Lotteries Amendment Bill [B21-2013]: public hearings (day 2)

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Trade and Industry

16 August 2013
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The National House of Traditional Leaders (NHTL) opposed the Lotteries Amendment Bill due to shortcomings. They felt that members of the Distributing Agencies should be recommended by the National Lotteries Board (NLB) and referred to the Minister for approval. NHTL explained that there was no reason to increase the number of members of the Distributing Agencies (DAs) and there was no need for the full time employment of agents. It affirmed that the NLB should be in full charge of the National Lottery and amounts should be allocated to different institutions based on their needs. Women, youth and the disabled should be considered for Board membership and the NLB must monitor and evaluate the work of the of the Distributing Agencies to ensure impartiality and fairness.

Members asked how the NHTL was going to reach the whole country and disseminate National Lottery information to local communities. Members asked for an alternative suggestion to employing full time staff members. Members were concerned about the potential for chiefs to prevent project approval. Members asked if there was a relationship between the NHTL, local and provincial government and other sector departments to respond to the multitude of social challenges. Members asked if there were socio economic profiles of rural communities so that effective response was possible. Members asked why there was a reservation about state involvement in creating the capacity of the national lottery. Members asked for clarification over conflicting statements that were in the document provided by the NHTL.

The South African Youth Movement (SAYM) stated that the Act needs to include young people, women and people with disabilities on the Board as people in those sectors were best placed to advocate for specific issues and ensure maximum impact in terms of development. SAYM cited operational inefficiencies in the structure of the National Lotteries Board and stated that disbursements made must be approved by the Board to ensure effective accountability and oversight. SAYM said that Distributing Agencies running the process of application assessment plus awarding of funding meant the system was prone to conflicts of interest. SAYM said national priorities set by government and those pursued by civil society must be complementary. SAYM suggested that the Board should make recommendations for the appointments of Distributing Agency members to the Minister for approval instead of the Minister appointing them directly. SAYM proposed that the chairpersons of the Distributing Agencies must attend NLB meetings although ex-officio. They would be able to provide the necessary technical view but this would also ensure that what they did was in sync with the broader vision of the National Lottery. Key challenges according to SAYM were issues of quorum, conflict of interest and the long turnaround time for applications. The challenges were a result of structural weakness caused by the independence of the DAs from the NLB and these conditions could breed an environment of hostility and poor planning. SAYM said that this was an operational matter caused by the structural configuration of the entire institution. Appointment of DA members must be strictly based on the availability of the panelist. An internal review mechanism for aggrieved applicants was supported. According to SAYM, the period of the licence was too short - it should be 10 years. Improvement of the administrative process through implementation of a paperless and technologically advanced system would fast track the application process. SAYM supported public education about the lottery. Pro-active funding was supported accompanied by research and aligned with national priorities.

Members asked if SAYM had an AGM, when the last one occurred, whether they publish an annual financial statement, when the last one was, the size of their membership, how they define young people, and the size of their membership. Members asked for comment on the point that the distribution of the fund and running of lotteries were actually two different spheres, which require different commitments and expertise. Members commented that the suggestion to go paperless would automatically exclude people in most rural areas. Members asked what SAYM’s reservation with appointing a state organ was. Members asked how many offices SAYM had, where were they located, what their visibility was and what kind of programs were they championing. Members asked what was SAYM’s level of capacity in terms of staff and what their revenue base was. Members asked SAYM to share some of their experiences in terms of partnership with government departments. Members asked for clarity about a mixture of full time and part time staff.

The South African Youth Council stated that it would be imperative for the NLC to introduce low entry barriers to access funding and secondly accessibility should reach all corners of South Africa. There should be transparency in all transactions of the NLC. Principles that would guide work were the equitable allocation of resources corresponding to high areas of need. Effectiveness and efficiency should be the order of the day when conducting business. DAs should account to the Commission and proposed members of the DAs should be recommended to the Minister by the Board. SAYC recommended that chairperson of the DAs should sit as ex-officio members on the NLC Board. SAYC was of the view that the concept of the organ of state was too wide a definition. The Bill should empower the Minister to appoint a caretaker operator. SAYC commends conducting research on worthy good causes that might be funded without lodging an application. The clause to enable the Commission to promote public awareness was welcomed. SAYC said that at least four members of the Board shall be persons who were not in the service of any sphere of government and selection should include due consideration for designated groups. SAYC said the initial duration of the licence should be 10 years with the option of extension by the Minister for a period not exceeding 24 months. SAYC supported the balancing of the audited financial statements with independently reviewed statements. The requirement of three years of audited financial statements was a hindrance to small organizations and change here would bring about redress and equitable allocation of resources. SAYC said when the NLC puts investment into any project, it should understand the extent to which the municipality supports that project.

Members asked how well structured SAYC was in rural areas. Members asked how SAYC reaches to informal settlements and rural places. Members asked why the state was not the right body to run the lottery. Members asked that if people could apply and get money without lodging an application what was the difference between that and SAYC’s request that it be "duly considered". Members asked how SAYC proposed to prevent abuse and arbitrary allocation of funds. Members welcomed comments on printing a toll free number on the back of tickets that informs ticket buyers to call if they were looking for help from lottery funds. Members asked for elaboration on the principle of redress and the risks associated with government intervening in the lottery. Members asked SAYC to consider two civil society movements which had had a huge impact in South Africa.

Meeting report

Introduction
Chairperson Ms J Fubbs (ANC) began the meeting by stipulating the need for more submissions. Although the hearings were advertised in a broad manner on radio stations it seemed apparent that not many people were listening. They did not get submissions from many of the people they were addressing. There were fledgling community structure that do not know how to draft a submission and Ms Fubbs made it clear that they did not need "advanced presentations or advanced English" and they were not looking for legal submissions. She suggested that this might be the general impression from the communities and perhaps the Committee was to blame.

National House of Traditional Leaders (NHTL) Submission
Kgosi Pontsho Maubane, NHTL Chairperson, explained that the NHTL was a statutory body created in 2009 which advised national government on issues that affected rural communities. The NHTL had deliberated on the Bill and found that some amendments were administrative in nature. The NHTL was ready to work in partnership with government to address the shortcomings. It would enable rural community projects and organisations to access resources from the National Lotteries Board (NLB). Kgosi Maubane stated that traditional leaders were optimistic that traditional councils would leave a developmental legacy in rural communities

Ingosi W Mavundla, NHTL Inkosi, was next to speak and suggested, referring to Clause 13 (inserting Section 13A into the Bill), that instead of authorising an organ of the state to conduct the lottery, the Minister in consultation with the Board, should appoint a caretaker company to avoid direct state involvement. Clause 24 inserting Section 26(B)(3) reads that the Distributing Agencies (DAs) shall be appointed by the Minister in terms of the act. The NHTL said that members must be recommended by the National Lotteries Board (NLB) and referred to the Minister for approval because the members’ accountability rests with the Board. Inkosi Mavundla said that there was no reason to increase the number of members of the DAs. The adjudication process was not done on a daily basis so there was no need for the employment of full time agents. The NLB must be in full charge of the National Lottery and the Department of Trade and Industry (dti) must look at amounts that should be allocated to different institutions in terms of their needs. Women, youth and the disabled should be considered for Board membership. The NHTL also asserted that the NLB must monitor and evaluate the work of the Distributing Agencies to ensure impartiality and fairness.

Discussion
Mr Radebe (ANC) asked how the information that they were deliberating on was going to reach throughout the whole country and be disseminated to local communities. He stated that certain leaders come and comment but do not have reach to those communities. The Committee had wanted to amend the Bill since 2010 because some children in rural communities had to swim to school and there was money available in the lottery fund to build bridges. He referred to the 14 August meeting, where government priorities had been questioned - noting that access to education and improving health was a commitment of government. Hopefully, some of the lottery money should be going to government priorities. He asked for comment from the NHTL on its attitude that some of the funding must go towards health, education and combating crime. In response to the NTHL’s comments about there being no need to increase the number of DAs and that agents should not be full time, Mr Radebe said that meetings of the DAs in the past were inconsistent and when they were not meeting, the needs of the community on the ground were still there. He asked that the NHTL suggest alternatives to full time staff, because a situation where adjudication was taking months while people were suffering was unacceptable.

Ms Fubbs pointed out that he raised this point in the debate and deliberations in 2009.

Mr G McIntosh (COPE) began by agreeing with the first part of Mr Radebe’s comment and then stated that stock funding and budgetary issues were complex and required debate. Mr McIntosh formally recognised the value of the Amakhosi and their importance in rural areas particularly in terms of development and growth and commended their positive contribution to the discourse. Children of this generation of chiefs were becoming more educated and one had a younger group of Amakhosi who had vision and education and could make a difference because of their status as people who were respected in the community.

Mr G Hill Lewis (DA) explained that his point was partly covered by Mr Radebe and stated that one of the things everyone had agreed upon was that there was indeed a problem with the length of time it took for the DAs to do their work. The overwhelming number of applications was one reason, and the existence of part time employees was another contributing factor. There were a huge number of applications and not many hours for work, so with full time employees, DAs would be able to dedicate more time to this. He asked for the alternative to dealing with the backlog of applications. Full time agents were favoured over part time.

Mr X Mabasa (ANC) said that one of the challenges faced by South Africa as a whole was to lift the poorest of the poor up the ladder. Redistributive mechanisms should be taken into account. Mr Mabasa asked how the Bill would ensure that the benefits of the fund went to the poor and did not leave out the most deprived. He used the example of organisations like those for people with disabilities but also rural places that were sometimes forgotten. Chiefs had various jurisdictional powers and if communities wanted to build something, these powers might say no. Sometimes there were issues of bribery with respect to these projects. What influence did the NHTL had with regards to how certain chiefs might make such demands? He asserted that there might be exceptions, but this body should intervene when development was held to ransom.

Mr Z Wayile (ANC) stated the need to build sustainable communities. It was strategically important that development should be integrated to involve many social partners, with reference to the Integrated Development Plan (IDP). He asked if there was a relationship between the NHTL, local and provincial government and other sector departments and if there was any relationship that existed to respond to a multitude of challenges.

Mr Mabasa stated that the Lotto was supposed to respond to social issues and good causes. His question was posed to maximise benefits from all sector departments. He asked if government had socio-economic profiles of rural communities so that an effective response was possible. It was important to understand how many men, women, young people, children were present and the state of the local economy in order to properly respond and coordinate activities to bring about social impact. His final question was about institutional capacity and the skepticism surrounding government involvement. If there was no government involvement, the private sector and social forces were not immune to being influenced. Mr Mabasa asked what the risks were, assuming there was no government involvement in the lottery.

Mr Radebe followed by stating the most culpable entity in the country when dealing with finance was National Treasury. Aside from being second to none in the world in terms of performance; they were an organ of state. The IDC was created by organs of state and he asked why there was a reservation about state involvement in creating the capacity of the National Lottery.

Ms Fubbs was unclear about the NHTL’s mention of its desire to work in partnership with government. That contrasted with their assertion of not wanting direct government involvement and was contradicted by a further statement of NHTL’s desire to work with rural communities. The Committee would like to meet and work with all important organisations and asked for clarification.

Kgosi Maubane responded by first explaining the structure of African traditional areas with regard to the topic of information dissemination. The top structure was a traditional council made up of villages composed of sub councils. Through this structure, it was possible to disseminate information from the top to people on the ground, because everyone was covered.

With respect to a traditional leader stalling development, Kgosi Maubane explained that the NHTL advocated for a system of chief in council and that the power and functions of a chief did not supersede those of a community. The system was based on community voting and resolutions. If a community agreed on a particular issue, there was no way the leader could stop that, because decisions were taken at the council level – in this spirit, there would be no hindrance to development.

Inkosi Mavundla added to the NHTL chairperson’s response by saying that the NHTL represented all provinces and information gathered at the hearings would be reported to the House which would subsequently reach the local houses by means of its organisational structure. He addressed the issue of skepticism tied to government involvement and asserted that the government might appoint a caretaker structure but should not take responsibility for the whole process.

With the explanation of fulltime status, the NHTL now understood the need, but said that agents should go to the communities to provide training workshops and do research which they could use in their daily activities as agents. Inkosi Mavundla explained that the partnership between traditional structures and government comprised a good working relationship and that there was a provincial house and district house that formulated committees and synergy existed between these structures. Members of traditional councils were subdivided into committees which were relevant to education and local government among other things. With respect to socio economic profiles, this data existed but was collected and compiled by local municipalities through the IDP and therefore statistics that pertained to socio economic issues existed. Addressing the question of how they were going to work with the National Lottery, the NHTL had signed agreements in House to work and address issues directly. Inkosi Mvaundla commented on the need to identify people who were responsible and eager to serve the needs of the people.

Mr Hill Lewis responded to the comments, saying he appreciated the thought, but there was an established process and it was not possible to have another process for people in rural areas. It was the responsibility of the Board and DAs to ensure money was spent responsibly, wisely and this responsibility did not fall on the shoulders of the traditional leader.

Ms Fubbs asked for clarification regarding “another process of application”.

Inkosi Mavundla stated that when people apply, they could apply for a particular project but they ould not be allowed to apply for the sake of applying if they were irresponsible. Recommendations were needed and the NHTL could advise on this.

Ms Fubbs supposed that this would work in the same way that MPs had gone ahead and supported work. It was quickly mentioned that “Mr Sapela”, parliamentary legal advisor was on leave today.

South African Youth Movement (SAYM) submission
Mr Sello Pietersen, Board Member of AYONGO (African Youth Organisation of NGOs) and Assistant Program Manager of SAYM, explained that SAYM had been established in 2002 in Kimberley as it was decided that there was a need for a youth body to advocate for youth interests on the broader issues that affect young people. SAYM had conducted research with the National Lottery recently to have a clear understanding about the specific focus on NGO funding practices in South Africa and how civil society had an impact on society in general. The Act needed to include young people, women and people with disabilities on the Board because the nature and the intention of the NLB was to ensure that there was maximum impact in terms of development, and people in those sectors were best placed to advocate for specific issues as well as contribute to the discussion in a broader sense. The current legislation was the primary constraint and resulted in operational inefficiencies. The National Lotteries Board (Commission) was the custodian of the NLB Distribution Trust Fund (NLBDTF) but it had very little to do with the distribution of funds. Disbursements made must be approved by the Board of the National Lotteries Commission (NLC) to ensure effective accountability and oversight. The distribution agency must account to the Board both operationally and strategically and SAYM recognised that the Bill outlined that DAs must account to the Board operationally, but the two were not mutually exclusive. Accountability must exist at the strategic distribution level. Currently the DAs conducted everything including applications, assessments, evaluation, adjudication and awarding of funds but this meant they were conflicted in their view. DA members running the process of assessing the application up to awarding a grant meant the system was prone to conflicts of interest.

Civil Society
Mr Pietersen stated that civil society must work towards the attainment of objectives set by the government and contribute to the attainment of a developmental state. Civil society must work closely with government as envisioned by the National Development Plan and many government policy positions to attain this goal. There was a National Consensus regarding the National Development Plan (NDP) and SAYM believes everyone must contribute to and therefore the national priorities set by government and those pursued by the civil society must be complementary.

Relationship between the Board of the NLB and Distributing Agencies
Mr Pietersen suggested that the Board should make recommendations for the appointment of the members of the DAs to the Minister for approval instead of the Minister appointing them directly - this way there were two centres of power so that operational issues in terms of implementation were seamless. The NLB should be empowered to sanction the DAs on both operational and strategic levels and make recommendations for remedial action to the Minister. SAYM proposed that the chairpersons of the Distributing Agencies must sit in ex-officio capacity in NLB meetings so that they were able to provide the necessary technical views but also to ensure that what they did was in sync with the broader vision of the lottery. Mr Pietersen stated that the current size of the Board should be maintained.

Challenges of quorum, conflict of interest & long turnaround period
Key challenges which had been deflected, according to SAYM, were issues of quorum, conflict of interest and long turnaround time for applications. These challenges did not emanate as a result of members of the DAs being part time and this should be dismissed. The challenges were a result of structural weakness caused by the independence of the DAs from the NLB and these conditions could breed an environment of hostility and poor planning. The solution was the full accountability of DAs to the NLB. Sound efficient planning with clear timelines would resolve the challenges of long turnaround periods. Mr Pietersen asserted that this was an operational matter caused by the structural configuration of the entire institution. If the DAs had to submit plans to the Board and their chairpersons were sitting on that Board then the issue of quorum would be mitigated. SAYM suggested that appointing DA members to full time positions brought implications of absenteeism. Mr Pietersen stated that the lottery was not about rating people in terms of their work but to contribute in attaining certain social breakthroughs and be able to undermine power to wherever it was. The appointment of the DA members must be strictly based on the availability of the panelist and a sound operational plan approved by the Board to allow all members to clear their schedules. The individuals appointed must have no interest whatsoever towards which the funds were allocated without compromising the skills and expertise requisite for the task at hand. The panel members must be subjected to the code of ethics and practices binding the Board.

Grievance channels for applications
Mr Pietersen said that the inclusion of the internal review mechanism for aggrieved applications in the Act must be supported because it was a progressive issue. The NLB must have the final decision on the grievance process in terms of awarding grants.

Licencing
Mr Pietersen explained that the need to ensure a much more effective public private partnership was important, because the role of the state in any market based economy was to create a conducive environment for the private sector to flourish. According to SAYM, the period of the licence was too short and did not make business sense. It should be 10 years - and for other worldwide institutions the period was 15-20 years. The Act must include clauses that empower the Minister to appoint a caretaker operator in case of revocation instead of a state organ.

Key Recommendations
The National Lotteries Board must be re-named the National Lotteries Commission headed by a Commissioner appointed by the Minister, and Mr Pietersen said there was a bit of confusion with the current form. He stated the application process must be simplified for new and smaller organisations and the chairpersons of the DAs must sit on the Board as ex-officio members. Finally, there should be a clear distinction between the functions of the Minister and the Board.

Supported Proposals
-Improvement of the administrative process through implementation of a paperless and technologically advanced administrative system to fast track the application process.
- Education in terms of what was the role of the National Lottery and how to apply for funds.
- Pro-active funding informed by research and aligned with national priorities and granted by the Board.
- Act must be harmonised with other pieces of legislation that exist in the same domain.
- DAs must account both operationally and strategically to the NLB.
- Monitoring and evaluation of the conduit funding must be enhanced.
- The licence must be awarded for a minimum of 10 years to promote more investment.

Discussion
Mr McIntosh stated that he did not know who SAYM was but would like to know whether it had an AGM, when the last one occurred, whether they published an annual financial statement and when was the last one. He also asked the size of its membership. He asked how SAYM defined young people and if one exceeded 30 years of age, could one no longer be a member. There had been lots of expertise and care in the distribution of funds but there did not always seem to be a consistent pattern in policy of distribution and the feeling had been that the distribution should be divorced from the NLB Board. In his opinion, the Lotto was part of South Africa's fibre from the poorest to the wealthiest and one could even play on one's bank internet platform. Government indeed had a responsibility to regulate and assist with the Fund to ensure that there was no exploitation but the concern was distribution. If someone in a rural community wanted to do a big project and required quick and easy access to funds, it just was not possible and the threshold for these people to get to the lottery fund was very high and difficult. The supply chain management directed from the NLB to the DAs should be a direct line. The distribution of the Fund and running of lotteries were actually two different spheres, which did not have to be in conflict, but which required different commitments and expertise. Mr McIntosh asked for a response on this point.

Mr Radebe said he thought it was great that the youth were interested in government and that this was critical for the future of the country. There was a huge digital divide in the country and in certain villages there was not even a signal to go paperless, so Mr Pietersen’s suggestion to go paperless would automatically exclude these people – digital must be phased in where appropriate. With respect to caretaker operators, it should be a state organ because one was talking about a structure that was already in place and no extra funding was required. There was a procurement process that would need to be implemented to select a private company, and this could take several months. What was SAYM’s reservation about a state organ? South Africans tended not to acknowledge when they were excelling: National Treasury was second to none, and it was an organ of state.

Mr Wayile commented that young people were a catalyst for a future society. An impression was given that SAYM was established in 2002 and it appeared as if they were focusing not only on South Africa but also the Southern African Development Community (SADC) region. He asked about how many offices did SAYM have, where were they located and what was their level of visibility. He asked what kind of programs SAYM were championing in the public discourse. He would like to hear lessons learned from SAYM’s success stories and in what provinces. What was SAYM’s level of capacity in terms of staff and how did they sustain the movement with regards to revenue base? This was not about casting doubt on the movement. There had been a number of pronouncements in terms of SAYM’s responses to youth development challenges. Recently there had been a youth accord and and he wanted to check whether there was a formalised working relationship or partnership with government institutions or agencies in so far as facing the challenges that affected young people. It was important for the development of an alignment and synergy to ensure that both government and private sector maximise benefits so as to avoid duplication of efforts. He noted some youth were unemployed, entrepreneurs, some in cooperatives not to mention a number of them facing challenges with drugs or alcoholism and a huge population of youth in prison. Mr Wayile asked the presenters to share some of the experiences in terms of that including partnership with other sector departments and correctional services. Mr Wayile added that he thought some of the proposals made by SAYM were sound with respect to inefficiencies and turnaround time by the lottery.

Ms Fubbs asked for clarification about a mixture of full time and part time that was mentioned by Mr Pietersen. one did not want to raise the financial burden of the national lotteries Board as well, and the same problems might be present.

Mr Alfred Sigudla, Program Manager of South African Youth Movement (SAYM), responded by saying SAYM was a South African youth NGO with regional interest operating both in the SADC region and internationally. They had advocates and a lobby board. The last financial report was in May 2013. Membership was approximately 200 youth organisations and they were a member-based organisation. They were affiliated to the South African Youth Council. They use the African Youth Charter definition which was ages 16 to 35 which was also in line with National Development Act. They had operated since 2002.

On questions related to what they do, how many offices they have, Mr Sigudla explained that they currently had 13 offices in the country with a staff complement of about 80. In terms of programs, they were implementing on behalf of government, he mentioned a program which was helping about 12 000 in Mpumalanga, the majority of which were young people. They were responsible for dispensing stipends of over R100 million of taxpayers' money, especially in the Community Work Programme, in order to contribute to societal good and the life of young people.

 They had been privileged to chair social affairs in the African Union that spearheaded the process of adopting the African Youth Charter. They had also mobilised young people together with South African Youth Council on the NDP process making sure the youth input was actually included, and also had been participating in the youth accord. They worked effectively with the National Development Agency and South African Youth Council in this regard. They had participated in SANAC and its technical committees and continued to do so. They were funded by different organisations internationally and domestically.

Mr Sigudla elaborated that they were not talking about a paperless system for submissions, but for the administrative process to speed up the process internally. In terms of state organ, SAYM believed that it was not good practice to have a state organ running a lottery - but in the event of the need for an intervention then it needed to be considered. Mr Sigudla emphasised that one could not legislate operational matters but one could legislate systematic and strategic issues. The structure in its current form contributed to the backlogs. SAYM’s view was that currently the custodian did not have direct responsibility to actually make sure that the turnaround time was enforceable. It was more structural and operational than strategic. The process of supply chain was purely operational and could be addressed if there was proper planning.

Mr Pietersen added that knowledge of Lotto was unquestionable but as to whether our people understand the role of the National Lotteries Distribution Fund and how to access it was another question. One could not have a situation where the same person evaluates the application, adjudicates on the application and ultimately was the one that awarded the funds. If one was going to separate those particular aspects, one would rather have someone permanent or more full time.

Ms Fubbs asked if Mr Pietersen meant that all the applications should be evaluated but the same people who evaluated them should not be making the final decision. She gathered that from the alliance’s point of view (YONGO), they did not think the idea of a state-run lottery was at all healthy although they did see the challenges that might lead to it. She asked if SAYM saw the necessity that possibly there might be the need to intervene and put in a state agency there but one had a challenge around time. SAYM pointed out that they supported the licensee getting ten years, but of course they were not referring to the state – they were referring to others that might get the licence.

Mr Pietersen explained that if the private sector was not working, then it was appropriate to look at alternatives such as state intervention. On the issue of full time and part time, if internal administration such as assessments could be done by different people then this would prepare space for an adjudication process, which ultimately must be endorsed by the NLB in their role as the custodian.

South African Youth Council (SAYC) submission
Mr Thulani Shefuta, SAYC President, indicated that SAYC was established in 1997and was an apex body of organisations in South Africa that represented the interests of young people who were organised in political youth formations. The majority of the parties that were represented in Parliament had youth wings that were represented by SAYC. They had the privilege of representing the youth sector at NEDLAC, NSA, SETAs African Peer Review Mechanism and so on.

Generic Comments
The NLC needed to be positioned as a strategic development partner as opposed to a panacea to all funding challenges in our society. The information coming through to the public focused on quantitative output of work that was done by the DAs. SAYC felt quantitative output should be balanced with impact assessments. Considerations that should be made in order for the work of the NLC to have impact were its programmatic choice and design. One of those was that it should be imperative for the work of the NLC to introduce low entry barriers and secondly accessibility to all corners of South Africa. An important aspect was scale. If a funding intervention was made – to what extent would the intervention employ people? Visible outcomes should be one of the considerations of the work of the NLC and high impact.

Principles
Funding of an organisation should have a direct link to the development imperatives of the area where the project was taking place. There should be transparency in all transactions or business activities of the NLC and that should be balanced with accountability. When NLC considered its work with all its agencies it would not do justice if there was no redress. One of the principles that should guide its work was the equitable allocation of resources corresponding to high areas of need. Effectiveness and efficiency should be the order of the day when conducting this business.

Distributing Agencies
With regards to DAs, the outcome of the process should introduce coherent institutional mechanism between the NLC and NLDTF. The DAs should account to the Commission and members of the DAs should be appointed by the Board. It appeared the Minister was being overloaded by making the appointments. If DA members were full time staff, they should not be appointed by the Minister in the same manner the Board was appointed by the Minister. That would bring bad lines of accountability from members of the DAs. SAYC recommended that chairperson of the DAs should sit as ex-officio members of the Commission, without voting powers. The adjudication process should be addressed by a very sound and efficient administration system that minimised the turnaround time through checking the mandatory qualifications of applications. Members of the DA should even have access to those applications not presented to them. When considerations were made for appointment of the DA members, they must include youth, women and people with disabilities.

Organ of state
SAYC was of the view that that the concept of the 'organ of state' was too wide a definition for who could operate the lottery in case of lapse or revoking of licence. The role of government to provide a conducive environment for business to operate – not to compete in the space of the lottery. If not properly institutionalised, the organ of state might not have the ad hoc and technical capacity to run the lottery. The Act must only empower the Minister to appoint a caretaker. It might be necessary to leave it open-ended so the Minister could consider an organ of state playing a full or part time role in the running of the lottery.

Functions of the Commission
SAYC commended the mandate to conduct research on worthy good causes that might be funded without lodging an application. Research and subsequent funding would provide the necessary flexibility to respond to immediate community needs. No one plans a disaster and when it hit, institutions such as the NLC should be responsive where bureaucracies might fail those peoples.

Mr Shefuta said that research should not only be for the purpose of funding but should inform the planning of the NLC so that it seeks to integrate some of the issues that emanate from communities well in advance. Responsiveness to the lives of people had to take precedence over what was considered a good practice or not. The Commission must be empowered to solicit application for grants from worthy causes which was one of the provisions in the Bill. This would support and promote the spirit of self initiative amongst communities. This was similar to unsolicited proposals, and would allow the NLC to scout amongst communities and determine that certain initiatives were taking place with or without NLC and so what kind of support could be provided to these initiatives. The clause to enable the Commission to promote public knowledge and awareness was welcomed and it should include appraising communities of the common mistakes people make in their funding applications in order to mitigate these mistakes. Regarding Clause 4, inserting Section 2B(1)(a), that clause should not only be limited to financial and administration affairs but should also include reporting by the Commissioner on the core mandate of the Commission.

Members of the Board
At least four members of the Board shall be persons who were not in the service of any sphere of government and selection should include due consideration for designated groups: youth, women and people with disabilities.

Board Committees
Mr Shefuta stated that the Bill suggested that any delegated function so performed shall be deemed to have been performed by the Board. Functions delegated by the Board to any committee must be reported back by that committee to the Board. The outcomes must only serve as recommendations to the Board for approval. It was dangerous to say that function was delegated by the Board to the committee and the committee had the final decision on the matter without the Board approving the decision from that committee. This section should also provide space for the Board to establish ad hoc advisory panels on specific issues of interest at the time.

Licence
Initial duration of the licence should be 10 years and the option of extension by the Minister for a period not exceeding 24 months was supported. For companies operating the lottery extending the duration would bring about stability of operations for these companies. The Minister may, after consultation, vary any condition in the licence. The provision of the Minister varying condition of the licence should be balanced by a provision for the Board to advise the Minister about the necessity of variation of conditions of the licence.

Amendment of Section 28
Mr Shefuta referred to Clause 26(b), amending Section 28(1): “The distributing agency shall consider applications for grants and might pay such grants”. In terms of being consistent with clear lines of accountability, the DA should adjudicate and approve applications. The Commission should effect the actual payment. This would bring about proper checks and balances between the work of the DAs and the Commission. This was one of the ways through which the Board would have a hold over the line of accountability of the DAs.

Financial Statements
Mr Shefuta welcomed the balancing of the audited financial statements with independently reviewed statements. It gave the opportunity to small community based organisations that were doing great work to access funding. The requirement of three years of audited financial statements was a hindrance to small organisations and promoted a league of traditional beneficiaries. Change here would bring about redress and equitable allocation of resources according to needs.

Government priorities
Government priorities and civil society work were not mutually exclusive. People want to create a false line between government priorities and work that was done by civil society organisations. Also alignment with government priorities did not mean funding government budget deficit or providing budget relief. The must be a clear link with the local economic development imperatives of the area where the project would be taking place. It must draw a synergy with the National Development Programme (NDP) or any other strategy of government. It was important to educate the public that when the NDP was adopted by social partners, it ceased to be a document of government and it becomes a strategic vision of society as a whole. Civil society then had an equal claim as much as government had. The Act must compel the NLC to align its work with the mainstream development agenda in line with the NDP, local economic development imperatives and any relevant sector strategies.

Conclusion
- Overload of duties of the Minister throughout the Bill
- The Bill should provide space for collaboration of efforts and minimise duplication and enforce sustainability of efforts beyond the NLC input.
- When NLC puts investment into any project, it should understand the extent to which the municipality supports that project.
- The extent to which local stakeholders could make inputs to sustain the project beyond the money that had been put in by the NLC should be accounted for.

Discussion
Mr Mabasa mentioned that there was a suggestion a body must be created additionally to the bodies that were in existence. Was that not going to increase the cost? It was important that the funding go via the quickest route to the recipients. Mr Mabasa appreciated the fact that the SAYC was aiming to play a critical role, meaning where government made mistakes, SAYC criticised and where government did things righ, SAYC was able to say well done. Mr Mabasa asked how well structured SAYC was in rural areas. Most bodies say they were in most provinces, but they were only in the most sophisticated towns of those provinces. It was very important that bodies that seek to work with communities should be able to say if they would satisfy the aspirations of the poorest of the poor. He asked how they reached informal settlements and rural places.

Mr McIntosh asked about Mr Shefuta’s assertion that the definition of organ of state was vague and ambiguous. He asked him to explain why the state was not the right body to run the lottery. He was concerned by the term "duly considered", and mention of “similar to the practice of unsolicited proposals”. If people could apply and get money without lodging an application what was the difference between that and Mr Shefuta’s request that it be duly considered? How could one do it without it being "duly considered"? How did SAYC propose to prevent abuse and arbitrary allocation of funds? He welcomed the suggestion of the committee to promote public awareness and suggested that on every Lotto card a toll free number should be printed that informs ticket buyers that if they were looking for help from the Lotto they could call a number. Everyone could see it and it would reach most South Africans. He welcomed comments on this idea.

Mr Wayile stated that in terms of the organ of state, there was an element that said that “concept was vague and ambiguous”. Government's role was to provide a conducive environment for business to operate/succeed, not to compete. The view that the role of government was in creating a conducive climate had been consistent since the public hearing started. Government had the responsibility to intervene economically, socially and otherwise so he did not understand the notion of not competing. The lottery was the money of ordinary people but the government became the custodian of ensuring proper regulation and a firm mechanism for distributing those funds. What were the risks associated with this particular proposal? Mr Wayile asked for more elaboration on the principle of redress. To him, redress meant rolling back the frontiers of poverty as imposed by the apartheid government. On effectiveness and efficiency, he asked for elaboration, because in his view the private sector had its own shortcomings just as the public sector had. Yet Mr Shefuta said the private sector was the only sector in society that was effective and efficient.

Mr McIntosh asked Mr Shefuta to consider two civil society movements which have had a huge impact in South Africa, namely the Treatment Action Campaign which had a huge influence on government to address the AIDS issue, and Section 27 which exposed the textbook problem in Limpopo province. Those were embarrassing to government, but were very important to keep society healthy and alive. Civil society was often uncomfortable but it was very important.

Ms Fubbs said Mr Shefuta mentioned qualitative and quantitative when speaking but it was unsure whether he meant both words. She expressed concern that it might be difficult to find a caretaker company in the private section with sufficient experience. On Board representation, youth, women and the disabled were represented, but the Committee felt strongly that people from rural areas must be included also. One thing that worried her in the public hearings was that only mainstream people were represented. She did not think that the Bill was only meant to benefit those in the mainstream. One must be very careful when one starts talking about mainstream. She congratulated both youth movements, and stated that it gave her a lot of heart to know it was not true that the country was dealing with a bunch of uneducated, unskilled youth.

Mr Shefuta replied to Mr Mabasa, saying that what SAYC was proposing was what was called an ad hoc advisory panel. What was meant by this was there might be an issue in society right now – such as the effect of drugs in many households – and that was something that we might need all sectors of society to focus on. The Commission should be allowed to put together a team of experts (not to employ) into an advisory panel, that would consider the extent of the challenge, that would recommend a course of action. This was not different from the idea of research but it was more of a sense of urgency to respond to the issue right now. He explained that the planning of the NLB might be such that most of the projects that were funded must have a certain percentage of young women participating. An advisory panel was needed to help guide the work of Commission in as far as rural responsiveness was concerned. The only costs would be for logistical and transportation purposes for those advisors to do their work. Mr Shefuta confirmed that there was a category of organisations under SAYC membership that were just rural youth organisations. Beyond this, the structuring was such that there was a national structure, existence in each province and local structures

Mr Shefuta addressed the recurring issue of organ of state. When he asserted the concept of organ of state was vague and ambiguous he did not mean the actual concept of organ of state but in as far as operating the lottery was concerned. He was of the view that the NLC should be the one that was empowered with the necessary technical skill - such that at a time of lapse - it would run the lottery. In response to the comment about fears that an organ of state did not have the predetermined technical capacity to run the lottery, he explained that the Bill proposed the function to appoint any other institution. Mr Shefuta said it might be a private institution for that matter. To mitigate suspicions of corruption, it might be seen as an easier route as shifting it away from the Minister, it might be an organ state that could pick a private institution. SAYC was of the view that this "capacity" was not about the capacity of the organ of state to discharge its core responsibilities. For example, we had one of the best parliaments in the world. There were many institutions that excelled in discharging their responsibilities as organs of state. However, SAYC’s concern was with regards to technical capacity. If the licence was revoked today, in the shortest time possible, did the chosen organ of state have the technical capacity to go live tomorrow with the lottery. SAYC was proposing that either we empower the NLC or we empower the Minister to appoint outright. The modalities of the extent to which the Minister considers the caretaker do not necessarily need to be detailed in the legislation itself.

In response to Mr McIntosh’s comments, Mr Shefuta responded that research on worthy causes should be funded without lodging an application or if an organisation had not submitted an application during the application funding window. At the time when the research was undertaken, and there was then an identified need within the NLC priority areas, then that organisation would be encouraged to submit a detailed project proposal with budget that met the requirement of the Commission so that it could be funded. It did not mean you did not submit an application, only that you had not done it within the specified application funding window. This should be encouraged.

There were actions we could take as individuals to militate against the challenges we face as society. SAYC believed that just as society had invested so much in us, in terms of schools, churches etc, so it was the collective responsibility to respond to community challenges. There were private interests for self profit that were hijacking civil society’s space and it must be guarded against. Being part of the solution, civil society must be the first ones to call on government to make an environment conducive for civil society to dispense their expertise in local communities and we must challenge anything that was against this.

In response to Mr Wayile’s comments, Mr Shefuta explained that what he meant by redress as a principle guiding the work of the NLC was that there were communities in South Africa that had dire needs compared to certain other communities. Those should be given priority. There were sectors of society that had certain inherent disadvantages compared to others. Those inherent disadvantages must also be considered. When the Commission discharged its responsibilities, it must raise the base of those who continue to be marginalised to those who continue to be beneficiaries, not only of government but any other preference.

With regards to effectiveness and efficiency, Mr Shefuta explained that bureaucracy must not suffocate the good work done by the NLC. One needed smooth machinery to help the Commission achieve its intended purpose prevent unintended delays in its response to the community. On his use of qualitative versus quantitative, he explained that the quantitative outputs of the work must be balanced with the quality of the impact of the work. The focus was not on how many organisations had benefitted but it should also go into the quality of the impact of the projects. In terms of mainstreaming, he was not talking about mainstream institutions but that the work of the NLC must have a strategic alliance with their mainstream development agenda – to respond to the challenges society agreed were the ones society faced.

Ms Fubbs thanked Mr Shefuta for the effective and full response and stated it was a great submission and praised the proposals in the SAYC submission. When a critique was made, one should always accompany these critiques with potential solutions.

Meeting adjourned

[Apologies from Mr M Oriani-Ambrosini (IFP) and Dr W James (DA)]
 

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