Brand South Africa & Media Development and Diversity Agency on their 2015/16 Annual Reports

Meeting report

Minister’s opening comments

Ms Faith Muthambi, Minister of Communications said that Brand South Africa had been established in August 2002 to help create a positive and compelling brand image for South Africa. Its main objective was the marketing of South Africa through the Brand South Africa campaign. She described the management structure of the organisation, and introduced the new CEO, Mr Kingsley Makhubela. She was proud that BSA had achieved most of its planned targets and had managed to achieve a clean audit for the first time since it had been established, which indicated that there was progress. There was also a positive cash flow for the first time in three years. The surplus was able to cover most of the short-term liabilities and there had been no irregular expenditure during the financial year under review. The employee compliment was dominated by women, and the vacancy rate had dropped to 4%.

Brand South Africa: Annual report

Mr Makhubela started by assuring the Portfolio Committee (PC) that the issues raised in its previous meeting had been dealt with, and that the BSA board had three different committees committed to dealing with all performance-related activities. BSA had ranked first in the South African audit system and third within the board system.  Its organisation had a 48% management component, and the staff turnover had been reduced to 15%. It had received baseline funding of R173.1 million from the Department of Communications (DoC), which was a 3% increase from the previous financial year. No additional amounts above the baseline had been received. BSA had achieved 84% of its predetermined objectives (PDOs).

Mr Promise Buthelezi, Audit Manager: Auditor General of South Africa (AGSA), said that human capital, finances and job evaluation were outsourced previously, but BSA was working towards in-sourcing those functions. It was committed to keeping the vacancy rate at a minimum, which was between 4% and 5%.  Three out of the five managers were male and the remaining two female, which resulted in a 60:40 gender split. 86% of its staff had tertiary education qualifications, and only 2% had not completed their Matric. The recruitment costs had been reduced and there had been a positive net cash flow from operating activities. The organisation had increased its assets in order to improve its solvency. In the previous year, it had had a solvency factor 0.43, but with better asset and liability management, the number had increased to 1.38, meaning that it had R1.38 in current assets for every R1 of current liabilities.

Mr Makhubela added that the excess cash had been used to cover the short term liabilities which had caused a deficit in previous years. This meant that even though the report indicated a positive cash flow, it was not an indication of under-expenditure, so no cash had been sent back to Treasury. BSA was working on a new performance measurement system which would score the success and completion of activities differently from the current system, which seemed a bit complex.

Discussion

Ms S van Schalkwyk (ANC) congratulated the organisation on its first clean audit, and commended it for its low vacancy rate. She asked what the percentage of employees with disabilities within BSA was, and how the number could be increased. She asked for a breakdown of the amount spent on training and development. She wanted to see that the employees were given opportunities to grow, and so she asked whether training was provided to the employees to help them advance to higher positions in the organisation. Did BSA offer funding for employees to study further? She asked that the financial breakdown for each programme be provided to the PC for it to identify the correlation between achievements and finances.

Mr M Kalako (ANC) was impressed with the clean audit, saying that BSA had improved a lot since it began. He asked about the difference between media content in South Africa compared to the media elsewhere -- what kind of image was being portrayed about South Africa in other countries? Was it similar to the negative views that the South African media had constantly been portraying of a government with internal conflict? There had been a time when countries outside South Africa thought that the country that was collapsing due to the service delivery protests. However, how was BSA branding South Africa and successfully promoting the country’s positive attributes?

Mr M Gungubele (ANC) said that South Africans tended to take their country for granted. Those that left the country and realised what was happening in other countries, would understand what he meant. He said that the targets had been articulated as actions, and not as achieved results, which was misleading. For example, finalising overall country messaging and key messages for select target markets and or audiences was not measurable. He felt that the language with which the results were put together was important. He was happy with the general performance and so it would be important to reduce the risks on expenditure costs, to ensure short term liabilities were constantly taken care of.

Ms N Tolashe (ANC) also asked about how South Africa was being branded. She felt that the country needed to know that there were systems in place to control matters. She was happy with the report.

Mr R Tseli (ANC) referred to Programme 2 and asked what work had been done in South Africa.

Ms P van Damme (DA) asked for a financial report on all the other entities working with the BSA. She also highlighted that there had been a 46% increase in employee costs, as well as salary increases for the executives. Furthermore, fruitless and wasteful expenditure had increased, and she and asked why this had been so.

Ms V van Dyk (DA) referred to the attendance register, which indicated that a number of people had never attended board meetings. Did BSA take action against board members who did not attend meetings? She was impressed with the whistle blowing policy. She also asked why the summary evidence of the agency could not be located. How many prints had been made and how many documents had been distributed. She asked whether it was necessary to have international managers, as inflation was high and the South African economy was not stable. Could South Africa afford to have offices abroad?  How were investments measured?

The Minister said that she would direct the entities not to report on activities which had not been completed, as being achieved in the future. She said that the Annual Performance Plan (APP) would incorporate all recommendation plans. The increase in fruitless and wasteful expenditure had been due to interest penalty payments to the SA Revenue Service (SARS). More money could be used to achieve branding abroad.

Mr Makhubela said that a manager abroad was indeed a need. A national brand had to be built. Other countries gained market share, based on how the world perceived them. South Africa was facing similar challenges. BSA wanted to make use of different resources to introduce a new concept of nation branding. He said that reputation was intangible. People formulated opinions based on perception. BSA wanted other countries to know about the good things that South Africa had to offer. He wanted South Africa to be perceived as the democratic country it was. He wanted South Africa to be known as a country that cared about global issues.

The amount that BSA owed to SARS had been about R76 000. BSA had employed South African representatives in the United States, Britain and China. He said that the skills that the representatives had were valuable and important to retain when they returned to SA. He wanted to ensure that the employees were kept within the organisation.
 
In a survey on the public’s trust in politicians, South Africa had ranked 93 out of 143 in 2013. It had recently regressed to 109, but it was important for everyone to understand that the issues were being dealt with.

Ms Linda Magapatona-Sangaret, Chief Marketing Officer: BSA, said building a country brand was complex, with many different messages being sent out by various sources. This did very little to build the country’s brand, and it was evident that to attract tourism and investment there was a need to co-ordinate marketing initiatives to make them more effective. There were many benefits to having a consolidated brand image, with the most important being that a consistent Brand South Africa message created strategic advantages in terms of trade and tourism for the country in an increasingly competitive marketplace. BSA had begun programmes to address the complexity of branding a country.

South Africans could play a huge part in being patriots for their country’s image. She referred to the USA as one of the most well-branded countries in the world, and said that South Africans needed to tell the good stories and not just feed into the bad publicity. She believed that 98% of the tourists who visited South Africa, left the country satisfied. Those who aspired to visit the country had usually been influenced by words of praise by other visitors, who went back to tell the great stories about what they had experienced. All the people of South Africa needed to be able to express their love for the country.

Mr Buthelezi said that the reason why the salaries, as well as salary costs, had increased was due to the recently filled vacancies. The employee numbers had increased to 52, which meant that the salary payments would increase. Organisational Development (OD) had recently looked at in-sourcing legal services, and the roles and responsibilities of the board secretary had increased, which meant that the salary had to reflect the increased effort. The salary changes had been taken into account for the 2014/2015 financial year, but had taken effect during the 2015/2016 financial year. BSA had also marked positions to be held by persons with disabilities, and preference for bursaries was given to those without degrees. The organisation was funding people without Matric qualifications to ensure that they were able to complete their Matric as soon as possible. Furthermore, BSA spent 70% of its income on its programme activities, and 30% was used to pay salaries.

Mr Makhubela admitted that the system used to measure activity had its shortcomings, and BSA appreciated the PC’s useful input. An improved working system would put in place to ensure that all concerns taken into account were considered. BSA used an internal programme called ‘play your part’ to measure the impact made. BSA was also ranked in the top 80 organisations that took part in active citizenship,

Mr Gungubele asked BSA to use performance measurements that were easier to understand. He also proposed a workshop, to better understand the role that the government could play to further Brand South Africa.

The Chairperson emphasised BSA’s achievements, and said that it was difficult to engage with such a well-performing entity. He thanked Brand SA and the Minister for their presence.

Media Development and Diversity Agency (MDDA): Annual report

Chairperson for the presentation.

Ms Phelisa Nkomo, Board Chairperson: MDDA, introduced the Acting Chief Operating Officer (COO), who delivered the presentation.

Ms Ndibongo said that the MDDA had been the largest contributor towards providing previously disadvantaged individuals access to control and management of the sector. The media landscape had changed considerably, with more than 200 community radio stations in existence. About 135 radio stations were funded by the MDDA, which was ensuring that all South African languages were being actively used to communicate and engage with communities. It had also invested significantly in the purchase of world class radio equipment, to enable quality productions.  In less than ten years since the first one-year licence was granted to the first community television (TV) station in South Africa, the MDDA had supported four TV stations. Similarly the community and small commercial print sector had grown significantly in recent years. South Africa was boasting more than 200 small publishers, of which a good proportion were publishing in indigenous languages.

The MDDA had strengthened and established new relationships with funders during the 2015/2016 financial year. It had also achieved 71% of its performance indicators, which was 96 out of 135. The financial and non-financial support projects had exceeded the annual targets. It was actively supporting the Minister of Communication’s digital roll out. The focus had been on supporting new and existing stations, to migrate them to digital equipment. Stations were also funded for audio streaming, to encourage online presence. Increased focus was placed on content development made possible by digital broadcasting, to enable stations to deal with issues happening around them and to enhance sustainability.

The MDDA had received an unqualified audit report. It had revised its monitoring and evaluation systems so that it could monitor the municipalities’ advertising expenditure as a contribution towards sustainability within the sector. It had experienced under-spending due to delayed project reports from the grantees. Expenditure had also decreased from R57 million in the previous financial year, to R53million. The MDDA had funded 26 community broadcasters and 24 print and digital media projects. Four of the community broadcast projects and six print and digital media projects were led by women. A total of 12 community radio projects and seven print and digital projects were led by young people. Although none of the projects was led by people with disabilities, a substantial number of people living with disabilities were on the boards of various stations and projects. The projects were mostly held in rural areas, where most disadvantaged communities resided.

Bursaries had been awarded to community radio stations for the Wits Radio Academy. Eight people were working towards taking the Advanced Radio Management Certificate, and three stations were being mentored. A Learning Forum was held and attended by more than 100 delegates in May 2015. The MDDA had worked closely with the South African Agency for Science and Technology Advancement (SAASTA) to support and train community media on science and technology in indigenous languages, and had been identifying community media projects to employ 17 interns. Within the research projects, the MDDA had managed to fund the women-empowered Uhuru Press, a website for women writers.

The MDDA had delayed taking on new projects due to the expiry of the board members’ terms, which meant the board did not have a quorum. The vacant positions had not been filled due to staff turnover and the organisational structure being under review. Once the board had approved the new organisational structure in January 2016, the focus would be on filling the vacancies.

The MDDA had received R22.6 million in the 2015/2016 financial year as part of the annual allocation from the Department of Communications. It had been able to successfully sign and manage contracts with broadcast funders, which had generated revenue of R32.5 million. R4.6 million had been generated from interest, and the funds used to support operational costs. In total, this amounted to R59.8 million. It had spent R9.2 million on employee costs, which was lower than the R11.5 million incurred during the previous year, due to the high vacancy rate. Grant expenditure had been R29.7 million. Operating activities had cost R13.8 million, which was more than the previous year, and was the result of making use of external service providers with temporary contracts to cover a lack of capacity. An overall surplus of R7 million was recorded. Other than employee remuneration, travel and accommodation costs had represented a major portion of the MDDA’s operating expenditure, although the National Treasury travel and accommodation guidelines were adhered to.

Ms Ndibongo reported that the financial year targets had to be refined, as they had not been SMART (Specific, Measurable, Achievable, Relevant and Time-bound). Management was committed to ensuring that the key vacancies were filled by the end of the financial year. About R4.6 million had been spent on consultants for internal audits, human resource management, getting an Interpreter, legal services, company secretarial services, information technology (IT), financial services and communications and branding. The MDDA had reported R5.3 million in irregular expenditure and a total of R1.1 million for fruitless and wasteful expenditure. The R1.1 million was due to late payments.
With the Agency operating for over a decade, an impact assessment study had been commissioned to reflect and evaluate the extent to which the MDDA was responding to its mandate for community media development and diversity. The study would also describe the impact it had had on MDDA’s funded projects. The Minister of Communications had also indicated the intention to review the MDDA Act and its associated regulation. The Agency was committed to support this initiative and to ensure that the MDDA accelerated its impact on media transformation.
Discussion

The Chairperson asked whether the 71% filled vacancies meant that the CEO position had been filled. He asked how many acting leadership positions there were in the organisation.

Ms W Newhoudt-Druchen asked why the MDDA had not referred to people with disabilities in any of the projects mentioned. Why had board members not attended meetings, and what was it was doing to correct the matter? What percentage of the staff had disabilities, and what were the roles of these staff members? She asked why there were so many vacant positions.

Ms Van Dyk said that the MDDA had a 50% vacancy rate, but according to the laws in place for organisations, vacancy rates should not be above 16%, which was a huge concern. She asked whether the vacancies had been advertised, when the MDDA had advertised the available job positions, and what the outcome had been. At the end of the 2015 financial year there had been 16 vacant posts, and the financial year-end for 2016 was approaching, but the number had not decreased. She highlighted the fact that there was a lack of executive managers, as the roles had not been filled.

In previous years, the MDDA had achieved about 50% of its annual goals, but there had been more activities than those highlighted for this financial year. She felt that the bar had been lowered, and suggested that the MDDA would have to find a way to set more effective and realistic goals. The report illustrated a high amount of irregular and wasteful expenditure. The wasteful expenditure of R1 156 000 had been due to late payments, and the MDDA’s financial position did not allow for such large amounts of irregular spending. She asked what mechanisms would be put in place to ensure that all funds were well managed and well accounted for. She emphasised that the lack of management had led to poor control of the resources. She also mentioned that the employee statistics had not included Coloured or Indian staff members, and asked whether the MDDA had the research statistics to indicate this. She also asked that the vacant positions be clearly stated, as well as an indication of the expenditure for the secretarial services. Why had the amount increased? She also asked about an organisation that had received funding of R800 000, when the application had been for R300 000.

Ms Van Damme asked why relevant steps had not been followed to prevent irregular expenditure.  She then asked whether a certain member was still a part of the board of directors.

Mr Tseli was impressed with the work that the MDDA had managed to achieve, even though it had been clearly stated that the organisation was under-funded. The Portfolio Committee had to arrange a meeting with National Treasury to deal with the on-going issue related to under-funded government organisations. He was passionate about community radio. He asked that the MDDA put together a report on municipal and entity activities, and for clarity on the procedure for granting licences for the financial year. About 13 grant receivers had been from the rural areas, and it was good to know that the MDDA was uplifting rural communities. He wanted to know how the MDDA would ensure that the people in each community were well informed about the local radio stations and that the people understood their purpose. He believed that local businesses could benefit from using these radio stations as an advertising platform.

Ms M Matshoba (ANC) wanted clarity about a complaint of unfair dismissal by a former employee, Ms Julia Mudzikwa, who had taken the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA). She said that the report mentioned that the CCMA had ruled in favour of the MDDA. She asked what the case had been about and the amount, if any, that had been received from the case. She also thanked the Minister for visiting Gugulethu in Cape Town when the community had highlighted the problems faced due to the radio station in Gugulethu. Because of the Minister’s visit, Gugulethu would be able to express grievances openly. She asked what the progress had been for new radio stations. What was the MDDA doing about areas with limited radio frequencies? What was happening to prison radio? She also asked how the MDDA was ensuring that there were sufficient rehabilitation programmes available to prisoners.

Ms Van Schalkwyk said that in the past, the recipients of grants, such as local radio stations, had had trouble during the application process, which had hindered the release of funds. She asked whether mechanisms had been put in place to prevent delays. She asked for details about the people who were eligible for training. Were they sourced from the community? What happened to the trainees once they had completed their training? She asked whether the MDDA helped them find jobs or placed them in opportunities within the organisation.  How did the organisation ensure that the programmes run were successful?

Ms Tolashe focused on the vacancy number. In April, 16 vacancies had been advertised, but it seemed as though the MDDA was running with a leaderless board, which was a major concern. The MDDA had to ensure that small entities were empowered. She asked what role the print sector played in achieving media development and diversity in SA.

Mr Gungubele spoke about the importance of unity. He felt that racial and peaceful unity was important for stability to occur. People needed to be informed, so the MDDA would have to come up with ways to intervene. He wanted to know in what way the MDDA was involved in assisting the entities that received funding. He also mentioned that the MDDA had to indicate its performance by using a measurable and uncontestable standard. It had appeared as though the MDDA’s goals were incorporated into the measured performance, but he felt that the goals set were not an accurate measure of the completed activities, and neither were the incomplete tasks.  

Mr Kalako said that the MDDA was almost 14 years old, and he felt that the organisation should have the ability to generate some form of income besides government funding in order to sustain its function.
 
The Chairperson said that the Auditor General was aware that success was not measured by how well finances were managed, but by the impact that the funds made to each project and programme.

Mr Tseli asked that the MDDA indicate the type of assistance, and the amounts, provided to each entity, including radio stations as well as printers.

The Minister asked the Member to check the report, which had all the information about the different community radio stations and established community media. She was pleased to hear that the Portfolio Committee was looking into ensuring that National Treasury provided enough funding. She felt strongly that print media had to support the needs of the media within each community and address issues that were related to their audiences. Most of the project funds ended up not reaching the intended recipients due to poor leadership and the lack of proper governance structures. There were many areas of regulation that needed to be dealt with in order to prevent the continuous cycle. The MDDA would look into ensuring that projects became self-sustainable and that it was able to maintain its own income. 

MDDA Chairperson, Ms Nkomo, said that usually problems with governance were discovered after entering into a contract which had strict regulations. The contract would state the amount to be received and what the money would be used for. However, once the first deposit went through, the money would be carelessly spent. Before making the second payment, the project managers were required to send a report to the MDDA, and that was where most of the delay took place. Furthermore, there had been very little accountability in the past, so the MDDA had begun monitoring some projects and had been forced to play a facilitating role in order to resolve matters between the leaders, and to receive a complete report. This had been problematic. The MDDA had decided to ask the communities to remain involved with the projects, to ensure that the leaders remained accountable for the finances, and that stations were not collapsing due to a lack of resources. She felt that the Western Cape Prison Radio was a project that would help self-empower those involved, as well as empower the community. It was a unifying project that would also enhance integration.

Ms Louise Vale, MDDA board member, said that the vacancy rate had been high because the MDDA had a new organisational structure which would suit the needs of the organisation and what it wanted to do.

Ms Ndibongo said that the organisation had different projects, where people with disabilities were active participants. The funding criteria had also been revised to ensure that people with disabilities were included in the sourcing criteria. There were 16 vacancies for the financial period under review, but the vacancies would hopefully be filled by the end of the financial year. The MDDA was under-staffed, which meant that many resources had to be outsourced. These contracts cost the organisation quite large amounts. The MDDA had also initiated a process where projects that received funding would have workshops to cover report writing, and what would be expected of the recipients, as well as how to deal with SARS payments.

Ms Thembelihle Sibeko, Acting CEO: MDDA, said that all funded projects had already been a part of the database. From these, a survey had been conducted to have an impact assessment from 100 community radio stations and about 49 newspapers. She mentioned the way in which the research would measure the impact made on these community projects. She also explained the application procedure which had led to a printing organisation receiving R800 000 when they had applied for R300 000. Sometimes a business would apply for a specific amount for funding, but an official would have to check the business operations to ensure that the application was justifiable, and sometimes it might be found that the business may need more funding due to inflation or a lack of equipment, and this would be added to the results of the official’s visit. After about a year or two, the funding needs of the project, or organisation or business would have increased, as has been the case with the above mentioned business. Furthermore, the R800 000 was as a result of multiple transactions after the previous deposits had been fully accounted for.

The MDDA said that irregular expenditure had taken place due to the vacant chief financial officer (CFO) position for about nine months. The incoming CFO would have to comply with National Treasury regulations. Training had been provided and the audit recommendations by the AG were being followed. A second supply chain manager was soon to be appointed.

The Minister also mentioned that the board member to whom Ms Van Damme had referred, had not been a part of the MDDA, as a letter of appointment had to be sent to him. He had not yet set foot within the MDDA when his case was investigated.

Ms Van Dyk asked why the funded entrepreneurs still needed grants after five years. She felt that if a business was not self-sustainable after a period of time, then funding should be offered to other businesses with potential.

Mr Tseli asked how applications were approved and what the MDDA did to ensure that funds were used for the correct function, as a number of local radio stations were failing even though they had received the financial assistance required.

The Acting CEO said that sometimes a small business within the community took longer to succeed, even though there was growth potential, due to the large amount of competition within the area and a lack of recognition from government officials within those areas. In the media printing industry, he mentioned that in most cases, large printing companies were most likely to remain afloat, which meant that the MDDA would have to step in for longer than five years to help a small business move past the initial challenge of starting up.

Mr Gungubele was concerned that the application process was too long. A process that took at least two years to reach completion was detrimental for start-up businesses. He proposed that the MDDA begin drawing up a new faster and more efficient model, as the country was in serious need of entrepreneurs.

The Chairperson thanked the MDDA for the presentation and congratulated it on the work that had been carried out thus far.
           
The meeting was adjourned.