Ikamva National eSkills Institute, Brand South Africa, SA Post Office, Universal Service & Access Agency of SA on their 2014 Strategic Plans

Meeting report

Introduction by Co-Chairpersons
The meeting was co-chaired by the Chairpersons Ms J Moroi-Moropa ANC (Communications) and Ms M Kubayi ANC (Telecommunications and Postal Services). Ms Kubayi said she had received apologies from the Minister of Communications, Ms Faith Muthambi, Minister of Telecommunications and Postal Services, Dr Siyabonga Cwele, and the Deputy Minister of Communications Ms Stella Ndabeni. She noted apologies from Committee Members also.

Ikamva National eSkills Institute (iNeSI): 2014/15 Budget and Annual Performance Plan briefings
Dr Harold Weso, Acting Chief Executive Officer, INeSI, said society had moved from the agrarian to industrial focus, and was now in the information age. The modernisation of ICT infrastructure was therefore critical to eradicating unemployment and inequality. INeSI, as a recently established institute, was aimed at e-skilling South Africa for equitable prosperity and global competitiveness. Its strategic objectives were to:
- ensure internal business excellence
- build a network of partnerships to stretch and combine resources to accomplish project objectives of mutual interest
- ensure ICT education and training expertise, infrastructure and courses to deliver the requisite e-competency development that the society and economy needed
- provide continuous research and innovation in a trans-disciplinary manner, to concentrate on new ways to embed ICT into people’s lives, for socio-economic benefit
- provide strategic direction for e-competence development and a monitoring and evaluation framework to measure impacts

The positioning of South Africa as a information and knowledge economy could be achieved through leveraging ICT capabilities to address socio- economic needs and improve the country’s human resource base of the country, for equitable prosperity and global competitiveness.

Discussion
Ms Kubayi appreciated the work INeSI was doing, and would like to hear how the merger with the former institute (NEMISA) had gone and whether there was stability achieved through the merger.

Ms M Shinn (DA) wanted confirmation from INeSI on which department it would report to, that on Communications, or Telecommunications. She asked what the e-readiness fund was, who was going to contribute to it and whether there was an expectation that private enterprise would contribute to this fund. She asked if it was going to be involved in training, or if it was going to partner with universities, colleges and business. She asked how co-labs were determined in provinces and how they would be managed, and the cost of running a co-lab. She asked if teachers and trade unions had bought their ideas.

Ms Shinn asked how collaboration with other government departments and spheres was going to work, especially the South African Local Government Association (SALGA). This was an ambitious project requiring extensive networking from schools, national, provincial and municipal government.

Mr G Davis (DA) said the setting up of INeSI was laudable, given the decline in South Africa’s e-readiness global rankings. He asked how it was working with schools, especially in rural areas where there was high e-illiteracy, to help learners become e-literate. He asked the cost per beneficiary to get e-skills. He wanted a breakdown of salaries, pointing out his concern that from a budget of R38 million, R21 million went to salaries. This was too high compared to the cost that went to goods and services, and seemed out of kilter. He wanted more detail on the community radio stations.

Ms M Mafulo (ANC) implored the Chairpersons to protect officials from the type of questions that they could not answer, such as that asked by Ms Shinn about the department under whom INeSI would fall.

Ms Kubayi agreed with Ms Mafulo that entities did not decide which department they would fall under, as they were dependent on the Presidential proclamation.

Ms Shinn clarified that she asked that question because the Committee was to debate the budget in the following week and this had an impact.

Ms Kubayi clarified that the Portfolio Committee on Communications would deal with budget vote 27, and there was no confusion that would have any impact on the following week’s plans. The appropriation that this Committee would deal with was Vote 7, for Government Communication and Information Systems (GCIS) and Vote 27, for the Department of Communications (DOC or the Department). Parliament could not make any pronouncements on something that had not been tabled. Members would know once the appropriation had been done, and budget allocation was made, as there was no Department of Telecommunications at present, and the present budget vote had nothing to do with that as yet non-existent department. She confirmed that Parliament had no say in where INeSI fell, and it was a prerogative of the executive to organise its business.

Ms Mafulo asked Dr Wesso to explain the organisation’s staff complement. She asked which mechanisms were used to identify and establish co-labs. She asked where in Western Cape the co-lab was situated.

Mr R Tseli (ANC) complimented the INeSI newsletter, which was informative and of good quality. He asked how many newsletters were in official languages including braille. He commented that internet banking had been plagued with challenges of criminals interfering with banking accounts. He asked for INeSI’s position on how South Africa was going to succeed on this challenge. He too was concerned with the high percentage of budget going to salaries. He wanted an explanation on the percentage of the budget that went to programmes which had a direct impact on the livelihoods of people. 

Ms D Tsotetsi (ANC) asked when INeSI intended to cover remaining areas, since it had only covered a few areas. She asked what mechanisms were put in place to guard and protect co-labs, especially those in remote rural areas. She too asked for an indication of the physical locations of co-labs so that the Committee would be able to do oversight. She asked if INeSI had relationships with schools. She also asked if it intended to engage in exchange programmes with other institutions in countries more developed than South Africa. 

Ms Molo-Moropa asked how INeSI was going to help older generations who had moved without technical e-skills. She asked where skills were required in terms of human resource development. She asked the relationship between information technology and telecommunication centres. She wanted clarification on the curriculum on e-skilling the nation, as it appeared to be a top-down approach. She also wanted clarification with regard to the merger, and timelines so that the Committee would be able to hold it accountable on dates given. She wanted to know if it collaborated with the former Public Administration and Leadership Management Academy (PALAMA) and Department of Cooperative Governance and Traditional Affairs (COGTA).

Mr H Nkoana (ANC) commended INeSI’s work, which was still new. He asked when co-labs were going to be established in other provinces. Noting that INeSI had e-skilled 3 500 learners, he wanted an explanation as to whether this number of 3 500 represented its total work. He asked how it envisaged its funding model to be in the future.

Mr Nkoana asked how it interacts with other stakeholder below the Further Education and Training College (FET) level, as it appeared that it did not address the lower areas in terms of competence and learning frameworks. He said the issue of where the entity would fall was no longer a matter to be discussed; the explanation given by the Chairperson was sufficient as no one was confused.

Ms Kubayi urged the entity to do things differently, taking cognisance of the current economic situation. From the start, it had to look to financial stability. She wanted clarification on the selection composition of Chief Executive Officers, and wanted more details on the remuneration, saying that this should have been included in the strategic plan.

Ms Kubayi asked how many South Africans knew about INeSI, commenting that her first knowledge of it was only when she became Chairperson of the Portfolio Committee. She then asked for its marketing strategy and how it would position itself. She wanted clarification on selection of leaders for training. She too was worried about the huge salary bill, as she expects the investment of government to be utilised efficiently.

Mr Gaitsiwe Lenepa, Acting Chaiperson, INeSI said the institute was brand new, having been launched in February 2014. The staff budget included the staff from the separate, now-merged entities, and most of the staff had come from NEMISA. The Department of Communication had not yet transferred the competencies required in order for the entity to functionally effectively. The Institute was almost at the final stage of appointing a CEO. It had worked with the Auditor-General, for each quarter, on how it should be reflecting its targets. In relation to the financing model, she noted that the Department would not be able to fund this project alone. The private ICT industry would contribute to the e-readiness fund. INeSI was holding discussions with other stakeholders, including teachers, unions and schools.

Dr Wesso said financial stability, collaboration and doing things differently were the core concepts and principles behind the work of INeSI. The programme had started in 2008, when the then-Minister had decided to embark on this project because of the lack of e-skills in the country. It went through a conceptual building phase, incubation phase, and in this year the implementation began. Similar projects were found nowhere else in the world, from Hong Kong to Cuba; from South to North. This was an institution that could address the needs of South Africa’s people for the 21^st century. INeSI was a “home- bred” South African model.

Dr Wesso said that the final version of the figures in terms of the e-readiness fund would be put together by 10 July. The Integrated Demand Management (IDM) programme cost R7.5 million for research. The research was done by fifteen international experts from nine countries. INeSI was working with the European Commission on exchange programmes. It had contributed R2.5 million for developing communities of influence in e-skills.

He said the programme had a buy in from the World Bank. The International Telecommunications Union (ITU) had proposed that this project be applicable in the whole of Africa. It was also working in collaboration with Egypt, Rwanda and Ghana.

Dr Wesso noted that in regard to the co-labs, INeSI was using capacities within institutions in delivering e-skills. It was doing a lot of work not only with PhD students, but also bringing communities to its centres. It was engaging with the South African Post Office and Universal Service and Access Agency of South Africa (USAASA) on the technology and connectivity needed in various centres. It started with an “environmental scan” to understand the needs and potentials in each province and the kind of expertise available in universities.

INeSI had presented its proposals to the Department of Basic Education (DBE) and worked closely with the Department of Higher Education and Training (DHET). Collaboration with all departments was good. It urged every government department to ring fence the budget for e-skills. It also worked closely with SALGA, and an e-governance course had been developed, mainly for middle managers, in government.

Dr Wesso confirmed that to promote awareness and marketing, INeSI needed to have the right budget to get the message across. It did not compete with schools, universities or schools, but did things differently by looking on ways to synergise skills. It used community centres and lecture rooms at universities, which minimised its costs and need to build structures. It utilised expertise at universities to do research. It had 20 PhD student, 20 masters and honours students at its co-lab in Gauteng. It was working with UNESCO in developing e-competency for teachers. The establishment of co-labs in other provinces was dependent on funding and transfer of functions. It had just established a co-lab in Limpopo, dealing with e-health.

INeSI was working on an introductory cyber-security course to address problems from internet banking criminals.

Dr Wesso confirmed that 27 newsletters had been produced, and INeSI would distribute them to all stakeholders around the world, big and small companies to keep them abreast of new developments. In relation to exchange programmes, it worked with the Australian University of Technology in Brisbane on new media space and also getting young people exposed. Its approach had to be bottom up, as typified by its development of the e-literacy course. It had to focus on research to build capacity to support e-skilling of society. E-skilling also took place in community centres where there was connectivity. There was a course called “e-skills for Centre Managers” directed to e-centre management. All e-skills courses were or would shortly be certificated. In relation to human resource development, it was working closely with the relevant committee. He confirmed again that the merger would be completed by and was dependent on the Department of Communications transferring functions, assets, human resources and budget.

Finally, he confirmed that the figure of 3 500 beneficiaries mentioned included researchers, and that INeSI had gone into deep rural areas where it had impacted with courses. It was working with schools as DOC had tasked it to develop e-literacy in schools.

Ms Moira Malakalaka, Chief Financial Officer, INeSI, said that there was a need for collaboration, because of the legacy of NEMISA, which had been an administratively-heavy institute with an output of only 150 students, so there were challenges with the numbers of students. INeSI had to collaborate and find ways to move into broadcasting, had not succeeded in this, and was now creating new media through mobile application applications, mobile broadcasting and community radio and community television. It was trying to do as best as possible with the little budget if had available, to reach more people.

She clarified that the budget presented was the former NEMISA budget only, and repeated that INeSI still awaited clarification on which Department would be handling the various functions, as well as what would happen to the former NEMISA functions. She reiterated that the challenge at NEMISA had been the large number of employees used for training, and its administrative size. Its salary costs were very high, and these had included staff development training to keep in line with the ever changing ICT landscape. There were vacancies, but a moratorium had been placed on filling other vacancies.

Mr Lenepa noted that the reason why so much had been allocated to salaries was an attempt to retain people, so that they were not attracted to the private sector’s better remuneration.

Brand South Africa (Brand SA) Strategic Plan 2014/2019 and Annual Performance Plan 2014/15
Mr Miller Matola, Chief Executive Officer, Brand South Africa, said that Brand SA said had continued to get an unqualified audit in the last financial year. He confirmed that the strategic plans included an emphasis on:
- Sustainable organisational finance
- Sustainable corporate services
- Brand and message alignment by key stakeholders
- Promoting pride and patriotism and active citizenship amongst South Africans
- Putting out positive messages about South Africa amongst target audiences, both domestic and international

Another representative of Brand SA, said that South Africans in Australia had negative views about South Africa.

Discussion
Mr Davis said the main objective of Brand SA was to define “South African-ness”, but asked what exactly this meant. He asked what major challenges it would face in marketing South Africa abroad. He asked what amount of the R167 million was spent on salaries, consultancies and external agencies. He asked in what kind of market research it was involved.

Mr Davis, noting that there was R59 million spent on perception management, asked whether perceptions were shifting as a result of the work. He asked how much was spent on developing the new logo and whether Brand SA used external agencies. He asked what difference there was in its domestic work from the work done by GCIS. He noted the comment that South Africans in Australia were quite negative about South Africa. He wanted to know the basis of this research and why it apparently was in Australia, and not London or North America.

Mr C Mackenzie (DA) asked whether Brand SA’s country managers were freelances or permanent employees.

Ms V Van Dyk (DA) asked how Brand SA measured its return on investment from international marketing.

Mr D Kekana (ANC) asked about the plans in relation to counteracting piracy, saying that the greatest pride was the national flag and emblems. He was worried that the programme for Administration got more money than the other programmes. He said that, at some stage after the budget vote, Brand SA must meet with the Committee again, to unpack the administration language, as it was too general and not specific.

Mr Kekana said the priorities of the President and the ruling party were to eradicate unemployment. He wanted an explanation as to when Brand SA would fill vacant posts. He said the management must be racially balanced, as South Africa itself was a “rainbow” nation. He reiterated that he wanted a more detailed report immediately after the budget vote.

Mr Nkoana asked about the number of Board trustees in Brand SA. He said that entities must not come and offer apologies to Parliament, as this was undermining Members’ work. He too was concerned about the vacant posts. He commended the unqualified audit report, but wanted an explanation why it had taken so long to get a clean audit. He asked if Brand SA was accessible to ordinary citizens. Like other Members, he noted that it mentioned one country where the perception of South Africa was not good and he wanted to know about others.

Mr W Madisha (COPE) asked how Brand SA responded to the problem that South Africa had lost respect internationally. As a result, investors were snubbing the country and South Africa was collapsing economically.   

Mr Tseli asked what type of support Brand SA could offer to small to medium enterprises, with regards to marketing their produce abroad. He asked the level at which the one disabled person employed, saying that he was concerned that many entities were employing disabled persons, for compliance purposes only, at lower level. He asked about the gender balance at management level.

Ms Tsotetsi asked how Brand SA rated its advocacy to urban young people in schools, to make them good ambassadors of the country. Some of them were born in suburbs and did not understand “traditional culture” as they were never involved in township life. She asked about Brand SA’s relationship with the Competition Commission. She asked for its opinion on whether the media in South Africa was patriotic enough to improve the image of South Africa.

Ms M Mafolo (ANC) asked for the racial representation of those in Australia who had negative views about South Africa, saying that they might be bitter people who left pre-1994 and continued to be bitter without understanding how the country had progressed. She had visited Oxford University as part of South Africa’s 20 years of democracy, where she was happy to meet many patriotic South Africans. She felt that Brand SA was not doing enough in Africa, and also in the Southern African Development Community (SADC) countries that had played an important role in the liberation struggle of South Africa. She was interested by Gauteng’s Citizen Responsibility Campaign and was happy with the partnership between Brand SA and Gauteng Provincial Government. She asked why it suggested that it would take more years to achieve a clean audit. She asked if it was vetting those in supply chain management. She also asked if Brand SA had met the mandatory 2% disability requirement.

Ms Shinn asked what the government needed to take on board during discussions it held with stakeholders abroad, and if the government was willing to listen.

Mr M Ndlozi (EFF) asked how Brand SA measured brand success, and suggested that the seemingly  heavy reliance on using investment as a benchmark was incorrect. Even at the time when there was the best of the best leadership, in the form of former President Mandela, investment levels did not change. People who had money in other parts of the world had other type of perceptions; they believed that Mr Mandela was a good person, but not good enough to manage their money, simply because he was black.

Mr Ndlozi asked what it was in South Africa that constituted collective pride. If such was there, he quipped that he could join members of the ANC in celebrating more about South Africa

Mr Ndlozi said Brand SA should have concentrated on the challenges it faced in “selling” the country abroad. The problems included police brutality, that was increasing, and the relationship between the government and the people. The report did not focus on the challenges it faced in marketing South Africa, and seemingly Brand SA did not even understand why it took the money. It should have noted that the corruption scandal around Nkandla, and the Marikana issue, was making it difficult to sell the country.

He asked how the crowd’s booing of President Zuma during Mandela’s funeral affected the South African brand. He asked if Brand SA played any role in Mandela’s mourning period. He wanted to know how was telling the story 20 years of democracy, as there had been no excitement and story to tell. He asked what Brand SA had done to bring South Africans together to share moments of pride over the past 20 years.

He asked for comment from Brand SA on changing the National Anthem to concentrate on the opening part only, which was a beautiful prayer of liberation. He was suggesting that because there were people in the Committee who felt that it must be taught every morning, which was problematic. He also wanted its opinion on singing SeSotho, Tswana and Zulu only in the National Anthem, as it was a mistake to include other languages in the anthem.  

Ms Kubayi noted, to Mr Ndlozi, that certain of the issues that he was raising were matters that would have to be debated by the politicians. He could not expect entities to comment on such matters, as they had no right or duty to give their opinion. The EFF could raise these matters at another forum, and the other parties would be able to respond.

Mr Ndlozi said he had asked that because he wanted to hear Brand SA’s view if it would be difficult to handle the rebranding.

Ms Moloi-Moropa confirmed that Members must not burden entities with political questions.

Ms Moroi-Moropa said there was a saying that “charity begins at home”, so she wanted to know how  Brand SA was helping the poor in accessing in-country tourism, which was very expensive. For example, many people who visited Table Mountain were foreigners. She asked if it was of the view that the prices for tourist attractions were reasonable for ordinary South Africans. She also commented that the entity needed to do more in branding of South Africa abroad. On her visit to Ghana with other parliamentarians, half of her time was spent on explaining to people what South Africa was all about.

She commented on her disappointment when she received, at a particular function, a gift that was made in China; whilst she understood that this product may have been cheaper, she asked where Brand SA featured in such incidences.

Ms Kubayi asked how Brand SA was responding to issues raised by the Auditor-General’s report, such as irregular expenditure and asked whether it had put mechanisms in place to avoid a recurrence.

Mr Ryland Fisher, Trustee, Brand SA said he had always valued the engagement with the Committee. He apologised that certain board Members were unable to be present.

Ms Kubayi said measures to cut travel expenditure had been introduced by former Minister of Finance, Pravin Gordhan, and there was not a problem in cutting expenditure.

Mr Fisher said that it was the prerogative of the President to appoint board members to Brand SA. The board was made up of people from various segments of society in South Africa. It was hoped that, through their collective input, they would help brand South Africa. The Board was currently reviewing the structure so as to identify the optimum number of board members.

Mr Matola clarified that Brand SA was not a marketing-specific sector agency. Its role was to market the brand of South Africa and the totality of this country as whole. Its main aim was to ensure the positive image and perception of South Africa in its entirety. It worked with sector specific agencies such as the Tourism Agency of South Africa and the Trade and Investment agencies. Its job was to bridge the gap between perception and reality about South Africa. The South African Tourism Agency marketed South Africa to South Africans inside South Africa.

He stressed that it would take much time to build a brand. It took a long time to come up with a logo to market South Africa abroad. Brand SA aimed to provide objective data about this country to potential investors and potential tourists. It would share the research that underpinned the work it did in the next engagement with the Committee.

Mr Matola said investor influence was a result of awareness and other fundamentals in this country especially the regulatory environment. The key determinants included labour relations, and investors did know there were strikes in South Africa. It did not sell the idea of potential forever, but also capabilities.

He confirmed that the country managers in United Kingdom and United States were employees of Brand SA. It audited its return on investment by assessing the coherence of the message about South Africa. It researched investor perception and the nation brand index, and reputation index helped in assessing that its message was being picked up.

He confirmed that Brand SA worked closely with GCIS, and this was how it was accessible to South Africa. In answer to the negative perceptions, he noted that he had cited Australia as one example. Perceptions differed across countries and expatriates in UAE, UK and USA had got different perceptions.  

Ms Alice Puoane, Chief Financial Officer, Brand SA, said the current staff consisted of 60% male, and 40% female, who were predominantly Africans. The points on disability were taken. 20% of the budget was spent on salaries in the past four years, 0.004% on consultancies and 0.2% on lead agencies, and 22% on administration. The other money was spent on office rentals and renovations.

Universal Service and Access Agency of South Africa (USAASA) 2014 Budget and Annual Performance Plan
Mr Zami Nkosi, Chief Executive Officer, USAASA, said USAASA’s history included non-delivery on targets, unscrupulous financial practices, lack of innovation, insufficient research, lack of stakeholder buy in, self-limitation of scope of work, and no longer term national plans in line with the mandate, and organisational fragmentation. However, there had been several interventions to address this and the present ones had resulted in a demonstrable ability to deliver on targets in fiscal year, a board resolution to adopt innovative practices, the recognition of and improvement of stakeholder support and an undertaking to review and deliver on national priorities. He also said USAASA had taken action on comments issued raised by the previous Committee.

In the 2013/14 financial year, USAASA had managed to connect 41 schools, commission broadband in Msinga Local Municipality, Emalahleni Local Municipality, and have an impact through 33 SMEs initiatives.

The 2014 strategic objectives included:
- Securing funding for financing USAASA projects for under-serviced areas
- Rolling out broadband infrastructure in under-serviced areas, with a particular focus on the provinces of Limpopo, Mpumalanga, Free State, Northwest, Northern Cape, KwaZulu Natal and Eastern Cape.
- Establishing partnerships for implementation of public and institutional connectivity, applications and content development, with a particular focus on schools connectivity and public access centres
- Developing USAASA’s research and monitoring and evaluation capacity
- Disseminating lessons and recommendations on ICT uptake and usage

Discussion
Mr Mackenzie said the presentation had not gone into any initiatives with the private sector beyond MTN and Vodacom, Intersite and Broadband Infraco, which had fibre underground. As a result, the government may end up duplicating the role of the private sector, instead of entering into partnership with the private sector. He knew of a company with 7.5km of optic fibre in the ground, of which 98% was underutilised, and was willing to share the name in private.

Mr Mackenzie asked about the criteria used to determine under serviced areas or municipalities, and assistance to schools. He asked whether there was mobile connection or/and fibre connections. He said there was a massive jump in the number of deliverables in the strategic plan and asked if USAASA had the capacity to roll out these deliverables. He pointed to a divergence of figures, as USAASA was mentioning a figure of 5 million digital terrestrial televisions (DTT) whereas Independent Communications Authority of South Africa (ICASA) had mentioned 8.5 million households.

Mr Davis said it was shocking that USAASA had 13 CEOs since 2008. He asked if the proposed collaboration with Media Development and Diversity Agency (MDDA) would help stabilise its work, and whether it was a good idea.

Mr Davis noted that the presentation highlighted the fact that USAASA had managed to connect 41 schools instead of the targeted 30. However, given that there were 24 000 schools in South Africa, he asked how long it was going to take to connect the remaining ones.

Mr Davis thought the R240 million spent on 2 million Set Top Boxes (STBs) was too much and asked if it was unfair to regard it as wasteful expenditure.

Ms Shinn said USAASA had “lost its way”. It had taken itself as the nation’s broadband infrastructure “guru” in this country. She asked who did research for it. She asked if it was in conflict with SA-Connect and the Broadband Council, and if there was communication with the Broadband Council, which had been doing the work that USAASA was now doing. She said broadband was unlikely to be found in rural areas for the next 10 to 15 years, and there was no electricity. She asked how many private sectors and national departments were involved in rolling out broadband in schools.

Ms Mafulo commended the entity for the work it was doing. She was happy that it was addressing matters raised by the Auditor-General (AG). She asked if it was covering all provinces to avoid over concentration in one or two provinces.

Mr Tseli lauded the entity for coming with commendable interventions against issues raised by the AG. He asked if it was able to utilise the whole budget allocated to it. He asked how many jobs it had created in the projects in which it was involved. He appreciated that it was targeting schools with disabilities. He asked if it had complied with the 2% disability target, and the gender balance across the organisational structure, as it was not sufficient to claim balance in the lower levels only. He suggested that USAASA must target the offices of traditional leaders as they had become centres of service provision, especially in Limpopo.

Ms Tsotetsi said that USAASA had an impressive performance plan, but asked if it had capacity to implement those proposals. She asked, particularly given that it was already half-way through the year, whether the proposals were realistic and asked what had been done thus far. She asked if it held exit interviews for introspection, to develop mechanisms to meet the challenges in staff turnover. She asked who was responsible for the wellness of employees, and asked if USAASA had employed an occupational therapist, psychologist or social worker. The performance of an entity was based on the wellness of employees.

Ms Maseko cautioned Members and presenters from using the term “people living with disabilities” as the correct term was “people with disabilities”.  

Ms van Dyk asked how USAASA was going to be able to achieve its strategic targets, taking into consideration its risks.

Ms Kubayi said the Legacy Report ha noted that the previous Portfolio Committee had visited a site where USAASA was supposed to have installed 24 computers, only to find 10. She asked if the strategic plan developed was in line with Section 82 of USAASA Act. She asked the progress made in identifying beneficiaries for set-top boxes. She was concerned with whether it met its own human capital requirements, given that the staff totalled only 67; she understood that it had an office in each province, and asked how the numbers affected its ability to deliver on its mandate. She said the past performance left a lot to be desired. She said the entity had to deliver on its mandate, taking into consideration its resources, capabilities and budget. She was worried about the risks in the strategic plan, which would impact on it delivering its mandate. She wanted an explanation of the institutional framework “which did not make sense”, as this could be a bottleneck to decision making and effective work.

Ms Moloi-Moropa was also concerned with the 10 computers observed on site as against the 24 expected, during the oversight to which Ms Kubayi had referred. She asked if its investment trends were in line with the Broad Based Economic Empowerment (BBBEE) principles. 

Ms Pumla Radebe, Chairperson, USAASA said the merger between USAASA and MDDA was work in progress. There was alignment of USAASA’s broadband work, as it would be unthinkable for the board to allow USAASA “to work in a jungle”. USAASA had attended a strategic meeting with SA-Connect, on the policy of government. She confirmed that the appointment of board was done by the Minister, and the Board would then appoint the Chief Executive Officer, with approval from the M/minister. The CEO in turn appointed other executive staff, in consultation with the board. All the other appointments below that level were done by the CEO.

Ms Makhotso Moiloa, Head:Corporate Affairs, USAASA, said that private sector investment in broadband was predominant in urban areas where there was guaranteed return on investment. USAASA was mandated by law to service under-serviced areas, which typically were rural areas. There was little or no investment in rural areas. The criteria for selecting under resourced areas was based on points of presence for 2G and 3G networks. The enabled USAASA to identify a market gap and stimulate the private sector to tap in. The current access for Limpopo was at 53%, and it was necessary to incentives that until it reached 100%. Limpopo, Mpumalanga and North West had the greatest market gap in 2G and 3G presence. The network roll out was done with a combination of fibre optic and mobile, based on the terrain of the province and region. She noted that USAASA still had retrospective funding in its account for DTT.

Mr Nkosi said the question on the 10 versus 24 computers had been resolved. All the installations done had been verified by three sources, with the internal audit, independent people and the CEO himself and CFO periodically visiting connected sites. The second mechanism was to test connectivity at schools to check the actual connectivity. The Auditor-General’s report did not mention any schools or labs that were not connected.  USAASA had a template of progress which allowed it to check the progress of connectivity, based on certain time lines. Above all, after an installation was done at a school, the principal would be asked to sign and acknowledge receiving computers, projectors and connectivity. The main challenge was when, after training and connecting a school, schools did not use the computers.

Mr Nkosi confirmed that In terms of procurement, 80% was done through BEE companies, 25% to women-owned companies and a specific target was given for youth organisations. The project of procuring set-top boxes was managed from DOC, but the money was sitting in the USAASA account.

He noted that USAASA would develop a turnaround strategy which would be shared with principals and stakeholders, and that this needed to be done to close the access gap.

He confirmed that, on a quarterly basis, the CEO, and Internal Auditor and the Risk Manager, would assess the progress made with regard to risks and their management. He confirmed that there was indeed capacity to implement the projects, and reminded Members that USAASA did not necessarily do the work itself but would use section 88 of the USAASA Act and allow other people to apply for funding and implement the project on USAASA’s behalf. It was important was to have good planners, good engineers in telecommunications and telecommunication to interpret and implement the plan and people who knew project management. USAASA would ensure that implementation was done according to agreed specifications.

Mr Nkosi commented on the broadband frontiers, and confirmed that most of the network operators did not go to areas where it was not profitable for them to do so.. USAASA’s responsibility was to stimulate and incentivise the private sector to go to under-serviced areas, especially government departments. It was not holding itself out as the “network infrastructure guru” in the country. Again, he referred to section 88 of its Act, which said that USAASA, using the Universal Service and Access Fund (USAF) must stimulate the construction and extension of the broadband network. It was compelled by the Act and was working closely with SA-Connect. It did not do anything outside its legal mandates.

Mr Nkosi confirmed that the cost of R10 million to connect schools involved the cost of computers, servers and the payment for two years after installation, including other identified sites. R6 million went to connectivity. It had moved from putting conventional computer labs in a school. It now put in a connection point through 3G or VSP, and provided each and every child from grades 8 to 10 with a gadget to download e-books and the curriculum. This had been tested in Soweto, and it was working for everyone, in the precincts of the school, was connected. This would eradicate the syndrome of scholars not being able to get their books on time. The funds made available were not sufficient to do the expected work, but it did the best with the little it had. It had started with projects in Msinga and Emalahleni. ICASA had never done a broadband project in Msinga and Emalahleni.

Mr Nkosi confirmed that in previous years, USAASA had not delivered what it was expected to deliver since the creation of the entity. However, he was pleased to say that it had developed a turnaround plan, starting to focus on the necessary matters, namely, to roll out broadband in schools and government institutions. It had made mistakes in the past, but it had corrected them and now had a plan that differed from those it had presented before.

Mr Nkosi confirmed that, in terms of timing, it would take five days to connect 15 schools, but it had not done so yet, because the USAF funds were transferred late, on 28 June 2014. By the end of this month USAASA would see to it that the schools were connected. He commented on capacity to spend, saying that in the last financial year all money on school connectivity was spent, and money was given as a roll over. Two broadband projects would be paid by the end of this month.

South African Post Office on its Budget and Annual Performance Plan (2014/15)
Mr Christopher Hlekani, Group Chief Executive Officer, South African Post Office, said that in the last year, labour instability had led to the brand erosion of SAPO. Moving forward, SAPO would re-align its internal governance, transform its enablement capability, drive commercial and financial discipline,  and address corporate culture and internal transformation. The key issue was the corporatisation of the Post Bank, which required R1 billion, for which R481 million had been provided by National Treasury. The difference was to be funded by SAPO.

Discussion
Mr Tseli said the envisaged loss of R7.3 million was worrying. He asked if SAPO had particular mechanisms to mitigate the situation, and said he had asked that question because its strategic plan which revealed lack of proper functioning. He asked for measures put in place to mitigate break-ins by armed criminals.

Mr Mackenzie asked whether SAPO could try using small shops in villages as sub post offices, as was the case in rural UK. He said his Post Office (PO) box was locked with a small key, that he had paid a renewal fee of R350, only to be told that he had not renewed the box and must collect his mail from the nearest post office. He asked if this situation could be addressed.

Mr Mackenzie pointed out that although PostNet charged higher than the SAPO, at least it was more visible – for instance, in Fourways in Gauteng, there were four Post Net offices close to each other but only one Post Office. Mr Mackenzie asked what communication products and digital services the PO aimed to provide.

Ms Shinn wanted an explanation on the progress made with regards to funding the universal service obligations of SAPO, either from DOC or National Treasury. She wanted an explanation on the challenges of urbanisation to SAPO, and asked what mechanisms it had put in place so that its services moved with people’s needs. The major challenge had been the striking of casual contracted employees, and she asked whether the strikes were to end any time soon.

Ms van Dyk asked how SAPO would address access by the disabled.

Mr Kekana wanted to know about performance management, saying that it had never been done in the last two years. He asked how SAPO was compensating employees. He asked how much was spent on capacity building. He appealed to the financial division within SAPO to come up with a full and detailed report, after the budget vote.  He asked for the number of post offices in South Africa. He asked for the number of vacant posts, asked what recruitment methods it used, the number of acting posts and when it intended to finalise these with permanent appointments. He wanted to know what was the sample size, for the 2009 customer satisfaction survey.

Ms N Ndongeni said the financial statement did not specify which assets there were, and whether they took the form of buildings or cars.

Ms Maseko asked if people who worked in supply chain management in SAPO had been subjected to vetting. She asked when it would comply with employment equity of 2% people with disabilities. She asked when the Post Bank would be fully functional, as it would be able to deal with people who did not have the opportunity to apply for loans from commercial banks. She asked why people opted for expensive courier services like DHL, when once SAPO had been an efficient courier services. She was worried by the level of strikes in the SAPO, and asked for mechanisms to engage with the unions on a longer term, perhaps over two years, to avert strikes.

Mr Ndlozi was concerned with the question of labour brokers and employees who were put on one year contracts. He asked if there were mechanisms to stabilise labour at the SAPO. He asked why SAPO contracted with G4S, which was a security company complicit with the illegal occupation of Palestine by Israel, as it had run a prison on behalf of the Israeli regime.  He said SAPO could not be seen doing business with companies violating human rights internationally and breaking international law in Palestine.

Ms Kubayi said it was important for SAPO to put matters to rights, where they needed to be. She was concerned with issues raised by the Auditor-General, which hampered the organisation from functioning effectively. She asked if SAPO was considering alternative modes of funding, rather than relying on government grants, which was not easy in the current economic situation. She urged SAPO to engage with sister departments in delivering services. She was worried with mandates remaining on the agenda whilst funding for them had been withdrawn. She asked whether SAPO was engaging with National Treasury on issues that had to be clarified by the Reserve Bank, in order to get a licence to ensure smooth corporatisation of the Post Bank. She urged SAPO to find ways of retaining customers by giving those services they expected. She asked if SAPO envisaged that there would be job losses in its turnaround strategy. She wanted an explanation on current liabilities. She wanted to know what was happening with its licence, with ICASA. She said there were a number of issues that did not give comfort for the Post Office, and the Board would have to attend to these.

Mr Hlekane said that SAPO, with leadership of the board, had started looking at ways to unbundle its information technology infrastructure roll out. The first phase was to isolate Post Bank, the second phase was to have a disaster recovery on the same site, and SAPO was now at the phase of moving the disaster recovery system to a different site. However, there were other key components such as the networking process, which had to be looked at, to minimise redundancy.

The approach that ICASA had taken when licensing was to allow a certain component of mail to be allocated to SAPO. The challenge was that there was no parity between what it needed to fund, and revenue that it could generate, and that gap had been filled by the subsidy component. The question was now how to fund the unserviced subsidy element, and he suggested there were two ways to do The direct one was that National Treasury would allocate to SAPO what it required. The second option was to look at SAPO providing other government based services - for example, delivering text books. It was working with ICASA on balancing the rollout to make sure there was enough oversight on the reserved component. The other option was that SAPO be given an opportunity to do business with government, to enable it to strengthen revenue.

He explained the rollout and said that the outlets were in line with ICASA requirements of having an outlet where there was 22 000 population density, or within a radius of 5km. Currently, it had to look at opportunities that the retail outlet offered, such as medical distribution services, of chronic medication in particular.

The commitment on the DTT was to build capability to be able to support the DTT project, and so SAPO was working closely with all agencies related to the DTT project. It had put together capabilities and funding for the programmes which would support DTT roll out and distribution of set top boxes.

Speaking to the employment issues, Mr Hlekane said that the Board, in July 2012, took a resolution that labour brokers would not be used, and from that time there was a change whereby labour broking was replaced by contracts. The contracts were inward-looking, to benefit the employees. SAPO did have temporary employees, mainly for distribution, and they worked in the morning and not in the afternoon. It contracted such employees in a manner that allowed it to meet its funding obligations and that was where its segment of temporary employees fell. it was looking to a long term sustainable and stable labour option. However, he said that it must be appreciated that SAPO was working on changing labour relations requirements

Ms Khumo Mzozoyano, Chief Financial Officer, SAPO, took note of the comment that SAPO should not just note percentages, but also show the actual figures. She said that the current assets included banking cash, receivables and inventories. The vetting processes in terms of supply chain management had started in 2013. SAPO did not have money to fund capex needs, and that was why it had put forward borrowing as a plan.

In the previous financial year, SAPO had received an unqualified report from the AG. The concerns that the AG raised was around SAPO operating for the first time without a subsidy, and whether the SAPO would be able to continue without funding support. SAPO had a programme to regularise its irregular expenditure. The fraud noted by the AG was detected internally.

Another SAPO representative said that SAPO was working with several bodies, such as the DOC, National Treasury, and was also sitting with the Director-General to finalise the steps for obtaining a banking licence.

Ms Hlamanani Manzini, Acting Chairperson, SAPO, said that issues raised by the Committee would be closely looked at.

Other Committee business
Ms Kubayi noted that the Committee Staff would put together a report to be presented on Friday, and Members would adopt it with any necessary amendments, after receiving it on 10 July. The budget vote would take place on 15 July 2013.

The meeting was adjourned.