National Youth Development Agency 3rd quarter 2013/14 performance report

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Meeting Summary

The National Youth Development Agency (NYDA) briefed the Committee, and indicated that it had made some positive moves since the last briefing. It had significantly reduced irregular expenditure. The emphasis of matter from the previous audit opinions had been addressed. NYDA was adopting a zero tolerance approach to non-compliance, and was hoping that a clean audit would be achieved in 2015 although it recognised that cleaning the NYDA was continuous work. The dispute with the former Chief Executive Officer had been closed as the parties reached an amicable agreement, and since December 2013 he had not been on the employment of the NYDA. Other matters concerning other staff were also resolved. This resulted in the dismissal of 31 other employees who were found guilty of the charges that were levelled against them. All matters regarding the structure of the organisation had been cleared, and stability was being realised. The NYDA had reduced the number of targets for itself to try to focus its work better. It was crucial that the NYDA should come up with a youth development institute. Progress had been made, and there were proposals made and meetings with vice-chancellors of universities. The project would be launched at the end of March. In order for the NYDA to achieve all the targets it set itself, it required partnerships with private sector, government and civil society. The NYDA received R390 million from the Presidency, and although its spending was a little behind, a number of programmes were picking up and it should improve on these. The operating expenditure was about R11 million under target. In relation to the material misstatements, as raised by the Auditor-General, NYDA had undertaken to do a full assets verification of 14 branches. The NYDA was in the process of putting together an overall collection strategy that would look at various options, and to clean the loan book and remove those who were not capable of paying back their debt. It remained, at the moment, a great challenge to the NYDA. This was a developmental institution and wanted to improve on grant funding. While work on the loan book was ongoing, the Agency continued to implement other measures, like taking defaulters through legal processes, and entering into restructuring of debt agreements. Another problematic area was that although the municipalities were supposed to help with youth offices, and make basic office facilities available, such as furniture, computers, internet connectivity and salaries of the existing municipal staff occupying those offices, many municipalities simply could not afford to do so, despite the fact that they may be willing. However, the NYDA was committed to trying to achieve this programme, had been trying to build capacity and offered a helpdesk facility for municipalities. There were about 294 youth offices around the country.

Members sought clarity on the details of the arrangement that was entered into with the former CEO, but accepted the explanation that this was a matter more properly to be taken up with the Minister. They also asked about the position of a board member who had been acting as CEO at one stage, and cautioned that the response should not have been so defensive. They asked whether NYDA had any plans other than entering into partnerships with municipalities, to get offices going throughout the country. Members agreed that the NYDA had recorded progress from the last time it appeared before the Committee.
 

Meeting report

Opening remarks
The Chairperson welcomed the National Youth Development Agency (NYDA or the Agency) and clarified that this Committee was both a Standing Committee, and acted as a Portfolio Committee to oversee the Department of Performance Monitoring and Evaluation (DPME), and entities, including NYDA. He said Members believed the NYDA was making progress, having improved on the previous ten key performance areas to five focussed ones. There were still challenges of getting the Agency represented all over the country.

National Youth Development Agency 3rd quarter 2013/14 performance report
Mr Yershen Pillay, Executive Chairperson, NYDA, read out a letter the Agency received from Sibokuhle High School in KZN. In that letter, the school principal thanked the NYDA and acknowledged the impact interventions by the Agency had on improving the matric results. Mr Pillay said the interventions were many and included assistance given to over 3 168 matric learners, and the Solomon Mahlangu scholarship. Well over 1 000 pupils had received career guidance.
All of these interventions spoke to the new strategy and the progress NYDA was making. The Agency was destined to achieve 80% of its targets. In March and April the Agency would be launching two new programmes – the South African Development Institute, and the Job Preparedness and Placement programme. These would complement other programmes that were focussed on education.

He was pleased to note that the NYDA had significantly reduced irregular expenditure. Emphasis of matter from the previous audit opinions would be addressed. The Agency was adopting a zero tolerance approach to non-compliance, and was hoped that a clean audit would be achieved in 2015. Cleaning the Agency was continuous work, and achieving that was going to be a challenge. There was a lot more work that needed to be done, but significant progress had been made.

The Chairperson interjected and said when the Agency was invited there were specific requests that were made, including in relation to the 3rd quarter performance report. Another matter that was spelt out in the invitation was that the Committee wanted to hear about the progress on the suspension of the former Chief Executive Officer (CEO), Mr Steven Ngubeni.

Mr Pillay replied that this matter was now closed. The parties reached an amicable agreement, and since December 2013 Mr Ngubeni had not been on the employment of the NYDA. Other matters concerning other staff were also resolved. This resulted in the dismissal of 31 other employees who were found guilty of the charges that were levelled against them. All matters regarding the structure of the organisation had been cleared, and stability was being realised.

Mr Khathuthelo Ramukumba, Acting CEO, NYDA, reiterated that the number of key performance areas were cut in order to make them more realistic and more focussed. For this year the Agency was pursuing 28 key performance indicators (KPIs). The annual targets had been achieved on most of these at the end of quarter three, and about nine were on course and the NYDA was hopeful it would achieve them as well.

Mr Clayton Peters, General Manager: Strategic Programmes, NYDA, read through the KPIs on the presentation and the targeted completion dates. He highlighted the career guidance interventions and the start of year campaign that would be launched in February. The Agency expected to overachieve on these. One of the flagship programmes was the youth build programme. In this programme 1 500 young people were expected to participate, and well over 1 200 had already been reached. The Agency had just graduated 100 young people in the Northern Cape on this programme and they were expected to build houses for the elderly. On the job preparedness programme, the Agency had set an ambitious target of reaching 100 000 young people. Just under half of that figure had been registered in the third quarter. On health and well being  a 5 000 target had been set, and had already been exceeded.

Mr Peters said that it was crucial that the NYDA came up with a Youth Development Institute. Progress had been made and proposals have gone out. There had been meetings with vice-chancellors of universities. This process was at the final stages of decision making and the project would be launched at the end of March. In order for the NYDA to achieve all the targets it set itself, partnerships were required with private sector, government and civil society.

Mr Ramukumba said the NYDA received R390 million from the Presidency. The Agency was hopeful it would be able to spend according to the key performance areas that had been identified. Spending patterns indicated the NYDA was a bit behind on what it should have spent by this stage in the financial year. In relation to operating expenses the Agency had under spent by about R11 million. A number of programmes was picking up. He took the Committee through the expenditure report and said there was correlation between performance and spending. Spending was picking up in the last quarter and the NYDA should be able to deliver on its mandate.

When it came to material misstatements, as raised by the Auditor General (AG), the Agency had undertaken to do full asset verifications of 14 branches. This would ensure that the assets register was up to date. Issues of weekly and monthly reconciliations were now addressed and were frequently reviewed by senior management. With the support of the audit committee, the Agency had also been able to get assistance for its internal audit function.

The Agency was in the process of putting together an overall collection strategy that would look at various options. The intention was to do work on the loan book and clean it and remove those who were not capable of paying the debt. The agency was a developmental institution. NYDA wanted to improve on grant funding. While work on the loan book was ongoing, the Agency continued to implement other measures like taking defaulters through legal processes, and entering into restructuring of debt.

Some of the measures that had been put in place to strengthen the supply chain unit included embarking on a nationwide NYDA database programme. All those who registered would have to be fully compliant and those that needed assistance would be provided with it. The intention would be to have a database that would have a footprint across the country, and that should enable the Agency to support local economies. The NYDA had also updated its supply chain policies. There would be workshops where senior managers and administrators would play a role in the Agency. There were programmes that were meant to address challenges identified by the AG in the human resources division. He took the Committee through the loan book and what was being done to recover the money lent to individuals.

Mr Ramukumba said the NYDA was undertaking a detailed audit of its IT systems. The IT governance aspects had been addressed. The Agency had a charter that had been approved and the board played a leading role in that aspect.

Mr Peters said host partners (municipalities) for youth offices were largely expected to avail basic office facilities like furniture, computers, internet connectivity and salaries of the existing municipal staff occupying those offices. The Agency provided all content in terms of the communication platform, as well as ongoing capacity building and support to the staff. There was a help desk at the Agency to help municipalities any time. The offices were regularly visited for purposes of understanding the needs of each office. There were about 294 youth offices around the country and he promised to send through a further breakdown of those offices by province to the Committee.

Discussion
The Chairperson commented that the presentation did not clarify whether the offices belonged to the local municipalities or were NYDA offices.

Mr Peters replied that the NYDA had 14 full service branches that were functional and manned by NYDA staff. All the full suite of the NYDA products could be accessed from these 14 branches. It cost roughly between R2 million and R5 million to operate a branch for a year. Some branches were bigger than others, but also the branches were dependent on the population size of an area.
The level below that comprised local youth offices that were established with the local municipalities, but these, in order to be included in the NYDA programmes, had to have signed an agreement with the municipality. He said 194 of these agreements had been signed and the main challenges related to implementation. Municipalities could either hire their own, or second existing staff from the local youth offices. He noted that in some cases, the agreements had been signed and staff were not available because municipalities had not hired. A related challenge was that staff had been assigned but as the work of the municipality grew they were then deployed elsewhere. Many of these agreements had also been signed but many of the municipalities had not honoured them.

Mr Ramukumba clarified that the signing of the Memorandum of Understanding suggested that there was willingness from municipalities, but most of them were faced with financial challenges. The reason the NYDA opted for the model of working with municipalities was because the Agency also faced a challenge with its own allocations, so it was not able, by itself to open those offices and fully fund them. Some, however, were functional and that young people could go into those offices and find the required support.

Ms A Mfulo (ANC) said she wanted to find out whether there was any other plan in place in addition to the partnerships, given the challenges with municipalities, in case the partnerships failed.

Mr L Ramatlakane (COPE) acknowledged that from the time the Committee last met the NYDA, it appeared that a lot was being done. He wondered why the delegation was only constituted of men.

Mr Ramatlakane said there were no details on the departure of the former CEO. He said he was under the impression that Mr Ngubeni had been reinstated, and thought that the mention of an amicable settlement probably also included a “golden handshake” and wanted to know what had been agreed to in this regard. He also noted that he had thought that Ayanda Makaula was at one stage the Acting CEO and asked where this person was now. He also wanted further elaboration on the statement that there were other employees who had been disciplined, and was worried about this, commenting that it seemed as if many people had been purged. Furthermore, he noted that there must have been reasons that necessitated the suspension of the CEO, and this Committee had been promised a report on the forensic investigations “when the time was right” and had been asked not to ambush the NYDA’s investigations at a point. He pointed out that the Committee was still owed this report, particularly as it pertained to allegations of irregular spending, for which Mr Ngubeni had been suspended. He asked that the full information be given to the Committee.

Mr M Swart (DA) concurred with the questions asked and suggested that a written report be submitted as the best route to follow when it came to the names of people fingered on the investigations and those that had since been fired.

Mr Ramatlakane sought clarity on the partnerships with the private sector.

Mr Swart sought clarity on the number of people assisted by the NYDA to rewrite their matric examinations, and for examples of what the costs had been, saying that the money spent on the project seemed excessive. He asked whether checks were carried out on business that had been funded, to see if they were functional.

The Chairperson sought clarity on grant funding and whether it was given to everyone.

Ms R Mashigo (ANC) said clarity ought to be given on the job preparedness programme and the statistics that had been provided. She said the NYDA should clarify its role, especially as it related to other departments.

The Chairperson said the communication from the Agency was not very clear. In the past, people had claimed to have never seen NYDA, although it was actually based in their own areas. He said the evaluation report needed to be clarified, especially its purpose, and he asked whether this evaluation report related to performance or to other aspects also.

The Chairperson was also puzzled about the reference to two loan books and asked whether these might refer to internal and external ones. He acknowledged there was progress. He also sought clarity on the municipalities’ youth offices and suggested that a new Committee would have to monitor and ensure that municipalities operated within a policy framework.

Mr Pillay gave some overall responses to the questions asked. He said, in regard to the former CEO that all parties involved needed to be commended on reaching the amicable solution, which made sense because young people needed “an NYDA that worked”. He was also grateful to Mr Ngubeni for his willingness to let the matter be laid to rest, so that the Agency could continue and focus on its primary mandate. The settlement reached was legally binding. This was within the mandate of the NYDA to reach such an agreement. If the Executive Authority wanted to see the report and contents, then this would be done, but only after that could it be shared with Parliament.

Mr Pillay noted that the irregular expenditure leading to the investigations amounted to R15 million rands. This was public information, had been noted by the Auditor-General (AG) and formed the basis of the charges that were laid. The Agency had done what it could on this; but had lost the case that it commenced in court.

Mr Pillay said that Ms Makaula had acted as CEO for a time, but she was a member of the board and not an employee of the Agency, who had been asked to guide the administration for a time, but there was no indication that she would be acting indefinitely or a permanent CEO, and any insinuation that she may have been “pushed out” was incorrect because of the understanding entered into in the first place. The Board had in fact wanted her to be appointed as CEO, but she was not willing to be appointed, due to family pressures, although she had done a marvellous job. The process to appoint a permanent CEO was underway.

Mr Pillay said about 3 168 students had registered for the matric rewrite, and that 87% of those had passed. The success of this programme had warranted a discussion with the Department of Economic Development, who wanted the Agency to scale up the programme. Whilst in general, the press did not tend to report positives, because “good news did not sell”, the media had given quite good coverage to the work and programmes of the NYDA, although this should still improve. The NYDA priorities were in order, but the Agency could not force media coverage.

Mr Pillay indicated that the targets on the job preparedness programme were too ambitious, and that the Agency would not meet them. Currently the figure stood at 45 000, but targets like that would really have to be reviewed in future.

Mr Ramukumba concurred with Mr Pillay that the 100 000 target was ambitious. In the previous year, there had been a lower target, based on the ability of the Agency to provide its services in the 14 branches. At the planning session, there was an intention to make sure the well over 100 local youth offices were functional, and if all those offices had become functional, together with 14 serviced branches, then the Agency would have been able to deliver on this target. However, the reality soon hit home when some municipalities were unable to put offices into operation. When that plan failed, the NYDA had then engaged with the Department of Cooperative Governance and Traditional Affairs (COGTA), which had its own young people’s programme, also done with local municipalities, to place about 30 000 young people across various municipalities in the country. If the NYDA had managed to place people on the job preparedness programme it would have assisted in meeting the targets.

Mr Ramukumba told Members that other alternatives than partnerships with municipalities had been considered. There was an intention to upscale mobile outreach vehicles, which would enable the Agency to reach out further. One of the challenges that the Agency continually had was the lack of increase on the allocations it received, which made it difficult to accommodate other interventions. The Agency accepted the situation in which many municipalities found themselves, with little cash reserves, although they were willing to assist. However, NYDA would continue to look for physical buildings to host these branches despite the limited resources.

The commitment from the Minister of Public Service and Administration was that government would participate in creation of jobs, in the compact of learnerships, coordinated by the Department of Public Service and Administration. NYDA also continued to engage with various Sector Education and Training Authorities, and the private sector. The confidence of the private sector remained low, for obvious reasons like bad publicity, but NYDA remained committed to good governance and if that improved, the private sector confidence would improve.

NYDA remained committed in achieving targets set, and as a result of that, had subjected all of the KPIs to a special programme, where the executive managers responsible for delivery must report weekly. NYDA remained confident that it was on course and that it should be able to achieve those targets. Mr Ramukumba explained that 90% of the loan book was considered “doubtful”, given the ability to collect. The writing-off of the loan book remained a major concern to the Agency. The central question was whether to invest more in pursuing the consideration of alternatives. The Agency would obviously not look to write off the entire loan book, because some assessments had indicated that there were people who were able to pay, just unwilling to do so. Grant funding was not the easy way out of the loan book. The NYDA had to locate itself properly within the value chain of governance, and also take lessons from other government departments. Government provided a lot of development finance institutions (DFIs) to young people, but the Agency looked at what was missing.

Entrepreneurship skills were identified as a challenge and quite low and at the moment not many young South Africans grew to be entrepreneurs and business people. Therefore the Agency was now trying to create and incubate young entrepreneurs. When a person came looking for funding, the first step NYDA would pursue was a technical assessment to test the attitude, and whether the person was likely to be able to be a success as a entrepreneur. If they failed this, people were taken for training, and the completion of that training would assist them to try again, and then the business plans had been examined for commercial viability.
There also was a mentorship programme associated with grant funding. This was to ensure that young people were subjected to a 24-month period in which they would be assisted by mentors who had business acumen. This was geared towards ensuring that young people did not fail and were linked to the right markets. He clarified that evaluations were done by the Ministry of Performance Monitoring and Evaluations.

Mr Ramukumba concurred with the desirability of involving Committee Members and government in ensuring that municipalities complied with establishing and putting youth offices into operation, and making them accessible to all.

Mr Ramatlakane said he understood that the terms of the settlement with the former CEO were confidential, but struggled to understand the explanation that the executive authority had left the matter to the NYDA. This was public money, so he had difficulty with why it was not disclosed to Parliament. The Committee would need that information, and maybe would have to ask the Minister further questions.

Mr Ramatlakane was also less than satisfied with the explanation on Ms Makaula, and said that Members had not in fact, in their questions, insinuated anything, but had merely asked a simple question, and he thought that a rather poor attitude was displayed in the reply, similar to the one that the former CEO had displayed. The language was not acceptable.

Mr Swart suggested that there was a need for NYDA to rethink its collection strategies, especially as they related to those who had received loans and were able to pay. He was worried that the Agency was now issuing grants that people were not required to pay back. He wanted to know if it was possible that all the loans could be converted into grants.

The Chairperson said this sounded positive and progressive. This was something that the NYDA could look at.

Mr Pillay agreed that the question on the settlement terms for the former CEO would be best put to the executive authority, and he said that it had been positive. The response given to Ms Makaula was based on a question asked as to whether she was considered as being one of those being suspended. The response intended to clarify that the board did not have the power to suspend Ms Makaula, who was a board member, and he reiterated that had the delegation known that questions would be asked about her position, the NYDA would have asked her to accompany them to speak for herself. He withdrew the use of the word “insinuation”. He said the NYDA appreciated working with the Committee and that feedback contributed to how the Agency functioned. The NYDA could only become stronger with the leadership provided by the Committee. The Agency appeared to be impacting on more lives of young people.

The Chairperson thanked everyone and said the Agency should pay attention to how its future delegations were constituted. The objective of government was to be committed to gender parity; so women had to be empowered and they needed to be part of delegations. The Committee accepted the explanation around the former CEO and would definitely raise the issues with the executive authority, although it was hard-pressed for time.

The meeting was adjourned.
 

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