Minister and Department of Communications on its 2012 Strategic Plan and Annual Performance Plan

Meeting report

Briefing by the Auditor-General of South Africa
The Committee was responsible for oversight over the Department of Communications (DOC), the Universal Service and Access Agency of South Africa (USAASA), Sentech, the National Electronic Media Institute of South Africa (NEMISA), the Independent Communications Authority of South Africa (ICASA), the South African Post Office (SAPO) and the South African Broadcasting Corporation (SABC).

Ms Alice Muller, Corporate Executive, Office of the Auditor-General presented an overview of the results of the review by the Auditor-General of the annual strategic and performance plans of the entities (see attached document).

The plans were assessed against the principles of the SMART criteria, i.e. whether the plans were specific, measurable, achievable, relevant and time-bound.  The plans of the DOC, USAASA, NEMISA, Sentech and SAPO adhered to the SMART criteria.  Two outputs identified by ICASA and one output identified by the SABC did not satisfy the criteria.  The briefing included specific recommendations for ICASA and the SABC on how the relevant plans should be set as well as a general recommendation on how plans could be improved.

Discussion
Ms J Killian (COPE) asked if the Auditor-General was satisfied that all strategic plans and performance goals of the various entities had been covered.  The Committee had previously suggested that the number of strategic plans were limited in order for the entities to focus on key issues.

The Chairperson asked if the Auditor-General considered the entities to have too many strategic plans.

Ms Muller explained that a high-level assessment was done on whether or not the targets set by the entities adhered to the criteria.  The number of strategic plans was not prescribed but the Auditor-General recommended that a few key issues were focused on.  It was difficult to manage and monitor a large number of plans.

Overview by the Minister of Communications
Ms Dinah Pule, Minister of Communications presented an overview of the strategic direction taken by the DOC to the Committee (see attached document).

The key focus areas included the development of a research and development strategy; the provision of Universal Access services; ICT skills training and capacity building; the development of the community media sector; the introduction of new television and radio channels with high levels of local content; public funding of the SABC and the implementation of the policy on cyber security.

Discussion
The Chairperson thanked Minister Pule for her input.  He anticipated that the briefing by the DOC would expand on the key strategic areas outlined in the overview.

Ms R Morutoa (ANC) said that Members of the Committee had not had sight of the briefing document submitted by the Auditor-General and the Minister’s speaking notes.  Members had not had the opportunity to study the documents and prepare for the briefing.

Mr D Kekana (ANC) supported Ms Morutoa’s position and suggested that the Committee proceeded with the briefing.

Ms S Tsebe (ANC) pointed out that submission documents had to be made available to the Committee seven days prior to the briefing.  If the documents were not available to Members, the Committee would be failing in carrying out its oversight responsibilities.  The Committee had previously postponed briefings by entities that had failed to submit documents on time.  She felt that the DOC should lead by example.

The Chairperson advised that the due date for submission of the briefing documents was Tuesday, 6 March 2012.  The Committee had agreed to extend the deadline to Friday, 9 March 2012.  The documents were only received at 10:30 on Monday, 12 March 2012.  During the Committee meeting on 9 March 2012, Members had agreed that the DOC could proceed with the briefing as copies of the printed strategic plan had been distributed.

Mr G Schneemann (ANC) agreed that the briefing by the DOC should be proceeded with.

Ms Morutoa proposed that the Committee held a caucus to discuss the matter.

Ms Killian supported Ms Morutoa’s suggestion.  The Committee had to have a consistent approach when applying the rules on the submission of documents.

The Chairperson agreed to a caucus and Members withdrew from the proceedings.  The Committee decided to proceed with the briefing and asked for an explanation why the briefing documents were not received on 9 March 2012 as promised.

Ms Rosey Sekese, Director-General, DOC apologised for the late submission of the documents.  The delay was caused by the need to make certain corrections and to ensure that all the issues referred to by the Minister in her overview were adequately covered.

Minister Pule was not aware of the undertaking given to the Committee that the documents would be submitted on 9 March 2012.  She would have personally contacted the Chairperson to apologise for the delay.  She had sight of the briefing documents on the afternoon of 9 March 2012 but was not satisfied with certain sections.  The matter was discussed with Ms Sekese late on the same day.

The Chairperson allowed the DOC to submit the briefing.  He asked the Department to ensure that documents were timeously submitted to the Committee in future.

Briefing on the Strategic Plan and Annual performance Plans of the Department of Communications
Ms Sekese introduced the delegation from the DOC and presented the briefing to the Committee (see attached document).

The briefing covered the mandate, vision and mission of the DOC and the planning process that was followed in developing the plans.  The six flagship programmes were aligned to Government outcomes 1, 3, 4, 6 and 7.

The key programmes focused on job creation; developing e-skills; provision of broadband services; Digital Terrestrial Television (DTT); the establishment of the Postbank and providing connectivity in rural areas.

Additional programmes included the development of a research and development strategy; providing universal access and connectivity services; training in ICT skills and capacity building; establishing community radio stations, a national youth radio service and dedicated television channels featuring local content as well as providing funding to the SABC as the public broadcaster.  The achievements during the 2011/12 fiscal year were summarised.

Five strategic goals were identified and 17 strategic objectives were set.  Details of the goals, objectives and the targets set for 2012/13 were provided.  The goals concerned the development of the ICT sector; the provision of ICT infrastructure; the promotion of socio-economic development; the improvement of the performance of the Department and the State-owned ICT entities and contributing to the global ICT agenda for the development of the African continent.

The legislative programme included the submission of the Electronic Communications Amendment Bill; the ICASA Amendment Bill or a new ICASA Act; the Postal Services Amendment Bill; the Posts and Telecommunications-related Matters Amendment Bill, the South African Post Office SOC Ltd Amendment Bill and the Electronic and Communications Transaction Amendment Bill.  The dates for the submission to the Cabinet and the impact of the proposed legislation were included.

The progress made in filling the vacant Deputy Director-General, Chief Director, Director and digital migration positions was outlined.  The human resources plan was currently under review and a human resources strategy was being developed.

Mr Sam Vilakazi, Acting Deputy Director-General: Finance and ICT Enterprise Development, DOC presented the programme expenditure patterns for 2008/09 to 2010/11 and the funding requirements for the Medium Term Expenditure Framework (MTEF) period 2012/13 to 2014/15.  (Note: figures provided in the briefing document were in thousands).  Total programme expenditure in 2010/11 amounted to R1,426,477,000.  The programme funding requirement in 2012/13 amounted to R1,712,339,000.  The National Treasury had not granted the additional funding requests for reporting entities over the 2012/15 MTEF period and partially granted the additional funding for ICASA, the SABC and Sentech.  The briefing was concluded with the impact of insufficient funding on the DOC’s projects.

Discussion
Mr Kekana observed that the facilities of SAPO and the Postbank could be utilised to provide services in the rural areas.  He asked the DOC to clarify the strategic plans concerning SAPO.  It was necessary to re-focus the operations of SAPO and to deliver services in line with the ICT objectives.  In the 2012 State of the Nation Address, the President had stated that all vacant government posts would be filled.  He noticed that several executive positions were currently held by persons in an acting capacity.  He asked what the reasons were for the inability to fill vacant posts.  He asked what action was taken by the DOC to create more jobs.

Ms Killian said that the DOC was a key government Department and was able to encourage major growth in the ICT sector through its policies.  In prior years, the Department had cited capacity constraints as the reason for the failure to achieve strategic plans.  She acknowledged that the purpose of the briefing was the Department’s strategic plans but she was not sure that the plans would result in a greater impact on the sector.  It was necessary to have goals and structures in place but in her opinion there was too much emphasis in the briefing on activities and not enough on the outcomes.  An indication of the responsible person and section would assist the Committee in assessing whether or not strategic goals were met.  The briefing did not include any details on the progress that had been made to date.  She was concerned about the Department’s ability to meet the DTT targets in the light of the limited amount of funding granted by the National Treasury for this project.  She advocated that ring-fenced funding should be made available to the SABC for the DTT project as it was doubtful that the broadcaster would be able to generate sufficient funds from its own operations.  She expected that the lack of sufficient funding for the other State-owned entities (SOE’s) would curtail the extent of progress being made in 2012.

Ms Killian asked for confirmation that the recruitment process had been expanded to ensure that the Department attracted the best possible candidates to fill the vacant positions.  The Committee was aware of bad human resource management practices in the past.  External bodies had been involved and the Department had been ordered by the Court to reinstate dismissed personnel.  The DOC had not been transparent about certain executive management appointments.

Ms Killian referred to the printed strategic plan document.  The risks outlined on pages 23 to 25 of the document were significant, particularly concerning unauthorised access to systems, the lack of resources and the adequacy of systems.  She was concerned that the strategy on litigation was not effective in mitigating the risks faced by the Department.  The strategic plans addressed the need to provide reliable systems but the outcome of the broadband study was still outstanding.  She acknowledged that progress was being made but more pressure was needed as the matter was urgent.  She suggested that the DOC reviewed the progress made by ICASA on a quarterly basis and by USAASA on a six-monthly basis.  She felt that the DOC needed to exercise more control over the SOE’s if better outcomes were required.

Ms Killian said that the ICT sector had requested a thorough review of the ICT policies.  The White and Green Papers dated from the 1990’s and the sector had changed significantly since then.  She questioned the proposed amendments to the ICASA Act and the Electronic Communications Act (ECA).  She suggested that the focus should be on a review of the policies and that piecemeal legislative changes were avoided.  ICASA did not have effective revenue collection systems in place.  It was necessary to ascertain what the challenges and needs of ICASA were when addressing the funding requirements of the Authority.

Mr Schneemann referred to the printed strategic plan document.  On page 12, it was stated that South Africa had lost its status as the leader in the field of internet and broadband connectivity on the African Continent.  He asked the Department to elaborate on the statement and to clarify what action was being done to address the situation.  More information on the strategy for job creation in the ICT sector was required.  The Committee required specific details in order to measure performance.  It was a matter of grave concern that the additional funding requests for major strategic programmes had been declined by the National Treasury.  He asked the Department to expand on the impact of insufficient funding provided at the end of the briefing.  He asked for information on how the shortfall would be dealt with, for example re-prioritising, specific action steps and what role would be played by the DOC.

Ms M Shinn (DA) was most perturbed by the gap between what was expected from the DOC and what was being delivered.  A review of the mandate of the DOC was urgently required.  She asked if the printed strategic plan document was proof-read before publication, for example reference was made on page 62 to activities during 2010.  She asked what the reasons were for the National Treasury declining the additional funding requests.  Within the following two to three weeks, the decision on the Square Kilometer Array (SKA) would be known.  If the SKA project was awarded to South Africa, communications services would be required.  No mention was made of the SKA project or of the provision of services for the Meerkat project.  She asked if the National Treasury had declined the request for funding for the manufacture of Set Top Boxes (STB’s) because it was not financially viable and it would be cheaper to import the STB’s.

Ms Shinn understood that the State Security Agency would be responsible for cyber security.  She asked for clarity on whether the policy had been approved, if the policy framework had been approved and which department would be responsible for implementing the policy.

Ms Shinn had been very interested in the Dinaledi Schools project since its inception.  She understood that the project had been stalled as it was found to be too expensive and the National Treasury had been unwilling to provide additional funding.  She noted that the Department planned to provide internet connectivity to 1650 schools.  Details were not provided on that was originally planned for providing connectivity services to schools and what network the schools would be connected to.

Mr B Steyn (DA) noted that the new structure of the DOC had been approved and would take effect in 2013/14.  In that year, the budget of the DOC would be reduced.  Senior appointments were currently under way.  He asked for more information on the organisational plans of the Department in 2012/13.  He asked for clarity on the review of a national commission included in Programme 6.  The Auditor-General had found that the DOC’s strategic plans conformed to the SMART criteria but he found it difficult to grasp the actual targets and objectives from the information provided.  He expected the DOC to exercise oversight over the preparation of the plans of the SOE’s.  The Auditor-General had found that the plans of two entities did not comply with the SMART criteria.

Mr Steyn referred to page 54 of the printed strategic plan document.  The DOC had identified the lack of sufficient funding as a risk.  Specific targets had been set for projects where the funding requirement was not approved.  The Department had not spent the funding that had been available for the same projects in prior years.  The Department had sent increasing amounts on external consultants, venues, entertainment and goods and services in 2010/11 and 2011/12.

Mr Steyn found that the targets were too broad, for example on slide 28, a market study on wholesale and retail prices would be undertaken but it was not clear what the objective of the study was or what would be done with the results.  The plans did not include the management of the risks that had been identified.  The DOC provided systems to all government entities. Unauthorised access to the DOC’s systems was a serious matter that had to be addressed urgently. He noted that there had been delays in compliance with international agreements and wanted to know what corrective action was taken.  He asked for clarity on the risk associated with the lack of a business continuity plan for the DOC.  The lack of structured engagement with the SOE’s and the inadequate level of interaction were not conducive to success.

Ms W Newhoudt-Druchen (ANC) pointed out that the Committee had to approve the budget of the DOC.  She asked if the National Treasury had declined the request for additional funding because the Department had failed to spend the funds made available in prior years.  She noted that the Department planned to provide internet connectivity to 1650 schools.  She asked how the DOC would ensure that the service continued in future as the schools lacked the necessary funding for maintaining the equipment and facilities.

The Committee had found during oversight visits that many community radio stations were not financially sustainable as the stations could not afford to pay the license fees levied by ICASA.  She wanted to know what the DOC was doing to assist community radio stations to become financially viable.  The aim was to manufacture STB’s locally but she had not been able to establish where these boxes were being made.  She asked how many STB’s would be required and if the 1000 small, medium and micro enterprises (SMME’s) involved in the STB project would be selling or making the boxes.

Ms Newhoudt-Druchen was very concerned over cyber security.  She was aware that the names of the Speaker of Parliament and the Deputy Minister had been used in fraudulent online scams.  She asked if the Department was taking any action to prevent the exposure of children to pornography on cell phones and the internet.  She noted that no provision was made to provide communication services for the Meerkat project and wanted to know what department was responsible for this project.

Ms Morutoa observed that the mandate, mission and vision of the DOC reflected the ANC’s policy on ICT.  She asked if the Department of Rural development collaborated with the DOC on providing communication services in remote rural areas.  She asked which of the projects were considered to be key projects.  She asked the Department to provide the Committee with more detailed project plans and timelines.  She asked what the plan was to roll out broadband services in each province.

Ms Tsebe said that the budget shortfall was a serious challenge that would impact most negatively on the poorer sector of society.  South Africa could not afford to lag behind other countries in Africa.  She suggested that the Committee asked the Minister of Finance and the National Treasury for the motivation behind declining the additional funding requests of the DOC.  She observed that the Department had spent its entire budget in 2008/09 but spending was well below budget in 2010/11.  She asked for an explanation for the under-spending.  It was not clear where the planned infrastructure roll-out would take place and she asked for a more detailed breakdown of the target areas.  The low power transmitter roll-out plan should be included in the Department’s plans as this project impacted on areas that were not the responsibility of the SABC or Sentech.  She asked how the 1000 SMME’s were affected by the lack of funding for STB’s and what action was taken by the DOC to address the issue.

The Chairperson said that the strategic plans of the DOC did not reflect that the Department should be playing the leadership role in the ICT sector.  The DOC had not provided insight into the status and outlook of the ICT sector.  The Committee wanted to see what role the Department played in the sector and what the intended impact of implementing the strategic plans was.

Minister Pule agreed that the DOC should be the leader in the ICT sector.  The Department faced many challenges.  The decision to conduct an analysis of the market and to undertake a review of the applicable legislation had been taken.  The sector would be invited to participate in a colloquium to discuss what the role of the DOC should be.  The reason for South Africa losing its status as the leader in the communications sector in Africa was most likely the failure to do adequate market research.  Government’s spending priorities were on education and health but the DOC could have done more to find alternative sources of funding.  The infrastructure roll-out plan involved the Department of Public Enterprises and its subordinate SOE Infraco.  Rural development was one of the key government priorities and the DOC had a role to play in realising all the national objectives.  Connectivity services would be provided to education and health facilities throughout the country.

Minister Pule advised that the DOC had commenced work on developing the cyber security policy in 2009/10.  The Department worked closely with the security cluster to develop the policy framework.  The Minister for Safety and Security had overall responsibility for cyber security.  She conceded that vacant posts had previously not been filled soon enough and gave her personal assurance that the appointment process would be finalised by the end of 2012.  Members’ comments concerning the human resources practices had been noted and she assured the Committee that the matter would be addressed.  The process to appoint a new SAPO Board and to fill the vacant Chief Executive Officer, Chief Operations Officer and Chief Financial Officer posts had commenced and was expected to be completed within three months.

Minister Pule said that the DOC was the policy maker in the ICT sector and had to create an environment where jobs could be created.  The SOE’s had to provide specific job creation data for each of their projects.  She agreed that the lack of adequate funding for the digital migration and DTT projects was a major challenge.  She had met with the Minister of Finance to discuss the impact of the declined additional funding requests.  The DOC accepted the blame for its failure to spend the available funds in prior years.  The target date for finalising the DTT project was June 2015 and she was confident that the deadline would be met.  She had asked Sentech to develop a detailed infrastructure roll-out plan.  Implementation would commence in September 2012 in Limpopo province.  Low power transmitters were previously concentrated in the more densely populated urban areas but the focus had shifted to the rural areas.

Minister Pule explained that the risk assessment was completed recently and more time was required to develop mitigation plans.  She hoped to present a detailed briefing to the Committee at a later meeting.  The Department of Science and Technology was responsible for the SKA and Meerkat projects and the DOC had no budget for providing communication services.  Certain previous incumbents of executive positions had been suspended and the Department was unable to appoint new people until the process had been finalised.

Ms Sekese explained that the funding for connecting the 1650 schools was derived from the savings realised from the 2010 FIFA World Cup programme.  The DOC had an agreement with Telkom, the Department of Basic Education and the provincial authorities to maintain the service.  The DOC had established a risk management committee as recommended by the Auditor-General.  The risk management committee interacted with the audit committee.  The Department took the mitigation of the identified risks seriously.

Mr Farhad Osman, Chief Director: Strategic Planning and Monitoring, DOC advised that mitigation measures were in the process of being implemented.  More detailed quarterly targets had been set for the market study.  The study would be conducted during the first year and the implementation of the recommendations would be addressed during the following year.

Due to time constraints, there was not enough time for the Department to respond to Members’ questions.  The Chairperson advised that additional time would be allowed to complete the briefing on Friday, 16 March 2012.  He thanked the Minister, Members and the Department for their participation.

The meeting was adjourned.