DPME Medium Term Strategic Framework (MTSF) outcomes progress: briefing by Minister

Standing Committee on Appropriations

15 August 2017
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Minister of Performance Monitoring and Evaluation presented the Department’s mid-term review of the implementation of the National Development Plan (NDP), outlining the government’s progress in the implementation of its strategic objectives, identifying programmes that were most at risk in terms of spending, as well as the key challenges and areas where the government needed to strengthen the implementation of its policies.

The presentation focused on the Medium Term Expenditure Framework (MTEF) period from 2014/15 to 2016/17. During this period, basic education was on an upward trend. The matric pass rate had improved to 72.5% in 2016, up from 70.7% in 2015. Bachelor passes had also increased to 162 374 in 2016, from 150 752 in 2014. The percentage of youths who obtained the National Senior Certificate had increased from 45% to 56%. The overall health of South Africans was improving, with life expectancy increasing, the child mortality rate declining, and more people living with HIV receiving permanent anti-retroviral (ARV) therapy. The conviction rate for the number of people prosecuted for corruption in cases involving R5 million and above had the doubled, and South Africa was improving its ranking on the world corruption perception index. The new BRICS Development Bank had also been established during this period.

The Minister pointed out key areas that were most at risk. These included basic education and post-secondary education and training, health, social development and peace and security. However, he also highlighted significant achievements, such as exceeding the target for the funding of university students by the National Student Financial Aid Scheme (NSFAS), more people qualifying as artisans, the settlement of land claims, and substantial investments in the automotive sector. The Black Industrialist Programme had supported 46 projects that had attracted R3.7bn of private-sector investment and created 19 859 jobs to date.

Members asked why the government’s 9 Point Plan had not had a significant impact on the economy, and how the Minister of Finance’s 14 Point Plan fitted in with the DPME and the NDP; why SA was performing very badly in terms of employment and economic growth when compared with other sub-Saharan countries; whether there was any value for money in TVET colleges; and what the Department’s views on consequence management were, given that most government departments were struggling with it. They suggested it would be a good idea to strengthen standard messaging across government departments in order to restore investor confidence in the SA economy. Other issues raised were the decline in the number of smallholder farmers, the disproportionate fees paid to implementing agents and consultants, and the progress thus far with regard to the governance framework that had been implemented to eradicate the challenge of low returns on equity in state-owned companies (SOCs). 

Meeting report

Ministers briefing on MTEF outcomes

Mr Jeff Radebe, Minister of Performance Monitoring and Evaluation, took the Members through the MTEF outcomes and highlighted areas of progress from 2014/15 to 2016/17:

  • Basic education was on an upward trend. The matric pass rate had improved to 72.5% in 2016, up from 70.7% in 2015. Bachelor passes had also increased to 162 374 in 2016, from 150 752 in 2014.
  • The percentage of youths who obtained the National Senior Certificate had increased from 45% to 56% in 2016.
  • Overall, the health of South Africans was improving, with life expectancy increasing by six years and reaching 63.3 years. The maternal mortality ratio had decreased from 158 deaths per 100 000 live births, to 154.
  • Child mortality had declined from 41 deaths per 1 000 live births in 2014 to 37 in 2016. Over 3.7 million people living with HIV were receiving lifelong anti-retroviral (ARV) therapy.
  • 331 000 housing units had been delivered during 2014-2016 (45% of the 2019 target).
  • Over 17 million beneficiaries were receiving social assistance. A total of 1.7 million children were accessing registered early childhood development (ECD) services.
  • The number of persons convicted for corruption in cases involving R5 million and above had more than doubled between 2013/14 and 2016/17, from 52 to 110. South Africa was improving its ranking on corruption perception index, but more remained to be done to end corruption and address high levels of violent crime.
  • 724 430 households (HHs) had been connected to the electricity grid since 2014 (58% of 2019 target of 1.25 million), and 52 778 HHs had been connected to non-grid sources (50% of 2019 target of 105 000 HHS).
  • Over one million HHs had been given access to refuse removal between the General Household Survey (GHS) of 2013 and GHS 2016, against the 2019 target of 1.3 million HHs.
  • 1.12 million HHs had been given access to decent sanitation since 2014 (45% of 2019 target).
  • 30 500 HHs had gained access to a reliable water service since 2014 (12% of 2019 target of 2.3million). Overall, only 69.9% of those with access to operational infrastructure experienced a reliable service.
  • The BRICS Development Bank had been established.
  • Tourist arrivals figures had gone up from 8.9 million to 29.2 million. Total tourist foreign direct spend had risen from R67.9 billion to R189.2 billion.
  • Disbursements from the African Renaissance Fund (ARF) for contributions to continental development to date amounted to R100.9 million.
  • The percentage of women in legislative bodies had improved from 38.4% in 2011 to 41.2% in 2015, but was still 8.8% short of the 2019 target of 50%.

Key challenges relative to the NDP vision were the slow economic growth and high unemployment rate, which remained obstacles to achieving a reduction of the unemployment rate to 6%. Levels of inequality remained very high.

The Minister also shared specific programmes and spending areas that were most at risk. These included the following:

  • For basic education, spending amounted to R243 billion, or 15% of the total budget in the 2017/18 financial year. The bulk of the expenditure in the provinces was growing more slowly than the overall budget, and therefore declining in relative importance.
  • Post-secondary education and training spending amounted to R77.5 billion in 2017/18, or 5% of consolidated budget. Approximately 53% of government spending was allocated to universities, 30% to skills development, 14% to technical and vocational education and training (TVET), and 4% on the Community Education & Training (CET) system.
  • Health made up R187.5 billion, or 12% of the budget. It was increasing slightly in relative terms, but remained at 12% over the MTEF period.
  • For social development, R180 billion, or 11.5% of the budget, was spent on social grants and welfare services, plus R20 billion on employment programmes and R55 billion on social security funds. Of the R180 billion on social protection, R159 billion went to social grants and their administration, and R20 billion on welfare. The budget was growing by just over 2% per year in real terms over the MTEF period, and it was maintaining its relative position.
  • With regard to peace and security, the budgeted amount was R192 billion, or 12.1% of the total budget. The budget had declined slightly over the past three years. The R192 billion was made up of R54 billion for Defence and Security, R44 billion for Justice and Prisons, and R94 billion for Police.

The Minister referred to the need for a skilled and capable workforce to support an inclusive growth path, and said access to post school education had been increasing steadily. The challenge going forward was quality and efficiency in producing graduates, and providing support for the poor to continue accessing post school education. The target of funding 205 000 university students through the National Student Financial Aid Scheme (NSFAS) had been exceeded for the 2016 academic year, with 255 213 funded. This was an improvement over the previous years, as the number of funded students had been declining since 2014 (186 150) to 2015 (178 961). Funding for TVET college students had been met since 2014, even though it showed a decline from 2015 (235 988) to 2016 (226 007). The annual target of increasing the number of people qualifying as artisans had been achieved. However, key challenges were the limited involvement of industry in the TVET curriculum and qualification design, and the limited work experience spaces available for students in state-owned enterprises (SOEs) and departments. Some of the administrative challenges with TVETs were the unsustainable operation of TVET campuses, as well as the weak data system for TVETs, making it difficult to calculate efficiency and plan properly.

With regard to rural development and food security, 87% (82.4m ha) of land was owned by white commercial farmers, with 13% available for black people. 10.6% (8.7 Mil. ha) of the 30% (24.6m ha) target to distribute agricultural land to previously disadvantaged individuals had been achieved. In addition, the government had paid out a total of R11.6 billion to claimants. However, there had been a slow pace of land reform, with only 40% of the 2019 target distributed since 2014. Research showed that 19.9% of rural households had no income to buy food in the last 12 months. The number of households participating in agricultural activities had decreased from 2.8 million (16.9%) in 2011, to 2.3 million (14.8%) in 2016.

Some of the key challenges in the agricultural sector included:

  • Agriculture’s share of gross domestic product (GDP) was shrinking over time -- from 2.1% in 2013/14, to1.8% in 2016/17, and projected to 1.6% in 2019/20.
  • The number of smallholders had declined by 744 in the three years, from 172 413 in 2014 to 171 669 in 2016.
  • Investment in agriculture, forestry and fisheries (AFF) had increased by only 0.4% over the three years, while growth had fallen from 6.9% to a negative -7.9% over the same period.

In terms of the highlights towards radical economic transformation, the revitalisation of the agriculture and agro-processing value chain reported that net farm income had increased by 26,6% in 2016, with new investment in the industry increasing by of 27.3% in the same period. The South African agro-processing sector, and food processing had accounted for 13.9% of total manufacturing value add in 2015, and was the largest manufacturing sub-sector. SA remained a net exporter in the sector, with exports of agricultural raw products increasing on average by 14.6 % per year since 2012, and imports by 11.5%. Twenty of the 50-50 policy projects aimed at strengthening the relative rights of people working the land had been approved, against a target of 50 pilot projects by 2019. 79 616 restitution claims had been settled, involving 2 045 412 beneficiaries, from 410 049 households. 23 Agri-Parks were currently being developed and would be completed by 2019.

In the automotive sector, private sector investment stood at R12.5bn in 2016 and exports had increased to R171.1bn. In May 2017, Beijing AutoWorks (BAW), together with the Industrial Development Corporation (IDC) had launched the expansion of the New Era Facility in Springs, Gauteng. The investment in this expansion was estimated at R250 million and would create 100 new jobs. First Auto Works (FAW) had invested R600 million into a truck assembly facility at Coega, Port Elizabeth.

The Black Industrialist Programme had supported 46 projects that had attracted R3.7bn of private sector investment and created 19 859 jobs to date. The implementation of the 30% set-asides policy was under way for small, medium and micro enterprises (SMMEs) and cooperatives. An estimated total investment of R24.6 billion had been attracted into the Oceans Economy, with government contributing R15bn and the private sector the balance. Department of Trade and Industry incentives amounted to R428.9 million. As a result, 6 453 jobs were estimated to be created.

Regarding the goal of an efficient, competitive and responsive infrastructure network, the mid-term progress report for energy was that the Renewable Independent Power Producer Programme (REIPPP) had unlocked R201 billion in investments. 6 244 MW renewable energy had been procured, with 3 175 MW already being supplied to the grid. The energy build programme at Medupi, Kusile and Ingula pump storage was being implemented. As for transport, multi-purpose pipelines to transport liquids between inland and coastal areas had been completed, and the procurement of 1 064 new locomotives had been implemented with significant localisation achieved.

With regard to water, the Mokolo and Crocodile Water Augmentation Project (MCWAP) Phase One had been completed and met all the short term water requirements in the area. At the Umzimvubu dam, planning and design work was at an advanced stage, with detailed design of the dam, the water treatment works and the bulk distribution systems 90% complete by the end of September 2016. However challenges remained with the completion of the project.

In terms of information communication technology (ICT), the digital migration transmission infrastructure projects were close to 95% complete, which would ensure 85% digital coverage in the country. The e-learning school ICT connectivity programme had reached 1 525 district schools, and 125 Dinaledi schools were connected and using e- learning services through a partnership with public (national and provincial departments) and private sectors. Lastly, through Operation Phakisa leveraging ICT in basic education, a total of 3 455 schools had been connected to the internet and received devices under the Universal Services Access Obligation (USAO) project.

With outcome 2 (health), evidence pointed to a continued improvement in the health of South Africans, including life expectancy and the mortality rate for children under the age of 5. Secondly, 3 323 functional ward-based primary health care outreach teams had been established and were functional, exceeding the MTSF target of 3 000 by 2 019. In addition, the Health Patient Registration System (HPRS) had been implemented in 1 849 health facilities, exceeding the 2016/17 target of 1 450 facilities. This had improved the availability of patient-level data and reduced waiting times in health facilities. Lastly, 1 037 Primary Health Care facilities had achieved Ideal Clinic status, against a 2019 target of 2 823 facilities.

In conclusion, the Minister said that while interventions to stimulate demand for SMMEs, co-operatives, township and rural enterprises were crucial, there had been inadequate focus on improving supply constraints (quality, skills and volumes) and the services that the market required. Secondly, only 27.3% of qualifying SMMEs were funded by development finance institutions (DFIs), and only 2% of start-up SMMEs used them as a source of finance. Thirdly, and most concerning, the 30-day payment challenges continued to persist. As at end of June 2017, invoices worth R4.4bn had not been paid by provinces within 30 days. Outstanding invoices for national departments amounted to R150 million. As a result of the DPME’s intervention, a total of R327 million had been paid to suppliers to date.

The presentation was a summary, and indicated that the DPME performed assessments of all departments and reported to Cabinet on any specific pressing issues.

The Chairperson thanked the Minister for the presentation, and invited Members to submit their questions, comments and clarity-seeking questions. She pointed out that this was information sharing, so that there could be relevance in the engagements with other departments that would be appearing before the Committee in the future.

Discussion

Mr D Maynier (DA) said that he had a special interest in the 9 Point Plan, and on slide 72 it was stated that “government needs to stay on course with the implementation of the 9 Point Plan.” However, on slide 19 it was conceded that the 9 Point Plan had not had a significant impact on the economy. He asked why the Minister thought that was the case, and what the DPME’s diagnosis was. Secondly, the presentation had been silent on the Minister of Finance’s 14-Point Plan to accelerate inclusive growth in South Africa -- how did that plan fit with the DPME and the National Development Plan (NDP)? Lastly, there had been a new division of labour between the DPME and National Treasury regarding setting budget priorities. He asked for clarity about this process, and when DPME could be expected to produce budget priorities ahead of the MTSF.

Mr A McLoughlin (DA) referred to slide 18, and asked the Department for comments on the fact that SA was performing very badly when compared to other sub-Saharan countries in terms of employment growth. As outlined in the presentation, ‘RSA was trapped in a low growth path since the global financial crisis had caused adverse global conditions, and local factors’. He believed that the external factors were seemingly being used as the scapegoat, and that surely there must be something wrong within the SA economy. He also asked for comments with regard to the fact that the country was falling far short in terms of achieving the GDP growth rate of 3.5%, as per the NDP. Lastly, with regard to persons convicted for corruption, he asked about how many people had been charged with corruption, because the presentation reflected only the persons who had been convicted.

Ms D Senokoanyane (ANC) asked whether there was any value for money regarding the implementation of TVET colleges, given the challenges that existed in those higher learning institutions such as the curriculum, employability, etc. Secondly, with regard to consequence management, what did the Minister see as a way forward in this regard, because all departments were struggling with this and people were not performing.

Mr B Topham (DA) referred to land reform, which was a major issue in the country. It had been recorded that 10.6% of the 30% target had been distributed to previously disadvantaged individuals (PDIs), and R11.6 billion paid out to claimants. He asked whether the R11.6 billion formed part of that 10.6% of land distributed -- and if it was not, surely it should be part of it. With regard to investment patterns, he asked whether the Minister or his team would agree that part of the problem with the declining investment in South Africa was due to Foreign Direct Investment (FDI), particularly the failure to maintain a standard message across government departments and radical political groupings, which were sending out mixed messages to the investment community, as well as the lack of a consistent government response. Would it not be a good idea to strengthen standard messaging across departments in order to restore investor confidence in the SA economy?

Mr N Ngcwabaza (ANC) said that it had been recognised that TVET colleges should be funded more, and a focus would be provided to intensify the curriculum and improve the employability of students who graduated from the colleges, because it was difficult when students had to find employment themselves with no assistance from the colleges. The funding model of the TVETs was an on-going concern, so now a decision had been taken to fund certain categories of higher education to expand. He asked whether there were any specific reasons why the number of smallholder farmers was declining. With regard to the 30% set-aside commissioned by government for procurement from SMMEs, at some point the government had spoken of a 60% set-aside for youth in the infrastructure employment programmes/jobs, so what had happened to that?

Ministers response

The Minister responded that on the issue of the prioritisation of the budget, the National Planning Commission was very pivotal in the implementation of the NDP. However, the key challenge in the current environment of fiscal constraints was to determine what programmes or departments the government should fund as a priority. The Commission had proposed that there should be a way to prioritise funding and identify key issues where, if funding was not provided, challenges would emanate the most. The process had been going on for a number of months now, and it was in the final stages of completing the mandate paper, which would set out in clear terms the priorities of the government. It was not a contract or document that suggested what departments should receive in terms of appropriations, but it would set out the hierarchy of the priorities. The team had debated whether it should provide more of this information at this meeting, but had decided not to furnish it today -- it would be provided only when it had been finalised by Cabinet. The Committee could then invite the Department to come back to present on the mandate paper. The purpose of the mandate paper was to assist Treasury when it did the allocations, to use it as a table of how it could allocate resources to various government departments.

With regard to TVET colleges, the point was that these colleges must remain as TVETs (i.e. technical colleges) and nothing else. Most students in those colleges studied marketing, communications and other commercial subjects, according to his experience. He believed that TVET colleges should stick strictly to technical learning and practical work, so the DPME was firmly encouraging a collaboration amongst all the relevant stakeholders -- the private sector, the government and the colleges themselves. Funding for education had increased, but the sector must also reform in order to assist the students to get employment through being taught practical skills.

The 14-Point Plan, as correctly suggested by Mr Maynier, was actually a list of ‘confidence boosting measures’, rather than a 14-Point Plan. The Department would in due time substantiate more on these measures.

Ms Nompumelelo Mpofu, the newly-appointed Director-General, DPME, responded that some of the interventions that had been introduced were taking root and were beginning to bear some fruit. However, the departments needed to stay the course and ensure that the implementation of the proposed interventions to eradicate some of the challenges took place. There was good progress thus far, and the DPME would like to help the country to actually focus on the 9 Point Plan and not introduce new plans or strategies or interventions.

With regard to the convictions, the data was focussed on people that who committed crimes above a certain amount (R5 million), but more information would be provided, as requested by the Member.

Mr Rudi Dicks, Outcome Facilitator: DPME, responded that addressing the issue of the messaging across various departments remained consistent with the implementation of the interventions that would restore investor confidence, because the government would speaking in one voice. Furthermore, the DPME conceded that all the interventions including the 9 Point Plan had not yet resulted in a robust turn-around. There was a bit of traction now but in the broader scale of the economy, things were moving slowly. There were sub-Saharan countries that were performing better than SA, but SA was more integrated into the global economy than some of them, including its design of the mainstream economy. South Africa had an export base with countries like China and India, and the so the decline in the demand in those countries had of course affected the economy. Many of those sub-Saharan countries came off a very low based economy, and while their economies may be seen growing at a rate of 7%, relative to the global economies this may not be significant.

With regard to the decline in GDP, it was important to admit the fact that the issue stemmed from the decline in the commodity market for bulk mining products (metal and minerals), which made up 50% of the value of exports. Such a decline would significantly affect the local economy. There were both local and global factors that hindered growth. These were partly because of the way the SA economy was designed and integrated into the global economy, and there was a need to diversify, particularly if one talked about radical transformation. In order to achieve the required growth rate the country needed to deal with unemployment and poverty, and to get there much quicker perhaps required revising some of the interventions that would assist the government to achieve its targets at a much faster rate.

The specific numbers of youths employed in infrastructure programmes could be provided in writing, as he was not quite sure of the precise number.

Mr Joy Rathebe, Outcomes Facilitator: DPME, said that not all corruption cases had been tracked for the purposes of the presentation. The focus had been only on the large scale corruption cases in terms of figures (R5 million). However, the total number of charged persons was 199.

Mr Thabo Mabogoane, Outcomes Facilitator: DPME, said that the number of smallholder farmers also revealed that land was very expensive in SA, and the figure reflected the number of people who opted for cash instead of the actual land. The R11 billion was linked to the 10.6% - which also supported the previous statement. This had led to a discussion on how prices of land should be determined as well as the observation that the willing-buyer, willing-seller method was not working because although government continued to spend a lot of money on this, it did not bear any lucrative fruits.

The DPME and the DAFF, together with the Department of Rural Development and Land Reform (DRDLR), had spent six weeks last year in a workshop through Operation Phakisa discussing food security. It had established that the type of challenges that were faced by farmers, or potential smallholder farmers, were quite complex. The common one included inadequate support by the government for smallholder farmers. Through engagements with the farmers, issues on input costs, water, water rights and land availability had come to light, and it had been found that due to these issues farmers were unable to expand their farms.

Lastly, access to the market, including local markets, continued to be a barrier, so it was important that government continued to purchase from smallholder farmers, otherwise they would continue to be deprived of the opportunity to grow.

Mr Maynier said that his 9 Point Plan question had been directed to the DPME to find out what local factors it believed accounted for the failures of the Plan.

Mr McLoughlin said if land was distributed to a farmer, the farmer received a title deed and could use that title deed to approach a bank to get a loan to cover input costs. Therefore, people should be educated and encouraged to explore these options as well, so that they did not continuously depend on the state to make provision for them. He asked how people opted for money instead of land, and what happened to that land when they received the money.

Mr A Shaik Emam (NFP) stated emphatically that it seemed that nothing was actually being done to put measures in place to halt corruption in various government departments and among stakeholders. Oversight visits were conducted by the Committee, but this seemed amount to nothing.

Furthermore, he sternly asserted that the TVET colleges were not responding to the critical need for skills in the country. On the other hand, there was a very high success rate of student loan repayments in other countries, but NSFAS continued to struggle to claw back the money owed by former students.

He asked the Department what the government was doing about the land issue in the country. There was no dedicated programme to empower people and educate them to ensure that the land was utilised for what it was intended, and until there was, food security would continue to be just a dream. It was important to take note of the fact that when land was taken from people, some of it had been taken in prime areas but now land was being distributed to less prime areas. He believed that this did not do the whole process justice, and people remained cheated because the value of land differed across different areas.

The Chairperson said that the Committee was focused more on government getting value for money and the effectiveness of service delivery across government departments. Recently it had met the with the Public Service Commission which had disclosed that in many cases, implementing agents that were utilised by the state were paid disproportionate fees. The office of the Chief Procurement Officer had stated that a large part of the Accelerated Schools Infrastructure Delivery Initiative (ASIDI) programme was implemented through implementing agents, the Development Bank of SA and the Independent Development Trust, with exorbitantly high fees. She asked what the Department thought could be done to ensure this trend was reversed and that the money actually went to the beneficiaries instead of the implementing agents.

One of the key areas was also ensuring the prevention of the abuse of limited resources and fruitless expenditure. The Committee kept getting reports of suspended officials in various government departments who were on retention of their salaries. This dated back to about five years, and the concern was that the Committee wanted to get value for money for the beneficiaries, so what was the Department recommending as a turn-around strategy, because this constituted wasteful expenditure?

The International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and National Treasury (NT) studies showed that the average return on equity for SOCs had been weakening since 2012, and was now below borrowing costs. To address these issues, in November 2016 the Cabinet had adopted a new governance framework for these entities. She asked the Department for its assessment of the progress thus far, and how the Committee could assist to ensure that the implementation and impact that was what had been envisaged.

The presentation had indicated that the black industrialist programme had supported 46 projects that had attracted R3.6 billion of private sector investment, and 19 859 jobs had been created to date. She asked the Department to share the types of projects that had been assisted, a list of those projects, and to provide more details about what they did, as well as the most successful ones.

The Minister responded that clearly that there was nowhere in the presentation that it had been admitted that the 9 Point Plan had failed -- it had simply been stated that it had not yet resulted in making an improved impact on the economy. This was a general statement, but there were programmes that the government was embarking upon to ensure that the targets and objectives were achieved. On slide 22, the key challenges had been outlined as to why the impact on the economy had not yet improved.

In addition, it took time to realise the full impact of the implementation of these programmes. For instance, mining and agriculture were not growing fast enough, and those sectors were key to the economy, so if they were not growing at the required rate, that impacted negatively on the economy. The 9 Point Plan was not solely dependent on government, but all relevant stakeholders in the economy, particularly the private sector. Therefore, collaboration with all the partners would make the process much smoother.

On the suspension of the officials that were on retention of their salaries, the Heads of Departments (HoDs) must be held accountable, and there was no reason why they could not be summoned to Parliament to account for such gross fruitless expenditure.

Ms Mpofu said that a detailed response on the fruitless expenditure on officials would be outlined in the mandate paper which would be provided to the Committee when it was finalised. However, one of the critical issues referred to in the mandate paper was the root cause of fiscal constraints and stagnant economic growth. This meant that the government must try to find the money within the system, reducing waste, identifying areas where there was no value for money, excessive use of consultancy and savings, and then introduce a new measure of how the interventions and programmes could be implemented. Furthermore, it should start introducing penalties for non-compliance in specific areas; engage with departments on how their budgets could be interrogated to ensure value for money for funded projects; and the DPME had to monitor the high vacancy rates. The DPME was already working with the office of the Chief Procurement Officer to interrogate value for money in certain contracts and tenders awarded to contractors, most importantly dealing with the excessive pricing by contractors. Contractors had a tendency of marking up their prices by up to 100% when doing business with the government, and this was something that needed to stop because it was pure exploitation. With that being said, the Competition Commission was dealing with this more robustly, and the DPME was very confident about the work that was being done by the Commission to bring those prices down and apply much stricter measures in the price determination of contractors.

Mr Mabogoane said that not all TVET colleges were dysfunctional. Some of them had success stories and were able to produce quality qualifications, and those were closely linked to the private sector. Although that was not the case across the TVETs, these colleges were meant to secure employment while a student was concurrently under an apprenticeship programme to acquire a skill. However, qualifications that were being offered at TVETs were currently being revamped.

As for funding, the model had been described as being ineffective, and if adequate funding was not provided the next FeesMustFall movement would come from TVET colleges. It was important to note that although the number of students that received funding had increased over the years, the number of students that did not qualify for funding had also increased. One often found that the money that was budgeted for teachers in the TVET colleges ended up being diverted to fund students. This was also problematic, because colleges ended up being short-staffed.

NSFAS loan repayments were soon going to increase, because NSFAS was going to partner with the South African Revenue Service (SARS) to impose repayments on those who were not currently paying, but were earning a monthly income above a certain threshold.

Mr Mabogoane said that it was often difficult to get a loan from commercial banks to cover input costs, especially when one was a new and upcoming smallholder farmer with no balance sheet or asset base whatsoever. In addition, the Valuer-General needed to be supported by government with all the necessary resources, because his office could provide the government with the correct prices for the land.

The Chairperson advised that she was not satisfied with the response regarding the TVET colleges, and asked whether the DPME could provide a detailed analysis as well as a recommendation, also outlining how many TVET colleges were functional or dysfunctional. She believed that the TVETs were currently at “an explosive” stage.

Mr Maynier concurred with the Chairperson comments, and suggested that perhaps the debt book of all NSFAS debtors should be provided as well, as he believed that the majority of those who owed NSFAS were employed by the State -- and in fact, by SARS as well -- so it would be interesting to see who those debtors were, and their places of employment.

The meeting was adjourned.

 

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