ICASA and SABC 2011 Strategic Plans with Deputy Minister in attendance

Meeting report

Independent Communications Authority of South Africa (ICASA) 2011 - 2014 Strategic Plan
Dr Stephen Mncube, Chairperson, ICASA Board introduced the delegates from ICASA and presented the Chairperson’s Overview to the Committee. The strategic plan had been presented to the Minister, Deputy Minister and the Department of Communications and the input received had been incorporated into the final version of the plan.

The approach followed had focused on integration and improving efficiency. The strategic plan was developed in line with Government priorities and all ICASA operations had been aligned accordingly. The Information, Communications and Technology (ICT) sector was dynamic by nature and required regulation that was without fear or favour. A key focus area was the licensing of new operators in the ICT sector to encourage competition to the benefit of consumers. The sector had experienced substantial growth over the previous 20 years and Government policy encouraged further development.

ICASA’s major projects included reducing call termination rates, digital terrestrial television (DTT) and the provision of universal access and services throughout South Africa. ICASA had finalised the regulations for and would be monitoring the broadcasts during the local government election period in April/May 2011. Other projects dealt with consumer education, local loop unbundling, spectrum licensing and wholesale call termination rates.

Mr Themba Dlamini, Chief Executive Officer, ICASA presented the briefing on the ICASA strategic plan for the period 2011 to 2014 (see attached document).

The briefing covered ICASA’s vision and mission statements, organogram, values and delivery agreements in terms of the national Outcome 6 and Outputs 1 and 5. Eight strategic objectives were set, i.e. to ensure the effective participation of historically disadvantaged individuals in the communications industry; to ensure the provision of broadband services; to optimise the use of the radio frequency spectrum; to promote the protection of consumers and provide accessibility for persons with disabilities; to promote the development of broadcasting services within the context of digital migration; to ensure compliance with legislation and regulation; to strengthen and modernise ICASA and to promote competition in the ICT sector. The link between the strategic objectives to Outcome 5 and Outputs 1 and 5 was indicated.

Details of recent achievements were provided. The outputs, performance indicators and targets for 2011/12 for each strategic objective were listed. The relationship between the inputs and the eventual impact was illustrated. Information was provided on the monitoring and evaluation processes utilised by the Authority.

The medium-term budget for the period 2010/11 to 2013/14 was summarised. The total budget for the current fiscal year amounted to R327.6 million, increasing to R358.1 million for 2013/14. ICASA planned to reduce the percentage of total expenditure spent on staff costs from 60% to 40% by 2013/14 and to increase the amount of revenue received. Each strategic objective was allocated a weighting and the costs over the three-year financial period were estimated. ICASA calculated that an additional amount of R133.4 million was required to meet the strategic objectives during 2011/12. Additional funding of R133 million was required to relocate the ICASA head office, to acquire new equipment, to complete an organisational review, skills audit and funding model, to improve control systems and to complete regulatory projects.

The risks to achieving the strategic objectives included a lack of funding and competencies, the simultaneous termination of managerial contracts, resistance to the performance management system, delays in the migration to DTT and ongoing litigation delaying the implementation of regulations.

The briefing concluded with an overview of ICASA’s contribution to the Medium Term Strategic Framework (MTSF) development indicators.

Discussion
Ms J Killian (COPE) thanked ICASA for the well-prepared presentation. She noted that the briefing had included the motivation for the additional funding that would be required to meet the strategic objectives. She felt that there was a lack of focus on the 20% of the objectives that would achieve 80% of the total impact. Certain outputs were not measurable and few target dates were provided. The briefing highlighted that the ICT sector had lost ground since 2002 and she asked what ICASA considered to be the five most critical steps necessary to take the industry forward. The asked what the most important projects were that required additional funding. She thought that DTT and the radio spectrum frequency projects did not enjoy the necessary sense of urgency from ICASA. The Committee would need to assess whether ICASA had the required capacity and funding resources to meet its objectives.

Ms S Tsebe (ANC) said that there had been complaints from ICASA’s regional office in KwaZulu Natal over a lack of engagement with ICASA head office. Several issues were raised that needed to be addressed. She asked how ICASA planned to fund the expected budgetary deficit. She asked how ICASA’s employees featured in the strategic plans of the organisation. She asked if all the findings of the Auditor-General had been addressed. She asked if steps had been taken to provide safe and secure storage of confidential documents at all ICASA offices. She asked if the complaints manual was available in all the official languages. She queried the lack of specific performance indicators for certain objectives. Sentech was mandated to roll out broadband infrastructure and she asked if there was a duplication of effort between ICASA and Sentech.

Mr C Kekana (ANC) had found during an oversight visit to the regional office in Mpumalanga that the management structure of ICASA was considered to be top-heavy, that the operations of the Authority was too centralised and that a lot of time was wasted because decisions could only be made at the head office level. Similar complaints were received from the other regional offices.

Dr Mncube noted the points made by the Members in respect of the oversight visits to ICASA’s regional offices. He explained that the organisational changes were made at the head office in the first instance in order to achieve a seamless interaction between head office and the regional offices. The planned re-engineering of the regional offices had not yet been approved and the ICASA Councillors had not yet visited the regional offices. ICASA planned to assign regions to the Councillors. A changing organisation required ongoing interaction but this was difficult if video conferencing equipment was unavailable. Additional funds were required to support head office/regional office integration. The CEO, Chairperson and three Councillors were recently appointed and at least six months were required to complete the head office re-engineering process.

Mr William Stucke, Councillor, ICASA advised that the strategic objectives were set out in detail in the Authority’s published strategic objective document. Specific target dates were indicated where appropriate. The briefing document included the objectives set for 2011/12. Of the five major projects, the local loop unbundling project was the largest and most costly. The frequency spectrum, promoting increased competition and providing nation-wide access to broadband services at a reasonable cost were other significant projects. The software for the frequency spectrum project was R12 million. The skills level and staffing capacity needed strengthening. The lack of adequate funding was a major concern as little could be achieved without the additional funds.

The Chairperson said that ICASA appeared not to be aligned with the Department of Communications (DOC) in respect of the local loop unbundling project. The DOC was the shareholder of ICASA and he wanted to know what deadline had been set by the Authority for the completion of the project.

Mr Stucke replied that ICASA was a Chapter 9 organisation but the role of the DOC was acknowledged. Local Loop unbundling was theoretically possible but required compliance from the operator. Some practical difficulties were experienced with the application process and the costing of the process.

Dr Mncube advised that ICASA and the DOC were in agreement on local loop unbundling and the lines of communication between the two entities were open. The DOC was responsible for setting the policy and ICASA was the regulatory authority. ICASA was committed to working with the DOC and any areas of conflict would be resolved.

Ms Killian pointed out that ICASA was a Chapter 9 organisation and its fundamental role was in terms of Section 102 of the Constitution. The Authority was accountable to Parliament but did not report to the DOC.

The Chairperson said that Parliament had to be assured that the policy set by the DOC was implemented and that there was no conflict between the Department and the implementation agencies.

Mr Kekana said that the regulations issued by ICASA had to be in terms of the policy set by the DOC. He asked why there were disagreements between the two organisations.

Ms N Magazi (ANC) asked when universal access to services would be achieved in South Africa.

Dr Marcia Socikwa, Councillor, ICASA replied that there had been a certain degree of overlap between the responsibilities of ICASA and the DOC. ICASA had established a committee to address the issue of alignment with the DOC and to iron out any areas of conflict between the two entities.

Mr Obed Bapela, Deputy Minister of Communications, confirmed that ICASA was required to operate within the policy framework of the DOC but the Authority’s independence was acknowledged. It was accepted that misunderstandings could arise from time to time but it was essential that any areas of conflict between the two organisations were addressed and resolved.

Mr Dlamini advised that a strategic framework for the regional operations of ICASA had been developed and would be submitted for approval by the Committee in the near future.

Ms Magazi asked if the strategy was informed by the regional operations. She understood that ICASA’s strategic plans would only be presented to the regional offices once the approval of the Committee had been given. She was of the opinion that the regional offices should have been involved in the development of the strategic plan in the first instance.

Mr Dlamini referred the Members to the organisation’s organogram. Input to the strategic plan had been received from the regional managers and he had met with them during December 2010 to brief the regions on the future strategy of the Authority. Once the strategic plan had been approved by the Committee, the regions would be briefed on the final product. ICASA had considered the Auditor-General’s report during February 2011 and developed the necessary interventions to address the issues that were raised in the report. To date, 95% of the issues had been resolved. The remaining 5% covered the major issue of the management of funds. A policy framework was in place for the management of records and classified documents. The compliance manual was not yet available in all 11 official languages but ICASA intended to ensure that this issue would be addressed in future.

Mr Tubane Mosia, Chief Financial Officer, ICASA advised that the deficit would be funded from the interest received on cash deposits, depreciation and deferred income.

The Chairperson observed that ICASA did not have sufficient funds to implement the five most significant priorities of the organisation. He asked if funds could be re-allocated to the priority projects.

Mr Dlamini replied that ICASA only had sufficient funding to remain operational and would need to approach the National Treasury to apply for additional funds. ICASA would consider the re-allocation of funds and ascertain if any non-essential programs could be postponed.

Ms Tsebe asked what progress had been made with resolving the remaining 5% of the issues raised by the Auditor-General. She said that there was a difference between policy and reality, for example the KwaZulu Natal regional office had no safe storage facility for documents. She asked for clarity on the apparent overlap between the mandates of Sentech and ICASA. She wanted to know what access to services was currently provided for persons with disabilities. Few television broadcasts included sing-language interpretation. She was aware of many complaints that ICASA personnel failed to return telephone calls. ICASA employed very few disabled persons. She asked what progress had been made to allow SMS messages to be sent from public telephones and to provide access to emergency services to persons with disabilities.

Ms Socikwa replied that there were no conflicts or overlapping mandates between ICASA and Sentech.

Dr Mncube assured the Members that ICASA shared their concern over persons with disabilities. He advised that consultations were held in all the provinces and more than 200 disabled persons had participated in the Boksburg summit. A resolution was passed at the summit and a final report would be issued in due course.

Ms Killian asked when the DVB-T2 regulations would be finalised. She noted that ICASA had stated that equipment was required for monitoring purposes and wondered what monitoring systems were currently used. Strategic Objective no. 7 included the formulation of a regulatory impact assessment (RIA) framework. She asked if ICASA had funding for this objective, as it was important that ICASA ascertained the impact of the ICT sector. The briefing had included a summary of the key risk factors but no coherent risk management strategy was in place. She asked how ICASA planned to ameliorate the identified risk factors.

Ms Magazi asked how historically disadvantaged individuals would be empowered and enabled to benefit from the new frequency spectrum. She asked what criteria would be applicable for the granting of new licenses. She wanted to know what had informed the strategic plans. There appeared to be an overlap with the DOC strategic plans with regard to infrastructure and she asked for clarity on the ICASA objectives.

The Chairperson noted that the strategic plans did not include a target date for the achievement of universal access (UA) in South Africa. He referred to a tender worth R14 million issued by the DOC for services that could have been delivered by ICASA. The tender indicated that there was a lack of communication between ICASA and the DOC. He said that large telecommunications operators generated substantial profits but were not BEE compliant. He asked what action ICASA took to ensure compliance. He suggested that ICASA prioritised UA and considered the changes in demand, for example the increased demand for data services. Community radio and television services could not afford the high tariffs and faced closure. He suggested that ICASA applied moral suasion to Sentech in an attempt to reduce the tariffs as a matter of urgency.

Dr Mncube replied that the provision of UA was an ongoing process. ICASA was engaged in defining UA but further research was necessary to determine the ICT scenario over the next 5 years. A target date of 2020 for UA seemed feasible but he was not in a position to confirm this date, as more information was needed.

Ms Socikwa explained that the Electronic Communications Act (ECA) currently allowed operators not to comply with BEE requirements. Amendments to the Act had been submitted to the Minister. The spectrum licensing framework specified that 30% of licenses were awarded to black-owned operators. An organisational review was under way but ICASA was currently constrained. The infrastructure necessary for UA required alignment with the Provincial authorities, for example when trenches needed to be dug. A long-term project with Sentech had been started.

Mr Dlamini said that ICASA’s outdated equipment made efficient monitoring and evaluation a challenge. The RIA was done with existing resources. The strategy was informed by Outcome 6 and outputs 1 and 5 rather than ICT policy. The summit was held with the intention to identify all the issues concerning disabled persons, which would be categorised and prioritised. Mobile phones already have the facility to convert SMS text message to sound. A risk alleviation strategy was in the process of being developed. He had noted the concerns that were raised by the Members regarding the regional operations and gave the assurance that the matter would be addressed.

Ms Socikwa said that ICASA was aware of the DOC tender and had discussed the matter with the Department. Website audits had been compiled and a comprehensive document would be prepared.

The Chairperson remarked that the R14 million tender was a waste of taxpayer’s money.

Mr Bapela responded that the money had not yet been spent. The consultation process had commenced and it might be possible to cancel the tender. The Minister had cancelled another broadband tender about to be issued. Section 15 of the ICASA Act required the Authority to collect the fees and transfer the funds to the National Treasury. He agreed that the strategic plan was ambitious and that ICASA had limited resources for meeting its mandate. The organisation and the funding models of ICASA, Sentech and the SABC had to be developed further and refined. Municipalities had lodged complaints with the DOC over the digging up of roads for ICT infrastructure and this problem had to be addressed as well. South Africa currently had 11% coverage and the target was to increase the percentage to 50% by 2015. He hoped that the new leadership in the Department would contribute to the roll-out of UA.

Ms Magazi requested that the DOC, ICASA and all the other stakeholders aligned the various infrastructure plans.

The Chairperson thanked ICASA and the Deputy Minister for the briefing. He suggested that all the stakeholders aligned their strategic plans and harmonised activities. He asked ICASA to submit a report to the Committee indicating the top 5 priorities and the corresponding funding requirements.

Monitoring of SABC Broadcasting during Local Government Elections: briefing by ICASA
Ms Socikwa presented the briefing on the monitoring of SABC television and radio broadcasts during the Local Government election period (see attached document).

The briefing set out the legislative framework for the monitoring of election broadcasting and the difference between party election broadcasts (PEB) and political advertisements (PA). Details were provided of the radio and television broadcast allocations between 24 April and 15 May 2011 and on 18 May 2011 (the date of the elections).

The Code of Conduct listed the regulations concerning violence, hate speech, children, news, controversial issues of public interest, privacy, dignity and reputation and competition and audience participation. All complaints with respect to any PEB and PA had to be lodged with ICASA within 48 hours of broadcast. ICASA would be monitoring all election coverage from 24 April 2011 and would publish a comprehensive report after the elections.

Discussion
The Chairperson asked for further clarity on the two-minute slots allowed for each political party and the additional slots based on the number of seats. He complained about television broadcasts where the comments of the ANC member were not shown while the comments of members of other parties were broadcast.

Ms Socikwa replied that there were 121 registered political parties. Each party was allocated a two-minute slot and access to regional SABC broadcasts was provided. The remaining available time was divided according to the number of seats won in the previous election. ICASA would be monitoring SABC broadcasts between 24 April and 15 May to ensure that the regulations were adhered to. The content may not be edited and must be within the gazetted time slot.

The Chairperson asked if other free-to-air broadcasters were subject to the regulations.

Ms Socikwa replied that only the SABC broadcasts were subject to the relevant sections in the ECA. Other broadcasters complied with the regulations on a voluntary basis and most were willing to comply.

Ms Killian asked if current affairs programmes would be monitored in addition to news broadcasts. Most parties preferred to have more frequent, shorter time slots than the single two-minute slot allowed.

Ms Magazi welcomed the regulations applicable to election broadcasting.

Concerns of Deaf SA
The Chairperson welcomed the delegation from Deaf SA to the proceedings. Deaf SA had requested an opportunity to raise certain issues with ICASA and the SABC and requested permission to show their placards to raise awareness. Permission could not be granted as such action was against the rules of Parliament. He suggested that a delegation from the SABC met with Deaf SA to discuss the concerns and gave feedback to the Committee. It was agreed that Mr Hlaudi Motsoeneng, Manager, Stakeholder Relations, SABC held a meeting with Mr Jabaar Mohammed, Western Cape Provincial Director, Deaf SA during the proceedings. The parties eventually passed a resolution, which was read out to the Committee. The Chairperson advised that the Committee would monitor the outcomes and track the progress made in implementing the resolution. Deaf SA was invited to present a briefing to the Committee at a future date.

South African Broadcasting Corporation (SABC 2011 - 2014 Strategic Plan
The Chairperson congratulated the SABC on being rated No 2 (74%) in a recent survey of public trust. The results indicated that the public trusted the SABC as a source of information and it was essential that the Corporation did not fail them. He advised that the Committee had received an affidavit from a former SABC employee. The employee had attempted to engage the SABC Board on certain issues but the Board apparently was unable to act. The affidavit had not been circulated to the Members of the Committee as the contents had to be verified before a decision could be taken on what action was required from them.

Dr Ben Nubian, Chairperson: SABC Board, introduced the delegates to the Committee. The briefing commenced with an audio-visual presentation on the SABC and its recent achievements.

Dr Ngubane delivered the Chairperson’s opening statement to the Committee (See attached document). The statement listed the SABC’s major achievements during the previous year, with particular reference to achieving Board stability, improving governance, improving the financial position of the Corporation, achieving strategic goals, improving stakeholder relationships and listing the recent broadcasting successes. An overview was provided of the SABC programs that supported the seven national developmental imperatives set by Government.

Mr Lerato Nage, Chief Financial Officer, SABC presented the financial overview for the 2010/2011 fiscal year. The revenue forecast as at 31 March 2011 was R5.51billion and total expenditure was R5.3 billion. The expected loss for the year was R203 million. A cash flow forecast for the period 2011/12 to 2013/14 was provided. The key drivers and assumptions were detailed and five alternative scenarios were devised. A projected funding statement and three-year income statement forecast were included. Repayments of the Nedbank loan were on track. Additional funding was required for capital expenditure but requests to the National Treasury for additional Government funds were turned down. The SABC anticipated continuing liquidity pressures over the following two years and proposed a re-structuring of the current loan to reduce the interest cost and improve liquidity. The SABC was not in a position to generate funding for DTT, estimated to be R408 million.

Dr Ngubane requested the Committee’s assistance to obtain additional State funding for the implementation of the SABC’s turnaround strategy.

Mr Robin Nicholson, Acting CEO, SABC presented an update of the implementation of the turnaround strategy approved in November 2010. A total of 92 tasks and projects were identified and assigned to individual senior managers. The status of the top sixteen projects was provided. In addition, a mandate review was undertaken.

Mr Cedric Gina and Mr Peter Harris, Members of the SABC Board, reported on the governance review undertaken by the Corporation. The briefing included the progress made in addressing the issues raised by the Auditor-General, the development of a risk management policy, framework and fraud and corruption prevention policy, a risk management strategy and key strategic risk mitigation plans. The SABC had identified 1,465 employees who owned companies, many of whom did business with the SABC. An independent firm of auditors was compiling a report on the progress made in dealing with the Auditor-General’s report.

Mr Nicholson explained the seven corporate pillars that informed the strategic plan of the SABC. Details were provided of the strategic intent and the focus areas for SABC television, radio and DTT. The current and future news operations were illustrated and information given on the planned 24 hour SABC news channel. Other strategic focus areas were sport, editorial management, mandate delivery, commercial sales, provincial operations, marketing and brand building and business unit objectives.

Mr Justice Ndaba, Human Resources Executive, SABC, presented the section dealing with human capital, performance management and the SABC’s operating model. A table of the number of employees per salary scale for the period 2007 to 2011 was included, which indicated an 8.8% reduction in headcount since 2008. The aim was to reduce the total headcount to 3,000 by 2014 but there were no plans for forced retrenchments. The briefing was concluded with a summary of the performance measures for the current financial year.

Discussion
Ms Magazi observed that the SABC was reducing the number of employees, which was not in line with the President’s job creation objectives. However, the Committee was aware that the organisational structure was bloated and had to be reorganised. The key factor was achieving the optimum balance necessary to sustain the organisation.

Ms Killian thanked the SABC for the detailed presentation. She commended the Board for the progress made in implementing the turnaround strategy, stabilising the organisation and developing a new culture. A major element of the turnaround strategy was the staffing issue. She suggested that more focus was directed to develop quality local content programming, which would create jobs and to improve the development and management of staff. She welcomed the introduction of a risk management strategy and proper audits. She asked what steps had been taken by the Special Investigation Unit to address the instances of fraud and corruption uncovered in the SABC. She asked what measures were taken to promote a healthy organisational culture (for example the introduction of a code of conduct) as alternatives to confrontational action against staff.

Ms W Newhoudt-Druchen (ANC) thanked the SABC for meeting with Deaf SA. She had campaigned for several years for the needs of disabled persons to be accommodated by the broadcasting media. She was concerned that the needs of the deaf community would not be met during the local government election period. The Committee was given the assurance that DTT would provide immediate access to broadcasts by the previous Board of the SABC. She was currently engaged in lobbying for South Africa to host a United Nations convention on communication with the deaf and would like to see that the public broadcaster was actively involved.

Ms Ndabeni complimented the Chairperson, Members of the SABC Board and the management of the SABC for the progress that had been made. She ascertained that the unsigned copy of the strategic plan document circulated to the Members was the official document.

Mr Nicholson confirmed that the copy of the document was identical to the version that had been signed by Dr Ngubane.

Ms Ndabeni noted that the financial forecasts were based on one of three scenarios that had been developed. She asked for information on the other scenarios. She pointed out that there were differences between the key performance indicators for the same objective reflected on different pages of the strategic plan document.

Ms F Muthambi (ANC) asked what progress was made with the introduction of the 24 hour news channel. She asked for clarity on the property owned by the SABC. Referring to page 48 of the strategic plan document, she asked why it was necessary to review procurement and internal audit processes in 2012, 2013 and 2014. She asked for information on the two-year performance contracts and the organogram referred to on page 49 and if the DOC as the shareholder had been consulted. The briefing to the Committee on the turnaround strategy during November 2010 had referred to only three pillars, rather than the seven pillars mentioned in the presentation. She asked for an update on the implementation of the turnaround strategy.

Ms Ndabeni referred to a number of examples in the strategic plan document where the key performance indicators or specific target dates were not clear or were omitted. The plans for improving organisational efficiency appear to be back-to-front as the structure was created first, followed by staffing and then by the development of a strategic plan.

The Chairperson noted that the SABC planned to install 300 low-power transmitters in rural areas. As the SABC could not confirm when the country would have 100% coverage, the number of transmitters to be installed was meaningless. He would prefer a plan to identify more communities that currently had no reception. He asked what long term plans were in place to provide 100% broadcast coverage by the SABC.

Dr Ngubane explained that the reduction of the headcount was a condition of the Government grant. The organisation had to be restructured in order to improve competitiveness and efficiency. The staffing level was bloated and it was decided not to extend or renew the employment contracts when they expired. A new organisational structure was developed and vacant positions were advertised, allowing any one to apply for the position. He stressed that the restructuring did not reduce jobs.

Mr Gina added that the reduction in headcount was achieved by natural attrition and that retrenchments were considered to be the last resort.

The Chairperson was aware that certain staff members had received payments without delivering any work. He asked how this practice saved costs.

Ms Killian asked if the disciplinary action taken against certain staff members where the person was suspended on full pay had been resolved.

Ms Muthambi asked for an explanation of the escalating personnel costs despite the reduction in headcount.

Mr Ndaba replied that three persons had worked to the end of their contracts and three had requested to be allowed to leave three months short of the expiry date when the SABC indicated that their contracts would not be renewed. Only one person had a contract of longer duration. The Corporation was dealing with the expiring contracts in six-monthly tranches and avoided creating false hopes that the contracts would be automatically renewed so that there was no legal basis for suing the organisation if the contracts were not extended.

The Chairperson observed that the current employment contract of the CFO expired in June 2011 but it had already been renewed. The SABC should not create the impression that certain employees were favoured.

Mr Nicholson advised that the renewal of the contract had been discussed with the Chairperson of the Board since January 2011. He pointed out that 58 new positions had been created in the digital division during 2011 and a further 40 new positions would be created in 2012. The analogue studios would no longer be required and would be closed down. The SABC was making use of freelance workers and the services of media companies, which were labour-intensive. It was estimated that seven jobs were created in the industry for every one SABC job. The SABC required all staff members to submit formal requests to do external work as specified by the Select Committee on Public Accounts (SCOPA). Audits were undertaken to ensure that the necessary requests were submitted, that the employee took leave for the period, who received payment and if any SABC facilities or equipment was used. The ruling did not apply to charitable work.

Mr Harris advised that risk policies and procedures were in place and the necessary training was being done. The SABC Board had recently decided to involve the SIU in cases where instances of fraud had taken place.

Ms Ndabeni asked how a key performance indicator (KPI) could be a date.

Mr Nicholson replied that the strategic plan document complied with the standards set by the Auditor-General. The document was audited by an independent auditor and an audit report was received. Where necessary, the KPI or target was clarified. An objective could have either a KPI or a target date, for example a process could be reviewed by a certain date. Two-year performance contracts were signed because many projects had durations of longer than one year and could have multiple deliverables. Performance rewards were linked to actual performance. A master plan to achieve 100% broadcasting coverage was underway. DSTV already provided 100% coverage but many South Africans could not afford to subscribe to the service. The additional 300 transmitters would cover the known areas where signals were not received. Complete and accurate census data on where people were living was not available but the SABC estimated that the additional transmitters would provide 98% coverage. The SABC did not have a strategy for identifying communities living in the remotest areas of the country and replied on such communities to bring the matter to its attention.

Mr Nicholson advised that the SABC owned a number of buildings but the current property strategy was not explicit enough and too vague. The strategy had to be reviewed to determine which buildings should be owned and occupied by the SABC and what the future accommodation needs of the organisation would be. For example, how many sites would be needed for DTT, whether any existing property could be utilised and where it should be situated. Certain properties had already been identified as superfluous but procedures to have the properties valued and disposed of, had to be in place.

Mr Gina confirmed that the Board agreed that a property strategy was necessary and would be submitted to the Committee when completed.

Ms Newhoudt-Druchen asked if there was a plan in place to provide 100% broadcasting coverage and if DTT would cover the entire country. She asked for clarity on the intention of launching the 24 hour news channel on DSTV.

Ms Muthambi noted that the revised organisational structure had been approved by the Board. She asked what process was followed in devising the new structure.

Ms Ndabeni observed that the strategic plans and new organisational structure required additional funding. She asked if the approval of the shareholder had been obtained. She repeated her earlier questions, which had not been answered.

Ms Killian observed that the turnaround strategy was being implemented and the SABC was slowly moving towards profitability but continued to request additional State funding. She noted that other cost savings measures had been implemented, for example outside broadcasting units and re-negotiating more favourable loan terms. Government expected the SABC to deliver on the DTT objectives.

Mr Nicholson responded that more attention was being paid to how the SABC delivered on its mandate and whether the desired impact was achieved. More work was necessary to measure the social impact of programming, for example the effect of programs aimed at pre-school audiences. A number of employees worked in facilities management and engineering services and it was a challenge to consolidate the different departments to deal with maintenance issues more effectively. He advised that DTT would not necessarily provide universal coverage although the technology allowed for increased access for persons with disabilities. The launch of the 24 hour news channel was postponed to October 2011 and the intention was to provide free-to-air broadcasts in addition to DSTV. He doubted that the news channel would replace current programs.

Dr Ngubane advised that the organogram had not been finalised and must still be approved by the Board. In the interim, nothing was being done about the employment contracts that were in force.

Mr Nage explained that the increase in staff costs equated to inflation plus 1.5%. Salary increases were only approved if the employee’s performance had been satisfactory. The SABC had lost a court case over the payment of post-retirement medical aid contributions and additional costs were incurred because the medical aid contributions of all retired persons had to be paid. The medical aid scheme for current staff was subsequently changed.

Dr Ngubane added that the objective was to align the number of staff to the organisational structure. The process had commenced only recently and it would take some time before the optimum headcount level was reached. The SABC had set a target to reduce the leave liability to R130 million.

Mr Ndaba said that the number of staff would be reduced by 20% in accordance with the turnaround strategy. It was estimated that there would be a saving of R122 million on staff costs for 2011/12. It had taken six months to develop the operational model and to design the organisational structure accordingly. The new structure had to be approved by the Board and the Minister before it could be presented to the staff. Organised labour had been involved during the entire process. The briefing included the assumptions that were used to create the performance baseline. The performance criteria applicable for staff were aligned with the strategic plan.

The Chairperson recalled that the SABC had been informed of the provisions of the Money and Related Procedures Act, which must be applied in addition to the Public Finance Management Act (PFMA). Page 48 of the strategic plan document indicated that the procurement processes had to be reviewed by March 2012. This target date created a logistical problem as the Committee had to perform quarterly reviews and it was not clear if the SABC would be in a position to submit a complete quarterly report by the due date.

Dr Ngubane agreed to reconsider the target dates specified in the strategic plan.

Ms Muthambi asked for clarity on the statement that the SABC would be unable to meet Government targets but would meet the grant conditions. She asked if the loan terms would be re-negotiated before the following financial year.

Ms Ndabeni asked for an explanation of the set-top boxes (STBs) referred to on page 82 of the strategic plan document.

Dr Ngubane replied that a recent court ruling referred to the STBs as a television set, which had resulted in confusion. It was necessary to obtain legal clarity on the issue and for ICASA to determine certain key definitions.

Mr Nicholson said that the SABC had set aggressive targets, which would be difficult to meet because the impact of DTT had not been factored in. The differences between the targets in the document could have arisen because different teams had compiled the document.

Ms Muthambi noted that the turnaround strategy was developed as a pre-condition for the Government guarantee. She asked if the SABC had identified the main cost drivers and wanted more details of the cost-saving measures that were referred to in the presentation. She noted that most of the top ten turnaround projects listed in the briefing were behind schedule.

The Chairperson suggested that the SABC, the DOC and the National Treasury met and held a productive discussion on the Government guarantee and the loan granted to the SABC.

Ms Ndabeni said that the affidavit from the former SABC employee was sent to the Chairperson of the Committee and was not intended for the SABC Board. She asked that the SABC provided a more detailed document setting out the strategic plans, the associated costs and who would be responsible for implementation.

Mr Nicholson explained that the changes in strategy affected the trading and pricing policies, debt collection and how customers would be serviced in future.

Ms A Ndlazi (ANC) asked who decided where transmitters would be erected and what role was played by the DOC.

Mr Nicholson replied than an analysis of needs was done and the largest audience determined. The site of the transmitters was decided between the SABC, Sentech and ICASA. The absence of census data meant that new transmitters were erected on a first come, first served basis. All complaints received from communities were listed and attended to as soon as possible.

The Chairperson asked the SABC to compile a plan for 100% broadcasting coverage. He suggested that all other stakeholders, including Sentech and ICASA were consulted. He requested that the SABC Company Secretary ensured that the Members of the Board were properly briefed before appearing before the Committee. He asked that all the KPIs and targets were correctly aligned with the strategic plans and budget and that all the outstanding matters were completed before the SABC appeared before the Committee on 24 May 2011.

The meeting was adjourned.