Department of Communications Annual Report 2010/11

Meeting report

Briefing by the Department of Communications (DOC)
Ms Rosey Sekese, Director-General, DOC introduced the delegates to the Committee and summarised the findings of the Auditor-General, which put the briefing by the DOC in context (see attached document).

The Department had subsequently established an internal audit function, an audit committee and a risk management function and the necessary governance structures were fully functional.  The Department had submitted a procurement plan to the National Treasury and established an evaluation and specification committee to monitor expenditure.

The Department had not spent the funds made available for the Set-Top Box (STB) program (R180 million) and the Sentech Digitisation program (R199 million) because the digital terrestrial television (DTT) standards were not in place.  R117 million was not spent because the 112 Emergency Call Centre project was terminated.  Telkom reported a saving of R150 million for the 2010 FIFA Soccer World Cup project.  The total amount of the unspent appropriation was R711.5 million.

Ms Sekese acknowledged the contribution made by Dr Harold Wesso to stabilise the environment in which the DOC operated during his tenure as Acting Director-General.

The key achievements of the Department’s six programmes for the 2010/11 financial year were summarised in a separate document (see attached document).  The report included the targets that were set; the actual achievements; whether the targets were achieved, partially achieved or not achieved; the reasons for the variance and the current status.

Mr Norman Munzhelele, Acting Deputy Director-General: ICT Policy Development, DOC took the Committee through the achievements of the ICT Policy Development branch.  Thirteen targets were achieved, 15 were partially achieved and nine were not achieved.

Mr Linden Petzer, Acting Deputy Director-General: Infrastructure Development, DOC summarised the achievements if the ICT Infrastructure Development branch.  Seventeen targets were achieved, eighteen were partially achieved and one was not achieved.

Mr Themba Phiri, Acting Deputy Director-General: Presidential National Commission on Information Society and Development (PNC), DOC presented the achievements of the PNC branch.  Nine targets were achieved and eleven were partially achieved.

Mr Moseamo Sebola, Chief Director: Bilateral Affairs, DOC presented the achievements of the International Affairs and Trade branch.  Ten targets were achieved, eight were partially achieved and one was not achieved.

Mr Sam Vilakazi, Acting Deputy Director-General: Finance and ICT Enterprise Development, DOC summarised the achievements of the ICT Enterprise Development branch.  Three targets were achieved and eight were partially achieved.

Mr Farhad Osman, Chief Director: Strategic Planning and Monitoring, DOC presented the achievements of the Governance and Administration branch.  All seven targets were achieved.

Mr Vilakazi concluded the briefing with an overview of the Department’s financial performance.  Total revenue amounted to R4.03 billion.  Total expenditure amounted to R1.4 billion.  The DOC transferred R2.6 billion in unspent funding and excess revenue to the National Treasury.  The appropriation statement indicated the amounts appropriated, actual expenditure and the variance for each of the six programmes.  A summary of the economic classification and details of the transfer payments to the subsidiary entities were included.

Discussion
Ms N Michael (DA) said that the lack of adequate human resource capacity was clearly a major problem for the Department.  Too many senior officials operated in an acting capacity, which was bad for morale as there was no sense of permanence.  She wanted to know why the Department had failed to fulfill its mandate, to fill the vacant posts and to create jobs.  She asked why there was a lack of data to conduct an impact assessment for the Electronic Communications Act (ECA) Amendment Bill and the Independent Communications Authority of South Africa (ICASA) Amendment Bill.  She wanted to know why the policy directive on the pricing of broadband services had not been issued.  She asked if the Department had obtained legal opinion on the issue of interconnectivity costs.  The cooperation with Finland was welcomed and it was noted that access to broadband services was considered to be a right of all citizens in that country.  She asked why Cuba was involved in the training programmes as that country was not considered to be a major player in the field of communications technology.  Only nine municipalities were involved in the e-health project.  She asked if the Minister had been approached and what the reasons were for more municipalities not being involved.

Ms J Killian (COPE) recalled that the Committee had agreed one year ago with the DOC that the Department would redefine its strategic priorities, fill vacant posts and review the key strategic projects.  She referred to the statement issued by the Committee after the meeting with the Department on 13 October 2010.  The Committee had felt that the Department’s performance was not acceptable and she was of the opinion that little progress had been made.  She sympathised with the recently-appointed Director-General and acknowledged the contribution made by Dr Wesso but remained perturbed by the continued lack of performance.  It would appear that the DOC expended 80% activity to achieve 20% result and it was necessary to develop ‘smart’ goals.  The Department suffered from internal strife and division, a high vacancy rate, excessive sick leave and overtime and many labour disputes.  She asked if the disciplinary action taken against members of staff had been finalised or if the Department continued to pay the salaries of staff that had been placed on suspension as well as the salary of the person who was appointed in the position.  She wanted to know how much was spent on unsuccessful labour disputes.

Ms Killian wanted clarity on the plans of the Director-General.  The Committee held the responsible officials accountable for carrying out their duties in accordance with the public service regulations and the Public Finance Management Act (PFMA).  The Department had suffered from a lack of leadership in the past and its mandate had a significant impact on all South Africans.  She was very disappointed in the lack of achievement that was reported.

Mr C Kekana (ANC) said that the Department operated in a very tough environment.  He also wanted to know more about the appointment of permanent staff in vacant posts and the role played by Cuba.  He felt that Cuba could make a more significant contribution, particularly in the manufacturing sector, than European Union (EU) countries.  South Africa needed to create more jobs and the manufacturing sector had an important role to play.

Ms S Tsebe (ANC) saw little improvement in the performance of the DOC.  She wanted to know what the strategy was to address the areas of concern.  The same issues were reported in the previous year, i.e. the lack of human resource capacity, the delays in projects, under-spending on all the programmes, many partially achieved targets, awaiting approval for projects and inaction whilst projects were reviewed.  She wanted an undertaking from the Department that its overall performance would be improved in the following year.

Ms Tsebe asked for detailed comment on the findings of the Auditor-General.  She asked if the Department’s audit committee was functional.  She wanted to know when the Department became aware of the problem areas and where the money came from for the unfunded posts.  There were discrepancies between the presentation and the report of the Auditor-General. During the Committee’s oversight visit to KwaZulu Natal, it was noted that the failure of the DOC to honour payment commitments had contributed to the financial problems experienced by the South African Broadcasting Corporation (SABC).  She asked what the status was of the digital migration programme and what had been done to create awareness amongst the public.

Mr N van den Berg (DA) said that the issue of cyber-security was important and asked when the policy directive would be in place.  He asked what the cost of the delay in the issue of the DTT standards was.  He noted that the DOC had not advertised the vacant posts or filled the posts in accordance with the public service regulation requirements.  He acknowledged the work done to date.  He said that the digital migration programme was very important for the country.

Ms W Newhoudt-Druchen (ANC) was most perturbed by the extent of the under-spending by the DOC as the disabled community depended on the Department for access to information.  She wanted to know the reasons for the under-spending.  She asked what the reason was for the termination of the 112 emergency call centre project.  The cancellation of the project also meant the loss of a number of jobs.  She asked how the Department could claim to have achieved the targets related to gender, disability and the youth when the service deployment component of the programme had been delayed.  She asked for a list of all the Dinaledi schools per province that had been connected as part of the 2010 FIFA World Cup legacy plan.  There appear to be a discrepancy between the percentage coverage quoted (27%, 38% or 39%).  She asked what the strategy was to achieve the 50% female gender target.

Ms R Morutua (ANC) said that the lack of achievement by the DOC was unacceptable.  Senior management were appointed and given responsibilities but there had been no improvement in performance, despite regular interaction with the Committee.  Members of the Committee were answerable to their constituents but were unable to respond to their queries.

The Chairperson said that the Committee had met with the Department on 29 February 2011 to discuss the statement issued subsequent to the October 2010 meeting.  The Department had given the Committee an undertaking to address the issues that had been raised but the report of the Auditor-General showed that little progress had been made.  The findings of the Auditor-General were not a surprise for the Committee.  He asked if the senior officials of the Department had signed performance contracts.

Ms Sekese replied that there had been little time to address the Committee’s concerns before the end of the financial year, 31 March 2011.  A review of the governance structures was completed and the senior management, audit committee and internal audit functions were in place.

Dr Harold Wesso, Deputy Director-General: e-Skills Institute, DOC conceded that 2010 was a difficult year for the Department.  Within one year, there were two Ministers of Communication and therefore two different strategic views.  Most of the issues raised by Members referred to the previous financial year.  Since the meeting with the Committee in October 2010, the Department had developed new strategic plans, project plans and business plans.  He agreed that the Department did not have a good spending record.  When he took over as the Acting Director-General, the Department had only spent 27% of the appropriated funds.  The percentage had subsequently improved to 70% of available funds, which took some effort to achieve.  The labour relations cases were external legal processes over which the Department had no control.  The restructuring of the DOC was aligned to the new Minister’s strategic imperatives.  However, the Department could not appoint staff to the vacant positions before the new organisational structure was approved by the Minister.  The Department had responded to the Public Service Commission (PSC) report on the irregular appointments.  The focus during the latter part of 2010 had been on stabilising the Department.  New management was now in place and progress was being made in addressing the problems.  He expected improved performance during 2011.

Mr Michael Ntshingila, Chief Director: Internal Audit, DOC said that the internal audit function was to provide assurance to management and to give advice.  There had been some improvement over the previous financial year as the Department had received an unqualified audit report on the financial statements.  A corrective action plan to address the Auditor-General’s comments had been compiled.  The issues concerning the members and the meetings of the audit committee had been resolved.  The audit committee was involved in resolving the Auditor-General’s comments and in developing a risk management strategy.  The terms of reference of the audit committee had been approved by the Director-General.  The Department lacked sufficient internal audit capacity and had appointed an external service provider on a temporary basis.  The vacant positions had been advertised.

The Chairperson asked if the Department disputed the Auditor-General’s findings concerning the unfunded positions.  The Department had the opportunity to discuss the matter with the Auditor-General during the audit process.

Ms Sekese replied that the DOC accepted the Auditor-General’s report and was currently engaged in resolving the issues that were raised.  She had requested the Auditor-General to investigate a number of issues, as part of a holistic approach.  She conceded that the internal audit department had not performed well in the previous year but audits were currently being done and the employment contracts of all personnel were being investigated.  Her performance contract was currently with the Minister.  The PSC reported unauthorised appointments and the Department of Public Service and Administration (DPSA) had made a team available to assist in resolving the problems and to made recommendations.  The DOC currently had a clearer idea of the human resources issues and was attempting to address the matters raised by the Auditor-General in a holistic manner.  An audit committee was appointed in June 2011 and progress was being made.  A bid specification and evaluation committee had been established and met on a weekly basis.  A procurement plan had been developed.  The committee monitored the expenditure on projects.

The Chairperson asked for more details of the corrective action plan to address the Auditor-General’s comments, the timeframe to resolve the issues and who was responsible.  The Committee was not pleased with the number of partially achieved and unachieved targets.

Ms Killian noted that the excessive amount of overtime payments distorted the salary structure of the DOC.  She asked if the risk committee was investigating the escalating overtime trend.  More than 50% of sick leave was taken by supervisory staff, which indicated a lack of morale that would impact on staff at the lower levels.  She asked what action plans were in place to address the sick leave situation and the wasted expense.

Ms Kedibone Sekwele, Chief Director: Human Resources Management, DOC agreed that the extent of overtime worked was a matter of concern.  In one instance, the overtime worked by the staff member exceeded 30% of his salary.  The absence of service contracts for senior management service (SMS) personnel had been addressed.  The unauthorised and unfunded position referred to one person and had been resolved.  The correct coverage percentage was 37%.

Ms Skekese advised that the Department’s corrective action plan was submitted to the Auditor-General in July 2011.  She was not aware that the Committee required a copy of the action plan but undertook to forward the plan to the Committee.

Ms Morutoa observed that the areas of concern arose more than two years earlier and that departments knew what needed to be done.  She did not accept the excuse that the Director-General was not aware that the Committee required a copy of the corrective action plan.

Ms Sekese confirmed that the Department had a risk mitigation policy, strategy and plan in place.  An external service provider was appointed to source a suitable system to monitor project costs.

The Chairperson interrupted and again explained exactly what information was required by the Committee.  The Committee needed to know how many vacancies there were, which positions were vacant and when the vacant posts would be filled.  It was a waste of money to appoint temporary service providers rather than employing permanent staff.

Ms Sekese explained that the Minister was involved in the appointment of Deputy Directors-General.  The process was onerous and the DOC had decided to stagger the appointments.  The positions had been advertised and would be filled by February 2012.  The vacant Chief Director positions would be filled by March 2012.  The employment plans had been agreed with the Minister.  The migration of staff from the previous to the new organisational structure would be completed by November 2011.  The DOC was over-committed for the current financial year and was sourcing an external service provider to establish a project management office.  The intention was to ultimately develop sufficient internal capacity.

Ms Killian was frustrated that Members’ questions were not responded to.

Ms Michael suggested that the Committee requested formal written responses from the DOC.

The Chairperson said that the Committee was not convinced that there was a proper action plan in place to address the human resource issues.  He asked the Department to submit a detailed action plan to the Committee.

Ms Sekese said that the Minister was involved but that the report should be completed by the end of the following week.

Ms Killian asked that the report addressed the issues of sick-leave, overtime and disciplinary cases as well.

The Chairperson awaited the report.  The Committee would need to set aside at least one full day to discuss the human resource matters with the Department.

In response to Mr Van den Berg’s questions, Mr Vilakazi said that the impact of the delay in issuing the broadcasting standard on the public and on broadcasters had not been done.  An external service provider had been appointed to put the mechanism for gathering statistics and data in place.  Additional information was included in the e-Barometer report.  The DOC was working with ICASA.  The Department had reported to the Committee two weeks earlier on the status of the digital migration programme.  The briefing had included the risks and challenges, which were being addressed.  The programme would be launched in April 2012.  The terms of reference for the awareness campaign were in the process of being finalised.

The Chairperson queried the withdrawal of the PUSANO directive.

Mr Vilakazi explained that the Ministerial directive issued in 2007 required the stakeholders to operate collectively.  However, it was found that this was not practical and the DOC had recommended that the directive was withdrawn.  Licenses were issued by ICASA in accordance with the ECA.

The Chairperson asked for an explanation of the review of the business model for Under-serviced Area Licenses (USAL’s).  Licenses were issued to entities but none were operational.

Mr Vilakazi admitted that the review of the business model for USAL’s was not done.

Ms Killian referred to the objectives concerning the Digital Dzonga project.  She questioned whether the DOC had sufficient capacity in place to effectively implement the digital migration programme and asked what plans were in place.

Mr Vilakazi replied that an interim task team had been established for the DTT project.  Senior positions had been advertised.  The digital migration programme was huge and the Department required specialist project management skills.  Entities in the communications industry had been approached to second staff to the Department and it was hoped that the programme would be a success.

Ms Tsebe observed that there was generally little understanding of the DTT project, even after the briefing.

The Chairperson added that there was a lack of understanding of the digital migration programme across the board.  The failure of DTT would be a national crisis.

Mr Vilakazi replied that a service provider was appointed to deal with the awareness campaign.  However, the agreement was terminated because of a lack of performance.  The awareness campaign was developed in 2009.  The appointment of a new service provider was in the process of being developed.  The target date for the launch of DTT was April 2012 but the initial phase would extend beyond 2013.

The Chairperson asked for an explanation of the inclusion of objectives in the DOC’s targets that should be dealt with by ICASA.

Mr Vilakazi explained that the targets were included as a result of historical confusion about the responsibilities of the various entities.  The legislation governing the South African Post Office (SAPO) and ICASA was now clearer.  The role of the DOC was to make policy rather than the implementation thereof.

Ms Morutoa did not accept the explanation.  The Committee understood exactly who was responsible for what and it was unacceptable that the Department was confused about the responsibilities of the various entities.

Ms Tsebe objected to the tendency of the DOC to lecture the Committee instead of providing direct answers to the questions asked b Members.

Ms Killian said that the Committee’s time was being wasted if the DOC did not know what the responsibilities of the key entities were.  The Department was in danger of setting itself up for failure and it was not acceptable to blame the previous dispensation for the lack of progress.  She suggested that the Department developed proper strategic plans and to obtain professional assistance if necessary.

The Chairperson remarked that the Committee had accepted the current strategic plans.  He suggested that objectives belonging to other entities were omitted from the DOC strategic plans and transferred to the entity concerned.

Mr Ntshingila explained that the agreement with Finland had been entered into by the previous Minister.  The pilot programme involved two provinces and Finland provided technical assistance.  The DOC had requested the support of the Department of Cooperative Governance and Traditional Affairs (COGTA) and the South African Local Government Agency (SALGA) to get more municipalities on board.  Municipalities were constrained by the lack of supervisory capacity, suitable premises and technical support.  To date, nine local government authorities in six provinces participated in the programme.  He undertook to provide a list of the municipalities to the Committee.  The target for the provision of e-Health centres was 80.  Not all the provinces were involved.  The Western Cape had its own programme.  To date, Gauteng had delivered 200 centres.

Mr Ntshingila explained that the digitalisation project involved the recording of the cultural heritage in digital format.  The project commenced in the North West province and was expanded to KwaZulu-Natal. To date, 250 young persons had been trained to collect the stories of people.  The recordings were sent to NEMISA and the participants received payment.  The DOC was unable to meet the target to train 400 youth because the tender had to be re-issued.  The Universities of Tshwane and Johannesburg were involved in providing training for e-Cooperatives.

Dr Wesso explained that the institutions of higher learning were unable to respond to the international demand for skills.  The DOC had investigated a number of countries that had managed to satisfy the demand for skills.  Cuba had a University of Informatic Sciences that used a novel way of organising faculties.  The Electronic Skills Institute (ESI) identified themes rather than sciences.

Mr Sebola added that Cuba could assist South Africa with developing manufacturing capacity as that country had gained much experience during its years of isolation.

Mr Petzer explained that the DTT roll-out plan included eight phases.  Implementation would commence in the more densely-populated areas.  The target was to achieve 60% coverage overall and most provinces would have at least partial coverage.  The 112 emergency call centre project was intended as a public/private partnership but was cancelled by the previous Director-General.  The new Director-General wanted to revive the project as a matter of urgency.  A list of the Dinaledi schools would be made available to the Committee.  The responsibility for the policy on cyber-security was not clear.  The matter had been debated and currently rested with the Deputy Minister of Communications.

The Chairperson asked for an explanation of the R500 million that was rolled over from the previous year.  Sentech had claimed that the lack of progress on providing wireless broadband services was as a result of delays by the Department.  The National Treasury would not approve the roll-over of funding unless all the elements were in place.  He asked when the Department would provide the required documentation to the National Treasury.

Ms Sekese replied that Sentech had applied for funding of R3.5 billion but only R500 million was granted.  The saving by the 2010 FIFA projects would be used for providing connectivity to 1600 schools.  The DOC was currently working with the Department of Basic Education on implementing a pilot project.  IFRACO, the DOC, Sentech and the National Treasury were discussion the roll-out of wireless broadband service pilot projects in KwaZulu Natal and Limpopo provinces.

Mr Ntshingila explained that the Department needed to establish proof of the concept before the necessary budget could be determined.

Ms Sekese advised that the necessary documentation would be provided to the National Treasury before the end of November 2011.

Ms Killian asked what the status was of the ICT Infrastructure Development programme (Programme 5).  The STB manufacturing standards were still outstanding.  The STB’s were critical for DTT and she wanted to know why the publication of the standards had been delayed.

Ms Tsebe asked for clarity on the spectrum pricing issue.  She wanted more details of the problems concerning SAPO.  She asked what support for the SABC was provided by the DOC.  She asked what the Department did to ensure that all other government entities paid outstanding accounts to the DOC on time.

Ms Newhoudt-Druchen asked what the R1.5 million allocated to the .za Domain Name Authority was used for.

Mr Petzer said that the DOC was not convinced that the auctioning of licenses as proposed by ICASA would work in South Africa.  The Department was in the process of finalising its report on the spectrum licensing to the Minister.  The Department had consulted with ICASA on the licensing of the spectrum.  The planned training for the installation of STB’s was delayed because the manufacturing standards needed to be in place.

Mr Vilakazi explained that SAPO had a problem with capacity.  The Department’s concerns over the SABC had been discussed with the Minister.  The SABC lacked an effective revenue collection mechanism.

The Chairperson pointed out that the Committee’s question referred to the outstanding payments from government departments, rather than the payment of TV license fees.

Mr Vilakazi replied that he was referring to the collection of revenue from government departments.  The funds allocated to the .za Domain Name Authority was used for operations.

Ms Tsebe said that the DOC needed to provide support to the SABC rather than blame the entity’s weak systems.

Ms Killian asked for an explanation of the achievements of State-owned Entities (SOE’s) listed on page 20 of the Department’s annual report.  She felt that the DOC had failed to provide adequate guidance to the SOE’s.  In particular, SAPO, ICASA and the SABC had failed to achieve their targets.  The SABC used to be self-sustainable.  She asked what action plan the Department had in place to assist the SOE’s.  She asked what the reasons were for the delay in signing the Memorandum of Understanding (MOU) on ethics with the University of Tshwane.

Ms Sekese replied that the Department was awaiting information from the SABC on what assistance was required.  The Department’s capacity to exercise oversight over the SOE’s had been increased.  The responsible person was at the Deputy-Director-General level (previously a Chief Director) but the position was currently vacant.

The Chairperson remarked that the Chief Executive Officers had complained that the Chief Director responsible for oversight over the SOE’s had no decision-making authority.

Mr Ntshingila explained that the MOU on ethics had taken longer to finalise as originally envisaged.  A conference on ethics was held during July 2011 and was attended by other universities on the African continent.

The Chairperson said that it was clear that much needed to be done before the performance of the Department could be considered to be acceptable.  He summarised the issues that were raised during the meeting that required urgent attention from the Department.  The Committee would be issuing its report on the annual report of the Department and required the additional information agreed on during the proceedings as soon as possible.

The meeting was adjourned.