Department of Telecommunications and Postal Services on its 2013/14 Annual Report, with Deputy Minister

NCOP Public Enterprises and Communication

05 November 2014
Chairperson: Ms E Prins(ANC)
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Meeting Summary

The Department of Telecommunications and Postal Services, with input also from the Deputy Minister, presented the 2013/14 Annual Report, emphasising that the task of the Ministry and Department was to ensure South Africans had access to modern technology. The major successes as well as the under-achievements in the year under review were outlined. Two of the four Bills that had been brought to Parliament by the former Department of Communications (some of whose functions were now within the new Department of Telecommunications and Postal Services (the Department) were had been signed into law. Connectivity had been achieved in 1 650 schools, as a spin-off from the World Cup Legacy project. The appropriated funds were R2.3 billion, and the total revenue was R4 billion. A breakdown was given of the entities which received transfers, and the amounts. A Green Paper was released in the previous year and currently a discussion paper was being drafted. Extensive visits by the Ministry and Department to all provinces had highlighted the need to bolster small businesses through ICT, and to provide key government services through public entities such as the Post Office. Other achievements included training workshops on the Small Medium Micro Enterprises (SMME) e-commerce platform, in four provinces, and the submission of unaudited financial statements to the external auditors for all entities. However, it was noted that the Department had been unable to submit the International Telecommunications Regulations to Cabinet for approval, and there were delays in the roll-out of the Broadcasting Digital Migration (BDM) public awareness programme. Key matters raised by the Auditor-General were noted and some of the plans put in place to address them were outlined. The Deputy Minister also gave a brief update on the SAPO and its entrance into the financial services arena, and the EU and South African dialogue and Finnish government initiative.

Members were appreciative of the presentation, and noted that some of the entities that had presented in the previous week had not been particularly helpful or well-prepared, and there was a need for this Department to work well with departments doing related work. A Member suggested that this Department should, as the former Department of Communications had done, continue to give six-monthly presentations, to check ongoing progress on programmes, and hoped that there would not be any continuing confusion over the division of work past this date. They urged that specific plans and actions be specified, rather than general terms. They questioned the slides on financial performance, asking that written information be provided on some of the figures and the re-allocation of funding from the Cyber-Security Hub. They also questioned the vacancy rate, noting that it should not be more than 10%, and noted the response that a "clean-up" of the organogram was being done. They also questioned the policy on overtime, commenting that it was high, particularly for certain classes of employees, asked about long-standing acting posts and when they would be filled, and also raised serious concerns about the use of consultants, pointing out that they appeared to be doing the work that the Deputy Director Generals had been hired to undertake, that they were not necessarily seen to pass on knowledge and that the top structures of the Department also seemed to be bloated. They also questioned whether people were signing performance agreements. Members wanted to know the priorities in relation to broadband, asked whether regulations had been received from the International Telecommunications Union, wanted to know more about the awareness campaign for digital broadband and how the small enterprises involved in the Department's projects were spread. They also asked for more detail on the e-skills training programme, employment equity,  the investigation into the media contract and expressed concerns about the South African Post Office strike. The Committee adopted minutes of meetings on 27 August and15 October.

Meeting report

The Chairperson noted the apology of the Minister, Dr Siyabonga Cwele and apologies from Members.

She thanked the Department of Telecommunications and Postal Services (the Department) for sending the documents for this meeting in time so that Members could go through them.

Deputy Minister of Telecommunications and Postal Services introductory remarks
Prof Hlengiwe Mkhize, Deputy Minister of Telecommunications and Postal Services, thanked the Committee for the invitation to this meeting, and said that the most important task that the Department faced was to work with the Committee to ensure that South Africans enjoyed access to modern technology. Telecommunications was one of the critical infrastructures needed to grow the economy. She mentioned the policy framework established while the department was under the stewardship of the previous Minister, Mr Yunus Carrim.

She highlighted some of the matters in the Annual Report. A Green Paper was released last year and currently a discussion paper was being drafted, and would be made available, in due course, to the public for comment.

One of the findings gained from an extensive visit to all nine provinces by the Ministry and Department was the need to bolster small business through ICT. Another key issue was provision of government services via public buildings such as the Post Office. One of the legacy projects of the World Cup 2010 was school connectivity. Four Bills were brought to Parliament, in relation to electronic communications, the Post Office and the work of the Department of Communications last year, and the President had assented to two. She noted that the Director General of the Department, Ms Rosy Sekese, had institutional memory of the policies of the Department of Communications, and had worked with the previous Minister and portfolio.

Ms Sekese thanked the Deputy Minister and briefly outlined what her presentation would cover. She noted, as background, that there were four proclamations following the establishment of the new Department of Telecommunications and Postal Services, which was continuing now to handle certain functions that were originally under the previous Department of Communications.  She gave a list of all its programmes and its key achievements (see attached presentation). She also noted that there were some under-achievements.

The achievements included the four bills brought to Parliament, two of which, the Postbank Amendment Bill and the South African Post Office SOC Ltd Amendment Bill, were signed into law. Other achievements included training workshops on the Small Medium Micro Enterprises (SMME) e-commerce platform, which were conducted in four provinces, and the submission of unaudited financial statements to the external auditors for all entities. The under-achievements included the Department being unable to submit the International Telecommunications Regulations to Cabinet for approval, and the delays in the roll-out of the Broadcasting Digital Migration (BDM) public awareness programme.

Ms Sekese spoke to connectivity, and said that connectivity to the Wide Area Network was completed for 1 650 schools across the nine provinces. There were more projects carried out in some provinces. One example was that in Limpopo a computer laboratory was installed, with internet connectivity to 23 computers at a high school.

Dr Sam Vilakazi, Deputy Director General: Administration, Department of Telecommunications and Postal Services, continued with the financial presentation. He noted that the total revenue was R4  billion, of which R2.3 billion was comprised of the appropriated funds. 70% of the budget was made up of transfers to entities. Some of these entities were SABC’s Digital Migration Project which received R76 million, International Telecommunications Union, which received R10  million, and the .za Domain Name Authority, which received R1.5 million.

Mr Farhad Osman, Chief Director: Strategic Planning and Monitoring, Department of Telecommunications and Postal Services, noted that the Auditor-General (AG) had raised a number of key matters during the audit process, including the timeous payment of suppliers; human resources management needs, particularly the filling of vacant posts; upgrading of the IT infrastructure; detection of irregular expenditure, and the need for a review of departmental policies and procedures.

The Chairperson thanked the Deputy Minister and the Department, and pointed out that when some of the entities had given their presentations to the Committee, in the preceding week, the Committee had found them not helpful, nor were they well-prepared. She noted that this Department and the Department that was dealing with other matters from the former Department of Communications should strive to work better together. The information and presentation given today would help the Committee with its oversight.

Mr M Rayi (ANC Eastern Cape) said it was difficult to see which work belonged to the Department of Communications, and which had been moved over to the Department of Telecommunications and Postal Services. He said that when reporting in six months’ time, there should be no confusion. There were areas where the Department acknowledged challenges and gave an action plan, but it was not, for example, sufficient for it to say "has been capacitated (in relation to human resources) - there had to be substantial and documented evidence of what had been achieved or put in place.

Mr Vilakazi said that there were some capacity constraints in terms of human resources. The Department had identified all the critical positions that had to be filled, according to the mandate of the Department. This structure, however, was bigger than the resources that had been allocated. The Department thus had to work with the allocated resources and decide what were the main priorities. All the Deputy Director Generals had gone through this process.

Mr Rayi asked, in regard to the admitted delays with implementation and time frames, whether it was possible to say how those would be addressed, and what the problems were.

Mr Vilakazi said that there were internal controls and a framework action plan had been developed. For instance, where there had been formerly been problems with the payment of suppliers within 30 days, it was now being monitored on an ongoing basis.

Mr Rayi noted that the slides on the financial performance were not clear, and no explanation was given for the actual expenditure, and variances. He noted that the compensation of employees’ budget, and the goods and services budget needed to be clarified. He wanted to know why the amounts for goods and services were higher than amounts for compensation of employees. He also noted that the National Cyber Security Hub had money reallocated, asked why, and what the priority projects were that took precedence over this hub.

Mr Vilakazi replied that on page 149 of the Annual Report, there was a more detailed breakdown of figures. On slide 32, under "Administration" there were three components. Then, linked to projects, were the salaries - for example, as the first component. In some programmes there were savings and that table explained how the variances were arrived at.

Mr Rayi commented that the vacancy rate was high. In the presentation, Mr Osman said that it had been reduced from 34% to 11%. His understanding was that it should not be more than 10%.

Mr C Smit (DA, Limpopo) asked about the comment that the vacancy rate was reduced to 11%, because elsewhere in the Annual Report there was reference to 19%.

Ms Sekese said that there was progress, but all the appointments have to go through the Department of Public Service and Administration process. The main upcoming appointments were for a Deputy Director General and a Chief Director. Mr Vilakazi had said that, when dealing with vacancies that were not funded, the vacancy rate would appear higher. A “clean-up” had been done, whereby only the vacancies that were funded were now taken into account in the calculations. The actual current  vacancy rate was 11%, but it would go as low as 6% after the “clean-up” and the immediate filling of vacancies.

Ms C Labuschagne (DA, Western Cape) asked whether there was a written policy on overtime.

Mr Smit said it was noticeable that overtime claims were taking place at certain skills levels, and asked what was the reason for this.

Mr Vilakazi said that overtime had to be reviewed, because there was an element of abuse. The Department issued a directive to stop overtime, because that time spent was part of the officials’ regular work.

Ms Labuschagne asked what was the plan of action for officials who had held acting positions (often in higher level posts) for longer than six months.

Mr Vilakazi said that posts must be advertised immediately that they became vacant.

Ms Labuschagne asked if the delegation could give reasons for some senior managers not signing performance agreements.

Ms Sekese said that when managing performance, there were certain issues with officials, and one such issue was the failure to sign the performance agreement which, after an involved process, could even lead to withholding salary. There was a disciplinary process under way as a result of disciplinary conduct.

Ms B Masango (DA, Gauteng) wanted to know, with regard to broadband, whether the approaches as outlined in slide 8 were stated in any particular order.

Mr Tinyiko Ngobeni, Deputy Director General: ICT Infrastructure Support, Department of Telecommunications and Postal Services, said that broadband issues were inter-related, although there was a focus on different aspects. The Department was currently following through what needed to be put in place in terms of infrastructure.

Ms Masango asked, in relation to slide 14, whether the International Telecommunications Regulations had been received from the International Telecommunications Union (ITU).

Ms Masango asked, on slide 17, whether the 100 small enterprises (SMMEs) were spread across the provinces and, if so, how they were spread.

Ms Masango noted that slide 18 talked about the awareness campaign in relation to Broadband Digital Migration (BDM). She wanted to know how the campaign was progressing. She also wanted to know the status of the dispute referred to in slide 19 that had affected the BDM public awareness programme.

Ms Masango asked how far the e-skills training programme had gone.

Mr A Singh (ANC, KwaZulu Natal) asked by when the vacancies would be filled.

Mr J Parkies (ANC Free State) referred to page 15, and asked what informed the Department with regard to employment equity and the employment of disabled persons.

Mr Singh asked about the extensive use of consultants.

Mr Parkies asked why consultants were being used to do the work of the Deputy Director Generals, who were well paid and should be doing the work themselves. These consultants were not transferring their skills to the Department. He asked whether there was a time frame for them to complete their work, and why internal capacity was not being used, pointing out that it would be a major concern if the Department was reliant on consultants.

The Chairperson stated that the human resources structure of the Department was top-heavy. She too pointed out her concern that consultants were being utilised, when there were officials who were capable of doing the jobs internally. This seemed to suggest that in effect the top structure could be done away with and be replaced by consultants.

The Deputy Minister replied that consultants were brought in for a particular purpose, and worked closely with the Deputy Director Generals. Their work was for a limited period of six months. She fully agreed with Members on the use of consultants, in particular that the Department must have its own competent officials and that it was expensive to make use of consultants.

Mr Vilakazi said that R417 million was spent for the use of consultants. The bulk of this money went to Telkom, and was linked to connectivity issues, but it was unavoidable that this amount had to be noted on the books of the Department.

Mr Rayi said that, as was the case with the former Department of Communications, a six monthly report by the Department should be presented to the Committee. He cited that although the time frame on broadband was stated as 2015, the Committee did not want to wait for reports until then, but wanted to hear progress reports regularly from the Department as it worked to the deadline.

The Chairperson asked how far the investigation into the media contract had gone.

The Deputy Minister replied that, according to the report from the former Minister, the matter was outside of the control of the Department, and there would be a report from the President.

The Deputy Minister also wanted to update the Committee in relation to the South African Post Office (SAPO), saying that the Reserve Bank, as a regulator, set criteria for all entities entering the financial services area. The Reserve Bank was progressing well in this regard. She said that all over the world the post offices had gone through the same process.

Mr Vilakazi noted that 65% of the SAPO's current business was from mail. Some of the outlets were not profitable. Some of its services would have to be funded.

Ms Mameetse Mphahlele, Head: ICT Review Project, Department of Telecommunications and Postal Service, gave some information on the European Union (EU) and South African dialogue. As a result of a summit held in Tunisia, on how countries could become part of the global society, and aim to empower, communicate,and participate, the Finnish government had set in motion a plan to the value of 4 million euro. This was a five year plan and helped to showcase what the global information society was all about.

The Chairperson said the Committee continued to be concerned about the Post Office strike, which had now been going on for twelve weeks. She wanted to know what intervention had been made by government, if any.

Mr Rayi said that he would prefer written responses to some questions today, for example, the question on the Hub.

The Chairperson agreed that receiving written responses would be useful and appropriate. This was particularly useful as a way to follow up questions.

She thanked the Deputy Minister for tackling a difficult task and wished the Department well.

Adoption of Committee minutes
Minutes of the previous meeting held on 27 August 2014 were adopted, with an amendment to the spelling of the name of Mr C Smit.

Minutes of the meeting held on 15 October 2014 were adopted, also with an amendment to the spelling of the name of Mr Smit.

The meeting was adjourned.

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