Special Funds for Development & Poverty Alleviation: public hearings

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Trade and Industry

10 March 2003
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Meeting Summary

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Meeting report

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

Chairperson: Dr. R Davies

Relevant documents
 

 

National Development Agency presentation [Please note that the graphs do not appear on the internet version, please email info@pmg.org.za for the full document]
National Development Agency disbursements [email
info@pmg.org.za for document]
Non Profit Partnership presentation
Kagiso presentation
Community Chest presentation
Treasury: International Development Co-operation (IDC): Draft Policy Framework and Procedural Guidelines for Management of Official Development Assistance May 2002

SUMMARY

 

Oversight hearings continued all day. The Committee heard progress reports from organisations which had received funds from government for poverty alleviation and development projects as well as progress reports from the disbursing agencies.

MINUTES
National Development Agency (NDA)
Mr D Mthembu, CEO of the NDA, made his presentation as in the attached Powerpoint presentation. He added the following points. He pointed out that the NDA was formed as result of an act of parliament in 1998. He said that the NDA had an integrated project approach. One part of the approach was reactive where they received applications for grants. At present they were receiving 50 to 100 applications per week. There was also a proactive approach where they would scope problems in the communities and mobilise them around projects. The third approach would be special programs which government and donors had highlighted or were involved in. He said that 65% of the funds went on projects while the rest went on capacity building of staff and overheads. He stressed that not more that 15% was spent on administration. He pointed out that funds from the government took long to reach them and could take up to eight months. As far as applications were concerned, he said that to date they had received 1822 applications. In January 2003 they had received 215 and in February 2003, 425 new applications were received.

Mr Rasmeni (ANC) asked whether the provincial offices were well known and whether the systems which they had in place were efficient and consistent. He said that it was his experience that people were discouraged by the NDA.

Mr Louw (DP) commented on the slow disbursement in the first two years of the NDA's existence and wanted to know the reason for this. He also wanted to know the outcomes of the risk management process.

Ms. Moloi (ANC) referred to the provincial offices and wanted to know at what level these offices were operating. She also wanted to know how the capacity building was being done.

Prof. Turok (ANC) commented that the NDA had a difficult job. He wanted to know if the funds from the EU came direct to the NDA or if they came via the ODA. He said that the NDA was very ambitious and wanted to know if there was any co-ordination between them and other funders or government.

Mr Nene (ANC), chairperson of the budget committee, wanted to know what formula they used for allocating funds. He also noted that Gauteng's budget was overspent while Kwazulu-Natal was underspent.

Prof. Rapinga (ANC) commented on the fact that 65% of funds was given for projects and wanted to know whether this was satisfactory and what the norm was. He also felt that the budget was overcommitted and wanted to know whether the sponsorship was value for money and whether the money was with projects or with provinces. He was also concerned with the total time that it took for the NDA to process contracts.

The chairperson commented on the fact that there was too many funding agencies and wanted to know if this was a strength or a problem.

Mr Mthembu said that there was too many agencies on the ground and that there was no co-ordination and no sharing yet they all dealt with the same poor people. He noted that government also had lots of projects for the poor but that there was little co-ordination. He said that they were trying to address this but that they were limited in what they could do. He said they were currently working with the Gauteng, Western Cape and Northern Cape governments. He said that in his experience the attitude was that people wanted the money but were not prepared to work together. He said that they were talking to other agencies such as Umsobomvu. He explained that the EU funds were received directly, but that there were delays as the technical agreements took time and the funds were only released once the systems were in place. He added that they had offices in all nine provinces and that they had embarked on a program in 2002 to make contact with people in the community.

Mr Gopane, the auditor for the NDA, said that due diligence was applied to all projects and that there was regular audits of these projects to see if their objectives were achieved. He said that community participation was important. He also pointed out that the financial statements for 2002 were availableshould they be requested.

Mr Mashabane, of the NDA, said that an application took approximately three months to process. He said that it was not always possible to stick to this timeframe as the volume of applications was huge. He said that at present they had 12 000 applications. He added that they were trying a new approach where projects were being clustered in areas. He said that they were trying to correct the overspending in Gauteng. He also pointed out that most orgainsations national offices was in Gauteng and therefore the money was not necessarily spent there. He said that there was pressure to get money out and other areas such as policy and research was neglected but this was being attended to. He added that a database of civil society organisations was being set up. He also explained that most projects run on a twelve month cycle while disbursement took place six monthly and therefore it seemed as if money was not being spent.

NICRO
Ms. S Solomon began her presentation by saying that NICRO was an established NGO and that it was a national organisation. She explained that NICRO had four different programs. Three of these programs was the entrepreneurship program, the diversion program which was directed at young offenders and the victim empowerment program which was aimed at victims of crime. She went on to explain they experiences with different funding agencies. She said that their experience with the State Lottery was that they were very slow and that they did not seem to have a strategy. She said that funds from the NDA had been slow as they changed from the former Transitional National Development Trust to the present NDA. NICRO was not able to access funds from the Umsobomvu Fund as their criteria and focus was different. She pointed out that even though NICRO was such an established orgainisation, they still had a problem getting funds. Ms. Solomon said that all their programs had been built from foreign funds and that she felt it was now time for the government to support them. She added that to get funds from Khula had taken two years. She then went on to point out the critical issues facing the organisation.

She said that she was aware that agencies were bombarded with applications. She felt that they were treated the same as all the other applicants even though they had a good track record. She added that there had been a bilateral agreement between the South African and Dutch governments to provide funds. The strategies were still being decided and this was slowing down the flow of funds. She felt that co-ordination was important between funding agencies. She was also concerned that the level of training at the staff at agencies was not up to standard. She remarked that some of them could not read or understand budgets when they came to evaluate them. She felt that there was a big need for partnership to develop between agencies. There was also bad management at these agencies since one did not have any contact person at many of these agencies once one had submitted an application. There was also a concern that government was creating a huge bureaucracy to dish out funds which was causing huge problems.

Mr Louw (DP) agreed with Ms. Solomon that there needed to be co-ordination between agencies and suggested that a summit be arranged for agencies to get together. Ms. Solomon agreed and said that maybe main role players in organisation should get together to decide on policy, strategy, etc.

Mr Nefolovhodwe (AZAPO) said that he identified with the problems and raised the issue of salaries. He said that there were many skilled people in NGOs and that they were attracted to either government or the private sector because the salaries were better. He also pointed out that it was important for organisation like NICRO to have a relationship with the NDA. Ms. Solomon agreed that there was a problem as far as losing people were concerned. She said however that there was no quick fix where salaries were concerned, but that they were trying to provide incentives for employees.

Ms. September (ANC) noted that NICRO was applying for funding from all over and she wanted to know what kind of legislation was needed to make the process easier. She also wanted to know what kind of questions were asked by funders when they evaluated projects. Ms. Solomon commented that even though NICRO was an established NGO they were not strong financially. She added that funders would do site visits to projects sometimes, but other times they would ask questions at the office and just look at financial statements without visiting projects.

Dr. Davies (ANC) wanted to know what best practice should look like. Ms. Solomon replied that NGOs need to work together with CBOs and train them.

Prof. Turok (ANC) suggested that the committee should sit with agencies and get legislation around funding. He also asked whether, in Ms. Solomon's opinion, they were more effective that government departments. He added that it had been said that money was not problem, but that the capacity to spend it was the problem. He wanted to know whether this was Ms. Solomon's experience as well. He referred to the fact that NGOs do not want to be monitored and wanted to know whether the Act was necessary. Ms. Solomon said that they had never had a problem spending money and that there were only a handful of organisations which could not spend money effectively. She added that there were some NGOs who were more effective that government as there was no red tape. She added that monitoring was necessary, but that there needs to be a balance and that must not be too tight.

Non Profit Partnership (NPP)
Mr E Saldanha introduced the presentation by saying that there was not a funding crisis for NGOs but rather the capacity to spend funds. He then handed over to Ms. A van den Berg to do the NPP's presentation. The presentation can be followed in the attached document. Ms. van den Berg added that they had a better relationship with the NDA than with the Lottery. The problems which they had encountered was one of slowness with agencies regarding funding. There was also too much bureaucracy regarding administration and insufficient facts about funds, also insufficient capacity in agencies and the fact that they were not pro-active. Mr Saldanha continued and said that the problem was systemic. He felt that the problem was with NGOs as well in that they lacked the capacity to spend and deliver. He felt that co-ordination was important to ensure sustainability and that a strategic approach was necessary. He also felt that there was no coherence between funding agencies. It was his opinion that there needed to be a holistic approach such as the NDA had. He also pointed out that there were conflicts in legislation. He said that examples of these conflicts were in the NPO Act and the Income Tax Act and also in the Trust Deed Act and the Lotteries Act. He ended by saying that communication was important and that agencies need to build a relationship with each other and NGOs.

Mr Nefolovhodwe (AZAPO) Referred to recommendation 8 that the NPP had suggested which suggested that civil society help in the distribution of funds and wanted to know how this could be done. He also wanted to know what could be done as far as the spending of money was concerned. Mr Saldanha said that when the Social Development Committee had established the board of the NDA they had suggested that six members be from government and five from civil society. Civil society however was not represented when this was decided. He said that he had no answer to the spending problem. He said that the government must be concerned about the spending and that there needed to be greater accessibility to government departments. He said that the NPP had been waiting for five months to get an appointment with two deputy Director Generals. He also said that there was frustration with parliament as they had made presentations to committees yet nothing seemed to be done.

Ms. September (ANC) wanted to know if the NPP felt that there was too much time spent on legislation and what the suggestion would be. She also wanted to know whether other agencies had representation from civil society on their boards. Mr Saldanha said that there needed to be representation by civil society on all funds.

Prof. Turok wanted to know what the NPP's relationship was with the IDC. He pointed out that parliament was not the executive and it seems ineffective and suggested that parliament needed to amend certain laws affecting funding. He called on the NPP to come forward with amendments that they could make.

The chair wanted to know what timeframe would be needed to sort out the systemic problems which were identified. Mr Saldanha said that he could not give a timeframe but would like to begin the process then.

Treasury: International Development Co-operation (IDC)
Mr W Jordaan explained that the IDC managed and co-ordinated the policies and decision-making regarding the Official Development Assistance (ODA). He pointed out that the IDC's role had changed from programming to facilitation when the RDP office was closed. He said that they tried to be transparent in their dealings. He pointed out certain issues around ODA. He said that the project agreements with donors govern what goes into ODA. The IDC takes its lead from the budget as far as spending is concerned. He pointed out that donors make decisions according to the GDP per capita of the country. He did not feel this was a fair criteria. He explained that the challenge in South Africa was that there was racially based inequality and this should be the most important reason for aid to be given. He said that he did not know for how long South Africa would be receiving funds. He felt that the best use for funds was for pilot development, developing best practice and to strengthen government. He said that the IDC tries to be transparent and accessible. In closing, he said that they hoped to have a ODA management system up and running on their website by June/July 2003.

Prof. Turok remarked that it seemed as if there was no shortage of money and felt that this was unacceptable and had to be examined. He felt that there was contradictions in the IDCs policy and said that there should be alignment. It was his feeling that the IDC should take its lead from pronouncements made in parliament by the President. He also felt that agreements with donors should be tabled in parliament. Mr Jordaan explained that government would meet with donors on a one-to-one basis. He said that in theory, there ought to be sector co-ordination. He did say however that there was looseness and felt that they could not just respond to pronouncements but needed more substance. He said according to policy, agreements with donors should be tabled in parliament.

The chair, said that donors normally respond to the need in a country and wanted to know if this was a problem. Mr Jordaan said that the funds which they had , had to spent or else they would lose it. He pointed out that whereas the RDP fund was just a channel for funds, the IDC was not just a channel, but made policy decisions as well.

Kagiso
Mr E Malobi, the Executive Chairman, of Kagiso explained that the organisation had been in existence for seventeen years and that R1,1 billion had passed through it. He explained that Kagiso's approach was to consult with people before it gave funds. He said this was slow, but effective. The funds given out was used for capacity building, education development and famine relief. He said that most of their projects were run by women in rural areas. He felt that that agencies had to decide who the poor were that they wanted to help as some people were mobile and the same people would then be able to access help from different sites. He said that collaboration between government and NGOs was possible. He felt that it was important to measure how much money is spent. If people did not know how to handle money, it was a big problem and had to be addressed. He said that the criteria must be clear and that good NGOs must be identified as he felt they were capable.

Ms. Mohamed (ANC) asked for more detail about Kagiso's rural development program and wanted to know about the development of women in these projects. Mr Malobi explained that most of these projects were small enterprise projects where women were helped to start their own small businesses.

The chair referred to the proliferation of funding agencies and mentioned the need for co-ordination between these agencies and wanted to know how this could be done. Mr Malobi said that he did not see any networking taking place. He felt that this should be forced and be made a prerequisite for the receiving of funds.

Prof. Turok said that it seemed as if NGOs had lost confidence in the government. He asked whether NGOs can do the work which governments were doing in other countries. He wanted to know whether parliament should urge spending by agencies. He also wanted to know whether South Africa had the capacity to spend and asked whether was easier to get money from foreign agencies or South African agencies. On the issue of confidence, Mr Malobi said that the government should take the lead. He said that NGOs must support government and should not try to replace it. He said that he did not feel there was a problem with the capacity to spend money. He said that the need was so big and that the role of NGOs was very important, but that organisations must just be careful how it is spent. He said that there was enough money coming into South Africa for NGOs.

Ms. L Mabe (ANC) wanted to know how NGOs could be assisted so that they can have skills to spend money of poverty alleviation projects. Mr Malobi said that new people needed to brought in and that a balance must be created. He said that there was a need to equip people to handle money. He added that this was a big risk, but one that needed to be taken.

Ms. Hajaij (ANC) wanted to know details about projects and the success rate of it. Mr Malobi said that he could provide her with the details she wanted.

Ms. September (ANC) said that because of the country's past, there was legacy of people who do not have the skills to spend money wisely. She wanted to know whether it was government or NGOs responsibility to build capacity. Mr Malobi said that there was also strict criteria for NGOs. He said that the problem was that many skilled people left to go to the city and that the people who are left are the women and children. He said that many times government would take over what NGOs were doing instead of reinforcing there work.

Community Chest
The CEO of the Community Chest in the Western Cape, MS. A Jones addressed the committee and followed the document attached. She explained that the Chest received money from donors and then gave it to other NGOs and CBOs. She said that around the time that democracy was introduced in South Africa, they had been challenged by their donors and had decided that nobody would be turned away when they approached them She explained that 99% of organisations that approached them have asked them to do capacity building for them. Out of this, their capacity enhancing program had been born. This program was split up equally between rural, urban and community areas. She emphasised that partnership needed to be built with organisations. She said that they had offered themselves as a resource for organisations. She said that they received between 900 and 1000 applicants per annum and support 500. As a result of the capacity enhancing program they had added 185 new CBOs to the list of beneficiaries. They also offered themselves as mentors to their beneficiaries.

Prof. Turok said that many people complained that they did not know where funds are available. He wanted to know how this situation can improve. He also wanted to know whether the Chest had any discussions with government and wanted to know what the accrediting grant distribution council was that Ms Jones had suggested be formed. Ms. Jones agreed that people did not know where funds were and that part of their capacity enhancing program was to make people aware of this and they had also established a help line to assist with this. She said that they have had discussions with government. The accrediting grant distribution council would be forum consisting of heads of different grant making organisations.

Mr Louw (DP) wanted to know what the Chest's experience was with the Lotto. Ms Jones said that the Lotto had a problem with power and wanted to exercise too much control. She said that the Community Chest could make the Lotto look good. They had however been denied funds because they were a conduit for funds. She pointed out that their beneficiaries had asked them to apply to the Lotto for funds.

Ms. Mohamed (ANC) referred to the composition of the Chest's board and its finance team and felt that more women need to be represented. She also wanted to know how the Chest interacted with NGOs and how they targeted the participants for the capacity enhancement programs. She also wanted to know how the Chest was doing in Johannesburg. Ms. Jones agreed that women needed to be represented and assured the member that this will be attended since she had received some resignations in that week. Ms Jones said that the Chest was growing in Johannesburg and Pretoria. Ms. N du Toit, Manager of the Chest's allocation team, said that they interact regularly with NGOs. She said that they have a database by which they are able to source participants for their programs. She said that the programs for 2004 were already fully booked.

Mr Rasmeni (ANC)wanted to know they reach out to poor to be part of the programs. Ms. du Toit said that they would go to the region and they would have a champion who would identify individuals. She said that some courses were reserved for the poor.

Ms. Hajaij (ANC) wanted to know whether there was any relationship with religious groups. Ms. Jones said that a large percentage of the beneficiaries were faith based organisations.

The chair, DR, Davies then summarised the two days hearings. He said that they had received a limited picture of disbursements as in most cases financial statements were not given. He said that capacity building, of agencies and NGOs need to be addressed. A problem which was identified was the proliferation of organisations with no co-ordination. There also seemed too be legislation inconsistencies. There was also a need to build on the capacities which NGOs had already.

Prof. Turok said that money was given to government departments and there seemed to be no policy or system to direct spending and check spending.

Mr Rasmeni said that there seemed to a problem with agencies cutting funds as the project cycle goes round.

Ms. Moloi (ANC) said that it was surprising that organisations spend much on creating vision yet there still seemed to problems in the spending of money.

Mr Rasmeni said that when government makes announcements, it creates expectations among civil society.

The meeting was adjourned.

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