Buyisa E Bag was set up as a Section 21 company flowing from a memorandum of agreement that was signed between government, labour and business to offset the perceived negative social and economic impact of the plastic bag levy that was introduced. The objectives of Buyisa E Bag were to support the expansion of collector networks, to establish rural Small Medium and Micro Enterprises, create additional capacity within NGOs, create new jobs and retrain workers within the plastics field. The Department was very concerned about the governance, expenditure and the performance of the company and decided to do a review. To determine whether the objectives that were set out in the Agreement had been met and if not, what contributed to the failure. Department’s desire was to ensure that the original objectives were achieved, to ensure cost effectiveness, transparency, accountability, to prevent duplication of work already done within the Department and to ensure that there were minimal job losses or disruptions in the functions of the company during the transition to a new or revised structure.
The review found that as an entity fully funded by the Government, Buyisa E Bag failed to comply with the Companies Act as well as the Public Finance Management Act. Since its inception, Buyisa E Bag never had a strategic plan, or a business plan, which had made it difficult for the company to have a vision. The conclusion that the Department reached was that Buyisa E Bag failed to meet its objectives as per the MOA. The core problem was that it was set up as Section 21 company, but it was solely funded with public funds. The Companies Act and the Public Finance Management Act each had very different requirements in terms of governance, and the current structure only allowed for limited oversight by the Department. The Department preferred to wind up company and absorb functions, staff and activities within the Department. This was the preferred option because it ensured minimal job losses and the Department would ensure that the original objectives were retained.
Committee Members raised concerns as to why Buyisa E Bag was allowed to receive public funds without a business plan or a strategic plan. When would the winding up process be concluded? The Committee members were dismayed that the presentation contained no financial analysis.
The role of SANBI was to be a national and international leading biodiversity institute. The institute aimed to provide the best scientific based evidence and best practice model for policy advice to government and to society at all levels. The institute supported conservation and sustainability for the use of biodiversity for human well-being to help unlock the potential value and benefits of
SANBI was better known for the nine botanical gardens that it managed across the country. These botanical gardens were windows into biodiversity because eight of the nice were based near urban areas. SANBi was expanding the
SANBI had six core programmes: 1) Understanding biodiversity- which underpins all the research work 2) Bio-based biodiversity programmes 3) The Grassland system 4) The Wetlands system 5) The National Botanical Gardens System 6) Policy advice and Human Capital development. The key achievements of SANBI were the work on land degradation, bursaries for MSc and post doctoral students-particularly for the grasslands programme, development of a data collection tool on Environmental Impact Assessment (EIA) information, law enforcement on threatened species, mainstreaming of biodiversity, reporting on the impact of GMOs on biodiversity, a range of work on marine diversity and work with De Beers on offshore mining The core challenges had been financial resources
Committee Members raised questions about the reliability of Environment Impact Assessments, the rational for SANBI’s R27 million appeal and questions on job creation in the biodiversity sector.
The Committee refused to allow the Ngonyama Trust Board to present its briefing to the Committee, because it had failed to provide the documents in advance.
The Chairperson invited the Buyisa E Bag delegation to present the briefing
Current Status of Buyisa E Bag
Ms Lize McCourt, Chief Operating Officer, Department of Environmental Affairs (DEA), stated that the Buyisa E Bag issue had been on the Committee’s books for quite a while and there had been subsequent developments in this regard. As the Minister communicated to the Committee Chairperson in a letter, the delegation would rather update the Committee on the current status of ‘winding up’ the Buyisa E Bag company and the absorption of its functions into the Department. Ms McCourt invited Hanlie Schoeman to give the presentation on behalf of the delegation.
Ms Hanlie Schoeman, Chief Director: Corporate Governance, DEA, stated that Buyisa E Bag was set up as a Section 21 company flowing from a memorandum of agreement (MOA) that was signed between government, labour and business to offset the perceived negative social and economic impact of the plastic bag levy that was introduced. The purpose of the levy was to promote reuse of carrier bags and to enforce a minimum thickness of the bags, which would promote the recycling of the bags. The objectives of Buyisa E Bag were to support the expansion of collector networks, to establish rural Small Medium and Micro Enterprises (SMME), create additional capacity within NGOs, create new jobs and retrain workers within the plastics field. As the sole funder of the company, the Department was very concerned about the governance, expenditure and the performance of the company and decided to do a review. To determine whether the objectives that were set out in the MOA had been met and if not, what contributed to the failure. The purpose of the review and the recommended way forward was informed by the Department’s desire to ensure that the original objectives were achieved, to ensure cost effectiveness, transparency, accountability, to prevent duplication of work already done within the Department and to ensure that there was minimal job losses or disruptions in the functions of the company during the transition to a new or revised structure.
The review found that as an entity fully funded by the Government, Buyisa E Bag failed to comply with the Companies Act as well as the Public Finance Management Act (PFMA). Since its inception, Buyisa E Bag never had a strategic plan or a business plan, which had made it difficult for the company to have a vision. Without this business plan, the activities were not always in line with the stated objectives. With regards to expenditure, from its inception, Buyisa E Bag was never able to spend its allocation and the company had very high administrative costs compared to similar programmes run within the Department. It was difficult to measure the company’s effectiveness in terms of the stated objectives as the company only began to measure some of the indicators as late as 2010 some of the indicators had no available statistics at all. Similar functions were performed within the Department such as the Working on Waste programme within the Social Responsibility component of the Expanded Public Works Programme (EPWP). There seemed to be a very negative perception of the company in the media and public with regards to the company.
The conclusion that the Department reached was that Buyisa E Bag failed to meet its objectives as per the MOA. The core problem was that it was set up as Section 21 company, but it was solely funded with public funds. The Companies Act and the PFMA each had very different requirements in terms of governance, and the current structure only allowed for limited oversight by the Department. The Department considered three options on the possible way forward:
•to continue with the current structure as a Section 21 company, but to revise the articles of association in order to resolve the governance and management problems. This option was not preferred because the confusion with regards to the governing legislation would remain.
•to wind up company and establish a public entity, however it was not a preferred option in light of the Government’s support for the rationalisation of entities, also, similar functions were performed within the Department and
•to wind up the company and absorb functions, staff and activities within the Department. This was the preferred option because it ensured minimal job losses and the Department would ensure that the original objectives were retained. Compared to other project funding within the Department, the cost was much lower. This would allow for the legal certainty in regards to governance.
The PFMA would apply, which would significantly reduce the risk to the Department. On 14 July 2011, the Board of Buyisa E Bag signed a special resolution to voluntarily wind up company. The Department appointed KPMG to facilitate the winding up process. In the interim, Buyisa E Bag would remain a corporate body and operate under the strict control and management of the Departmental interim board. The Department foresaw this process unfolding over the next three to six months, after which all of the staff and functions would be absorbed within the Department and no jobs would be lost as a result of the absorption and the conditions of employment of all employees would be honoured.
The Chairperson opened the floor to discussion
Ms N Magadla (KZN, ANC) asked why was there duplication of functions between Buyisa E Bag and the Department. If the company was not effective why was it there?
Mr D Worth (
Mr G Mokgoro (
The Chairperson asked when the winding-up process would be concluded? What was the community impact on areas where the buy-back centres were located?
Ms Schoeman responded in terms of duplication of functions, when plastic bags were promulgated there were concerns about job loss from the labour lobby. Subsequently the plastic bag industry and Government agreed that the company needed to be established as a Section 21 company solely funded with public money. The thinking was that the money would come from the levy, not Treasury. However, this was not how Treasury worked. Treasury provided an allocation, rather than linking the revenue directly to the outcomes. All the revenue went directly to the Receiver of Revenue at the Treasury and it apportioned the funds that came from Treasury. Buyisa E Bag was governed by the Companies Act, and the governance of Buyisa E Bag was through a board comprised of the principle stakeholders in labour and the plastic bag industry. In terms of the business processes, the reporting and the financials, there was no accountability to Government. Instead there was accountability to the board of a Section 21 company. However, taxpayers provided the money for the work, so there needed to be accountability in terms of the PFMA, this was where things went wrong.
Concerning duplication of functions, there were certain elements such as the buy-back centres that would not be duplicated and would be absorbed. However there were elements such as the clean-up, support to SMMEs, education, job creation which were duplicated very specifically through ‘Working on Waste’- an Expanded Public Works Programme managed through the Social Responsibility Programme within the Department. Buyisa E Bag was a company that had company costs associated with it that was doing the same thing done with a Government Department without the company-related costs. Winding up meant that Buyisa E Bag would cease to exist and the timeframe for this would be December of 2011. The Department did not use the term ‘liquidated’ because there were financial assets and liabilities associated with that term.
Mr Mokogoro interrupted and emphatically stated that this was “totally unacceptable.” He asked how these people in high positions could allow the company to function without a business plan. Why was there no accountability? He suggested that the Committee not “waste its time” in listening to the Department and that they should go back and return with a more thorough briefing explaining the omissions.
The Chairperson stated that she was not happy with the presentation because it did not give the Committee any guidance. It was just a “blank thing.”
Ms Magadla agreed with Mr Mokgoro’s suggestion.
Mr Worth stated that the Committee should allow the Department to continue and explain what they meant by effectively liquidating Buyisa E Bag and explain what the new structure would achieve.
Mr Mokogoro replied that Mr Worth’s suggestion would not help the Committee because there was no basic substance to the report and the Committee was given an explanation with no foundation.
The Chairperson was dismayed that the briefing contained no financial analysis.
Mr Mokogoro asked why the Committee should continue discussing this matter.
The Chairperson stated that the Department should come up with a clear documentation to provide the Committee with information on outcomes of what would be achieved
Mr Ishaam Abader, Deputy Director-General: Environmental Quality Programme (EQP), DEA, responded that a Section 21 company was separate entity from Government and the only connection was the taxpayer money. Buyisa E Bag was more independent, whereas entities within the Department were accountable to it and bound by the PFMA. The problem was that Government was funding this company, hence the PFMA made the Department accountable for that money. Most of the Departmental officials got involved at the later stage and it was discovered that the company was not doing what it was supposed to do. This was a problem because the Government was using taxpayer money to fund this Section 21 company.
Mr Mokgoro interrupted and stated that he was “motivated to not waste time listening to rubbish.” There was a MOA between the Department and Buyisa. How come there was no plan at the time that this was entered into? How could the Department give money to someone who was independent and was not accountable for the use of public money?
The Chairperson closed the debate and stated that the Committee was not happy that the Department released money where there was no strategic plan. The Department should go and return with clear documentation for the Committee.
Ms McCourt responded that a strategic plan should not be confused with a business plan. In reference to the Minister’s letter to the Committee, the Department could not present on those things because the company ceased to exist. Instead the Department would come and explain what the winding up process was about, what led to the process and how was the Department seeking to honour the original objective as to why Buyisa E Bag was established. That was what was presented that was what the delegation was instructed by the Minister to do. What the Departmental officials could do was to provide the Committee with a detailed report, which outlined the review processes. The MOA allowed the Department to terminate funding with a six-month notification and this was done in March. As an independent, not-for-profit Section 21 company, Buyisa E Bag had two options: either find the money elsewhere or go the liquidation route. Winding up the company would prevent job losses, so the Department assisted the company in the winding up process, so that original objectives of the MOA were honoured. The Department could provide the Committee with the review report, but would not come back and stand in for the company ever, because it was not the role of Government to be the legal accountable authority for a Section 21 company. The Board of the company was accountable in terms of the Companies Act. The Department could return and inform the Committee of the Department’s processes from an accountability perspective regarding the money. In terms of the accountability and governance of the company, it was not the legal role and mandate of the Department.
The Chairperson requested review documents and the MOA and the Committee would write back to the Minister.
Mr Mokogoro stated that the Committee did not ask the Department to come in and stand for the company. The request was why to explain why there was gross negligence by the Department when the MOA was entered into? There was no way that the Committee could accept the briefing presented.
The Chairperson invited the South African National Biodiversity Institute (SANBI) to present its briefing.
Briefing by South African National Biodiversity Institute (SANBI)
Ms Tanya Abramse, CEO of SANBI stated that the role of SANBI was to be a national and international leading biodiversity institute. It was the leader on a wide range of knowledge generation work and research on certain species and ecosystems, Genetically Modified Organisms impacts and bio-adaptation to climate change. The institute aimed to provide the best scientific based evidence and best practice model for policy advice to government and to society at all levels. The institute supported conservation and sustainability for the use of biodiversity for human well-being to help unlock the potential value and benefits of
SANBI was better known for the nine botanical gardens that it managed across the country. These botanical gardens were windows into biodiversity because eight of the nine were based near urban areas. SANBi was expanding the
The source of SANBI’s mandate was a public entity under the DEA, established by the Biodiversity Act of 2004 on the foundations of the National Botanical Institute. The shift from the National Botanical Institute to SANBI was a greatly expanded legal mandate. SANBI participated in the Presidential Outcome 10 in support of the Department. SANBI had a five-year rolling corporate strategic plan, based on the Cabinet-approved National Biodiversity Strategic Action Plan. SANBI had an annual performance plan approved by the Minister and monitored by the Department. SANBI’s board had also signed a governance protocol with the Director General of DEA. SANBI has help government to achieve the Millennium Development Goals, particularly goal number seven.
SANBI had six core programmes: 1) Understanding biodiversity- which underpins all the research work 2) Bio-based biodiversity programmes 3) The Grassland system 4) The Wetlands system 5) The National Botanical Gardens System 6) Policy advice and Human Capital development. The key achievements of SANBI were the work on land degradation, bursaries for MSc and post doctoral students-particularly for the grasslands programme, development of a data collection tool on Environmental Impact Assessment (EIA) information, law enforcement on threatened species, mainstreaming of biodiversity, reporting on the impact of GMOs on biodiversity, a range of work on marine diversity and work with De Beers on offshore mining to identify priority areas for biodiversity management in the hope of providing business the tools and data to improve their business management to better protect the environment.
The core challenge had been the lack of financial resources. SANBI’s Medium Term Expenditure Framework grant had been cut or stagnant over the last five years, despite a greatly expanded mandate, high inflations in terms of wages and a 25% increase in electricity costs. SANBI also still struggled to highlight that the biodiversity sector was one where an individual could pursue career opportunities. SANBI worked constantly to overcome the legacy issues around biodiversity in South African society.
Ms B Mabe (Guateng, ANC) asked whether SANBI was only involved in research and what else was it doing to increase its visibility in communities that did not know about the institute? What was SANBI’s specific role with regards to EIA? Did SANBI have timeframes? How reliable were the EIA reports? She added that SANBI needed outside of the box solutions to get funding.
Mr Worth stated that most botanical gardens did not generate enough money to be self-sustaining. What was spent in total on the gardens? What was the amount of R27 million that SANBI was appealing for to be used for?
Mr Mokgoro asked how many MSc and PhD scholars had SANBI offered bursaries for. Was the R300 000 sufficient, because scholars received a stipend?
The Chairperson asked what percentage of funding was from the Department and what percentage was generated from SANBI?
Ms Magadla asked about job creation in the biodiversity sector.
Ms Abramse responded that the basic Government grant constituted was 46% of SANBI’s total income. This represented an increase of 7% over the recent year, but did not cover increased operational costs. SANBI only receive about 8% of total income from grants. Unlike the National parks, the botanical gardens were a ‘walk through facility’, and SANBI would not raise the price of admission, as would prevent low-income people from being able enter the gardens.
A lot of SANBI projects had come from donor money, from the Water Research Council, EPWP, The Departments of Agriculture, Forestry and Water Affairs. SANBI worked very closely with DEA on strategies to overcome the financing challenges.
SANBI had established conservation and biodiversity messages within the national curriculum of basic education. Most of the beneficiaries of the Gardens were primary school kids doing environment and biodiversity studies, which was what SANBI was known for. SANBI wanted to participate in follow through to engage with the curriculum and engage with the students when they were pursuing their matriculation studies and also at the university level.
SANBI did not engage in the EIA, except in support of the Department, as it would be a conflict of interest. What SANBI did was to provide science-based information for the Department to make a decision. Hopefully this would make the EIA more popular with business. SANBI’s role was in support of the EIA.
On the subject of bursaries, Ms Abaramse stated that in order to do this question justice, she would write a full-scale report and send it to the Committee Chairperson. The R300 000 that was referred to in the presentation was only for the Grasslands project.
On job creation, SANBI was putting forth a proposal to fund training for 47 000 ‘green jobs’. According to SANBI’s research there were 47 000 public sector environmental, biodiversity jobs standing empty across the country. SANBIS first phase was not to create new jobs, but to fit people in the available jobs. Research showed that there were not enough qualified people to fit into these jobs. There was a large cohort of unemployed university graduates who were unable to do the jobs because their university training did not adequately prepare them. SANBI planned to ‘incubate’ graduates and train them to fill these posts.
In response to the R27 million appeal, despite SANBI’s stringent cost-cutting measures of limiting travel, employing no new persons for critical posts. There were a few critical posts where individuals had retired and the Institute was beginning to be hampered. SANBI needed at least R27 million to fulfil its mandate.
Ms Schoeman responded that in terms of the EIA, the reliability of the reports was a concern. There was recently a conviction against an environmental consultant for providing the government with misleading information. It was a criminal offence to provide incomplete, incorrect or misleading information. The Department was regulating environmental assessment practitioners, in March 2011 the Minister had launched the Environmental Assessment Practitioner Association and they had submitted an application to the minister to become a registration authority similar to other professions where there codes of ethics and conduct existed.
Mr Christopher Willis, Chief Director of the Gardens programme, SANBI, responded that the costs associated with running the gardens consisted of 360 permanent personal in the nine gardens, which cost R65 million per year. The operating costs were R21 million and the gardens generated between R35- R40million in revenue per year. The Gardens also generated income through sponsorships and donations from the corporate sector and NGOs, as well as support from the EPWP, where SANBI had been able to build education centres.
The Chairperson thanked SANBI for their presentation and invited the Ngonyama Trust delegation to face the Committee.
The Chairperson asked why the Committee only received the briefing documents today.
Mr Mokgoro also asked why it was so difficult for the Ngonyama Trust board to get the document to the Committee ahead of time.
The CEO of the Ngonyama Trust Board stated that the documents were supposed to be sent on the previous Friday; however there was a power outage. An attempt was made to re-send the documents on Monday and that failed.
The Chairperson replied that this showed the Committee that the Ngonyama Trust Board was not serious, as they were invited to the Committee two weeks ago. The Committee had a policy not to engage in briefings where documents were not provided in advance, as members required time to review the documents. The Committee would not hear the briefing today. Instead they would give the Ngonyama Trust Board another day to present to the Committee.
Mr Worth agreed with the Chairperson
Ms Mebe asked where the women on the Ngonyama Trust Board were.
Mr Mokgoro stated that the Committee could not listen to the briefing because the Committee needed its content advisor to take the members through the document first.
The CEO of the Ngonyama Trust Board stated that he wished to record the apology of the board and took full responsibility for failing to provide the documents in advance. This was first time in 14 years that Ngonyama Trust had been invited to present before Parliament, the invitation was directed to the Department and the Department passed it on to directly to the Ngonyama Trust Board. The Ngonyama Trust board would have appreciated an emphasis that this was how Parliament operated. He requested that the Committee inform the Ngonyama Trust delegation of any further details on what else needed to be provided, as they needed to be sure that the next time they stood before the Committee, they were prepared to hear the briefing.
The Chairperson requested the report from the Auditor General and asked for the size of the land and an indication o the “demographics of the community”, so that when the Committee discuss the matter further, it had the profile of “what was going on there.”
The Chairperson closed the meeting.
- SANBI’s National Botanical Gardens: Summary of Progress & Achievements, Challenges and Financial Status
- SANBI’S National Botanical Gardens Summary of Progress & Achievements, Challenges & Financial Status
- South African National Biodiversity Institute Annual Report 2010/11
- South African National Biodiversity Institute presentation
- Report by Ingonyama Trust Board
- Ingonyama Trust Board presentation
- Buyisa-e-Bag presentation
- We don't have attendance info for this committee meeting
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