DPME, NYDA & Stats SA on their 2015/16 Annual Reports; Committee Report on BRRR

Public Service and Administration

13 October 2016
Chairperson: Ms R Lesoma (ANC) (Acting)
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Meeting Summary

The Portfolio Committee on Public Service and Administration/ Planning, Monitoring and Evaluation heard presentations from Statistics South Africa (StatsSA), the Department of Performance Monitoring and Evaluation (DPME) and the National Youth Development Agency (NYDA) on their 2015/16 annual reports.

StatsSA said it was still growing and was currently in its fifth phase, which entailed growth through coordination and collaboration. It had received a clean audit opinion for the third consecutive year, and while most key projects of the entity were still in progress, the Customer Satisfaction Survey (CSS) and digital workplace projects had been completed in the financial year. The organisation had achieved 80% of its annual targets and spent 98% of its R2.32 billion allocation. Some targets had not been achieved due to resources being reprioritised and information communication technology (ICT) environmental challenges. StatsSA had won the bid to host the 2017 United Nations World Data Forum (UNWDF), which was the first of its kind. Compensation of employees accounted for the highest expenditure, due to the reliance of the organisation on intellectual assets, and a reduction of R57 million from its allocation in the next financial year would impact “warm bodies”.

Members asked about the job levels occupied by disabled employees within the organisation; the impact of staff cuts on the efficiency of the organisation; whether more funds would be allocated for ICT; how unfunded projects could be accommodated in the entity’s budget; what the underlying causes of sick leave in the public service were; whether fluctuating inflation and currency exchange rates were making the Consumer Price Index (CPI) irrelevant; and if the posts that were not filled were critical ones for the entity.

The DPME’s annual report confirmed its achievement of a clean audit opinion for the fourth consecutive year, and almost 80% of targets had been achieved. The Operation Phakisa initiative continued to add value to the DPME’s planning and monitoring approaches. The Department produced quarterly monitoring reports on the medium term strategic framework (MTSF) to inform Cabinet on progress and challenges in implementing government priorities, and had supported four provincial departments to develop provincial evaluation plans. It had monitored 97 new facilities through the Frontline Service Delivery Monitoring Programme (FSDMP), and the Local Government Management Improvement Model (LGMIM) programme had enrolled 30 municipalities across six provinces. A Presidential Working Group on Youth comprising of Deputy Ministers had been established to monitor and drive the implementation of the National Youth Policy 2020. The Ministerial and Deputy Ministerial functions that had been transferred from the Presidency had increased the budget allocation from R717.7million, to R754.2million, and the department had spent 99.3%.

The Department was asked why invoices had not been paid on time and why it had incurred irregular and fruitless expenditure. Members said its 80% performance was unacceptable if it intended to monitor other departments. They asked if the NDP was still appropriate and if departments were effectively implementing the targets envisaged by the NDP. What actions were being taken to address the internal weaknesses identified by the Department? What was the Department’s yardstick for performance measurement? Why had no employee with disabilities been promoted in the financial year? The Chairperson warned that the Treasury was cutting the budgets of departments that failed to fill vacant positions, so the DPME had to ensure the filling of vacant posts.

The NYDA reported that it had received a second clean audit opinion from the Auditor General of South Africa (AGSA) and recorded its highest performance with its 96% achievement of all key performance indicators approved by Parliament. It had successfully concluded its organisational realignment and culture change programme, which had resulted in a reduction of 91 positions and an overall monetary reduction of the salary bill by 25%. Total project disbursements had amounted to R256.433 million. There had been irregular expenditure of R74 000, and fruitless and wasteful expenditure had amounted to R3 000. The NYDA said that it alone could not solve the challenges of all youth in South Africa with its budget of R400 million, and skills development was the key to poverty and unemployment in the country.

Members suggested the Committee should include additional funding for the NYDA in its recommendations; they asked why almost half of the entity’s allocation was spent on employee costs and not on projects; they said the Matric rewrite programmes should be scrapped to cut costs, since the programme was the sole mandate of the Department of Basic Education. The Chairperson said that the NYDA was not only expected to act within its mandate, but also to play an advocacy role in influencing other departments to engage in youth programmes. In reviewing the NYDA legislation, due process must be followed and stakeholders must be consulted to avoid challenges to the legislation in court after the amendments.

Meeting report

Statistics South Africa (StatsSA): Annual Report

Dr Pali Lehola:Statistician General (SG): said StatsSA was still a growing organisation and was currently in its fifth phase, which entailed growth through coordination and collaboration. The entity had received a clean audit opinion for the third consecutive year, and while most key projects of the entity were in progress, the Customer Satisfaction Survey (CSS) and digital workplace projects had been completed in the financial year. He said that the Gross Domestic Product (GDP) was an underutilized tool.  Arrangements were on-going for the commissioning of its new “green building”.

He reported that out of the 1 081 work programme targets, 869 had been achieved, 24 had been achieved late, 182 had not been achieved and six had been discontinued. The organisation had achieved 80% of its annual targets and had spent 98% of its R2.32 billion allocation. The organisation’s 8.9% vacancy rate had been maintained, females occupied 40.3% of senior management service (SMS) posts, and 1.3% of the employees were disabled.

Some targets had not been achieved due to resources being reprioritised towards community surveys and information communication technology (ICT) environmental challenges. The entity measured changes in the economy using statistics form trade and industry, national accounts, price stability, and government and private sector finances. Changes in society were measured by using a wide array of tools, and there was an increasing level of trust in statistics.

Through the organisation’s corporate governance, strategic risks were monitored. He confirmed the training of 68 staff members at Masters level and the appointment of 165 interns. He also said that the organisation now had a new logo. There were partnerships with different stakeholders to assist with the quality of statistics provided. The SG said that StatsSA had won the bid to host the 2017 United Nations World Data Forum (UNWDF) which was the first of its kind.

The administrative function, which includes accommodation, fleet, capital contribution, and centralised training and recruitment, and accounted for 35.2% of the expenditure, had been centralised. Statistical collection and outreach accounted for 25.3% of the expenditure, while survey operations accounted for 10.5%. Compensation of employees was responsible for the highest expenditure, because the organisation relied on intellectual assets. 28.8% had been spent on goods and services, 13.8% on payments for capital assets, and the balance for transfers and subsidies, and payment for financial assets.

The organisation’s historical cost cutting measures had started in 2007 and costs had been reduced in areas such as travel and subsistence, fieldwork and advertising. The savings from vacancies had resulted in a shortfall on the devolution of funds and had also assisted to foster an Income and Expenditure Survey (IES). A reduction of R57 million from its allocation would impact “warm bodies”. The entity had also identified reputation and financial risks in the system.

Regarding the statistical geography, Dr Lehola said the allocation of addresses for all had the potential for adding value, such as enabling an integrated Geographic Information System (GIS) for the state. He explained that integrated policy research and analysis added value via the identification of inefficiencies in the system, but also posed a risk of having incoherent policy decisions and outcomes.

He identified the key strategic priorities of the entity as legislative reform, policy statistics and decision making, an economic statistics sub-system, an innovation and modernisation programme, a social statistics sub-system, data revolution and international statistical development.

Discussion

Ms W Newhoudt-Druchen (ANC) said it was difficult to engage meaningfully with the entity and ask questions because the hard copies had been received late. She sought clarity on the entity’s definition of “high impact targets” and also inquired about the job levels occupied by disabled employees within the organisation.

Mr E Marais (DA) inquired if the cuts in staff complements and budgeting, which had commenced since 2008, would have a serious impact on the efficiency of the organisation. He asked for a statistical breakdown of the provincial populations across the nine provinces.

The Chairperson said that an updated population breakdown should be reflected in the entity’s quarterly report.

Mr A van der Westhuizen (DA) said the SG had reiterated the statement, “the dangers of technology,” a couple of times. The audit committee had raised a red flag on the ICT infrastructure of StatsSA. He asked how these red flags impacted on the entity, since it relie solely on ICT connectivity to deal with its vast input. He also asked if more funds would be allocated for ICT for on-going processes, and how the funds would be accommodated in the budget if necessary.

Mr S Motau (DA) asked if the Cabinet was aware of the issues which were deeply bothering the entity. He inquired how unfunded projects, like the Living Conditions Survey (LCS), could be accommodated in the entity’s budget. Had any research had been conducted to identify the underlying causes of sick leave in the public service?

Ms Z Dlamini-Dubazana (ANC) said there were issues that appeared to be beyond the SG’s powers that the Deputy Minister should address. She inquired about the survey standard scales adopted for the Citizen Satisfaction Survey (CSS) in order to ensure the consistency of future surveys. Research was at the heart of every government. StatsSA had been saddled with an additional task by the Treasury to conduct surveys on the Gross Domestic Product (GDP). The task was huge and cumbersome, and involved examining all the micro economic sectors that kept the economy stable. Due to the limited allocations to fund research and surveys, it was difficult to have an empirical instrument or proven data to defend survey debates. Most agencies capitalised on the fact that the literacy level of the South African community was below the literacy level of developed nations. She requested that the Deputy Minister engage the Minister to ensure that when tasks were transferred from entities, resources had to be transferred as well to ensure the competent execution of the tasks.

She asked if the Consumer Price Index (CPI) was still relevant and if there was a tentative measure to ensure the stability of the currency and inflation rates if the CPI was deemed irrelevant. She expressed her worry about the lack of funding for key projects such as the Living Conditions Survey (LCS). There were indications of fragmentation as regards research and development, as entities presented conflicting statistics which were potent enough to question the research methods and findings of Stats SA. She proposed that when the entity presented its third quarter report, a model should be presented on avenues of coordinating and collaborating on-going research to affirm that the entity had controls and regulations in place, based on proven information.

Ms Dlamini-Dubazana then asked why the entity under-scored itself as regards the AG’s audit opinion. In a previous engagement with the Committee, the AG had affirmed that the entity’s audit was unqualified with no findings, because the outstanding documents requested by the AG had been submitted within the given time frame. She asked that the entity assist with statistics on the financial performance of privatised state enterprises, and how could they be improved. She commended the organisation’s presentation and said that StatsSA played a key role in assisting the government to realise its mandates.

The Chairperson inquired if the vacant posts were critical for the entity as Treasury intends to cut funds when posts were not filled. She asked the Deputy Minister (DM) if engagements could be made with the Department of Cooperative Governance and Traditional Affairs (COGTA) to ensure that resources must accompany functions, as there were serious implications when functions were transferred to entities without resources. On sick leave, the Department of Public Service and Administration (DPSA) had an outstanding presentation on Procedure on Incapacity Leave and Ill-health Retirement (PILIR), and sick leave issues would be addressed. Regarding the duplication of mandates or resources, she said the survey in KwaZulu-Natal appeared to be a pilot programme, and asked about the extent of engagements with other departments with regard to conducting their own surveys.

She addressed the DM, saying that spatial planning of Integrated Development Plans (IDPs) in municipalities must be well informed. She then commended the entity on its achievement of an unqualified audit report with no findings, coupled with the fulfilment of its predetermined objectives. She urged that the legislative reform of the National Youth Development Agency (NYDA) being awaited by the Committee should be presented as soon as possible, and roadmaps should be furnished in the second quarter report.

The SG mentioned that the average of eight days’ sick leave remained a concern. As regards the dangers of technology, he said technology was very vital for the organisation and statistics relied on technology. A major concern was the lack of governance in technology. Global partnerships with a data forum were facilitated by private entities, and not by state entities. He expressed his concern that “government would be captured” and the private entities would utilise the available means to promote their personal interests. The participation of volunteers was not governed by any accountability mechanism, which was a function of the government. The lack of legitimacy in data partnerships posed a threat to governments, as governments were not actively involved in data revolution engagements. The first World Data Forum was being held in SA in 2017. He said the SG of Canada had resigned because of worries over independence from shared services, which prevented the state from having substantial control over the statistics in the country. He said that the same was applicable in South Africa, as services were shared with the State Information Technology Agency (SITA.) He said merely presenting data induced schizophrenia in politicians, and explained that on a quarterly basis, or as required, when statistics were released, explanations had to be provided as well information on essential action to be taken. The danger of statistics was that as they became useful to policy, they also became threatened and abused as well, except where there was legislative reform. The entity aimed to enlighten politicians about the dangers of technology.

Prior to the “fees must fall” protests, politicians had never considered education a priority. In recent surveys, citizens had considered education the 18th priority in the face of the “fees must fall” protests. An analysis of the core drivers of poverty revealed the years of schooling and the lack of jobs as the main core drivers. Multi-dimensional poverty indicated what needed to be prioritised, and if education was not prioritised by society, it would not be featured in the NDP, and politicians would not be voted into power if they sought to address issues that were not considered a priority by citizens.

Dr Lehola said the GDP would be effectively utilised and the Committee would be briefed in further engagements on how tools such as growth accounting frameworks and the social accounting matrix, amongst others, led to prioritisation in government. Coordination of information was an instrument that highlighted the need for information on what the research agenda of the country should be.

He confirmed that the vacant posts were critical, and while the entity had been advised by the Treasury to freeze vacant posts, he had explained that freezing them during the entity’s transition process would distort the structure. Critical surveys had not been funded and the organisation continued to make sacrifices, even though the sacrifices had not been realised. He said that when the organisation had held discussions with investors and the Minister of Finance in New York earlier in October 2016, it had been heart-warming to hear from investors that the statistics that came from SA were trusted and were driven by people who were qualified and represented the true picture of the nation.

Ms Celia de Klerk, Chief Director: Strategy, StatsSA, said that the seven high impact targets had been specifically identified, as they were related to publications in the core areas of economic and population statistics and social statistics. The two targets not met had been the heath and bio statistics targets, because three key senior employees had left the organisation within one to three months, which had consequently delayed their delivery. The entity’s targets to publish research support on government, social economic planning, and applications of estimation models had not been achieved due to reprioritisation towards the development of planning tools which were critical to the entity. She said the reprioritisation of resources had assisted the organisation to achieve some other high impact targets.

Ms Akhtari Henning, DDG: Corporate Services, StatsSA, said disabled employees ranged from levels 4 to 13, and were in permanent positions. Disabled persons also occupied temporary employment positions in the organisation, mostly in the fieldwork environment. The entity strives to achieve a 2% disability rate for temporary employees, but reiterated that the organisation had to deal with a budget cut of R57 million in “warm bodies”. The entity did not have a mandate to negotiate strategies to reduce “warm bodies” within the public service. There had been sessions with the National Treasury to see how Public-Private Partnership (PPP) guidelines could be improved in terms of processes and governance, and how to negotiate value for money and ascertain that the ownership of a PPP was not outsourced.

Mr Luxolo Lengs, Acting DDG: Statistical Support and Informatics, StatsSA, clarified that the red flags had been raised with the AG by the organisation during the second and third quarters, after examining the ways the environment was providing support to the organisation. He described the organisation’s ICT challenges as the legal system and the ageing infrastructure, its skills set, the lack of an operating model, and the of lack skills within the IT environment. With the modernisation of the National Statistics Offices (NSOs), the ICT department had been left behind in areas of transformation. He said the IT environments from four different buildings had been successfully moved to the new building without outsourcing, and the ICT issues as regards the red flags had been mitigated before the Committee’s survey, and no new IT challenges had been identified afterwards. He said that extra funding was needed because a transformational way to change the ICT into a strategic business unit had been identified. If no funding was received, the system would be examined to identify avenues for generating revenue through savings, as this had been the situation for the entity for the last ten months. He added that a responsive IT environment had been built by the organisation, and the future orientation of the environment needed to be addressed and an operating model must be built. As regards the dangers of technology, he said that if the government failed to take charge of the IT landscape to support statistical collection, private parties would take over the role of NSOs.

Mr B Mathunjwa, CFO: StatsSA said that the entity had been requesting funding in the past for the Income and Expenditure Survey (IES) and Living Conditions Survey (LCS) projects, and the request was now being escalated to the DG level.

Ms Kefiloe Masiteng, DDG: Population and Social Statistics, StatsSA, said that since the 2011 population census of 51.8 million, a mid-year population estimate had been published annually. According to the mid-year population estimate that had been published in August 2016, the total population was estimated at 55.9 million. The provincial distribution had been 13.4 million in Gauteng, 11.1 million in KwaZulu-Natal, 7.7million in the Eastern Cape, 2.7 million in the Free State, 5.8million in Limpopo, 4.3 million in Mpumalanga, 1.1 million in Northern Cape, 3.7 million in Northwest, and 6.3 million in the Western Cape. She said that the next census would be conducted in 2021.

Ms Yandiswa Mpetsheni, Acting DDG: National Statistics System, StatsSA, referred to the roadmap for legislative reforms, and said stakeholder consultations had been concluded at national and provincial levels, and there had also been study tours with stakeholders. The entity was currently engaged with a comparative analysis of the country’s statistics laws and the laws of other countries, as well as an examination of South African data laws in terms of their impact on legislative reform. The road maps would be presented at the end of February 2017.

Dr Lehola added that the Gauteng province continued to grow, even though KwaZulu-Natal used to be the most populous province. Gauteng now had a clear lead of two million over KwaZulu-Natal due to internal migration within the country.

Mr Joe de Beer, DDG: Economic Statistics, StatsSA, referred to the relevance of the CPI, and said the best international practice was to review it every five years. The entity had reviewed it over a four-year cycle in the past, and the entity was busy changing the weights of the CPI and producer price index (PPI), which would be published in February 2017 for the reference month of January 2017. According to the four-year cycle adopted in the nation, the CPI was still relevant. If no funding was obtained for the IES, the CPI would become irrelevant in the next three to four years, as there would be no information to update the base or the weightings. Also, there would be no means of tracking the expenditure patterns of households. The International Monetary Fund (IMF) had introduced the Special Data Dissemination Standard (SDDS) to which countries had to subscribe in order to ensure the accuracy of the GDP. at South Africa was one of the few countries in Africa that met SDDS standards which affirmed that the country’s GDP was still relevant.

Ms Dlamini-Dubazana said her inquiry regarding the relevance of CPI stemmed from the SG’s comment that the Income and Expenditure Survey (IES) was not funded. She inquired why the IES was not included in the 2015/16 budget vote.

The Chairperson mentioned that additional information and responses should be forwarded to the committee in writing, especially information pertinent to the breakdown of the provincial populations.

Mr Buti Manamela, Deputy Minister: Department of Performance Monitoring and Evaluation (DPME), affirmed that the relevance of the CPI was not debatable. He said that funds had not been allocated for the CPI because the weighting of goods changed over time, and changes in basic needs had a direct impact on inflation and pricing. A written response would be prepared by the SG to explain why resources had not been allocated for the programme. Issues pertinent to engagements with COGTA would be duly addressed.

Mr Manamela indicated that education had not been considered a priority by politicians in the recent elections because the elections were local government elections and education was considered to be beyond the mandates of the local government. He commented that the legislative reform should be tabled to the Portfolio Committee as soon as possible, and StatsSA must be made the mandatory institution in terms of reliance on data. The Cabinet was fully aware of the entity’s issues, and resources should be directed to areas where problems were encountered.

The DM said that part of the migration to Gauteng from other provinces was due to the availability of resources and developments in the province, and consequently the current government was totally committed to facilitating rural development.

The SG confirmed that 60 copies of the report had been delivered and Ms Newhoudt-Druchen would be issued a copy. The entity had engaged the Treasury on several occasions to solicit for funds, but much emphasis would be made on engaging on the same matter. He said the country was being put at risk if IES and LTS were not funded.

The Chairperson said the Committee agreed that documents received late for the scheduled meeting would not be perused. The early submission of documents would assist the Committee to have meaningful engagements. The Committee would engage with COGTA and also invite Treasury to educate the Committee on the policies being adopted when funds were withdrawn from entities during the financial year as a result of vacant posts.

Department of Performance Monitoring and Evaluation (DPME): Annual Report

Mr Tshediso Matona, Acting DG: DPME, confirmed that the entity had obtained a clean audit opinion from AGSA for the fourth consecutive year, and the organisation had spent 99.3% of its allocated budget. Almost 80% of its targets had been achieved, while some had been completed out of the planned time frames. A new National Planning Commission (NPC) had been appointed to support the implementation of the National Development Plan (NDP), and the DPME continued to conduct research work to support implementation of the NDP and the Operation Phakisa initiative, which focused government programmes towards results and also continued to add value to the DPME’s planning and monitoring approaches. The latest Phakisa on Agriculture, Land Reform and Rural Development had been launched in September 2016.

Substantial progress had been made through the DPME’s methodology in regard to South Africa’s ocean economy, and the health, education and mining sectors. The DPME had assessed all national and provincial strategic and annual performance plans (APPs) and provided guidance regarding alignment with the NDP and the MTSF, as well as budget alignment with the priorities. The Department had produced programmes of action (POA) quarterly monitoring reports on the MTSF to inform Cabinet on progress and challenges in implementing government priorities, and had supported four provincial departments in developing provincial evaluation plans. The entity had monitored 97 new facilities through the Frontline Service Delivery Monitoring Programme (FSDM), the Local Government Management Improvement Model (LGMIM) programme had enrolled 30 municipalities across six provinces in the past financial year, and the Management Performance Assessment Tool (MPAT) had secured 100% participation (155 national and provincial departments) on the assessment of management practices.

The President had established the Presidential Working Group on Youth, comprising of Deputy Ministers to monitor and drive the implementation of the National Youth Policy 2020. In the past financial year, the DPME had embarked on a strategy review process which was necessitated by the integration of the planning and performance monitoring and evaluation functions, and heightened expectations for a more agile and responsive DPME to increase the impact on performance of government in delivering on the NDP.  Effective planning, monitoring and evaluation (PME) was needed to improve the use of evidence for PME, by improving data collection and use, as well as verification through increased on the ground monitoring, amongst others. The process identified challenges such as the disjoint between sector planning and monitoring, an inadequate degree of alignment of the NDP/MTSF, direct government plans and budgets, late resolution of problems, unexploited specific levers of government, poor PME and the use of evidence, amongst others. The DG said that the entity had responded to the highlighted challenges by integrating planning roles in the National Planning Commission (NPC) and outcomes, focusing the government agenda on priority issues and sectors, ensuring budget alignment with government priorities, and leveraging the state procurement spend and regulatory role to advance the NDP, oversight of state-owned companies (SOCs) and development finance institutions (DFIs), amongst others.

As regards performance per programme, Programme 1 (administration) had achieved 69% of its targets, but the target to maintain the vacancy rate at 10% had not been met. Programme 2, which referred to Outcomes Monitoring and Evaluation (OME), had achieved 60% of its target, though some of the targets not achieved were related to the production of a quality assessment report and tabling of the National Evaluation Plan to Cabinet by the due date.  Programme 3 which pertained to Institutional Performance Monitoring and Evaluation (IPME), had achieved 77% of its targets, with some partial achievements. The organisation’s Programme 4 (national planning) achieved only 63% of its targets, with three partially achieved targets. As reported, Programme 5, pertaining to the  National Youth Development Agency (NYDA), had achieved all its targets.

Reporting on the entity’s human resource overview, he said that the DPME had successfully absorbed the Ministerial and Deputy Ministerial functions transferred from the Presidency to the DPME, and staff members had been inducted and integrated into the DPME with minimum disruptions. Disabled employees accounted for1.8% of the workforce, the entity had 83% Africans, and women at the SMS level accounted for 47.9% of the employees. Performance Management and Development System (PMDS) assessments had been concluded for the 2014/15 performance cycle, Employee Health and Wellness (EHW) services and programmes were implemented in the Department, and training of staff was being undertaken in line with the workplace skills. 26 interns were offered internships during the period, and all SMS members had concluded and signed performance agreements and financial disclosures within the specified timeframes. Highlighted challenges of the organisation’s HR included the difficulty in achieving disability representation at the SMS level, despite efforts to attract disabled candidates, retention of staff in corporate services due to job hopping for better remuneration, especially at salary levels 9-12, and delays caused by the compulsory pre-employment screening that was conducted by the South African State Security Agency (SASSA).

Mr Pieter Pretorius, CFO: DPME, presented the entity’s financial performance. He said the Ministerial and Deputy Ministerial functions that had been transferred from the Presidency had increased the budget allocation from R717.7million to R754.2million. The Department had spent 98.4% of its allocated budget (excluding NYDA transfers), and 99.3% including NYDA transfers. It had received a clean audit opinion for the 2015/16 financial year. Most drawings and expenditure had occurred in the third quarter of the reporting period. Compensation of employees had accounted for 52.2% of the total allocation. The Department had incurred R140 000 in irregular expenditure, of which R120 000 had been condoned, with a written warning issued in one case. It had also recorded R347 000 in fruitless and wasteful expenditure, although R220 000 had since had been determined as not fruitless after the end of the financial year.

As regards the 2016/17 adjustments budget, Mr Pretorius said R30 million in savings had been declared on the compensation of employees due to delays in implementing the revised organisational structure. The projected shortfall on goods and services would be addressed through cost-saving measures and a request to the Treasury to transfer R9 million from the compensation savings to goods and services.

In his concluding remarks, Mr Matona said the Department had made good progress in executing its mandate and its programmes, which were expanding in weight and scope. The DPME was currently engaged in a strategy review process in order to respond to its capacity constraints and to strengthen and align its work to ensure that strides were made. There were high hopes that once the review was concluded, the work, structure and resourcing of DPME would enable it to better plan and monitor the work of government.

Discussion

Ms Dlamini-Dubazana raised concern about the functionality of the Department and said it was disheartening to discover that there was currently no model that the DPME had identified to resolve problems encountered in departments, and no efforts had been made to address the weaknesses identified. She inquired if engagements had been made with the SG as regards the poor monitoring, evaluation and use of evidence identified as weaknesses. She regarded the Department’s presentation as inconsistent information, as there were discrepancies between the hard copies of the annual performance and the presentation as regards the summary of performance and targets. She asked the CFO if funds had been allocated based on the targets reflected in the hard copies of the annual reports or those reflected in the presentation. She also asked why invoices had not been paid on time. As regards property, she inquired why the Department had incurred irregular and fruitless expenditure. She clarified that the audit opinion from the AG had been a clean audit and not an unqualified with no findings, as depicted. She then sought clarity on the key issues highlighted by the AG.

Mr Motau said the SABC had given the word “bonus” a bad name. He inquired if the performance rewards highlighted in the presentation referred to rewards or bonuses. The AG had identified in his report that there had been material misstatements in all four audited programmes of the entity. He said that the AG had said that the root cause of the misstatements had been inadequate review and monitoring over performance reporting by management. The AG’s report about the entity was worrisome, because it was expected to monitor and evaluate all departments in the government, and was expected to be a role model for other departments. While an 80% performance might appear acceptable to the AG, the performance was inadequate for the Department if it intended to monitor other departments. An 80% achievement simply meant 20% of targets had been unachieved, and the Department was expected to achieve 100% if it intended to monitor other departments.

Mr Van der Westhuisen said that the DPME was expected to be a model department for other departments. Five unpaid invoices by the entity were “five too many”. He inquired if the NDP was still appropriate, and sought clarity on whether departments were effectively implementing targets envisaged by the NDP. There were a lot of performance indicators, and the Department was failing to make impacts and generate results on how government was succeeding. The Department itself was meant to be a measuring tool for other departments. He feared that there had been no advancements in the public service compared to previous years, and he enquired about the actions or plans taken to address the internal weaknesses identified by the Department. How could outcomes and progress could be measured in the future in terms of the Department’s yardstick?

Mr Marais clarified the political statement, “the DA do support the NDP,” which was reflected in the report. He said that while the DA supported the NDP, the DPME played an important role in guiding other departments to implement what needed to be done. He asked if it could be guided in any way to implement the NDP to the benefit of South Africans. The NDP should be scrapped if it was not supported and entities assisted to adjust their strategic objectives.

Mr Mncwabe sought clarity about the identified weaknesses. Were the responses given in the report on-going actions to mitigate the weaknesses, or mere proposals to address the weaknesses?

Ms Newhoudt-Druchen said she was still quite new to the Committee, and trying to establish the link between the youth directorate and the NYDA. How did the youth directorate and the NYDA integrate? How was the youth development budget shared between the two? She commended the breakdown of employees with disabilities as regards employment equity, but expressed her worries that the number of employees with disabilities was not reflected in some other areas of the report. She asked why no employee with disabilities had been promoted in the financial year and why there had been no skills development training for disabled employees.

The Chairperson referred to the AG’s report, and said evidence submitted must always tally with predetermined objectives. The AG relied on hard evidence, and consequently submissions were expected to tally with predetermined objectives. The AG had also highlighted that the Department had a 95% appetite for respecting supply chain protocols as regards to procurement. An achievement of 100% was feasible. She asked if there were issues with the Department’s IT infrastructure. A balance had to be struck between looking inwards as a department, and adding value to other departments via evaluation. Details of engagements and projects with other departments in terms of sustainability should be furnished in future engagements. She said that the Treasury was cutting costs of departments that failed to fill vacant positions, and the DPME must ensure that posts were filled. The Department’s second quarter report should include the frontline service delivery monitoring tool. She suggested that the Committee should be briefed by the DM on the implementation of APP in the second quarter report. The high rate of resignations should be addressed when the Policy and Procedure on Incapacity Leave and Ill-Health Retirement (PILIR) report was presented, and rewards of employees must be supported by evidence of performance in areas of core functions.

Mr Matona clarified that the performance rewards were bonuses, and they were bonuses awarded in the previous financial year. He was not personally involved in the allocation process. Only low level employees needed to earn bonuses, and the impact of the earned bonuses could not be underestimated, as they were potent enough to impact on staff morale. His observations had revealed that the basis for the recommendation of bonuses was not rigid enough. The circumstances under which bonuses were awarded had been reviewed, and only employees who deserved bonuses would be rewarded. Some employees would benefit from only small salary adjustments. As regards financial misstatements, the AG had said that following explanations by the management, they were no longer misstatements. The AG’s report was being interpreted differently.

Ms Dlamini-Dubazana interjected, and said that her inquiry had stemmed from the presentation of the AG, while Mr Motau’s inquiry had been from an extract from the Department’s report. Her inquiry was therefore not based on her personal interpretation of the DPME’s report, but rather on the AG’s report. She then refuted the DG’s argument, and said he should rather defend the policy.

Mr Matona then read an extract from page 97of the annual report, which read: “As management subsequently corrected the misstatements, I did not identify any material findings on the usefulness and reliability of the report and performance information”. This referred to the AG’s audit opinion of the DPME.

Mr Clement Madale, Head: Office of the Director General, DPME, said that the disagreements with the AG during the audit process had been clarified, and this had subsequently been captured in the annual report as read by the DG.

Mr Matona said that the reported 80% performance was linked to the targets set out by the department. Areas that were “partially achieved” were areas vulnerable to disagreement between the AG and the Department. Some partially achieved targets, for instance, required the submission of reports to Cabinet and if they were not submitted as required, the AG referred to the targets as unachieved. An unachieved target did not necessarily imply that work had not been done, but rather that the work had been done or the report prepared, but had not been submitted to Cabinet. He said that the Department had the capacity to perform better in the next APP.

The DPME was a monitoring department and as such, it addressed how targets could be better set, designed and measured. It was possible to strike a balance between self-introspection and monitoring other departments. The government was implementing the NDP, and its validity was not debatable. The DPME was still quite new and there was a learning curve, and all departments were just starting to implement the NDP. He pledged that the Department would be more effective in the next financial year.

A critical self-introspection had been conducted by the Department to highlight its own internal weaknesses. It had been a tool to assist the Department to identify avenues of delivering on its own mandates and the future orientation of its own work. He agreed that 80% achievement was not appropriate, and the Department clearly needed to achieve 100% if it aimed to regulate or monitor other departments. Proper performance management had to be conducted, and all targets should be met.

As regards vacancies, he said that the screening process by SASSA was a factor beyond the control of the DPME. It was performing slightly better on gender than on disability, and skills development in government was demand driven. He said that employees were expected to indicate the skills necessary for professional growth in their performance agreements.

Mr Pretorius clarified that the five invoices not paid had been five out of 8 626 invoices involving a total of R219 million, and only R19 000 had not been paid on time. The Department’s target for the payment of invoices was ten working days, and not 30 days. The current average was nine working days. Most of the fruitless expenditure related to travel, in cases where cancellation penalties had been incurred. The information on the budget distribution between the NYDA and the youth development was contained on page 112 of annual report. The CFO said that self-programmes differed from targets in such a way that an entity could have a series of self-programmes, and a self-programme might have several objectives and targets, which better explained why the number of targets exceeded that of self-programmes.

The DM said the presentation had detailed the responses to the weaknesses highlighted by the Department, and not the proposals. The 2016/17 annual report would reflect the changes that had been made to address the weaknesses. He said that when the President had taken the decision to merge planning with performance monitoring and evaluation, the understanding was that although both processes were separate, they had to address each other. The identification of weaknesses would be a continuous process to assess the Department’s performance in successfully integrating its planning role with the monitoring and evaluation role. As regards the NDP, the current administration had developed a MTSF as the five-year plan to implement the NDP, and government departments set their APPs based on the MTSF as part of the implementation of the NDP. The NDP brand had been re-launched and it remained the duty of the DPME to strengthen its communication and engagement around the NDP. The Department aimed to ensure that every sector in society was involved in the implementation of the NDP, as it was a national plan. The whole of government should prioritise youth development, and the Presidency intended to take a lead in terms of coordinating government’s youth development work in terms of policy and legislation. The NYDA would be the main primary implementing agency of government for youth development.

He said the DPME appreciated the comments and concerns raised, and its main aim was to be a model institution through its desire to fully achieve its targets. He hoped that there would be improvements in the 2016/16 annual report.

The Chairperson said that the Department should furnish the Committee with a report on the monitoring of the implementation of the NDP outcomes, as well as the impact results. The Committee would closely monitor the turnaround of the filling of vacancies.

National Youth Development Agency (NYDA): Annual Report

Mr Khathu Ramukumba, CEO: NYDA, said the NYDA had achieved its second clean audit opinion from the Auditor General of South Africa (AGSA) and had also achieved its highest performance in history, with a 96% achievement of all key performance indicators approved by Parliament. The Agency had successfully concluded its organisational realignment and culture change programme which had culminated in reducing the number of positions by 16%, with a 25% reduction in the salary bill. Substantial progress had been made as regards legislative developments of the youth empowerment plan, the integrated youth development strategy, the national youth service coordination framework and the amendment of the NYDA Act.

Programme 1 (economic participation) had over-achieved it targets through its involvement with 673 youth-owned enterprises, 63 042 young aspiring and established entrepreneurs, and by providing 72 communities with community development facilitation support, and creating and sustaining 3 672 jobs.

Programme 2 (education and skills) had also over-achieved its targets by enrolling 4 736 young people in matric re-write programmes, supporting 406 youths through the Solomon Mahlangu Scholarship Programme, enrolling 2 136 youths in structured Youth Build programmes, enrolling 14 907 young people in National Youth Service (NYS) volunteer programmes, and supporting 61 392 young people through life skills, job preparedness and job placement programmes.

Programme 3 (health and wellbeing) had over-achieved its targets by facilitating the access of 6 769 young people to health and wellbeing programmes and providing health and wellbeing interventions to 241 000 youths.

The entity’s fourth programme (policy and research), just like the previous programmes, had over-achieved its targets by creating 47 youth development research and evaluation products and policy reviews. The programme also provided 1 592 000 youths with access to information and awareness on youth development programmes. 59 organs of the state and the private sector had been lobbied to support and implement youth development programmes, creating a platform for 11 570 youths to participate and benefit from democratic processes, and gaining commitment of funds totalling R107.89 million for youth development programmes.

In Programme 5 (governance), the NYDA had failed to achieve its target to establish an efficient and effective IT system to support youth development due to:

  • An approved, but not yet operational, information data security management policy as regards data governance;
  • An approved, but not yet operational, business continuity management strategy as regards IT service continuity management;
  • Absence of policy for Bring Your Own Device (BYOD) to implement platform standardisation;
  • On-going, but not yet completed, mobile application to implement future business requirements.

The programme had met its targets as regards implementation of the phase 2 roadmap, capacity building to enhance staff performance, operationalising information dissemination access points, and compliance with policies and legislation for good governance.

Mr Waseem Carrim, CFO: NYDA, presented the financial report of the entity. He said the NYDA had net assets of about R1.6 million and net liquidity of R883 000, which was sufficient to meet all the entity’s liabilities as they became due and payable. The deficit for the year had been R24.6 million. The main area of expenditure had been on employee costs which had been further influenced by the pay-outs of voluntary severance and retrenchment packages to employees who had exited the organisation due the restructuring and realignment of the organisation, to reduce the high salary bill for future financial years. Prior accumulated surpluses had been used to fund the process, and the adjusted deficit for the financial year was zero.

Total project disbursements had amounted to R256.433 million in the financial year, irregular expenditure had been R74, 000, and fruitless and wasteful expenditure had amounted to R3 000. Expenditure had exceeded the budgeted amounts for all programmes except research and policy. R437.326 million had been budgeted, and R465.661 million had been spent.

The NYDA had completed one of the most successful restructuring processes in government. The restructuring programme which had been concluded in December 2015 had seen the number of positions reduce from 565 to 473, while the overall salary bill had been reduced by 25%, from R189 million to R145 million.

Ms Rachel Kalidass, Audit Committee Chairperson: NYDA, said the entity was pleased about the successful achievement of its second clean audit opinion. It had received maximum support and cooperation from the outgoing board as well as management in the implementation of recommendations. The clean audit represented a totally unqualified opinion, with no material findings.

Mr Ramukumba also briefed the Committee about the legislative context of the organisation. He said the NYDA Act amendment process was being undertaken by the youth desk in the DPME. The processes undertaken included the appointment of a technical committee comprising of the NYDA, DPME, the Presidency, DPSA, COGTA and National Treasury. Four versions of the bill had been proposed and submitted to the State Law Advisers. Consultations had been undertaken with National Treasury in respect of the funding of the provincial models proposed, and the final bill would be presented to the Deputy Minister in the next two weeks.

The Integrated Youth Development Strategy and Youth Employment Plan had been crafted and submitted to the DPME. Consultations had been concluded with the provinces. The documents had to be presented to the National Economic Development and Labour Council (NEDLAC) and government clusters, and finally approved by Cabinet. The National Youth Service Coordination Framework had been crafted and presented to the Deputy Minister.

The CEO said that the organisation had short-term activities to:

  • Launch the NYDA mobile application to break barriers to the access of NYDA’s product and services through travel distances;
  • Roll out free Wi-Fi services at all NYDA full service branches to facilitate access to opportunities available on the internet;
  • Launch rural development forestry and furniture-making projects, which had a growth sector in the economy;
  • Launch the youth cadet and flag programme with the Department of Arts and Culture;
  • Roll out the NYDA jobs database programme, in collaboration with Lulaway;
  • Host the second South African Youth Awards.

According to statistical data, there were 19.5 million youths, which was 36.5% of the country’s population. Youth unemployment was estimated to be at 60% for all ages of youth. The youth made up 534 000 entrepreneurs out of the two million total in South Africa. Youths with less than Matric were more likely to be unemployed, with the share of young people who were unemployed without Matric being 57%. The basic education dropout rate was estimated at 50%.

The strategies to curb youth unemployment included education, youth entrepreneurship, skills development and the national youth service, amongst others. The “Fees Must Fall” movement was an indication that the majority of the youth still had perceptions that breaking the chains of poverty could be realised through education. The NYDA alone could not solve the challenges of all youth in South Africa with its budget of R400 million, compared to that of Department of Education, which was R254 billion.

As regards employment equity, he said that the entity had a total of 179 male employees (167 Africans, seven Coloureds, four Indians, and one White) and 248 female employees (219 Africans, 17 Coloureds, six Indians, and six Whites).

Discussion

Ms Dlamini-Dubazana commended the presentation of the entity. It was worth acknowledging the death of a staff member of the NYDA and the support of the previous board. In previous engagements with the AG, the NYDA had achieved a satisfactory performance and should not underestimate its performance, as it had achieved an unqualified audit with no findings. There were currently no funds to assist the entity, and partnerships with government entities should be conducted through outreach programmes to municipalities to assist the entity to achieve its mandates. The Committee would definitely include additional funding for the NYDA in its recommendations. She also agreed that entrepreneurship studies should be included in the basic education curriculum.

Mr Motau asked if the entity could really afford the advertisements seen in the media, making specific reference to the advert on the hard cover of the annual report.

Mr Van der Westhuizen said that an entity such as the NYDA should exist only for the purpose of making a positive impact on the lives of South African youths. It was quite disturbing to realise that the NYDA was under-funded. He pointed out that the average remuneration for the top management -- six staff members -- was R2.6 million, while the President’s salary was R2.75 million. Almost half of the total funds allocated were spent on employee costs, and not on projects. He asked if the average remuneration of R2.3 million per staff member for senior management of the entity was justifiable, and also if it was justifiable for the entity to retain more than 35% of its budget and spend it only on employee costs. It was audacious of the CEO to solicit for additional funds while so much was spent on administration and the internal processes of the NYDA. What percentage of the solicited funds would be spent and disbursed to young people?

Mr Mncwabe commended the presentation by the NYDA and the improvements made over the years. He said the Matric rewrite programmes should be scrapped to cut costs, since it was the sole mandate of the Department of Basic Education, which had a budget of R254 billion. The savings should be utilised for youth development programmes, such as skills development. The state could provide free education, but education was not the solution to unemployment. He commended the entrepreneurship and skills development initiatives of the entity, and said that skills programmes of TVET colleges were not well marketed. He also commented that programmes on performing arts for young people should be capitalised on. The best thing Mr Hlaudi Motsoeneng (SABC Executive Officer for Corporate Affairs) had achieved so far was the 90% local content initiative on South African media. He said skills development was the solution to unemployment in the country, and assisting Matric rewrites was beyond the mandate of the entity.

The Chairperson said that the DPME also needed to market itself without wasting funds. The advert on the cover page of the annual report was a marketing strategy and although good, did not portray the government. She endorsed the budget split of the operational budget and the actual programmes, and said that the NYDA was expected act not only within its mandate, but also to play an advocacy role in influencing other departments to engage in youth programmes. A breakdown of salary levels was necessary to assist in benchmarking with the private sector salaries, to get a clear indication of acceptable standards, as well as the job description of the roles. She said most legislative amendments were rejected due to a lack of consultation with stakeholders and in reviewing the NYDA legislation, due process must be followed and stakeholders must be consulted to avoid challenging the legislation in court after the amendments.

The CEO clarified that the salaries had included severance packages that were paid out to officials who exited the organisation. Four employees in the top management had exited the organisation. He said that the Matric rewrite would be officially handed over to the Department of Basic Education from 2017.  The NYDA was passionate about Technical and Vocational Education and Training (TVET) colleges and also about engagements with the performing arts. The former COO of the SABC and the COO of the Film and Video Foundation were engaged in collectively working on a programme to create media opportunities for youths. The project was on hold due to recent developments at the SABC. The essence of the adverts was to build the confidence of the private sector in the NYDA and also to foster private sector partnerships with the organisation.

The Chairperson thanked all attendees for their attendance and engagements.

The meeting was adjourned

 

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