The National Development Agency (NDA) presented its 2012/13 Annual Report to the Committee. The NDA informed the Committee that its five strategic goals were aimed at leveraging strategic partnerships to eradicate poverty and enable poor communities to achieve sustainable livelihoods.
Through its strategic goals, the NDA was able to outperform most of its intended targets and obtain a clean unqualified audit report. Financially, in the year 2012/13, the NDA had a total revenue of R190 275 528 and its expenditure amounted to R196 680 79, with a net deficit of R6 405 263. Its total expenses increased by 18.1% year on year mainly driven by the increase in mandate expenses. Administrative expenses were mainly driven by infrastructure costs (operating costs) and staff costs.
Members said the NDA’s level of overachievement, although impressive, showed that there was an overall problem in planning because they failed to review their targets. They said they noticed a huge decrease in the NDA’s salary costs and wanted clarification on why this was the case. Members said they were impressed that there had been an increase in the amount spent on projects but wanted clarification on why there was an increase in board fees as well as consultation and professional fees.
The Committee adopted the minutes of 20 August, 17 September, 8 and 9 October, 16 October, and 26 October 2013 were adopted.
Opening Statement by the Deputy Minister
Ms Bongi Ntuli, Deputy Minister of Social Development, greeted the Committee and observers in all eleven official languages. She said the work of the National Development Agency (NDA) was very important because it was breaking the cycle of multigenerational poverty. She was pleased with the overall work of the NDA because it was striving to deliver the requirements on its mandate. She wished to express gratitude to NDA board members for their hard work in ensuring that policies were issued accordingly in order to better the lives of people.
Briefing by the National Development Agency: 2012/13 Annual Report
Mr Malose Kekana Chairperson of the NDA, thanked the Committee for giving it the opportunity to report back. In the past the NDA noticed a trend of decreasing budgetary allocation by the National Treasury (NT) due to the global financial crisis, but through its efforts it had wanted to make sure that the scale and reach of the NDA was not limited by budgetary issues. In terms of increasing its funding, close to 50% of the funding that had accrued did not come from government but from third parties, and the NDA anticipated that almost all the funding it received from government would be matched by what it received from third parties. Since the NDA brand was well received in the market, from a governance point of view it was important for it to continually improve and maintain its current clean unqualified audit finding, which had been a tremendous improvement from its previous findings. It was important to implement coherent and working systems within the NDA because this aided in professionalising development. He asked the Executive Director to proceed with presenting the Annual Report.
Mr Reuben Mogano, Executive Director for the NDA, presented the 2012/13 Annual Report of the National Development Agency who was mandated to contribute towards the eradication of poverty and its causes by granting funds to Civil Society Organisations (CSOs). Its overall strategic goal was to leverage strategic partnerships to eradicate poverty and enable poor communities to achieve sustainable livelihoods. In order to achieve its intended goal the NDA employed 5 significant strategic objectives:
Strategic Objective 1: To carry out programs or projects aimed at meeting the development needs of poor communities.
The NDA managed to fund CSOs implementing poverty eradication programmes and through its funding three programmes on Early Childhood Development (ECD), Food Security and Income generation programmes were approved. R26.6 million value was allocated to ECD programmes against the target of R22.4 million, and a R30.2 million value was allocated to Income Generation programmes against a target of R30m. 153 Food Gardens on ECD sites were funded against a target of 129 food gardens, there were 4122 beneficiaries of ECD programmes against a target of 3850 beneficiaries, and 3480 beneficiaries of Food Security programmes against a target of 2912 beneficiaries with 507 jobs created through ECD against a target of 114 jobs, and 477 jobs created through Food Security against a target of 400 jobs.
The NDA deviated from some of its set targets in areas such as the training of ECD practitioners. The entity managed to only train 667 ECD practitioners against a target of 774. It achieved a target of 1.2% against a target of 10% in regard to people with disabilities and this was due to over-targeting, since the national norm was 2%. Out of a target of 1686 of jobs that would be created through income generation programmes, the NDA under-performed and created 906 jobs.
Strategic Objective 2: To undertake research publications aimed at providing the basis for development policy.
In its goal to conduct research that would support internal functions, the NDA managed to produce 88 close out evaluation reports on NDA funded projects. Three case studies were produced on NDA programme areas meeting the annual target of three. Four good practice reports were produced on NDA programme areas meeting its target. 47 Performance Monitoring reports were produced for NDA funded projects exceeding a target of 42, and four research reports on NDA programme areas were produced exceeding a target of two.
It deviated from some of its targets in areas such as producing 38 baseline reports on NDA approved projects against a target baseline of 58. 47 mid-term evaluation reports were produced against a target of 127, online resource centres were not established, an impact assessment report was not produced, journal articles were not produced, a development report was not produced, and the South African CSOs, and Millennium Development Goals (MDGs) report was not produced.
Strategic Objective 3: To strengthen the institutional capacity of Civil Society Organisations
The NDA managed to capacitate 223 CSOs in governance; financial, project & conflict management; business plans, strategic planning and technical skills exceeding an annual target of 210. 3831 CSOs were beneficiaries of CSO capacity building interventions exceeding an annual target of 2520, R4.4 million was allocated and disbursed to capacity building for lobbying and advocacy to CSOs networks exceeding an annual target of R4.2 million, and a CSOs database by geographic location and sector was developed.
Through its institutional capacitating plans, only 78% of CSOs demonstrated improved implementation in governance, financial, project and conflict management, business plans, strategic planning and technical skills. Deviations were due to poor improved performance from participants who were trained on financial management, which averaged 58% improvement.
Strategic objective 4: To promote and maintain organisational excellence and sustainability
The NDA achieved a 2.26% vacancy rate against an approved staff complement in contrast to a target of 5%. The entity achieved a 1.75% staff turnover on critical skills against a target of 8% - 70% of staff were trained according to the Work Skills Plan, meeting the planned target of 70%, and 96.1% of all staff achieved a performance rating of three and above exceeding the planned target of 95%. 100% of Human Resources (HR) strategy was executed per timeline exceeding an annual target of 80%. There was an 80% reduction in repeat internal and external audit findings meeting the planned target of 100%, and 98% of staff performance reviews were conducted bi-annually exceeding a target of 90%.
There were no deviations under this strategic objective.
Strategic objective 5: To promote debate, dialogue and sharing of development experience
The NDA was able to achieve three resource mobilisation events hosted, exceeding the planned target of two. Nine CSO Provincial Sector Fora were hosted meeting the planned target and two NDA profiling events were sponsored meeting the planned target of two. The entity managed to produce 12 publications. R1 million value of free publicity was secured exceeding a target of R250 000. The NDA witnessed 676 246 NDA website hits exceeding a target of 250 000 hits, 114 Internal communication initiatives were implemented exceeding a target of 110 and seven Special Development Profiling Events were implemented as planned.
They deviated from some of their targets in areas such as failing to facilitate CSO dialogue programmes as planned. The NDA hosted four provincial dialogues against a target of nine. The NDA failed to conduct their brand survey and customer satisfaction survey. They only managed to secure R398 742 of media advertorials against a target of R700 000, and intranet hits were not monitored due to delays in implementing the ERP systems as the tender was withdrawn.
Mr Phumlani Zwane, Chief Financial Officer for the NDA, presented the financial information of the 2012/13 financial year. For the year 2012/13, the NDA had a total revenue of R190 275 528 and its expenditure amounted to R196 680 791, with R116 522 847 allocated towards mandated expenses, which constituted committed poverty eradication projects, third party managed funds committed, direct project costs, research and development and capacity building. Administrative expenses amounted to R80 157 994 and constituted staff costs, operating leases, accommodation and travel and other operating costs. The NDA saw a net deficit of R6 405 263.
The entity noted that the growth in transfer revenue of 13.1% year on year was mainly driven by increase in funds mobilised from other partners and government departments. The NDA allocation from the Department of Social Development (DSD) only increased by 3% from R161 million in 2012 to R166 million. Total expenses increased by 18.1% year on year driven mainly by the increase in mandate expenses, which was attributed mainly to the significant increase in the projects committed and managed on behalf of other partners and government departments.
Administrative expenses were driven mainly by infrastructure costs (operating costs) and staff costs due to the nature of NDA’s business. The increase in compensation of employees of 19% was attributable to increase in staff compliment due to filling of critical posts that were vacant in the previous year and annual inflationary adjustment of 6.5% in salaries. The year on year 13% increase in operating lease was attributable to average annual increase in rentals of 9% and the inflation increase in municipal service expenses. Other operating costs were attributed to increases in IT communication costs due to the implementation of the new Multiprotocol Label Switching (MPLS) network, marketing coasts, professional and consulting fees and annual external audit fees.
The Chairperson thanked the NDA for its presentation and asked if the money was rolled over from most of the targets it over-achieved. Because of the NDA’s level of over-achievement, she asked why it failed to review its targets and adjust them. This showed its planning was problematic. She asked if over-achievement had an impact on the entity’s overall budget. If so, was the level of overachievement part of the budget, but was simply not being reflected in the presented figures? She asked if the NDA could clarify its employment vacancy figures.
Mr M Waters (DA) said there was a huge decrease in the NDA’s salary costs. He wanted clarification on why there was a decrease in staff costs. Last year the Annual Report stated that R43.8m was spent on goods and services, but this particular expense was not indicated in the current Annual Report. Last year the NDA spent R3.2 million on capital assets. He wanted guidance on where that expense was represented in the Report. He said he was impressed that there had been an increase in the amount spent on projects but he wanted clarification on why there was an increase in board fees as well as consultation and professional fees.
Mr Mogano said it was commendable that the NDA had overachieved on its targets, although they acknowledged that they might have under targeted. The entity saw significant overachievement because during planning it managed to raise alternative funds due to the mobilisation of third party resources, hence it was able to stretch its reach. The CFO would respond to the financial management issues.
Mr Zwane said there was a decrease in salary costs because the NDA had conducted a complete review of its infrastructure cost at the provincial level as well as an analysis of staff members who were not office administrators. Through its analysis, the NDA as a whole agreed that it would take the salaries of those employees who were not office administrators and categorise them within Direct Project Cost Expenditure, which also fell within its overarching mandate expenditure. With regard to the area of goods and services, that particular category was now classified in the administrative category. The increase in consultation and professional fees was due to the forensic audit cost that was taken to review supply chain management. Other cost drivers had to do with the review of the structure board, ICT governance review and the audit project. All these cost drivers were one-time business costs that were not expected to happen again.
Mr Kekana clarified that the NDA had addressed its vacancy rate and filled up all its positions. In terms of board fees, the NDA followed the guidelines by the National Treasury.
Mr Coceko Pakade, Director-General at the DSD, stated that in the last quarter the NDA had seen significant improvement and the DSD was comforted that they were working on some of their shortcomings. Six provinces had already committed approximately R51 million to NDA’s new focus, which was presented to them. Overall, the NDA would make sure it worked closely with Non Profit Organisations in enhancing and capacitating them. He thanked the Committee for allowing the NDA to present.
Ms N Gcume (COPE) thanked the NDA and the Department for all its hard work. As a Committee, they appreciated when good work was being done.
Adoption of Committee Minutes
The minutes from 20 August and 9 October were adopted with amendments. The minutes from 17 September, 8 October, 16 October and 26 October 2013 were adopted.
The meeting was adjourned.
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