National Lottery Fund: briefing by the Department of Trade and Industry

Meeting report

PORTFOLIO COMMITTEE ON SOCIAL DEVELOPMENT
25 September 2002
NATIONAL LOTTERY FUND: BRIEFING BY THE DEPARTMENT OF TRADE AND INDUSTRY

Chairpersons: Mr Saloojee and Dr Davies

Documents handed out:
Presentation by the National Lotteries Board

SUMMARY
The Department of Trade and Industry briefed the Committee on why lottery funds had not been fully distributed to the public's expectations. The Committee not convinced and attributed the delay to sheer negligence and unwarranted inefficiency of the Department of Trade and Industry. The Department responded that they were in the process of letting the public access information on the fund through posters and fliers

MINUTES
Ms Ludin: Deputy Director General of the Department of Trade and Industry gave a presentation on the background, history and legislation governing the National Lottery Fund. She acknowledged the delay in the distribution of funds accruing from the National Lottery. She presented statistics of funds that had already been distributed to charity organisations and other qualifying organisations. She argued that the distribution of the funds was nevertheless impressive by international standards and also taking into account the constraints that they faced in distributing funds. She concluded her presentation by recommending some steps to be taken in order t fill the gaps and backlogs and she emphasized that the law needed to change in order deal with the issues.

Discussion
Mr Van Jaarsveld (NNP) wanted to know what the distribution criteria were for distributing funds to the RDP fund and the miscellaneous category.

Ms Ludin explained that firstly, the RDP fund did not exist anymore. Secondly she explained that the problem was that there was no distribution agency and hence the National Lotteries Board was being used as an interim distribution agency. Finally she explained that the funds still existed and would be distributed.

Ms Kalyan (DP) was outraged that so little of the funds had been distributed in the face of poverty in South Africa. She was shocked to learn that the RDP fund did not exist at a time that it was most relevant. She was also stunned and annoyed by the high rejection rate of applicants for the funds and wanted to know what the Department was doing about.

Ms Ludin agreed that the rejection rate was high. She added that some educational materials were being distributed to educated prospective applicants on how to apply. She however reckoned than on evaluating the impact of the education, the department though there was a need for more education.

Ms Kalyan (DP) also wanted to know the Sunday Times report was true that for every one rand only three cents was distributed to the public.

Ms Ludin denied the truth of the article and maintained that probably Sunday Times and the Department had not been doing the same calculations.

Ms Mars (IFP) wanted to know how soon the law would be amended to reduce the rejection rate.

Ms Ludin had no specific or estimated time except that the Department would try to expedite the amendments of the legislation governing the distribution of the funds.

Ms Ramotsamai (ANC) was annoyed by the fact that none of the issues regarding the lottery funds had been resolved since the Department made a presentation on a previous occasion. She reckoned it was a waste of time and showed the lack of commitment by the Department to distribute funds to the poor majority. She observed that the list of charity organisations that had been receiving funds were already established and well off whereas the needy organisations did not feature anywhere. She suspected that all the organisations that were rejected were the very needy ones. The lottery funds did not reach grassroots people who were the very ones supporting the lottery.

Ms Ludin agreed that applications by needy organisations were rejected, and she explained that until the law changed, the Department could not do otherwise. She made an example that one of the requirements for funding was that organisations had to be registered as NGO's with the Department of Social Development.

Dr R Davies (ANC) observed that there was too much surplus in the financial statements of the National Lottery Board. He asked if there was any programme to distribute the surplus.

Ms Ludin did not allude to any programme to deal with this R1.2b surplus.

Dr Davies reiterated Ms Motsamai's point that the Department was funding organisations that were better off and neglecting needy ones. He asked if the Department had done a study on the net social cost of the lottery.

Ms Ludin reckoned that such a study was a good idea but that it was not undertaken. She however, added that there was a study on the impact of gambling including the lottery.

Ms Chalmers (ANC) wanted to know if the Department would publicly refute the Sunday Times report the previous week, which discussed the poor payouts from the lottery fund.

Ms Ludin explained that the issue was not just about refutation and denial but also about how facts were put across.

Ms Chalmers (ANC) observed that the distribution of the lottery funds was not transparent.

Ms Ludin agreed and said that the Department was in the process of letting the public access such information through posters and fliers.

Ms Chalmers asked why the miscellaneous category funds were not distributed for disaster relief. Ms Dlamana (ANC) asked the same question.

Ms Ludin explained that it was used for disaster relief in the first year of operation.

The Chairperson calculated that only R1billion had been distributed out of R9.3b worth of the lottery tickets sales. He wanted to know why that money was not used to employ more staff for the distribution of funds.

Ms Ludin explained that the shortage of staff was not within the Board but with the distribution agencies because it was difficult to employ them on a permanent basis. She promised that the department would look into the issue of how best to utilize and employ staff for the distribution agencies.

Mr Da Camara (DP) said that he did not share the optimism of Ms Ludin. He reckoned it was unacceptable that so little money was being distributed. He asked how many charities received funds out the 3500 charity organisations.

Ms Ludin said that it was 1240 but that she had no interim statistics for this year.

Ms Southgate (ACDP) clarified that her party did not support gambling but that it would assist in the distribution of funds to benefit poor people. She expressed her anger at the way the Department had failed poor people. She also suspected that the well off charity organization had more that one source of funding and yet the department was giving funds to them. She wanted to know if the department had any mechanisms to determine if an organization had more than one source of income.

Ms Ludin said that there were no such mechanisms.

Ms Tsheole (ANC) demanded an elaborate and detailed report next time the Department makes a presentation on the issue. She also suggested that the Department must have projected figures for the sustainability of the funds. Finally she added that the parliamentarians should have access to material such as application forms for funding so that they give them to the public and can make recommendations. Ms Ludin acknowledged the proposal.

Dr. Jassat (ANC) suggested that HIV/AIDS programme should be made a special and separate project for funding.

Ms Ludin agreed about the importance of HIV/ AIDS programmes and that they would look into that issue.

Mr Lockey (ANC) was not impressed with the progress of the distribution of lottery funds and that there was no effort to deal with the issues. He said that after listening to the presentation, the Sunday Times report was almost confirmed.

Prof Mbadi (UDM) expressed his unhappiness about the lack of distribution of funds and that there was an imbalance in the distribution, favoring urban to rural areas.

Ms Ramotsamai (ANC) asked if there would be decentralization of funds.

Ms Ludin said that twenty percent of the fund would be decentralized

Ms Kalyan suggested that education about the lottery funding should be placed at the back of lottery tickets. She also wanted Ms Ludin to explain the new Daily Lotto, which was a new game.

Ms Ludin was not sure and she promised that the matter would be reviewed.

The meeting was adjourned.