Members asked whether NDA had been informed of the budget cut, what steps it had taken to adjust to it, how this affected it, and urged the NDA to focus on setting goals that it could achieve. Members wanted to know why the urban provinces seemed to have more projects approved, since the focus should be on the rural areas. They were concerned about the instances of irregular expenditure. They felt that the presentation had been too general, and that a more specific progress report was needed. In particular, they wanted to know where the projects were located. They questioned whether the capacity building was actually having results, and was resulting in value for money being achieved. More data was required on the projects, and Members questioned the stated failure rate, which seemed very high, but were informed that this was a percentage of groups, and was not a reflection of the budget figures. Members were concerned that the Annual Report and presentation had some conflicting or inconsistent information and felt that a “cut and paste” exercise had been carried out. Members questioned whether the repositioning of the NDA was the right approach. They questioned the award of bonuses, and the filling of the post in KwaZulu Natal. The Deputy Minister explained that it was hoped this would unlock potential but conceded that further discussions were needed.
National Development Agency (NDA) and Deputy Minister Social Development: Annual Report 2010/2011 briefing
Mr Malose Kekana, Chairperson, National Development Agency, introduced the delegation.
Ms Vuyelwa Nhlapo, Chief Executive Officer, National Development Agency, tabled the Annual Report 2010/11 of the National Development Agency (NDA). She noted that this was the tenth anniversary of the NDA. She briefly reflected on the year under review and the strategic goals of the NDA (see attached presentation).
The first strategic goal of the NDA for this year was to build the capacity of community service organisations (CSOs) to enable them to carry out development work effectively. A number of Early Childhood Development (ECD) networks and sites were supported, as well as 30 rural development CSOs and co-operatives. Other CSOs, which focused on gender, HIV, vulnerable people, the elderly, youth, and five intermediary bodies, also received support.
The second strategic goal was the granting of funds to contribute towards the eradication of poverty. A breakdown of the grant allocation for the year was given (see attached presentation). Thirty sustainable CSOs and co-operatives in rural development were funded. Ten land reform projects were funded, fifteen Food Security Projects in ECD sites, and ten CSOs supporting vulnerable groups were also supported.
The third strategic goal was to facilitate research towards poverty eradication. Reports and case studies were published for distribution. A consolidated report for targeted funding was compiled. A number of technical reports were generated and accessed by CSOs. 60% of close-out projects were evaluated and dialogues and seminars were organised.
Strategic goal four was to position the NDA as a premier development agency and mobilise resources. Key achievements included the establishment of a national network, and implementation of partnership agreements.
Strategic goal five was to promote and maintain organisational excellence and sustainability. Key achievements included the review and update and training on policies and processes, monitoring and implementation of corrective action, among others.
Mr Phumlani Zwane, Chief Financial Officer, NDA, presented the financial report (see attached presentation for details). The accounting deficit was highlighted and it was explained that this was largely due to the large budget cut. The total revenue was lower than in the previous year and the reduction on the revenue transfers had a negative impact on the interest collected on cash balances.
Ms Nhlapo then outlined and explained the challenges faced by the NDA (see attached presentation). The capacity of CSOs remained a challenge. Other projects required more close monitoring interventions. There was a need to achieve a division between the mandate costs and administration costs.
Ms P Tshwete (ANC) asked if the NDA had been informed of the budget cut, and how projects were approved.
Ms Nhlapo responded that the cut had been instituted by National Treasury (NT). She noted that National Treasury perhaps was not fully appreciative of the nature of the NDA funding. Some of the approved projects had not received their full funding allocations. She also noted that money had been released in batches. NDA had discussed the matter with NT, and some clarity was achieved.
Ms Tshwete questioned why more rural areas had less projects approved than the urban provinces.
Ms S Kopane (DA) questioned the irregular expenditure by the NDA, saying that this seemed to indicate poor monitoring and evaluation. She also questioned what plan of action the NDA had to fulfil its mandate, despite these budget cuts. She stressed that the NDA should not try to be too amibitious, but should rather focus on setting goals that it could achieve.
Ms Nhlapo explained that some organisations struggled to produce adequate reports in support of the funding that they requested.
Ms Kopane noted the challenges, but asked if the NDA could rather produce a progress report, rather than a general overview.
Ms S Paulse (ID) asked what had caused the discontinuation of some of the projects and asked if the NDA was going to carry on with the projects in the future.
Ms Nhlapo responded that perhaps the NDA had been incorrect in not rescheduling certain matters and discussing them fully with the Finance Committee. There had been a reduction of projects.
Ms M Mafolo (ANC) asked why the NDA had simply produced figures on the approved projects without stating, for the Committee, where those projects could be found.
Ms Nhlapo responded that, as had happened previously, the NDA would follow up and give more specific information on the projects.
Mr R Bhoola (IFP) questioned if the capacity building was resulting in value for money. He stated that the report was commendable but more hard work was needed.
Ms Nhlapo responded that NDA would continue to face a challenge in terms of capacity building because new organisations needed basic training to manage funds. She reiterated that in some cases, proper reports were not produced by those organisations.
Mr Bhoola asked for data on the completed projects. He noted that there was a very high failure rate, showing 80% failed projects. He questioned if that was not contradictory to the aim to assist the poor. He also questioned why there was no baseline study conducted in that year. He wondered why the R20 million that was achieved was not carried forward as capital in the new financial year to minimise budget constraints.
Ms Nhlapo said that the figure of 80% related to the civil society organisations that supported vulnerable groups, and was not a figure of 80% on the overall budget of the NDA. She noted that there was no need for a baseline study because the NDA already had adequate information that it needed to commence funding. She also clarified that the R20 million was the figure that had been budgeted, but it had not been achieved, and therefore it was not available to be used as capital.
The Chairperson asked why there were discrepancies between this presentation and the Annual Report.
Ms Nhlapo explained that the figures in the presentation included national figures, which had not been included in the Annual Report.
The Chairperson questioned the repositioning of the NDA. She wondered if the proposed strategic priority did not run the risk of making the NDA lose the focus of its mission statement. She wondered if it was not wiser for the NDA to consider a strategic refocusing, instead of looking inwards to try to solve the problems.
Mr Sipho Shezi, Special Advisor to the NDA, stated that the time was right for reconsideration on the focus areas, and that matters could not continue along the same lines.
Hon Mari Ntuli, Deputy Minister of Social Development, stated that it was hoped that the NDA could unlock potential and give hope to the poor, but that it had ended up by becoming a stand-alone entity, and this had resulted in it not achieving as it should. She noted that she was concerned about the suggestions of lack of capacity, which should not be raised as an issue. She suggested that a meeting should be arranged between the Special Advisor, the board and the Chief Executive Officer of the NDA, before she answered further questions.
Ms Kopane asked why the NDA officials were awarded bonuses, pointing out that this money could have been used for better purposes and there was a possibility that services to the poor had been compromised. She also commented that there was a “cut and paste” approach to the presentation.
The Chairperson pointed out that if bonuses were contracted, they could not be unilaterally removed. She noted that the bonuses in the public sector were also far more tightly regulated than those in the private sector.
Ms Nhlapo explained that the bonuses amounted to less than 3%, on average.
Hon Ntuli stated that the future of the NDA was not bleak, and she would be calling for substantial increases in the budget, in order to supplement the work that the NDA was doing.
Ms Ntuli said that the question must be asked whether the NDA was really making inroads into poverty in the most remote rural areas was not bleak, but said that sometimes there was too little evidence of this.
Mr Bhoola voiced his displeasure on the discrepancies and mis-directions of funding that had been reported in the media. He cautioned that the NDA should be careful of such situations. He noted that the NDA should be working for the poor and should guard against serving individual interests.
Mr Bhoola asked why the post that was vacant in KZN had not been filled.
Ms Nhlapo responded that this post in KZN became vacant when a disciplinary hearing resulted in the employment of the incumbent, at provincial managerial position, being terminated. The NDA had now advertised the vacancy. It was in the process of shortlisting.
Ms Suraya Bibi Khan, Board member, NDA challenged Members of the Committee that trust should not be fragmented between the Committee and NDA, and she remarked that the Committee Members would face a challenge themselves if they tried to undertake the work that the NDA was doing.
The Chairperson thanked the Minister and officials, and noted that a report would be compiled for presentation to Parliament.
The meeting was adjourned.
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