Department of Performance Monitoring and Evaluation & National Youth Development Agency on their 2011/12 Annual Reports

Standing Committee on Appropriations

18 October 2012
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Department of Performance Monitoring and Evaluation (DPME) and the National Youth Development Agency (NYDA) briefed the Committee on their 2011/12 Annual Report results.

The DPME informed the Committee that it was the first year they received a budget, and therefore, this was their very first Annual Report. The institution was awarded an unqualified audit opinion from the Auditor-General (AG); however, the AG expressed dissatisfaction that some of the DPME's targets were not time bound, and that necessary steps were not taken to prevent incidents of irregular expenditure. Overall, the DPME achieved 63% of its 86 targets, 31% of the targets were partially achieved, and 6% were not achieved.

The Committee asked how the DPME could ensure that other departments' targets were more ambitious, how they were going to assist in improving government departments' Annual Performance Plans (APPs), if the DPME intervened if they thought departments' targets were not going to assist national government priorities, and if they could explain what “partially achieved” meant. Members noted an audit finding, which said that the Chief Financial Officer did not take reasonable steps to prevent irregular expenditure of R524 000. They asked for clarity on the matter. They also asked if DPME was obligated to use SITA for their IT needs and if SITA was responsible for the delays in implementing a proper IT systems. The Committee wanted to know how the DPME would ensure that provincial departments were complying with their national counterparts to ensure that targets were achieved. They were pleased that DPME was in the process of establishing a framework that would assess if Heads of Departments were fulfilling their mandates.

The NYDA informed the Committee that they received an unqualified audit opinion from the AG with two emphases of matter on material impairments, which spoke to the irrecoverability of loans, and irregular expenditure that amounted to R133 252 000. The NYDA achieved 90% of their predetermined targets – 63 out of 70 Key Performance Indicators were met and/or exceeded. A brief update was given about the progress made by Star Schools.

Members noted contradictions in the NYDA's presentation, which stated that all their tenders in 2011/12 were compliant and that all transactions were done timeously to prevent fruitless and wasteful expenditure. However, the AG's report showed that this was incorrect, as their were incidents of wasteful expenditure and the NYDA was penalised for late payments to SARS. There was great confusion about who the NYDA was accountable to. The NYDA explained that they answered to the President of the Republic of South Africa; however, the President delegated the responsibility to the Minister in the Presidency, Hon Chabane. They explained further that the board was supposed to be the bridge between the NYDA and the Minister; however, a new board had not yet been appointed by Parliament. The Committee was concerned about the NYDA, saying that someone had to answer for the entity's flaws, which included issues around procurement and the recoverability of loans.

Members also complained that the NYDA's presentation was too haphazard and it was difficult for them to find the answers they needed. They warned that projects had to be coordinated in line with the budget and the strategic plan. They wondered if the entity had any sort of performance management system in place

A DA Member asked if the NYDA honestly thought that they deserved bonuses after they did not conform to supply chain management processes, after they were operating without an internal committee, their financial statements were not prepared well, and when their loan books looked like a “dog’s breakfast”.

The meeting was concluded with a collective decision from Members to hold a workshop with the NYDA and the authority responsible for the entity. There were many issues that had to be discussed and resolved, and it was difficult to “throw stones” at the NYDA when the entity's accounting authority was not present at the meeting to give them guidance.

Meeting report

Opening Statement
The Chairperson informed the Committee that the Department of Performance Monitoring and Evaluation (DPME) fell under the Minister in the Presidency for Performance Monitoring and Evaluation and; therefore, Members were not supposed to ask questions that required his direct response. 

Department of Performance Monitoring and Evaluation Briefing
Dr Sean Phillips, Director-General in the DPME, reminded the Committee that it was the first year that the DPME had received a budget, and as such, this was the first Annual Report produced by the institution.

Key Achievements per Strategic Outcome Oriented Goals

1. To advance the strategic agenda of government through the development and implementation of the outcomes approach, monitoring and reporting on progress and evaluating impact.
The DPME institutionalised quarterly monitoring of the delivery agreements by Cabinet and initiated reviews of the delivery agreements based on Monitoring and Evaluation (M&E) findings. It also provided the political principles in the Presidency on briefing notes on matters before Cabinet.

The institution completed the National Evaluation Policy Framework, an evaluation of the Early Childhood Development Framework, a study on sanitation, and carried out a Mid-Term Review that provided an assessment of progress towards meeting government priorities.

2. To promote monitoring and evaluation practice through a coordinated policy platform, quality capacity building and credible data systems
The DPME convened national and provincial M&E forums, established M&E training courses for officials, and developed guidelines for other departments on various aspects of M&E. The DPME also produced the 2011 Development Indicators.

To conduct institutional performance monitoring and front line service delivery monitoring
The DPME developed and implemented a Management Performance Assessment tool (MPAT) and obtained an agreement from all the provinces to implement a joint programme of annual management performance assessments of national and provincial departments. Assessments were carried out on 27 national departments and 60 provincial departments by the end of March 2012. The entity also assessed draft Annual Performance Plans (APPs) of 33 national departments and gave feedback to accounting officers on whether their APPs reflected commitments to relevant delivery agreements. The DPME also developed improvement plans to enhance the efficiency and effectiveness of the Presidential Hotline and achieved a case resolution of 82% by March 2012.

Performance per Programme:

Programme 1: Administration
Of the 20 targets under Administration, the DPME achieved 16 of them (80%). The rest of the targets that were partially achieved included developing a risk management strategy, developing a communication strategy, developing a procurement plan and establishing a comprehensive asset register.

Programme 2: Outcomes Monitoring and Evaluation
The DPME achieved nine out of 15 targets (60%) for this programme. The rest of the targets were partially achieved. The six targets partially achieved included giving support to national departments and the Premiers Office to translate delivery agreements into provincial targets, researching and strengthening an evidence base for outcome monitoring, promoting and communicating an outcomes approach, reporting on alignment of the APP and strategic plan of 45 national departments, refining delivery agreements, and quarterly reporting on the Programme of Action (POA).

Programme 3: M&E Systems and Business Systems and ICT
The DPME achieved 18 out of 34 targets (53%). 11 targets were partially achieved and 5 targets were not achieved at all. Of the 11 partially achieved targets, 9 related to the targets for business and ICT. The two other partially achieved targets related to M&E systems coordination and support. Targets not achieved included the development of a framework on the modelling needs of the DPME, the establishment of an integrated DPME projects dashboard, holding a stakeholder workshop for M&E IT guidelines, and performing a review of all the drafted components of GIS.

Programme 4: PSAO
Of the 17 targets, DPME achieved 11 (65%). Six targets were partially achieved. Some of the targets included the Presidential Hotline which was transferred to the DPME on 1 October 2011. The six partially achieved targets related to the 45 APP assessments that had to be done, undertaking the review of content and process for Heads of Departments (HODs) performance assessments, developing frameworks for citizen-based monitoring, developing a delivery support framework by September 2011, and facilitating three support interventions related to management weaknesses.

Overall, the DPME achieved 63% of its 86 targets, 31% of the targets were partially achieved, and 6% were not achieved.

Financial Information and Audit Report
The biggest area of under-expenditure fell under Payments for Capital Assets, where machinery and equipment was under spent by R1 188 000 and software was under spent by R590 000. The DPME aimed to reduce the overall variance in expenditure for each of its programmes to less than 2% and had introduced more regular monitoring of expenditure versus budget to achieve this.

The DPME received an unqualified opinion from the Auditor-General (AG). However, the AG also found that the institution's performance targets were not time bound, 39% of planned targets were not achieved, and the financial statements were not prepared in all material respect in accordance with requirements of the Public Finance Management Act (PFMA). The DPME has since improved its performance targets in its 2012/13 APP. The DPME set ambitious targets – achieving 63% and partially achieving 30%.

The AG also found that the DPME's accounting officer did not take reasonable steps to prevent irregular expenditure. There were six reported cases of irregular expenditure, all of which were related to procurement. Irregular expenditure amounting to R34 000, related to an order for a conference venue for which the CFO's approval was not obtained. This had since been corrected. An irregular expenditure of R524 000 related to the development of POA software where the CFO provided approval for deviating from the tender process, but did so without sufficient documented motivation. In the future, the CFO would ensure that sufficient documentation was filed. An amount of R101 000 was for non-compliance with the provision of the PPPFA where forms from a supplier were misplaced. A checklist had been implemented to ensure that all documentation was filed before a procurement process was finalised. Irregular expenditures of R137 000 and R247 000 related to two orders placed by the Presidency while DPME was part of the Presidency vote, which were subsequently paid for by the DPME. An expenditure by R408 000 related to spending on leases for photo-copying machines and 3G data modems. These were defined as finance leases which were then condoned by the National Treasury.

Human Resource Information
The vacancy rate at the end of the reporting period was 30%. Currently, it stood at 15%. The HR structure was revised at the end of the reporting period and the post establishment increased from 141 posts to 195. The DPME only had funding for 141 posts for 2011/12, but additional funding for the new posts would become available at the beginning of the 2012/13 financial year. The DPME had trouble filling the Deputy Director-General posts as it was having trouble recruiting the right candidates. The Employment Equity Plan for the DPME was approved for implementation from 1 October 2011. The entity was in the process of recruiting more females and Africans in senior management positions. 1.5% of DPME employees had disabilities. Efforts were being given in this area to ensure the DPME's 2% target was achieved.

Mr M Swart (DA) noted that the DPME had its problem areas, but at least it was doing something to address them. He understood that the DPME was a new department, which meant that Members could be a little lenient with it. He asked how the entity could ensure that other departments’ targets were more ambitious. He thought the Committee should have more information about the results of the DPME’s monitoring activities. He suggested that the Committee set a certain time provision for when the DPME should give Members these monitoring results.

Dr Phillips answered that when targets were related to change processes and improving performance, it was difficult to think of a “realistic” target. Departments had to set ambitious targets if they wanted to see improvements. This did not mean that targets had to be unrealistic and he was aware that there were obstacles that could deter departments from reaching their targets. In the DPME’s engagements with departments regarding delivery agreements, they highlighted where departments’ targets were not ambitious enough. Generally speaking, the targets and delivery agreements were quite ambitious. The DPME also looked at whether targets in the APPs were ambitious enough to enable the targets and higher level delivery agreements to be met. When parliamentary committees met with their departments on their APPs, they could also ask the DPME to comment on them.

Mr J Gelderblom (ANC) stated that 33 departments had provided the DPME with their Annual Reports. He asked how the DPME was going to improve on these reports.

Ms L Yengeni (ANC) noted that there were a few departments that had not submitted their delivery agreements to the DPME. She wanted to know who they were. The DPME also said that it wanted departments to have more ambitious targets. She wanted to know if the Department could unpack the term “ambitious”. How did the DPME scrutinise these targets? Did the DPME assess them? If the Department felt that targets were not going to assist the national priorities of the government, did they intervene? She noted that the DPME’s under-expenditure related to IT systems that were required. She asked if there was any other area that the DPME under-spent on. She referred to one of the audit findings where it was noted that the CFO did not take reasonable steps to prevent irregular expenditure of R524 000. She asked for clarity on the matter. She did not fully understand the term “partially achieved” and wondered if it meant that the budget for each target was also partially used.

Dr Phillips responded that the DPME would provide the Committee with a list of departments that did not submit their APPs to the DPME for comment. 

Dr Phillips answered that when the DPME looked at departments’ APPs, it looked at whether or not they had enough in their APPs to give assurance that higher level targets in the delivery agreements would also be achieved. In terms of the under-expenditure on IT systems, this was the main area of under-expenditure for the institution. But, there were other areas where money was under-spent such as compensation and goods and services.

Dr Phillips explained the irregular expenditure of R524 000. In terms of the PFMA and National Treasury regulations, the accounting officer had financial powers in the DPME. There were a set of financial delegations in the DPME, which were aligned with guidelines for financial delegations as put forward by Treasury. According to those guidelines, the CFO had powers to approve certain processes. This was common practice in departments. Procurement regulations required that if procurement of a particular item was going to be more than R500 000, the normal procedure was to have an open tender. If less than R500 000, the normal procedure was to get three quotations. The accounting authority could approve a deviation from those procedures with proper written motivation. When the AG checked this, he found that there was not proper written motivation for the deviation that allowed the total value of the procurement to exceed R500 000 by R24 000. During the course of the implementation of the project, things came to light which the DPME was not aware of before and they had to ask the service provider to do some additional work which took the value slightly above R500 000. It was entirely in the CFO’s powers to approve this deviation but the error that was made was that the CFO did not adequately write down the reasons for the variation. The CFO is now aware that he should do this in the future.

The Chairperson interjected saying that he understood how this happened as it was difficult when amounts were just above R500 000, but it was a problem everywhere in terms of procurement. He asked how DPME could ensure that this did not happen again.

Dr Phillips assured the Committee that the CFO and the AG were aware that in some instances departments could be tempted to reduce the size of the project to make sure it came below R500 000 because it was quicker to procure through quotations than to hold an open tender process. This was something that the AG was aware of. If they reached the opinion that departments deliberately broke down or divided procurements, there would be trouble. However, the AG did not reach this conclusion with the DPME. The amount was classified as irregular because there was not sufficient written motivation for the variance.

Dr Phillips responded to what the DPME meant by partially achieved targets. He stated that the DPME was very strict in terms of meeting its targets. The AG said that targets and indicators had to be very precisely related, and they had to be measurable and time bound. As an example, if the DPME had set a target of analysing 45 national departments’ APPs, and only received 33 timeously, then it could not complete its target. It was a matter of determining whether the DPME achieved precisely the target that it had set for itself. It was not fully achieved, but could be classified as partially achieved. If a target was partially achieved, it did not always relate to expenditure.

Ms R Mashigo (ANC) asked if DPME was obligated to use SITA for their IT contracts. She wanted to know so she could understand if SITA was responsible for the IT delays in the DPME.

Dr Phillips replied that the DPME did have an obligation to work with SITA, especially as a new department that had to put IT systems in place. There were problems experienced with SITA, especially by other departments, but the DPME was aware that SITA had a turnaround strategy in place and it was making improvements in certain areas. Although the process was quite slow, the DPME was reaching the conclusion of its partnership with SITA who was designing and putting in place the DPME’s IT system.  

Mr G Snell (ANC) stated that the DPME needed a national standardised IT system to be able to collect credible, standardised date. Were there any plans to pursue this? Delivery agreements were being translated into provincial targets. Was there a standard method or format for unpacking and measuring this data? What mechanisms were in place to ensure that provinces were complying with DPME’s requests? With regards to the national departments with concurrent functions – clearly, there were targets that were reliant on provincial departments’ performance. He asked how the DPME would ensure that provincial departments were complying with their national counterparts to ensure that those targets were achieved.

Dr Phillips replied that the approach that the DPME took, which was the approach taken by the government for last ten years or so, was that it was too ambitious to have a single IT system for all of government’s data, especially since a lot of money was already invested into current systems. What had to be done was to say that all departments had to have their own IT systems, but from a national point of view, each of the individual systems had to adhere to a certain level of standards.

Dr Phillips stated that a lot of work was being done by the relevant national line function departments with regard to the concurrent functions with provinces. The key concurrent functions covered by delivery agreements were health, basic education, local government, environment and rural development. In all those instances, the delivery agreements were negotiated between the national and provincial departments. It was quite an intensive engagement, which the DPME participated in and played a facilitating and advisory role. There were detailed targets across a range of indicators, which were being monitored.

Ms A Mfulo (ANC) noted that the DPME had postponed its workshop for M&E IT guidelines. She asked if this was going to hinder its progress. The DPME stated that 1.5% of their staff was disabled. She wanted to know which positions they held in the DPME. Was the DPME’s information strategy achieved?

Dr Phillips explained that the DPME’s target for employing persons with disabilities was 2%, which was a standard target. The DPME had achieved 1.5% of this target.

Ms Kaajal Soorju, Director: Human Rights Management in the DPME, added that 0.5% of the 1.5% disabled persons working at the DPME were working at production level, another 0.5% were working at junior level and the last 0.5% were working at middle management level. The DPME tried to recruit at senior management level, unfortunately, candidates with disabilities were highly sought after and the DPME failed to recruit anyone. 

Dr Phillips stated that the target regarding the workshop was partially completed. It did not happen during the financial year; however, it had since been completed.

Dr Phillips replied that the information strategy was finalised and the DPME was in the process of implementing it.

The Chairperson appreciated the fact that the DPME was developing a framework to assess the HODs. He asked how far along this process was. He thought the Committee should be able to access the reports sent to Cabinet. There was a requirement that departments should submit their APPs to the DPME. How did the DPME ensure that all departments understood that this was a requirement? The Committee had to recommend the approval of budgets; therefore, it was important that APP’s were as close to reality as possible so budgets could be credible. He noted that SITA seemed to be “one big problem”.

Dr Phillips answered the question on the performance assessments of HODs. He stated that the DPME worked with the DBSA and received approval from Cabinet for making changes to the monitoring system – the DBSA worked on a new policy for HOD performance assessments, which would provide for two key changes. The first was that, in the future, DGs in the Presidency and DGs at provincial level would play a more significant role in the assessments of HODs. Also, HODs would have signed performance agreements in place. Secondly, there would be changes to the content of the performance agreements to ensure that HODs are assessed regularly.

Dr Phillips
explained that it was a National Treasury regulation that departments must submit their draft APPs to the DPME for comment.

The Chairperson thanked the DPME for its presentation. He stated that the Committee wanted a formal update from the DPME regarding issues that were flagged by the AG, so Members could monitor them more effectively.

National Youth and Development Agency (NYDA) Briefing
Mr Steven Ngubeni, Chief Executive Officer of the NYDA, informed the Committee that he was the CEO and the transitional accounting authority since Parliament has not yet finalised the appointment of the NYDA board.

NYDA Performance Information 2011/12
The NYDA achieved 90% of its predetermined targets, a 5% increase from the previous year's achievement. 63 out of the 70 Key Performance Indicators (KPIs) were met and exceeded and the AG's finding on the entity's performance information was very positive. KPIs were not achieved for Policy Research and Development (2), youth advisory and information services (2), the National Youth Fund (1) and governance (2).

KPA 1: Economic Participation
The NYDA exceeded its targets for providing business support to young people, for providing financing support to young entrepreneurs, and for providing employment opportunities for the youth.

KPA 2: National Youth Service and Social Cohesion
Objectives included promoting opportunities for young people to serve their communities, creating a platform for young people to participate in and benefit from democratic processes and creating and supporting social networks to benefit young people. All targets were exceeded or met.

KPA 3: Policy, Research and Development
Objectives included developing an Integrated Youth Development Strategy (IYDS) and guidelines for the implementation of Youth Development Programmes (YDP), identifying annual national youth development priorities, promoting and advocating for a uniform approach by all sectors on matters relating to youth development, conducting researching and evaluations to inform policy and programme interventions, and providing inputs on policies and legislation by government and other relevant structures. The Office of the Presidency has not provided the NYDA with confirmation of approval by the Cabinet for the IYDS. The targets for developing an IYDS; therefore, have not been met due to the fact that the NYDA has not yet received confirmation for approval by Cabinet. All other targets concerning the objectives were met and exceeded.

KPA 4: Training and Development
Objectives included facilitating education opportunities, facilitating and implementing technical entrepreneurship and life skills training programmes, providing and facilitating capacity building of youth development practitioners, and facilitating youth development work as a recognised profession. All targets regarding the objectives were meet or exceeded.

KPA 5: Youth Advisory and Information Services
The objectives included providing career guidance services, providing access to information regarding products and services of the NYDA and referrals to other agencies, providing administrative and operational support to service delivery, and branding the NYDA offices and project sites to improve visibility of the NYDA. The target to interact with 140 000 youth through the NYDA call centre was not achieved because the Telkom cable was stolen for the period of three to four months. All other targets were met.

KPA 6: National Youth Fund
Objectives included planning and setting up the National Youth Fund (NYF), mobilising and leveraging financial assistance to Small Medium and Micro Enterprises (SMMEs), and providing financial support to projects initiated by youth. All targets stemming from the objectives were met or exceeded.

KPA 7: Governance
Objectives included ensuring compliance with all applicable statues and policies, and implementing systems and processes to increase the recoverability of defaulting loans. The target was to decrease the number of defaulting loans by 20%. The target was not met as the economic downturn led to youth entrepreneurs not being able to generate adequate profits to be able to pay their debt. A number of micro loan clients were start-ups that required a lot of support before they could realise profit to enable them to be up to date with their payments.

Audit Report 2011/12
Mr Katru Ramkunra, Chief Financial Officer for the NYDA, stated that the AG issued NYDA with an unqualified audit opinion with two emphases of matters. This was a significant improvement from the five emphasis of matters reported in the prior financial period.

Material Impairments
The NYDA raised a provision for impairment when objective evidence existed that the recoverability of loan amounts were doubtful. At 31 March 2012, R161 323 000 (86%) of the loan book was impaired because the recoverability of those loans were doubtful. The increase in impairment in the prior period was 25% while the current one was 13%. This reflected a significant decline in the rate of increase at 12%. This was an indication that measures implemented by the Agency to ensure repayment of loans by beneficiaries were bearing fruits. Impaired debts were only written off once all other avenues to recover them had been explored. The NYDA followed up with clients to determine the recoverability of loans and clients who genuinely could not honour their commitments were provided with assistance. Young entrepreneurs who were unable to honour their obligations due to economic conditions were granted payment breaks for a maximum of 12 months, and legal action was taken against clients that had the resources to honour their commitments but did not.

Irregular Expenditure
The NYDA incurred irregular expenditure of R133 252 000 as a result of non-compliance with Supply Chain Management (SCM) prescripts as determined by the National Treasury. Travel and accommodation expenses to the value of R28 million were incurred from a contract entered into by the Umsobomvu Youth Fund. This contract has since been terminated. An amount of R15 million resulted from expenditure procured by the deviation from normal procurement procedures, which the AG did not accept. The majority of the irregular expenditure resulted from the decentralisation of procurement as divisions of the NYDA procured their own goods and services. When supporting documentations were requested for audit purposes, most of them could not be produced. Procurement of goods and services has since been centralised to the SCM unit and record keeping was centralised to the SCM unit as well.

Oral Briefing by Star Schools on Matric Results (No written submission)
Mr Ngubane asked Mr Eunice Ebrahim, Head of the Star Schools, to give Members a quick update on the progress made regarding matriculants.

Mr Ebrahim clarified that Star Schools allowed students finish their matric year or to redo their Matric year. The number of schools in each province varied according to the areas' needs. Subjects that were offered included English, mathematics, physics and accounting. The schools were not full time institutions; they were supplementary service providers that conducted lessons, registered students with the Education departments and conducted exams. Only the best teachers were recruited and since most of them worked during the week, lessons were held on Saturdays.

Results at the end of 2011
Mr Ebrahim warned that the Committee had to be cognisant of the type of learners Star Schools dealt with. These students had mostly been out of school for years or had struggled in schools most of their lives. This came with many challenges because learners seemed to have major gaps in their knowledge. This was a result of learners being part-time or return students. What was disappointing was the number of students that dropped out before the end of the year. The drop-out rate was 38%. This happened for a number of reasons. Because Star Schools accepted many rural students, transport to and from schools was an issue for students. Many students were also offered full-time employment, as menial as the jobs were, and chose to support their families instead.

The pass rates for most individual subjects offered by Star Schools were on par with many of the national results. However, the pass rate for Star Schools was 47%. Star Schools hoped to improve on this and certain measures were being taken to assist students. Classes have been extended and would now be offered between Mondays and Fridays as well.
Mr Snell noted that the NYDA’s presentation said that all their tenders in 2011/12 were compliant; however, the AG thought differently. There seemed to be some sort of contradiction.

Ms Yengeni said that the Committee was still confused about who the NYDA was accountable to in the Presidency. She asked for clarity on the matter.

Mr Ngubeni replied that the NYDA answered to the President of the Republic of South Africa; however, the President delegated the responsibility to the Minister in the Presidency, Hon Chabane. The board was supposed to be the bridge between the NYDA and the Minister, but there was no board.

Ms Yengeni asked who the NYDA received its money from.

Mr Ngubane explained that the Presidency would submit the NYDA’s annual budget to the National Treasury.

Ms Yengeni stated that the NYDA, like all other entities, were answerable for someone. It was not the first time she had heard this. As far as she was concerned, the NYDA needed guidance. Someone had to answer for the NYDA’s flaws. 

Ms Mfulo stated that she had seen the Annual Report and the presentation seemed to answer some of the AG’s questions. But, the presentation was too haphazard and it was difficult for Members to find the answers they needed. She warned that projects had to be coordinated in line with the budget and the strategic plan.

Mr Snell noted that there were issues around procurement that were identified that were of concern for Members. There were new policies and procedures in place to address these problems. He asked if these had been adopted yet. He understood that loans had to be given to those that were previously disadvantaged. He also understood that distinction had to be made between those that were bankable and those that were not. He wondered if it was time for them to look at a grant system. The NYDA said that the loans were based on business plans that showed some sort of profit. On the other hand, the NYDA was saying that there was a possibility that they would not recover 86% of their loans, but jobs would be created. He asked if the NYDA had any data on how many jobs were created. Was there any sort of performance management system running within the organisation?

Mr Swart stated that the Committee looked at the KPIs mentioned in the presentation and heard what the NYDA said about performing well - to the point that they were paying themselves bonuses. He thought they were living in a “dreamland”, as the NYDA had to ask themselves how many of the people they helped had actual jobs. That was how they should have measured their success. The matter of loans was concerning, as they were probably not going to get most of that money back. He did not want to know what the NYDA’s legal fees looked like if they were taking some of these people to court. He asked if they honestly thought that they deserved bonuses after they did not conform to supply chain management processes, after they were operating without an internal committee, their financial statements were not prepared well, and when their loan books looked like a “dog’s breakfast”.  The NYDA had to learn that they were using tax payers’ money and that the public had to have value for money. He could not support anything he heard from the NYDA’s presentation, as he did not believe anything from the presentation.

Mr Gelderblom stated that mistakes were made that had to be rectified. However, he had confidence in the NYDA and thought they would turn the organisation around. Next year, the Committee would judge the NYDA. He was concerned that there was not much focus on deep rural areas. He asked how many of the NYDA’s training programmes were in deep rural areas. He understood the need for training in different disciplines, but thought that the NYDA had to put more emphasis on entrepreneurship.

Dr S Van Dyk (DA) noted that the presentation stated that everything was done timeously and that fruitless and wasteful expenditure was prevented. But, then the Annual Report (page 120) showed that there were fruitless and wasteful expenditures, and a penalty from SARS for late payment. He asked for clarity on this.

The Chairperson noted that some of the issues raised in the AG’s report in 2010/11 were raised in the 2011/12 report as well. He needed to know why. The NYDA needed a clear plan that had to be forwarded to the Committee so Members could monitor the entity more closely. He noted that many of the NYDA’s internal controls were outsourced. What did this mean? He needed clarity on whether the NYDA had an audit committee. He noted that the presentation showed many achievements and wondered if perhaps, the NYDA’s targets were set too low. He warned the entity that they needed to have more ambitious targets. Clearly, something was wrong if the NYDA managed to over-achieve on so many of their targets. He was not saying that this was a bad thing; however, targets had to be more ambitious. The Committee also needed more clarity on how much of the budget was spent on each of the NYDA’s programmes.

Ms Yengeni suggested that a workshop be held between the Committee, the NYDA and the DG in the Presidency that the NYDA was answerable to. The sooner this happened, the better. There were so many questions about loans and salaries that had to be addressed and needed clarity. Based on these discussions, the Committee would monitor the NYDA. At this stage, it was difficult to throw stones at the NYDA because the accounting officer had to answer to all these matters.

The Chairperson informed the NYDA delegation that they could respond to the questions and concerns raised by Members; however, it seemed that the Committee wanted to approach this interaction differently. The Committee was saying that there were challenges, and it was suggested that a workshop should be held to discuss these problems. However, there was an issue of who the executive authority was that had to be resolved – the executive authority in charge of the NYDA had to be there give the entity guidance.

Mr Ngubane clarified that the NYDA was not the accounting authority; the board was. However, Parliament still had to appoint and approve the new NYDA board. The NYDA Act said that the Minister or the President had to be there to account for the NYDA. But, even if the Minister was there, the NYDA would still have to answer to Members questions and concerns.

Ms Yengeni stated that the Committee understood that the NYDA delegation was not the accounting authority; however, Members needed them to clarify certain issues like why they were making the same mistakes each year. Now that the Committee had clarity on who the NYDA answered to, they needed these authorities to be present at the meeting. If the NYDA delegation tried to respond, all they would do is give the same answers as they did the last time and Members would still be dissatisfied. At this point, the NYDA could not respond – the Committee would just end up “throwing stones”.

Ms Mashigo noted that there were a lot of issues that had to be dealt with. The Committee seemed to be dealing with more than just appropriations issues. She suggested that the Committee allow the NYDA to answer the questions that they were able to.

Mr Swart replied that the NYDA could answer the questions but the same problems would still be there. He agreed with the suggestion that a workshop should be held to discuss all the issues Members had with the entity. He suggested that someone from the DPME should be at the workshop as well. He understood that the NYDA did important work; it was just the way they did it that had to be re-assessed.

The Chairperson noted that the Committee’s draft programme had a preliminary date for the workshop. The Committee would come back to the NYDA with a formal date. He thought that the workshop was going to be very helpful.

The meeting was adjourned.

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