, but had been unable in others to enroll students. It had a strong focus on learnerships and graduate development. It trained volunteers for the World Cup of 2010 to ensure sufficient numbers of skilled people. The National Skills Development Strategy (NSDS) consultations were ongoing. A Sector Education and Training Authority (SETA) landscaping was proposed, but a response was still awaited from the Minister. A Department of Higher Education and Training (DHET or the Department) evaluation had allocated a score of four out of five for THETA.

Mr Tsotetsi then reiterated that the audit report was unqualified, with little emphasis of matter. THETA adhered to Generally Recognised Accounting Practices (GRAP), was guided by accounting policies and had made no changes to them in the year under review.

He noted that the skills development levy income was 96% of the revenue, penalties income was 1%, National Skills Fund (NSF) projects was 1%, interest income was 1% and other income was 1% of the revenue. He outlined the figures generated, and noted that THETA had a net decrease in the cash. The deficit ratio was 11% and the liquidity ratio was 66%.

Discussion
Mr K Dikobo (AZAPO) noted that two different percentage figures were given, in two different places, for administrative expenditure, and asked that this be explained.

Mr Tsotetsi replied that the actual figure was the same, but the 10% referred to “10% out of 100%” while the figure of 12.5% was “12.5% of 80%”. The department contracted the South African Revenue Services (SARS) to collect levies from the employer, retain a 2% collection fee and pay the 98% to the department. The National Skills Fund (NSF) retained 80%, and this went to THETA, which related its spending to the income.

Mr Dikobo noted that THETA had mentioned both a “clean” and “unqualified” audit report but said the two terms did not necessarily have the same meaning. The liabilities and debt exceeded its assets by R7 million, and he wondered how this was to be explained in that context.

Mr Tsotetsi replied that the Auditor-General (AG) was reporting on the way in which the accounting was done and the issues were handled. The Board of THETA had clear planning behind the decision to spend as it did. THETA had not received any qualifications from the AG, but only some emphasis of matter reports, some of which were within the control of THETA, whilst others were not.

Mr Caleb Mabaso, Chairperson, THETA, added that the unqualified report showed that the administrative regime was sound, and that THETA had complied with Public Finance Management Act (PFMA) and Generally Recognised Accounting Practices (GRAP). The Auditor-General had the mandate to raise certain issues of concern. The emphasis of matter pertained to issues not yet concluded, and did not necessarily point to any problems of risk. He explained that one of them concerned a claim that THETA had against a service provider, but was uncertain about how the matter would be concluded when it went to Court. The uncertainty regarding the SETA landscaping, which led to some doubts about whether the SETAs would be a going concern, was outside the control of THETA.

Mr Dikobo asked THETA if it agreed that it had received an unqualified report, rather than a clean audit.

Mr Tsotetsi replied that THETA would not use the terminology just for the sake of doing so. In the future, however, he conceded that a “clean” audit would refer to a report with no emphasis of matter, and no adverse comment on management issues.

The Acting Chairperson stated that the definition of an unqualified or clean audit was the Auditor-General’s definition and not that of the Committee.

Mr Dikobo was concerned about small levy paying firms and asked what the challenges were, and the targets, for them.

Mr Muzi Mwandla, Skills Development Manager, THETA, replied that the challenges related to performance, which was slightly determined by the budget relating to discretionary grants and levies that had to be disbursed. The small levy paying firms related to the mandatory grants. THETA set targets for support of large, medium and small levy paying companies.  Small levy paying companies were those that employed less than 50 people, and they were numerous in the sector. However, the wage-pay out, which in turn determined the skills levy contribution, was minimal. On average they contributed about R1 000 per annum, but the cost of claiming from THETA for support was often higher than what they had to pay already, so a number did not bother to claim, and were consequently not supported. THETA had a plan to provide support for skills development facilitators, in order to make it easier for small levy paying companies to be supported.

Mr Tsotetsi added that a huge number of employees in the sector were not on pay-rolls and were not registered with SARS, and would thus not be included in the 1% levy. The Skills Development Act (SDA) further made provision that Small, Medium and Micro Enterprises (SMMEs) were exempted from paying levies if the payroll was less than R500 000 per annum, which did exclude a number in the sector. The levy base was thus very low. The sector did not have a collective bargaining forum, and there were no strong trade unions to negotiate wages with employers.

Ms F Mushwana (ANC) showed concern for the zero percent employment placement. She said that job creation must be improved with skills. Tourism salaries were not encouraging, which was a challenge because tourism could be the backbone of the country.

Mr S Makhubele (ANC) asked why there were no achievements in placement and training with Further Education and Training (FET) colleges.

Mr Mabaso replied that students spent a lot in order to study tourism, but the entry-level remuneration did not compensate for this. THETA had no power to interfere on these private-sector issues.

Mr Tsotetsi added that THETA had good intentions when it contracted employers to take part in the learnerships, but one of the terms of the contracts was that the employers should accept placement of a certain percentage of the learners. Employers were thus cautious about the number of learnerships they would offer.

Mr Mwandla agreed that placement was the ultimate target, and after training THETA tried to ensure that learners would become employed or self-employed. This, however, was also a challenge. Placement was highly dependent on the availability of employment within the sector. THETA had introduced a graduate development programme, to incentivise the scheme for the graduates to gain work experience. The demand for this was high, so the financial resources were quickly exhausted, and THETA did not have enough funds to ensure placement in the financial year under review.

Mr A van der Westhuizen (DA) asked why there was a drop in funding from the National Skills Fund (NSF).

Mr Tsotetsi replied that THETA was waiting to get money from NSF, but there was some dispute as to whether THETA had submitted the report that would have justified the payment. This had been cleared up and THETA would receive the funds.

The Acting Chairperson asked if THETA had submitted the report on time to NSF.

Mr Tsotetsi replied that on 31 March 2010 the report had not been submitted, because there had been a problem with the notation of the learners’ competency. THETA thought that it was better to hold back the report until it was correct and complete.

The Acting Chairperson asked why targets were not set within the financial year time frame, and why reporting of learners fell outside an accounting year.

Mr Tsotetsi replied that this was the result of the kind of environment. THETA was dependent on learners being declared component, and, if they were not ready to be assessed within 12 months, then THETA could not force the assessment. The declaration of competency could go beyond twelve months, but would not exceed 18 months. Learners would be assessed when ready.

Mr Tsotetsi added that for the future a better arrangement would be made between the DHET and the NSF. Previously, NSF took a certain time to consider the applications, which were submitted within a window period. Any delay in approval or payment of funds would impact on the performance and income.

The Acting Chairperson asked if the issue of NSF funding and the timeframes had been considered in relation to the SETAs, as lack of funding clearly had an impact.

Mr Hannes Hoon, Director, Department of Higher Education and Training, stated that NSF was dealing with the issue and holding discussions with the Acting Director General, the Deputy Director General, and stakeholders. The results would be conveyed to the SETAs.

The Acting Chairperson cautioned that she wanted to prevent the SETAs having to account for processes of the NSF. However, she recognised that the matter was now receiving the necessary attention.

Mr van der Westhuizen asked why there was a 20% decrease in grants, and why administrative expenditure had increased.

Mr Tsotetsi replied that the two were not interlinked. The mandatory grants related to companies who paid the levy and were thus entitled to the mandatory grants, by applying for them at the end of June. THETA encouraged everybody to apply. However, if there was a drop in the numbers of applications, there would be a decrease in the pay-out, which had happened this year. The administration costs showed the effect of inflation and salary increases. However, THETA remained within its limit of 10% of expenditure for administration.

Mr van der Westhuizen asked THETA whether the severe financial over-commitment was due to pressure on the SETA, or poor planning.

The Acting Chairperson noted that THETA was overcommitted, but not yet licensed, and urged that it should be more cautious how money was spent, and manage its funding properly. THETA had no mandate beyond March 2011.

Mr Mabaso replied that learnerships had increased in popularity, and THETA was overwhelmed by the response shown for the learnerships. In hosting the biggest world soccer event, the hospitality and tourism industry was central, and contributed positively, by maintaining good service levels. THETA had learned from the over-commitment, which was occasioned by the circumstances. It now had a clean slate for the financial year of 2010/11.

Mr Tsotetsi replied that 2008/9 was a critical period for ensuring that the necessary skilled workforce for the World Cup was in place. He agreed that more was taken on than the SETA had budgeted.

Mr van der Westhuizen noticed a problem with attendance of board and committee meetings, meaning that traveling costs of those who did attend were highlighted as wasteful expenditure. He asked what THETA was doing to encourage the attendance at meetings.

The Acting Chairperson raised issues of governance, and asked why the board was not meeting.

Mr Mabaso replied that the issue was examined. The reasons for the lack of meetings was that a lot of events and activities taking place during the World Cup had impacted on people’s ability to attend meetings. However, THETA did not find this acceptable. It was re-examining the policy. It had also appointed a board secretary to improve the coordination of meetings. These meetings would in future continue, despite the lack of attendance.

Mr van der Westhuizen asked if the uncertainty about the future of THETA beyond March 2011 had influenced staff morale, staff turnover, staff remuneration and staff retention.

Mr Mabaso replied that staff morale was a tricky issue, but was being managed closely, especially through clear communication with staff to ensure that they were aware of what was going on. THETA tried to encourage its staff to stay in order not to impact upon its activities.

Mr Tsotetsi confirmed that the staff was informed, on a regular basis, on the developments, and was confident that in fact THETA would continue. However, it was difficult for THETA to appoint good staff, due to the uncertainty.

Mr Makhubele asked whether the delay in registration of new qualifications affected the learners.

Mr Ebrahim Boomgaard, Education and Training Quality Assurance Body (ETQA) Manager for THETA, replied that the South African Quality Authority (SAQA) process required that anything involving up to a three-year qualification had to be reviewed and re-registered. THETA had held an extensive review process from 2005 to about 2007. A number of qualifications were submitted for registration to SAQA. Some were sent back in order for corrections to be made, but by the time they were re-submitted, the Quality Council for Trades and Occupations (QCTO) had by now been established, and SAQA would no longer register qualifications. Thus, some of the new qualifications could not be registered. As soon as the license for THETA’s continuation had been approved, it would then register all qualifications that it had been unable to register previously, under the QCTO. Providers would also need to do things properly in the future.

Mr Makhubele was worried that little or no transformation seemed to have taken place, and enquired specifically what the challenges were, and what efforts had been made to address them.

Mr Tsotetsi replied that the tourism sector was the least transformed sector, and the Department of Tourism had to come up with a Black Economic Empowerment (BEE) scorecard. It would be interesting to check the extent to which the BEE scorecard had contributed to transformation. THETA had a project that would be able to identify companies to study the impact of compliance regarding BEE.

Mr Mwandla added that in the current year, THETA had plans to deal with equity, but he reminded the Committee that THETA’s mandate was limited to skills development. Although it did have equity targets for training, including 4% disabled, and 54% women, it was beyond its scope to deal with ownership of enterprises.

The Acting Chairperson asked THETA to clarify what THETA had some disagreement with the findings of the forensic audit report, and what corrective measures the board took in respect of those issues with which it was in agreement.

Ms Thobela Nightingale, Accountant, THETA, replied the prior year’s errors had arisen because an expense of 2009/10, which had been prepaid, was incorrectly reflected in the balance sheet for 2008/9, following approval that this should be done. The income for small, medium and micro enterprises (SMME) was accounted for, but was overstated in the previous year. Both expenses were accounted for, but one in the wrong period, and one being overstated. It was not material enough to qualify the financial statements.

The Acting Chairperson asked why THETA thought it important to know the sources of allegations.

Mr Mabaso replied that this was not done to clarify why an issue was brought forward. THETA had a line, managed by an external partner, and received reports on the results found, but was not involved in this. It would have been beneficial for investigators to know the source in order for questions to be asked directly during the wide-ranging investigations.

The Acting Chairperson asked THETA to clarify and explain the emphasis of matter in the Auditor-General’s report. She outlined that these involved a legal issue between THETA and a service provider, and the meaning of the contingent asset of R12 572 000 from NSF, due to some deliverables not being met to date. She asked if THETA was spending money it did not have. She also asked for an explanation why the figures for 31 March 2009 had been restated as a result of errors discovered during drafting of the 2009/10 financial statements.

The Acting Chairperson also noted that THETA incurred a net loss of R17 482 000 during the year ended 31 March 2010, and current liabilities exceeded its total assets by R7 672 000. She said a detailed explanation of finances was required. THETA did not only require a clean audit, but proof of its performance, output and impact on society. In regard to performance, the “easy” targets were met but the most important and critical targets were not met, specifically those around scarce skills, transformation and SMMEs.

Mr Tsotetsi replied that the legal issues referred to the action that THETA took against a certain supplier; and here two different sets of information were given to the AG by the lawyers and THETA. THETA had communicated with the lawyers to ensure that this would not recur.

Mr Mwandla said that the entire performance report for delivery in 2009/10 should be seen against the context of the following year, because THETA had overcalculated its learnerships, so it had started out on a negative note.

The Acting Chairperson noted about high turnover of Chief Executive Officers (CEO), and wondered if this affected the financial management.

Mr Tsotetsi replied that the current CEO had been at THETA since July 2003, although there had been a high CEO turn-over in 2002-2003. He was very serious about ensuring that THETA moved rapidly in regard to delivery, meeting of targets and complying with legislative requirements.

The Acting Chairperson asked THETA how accessible it was to stakeholders. She noted that the website was not user friendly, and did not list any regional offices.

Mr Mabaso took note of this comment and said the website would be improved. He reminded the Committee that THETA faced uncertainty about its future, and had to look at what had been proposed and what the impact would be on THETA. Longer-term planning had been held back, and the resolution had been made to establish satellite branches, but their financial implications also had to be considered. This should become clearer in future.

Mr Dikobo asked that THETA must focus on new venture creation, noting that the targets for this were not reached. If there were difficulties around placement, then new venture creation could create self-employment opportunities.

Mr Tsotetsi replied that this programme was for youngsters keen to run their own businesses. During 2009/10 THETA took in a huge number of learnerships, and had specifically opted not to take on new venture creation because its resources were already over-committed.

Mr Mwandla added that this was not an oversight. It was agreed that learners who could not be placed in formal employment should be given the opportunity to study how to create their own businesses. This, however, was not possible in 2009/10 because of financial constraints. In 2010//11 provision as made to put learners on the new venture creation programme.

Ms Mushwana noted that the rate of people unemployed was 76%, compared with 24% who were employed, and asked if THETA had a turn-around plan in order to improve the numbers employed.

Mr Mwandla replied that the learnership report indicated the status of learners in learnership programmes for the period 2009/10, and that 20% of the learners were employed already, while 76% of the money spent was spent on those who were unemployed. More money was being spent on the unemployed.

The Acting Chairperson asked if THETA had a new customer service programme, and what happened to SA Host.

Mr Tsotetsi replied that THETA still continued with SA Host as part of its programme and assisted leaders in that respect. It launched a union standard based customer care programme in Durban on 9 May 2010. THETA was currently training people on how to use the customer care programme, and, unlike SA Host that could only report on numbers of companies, THETA would be able to report on number of people.

The Acting Chairperson asked that THETA must provide written answers in regard to the transformation issue, service provider and SMMEs, in order for the Committee to understand where the money was spent.

Clothing, Textile, Footwear and Leather Sector Education and Training Authority (CTFL SETA):  2009/10 Annual Report

Mr Poovendren Naicker, Chief Executive Officer, Clothing, Textile, Footwear and Leather Sector Education and Training Authority, briefed the Committee on the 2009/2010 Annual Report of the Authority (CTFL SETA). The number of firms registered with the CTFL SETA increased gradually to 7 000, while the number of firms contributing levies declined because of the economic difficulties, and thus the numbers who qualified for mandatory grants also declined, to 572 firms. Companies within this sector were mostly in Kwazulu-Natal, Gauteng and Western Cape. The sub-sector numbers were highest for textiles, clothing and footwear firms. Together, clothing and textile sub-sectors were responsible for about 80% of formal employment in the sector. Clothing represented 50% employment, and 36% levy contributions, while textiles had 30% employment and 43% levy contributions. 

CTFL SETA disbursed 80% of its mandatory grants budget to 572 firms that submitted Workplace Skills Plans (WSP) and Annual Training Reports (ATR). It had enhanced the submission through advocacy and marketing campaigns. CTFL SETA registered 663 workers for the discretionary grants for employed learners on Adult Basic Education and Training (ABET), management development, technologist training, learnerships and critical or scarce skills programmes. It also registered 533 unemployed people for discretionary grants on learnerships, technology programmes and work experience interventions.

Mr Naicker then focused on the sector projects implemented in partnership with other organisations and donors. The annual Cape Town Fashion Festival was organised by the South African Clothing and Textile Workers’ Union (SACTWU), to promote local clothing, textile and designs. The SETA undertook Continuous Professional Development for sector employees, in collaboration with the Kwazulu Natal Department of Economic Development and Tourism (KZN DEDT), as well as clothing and textiles seminar series. CTFL SETA ran a masters programme at the Technical University of Liberec in the Czech Republic, and 18 South African students obtained masters degrees in textile science, funded by KZN DEDT and the SETA. The Learnership Implementation Project was done in collaboration with, and funded by, the Wholesale and Retail SETA. Funding was given for learnership grants to register 150 unemployed people on CTFL learnerships. A Team Leader Development project was offered to 150 supervisors and employees. The Training Layoff Scheme was also done, in collaboration with the Wholesale and Retail Seta and the National Skills Fund (NSF), for 1 435 participants from five clothing and textile factories in Uitenhage, Newcastle, Durban, Port Elizabeth and Cape Town. Other projects funded from the discretionary funding included QCTO qualifications development with a national impact, short courses for patternmaking, work study, sewing machine mechanics and sewing machinists in Kwazulu Natal and Cape Town. There was also a Textile Technical Training Project in Western Cape, a skills programme at NQF level 1 for clothing manufacturing, and cluster training for small firms in Gauteng. New Venture Creation Projects were held in Kwazulu Natal. Masters students at University of Stellenbosch were supported.

Mr Naicker stated that 146 sector specialists were trained in the use of the critical skills guide. 70% of large firms, and 67% of medium firms, received WSP or ATR grants. CTFL SETA supported 31% of small levy paying firms. CTFL SETA did not meet its targets for support for small Black Economic Empowerment (BEE) firms and BEE cooperatives. However, it undertook a study to establish the number of existing small BEE firms and cooperatives within the CTFL sector. Black ownership in small businesses was high, but black female ownership was low. Black ownership in medium and large companies was found to be very low, so transformation in the sector had to be addressed. The number of workers entering and completing ABET programmes, learning programmes, unemployed people entering and completing learning programmes and the organisations supported were set out (see attached presentation). 42 learners were assisted to gain workplace experience and 82 young people had entered new venture programmes, while three institutions were accredited to manage delivery of new venture creation qualification. The ETQA audit achieved 1.9 out of 3.

About 57% of the learners registered were previously unemployed. 6 768 learners graduated successfully. It was estimated that placement in employment was over 80%. The SETA accredited more than 70 Workplace Providers and five Host Training Providers to offer full qualifications at NQF level 1 and 2 to learners. It established a Further Education and Training (FET) model to enable smaller firms in the sector to participate in learnership delivery through partnership with Host Training Providers. It entered into Memorandums of understandings with seven Public FET Colleges to offer a full industry qualification at NQF level 1. It also accredited non profit organisations and community based organisations to offer skills programmes. Regional events were held in Gauteng, Kwazulu Natal and Western Cape, to highlight the role of women leaders. There was also a learning programme for disabled people in sheltered employment in Cape Town and Johannesburg to develop sewing and clothing construction skills for potential entrepreneurs, and 18 disabled learners were verified as competent against an NQF-aligned credit. CTFL ETQA took early initiatives to commence with development of occupationally-directed qualifications for registration with the QCTO framework.

Ms Gina Layzell, Chief Financial Officer, CTFL SETA, briefed the Committee on the financial overview and trends. CTFL SETA had received its tenth unqualified audit, with no material matters reported. It received permission from the Minister of Higher Education and Training to exceed 10% spending on administration, to cover the 262% increase in AG fees, and in recognition of the decrease in levy income resulting from the economic climate. Cost cutting measures were introduced, by relocating to cheaper premises in Cape Town and negotiating better rates in Kwazulu Natal and Gauteng. Salary increases were limited to 6.5%, and staff training was aligned to mandatory grant allocations, with top-up training through discretionary grants and bursaries. External consultants were limited since internal staff had capacity to handle key performance areas, strengthened by using interns and work experience candidates. Expenses were carefully managed, and office equipment was well maintained to extend its lifespan, while service providers had agreed not to increase their fees. CTFL SETA had R48 500 000 in discretionary grants, of which R44 000 000 was contractually committed. This SETA experienced delays in paying grants, which were paid in tranches to minimise risk.

Discussion
The Acting Chairperson noted that the regional offices of CTFL SETA would make it more accessible.

Mr Makhubele acknowledged that the CTFL SETA operated in three provinces, but asked whether it planned to broaden this further.

Ms Mushwana asked why CTFL SETA was focused in only larger provinces, since the smaller provinces needed the transformation more urgently.

Mr Naicker replied that CTFL SETA had a strategy to deal with rural development and although it had physical presence in three provinces, its reach was wide. Kwazulu Natal offices dealt with Eastern Cape, the Western Cape offices dealt with Northern Cape and lower parts of Free State and the Gauteng offices dealt with the upper Free State, Limpopo, North West and Mpumalanga. All companies from all the provinces benefited from the scheme of skills development and grants funding as all companies within the boarder of South Africa were well in reach of CTFL SETA. With a larger budget and a higher levy skills income, offices would be opened in the other provinces.

Mr Makhubele asked why there was little movement on BEE firms and BEE cooperatives.

Mr Naicker replied that the SETA had done research into the number and status of BEE companies in the sector, which focused on large, medium and small firms and cooperatives. Although not yet finalised, CTFL SETA anticipated that some kind of strategy would evolve from the study. The SETA wanted to incentivise BEE firms to participate in the skills development strategy. However, traditionally most companies in the CTFL sector were owned by white families, and there was not much incentive for this to change. The SETA wished to promote BEE within companies and to empower those that were BEE compliant.

Mr Makhubele asked if the SETA met the conditions regarding the R2 million that was supposed to be spent in the previous year.

Ms Layzell replied that the R2 million was received from the Wholesale and Retail SETA, out of a joint collaboration project. The funds were received in the last month of the financial year, and the condition attached to the funds was that a funding window for learnerships had to be offered. This had taken place in the new financial year.

Mr Makhubele asked why the constituency representatives had operated without remuneration for a year.

Mr van der Westhuizen complimented the SETA on its size, and good report, with good figures.

Mr Naicker noted that under the terms of reference and Constitution of the CTFL SETA, board members did not receive remuneration, but were compensated for subsistence and travel. Board members gave of their time because they were interested and concerned about the SETA and wanted it to be sustainable.

Mr Makhubele noted, from the Annual Report, that there were many misallocations and miscalculations, leading to errors in prior years, and he asked that these be explained.

Ms Layzell replied that the prior errors were detected by the CTFL SETA, not the AG, and were incorporated into the draft financial statements, prior to audit. The problem with the discretionary expenses in the previous and 2009/10 financial years was that the SETA had been unable to pay discretionary grants, having repeatedly tried to get outstanding documentation from the companies, but was then informed that these companies no longer needed the grants, so they were recorded as a prior error. Website costs, originally allocated to administrative costs, were then re-allocated to intangible assets. There had been some rounding-off errors for fixed assets that needed to be re-stated.

Mr Makhubele asked if the challenges had been identified relating to CTFL SETA’s HIV/AIDS policy.

Mr Naicker replied that every good organisation that was well managed, efficient and effective had policies and procedure relating to HIV/AIDS, and employee management. The CTFL SETA had clear guidelines set out in policies and procedures relating to infected employees, and interaction with them by other employees. No breaches had to be reported to senior management. He added that CTFL SETA also had guidelines, policies and procedures on how it dealt with clients and stakeholders.

Mr Makhubele noted that CTFL SETA indicated a foreign exchange risk, and asked what was the level of exposure, and implications of the risk, and what mechanisms were in place to avoid the risk.

Ms Mushwana asked what informed CTFL SETA’s choice to engage with the university in the Czech Republic.

Dr J Klopper-Lourens (DA) asked about the South African students who did their masters degrees at the university in the Czech Republic, asking for the differences between this degree and Stellenbosch University, and whether they had a different focus.

Ms Abieda Abrahams, Chairperson, CTFL SETA, said that students went to the Czech Republic mainly because it had allocated funding to those students.

Mr Naicker added that in the higher education landscape, there was limited capacity to offer programmes directly related to the CTFL SETA scope. The university in the Czech Republic offered excellent masters programmes in textile science, which were not offered by any higher education institutions in South Africa. The masters programme offered by the University of Stellenbosch had a pure science orientation, and the Czech programme was deemed superior. Those learners who studied abroad were contractually bound to serve the sector, in repayment for their full funding while they studied, and much effort was put into ensuring employment for these highly skilled graduates.

Mr Makhubele noted that a large part of the CTFL workforce had no formal schooling, and although ABET was used, he also wondered about Recognition of Prior Learning (RPL).

The Acting Chairperson enquired why the RPL strategy review, planned for February 2009, did not take place, and asked what lessons had been learned and what difficulties were identified with the RPL process during previous reviews in 2000 and 2008.

Ms Abrahams stated that RPL was a real concern, and it was an issue that the industry had not been addressing in the past. However, there was now an action plan to look at it. CTFL SETA did not focus too much on ABET training, and this too was a real concern within the industry. Attention should be given to a marketing strategy on how to take it forward.

Mr Naicker added that a company in Gauteng had granted RPL to 150 learners at a NQF level 2. RPL, however, could not happen too easily in the workplace, because of the structure of the SAQA-based qualification. However, the new QCTO qualifications were based on a different structure, having knowledge, practical and work experience components. There would be benefit to implementing RPL properly in the sector, and there would be set indicators, targets and budget for implementing it, to recognise those workers who had experience gained through a number of years of work in a company.

Mr Makhubele asked if CTFL SETA could buy its own building instead of leasing offices.

Mr Naicker replied that CTFL SETA did not have large financial resources, and it was more financially prudent to lease than to buy offices.

Ms Layzell added that the purchase of a building had been discussed with the board, but, owing to the financial constraints, it was decided to lease.

Ms Mushwana asked whether the seven FET colleges with whom CTFL SETA had Memorandums of Understanding were spread over the country.

Mr Dikobo asked with which FET colleges there were partnerships.

Mr Naicker replied that the CTFL SETA’s partnerships were spread over the country. It had accredited a number of FET colleges to provide NQF level 1 clothing programmes. Not many of the FET colleges were interested or requested accreditation, as they lacked an understanding of the requirements, and some had capacity issues. There were challenges in the sector, especially given the need to skill people, to guarantee sustainability in the long term, and to provide quicker turnaround of garments to meet the demands of the market. It was quite an achievement to partner with seven colleges.  The focus of the National Skills Development Strategy was on partnerships with colleges, and the CTFL SETA would like to set a curriculum in this field.

Mr Dikobo said that he had found the Annual Report difficult to read, as it was reflecting figures for a number of years.

Mr Naicker replied that the CTFL SETA had no intention of clouding any issues, but the presentation had looked at the whole five-year strategy. The SETA had been proud of what it had achieved, in the light of its financial constraints.

Mr Dikobo asked why there had been no new venture creations, and also enquired about the lifespan of previously-created ventures.

Mr Naicker replied that CTFL SETA did not track how many of the previous new ventures survived, as it had only been required to monitor them for six months, and ensure that they were registered. The mentorship and coaching was intended to ensure sustainability for the medium to long term.

Mr Dikobo stated that although the CTFL companies may be concentrated, there were also other businesses, such as dry-cleaners, in areas where there may not be manufacturers. He asked if dry-cleaners paid levies.

Mr Naicker replied that more financial resources needed to be deployed, and the marketing strategy would be increased when resources were available to bring in smaller sub-sectors, especially in smaller provinces. Dry-cleaners did contribute to the levy within the sector.

Mr van der Westhuizen was impressed that this SETA had collaborated with others, but asked why CTFL SETA had to scale down on many activities for the retraining programmes and economic recovery plans.

Mr Naicker replied that the CTFL sector was targeted by the government’s Industrial Policy Action Plan. The CTFL stakeholders had engaged with the Department of Trade and Industry, and compiled a R1.3 billion skills development project plan, hoping to receive funding from the NSF. However, it could not procure the funding to implement the skills development project. The CTFL SETA was awaiting the outcome of three project proposals that were put thought the NSF during the last funding window.

Dr Klopper-Lourens asked what kind of disabilities the learners in sheltered employment had.

Mr Naicker replied that the disabled learners came from a sheltered environment, and were either physically or mentally challenged.

Dr Klopper-Lourens asked about the figure of 51 learnerships registered, as against the number of graduates, and enquired about the dropout rates. He also asked for more clarity on the 80% figure for placement in employment, and how the study tracked people.

Mr Naicker replied that 51 occupational programmes and qualifications were registered against learnerships, and referred to the programmes, not the number of learners. A detailed, in-depth, and extensive tracer study was conducted in the sector, which had produced the figure of 80% employment of learners.

The Acting Chairperson asked CTFL SETA to elaborate on the issue of skills lay-off. She also asked if the SETA was able to trace where people were either training or had been absorbed in the industry.

The Acting Chairperson was concerned that CTFL SETA only had NQF level 2 learnerships, as she thought that learnerships at higher levels were needed, such as level 5 (matric). She also asked how people would be attracted to the sector.

Mr Naicker assured Members that CTFL SETA did have higher level learnership programmes, for team leaders and management development, at levels 3 and 4.

The Acting Chairperson stated that the clean audit did not translate into performance, as targets were not met. The Committee wished to know what was done with the money the SETA received. She was also concerned that the targets for SDF level training, SMME and New Venture Creation had not been met, and asked what the challenges and issues were. She also wanted to know how its activities related to market demand, and how the industry responded in order to grow, as its positioning was important.

The meeting was adjourned.