Department of Communications on its 2011 Strategic Plan

NCOP Public Enterprises and Communication

24 May 2011
Chairperson: Ms M Themba (ANC, Mpumalanga)
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Meeting Summary

The Department of Communications presented on its 2011/12 budget and plans. The presentation looked at the DoC’s mission, vision, mandate, flagship programmes and additional projects and financial information. The flagship projects focused on job creation, e-skills, broadband connectivity, the rolling out of Digital Terrestrial Television (DTT), the Postbank, and rural connectivity. The DoC has identified a few critical areas which could facilitate the creation of approximately 151 050 jobs over the medium to long term period. These areas included broadband infrastructure and services, DTT infrastructure, creative industries, SMME and capacity building, manufacturing of electronics, the regulatory environment, and the postal sector. National Broadband Infrastructure was allocated R450 million over the Medium Term Expenditure Framework (MTEF) period. R100 million was allocated for 2011/12, R150 million for 2012/13, and R200 million in 2013/14. Set Top Box (STB) subsidies were being allocated R690 million over the MTEF, with R220 million for the 2011/12 financial year, R230 million for the 2012/13 financial year, and R240 million for 2013/14. Regarding budget allocations, R1 449 112 000 was allocated for the 2011/12 financial year, R1 341 705 000 was allocated for 2012/13, and R1 411 681 000 was allocated for 2013/14.

The Committee’s concerns included whether the DoC had the “right” people working with the Further Education and Training colleges and universities in order to transfer e-skills, why the e-skills programme was only being implemented in well-developed provinces, if South Africa was going to benefit from the manufacture of some of the DTT equipment or if all were going to be imported, why the DoC had under-spent by R100 million, whether the government was “winning” in connecting rural areas, was the country ready for Digital Migration, what criteria the DoC used to determine which provinces it should develop because it always seemed as if projects were being implemented in the Western Cape.

Members also asked if community radio stations knew there was a grant they could receive from the DoC, what the DoC was doing about the money owed to Sentech by community radio stations, who the commissioners were within the Presidential National Commission (PNC), whether the PNC was a Chapter 9 institution and whether it was supposed to have been “closed”. They also wanted to know if the DoC did comparative research when it estimated its budget for job creation. The Committee noted that the DoC Director-General o had once said that the DoC was the type of entity that could only create the climate for others to create jobs. They did not understand this statement and asked for clarity. The Committee requested a document showing the exact locations where e-skills programmes and other projects were being implemented so they could perform proper oversight on them.

Meeting report

Department of Communications (DoC) briefing on their Budget Vote
Dr Harold Wesso, DoC Acting Director-General, briefed Members on the DoC’s vision, mission and mandate. He also spoke about the DoC’s flagship programmes, which included:

▪ Job creation - to establish an Information and Communication Technology (ICT) industry-wide working group on job creation to facilitate the identification of priority areas for job creation.
▪ E-skills – to “massify” the e-skilling of South Africa for a rightful place in the Information Society and Knowledge-based Economy.
▪ Broadband – to improve broadband penetration to match comparative countries such as India, Brazil and Chile. An Integrated Broadband Plan would be developed to facilitate capital investment, innovation and rural access. Plans for connecting schools, health, and government centres will improve service delivery, and the uptake and usage of broadband by government and individuals.
▪ Digital Terrestrial Television (DTT) – South Africa has formally adopted DVB-T2 as the preferred standard for the migration of analogue to digital broadcasting. In implementing the Digital Migration Policy in South Africa, the programme will focus on finalising the Set-Top Box (STB) manufacturing strategy, scheme of ownership support for poor households, and the local and digital content development strategy.
▪ Postbank – the Postbank Bill was signed into an Act late last year. Work will begin to fast-track the roll-out of the Post Bank centres or outlets throughout the country.
▪ Rural Connectivity – The ICT rural development strategy will be implemented through various key programmes during the financial year 2011/12.

The broadband programme would seek to increase broadband penetration, develop a broadband strategy and implementation plan, and finalise provinces and municipalities broadband guidelines. Currently, the DoC is focusing on the roll-out of broadband infrastructure to schools, clinics, health centres and other government centres in the Msinga, Sisonke, Ilembe and Amajuba districts in Kwazulu-Natal (KZN), in the greater Tzaneen district in Limpopo.

Regarding the Postbank Programme, the DoC was in the process of developing a borrowing policy, an investment policy, and a lending policy for the Postbank. During the rolling-out of Postbanks, priority would be given to under-serviced rural areas. The Postbank’s focus would be on the “unbanked” population who are not part of the formal banking sector.

The DTT programme would accelerate the implementation of the Broadcasting Digital Migration Policy, ensure the availability of affordable STBs, ensure there is proper governance for the Broadcasting Digital Migration (DGM) Programme, and facilitate and monitor the DTT infrastructure roll-out. DTT transmitters have been rolled-out to reach 60% population coverage. Most of this coverage is largely in the metros, but the impact at the local level will be realised at a later stage following the distribution of STBs. The DoC would facilitate the implementation of the action plan to benefit Small, Medium and Micro Enterprises (SMMEs) in the BDM value chain.

The e-skills programme would focus on implementing e-skills training programmes, developing and implementing an e-skills awareness campaign, expanding the ICT career expo, expanding the network of universities and Further Education and Training (FET) colleges, and implementing e-skills training for 1100 youth and unemployed graduates. Currently, the DoC has Memorandums of Understanding (MoUs) with five universities in Gauteng, Northern Cape, Western Cape, Eastern Cape and KZN. MoUs were being initiated with Limpopo and North West. Work has been commenced with 20 FET colleges across all provinces to conduct proprietary IT training, and teachers were also being trained in embedded software and multimedia.

The rural connectivity programme would focus on adopting and implementing the ICT Rural Development Strategy, operationalising the SMME e-commerce portal, establishing 400 digital hubs in rural areas, and facilitating the roll-out of low power transmitters to cover 5 million inhabitants.

Regarding the job creation programme, the DoC has identified a few critical areas which could facilitate the creation of approximately 151 050 jobs over the medium to long term period. They include broadband infrastructure and services, DTT infrastructure, creative industries, SMME and capacity building, manufacturing of electronics, the regulatory environment, and the postal sector.

Some of the additional projects that the DoC was involved with includes the Impendle Community Communications Centre, the e-schools and e-health connectivity programme, the e-literacy programme for youth offenders, the development of hospital websites, the municipal website project, the National Digital Repository, the Military Veterans Project, the Community Radio Sector Project, and the Inspire Programme.

National Broadband Infrastructure was allocated R450 million over the Medium Term Expenditure Framework (MTEF) period. R100 million was allocated for 2011/12, R150 million for 2012/13, and R200 million in 2013/14. STB subsidies were being allocated R690 million over the MTEF, with R220 million for the 2011/12 financial year, R230 million for the 2012/13 financial year, and R240 million for 2013/14. Regarding budget allocations, R1 449 112 000 was allocated for the 2011/12 financial year, R1 341 705 000 was allocated for 2012/13, and R1 411 681 000 was allocated for 2013/14. The bulk of the 2011/12 budget would be classed as transfers to be made to the Independent Communications Authority of South Africa (ICASA), Sentech, the Universal Service and Access Fund (USAF), the South African Post Office (SAPO), the South African Broadcasting Corporation (SABC), The Universal Service and Access Agency of South Africa (USAASA), Channel Africa and the National Electronic Media Institute of South Africa (NEMISA). 

Discussion
Mr H Groenewald (DA, North West) stated that he thought the Committee should see what was happening regarding broadband cables, especially the undersea cables. Members had to see what was happening themselves. He also wanted to know what was happening in the provinces regarding the pipelines that were being put underground. Was this part of the broadband programme? Where were the cables going to? He was happy that the DoC was working hand-in-hand with schools and the Education Departments. He was concerned with whether the DoC had the “right” people working with the schools and FET colleges in order to transfer these skills. He asked where all the equipment that was needed for the DTT programme was manufactured. He asked if South Africa benefited from the manufacture of some of the equipment or if all of them were imported. For example, the STBs were manufactured in china, which did not benefit the country at all. He thought it was important to manufacture the equipment in the country so South Africans could benefit from it.

Dr Wesso replied that the DoC had to arrange an oversight visit for the Committee to see the undersea cables. One of the places would be in Blouberg Strand where Members could see what was happening. The cables that were being laid underground, which were various colours, were from different companies. This was part of the problem as sometimes there was no coordination between the companies, especially in major cities where fibre-optic cables were being laid. The companies and government were not playing their roles in rolling out cables to other areas. This was why the DoC had a programme to roll out broadband to rural areas. The private sector was more interested in where it could make its money, which meant that the government had to go where there was market failure. The DoC was developing policies and strategies to ensure the entire country was being covered.

He said that the training of lecturers at FET colleges was a major challenge for the DoC. The DoC was currently in discussions with the Department of Higher Education and Training (DHET) to see how best to train lecturers at FET colleges to train students. The DoC found that the quality of training at FET colleges was not very good. The DoC was aware that this was a very serious problem and they were dealing with the matter at a very high level. For example, the DoC developed a multimedia qualification for FET colleges. This was the future, but the DoC found it very difficult to get lecturers to be trained in multimedia.

Dr Wesso addressed the Member's concern regarding the manufacture of STBs. He said that the focus of the STB strategy was to create a national programme to develop a national electronics industry with STB manufacturing as a catalyst. The strategy would not entail the importation of STBs, but would look at the production of STBs locally. This strategy would allow the country to export the products to other African countries. However, the Committee had to understand that it was difficult for a developing country such as South Africa to get to a position similar to that of a European country overnight. The government and the DoC were doing their best to deliver on ICTs.

Mr O De Beer (COPE, Western Cape) noted that Dr Wesso had once said that the DoC was the type of entity that could only create the climate for others to create jobs. He did not understand this. He also noted that the DoC had under-spent on their budget by almost R100 million, so he understood the justification for having a decrease in their budget. He did not think the presentation put any emphasis on whether the government was “winning” its agenda in terms of connecting rural areas. He appreciated the DoC's hard work in getting mobile companies to decrease the cost of interconnection fees, as he felt South Africa was one of the most exploited countries in terms of interconnection tariffs.

Mr Sam Vilakazi, Acting Deputy Director-General: Finance and ICT Enterprise Development (DoC), replied that the challenge of job creation was quite massive. The DoC was working on plans that would inform what could be done with respect to the budget and job creation. National government had to work with local government, provincial government, as well as the private sector to create jobs for South Africans.

Dr Wesso answered that the reduction of interconnectivity rates was an ongoing project. The rates had decreased over the past few months. As the government created competition and a competitive environment, the rates were coming down. Interconnection rates were something that was being dealt with by private sector companies, as the government could not tell these companies what to do. However, ICASA could create policies and strategies to facilitate the process of reducing the rates.

Mr Vilakazi stated that it was true that the DoC’s budget had decreased compared with the previous year’s budget allocation. This was because the previous year’s budget allocation was loaded with 2010 World Cup items that were used by Sentech, Telkom and other entities to roll out World Cup infrastructure. However, even with the reduced budget allocation, the DoC still had over R300 million to use for rolling out other projects.

He said that the under-spending of the budget occurred because the DTT standards had not yet been promulgated so money could not be dispersed for STBs, and money that had been set aside for Sentech to use for DTT infrastructure could not be utilised because the DoC did not know which DTT standard the government was going to adopt. The DoC has applied for these funds to be rolled over.

Mr Vilakazi addressed the concern of whether the government was winning its agenda to connect rural communities. He said there were 27 000 schools that had to benefit from the connectivity programme and hospitals had to benefit as well. Currently, the infrastructure at hospitals is well below standard. Several billion Rands were needed to implement a project of this kind.

Mr M Jacobs (ANC, Free State) stated that the greatest challenge that the government had was to translate theory into practice. He noted that the e-skills programme was being implemented mostly in well-developed universities in provinces. He wondered how this would help to address the lack of skills in rural areas. It meant that those that were rich would continue to be rich, while the poor would continue to be poor. Why was the e-skills project being implemented in colleges and not in schools so learners could be educated about e-skills at an early age? He stated that the Committee would appreciate it if the DoC could give them the exact locations where e-skills programmes were being implemented so they could perform proper oversight on them. In which areas would jobs be created and when would the job creation process start? Did all community radio stations know there was a grant that they could get from the DoC?

Dr Wesso replied that the Committee needed to understand how different universities could be used to implement government programmes. There were different kinds of universities: previously disadvantaged universities, wealthy universities, universities in urban areas and universities in rural areas. For example, the University of Western Cape (UWC) is a previously disadvantaged, “black” university in an environment where there are a lot of developments taking place. Then there is Walter Sisulu University in the Eastern Cape, which is a black, rural university. The DoC also wanted to focus on ICTs for rural development. The Doc would provide the Committee with the addresses of these universities where e-skills programmes were being implemented.

Dr Wesso said that the DoC, over the next three years, would try its best to contribute to the five million jobs that the President said would be created. The Presidency wanted each department to give them a sense of how many jobs they would contribute toward the five million. The DoC said that they could contribute 150 000 jobs over the three-year period. They still had to see what kind of jobs they would be creating.

He said that the DoC was in the process of working with and training community radio stations. There was a section within the DoC that worked very closely with community radio stations.

Mr M Sibande (ANC, Mpumalanga) wondered what criterion the DoC used to determine which provinces it should develop because it always seemed as if projects were being implemented in the Western Cape, and there was a lack of development in areas that really needed it. He asked the DoC to elaborate on the criterion they used. He also thought it would be more useful if the DoC could give Members a list of the amount of jobs that were going to be created in each province. He asked if the DoC had a system in place to monitor the funds that were distributed to their subsidiaries. He noted that there were still many areas within the country that did not even get a signal for television. He was concerned that the DoC was not ready for digital migration.

Dr Wesso explained that when the DoC decided on which province to work with, it was always to balance the amount of work they did in rural and urban areas. The DoC learnt lessons from rural areas in terms of what the demands were, and what issues they needed to focus on. The DoC also looked at provinces where things were already happening to see what the DoC should replicate in other under-developed provinces. The government could only come in to places where there was real market failure, in partnership with the private sector. The private sector will not invest in areas that were deemed not to be profitable. This was such a big multi-billion rand project, which the government could not be expected to handle alone.

Dr Wesso replied that the deadline for digital migration to be complete was 2013. The DoC was focused on developing an STB manufacturing strategy at the moment, which would be given to Cabinet very soon. The government has decided that there would be a strategy for subsidising STBs so everybody could benefit from digital migration. This would be targeted at people with very low income.

The Chairperson asked who the commissioners were within the Presidential National Commission (PNC), whether the entity was a Chapter 9 institution, and whether it was supposed to have been “closed”. She noted that money had been owed to Sentech by certain community radio stations. She asked them to update the Committee on what was happening regarding the payment of money to Sentech. When did the DoC provide these community radio stations with training and how many of them had licenses but no equipment? Did the DoC do comparative research when they estimated their budget for job creation? She asked the DoC to clarify what they meant when they said they could only create the climate for others to create jobs.

Mr Vilakazi answered that there was a scientific process that the DoC followed in terms of estimating the number of jobs that would be created and the budget that would be needed for it. The estimates for the budget and number of jobs to be created were very realistic.

Mr Themba Phiri, Acting Deputy Director-General: Presidential National Commission on Information Society and Development (PNC on ISAD) in the DoC, replied that the DoC implemented a bail-out plan in the last year for community radio stations that owed Sentech money. Going forward, together with Sentech, the DoC revised the billing system so that community radio stations could afford the transmission costs that Sentech charged them.

He said that the DoC held training sessions for community radio stations on the management of stations, financial management and good governance. Training sessions were held before the local government elections. He said there were community radio stations that were licensed but not operating. Some of these stations were waiting for their supply of broadcasting equipment. The DoC would be providing 58 community radio stations with equipment within this year.

Mr Vilakazi answered that the Chairperson was quite correct; there has been a call from Parliament to close the PNC as it did not really function in a manner that it should have. There was a suggestion that the government integrate the work of the PNC to ensure it is sufficiently closed. The PNC was established by the former President so a process has to be followed in terms of the presidential orders. This process had been started already. The PNC was never a Chapter 9 institution; it was not even established in terms of a law that was promulgated. It was established by presidential decree. Commissioners were appointed in 2001 and their terms were never renewed. The PNC has just been there to perform functions in communities.

Dr Wesso explained that the Committee had to understand the mandate of the DoC, which was fundamentally about national policy development and research development. In the past, the DoC developed policies and strategies, and they had an inward-looking way of doing it. The DoC has developed the policies and expected other departments to implement them because the DoC is not an “implementing” department according to its mandate. He did not think the DoC, or any other department had the budget and the resources to provide a blanket implementation framework across the country. So, in developing policies, the DoC had to ensure that the entire country was covered. They did this by creating “pilots” so that they could provide guidance for rolling out projects nationally. Many of the Members' questions were complicated in terms of the mandate of the DoC. He gathered that Members wanted the addresses for projects that were being rolled out in various provinces. The DoC could provide the Committee with these details. They could even arrange for Members to receive a tour that would take Members to these places.

The Chairperson noted that the Committee had asked for this information previously but had not received it.

Mr Sibande added that it was the Committee's duty to perform oversight over the DoC and their projects. Members were asking the DoC questions and instead of the DoC responding to the questions properly, the Committee was being told that they should perform oversight on these projects. Dr Wesso was an accounting officer and the Committee had a right to ask him what was happening within the DoC.

Mr Jacobs noted that Dr Wesso had said that the DoC's mandate was for policy formulation. However, this went hand-in-hand with their budget. So what was the Committee supposed to do oversight on? He thought perhaps the Committee had to perform oversight on the DoC's policy formulation mechanism.

Ms L Mabija (Limpopo) requested that the Committee focus on the topic and hand and respect one another, so that the Committee and the DoC were able to assist one another. The meeting was held in order for the Committee and the DoC to discuss how to properly implement the DoC's projects and programmes. She pleaded for Members to respect the agenda of the meeting, as they did not want to utter statements that would insinuate other things.

The Chairperson stated that Members concerns were clear. She noted that there had been a time when they had congratulated the Minister of Communications for saying that the DoC would be creating a great number of jobs over the next three years. Therefore, it seemed to be a contradiction that Dr Wesso was saying that the DoC's mandate was not to create jobs. She also wanted the DoC to send the Committee a proper presentation that would assist Members in working with their respective provinces. Since there was a time constraint, Members would have to forward any other questions to the DoC. She thanked the DoC for their presentation and thought it would be best for the Committee to perform oversight on the DoC’s projects and programmes.

Dr Wesso said that he would forward to the Committee a document giving the exact locations of where the DoC’s projects and programmes were being implemented.

The Chairperson thanked Dr Wesso and said she expected to have the information by Friday, 3 June 2011.

The meeting was adjourned.


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