Department of Cooperative Governance and National Treasury on funding model for Community Works Program briefing

Standing Committee on Appropriations

11 February 2014
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

National Treasury said that the Community Works Programme (CWP) programme was initiated in 2009/10 and since then there had been growth of over 30%. It was expected to have an average annual growth 28.9% in the medium term, but this was not sustainable. The split between wages and operational costs stood at 65:35, but Treasury would like to see the split increase in favour of wages paid. Currently there was a three-tier management layer, which would become a single tier in the next financial year to reduce costs. The programme had created over 200 000 work opportunities and the target for this year had already been exceeded. There had, however, been Treasury concerns of under-expenditure.  It wanted the programme to expand from the current 140, to 234 municipalities. The difference between the CWP and the Expanded Public Works Programme (EPWP) was that the former was area-based, while the EPWP was sector-based. Challenges facing the programme were that there was insufficient cooperation between the Department of Cooperative Governance (DCOG) and the Department of Public Works.
 
The Department of Cooperative Governance said the CWP aimed to be a community-driven programme to soften the negative impact of high unemployment in the areas of greatest socio-economic need.  In 2011/12, it had created 105 000 work opportunities and in 2012/13, 204 000 work opportunities.  Currently the programme was implemented through a three-tier management system involving the provinces. This model was not cost effective and would be replaced by a single tier of lead agents, which was expected to be operational in the new financial year. The CWP would fall directly under the ambit of the Director-General. The new model would release more funds for distribution. Wage distribution totaled R1.3bn.

Key challenges were proper contract management, as there were differences in the numbers being reported, monitoring and evaluation, the delineation of roles, the use of the implementation manual as an auditing tool, adequate capability and capacity to manage the programme, and financial management capability and capacity. The challenges were being addressed by the use of a single level of agent, by not sub-contracting the implementation, and payments would be made directly by the Department.

Members said the programme appeared to be a duplication of the EPWP.   The participants were doing low-skilled work and surely the municipalities had the capacity to oversee the implementation.  The programme needed to find a way to turn the work opportunities into work.   The budget had increased, yet the number of work opportunities had decreased relative to the previous year. Were the jobs permanent or not?  What informed the work opportunity targets? The presentation should have included the total number of municipalities in each province, apart from the number of municipalities where the programme was being implemented. Where did the Treasury get its figures from?  Why had the programme been transferred from the Department of Social Development, which had piloted it, to the DCOG?  Was there was a partnership with the Department of Social Development?  How could municipalities get involved in the programme? What mechanism was used to inform communities about the CWP?  What level of coordination existed between different departments?  Who should be contacted if one wanted to pass on information?
What capacity was there to verify the numbers being supplied to the Department by the agents -- and could this be reconciled to the payments being made?

Meeting report

Chairperson’s Opening remarks
The Chairperson said the CWP was part of the EPWP and the biggest complaint was that money was being spent on implementing agents, when it was intended to benefit ordinary citizens.

National Treasury briefing
Ms Marissa Moore, Chief Director of Public Finance in the Treasury, said that the CWP programme was initiated in 2009/10 and since then there had been a growth of over 30%. It was expected to have an average annual growth of 28.9% in the medium term. The bulk of the money was spent on wages. The ratio of wages to operational costs stood at 65:35, and Treasury would like to see the split increase in favour of wages paid.  Initially costs had been itemised as consultant and transfer payments, but they were now classified under goods and services. Currently there was a funding model comprising a three-tier layer of management by provinces in respect of day to day planning. The focus this year would be to develop an information management system to support a change to a one-tier management system and thus reduce costs. The programme had created over 200 000 work opportunities and the target for this year had already been exceeded. She acknowledged that the figures of Treasury and the Department presentations did not correspond, and she would investigate the matter.

There had been Treasury concerns of under-expenditure, and the goal was to expand the programme from the current 140 municipalities involved, to 234 municipalities, especially in rural areas. The difference between the CWP and the EPWP was that EPWP was a sector-based intervention, while the CWP was an area-based intervention. Notwithstanding this, she said there should be better synergies through using EPWP management, for example. This was being recognised in the third round of the CWP.

A challenge facing the programme was that the growth rate was not sustainable due to fiscal constraints, and therefore there should be an increase in efficiency and cost savings through the use of Non Governmental Organisations (NGOs), for example. There was also insufficient cooperation between DCOG and the Department of Public Works.
 
Department of Cooperative Governance briefing
Mr Tozi Faba, CWP National Programme Manager, said the CWP aimed to be a community-driven programme to soften the negative impact of high unemployment in the areas of greatest socio-economic need. From 2011 to 2012, it had created 105 000 work opportunities and from 2012 to 2013, 204 000 work opportunities, 58% of which were filled by women. Up till December 2013, it had created 179 000 work opportunities. Currently the programme was implemented through three lead agents, who each had responsibility for three provinces. They in turn worked through provincial implementing agents, who in turn worked through local implementing agents. This model was not cost effective and would be replaced by a single tier of lead agents.  This was expected to be operational in the new financial year. The CWP would fall directly under the ambit of the Director- General. The new model would release more funds for distribution. Wage distribution totaled R1.3bn.

Key challenges were proper contract management, as there were differences in the numbers reported, monitoring and evaluation, the delineation of roles, the use of the implementation manual as an auditing tool, adequate capability and capacity to manage the programme, and financial management capability and capacity.  The challenges were being addressed by the use of a single level of agents, no sub-contracting of the implementation, and payments would be made directly by the Department.

Discussion
Mr M Swart (DA) asked if the jobs were permanent or not. He said the programme appeared to be a duplication of the EPWP. The annual growth of the programme had been 34% and municipalities controlled the funds, whether it was CWP or EPWP, with the sub-contractors’ share increasing from R709m to R1.2bn.

Mr G Snell (ANC) said the participants were doing low-skilled work, and surely the municipalities had the capacity to oversee the implementation.  The programme needed to find a way to turn the work opportunities into work. For example, workers could be trained to recycle waste, which they could do in the formal sector.

Mr L Ramatlakane (COPE) said the budget had increased, yet the number of work opportunities had decreased compared to the previous year. What informed the work opportunity targets? The presentation should include the total number of municipalities in each province, apart from the number of municipalities where the programme was being implemented.

The Chairperson asked where the Treasury got its figures from.

Ms R Mashigo (ANC) said the Department of Social Development had piloted the programme, so why had it been transferred to DCOG?

Ms A Mfulo (ANC) asked if there was a partnership with the Department of Social Development.  The training provided should be to empower, not just for the sake of training.

The Chairperson asked how municipalities got to become involved in the program.

In trying to distinguish the difference between CWP and EPWP, Mr Faba used the example of the EPWP being used to repair roads, and the participants would be trained in the skills required. The CWP implementation would be one where, for example, the community identified the bushes alongside the road to be a threat to the safety of people and request that the bushes be cleared and the roadsides be kept bush free.

Mr Vusi Madonsela, Director General, DCOG, said they would provide the Committee of a list of the CWP programmes that had been undertaken.

Mr Snell asked what mechanism was used to get the CWP to communities.

Mr Faba invited the Committee to inform him when they went on an oversight visit so that he could inform them of programmes in that area.

Mr J Gelderblom (ANC) asked what level of coordination existed between different departments. Who should be contacted if one wanted to pass on information to the community?

Mr Madonsela said the programme was focused and targeted on the poverty “pockets” of the country.

Dr Simphiwe Mngadi, CWP Programme Executive said that the programme had been moved to the Department because it was responsible for coordinating government actions where all spheres of government  and sectors needed to work together. It had a draft Memorandum of Understanding with the Department of Social Development.

She said the CWP worked through local community committees and one could contact the National programme Manager, Mr Faba.

Mr Madonsela said it had held discussions with the South African Local Government Association (SALGA) but had not publicised the programme in communities.

The targets of the programme were informed by the budget allocation.

The over expenditure occurred when targets were exceeded because cost efficiencies had resulted in extra money being available for allocation to work opportunities. In addition, the programme targets  included seasonal and underemployed workers.

The cumulative total was the overall total of people that had been touched and ‘cumulative’ was perhaps not the right term to use.

Mr Faba said that the training was relative to the job in hand and in the case of the example quoted earlier the clearing of the bushes might require training in the use of a chain saw machine. He said that by 2017 the CWP should be visible in all municipalities.

Mr Swartz asked if municipalities were not part of the current 140, would they be refused or would there be an investigation first.

Mr Madonsela said they would not be refused outright, but would be considered in the light of what had been planned.

He said that there had been no study on whether service delivery protests were against CWP programs.

He said workers were currently paid via agents but would be paid directly in the coming financial year.

Dr Mngadi said that the private sector were important partners in the programme, especially in relation to training.  The staff complement had been strengthened to take on the role of monitoring and evaluation.  The figure of 172 000 work opportunities were actual figures up to the end of December 2013, but there were still some months to be accounted for before the end of the financial year.

Mr Snell asked what capacity there was to verify the numbers being supplied to the Department by the agents.  Could this be reconciled to the payments?

Mr Madonsela said the CWP was not a DCOG program, but was a government-wide programme.

Regarding Mr Ramatlakane’s question, he said they would look at the figures again and reconcile them with those of the Treasury. It should be noted that there had been a time when the programme had underspent and the Treasury had cut R1.2bn of funds over the Medium Term Eexpenditure Framework (MTEF) period.  
At present they were relying on a reconciliation of what was paid into the bank accounts of participants to reduce the risk of “ghost” workers. It would procure a system using biometric fingerprints to clock workers in and out, and thereby try to reduce the risk.

The Chairperson said that the Department had done interventions to reduce wastage by removing the middleman and increasing the coordination between departments. There remained the challenge of people accessing the programme and the underspending on the programme.

The meeting was adjourned.
 

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