Universal Service and Access Agency of South Africa & National Electronic Media Institute of South Africa 2012 Strategic Plans

Meeting report

Strategic Plan and Budget of the Universal Service and Access Agency of South Africa (USAASA)
Mr Sam Vilakazi, Executive Caretaker, USAASA introduced the representatives from the Agency and presented the briefing to the Committee (see attached documents).

The Agency’s written responses to questions asked by Members of the Committee during the meeting on 16 March 2012 were circulated.  An update on the disciplinary processes underway was provided.  The draft value-for-money audit report had been submitted.  The Chief Executive Officer had resigned and a settlement agreement had been reached.  Acting incumbents in key positions had been appointed.

Four key projects were aligned with the National Outcomes, the Minister of Communication’s performance outputs and the objectives of the Department of Communications (DOC).  The total budget for each key project was indicated.  The projects concerned the establishment of 200 community access centres and the training of 200 access centre personnel (R31.2 million); the connectivity upgrade programme for schools (R7 million); the subsidising of 469,387 Set-Top Boxes (STB’s) (R230 million) and the development of a National Universal Service and Access Strategy (R2.8 million).

The briefing included the quarterly project targets for 2012/13 and the expenditure estimates for the Medium Term Expenditure Framework period 2012/13 to 2014/15.  The total allocation for USAASA was R333.7 million for the 2012/13 fiscal year.  The social spin-offs of the USAASA projects included the creation of 400 jobs in the community access centres and the improvement in the level of skills through the partnership with the e-Skills Institute.

The relevance and re-positioning of USAASA was under consideration.  The strategic context of the Agency within the ICT sector was illustrated.  The short-term operational interventions included the streamlining of projects and skills and addressing the issue of the lack of capacity in key units.  The medium to long-term intervention concerned the re-positioning of USAASA into a new entity.

Discussion
The Chairperson asked if all the strategic objectives concerning USAASA in the strategic plan of the DOC had been covered.

Ms M Shinn (DA) noted that USAASA had planned for the distribution of the STB subsidies during the third and fourth quarters of 2012/13.  She understood that the manufacturing of the STB’s had not yet been finalised and a lead time of nine months was required before the boxes would be available.  She asked what plans were in place to train the staff responsible for distributing the subsidies and how the persons qualifying for the subsidy would be identified.  She asked what support structure for the distribution of the STB’s would be in place.  She wanted to know what the long-term strategy was for the STB’s as the lifespan of the market would be relatively short.  She asked what the role of the South African Post Office (SAPO) was in the distribution of the STB’s and why the responsibility for the entire STB programme was not transferred to SAPO.  She asked what the current balance of the Universal Service and Access Fund was and if the Fund was intended to provide broadband access services.

Ms F Muthambi (ANC) observed that USAASA was entirely financed by government funding.  USAASA had operated without a Board since November 2011 and the Minister had undertaken to appoint a new Board as a matter of urgency.  Currently, the Agency was not compliant with the King III principles of corporate governance.  The written response to the questions asked by Members on 16 March 2012 concerning the disciplinary action taken against the former CEO of USAASA was inadequate.  She asked if charges had been laid against the CEO and if a copy of the settlement agreement could be provided to the Committee.  She wanted to know who had authorised the settlement as there was no Board in place.  She asked who was responsible for the fruitless and wasteful expenditure that would be identified by the Auditor-General and what the amount involved was.  She noted that other disciplinary procedures were in progress and asked if further financial settlements were anticipated.  She asked what the executive caretakers appointed by the DOC had achieved to date.

Mr B Steyn (DA) asked if the 400 new jobs that would be created by the establishment of the community access centres translated to an average of two jobs per centre.  The target number of STB subsidies was very specific.  He understood that the intention of the subsidy was to cover 70% of the cost of the STB and that the benefit would be granted to the poorest of the poor.  He wondered what support would be provided for that sector of society that was not able to afford the balance of 30% of the cost.  USAASA was not a new entity and a rural development strategy should already have been in place.  He asked if the objective concerning the development of a policy was new or if an existing policy would be adapted or improved.  The same question applied to the development of a universal access strategy.  He asked why it was necessary to appoint a service provider do develop the strategy.  He asked for an explanation of the Fund Manual and how the cost of printing the manual would be covered as no provision had been made in the budget.

Mr Steyn had visited some community access centres and had found that many were not functional.  He calculated that the average budget per centre was R150,000 but it was not clear what this amount would cover.  He understood that the sites (schools) requiring an upgrade of connectivity services had been identified and asked for confirmation that USAASA was ready to roll out the programme.  He queried the accuracy of the quarterly targets for the Connectivity upgrade programme and the support functions (pages 13 and 14 of the briefing document).  He asked for an explanation of the funding that had been rolled over from the previous fiscal year.  He pointed out that there were discrepancies in the briefing documents that were circulated to Members.

Mr Steyn asked for more information on the re-positioning of USAASA and how this would impact on existing operations.  He wanted to know what the timeframes were for the re-positioning exercise.  He wondered about the necessity of integrating the operations at this stage as the Agency had been in existence for a number of years.

Ms W Newhoudt-Druchen (ANC) asked for clarity on the involvement of SAPO in the distribution of the STB’s.  She asked what USAASA’s responsibility was within the STB programme and what was being done to inform the public, particularly the disabled community.  She asked for more information on the MTEF expenditure for the Universal Service and Access Fund, what was meant by the ‘old mandate’ and what the fund was used for.  She asked how the number of STB subsidies was determined.  USAASA planned to subsidise 469,387 STB’s but there were at least 5 million households in the country and 13 million South Africans received government grants.

Ms S Tsebe (ANC) asked what projects the former CEO was involved in.  She continued to receive complaints from communities about the lack of access to broadband services and wanted to know what progress had been made to provide community access centres.  She queried the nature of the new jobs that would be created and if these jobs would be sustainable.  She asked what the involvement of Sentech and the provincial and local government entities were in the establishment of the community access centres and what the plan was for the ongoing maintenance of the centres.  She asked what action had been taken to address the issue of the lack of capacity within USAASA.  She shared Ms Newhoudt-Druchen’s concern about the lack of awareness of the STB programme.  The Minister had appeared in a television advertisement but no mention of the STB programme had been made.  The STB’s were a prerequisite for the digital terrestrial television (DTT) project and the poor, rural communities would be affected the most.

Mr Vilakazi advised that the Minister of Communications had reviewed the Boards of all the State-owned entities, including USAASA.  The process of appointing a new Board was underway and was expected to be concluded by the end of May 2012.  The disciplinary action against the former CEO concerned his performance.  A legal process was involved and the conclusion was that substantial legal costs would be incurred if the process was dragged out.  The financial settlement reached was equivalent to 7 months’ pay and avoided the need to keep the CEO on suspension with full pay for a lengthy period.

Ms Linda Ngcwembe, Acting Chief Financial Officer, USAASA advised that the total settlement amounted to R758,000, including leave benefits.

Mr Vilakazi said that the settlement was authorised by the Executive Caretakers appointed by the Minister.  The agreement was based on the advice received from the Agency’s legal advisers and the Minister had been informed.  The Executive Caretakers were mindful of the fact that such settlements were considered to be fruitless and wasteful expenditure by the Auditor-General.  However, the cost of a lengthy legal process while the CEO was on suspension with full pay would have been significantly more than the settlement amount.  The disciplinary action against other officials was continuing under the guidance of the Agency’s legal advisers.  The Agency was keen to have the process finalised as soon as possible but by its nature, disciplinary proceedings was a lengthy process.

Mr Vilakazi explained that the Executive Caretakers were appointed in November 2011 after allegations of fraudulent practices were made.  The situation at the Agency was reviewed and internal financial control measures were immediately put in place.  Tender evaluation and specification committees were appointed.  The management structure and governance issues were considered and the operational structure was assessed in order to determine to what extent the Agency was able to deliver on its mandate.  Audits of the assets were undertaken.  During the process, the Agency’s projects were delayed.

Mr Winile Lamani, Acting Executive: BDS Division, USAASA apologised for the discrepancies in the information provided to Members.  The discrepancy involved the subsidising of television antennas and installation costs.  The number of STB subsidies was established by dividing the funding made available by the subsidy of R800 per household.  A survey to determine the number of households that would require the subsidy had not been conducted and the Agency was unable to estimate how many applications for the STB subsidies would be received.  An assessment of the existing systems of SAPO was made and the conclusion had been reached that certain systems would need to be changed to accommodate the distribution of the STB’s via the post offices.  The intention was to provide one STB subsidy per household.  The number of recipients of State grants could not be used to determine the number of potential subsidy applicants as there was more than one grantee per household.  USAASA was attempting to determine which areas in the country were poor and most in need.

Mr Lamani explained that the DOC was responsible for the strategy for communicating the STB programme.  An awareness campaign had been planned and would be launched on 5 May 2012.  USAASA and the other entities involved would participate in the campaign.  The extent of the uptake would depend on the level of awareness.  This was not under the control of USAASA but there would be an impact on Agency.  Another factor to be taken into consideration was the granting of subsidies to holders of television licenses only.  It was difficult to predict the rate of uptake as there was a general tendency to procrastinate.  The date when analogue signals would be terminated had not been established.

Mr Lamani advised that the assumption had been made that at least two persons were required to provide administrative and support services per community access centre.  In certain centres a person to provide training would also be required.  The business plan of USAASA was amended after the Committee had recommended the Agency focused on fewer projects.  The budget was limited but the decision had been made to double the target for the number of community access centres from 100 to 200.  The funding provided for the community access centres was a subsidy and was not intended to cover the cost of the centres.  The centres were established through public/private partnerships as the Agency had found that it was not feasible to establish and run the centres on its own.  The strategy was to develop the existing community centres and access facilities at schools.  In certain cases, issues concerning ownership of the centres had not been resolved.  The centres experiencing difficulties would be identified and the requirements for the facilities to be upgraded and become functional again would be determined.  The centres played a role in the training programmes offered by the e-Skills Institute.  The projects initiated by the former CEO would be continued.  He hoped that the upgrading of centres would be under way when the Committee conducted oversight visits.  Certain local government entities were willing to assist with the community access centres and had identified private organisations that could become involved in the programme.  In other cases, the municipality lacked ICT knowledge or was unable to provide assistance.  USAASA was willing to discuss the establishment of the centres with anyone who was willing to participate in the programme.  A rural development strategy had been developed by the DOC and the USAASA strategic plan had been aligned with this strategy.  USAASA planned to undertake further public consultation as there was limited knowledge in the sector of the availability of the Universal Service and Access Fund.

Mr Vilakazi advised that the DOC had started the process of making the STB’s available.  The invitation to submit proposals had been published.  USAASA’s plans had been developed on the assumption that the STB’s would be available for distribution as planned by the DOC.  An application to roll over the unspent allocation from the prior year had been submitted to the National Treasury but the decision was not yet known.

Mr Lamani said that the original budget of R60 million to provide broadband access services was inadequate.  The funds available were barely adequate for doing preparatory work and would have little impact.  USAASA had decided to rather focus its limited resources on the community access centres.

The Chairperson observed that the provision of broadband services was a national priority and was one of the DOC’s key strategic objectives.

Mr Lamani replied that the development of the National Universal Service and Access Strategy was included in the strategic plans of USAASA.

Mr Vilakazi added that the DOC was still in the process of developing a master plan for broadband services.

The Chairperson asked USAASA to inform the Committee if any of the DOC strategic plans involving the Agency had been excluded.  The strategic plans had to be consistent in the use of terminology.

Ms Muthambi was not satisfied with the response provided concerning the settlement reached with the former CEO.  She pointed out that the provisions of the Public Finance Management Act (PFMA) had to be complied with.  She understood that a forensic audit had been done and wanted to know what the cost of the audit had been.  The outcome of the audit had resulted in the charges being brought against the executive managers.  She was concerned that the disciplinary procedures had resulted in delays in the Agency’s projects.  The Committee needed to determine whether or not the financial settlement that had been reached with the former CEO was justified and she wanted to know what the estimated cost of the alternative legal process was.  She asked for the assurance that the other disciplinary cases would be dealt with and that no other financial settlement agreements would be made.

Ms Muthambi understood that a skills audit had been undertaken.  She wanted to know if the audit was completed, who had done the audit and what the outcome had been.  USAASA had informed the Committee during previous meetings that a Human Resource manager would be appointed.  The re-positioning of USAASA had been under discussion for a number of years and was not an acceptable excuse for the failure to deliver on its mandate.  He asked what the current situation was concerning the re-positioning of the Agency.  She asked if business plans had been developed for all the projects included in the strategic plans.  She asked how the training spin-off from the access centres would be measured.  She asked if there were any examples of successful community access centres established by public/private partnerships.  She asked what action had been taken against the service provider that had received payment from USAASA but had failed to deliver the agreed services.  She understood that a new tender had been issued but wanted to know what lessons had been learned and why the Agency continued to spend money on projects that had failed.  She asked if USAASA made any contribution to the development of the DOC’s broadband strategy.

Mr Steyn repeated his earlier questions, which were not responded to.  He noted that USAASA had budgeted an amount of R860,000 for legal fees and assumed that this was in respect of the disciplinary action being taken.  USAASA had a relatively small budget but the amounts budgeted for bank charges and audit fees appeared to be excessive.  He asked for an explanation of the budgeted travel and subsistence expenditure items.  He asked if the quarterly targets indicated were for the quarter only or if the activity was of an ongoing nature.  For example, the implementation of the strategic plans was targeted for the third quarter but should be ongoing throughout the year.

Ms Shinn understood that the plan had been to ensure that 5 million households would continue to receive television broadcasts during the implementation of the DTT project.  She asked for an explanation of the substantial difference between the target of providing 469,387 STB subsidies and 5 million households.  She remained unconvinced that the STB’s would be manufactured and ready for distribution by the third quarter of 2012/13.

Ms Tsebe remarked that local government Councilors played a vital role in providing information to communities.  In certain rural communities, the post office was situated in the offices of the local traditional leader.  The Committee was aware of the problems with this arrangement and had received complaints from residents that they had been denied access to post office facilities.  She asked if alternative arrangements could be made for the distribution of the STB’s in such cases.

The Chairperson observed that it might be necessary for the Committee to be briefed by all the stakeholders involved in the DTT project.  The current status of the project and the available funding had to be determined.  He suggested that the Members deferred their questions on the STB’s as it was unlikely that USAASA was in a position to provide meaningful responses.

Ms Shinn understood that the data provided by USAASA on the STB’s referred to the activities planned for the current year.

Ms Muthambi asked if USAASA had a detailed plan for the STB subsidy programme in place.

Ms Tsebe agreed with the suggestion made by the Chairperson.

Mr Vilakazi confirmed that a forensic investigation had been completed and that the results had led to charges being laid against certain executives of the Agency.  In the case of the former CEO, the charges related to his performance and the role he had played in the allegations that had been made.  It was necessary to determine the exact nature of the offences, i.e. if it had been a matter of negligence, ignorance or a failure to exercise his responsibility over the performance of subordinate managers.  Consideration had to be given to the fact that the Board had given certain powers to subordinate managers.

The Chairperson interrupted to point out that the provisions of the Electronic Communications Act (ECA) was clear that the executives were under the control and direction of the CEO, who was appointed by the Board.  The CEO was therefore held accountable for the actions of his subordinate managers.

Mr Vilakazi agreed the provisions of the ECA were clear.  However, the Board had undermined the CEO by giving certain powers to his subordinates and making it difficult for him to operate.  The legal advice received indicated that the Agency was unlikely to have won a legal battle and the decision was made not to waste more taxpayer’s money to defend the matter.  He assured the Committee that the cost of a protracted Court case would have been substantially more than the amount of the financial settlement.  The matter was complex and involved several officials.  The involvement of all concerned had to be investigated.  There was currently no indication that other financial settlements would be necessary.  The intention was to conclude the disciplinary process as soon as possible.

Mr Vilakazi advised that an internal skills audit was undertaken and a report had been issued.  An external service provider was not appointed and there was no additional cost to the organisation.  The appointment of a Human Resource manager had not been finalised.

Mr Lamani explained that the target for the implementation of the strategic plan during the third quarter referred to the submission of an internal audit plan to the audit and risk committee.  The actual implementation of the plan was an ongoing process.  The cost of establishing community access centres had not been determined.  USAASA needed to establish public/private partnerships in the first instance.  The Universal Service and Access Fund included the funds allocated for community access centres (the ‘old mandate’ of USAASA) and the funds allocated for the STB subsidies.  Page 14 of the briefing document was included in error and should be disregarded.  The re-positioning of USAASA was the response to the historical performance of the Agency, which had been less than satisfactory.  Some of the issues concerned the policy framework, which needed to be reviewed.  Other matters related to the lack of capacity within the Agency to fulfill its mandate.  The problems would not be resolved by merely amending the ECA.  Unfortunately, many of the suspended officials were highly skilled.  The Executive Caretakers had attempted to improve current operations by integrating the activities of the various divisions in order to avoid duplication.  USAASA had to be aligned with the new ICT policy framework that was being developed and its future positioning would be the subject of a more general review.

Mr Lamani explained that the concepts and business plans for the various projects were developed in 2010.  Subsequently, key areas and challenges had been identified.  The challenges included the hand-over of community centres and related issues with ownership and funding.  USAASA had developed the concept of rapid deployment of the community access centres to replace the original plan for the Agency to establish and manage the centres.  The new plan involved the establishment of public/private partnerships for the centres.  If adequate due diligence had been done, the previous failures and incidents of service providers reneging on agreements would not have occurred.  USAASA should not wait for 100% broadband access before making facilities available to communities but realised that it was essential that the community was involved in the establishment of the centres and that the centres would be financially sustainable.

Ms Muthambi awaited a response to her earlier questions.  It was not clear what the reasons were for the failure of the community centres that had been established.  She understood that an assessment had been done during 2011 and asked that the Committee was informed of what the findings had been and what action needed to be taken to ensure that the Agency delivered on its mandate.

Mr Vilakazi explained that the matter concerning the service provider had been included in the forensic investigation.  A value-for-money audit was undertaken but he was not in a position to comment until the final audit report was received.  He undertook to provide a detailed report on the situation at USAASA when the Executive Caretakers were appointed and what action had subsequently been taken.  A review of the organisation had included how the projects were being managed, if the projects were still relevant, what priority should be assigned to each project, if USAASA was delivering on its mandate and if the Agency was correctly positioned.  USAASA had initiated a number of interventions and projects since it was established.  It was acknowledged that the community access centres had not been successful.  The reasons for the failure of the programme were the original ‘charity’ model that was used and the lack of community involvement.  The centres had been vandalised and the equipment had been stolen.  The new model would ensure more involvement by the community and a vested interest by the partner in ensuring that the centre remained functional.  The international trend supported the premise that the public/private partnership would deliver a more successful outcome.

The Chairperson noted that Members were not convinced that USAASA would be able to successfully implement the planned projects.  He suggested that the Executive Caretakers provided quarterly progress reports to the Committee and included detailed business plans that indicated exactly when what would be done by when.  He asked for copies of the forensic audit report and the corrective action plan to be submitted to the Committee.  He stressed the importance of skills development and the need to ensure that skilled staff was appropriately deployed within the organisation.  USAASA shared the challenge of a lack of skilled resources with the DOC and the other state-owned entities in the ICT sector.  Attention had to be paid to the filling of vacancies and the need to minimise the loss of skilled personnel.

Ms Muthambi observed that the corporate and business plan did not include detailed budget information.  Previous briefings to the Committee referred to challenges with lease agreements, the cost of rental premises and money spent on research and development activities that did not result in any useful information.

Ms Ngcwembe responded to earlier questions concerning the budgeted expenditure items for 2012/13.  The budgeted amount for audit fees of R762,000 was the fee charged by the Auditor-General.  The Agency had attempted to negotiate a discount but had little choice as this was a PFMA requirement.  The amount of R45,000 for bank charges was considered to be reasonable as a number of small transactions was made.  In addition, bank charges amounting to R27,000 were budgeted for the Universal Service and Access Fund.  The budget for legal fees was R860,000 and covered the cost of appointing external legal advisers.  The budget for travel and subsistence expenditure amounting to R3.5 million covered the cost of travel and accommodation for the provincial coordinators, the attendance of executives at Parliamentary briefings and overseas travel identified by the DOC.  The budget of R30.7 million for salaries and wages was based on the number of employees.  Lease payments totaled R4.9 million for the ten provincial offices and the head office.  She had no knowledge of previous concerns over the cost of rentals, lease agreements and the expenditure on research and development.

The Chairperson asked for the role and capacity of the provincial coordinators to be explained.  He hoped that the skills audit provided useful information and suggested that the Agency’s plans for redeploying employees included additional training.  USAASA played a key role in the provision of access to ICT services in rural areas and the poor sectors of the country.  SAPO was obliged to establish post offices in remote areas in accordance with its universal service obligation mandate regardless of whether or not these post offices were financially viable.  He asked USAASA to determine which community access centres were unlikely to be financially viable and would require alternative funding arrangements.  A similar approach should apply to non-viable post offices and to community access centres.

Strategic Plan and Budget of the National Electronic Media Institute of South Africa (NEMISA)
Dr Molatelo Maloka, Chairperson of the NEMISA Board introduced the delegates.  Dr Harold Wesso, Acting Chief Executive Officer, NEMISA presented the briefing to the Committee (see attached documents).

The Department of Communications had instructed NEMISA to conduct an organisational review with the aim of integrating functions and eliminating duplication.  The operations of the Institute of Space and Software Application (ISSA) and the e-Skills Institute would be integrated with NEMISA.  A new Chairperson of the Board, new Board members and Acting CEO had been appointed.  New mandate and organisational structures were under consideration.  The Institute would be aligned with the National and Departmental goals and cognisance would be given to global trends, technological developments and the demands of the constantly changing ICT sector.

The briefing covered the vision, mission, values and mandate of NEMISA.  The original mandate was to provide skills training for the radio and television broadcasting industry.  Market conditions and the changing ICT environment demanded skills in multi-media technology and the training courses offered by NEMISA had to be adjusted accordingly.

The objectives and deliverables of the National Digital Repository (NDR) and community radio projects were summarised.  The DTT programme demanded skills in digital broadcasting and the installation and maintenance of STB’s.  A value chain study would indicate business and job opportunities and what skills would be required.

Achievements during 2011/12 included receiving accreditation from the MICT-SETA, finalising the certification of students; reaching an agreement with the Council for Scientific and Industrial Research (CSIR) for the establishment of a research and development facility; industry awards, developing a training programme for lecturers; receiving Microsoft accreditation and having student productions accepted by e-TV.

Five strategic focus areas were identified.  Details were provided of the strategic objectives, key performance areas (KPA’s) and targets.  The objectives were aligned with the strategic plan of the DOC.  The Annual Performance Plan for 2012/13 included the quarterly targets that had been set.

Ms Moira Malakalaka, Chief Financial Officer, CFO presented the budget for the 2012/13 to 2014/15 MTEF period.  Total revenue for 2012/13 amounted to R46.6 million.  A breakdown of the amounts allocated to each strategic objective and project was provided. 

Dr Wesso summarised the Human Resources plan and strategy, which was currently under review.  130 students were enrolled for the 2012 academic year.  The number of students was restricted because of the limited space available.

Discussion
The Chairperson welcomed the recently appointed members of the NEMISA Board.  He asked the Department to ensure in future that the strategic plan documents submitted to the Speaker of Parliament were not changed.  The Committee could only consider the version that had been formally submitted to Parliament.

Ms Muthambi noted that some copies of the Annual Performance Plan circulated to Members had not been signed.

The Chairperson explained that an electronic version of the plan was printed and circulated.  This version omitted the signatures.  Members subsequently received original, signed documents.

Ms Muthambi asked if the training course for lecturers were being offered at all the Further Education and Training (FET) Colleges in the country.  She asked for a list of the accredited training programmes offered by NEMISA to be provided to the Committee.  She was concerned by the relatively small number of students and asked what plans were in place to increase the training facilities.

Ms Newhoudt-Druchen asked if NEMISA offered training on DTT and on maintenance of the STB’s.  She asked how many students with disabilities were enrolled.  Previous briefings to the Committee had created the impression that NEMISA was struggling but this briefing indicated a more positive outlook.  She agreed with the emphasis that was placed on the importance of providing e-skills to the youth.  She asked if the training facilities were adequate and suited to the purpose.  She wanted to know how much was being spent on students and if the bursaries offered had to be repaid by the students.

Ms Shinn asked for more information on the integration of operations referred to during the briefing.  She was concerned over the short period of time allowed for the integration process and wanted to know what had led to the request from the DOC to proceed with this.  She asked what the synergy was between the training offered by the three entities that would be merged under NEMISA as the skills required for the space, science and animation disciplines were diverse.  She asked how the merged structure would be funded.  In her experience, it was not feasible to simply combine the budgets of the organisations being merged.  Professional assistance was required for a successful integration process and she doubted that three months was adequate.  Very few students were being trained and the product offered by NEMISA appeared to be limited.  The Institute’s website had not been updated since 2009.  It would appear that most students were being subsidised and she asked how it was determined which students would be required to pay tuition fees.  The asked if the total amount of R25 million for current projects was included in the total revenue amount.

Mr Steyn asked what progress had been made to recruit students from all the provinces.  The briefing made no mention of the new campus referred to in the Annual Performance Plan document.  The Annual Performance Plan did not include the integration issue.  He asked for more information on the three entities that would be merged, their available budgets and staff numbers.  It might be necessary to present a separate briefing to the Committee on the merge and the reorganisation of NEMISA.  He supported the idea of providing training on STB maintenance and installation.  He expected the training to be more technical in nature than the training on radio and television broadcasting.  More lecturers would be needed.  He asked for more information on the research and development undertaken by NEMISA.  He noted that Dr Wesso had stated that 80% of the students trained by NEMISA found work in other sectors.  He wondered if this was the desired outcome.  Reference was made to a report that had concluded that 95% of workers would be required to have e-skills in future.  He agreed with this conclusion and felt that ICT skills development was not receiving enough attention in South Africa.  He calculated that the average cost of training 130 students by NEMISA was R353,000 per student per annum.  This appeared to be excessive and he wondered if it was money being well-spent.  He asked for and explanation for the substantial increase in sales and marketing revenue and in asset value over the prior year.  He noted that certain strategic plans continued from the previous year.  Other plans should be ongoing operational plans.  He asked for clarity on the quarterly targets that had been set for student enrolment and queried the target to achieve half of the annual fundraising target in the first quarter.  He asked for more information on the quarterly targets for animation productions.  No provision had been made for relocation costs when the campus was moved.  The briefing did not address the matter in any detail.

Ms Tsebe asked for an explanation of NEMISA’s student recruitment strategy and if any awareness campaigns were undertaken.  The existence of NEMISA was not known in poor rural communities.  She asked what the current organisational structure was and how the structure would change once the other entities had been merged.  The budget for strategic objective 4 (alignment and improvement of stakeholder and partner relations) was only R1.1 million, which appeared to be relatively little.  She criticised the errors in the documents which appeared to be the result of copying the previous year’s plan.

Dr Wesso advised that the train-the-trainer course was offered at FET colleges in collaboration with the Department of Higher Education.  The course was developed with the assistance of a Professor from South Korea with expertise in multimedia.  As it was a new qualification, 20 lecturers were trained in a pilot course.  The multimedia qualification was currently offered at five FET colleges and would be extended to other colleges as lecturing capacity increased.  South Africa suffered from a lack of qualified lecturers.  He undertook to provide the Committee with a list of the accredited training courses.  NEMISA could accommodate only 130 students at its in-house training facility.  A model was being developed that would allow for the training programme to be offered at six universities situated in different provinces.  NEMISA was developing a network with other training institutions to provide e-skills to the entire country.  The Institution had found that the old skilling methods were no longer effective.  The new approach involved collaboration, forming synergies with other educational institutions and involving the private sector through public/private partnerships.  It was essential that NEMISA developed leading products and raised its profile in order to attract investment.

Dr Wesso explained the technical skills that would be required to manufacture, repair and maintain the STB’s.  Installation of the boxes would be relatively simple.  The DTT project offered opportunities for small businesses to be established, particularly in the rural areas of the country.  With the necessary skills, many currently unemployed people would be able to benefit from the project.  It was important that South Africans were provided with the necessary skills to avoid people from other countries taking advantage of the skills gap.  The ICT and media sectors were suitable environments for and offered many opportunities to the disabled community.  He agreed that the training of persons with disabilities was important as the country was in need of creative minds.

Dr Wesso advised that the current lease for the training facility expired at the end of 2013.  It was essential that more spacious premises were found.  The matter was currently under discussion with the DOC.  It was worth considering alternative solutions, for example allowing private enterprises to erect buildings on university campuses and forming partnerships with the United Nations development programme.  Approximately 80% of students received full bursaries, which covered the cost of accommodation, meals, and tuition.  These students were from disadvantaged communities and could not afford to pay for the training.

Dr Wesso said that the issue of the integration of ISSA and the e-Skills Institute into NEMISA had been under discussion for some time.  ISSA was virtually defunct but work had been done to develop software applications for Government.  The digital environment required skills in developing software applications.  The concept behind the decision to merge the three entities was to develop critical mass for skilling people.  NEMISA was originally established to provide training for the broadcasting sector but technological advancements in the media sector demanded a review of the product offering to ensure that it remained appropriate and relevant.  The employees of the three entities would be accommodated in the new organisational structure.  Most lecturers were employed on a part-time contractual basis.  He was confident that the integration process could be completed in the three month timeframe.

Dr Wesso said that the project funding amounting to R25 million was allocated by the DOC in addition to the allocation for NEMISA.  Students were recruited from all the provinces.  Under the new model, students would not be required to attend the training courses in Johannesburg and were more likely to remain in their home provinces.  Discussions were being held with the provincial authorities and USAASA to utilise the community access centres for training purposes.  NEMISA was not currently marketing the training courses offered as the number of students that could be accommodated was limited.  The Institute had focused on the development of training courses that could be offered at other tertiary institutions where a greater number of students could be accommodated.  The agreement with the CSIR Meraka Institute allowed students access to research facilities.  NEMISA currently had no research and development capacity but had formed relationships with tertiary institutions and would be in a position to undertake or commission research within a relatively short period of time if necessary.  The Department of Trade and Industry had estimated that the ICT sector required at least 38,000 technicians and 6,000 ICT managers.

Mr Takalani Nwedamutswu, Chief Operations Officer, NEMISA explained that the academic and financial years followed different cycles.  The fourth quarter of the fiscal year included the first semester of the academic year.  The Board had approved the change management strategy for the organisation.  The strategy was implemented where there would be no impact on the integration of the three entities.  A new organogram would be drawn up once the new functional structure of the merged entity was finalised.  The strategic plan covered the historical mandate of NEMISA.  Details of the planned integration were provided with the intention of keeping the Committee informed.  He was confident that the quarterly targets for productions for community media were achievable.

Ms Malakalaka said that the budget for 2012/13 included an amount of R49.8 million for capital expenditure for the acquisition of new premises.  NEMISA expanded its reach through collaboration with other stakeholders in the industry and was hesitant to spend money on marketing campaigns when the number of students that could be accommodated was restricted by the available space.

Mr Thami Ka Plaatjie, Member of the NEMSIA Board advised that similar concerns were raised during the first meeting of the new Board.  Another concern was that the SABC was not employing NEMISA graduates to the desired extent.  The Board was convinced that the integration of the three entities would be beneficial, despite the absence of obvious synergy between the organisations.  The Board was of the opinion that there was room for improvement in the product offering of NEMISA.

The Chairperson clarified that the strategic plan submitted by NEMISA referred to the current operations of the Institute, before any merging with other organisations.  It had not been made clear when the integration would take place and what the impact of the merged operations on the strategic plans would be.  The strategic plan made no mention of the planned merge.  The Committee had not received any documents concerning the integration plans and had no information on the budgets of ISSA and the e-Skills Institute.  The Committee had not been briefed on the integration plans and what the mandate, strategy and performance targets of the merged organisation would be.  The Committee had to be informed of quarterly performance targets in order to monitor the performance of the organisation.

Ms Muthambi said that a Ministerial directive on the merge of the three entities had not been issued.  The Committee should only focus on NEMISA.  The composition of the Board, profiles of the new Board members and the Board governance committees were not included in the strategic plan documents.  She asked if NEMISA had considered collaborating with Telkom to share its learning centre and student accommodation facilities in Olifantsfontein.

Mr Steyn asked if the cost of acquiring new premises should not be borne by the Department of Public Works.

Dr Wesso confirmed that the Annual Performance Plan only referred to NEMISA.  A new plan and budget would have to be developed for the merged entity, which was unlikely to be in place before the end of the current financial year.  In the interim, normal operations and the projects underway had to continue.  The Annual Performance Plan was submitted in January 2012, which was before the new Board and Chairperson were appointed in April 2012.  NEMISA was already collaborating with Telkom and was aware of its training facilities.  The Institute also worked with a South Korean organisation to provide training for lecturers in embedded software development disciplines.  The Curricula Vitae of the members of the Board would be provided to the Committee.

Ms Malakalaka advised that discussions had been held with the DOC on the relocation of NEMISA.  The Department had to start the process.  The cost of relocation was not included in NEMISA’s budget.

The Chairperson asked what the asset acquisition item of R49 million in the NEMISA budget statement was for.  He advised NEMISA not to be too reliant on the Department for the move – ICASA had been trying to move to new premises for at least three years without success.  The accommodation needs of the merged organisation had to be taken into consideration.  The Committee required a detailed report and briefing on the integration of the three entities.  The positioning of NEMISA was under consideration.  It was not clear if NEMISA should report to the DOC or to the Department of Higher Education (DHET).  NEMISA was already engaged with the FET colleges and universities.  The repositioning of the Institute would be accelerated if the strategic plans of the merged organisation indicated that alignment with the DHET was the best alternative.  The vacant CEO position should be filled as soon as possible.

Dr Maloka thanked the Committee for its support.  The questions asked by the Members helped the new Board to focus on the matters of critical importance.  The Board would be ready to present a briefing to the Committee on the merged organisation in the near future.

The Chairperson thanked the participants for their input during the proceedings.

The meeting was adjourned.