Special Funds for Development & Poverty Alleviation: public hearings

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
10 March 2003
SPECIAL FUNDS FOR DEVELOPMENT & POVERTY ALLEVIATION: PUBLIC HEARINGS

Chairperson: Dr. R Davies

Relevant documents
 

Umsobomvu Powerpoint presentation
RDP Special Funds

SUMMARY
Various organisations which had received funds from government for poverty alleviation and development job creation projects appeared before the committee to report on their progress and how the funds had been spent. Disbursing agencies were also called to give an account. It emerged that funds were slow in being disbursed by agencies. Reasons for this was the number of applications received or organisational problems. Agencies also felt that many NGOs and CBOs lacked capacity to be efficient. It also emerged that there were many organisations doing the same work with no co-ordination.

MINUTES
The Chairperson explained that there were concerns about the spending of the funds earmarked by government for the combating of poverty and for development. Prof Turok, a member of this committee, had initiated the discussion and this had brought about the public hearings. The Chair hoped that a report could be written on the matter and that it could be debated in the House. He pointed out that their interest was in the systemic and policy issues. He noted that all the relevant organisations that had been asked to come, had agreed to come.

Umsobomvu Youth Fund
Mr. M Kekana, CEO of UYF, started off by pointing out that the presentation would not just explain how funds were spent but also point out the lessons learnt in the process. (See the Powerpoint presentation). He added that there was a long gap between the announcement of the fund and the actual time when the fund started up. This was because it took time to put everything in place. He said that the challenge for the fund was not only that money be spent well but that effectiveness and efficiency was of utmost importance. He pointed out that there was a big gap between the skills which the youth had and the jobs which were on offer. He pointed out as well that it was estimated that it cost between R35 000 and R100 000 to train a young person. He also pointed out that the UYF took an integrated approach as they felt it was not enough to give technical skills but also life skills. Another challenge which they faced was the fact that many of the NGOs and CBOs were started after 1995 and did not have enough experience and capacity. He pointed out that they had experienced acrimony as they had emphasised accountability to these organisations.

Prof. B Turok (ANC) said that the presentation was interesting but that he would have wanted more information and figures on income, expenditure and cash flow. He also wanted to know whether they were doing that which the government wanted them to do and whether they were not duplicating things which the government was doing. Mr. Kekana said that communication had not been clear and if the committee had asked for financial statements, they would have supplied it. On the question of duplication, Mr. Kekana said that the issue was around ideology as some believed the government was centralised and some believed it was decentralised. He therefore felt that it was not either the government or them but rather both. He said that they wanted to support and enhance what the government was doing. He made the example of the bridging program which they were running for black chartered accountants. He said that they took a scientific approach to human resource development and this was in line with the government.

Mr. D Lockey (ANC) asked why there seemed to be abias towards Gauteng. He also wanted to know why the transport costs etc. was increasing each year and what the youth card was about as he felt they might be duplicating the work of home affairs. Mr. Kekana said that the bias towards Gauteng was there as the rural areas did not have the capacity to handle the funds. He stressed that more than 66% of projects must come from other areas. The money might be going to Gauteng, but it is used elsewhere. He said that the costs did not increase but that the resources were limited and therefore as a percentage, the costs had risen. The youth card was for all young persons over the age of fourteen. This would enable youth to obtain discounts and would also enable the fund to keep in contact with the youth.

Mr. S Rasmeni (ANC) wanted to know what the fund was doing so that the youth could have access to the fund. He also wanted to know how government support was lacking and what co-operation there was with local government. Mr. Kekana said that they are meeting with mayors and local councilors in many towns concerning different projects. He said there was a need to have specific projects with youth.

Prof. S Rapinga (ANC) wanted to know what the future of the fund was. He also wanted clarity around the intermediaries which Mr. Kekana had spoken about. Mr. Kekana said that the intermediaries were youth as well in areas where capacity had to be developed.

Mr. Louw (DP) wanted to know what the relationship of the board was with the Department of Trade and Industry (DTI). He wanted to know how the UYF measured what they have achieved. He also wanted know what the relationship was between the fund and the education department and with the youth commission. Mr. Kekana replied that they had a good relationship with the DTI. Referring to the number of jobs created, he said that after twelve months they had a 65% success rate. He stressed however that it was early days. He said they had a relationship with the education department and cited examples where they had used youth to paint schools and were looking at using youth to erect fences around certain schools.

Ms. F Hajaij (ANC) also wanted to know how they measured their success. She commented on a project in Midrand and wanted to know whether there was any links with trade expertise and big businesses in that area. Mr. Kekana said that there was some linkages in Midrand and added that some franchises were being created.

Mr. P Nefolovhodwe (AZAPO) wanted to know the statistics around the youth such as where they are concentrated, unemployed etc. Mr. Kekana said that these statistics were not requested. He added however that 60% of the unemployed were black young women. He pointed out that 70% of the youth was in the rural areas. Of the youth that were employed, 70% earned less than R500 per month while less than 10% earned R3500 or more. Of this 10%, most of them were white.

Ms. F Mohamed (ANC) said that there was frustration on the ground amongst youth as they felt that the UYF was not helpful. She was also concerned about the rollovers of money that was not spent. She wanted to know whether there was any co-operation or co-ordination with the various youth chambers. Mr. Kekana felt that it was unfair to blame the UYF and the Youth Commission for the frustration that was felt. He said that SETAs and the education department was also to blame. He said that the UYF did not have rollovers as they had received money once off. He said that they work with all youth organisations. He added that they had recently approached the South African Council of Churches youth section so that they could work with church youth groups.

The chairperson, Dr. Davies (ANC), asked how much of the R2 billion received from government they had at hand and how long he thought the fund would remain. Mr. Kekana pointed out that they only received R850 million with interest and that they hoped to spend all the money as the need was big. He added that there was pressure to spend the money. He hoped that the fund would continue.

Ms. B Ntuli (ANC) wanted to know how the UYF reached youth in the rural areas as they did not know about the fund. She also wanted to know what the yardstick was to measure achievement. She noted that there had been links with agriculture but wondered if there was any co-operation with labour and health. She also wanted to know where the advisory centres were. Mr. Kekana said that they used radio, television and the print media to reach the youth, but added that the church was probably the best way. He said that the location of the advisory centres were in the report. He added that when they get involved in projects they approach the relevant SETAs and try to enhance what they are doing.

RDP Fund
Mr. W Jordaan of the RDP Fund then addressed the committee. Mr. Jordaan explained that the RDP fund was an account that dealt with donor funds. He pointed out that it was not for poverty alleviation per se. He explained that these were given to government projects until the closure of the RDP office in 1996. The fund received its money from international donors, government and local donors. The money was utitilised for government and accountability was with the Accountant General. The interest on these funds was not used but was returned to donors. He added that reports that there were millions unspent was not true. He said that money was not given to civil society directly but rather through government departments.

Prof. B Turok (ANC) commented that the annual report was very skimpy. He wanted to know whether there was a build up of unspent money. He also referred to a letter which he had from the Auditor General (AG) which expressed concern that there was no performance audit on projects for which funds were given. He added that agencies could get funds from the RDP fund as well as from a donor directly and this would not be picked up. He also wanted to know whether the regulations could be bypassed. Mr. Jordaan said that this was just an account and there was no co-ordination. He said that the IDC communicated with donors. South Africa qualified for project assistance and therefore received money alone for projects. He added that with the establishment of the fund, 30% of the fund was through the RDP and the balance was through technical assistance. He pointed out that the donor money was off budget. The Accountant General monitors the money in the fund.

The chair, wanted to know how the RDP fund shaped programs. Mr. Jordaan said that the utilisation of these funds was spelt out in agreements with donors in most cases the donors gave technical assistance to the country. He added that the name RDP should maybe be changed to the ODA as it was not a developmental trust. He said that regulations can not be bypassed but that it does happen in some cases.

Ms C September (ANC) referred to the interest on the money and wanted to know how much of it was returned. She also wanted to know if the reason for underspending was because the number of projects was drying up. She also wanted to know what the future of the fund was. Mr. Jordaan said that he had no figure as to the amount of interest or money returned. He did add however that 80% of the interest was returned. He said that the future of the RDP fund was determined by the National Development Agency (NDA).

Ms. Hajaij (ANC) commented that the NDA was supposed to monitor donor funds and wanted to know if this was still so. Mr. Jordaan said that he was not prepared to speak about the NDA.

Ms. Mohamed (ANC) wanted to know if the outcomes that the fund had was realistic and what the criteria was for spending and who the fund was accountable to. Mr. Jordaan added that the accountability was with the Director-General of the relevant departments. He also said that funds not used was invested by the Public Investment commission.

Prof. Turok expressed concern that there seemed to be no control over the funds and that it seemed just to be a channel for funds to flow through. He was concerned that there was no policy which governed the fund. Mr. Jordaan added that he felt the fund's name caused confusion and explained that there was a policy which governed the fund.