Department of Telecommunications & Postal Services on its 2015 Annual Report; ITSO agreement Article XII ratification

NCOP Public Enterprises and Communication

25 November 2015
Chairperson: Ms E Prins (ANC, Western Cape)
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Meeting Summary

The Department of Telecommunications and Postal Services (DTPS) presented its Annual Report for 2014/15. This Department had taken over, from the Department of Communications, the state-owned entities  Broadband Infraco and State Information Technology Agency. Highlights of the year included the development of a National Integrated ICT Policy Green Paper. The ICT policy review had started in 2012 and although a recommendations report had been developed, the draft White Paper was not yet finished because of an extension to the deadline occasioned by the high level of response. Other activities included a  benchmark study on mobile data pricing, partial achievement of the National Address System by way of a concept paper being drafted, and a draft policy developed. The Community Broadcasting Growth Strategy was partially achieved, as the Presidential Proclamation had impacted on mandates and functions. The ICT Broad Based Black Economic Empowerment (BBBEE) Council had been established and was now functioning. More work was still needed on the draft national e-strategy. It was accepted that the cost to communicate was too high, and not transparent, but it was hoped to improve this through the policy directive on price transparency and premium content that was with Independent Communications Authority of South Africa (ICASA) at the moment. DTPS was also making a study and recommendations on mobile data pricing. Another study looked into national roaming, and an internet strategy was developed and approved. Material and information on SA’s ICT sector and military heritage was fully achieved through a website, the ICT Capacity Development Programme on Information Ethics was fully achieved and the ICT agenda partially achieved across three spheres of government. A draft deployment policy for digital readiness had been presented and it would then be incorporated into the integrated ICT policy. R200 million had been allocated for digital development for the 2015/16 financial year. New incumbents had been appointed to the posts of Chief Executive Officer and Chief Financial Officer at SA Post Office and a new board was approved. The corporatisation of Postbank was still awaiting approval from the Reserve Bank. In this year, the DTPS had spent 97.5% of budget.

Members were not entirely happy with the progress, commenting that morale must be low, particularly in the SA Post Office, and the fact that salaries were not being paid was a major problem for which nobody seemed to be taking full responsibility, and stability had to be achieved quickly. Members asked about the impact of the split of functions, and wanted to know more about the reasons why policy directives were not finalised and the delays cited. They urged that school projects to provide ICT must be prioritised and hastened. Members questioned whether the criteria for Postbank did not affect the whole point of trying to have a bank with low cost and easy accessibility. They felt that small black enterprises needed more support. Members were worried that telecommunications pricing was exorbitant and wanted to know why it had taken so long to get the pricing regulations prepared. They asked for reports on the BBBEE Council and any opposition to it, and stressed that vetting was an essential part of the processes. Members suggested that gender representivity in the DTPS was poor and wanted to know how much of the budget went to salaries. They asked why some manuals and work had not yet been produced, whether consequence management was being enforced and why there were so many plans that had not yet come to fruition. They felt that there was not enough attention paid to the rural areas for IT development. They asked about collaboration with municipalities on the National Address System and asked what strategies were in place to counter cyber-crime. 

Meeting report

Department of Telecommunications & Postal Services 2015 Annual Report briefing
Mr Joe Mjwara, Acting Director General, Department of Telecommunications & Postal Services, started by noting that the Department (or DTPS) had advertised to fill 43 vacant posts. Two additional state owned companies (SOCs)in the form of the Broadband Infraco and State Information Technology Agency (SITA) were taken over by the DTPS from the Department of Communications (DOC). A National Integrated ICT Policy Green Paper was developed to form a White Paper on national integrated ICT policies. The ICT policy review started in 2012 and a recommendations report had been developed. The draft White Paper was not yet finished, due to the high volume of public responses and an extension to the deadline. This would hopefully be finalised by the end of the financial year.

A benchmark study had been conducted on mobile data pricing. A National Address System was partially achieved; a concept paper has been developed and approved. A draft National Address System Policy was developed. The Community Broadcasting Growth Strategy was partially achieved, due to the outcomes of the Presidential Proclamation which had an impact on mandates and functions. The ICT Broad Based Black Economic Empowerment (BBBEE) Council had been established and was now functioning. A national e-strategy had been drafted but it had not been finalised as more research and consultation was needed on the draft strategy in terms of analysis and data research. The cost to communicate in SA was too high and the contracts were not transparent. A policy directive on price transparency and premium content was with Independent Communications Authority of South Africa (ICASA) at the moment, and it would hopefully provide transparency on contracts. The DTPS are looking at a study on mobile data pricing to make sure it was not overpriced and confusing.

A study had been compiled on National Roaming and an internet strategy had been developed and approved. Material and information on SA’s ICT sector and military heritage was fully achieved through establishing a website and collating information. The ICT Capacity Development Programme on Information Ethics was fully achieved. The ICT agenda across the three spheres of government was partially achieved. In respect of the digital readiness strategy, a draft deployment policy had been developed and presented to the Economic Sector Enterprise and Infrastructure development for approval to gazette, and it would then be incorporated into the integrated ICT policy. An amount of R200 million had been allocated for digital development for the 2015/16 financial year.

He reported that in the South African Post Office (SAPO)  a new Chief Executive Officer and Chief Financial Officer had been appointed and a new board had been approved. Matters were improving in the postal service. The corporatisation of Postbank had been partially achieved but the DTPS were waiting on the vetting and fit by the South African Reserve Bank (SARB). It was also busy with the advancement of broadband in the SADC.

Mr Farhad Osman, Acting Deputy Director General: Administration, DTPS, spoke briefly about the finances. The DTPS had a R2.2 billion appropriation budget and an expenditure of R2.1 billion for 2014/15, which meant that it had managed to spend 97.5% of the budget.

The Chairperson stated she was not happy with what was going on in the Department. The morale in the Department must be very low due to all the negative news regarding the postal services. Employees were not being paid and that was a massive problem. No-one was taking responsibility. She emphasised that it would be vital to stabilise the Department with the placement of permanent top management. She asked what impact the split of functions in the Department had created.

Mr J Parkies (ANC, Free State) asked about the ICT Policy Review, as set out on page 4, and asked that Members be provided with a copy of the White Paper. In relation to page 8, he asked the DTPS to explain why policy directives could not be finalised, what the impact was of delays from ICASA and who was the service provider and why there was a delay in respect of the national roaming plans. He urged that the school projects to provide IT infrastructure must be hastened, particularly in the Free State. He wanted an explanation of the Presidential proclamations. He suggested that Postbank could not be subjected to commercial banking criteria as it would effectively hinder the whole point of having a bank for low costs and easy accessibility. He said, in relation to the comments on the work with small, medium and micro enterprises (SMMEs) that black enterprises need to be assisted and developed. He would like to see the Acting Director General accept a permanent appointment.

Mr E Mlambo (ANC, Gauteng) referred to page 3 and said that the Director General had not spoken to the telecommunications pricing, which he described as “exorbitant”, and the Committee wanted the detailed report and explanation for why the pricing regulations had been so slow in coming to fruition. He asked who had been opposed to the BBBEE Council. He commented that gender equality also needed to be addressed within the DTPS top management, for it was poor.

Mr J Julius (DA, Gauteng) stated that the ITC research and development policy seemed to have some aspects left out of the presentation – he referred to numbering that did not follow sequence. He asked what percentage of the budget was going on salaries. He commented that the electronic system was still in process and there was just a draft procedure manual on inventory and consumables that would be presented at the next meeting, and he wanted to know why this had not yet been achieved, and why the vacant positions had not been filled. He noted that a draft procedure manual on asset management had been developed and would be presented at the next meeting, but wanted to know why this was still on the agenda and why it had not yet been finalised. He also enquired what consequence management measures had been formulated and were in place. He commented that there were many drafts and action plans that had been around for a number of years, but nothing had been done about them. He wanted to know what policies was DTPS employing, to get to the position that it was in, regarding Postbank. He was sorry to note that the rural areas were not being prioritised for ITS development. The vetting could not cause the delay, as it must be an essential part of the process to ensure value for money and should not be seen as a burden.

Mr O Sefako (ANC, North West) stated that the Postbank needed to remain the people’s bank. He wondered whether, with the National Address system, there was collaboration with the municipalities. In relation to the e-strategy he wanted to know more about the strategy to combat cyber crime.


Mr Mjwara responded that DTPS had a new mandate, which meant that it was essentially a new department. This Department was vital to get South Africa (SA) working and running smoothly. There had been a number of senior managers disciplined and a number of Directors General had been hired and fired. He believed the DTPS had come through the worst stages now, and he hoped that it would have fulfilled 80% of its targets by the time of the next meeting. He assured Members that the split of functions did not hamper delivery or affect performance. He commented that the report of the Auditor-General (AG) was critical. The Department accepted that the same matters could not appear for year after year and it was hoping to achieve a clean audit for the next financial year.

Mr Osman added that the DTPS had a plan to address the points raised in the report of the AG, point by point, in order to achieve a clean audit by the next year. The action plan had been implemented through a steering committee and operations committee. The Department had not had a Chief Financial Officer for some time, and this had impacted on the asset register and payments system. The completion of an automated invoice tracking system would assist with paying on time. In respect of the vacancies, he reported that 43 positions and 3 Deputy Director General positions had been authorised for employing new people. The percentage of budget going to salaries was 8.4% of total expenditure, or R183 million. 

Mr Willie Vukela, Acting Deputy Director General: Policy, DTPS, policy, stated that ,much time for discussion had been allowed on the benchmark for mobile pricing and data, and the period for consultation had now closed, and a document would be gazetted. In relation to Postbank, he reminded Members that the Banks Act applied universally to all banks, no matter what type of bank. Postbank had gone through all the requirements that normal financial banks went through. There was dialogue with the National Treasury and the Reserve Bank on Postbank. A vetting process was implemented before actual deployment of the policies. BBBEE was under way, and although there was initially resistance from big business to this BBBEE Council, there had been much improvement in this area.

Mr Michael Ntshingila, Acting Deputy Director General: State Owned Enterprises, DTPS, responded that in order for anyone to start a bank, it was necessary to get permission from the Reserve Bank, and then the matter needed to be approved in terms of the Banks Act. The DTPS had submitted all the required documentation for Postbank to the Reserve Bank and the next step would be approval and feedback.

Mr Tinyiko Nyobeni, Deputy Director General: Infrastructure, DTPS, stated that the the schools connectivity programme was under way and was being implemented in the different provinces. 800 schools had been connected in the financial year. 571 schools, over a three-year programme period, would be connected in the Free State. The remaining parts of the country would be covered in the second phase of the programme. By 2020, high speed connectivity would be provided to all schools. The DTPS worked with the South African Police Service (SAPS) and the Department of Justice to look into cyber crime. The DTPS engaged with international bodies in this area.

Mr Alfred Mashishi, Acting Deputy Director General: Information Society, DTPS, said that the development of the knowledge economy was vital for SA. Sectors of society involved in this must be incorporated. A workshop was set up to understand the challenges and highlight who the main players were. There had been a report created on BEE involvement in the SMME sector, and this would be presented to Members.

Request to approve SA’s ratification of article XII paragraph (c) (II) of the International Telecommunications Satellite Organisation agreement
Mr Mjwara stated that in 1973, the International Telecommunications Satellite Organisation (ITSO) was formed to implement a UN resolution on communication satellites and use of outer space. It was then privatised. Currently there was around US$ 1 to 1.5 billion worth of assets in 21 orbital locations. ITSO provided essential satellite capacity. The company was in debt at the moment, even though it had assets, and in order to protect those assets from being attached by its creditors, it was necessary to have a form of agreement around protection and ring-fencing of these assets. Article XII dealt with this. In order to be of force, it had to be ratified by member organisation states, which included South Africa. He pointed out that South Africa needed the satellites to perform its communication plan and connectivity outlay and was thus requesting the support of the Committee in recommending the ratification of the agreement to the House.

Members agreed to recommend the ratification.

The meeting was adjourned.


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