National Development Agency 2009/10 Annual Report with Minister & Deputy Minister; Committee Programme

Meeting report

National Development Agency Annual Report 2009/10
The Chairperson noted that the Committee had considered the NDA Annual Report in 2010. However, midway through that presentation they discovered that the presentation did not concur with the information tabled in Parliament in their Annual Report. The NDA was asked to come back and present with the correct information.

The Chairperson noted that the Minister of Social Development, Ms Bathabile Olive Dlamini, and the Deputy Minister of Social Development, Ms Bongi Maria Ntuli, were both present for this briefing.

The Chairperson turned the floor over to the Minister to introduce the presentation.

Ms Bathabile Dlamini, Minister of Social Development, introduced the delegation with members from the NDA Board, the Department of Social Development, and the NDA. She turned the presentation over to the Chief Executive Officer of the NDA to give the report.

Ms Vuyelwa Nhlapo, NDA Chief Executive Officer, confirmed that the presentation had corrected the mistakes of the previous presentation and it was an accurate reflection of the Annual Report.

Ms Nhlapo stated that for the 2009/10 financial year, the NDA had received an unqualified audit report, which had been consistent for the last four years. She also outlined the reporting and accountability structures for the NDA. She then reviewed the primary and secondary mandates of the NDA in addition to the vision, mission and values and Strategic Goals of the organisation (see presentation).

Key achievements for Strategic Goal One included a total of R111.1 million was disbursed to 396 approved projects. Ms Nhlapo indicated that the figure of 396 projects included projects that were approved in previous years in addition to the 77 projects that were approved for funding in 2009/10 to the value of R95 million. Of the 77 projects that were approved for 2009/10, they were targeted towards addressing issues that were key in terms of poverty. These projects included 11 food security projects to the value of R 13.3 million, 45 income-generating projects funded to the value of R54.2 million, 15 agriculture and agribusiness projects funded to the value of R23.4 million, and 6 networks of NGOs funded to strengthen capacity of their membership to the value of R3.8 million. She stressed that each approved project had an element of capacity building to address capacity and sustainability issues in addition to conflict management support to ensure that projects move forward. Ms Nhlapo presented a slide that showed the breakdown of projects and approved funding by province and a provincial poverty index.

Key achievements for Strategic Goal Two included the development of a resource mobilisation strategy to raise funds in addition to signing MOUs with strategic partners for facilitation and coordination of programmes in rural economic and development zones. The awareness and media profile of the NDA was improved as a result of funded projects and community-building initiatives. The NDA planned to identify and empower people from vulnerable groups, and in the 2009/10 year, the NDA appointed two people with disabilities and approved an employment equity plan. Ms Nhlapo noted that the NDA was not doing as well as it could in employing people with disabilities in the organisation. An Occupational Health and Safety (OHS) policy was developed, approved and implemented resulting in the appointing of 15 OHS representatives.

Also under Strategic Goal Two, the NDA set the objective of having 65% of funding directed towards project funding and 35% allocated towards administration. Ms Nhlapo noted that they could not achieve this target because of lower interest rates than expected and an inability to raise enough funding from other sources. She stressed that, going forward, the NDA had developed a cost reduction strategy and strengthened the resource mobilisation strategy to ensure that they meet this target. The NDA also created a performance management system that linked individual performance to the objectives of the organisation. During the year under review, the NDA was able to address 50% of the audit findings, and planned to improve upon this figure in the future.

Under key achievements for Strategic Goal Three, the NDA developed a draft sector strategy for undertaking dialogue and submitted it for consultation. The NDA also developed a tool for measuring efficacy of these dialogues. Ms Nhlapo noted that this tool was still undergoing consultation.

Key achievements for Strategic Goal Four included the approval and installation of a database at the provincial level to assist in monitoring projects. The NDA was continually disseminating research on poverty and development issues to the provinces. Monitoring and evaluation of project performance was conducted to determine the extent to which projects were managing to implement as indicated in their implementation plans, and to determine if the projects were yielding the results that they were supposed to. In regards to shared lessons, two best-practice case studies for funded projects were produced.

Ms Nhlapo then addressed the challenges experienced in undertaking the work of the NDA. The primary challenge was limited financial resources. The government grant was very small when compared to the amount of poverty in the communities. However, the NDA had plans to further mobilise resources to add to the funding that they receive from government. The NDA was suffering from inadequate skills and competencies of their staff in the provision of support to funded projects.  The NDA was providing ongoing skills training to address this problem. The lack of institutional and technical capacity of funded projects was a challenge to successful implementation of funded projects. The NDA had targeted capacity building interventions to address these issues. It continued to experience challenges with the monitoring of funded projects. It was currently developing a turnaround strategy for the effective monitoring of funded projects.

Ms Rashida Issel, NDA Chief Operations Officer, presented the financial report for 2009/10. The NDA received a grant from the government in the amount of R144 million. Interest earned was R16 million, but this was less than expected. Mandate costs to fund projects was R94 million; however, project write backs amounted to R12 million. Administration costs amounted to R72 million. Cash reserves in the bank were R216 million; however this money was committed to contractual arrangements and approved projects from this and previous years.

Ms Issel's analysis of the financial performance indicated that the NDA received an increase of 6% in the grant from National Treasury and interest on bank balances was lower by 28% (R10.6 million) due to a reduction in interest rates and declining cash holdings. Projects worth R12.4 million were written back due to project related challenges and environmental factors. Administrative expenses were reduced by 3% from 2009 as a result of cost containment measures put into place.

Ms Issel announced that the NDA received an unqualified audit for the year with an emphasis on an irregular expenditure to the amount of R881 819.

Ms Nhlapo concluded the presentation by thanking the Committee.

Discussion
The Chairperson asked if Mr MF Kekana, NDA Board Chairperson, had any further comments to add.

Mr Kekana added his thanks and stated that he would take any questions the members had.

Ms P Tshwete (ANC) asked when the NDA would see the core business getting more percentage than the administration and what was their turnaround strategy to ensure that they do not spend more money on administration rather than core business. She asked what the turnaround strategy was for the challenge of inadequate skills and competencies of NDA staff in monitoring projects.

Ms H Lamoela (DA) asked why awareness initiatives were undertaken in only five provinces and in which provinces were they undertaken. Could the NDA provide which media and newspapers were used for raising the profile of the NDA. She asked if the NDA could supply the Committee with the outcomes of the dialogues that had been conducted. She requested that the department supply the Committee with a copy of the reports on the 77 funded projects. She suggested that if monitoring and evaluation was taking place, why was there still conflict management required with 6-year old projects. There were many unanswered questions that she had asked previously, and asked if the department was ready to provide answers. On 17 November 2010, the department was asked to provide the Committee with a copy of the fraud prevention plan; were they prepared to provide the document today? In regards to a successful project that was visited in 2009, she asked how the NDA had assisted to improve the marketing challenge they faced, what was done and could she get some feedback.

Ms H Makhuba (IFP) asked when the positions of Chief Financial Officer and Company Secretary would be filled. What were the project challenges and factors that led to the R12.4 million in write backs?

A member of the Committee asked if the NDA had any way of assisting people to develop their proposals and business plans to suit the criteria that they require. According to the presentation, more projects were approved for provinces that had a low poverty index. She asked if the NDA provided reasons when projects were not approved. Did the NDA have a way to fund more small projects such as chicken farming?

A Committee member asked for the findings on the national study on the state of ICT in the NGO sector. She asked why the NDA did not review their accounting policy, what were the systems put in place to address the identified risks, and what was the outcome of the disciplinary actions. Following the unqualified report from the Auditor General, she asked how the NDA planned to address the irregularities in the procurement process in the current year. She noted that monitoring was identified as a problem in the presentation, yet the financial statements indicated that the budgeted amount for monitoring and evaluation had been reduced.

Ms T Kenye (ANC) asked what strategies were available for the rural poor to get access to documents. She asked if the NDA had succeeded in sustaining relationships with local governments. Lastly she asked if the NDA was succeeding in retaining staff.

Ms Tshwete asked what the status of the land used for projects at the end of the project. Did the land become the property of the beneficiary, or was it leased? She asked the NDA to explain the link between the organisation and the provinces.

The Chairperson noted that this presentation was a significant improvement over the previous one. She commended the NDA for their boldness to write back projects that were not working. The Chairperson asked for the status of assets for projects that were stopped. She asked for a list of all projects written back so that the Committee did not visit projects that no longer existed. She also asked for a list of projects in good standing, listed by province, that the Committee could visit.

The Chairperson noted, in regards to the R881 000 in irregular expenditures, that the NDA was within reach of a clean audit. She asked if the NDA had eliminated all of the outstanding audit queries and if there was an audit action plan developed to ensure that this irregular expenditure did not happen again.

The Chairperson asked the Minister, CEO, and Chairperson of the Board if strategic partnerships, including international partnerships, were being engaged in that would bring more funds to the NDA.

The Minister thanked the Committee for the future opportunity to present the strategic view of the NDA. In addressing inadequate skills, the Minister stated that the NDA had held workshops to look into this and to look at staff retention. She noted that community development needed commitment. The Minister agreed that monitoring, mentoring and incubation should also be amongst our priorities. They did not give members of the community money to do as they please and the NDA would put more effort into supporting projects. The aim was not to write off projects, rather the aim was to assist in working through the conflict stage of a project. The Minister noted that there was a need for the NDA to mobilise communities to work towards development, and that the NDA could take a larger role in supporting other areas of development.

Mr Kekana stressed that one of the primary mandates that came out the presentation was capacity building for NGOs. Establishing partnerships in order to strengthen the capacity of NGOs had to be one of our objectives. He also commented on ways that people in communities could give more to improve social cohesion. He also stressed that it was important to share best practices.

Ms Nhlapo stated that they were looking at the administration costs of the NDA; however, the NDA had strength in its ability to disburse funds in that it could disburse more funds utilising its current administrative structure.

Ms Nhlapo stated that the issues behind the write backs included conflicts that could not be resolved despite interventions that were put in place to assist. Other issues were related to projects that could not demonstrate an adequacy in areas such as technical capacity or management capacity. If there were instances of financial mismanagement and misappropriation, the projects were terminated. Ms Nhlapo emphasised that the NDA supports, assists and strengthens projects before writing them back.

Ms Nhlapo explained that the NDA had passed a resolution that ensured a review of financial policies once every two years. The financial policy had taken longer to review as a result of the consultation process. It was not finalised by the end of the financial year; however, it had now been finalised. In order to avoid irregular expenditures in the coming financial year, they needed to enforce compliance with the supply chain management policy. In regards to questions addressing risk, there was a register that identified critical risks related to project areas and units were expected report quarterly on how they managed their risks.

Ms Nhlapo stated that the findings of the national study on state of ICT in the NGO sector revealed lack of capacity. She noted that there were serious limitations including with connectivity. Further, telecoms and fax were the most used. Approximately 50 percent of NGOs used mobile phones and only nine percent of NGOs used the internet to raise money and interact with partners. Only 14 percent of NGOs were found to spend significantly on ICT.

Ms Nhlapo reviewed the slide that identified the poverty indices of the provinces. She noted there was a tendency to underestimate the move of informal settlements that changed the poverty index. It was more important to look at the amount of money spent against the poverty index instead of the number of projects approved.

She explained that the policies shared in this presentation were internal policies that guided the management of the organisation.  However, processes were streamlined to ensure that the project approval process was quicker. This also included the fact that NDA contracts were translated into seven languages so that project organisations could understand what was expected of them.

Ms Nhlapo noted that the NDA not only used newspapers but also community radio stations so that they had a mix of media that was used to get information out to the people.

She indicated that the positions in the NDA that were not filled at the time of the report were now filled.

Ms Nhlapo did not have information at hand on specific projects that members had questioned. Answers to these questions could be provided to the Committee within seven days.

A member of the NDA delegation stated that assets were previously donated to the organisation. However, the NDA now retained assets until contracts were finished. This was done to prevent asset stripping in cases where projects were terminated early. There were problems with access to land in the Western Cape. These problems needed support from various levels. There were only two instances where the NDA purchased land.

Ms B Ntuli, Deputy Minister of Social Development, reiterated that poverty shifted thus changing the poverty index between provinces. She invited the Committee to work closely with Department and the NDA to assist in alleviating poverty. She emphasised the need for training and assistance so that people had the capacity to run successful projects. More institutions needed to be drawn in to assist in the fight against poverty.

The Chairperson thanked the Deputy Minister and the NDA delegation. She stated that the Committee would be considering the report in two weeks time.

First-Term Committee Programme 2011:adoption
The Chairperson read through the Draft Committee Programme. The following amendments were proposed:

-15 February 2011: discuss the Human Rights Commission Report and hold the (Department) Social Developments' Briefing on issues emanating from the State of the Nation Address;
-22 February 2011: adopt the Committee Report on the National Development Agency (NDA) Annual Report and begin drafting the Committee Annual Strategic and Business Plan;
-1 March 2011: discuss the South African Social Security Agency (SASSA) Annual Report; and
-the remainder of the program would remain the same.

A member of the Committee asked for clarification about two dates that covered the Committee Annual Strategic and Business Plan.

The Chairperson noted that the first date was to draft the plan and the second date was to adopt the plan, giving members time to reflect on the draft.

The Chairperson noted that a special request would be made to the House Chairperson for an additional meeting.

The Committee adopted the programme.
 
Committee Minutes: adoption
The Committee reviewed and adopted the minutes of 20, 21, 26 October and 17 and 24 November 2010.

The Chairperson adjourned the meeting.