National Development Agency (NDA) 2009/10 Annual Report with Minister of Social Development

NCOP Health and Social Services

07 March 2011
Chairperson: Ms N Rasmeni (North West, ANC)
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Meeting Summary

The Chief Executive Officer of the NDA, accompanied by the Minister of Social Development, presented the National Development Agency (NDA) Annual Report for 2009/10.

The NDA presentation outlined the key achievements under each of the four strategic goals of the organisation, which notably included the approval of 77 projects in the areas of food security, income generation, targeted agriculture and agribusiness, and capacity building. The total value of these projects was R95 million. The NDA reviewed a number of internal policies and procedures in an attempt to reduce administrative costs such that 65% of the departmental grant would go towards project funding and 35% would go towards administration. The NDA did not achieve this target. The presentation also outlined some key challenges that were faced during the reporting year and provided their intervention strategies for overcoming these challenges. Key challenges included limited financial resources, inadequate skills of NDA staff, lack of technical capacity of funded projects, and inadequate monitoring and evaluation of funded projects.

The presentation on financial performance noted that the NDA had received an unqualified Auditor General report, with emphasis of matter on irregular expenditure of R881 819. The NDA received a grant of R144 million from the government and R16 million from interest and other sources. The NDA spent R89 million [55,2%] on poverty eradication projects, with another R72 million on administrative costs [44.8%].

Members' questions focused on a desire to see the data broken down by province. They asked how the NDA arrived at the poverty index used to allocate funding. When projects were in place, members asked how projects were monitored and how the NDA was planning to increase the skills of their staff to make monitoring more effective. They asked how the NDA planned to achieve the 65 / 35 percent split between project funding and administrative costs. They asked if the numbers of projects were going to increase, if existing projects were sustainable, and what the NDA did to avoid having to write back projects.

Meeting report

The Committee Secretary noted that the Chairperson was away on sick leave. She requested nominations for another Chairperson for the meeting. The Committee elected Ms M Boroto (ANC, Mpumalanga) as Chairperson for the meeting.

Presentation by the National Development Agency
The Chairperson noted that the Minister of Social Development, Ms
Bathabile Dlamini, was present for this briefing. After introductions, the Chairperson turned the floor over to the Minister.

Ms Bathabile Dlamini, Minister of Social Development, introduced the delegation with members from both 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, Chief Executive Officer for the National Development Agency (NDA), introduced the presentation. She stated that for the 2009/10 financial year, the NDA received an unqualified audit report, which had been consistent for the last 4 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 attached 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 targeted issues important to addressing 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 non-government organisations (NGOs) funded to strengthen capacity of their membership to the value of R3.8 million. She stressed that by funding networks, those networks in turn would strengthen the capacity of their member organizations. Each approved project had an element of capacity building to address capacity, sustainability and financial management issues in addition to conflict management support to ensure that projects moved 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 mobilization strategy to raise funds in addition to signing two 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 public awareness 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 organization. An Occupational Health and Safety (OHS) policy had been 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 their own administration costs. 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 mobilization strategy to ensure that they meet this target. The NDA also created a performance management system that links individual performance to the objectives of the organization. During the year under review, the NDA was able to address 50% of the audit findings, and plan to improve upon this figure in the future.

Key achievements for Strategic Goal Three included the NDA developing 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 also still undergoing consultation.

Key achievements for Strategic Goal Four included the approval and installation of the In-touch 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 the issues as indicated in their implementation plans, and to determine if the projects were yielding the results that they were supposed to be yielding. 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. She expressed that the government grant was very small when compared to the amount of poverty in the communities. However, the NDA had plans to further mobilize 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. Ms Nhlapo stated that the NDA continued to experience challenges relating to the monitoring of funded projects and they were currently developing a turnaround strategy for the effective monitoring of funded projects.

Mr Phumlani Zwane, NDA Chief Financial Officer, presented the financial report for 2009/10. The NDA received a grant from the government of R144 million. Interest was R10,6 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 Mr Zwane noted that this money was committed to contractual arrangements and approved projects from this and previous years. The NDA ended the fiscal year with a deficit of R1.2 million.

Mr Zwane's analysis of the financial performance indicated that the NDA received an increase of 6% in the grant from the National Treasury. Interest on bank balances was R16 million, but this was 28% less than the previous year 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 that were put into place.

Mr Zwane announced that the NDA had 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 stating that the issues which led to the irregular expenditure had been addressed.

Ms B Mncube (ANC, Gauteng) asked how far along the NDA was in addressing the challenges that had arisen in funded projects. She noted the location of several funded projects mentioned in the NDA's Annual Report and asked where the other funded projects were located. She asked that if the NDA in the future could present statistics broken down by province and location. She noted that the migration of people from other provinces to Gauteng was not followed by a commensurate change in the poverty index, or change in allocation of funding to Gauteng. She asked for clarity on the process that vulnerable people would follow in order to apply for funding.

Ms D Rantho, (ANC, Eastern Cape) asked if the NDA had any programmes directed towards ex-convicts. She asked how local municipalities and communities were involved in the development projects by the NDA. She asked how the NDA monitored projects. Specifically, organisations were given money that had no financial skills to proceed with the projects. She asked why the NDA presented their goal of reaching a 65 / 35 percent split of project funding to administrative costs as an achievement, but they then stated that it was not achieved.

Ms M Moshodi (ANC, Free State) asked if the NDA had planned to increase the number of funded projects and how they intended to accomplish this. She also asked what the outcomes of the dialogues were that the NDA had engaged in. Lastly, she asked that the NDA remember that the Free State was a rural province when they considered project funding and approvals.

Mr W Faber (DA, Northern Cape) asked what percentage of staff received performance bonuses. He asked how many of the 77 funded projects were economically self-sustainable following training. He also asked who saw to the quality of the training providers and if there were criteria established for these providers. Lastly, he asked for clarification on the project write-backs.

Mr M De Villiers (DA, Western Cape) asked the NDA for their assessment of the sustainability of their projects. He asked the NDA what information they held on Civil Society Organisations (CSO) and if the NDA had any information on the institutional capacity of each organisation. Mr De Villiers asked for an explanation on the difference between the 396 approved projects and 77 approved projects that were both noted in the presentation. He asked if there were any vacant posts in the NDA, especially at the managerial level. If there were vacant posts, when would they be filled?

Mr De Villiers asked what the relationship was between the NDA and the Department of Agriculture in addressing poverty such that the two organisations avoided overlap. He asked if the NDA was able to make use of those people who had benefited from previous skills development from the NDA and how this was achieved. He asked for clarity about the mathematical system that the NDA used to determine the amounts allocated to the provinces.

Mr De Villiers asked if any of the signed MOUs were signed in the Western Cape and with whom. He asked what challenges existed for the NDA that caused them not to achieve the 65 / 35 percent split in project funding to administration costs. He asked for the outcome of the impact performance studies and the findings of the ICT study on the NGO sector. Lastly, he asked if NDA had any mechanisms in place to retain their staff once they have received training, or were they experiencing losses of staff to other departments.

Mr T Mashamaite (ANC, Limpopo) asked for clarity on the short term employee benefits outlined in the financial report. He noted that the NDA was attempting to reduce staff costs, but the financial report noted that the staff costs increased between 2009 and 2010.

Mr S Plaatjie (ANC, North West) asked if any of the income generating projects that were funded by the NDA led to the creation of future projects. Also, could the NDA clarify the distinction between an agricultural project and an agri-business project? Lastly, he asked what the actual challenges and environmental factors were that led to write-backs.

Ms M Makgate (ANC, North West) asked if the NDA first trained people before starting a project in order to avoid problems with conflicts and maladministration. She also asked when the NDA came up with the impact assessment and mid-term review strategy. She asked how many projects were not functioning and how the NDA intended to assist these projects. Lastly, she asked if the In-touch system was providing the information that the NDA had hoped it would.

The Chairperson noted that there was no regional manager in her home province of Mpumalanga and perhaps this was a contributing factor to the relatively few projects approved there.

Mr Vusi Madonsela, Director General: Department of Social Development, stated that it needed to be understood that the poverty challenge was bigger than the NDA. The NDA aimed to make a meaningful contribution.  It would be therefore, difficult to equate poverty to the number of projects. Projects were meaningful, but projects had to be linked to other initiatives. The poverty challenge was bigger than government and it required the whole of society to contribute.

Ms Nhlapo responded that the NDA had not implemented 50% of the Auditor General's recommendations. She noted that this challenge related to projects. In particular, it related to the internal skill shortages in capacity to monitor projects. It also related to the lack of capacity of CSOs to properly implement projects. The NDA had not yet reached a level where they were comfortable in these issues to state that they had addressed the concerns of the Auditor General. She noted that of the 77 projects approved in 2009/10, the NDA had allocated money to address the capacity issues of these projects. In accordance with the mandate of the NDA, they provided funding to CSOs to train other CSOs in order to expand the skills base of the population.

Ms Nhlapo stated that she would give the list of projects to the committee secretary for distribution to the Committee.

Turning back to capacity building, she noted that capacity building was linked to sustainability. Projects were not funded indefinitely, therefore it was critical to ensure that once funding ran out, the projects were self-sustainable. The NDA also continued to work with these projects to link them to future projects.

Ms Nhlapo noted that the NDA funded CSOs. If there was a community group of ex-convicts that formed a CSO then the NDA could fund them. However, the NDA did not fund individuals.  The NDA also reviewed communities to ensure that the CSOs actually addressed the challenges of those communities through their projects.

Ms Nhlapo noted that the presentation stated intended goals and then listed how close they came to addressing those targets. Hence the 65/35 percentage split was a goal, but they did not achieve this target. However, the NDA reduced costs by 3% through a cost containment strategy.

She noted that the NDA was not about the number of projects that were funded. Rather, it was about funding certain areas within a community and within the given budget. It was impossible to cover all the projects they wanted to. The important question in the future was to ask what the impact of the NDA was given their limited budget.

In regards to project write-backs, Ms Nhlapo explained that payments to projects occurred on a periodic basis, they did not receive all of their funding upfront. Most projects started well; however, there were times when internal conflicts or misappropriation of funding or other capacity issues reached a point where intervention was no longer helping. The NDA would then make a decision to end support for the project. At this point, any remaining funding that was allocated to this project would be written-back and put towards funding another project. There was a guiding policy that the NDA followed to cease support to projects.

The only vacant Provincial Manager post was for the Eastern Cape. The Provincial Manager post for Mpumalanga had been filled. The post in the Eastern Cape should be filled by the end of this fiscal year. Ms Nhlapo noted that she did not recall any MOUs which were signed in the Western Cape in 2009/10.

Mr Ruben Mogano, NDA Development Management Executive, explained the two types of processes for applying for funds from the NDA. First, was called the Request for Proposals (RFPs), the second was called Programme Formulations. The first process was an open process where the NDA invited Community Based Organisations (CBOs), Non Profit Organisations (NPOs) and cooperatives to apply for funding through an advertised competitive process. The second Programme Formulation process involved the NDA going into communities to assist community groups in establishing a suitable structure to apply for funding and manage the project. He noted that RFPs favoured more established organisations such as NGOs. This was because the RFP required a certain level of capability in putting the proposal together. The Programme Formulation approach had the drawback of putting the NDA in the position of referee and player. This was because the NDA was involved in the social mobilisation of the community and then sought out funding from the NDA. Those projects were also monitored and evaluated by the NDA. The NDA was also pursuing a middle ground between these two types of processes, but the focus was on the Programme Formulation approach. Neither processes were completely open for all in the nation. The NDA established areas of focus for the given year. The focus changed from year to year.

Mr Mogano noted that there were regular interactions with municipalities. The majority of NDA funded projects were agricultural projects which required land, and this required negotiation with the municipalities and occasionally with traditional leaders. Relationships with municipalities were also required to assist the NDA with monitoring, issues of co-investment, and ongoing support.

Previously, the NDA invited service providers of selected areas and skills to register on their database. There were areas where the NDA was not able to attract service providers.

Mr Mogano stated that the system used to calculate payment amounts was the poverty index; although it was more reflective of a population index. There were contentious issues surrounding how this figure was arrived at that would not be solved at this level. The NDA adopted an index that they could defend. The figures that were used in this presentation were from HSRC (Human Sciences Research Council). 

Ms Rashida Issel, NDA Chief Operations Officer, stated that the performance bonuses were approved by the Board and allocated based on the performance monitoring guidelines. She outlined the number of people in the organisation who did and did not receive bonuses [The figures were inaudible].

Prof Peter Ewang, NDA Executive Director: Research and Development, reiterated that there was a process to ensure critical review of projects before they were written-back. In regards to the NDA database, it contained information on what the CSO did, when it started, and who was the contact person. The CSOs were major stakeholders of the NDA's business. He stated that agriculture dealt with growing food and food security and agri-business dealt with processing and marketing of food products. The In-touch system addressed the monitoring processes that had been discussed. It produced reports on the impact and sustainability of projects.

The Minister added that the Department of Social Development (DSD) was present because they have an oversight responsibility for the NDA. On the issue of write-backs, she insisted that it was a no-go area. Development of an organisation required mastery of some of the issues that often led them to failure. It was important for the NDA to review the impact of projects on the ground. They must also make an investment in human capital development through projects. She noted that DSD looked at the issue of integrating ex-offenders into society through the use of social workers and others. She stated that people would migrate to richer provinces. People were free to move where they want, but one should work with provinces to address the needs of the poor in the provinces. She concluded that the NDA needed to raise more funds so that they were not entirely dependent on government funding.

In addressing the outstanding questions, Ms Nhlapo added that the outcome of dialogues that were held in Gauteng resulted in the signing of MOUs in public policy research. The findings of the national study on the state of ICT in the NGO sector revealed lack of capacity. There were serious limitations including with connectivity. Furthermore, telecoms and fax were the most used. Approximately 50% of NGOs used mobile phones and only 9% of NGOs used the internet to raise money and interact with partners. Only 14% of NGOs were found to spend significantly on ICT. She noted that income-generating projects were not creating additional projects in every case, nor was this the primary goal. There were no performance contracts outstanding in the 2009/10 year under review. She would send the outcomes of the impact studies to the Committee.

Ms Makgate asked how the NDA accommodated not well-established CSOs, or NGOs.

Mr Mogano responded that these sorts of organisations were accommodated through the Project Formulation approach. The NDA then provided assistance to the organisation in pursuing an application. Audited financial statements were not required until the organisation obtained funds, or had previously handled funding.

The Chairperson thanked the Minister and the delegation for attending.

The Chairperson adjourned the meeting.


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