Agrément SA, IDT + Construction Industry Development Board 2016/17 Annual Report

Meeting report

Briefing by Agrément South Africa (ASA)

Dr Jeffrey Mahachi, Acting Chairman of ASA Board, indicated that Agrément South Africa was established by the then Minister of Public works in 1969. The entity served the construction and building industry by providing valuable specialised testing of new and innovative systems. He said that the technical assessment served the construction and building control officials with an authoritative technical scientific assessment of system performance. This enabled these officials to be able to make expert judgement on the suitability or otherwise of a particular product in their areas of jurisdiction. This strategic assistance provided valuable information and thereby enabled modern construction methods to come to the fore.

The Board continued to exercise its oversight role and well as interacted with the National Department of Public Works to ensure Agrément South Africa was adequately managed. This ensured the efficient and sustainable management of public funds transferred from the National Department of Public Works as well as the fees paid in by applicants’ in the form of technical assessment and annual fees. He said that this was vital for successful corporate governance of Agrément South Africa. The term of the current Board of Agrément South Africa was extended by the Minister of the National Department of Public Works until such time as the new members of the Board took office. The extension of tenure of the current Board was to enable the smooth transition of the entity to a juristic persona. It was viewed as critical that the entity continue without any disruptions in the execution of its important strategic mandate.

Dr Mahachi mentioned that there were currently eight Board members and the current Chairperson was Mr Pepi Silinga. The strategic planning session was held annually and the technical committee of the Board had the key responsibility to review evaluation reports and draft certificates and if satisfied, approve them for certification. The technical committee relied heavily on external technical experts for their independent technical opinions. He highlighted that this was extremely vital for the credibility and independence of the expert opinion. Agrément South Africa selected technical experts who were recognised as industry leaders within their profession. This enabled their professional technical expert opinions to be accepted and respected within the construction industry. The Board ensured Agrément South Africa was well governed. The entity received a clean audit report and there was no qualification or emphasis of matters to report.          

Dr Mahachi stated that the benefits of Agrément certification included the following:

• The technical conduit to new and improved standardised building materials
• Improved performance of infrastructure development due to advancements in products & building systems
• The certification could lead towards improvement of existing products and actually doing more with less
• Contribute to accelerated infrastructure development
• Reassurance of fitness for purpose
• Authoritative assessment of system performance
• Could help effectively addressing infrastructure backlogs

Agrément South Africa received innovative construction systems and products from members of the public, for which there were no national standards or codes of practice.  Agrément South Africa carried out holistic and comprehensive technical assessments to evaluate the suitability of the product or systems as being “fit for purpose” or not. Agrément South Africa served the consumer interest by providing assurance of fitness-for-purpose of innovative, non-standard construction products as well as on-going quality assurance. He said that Agrément South Africa worked with the construction industry in the development of cost-effective, innovative and non-standardised construction technology. Agrément South Africa disseminated correct, objective and relevant information to all concerned in respect of the technical, socio-economic and regulatory aspects of innovative and non-standard construction technologies. He said that Agrément South Africa supported the application of the National Building Regulations.

Dr Mahachi said that the Agrément South Africa Act was accented to the Honourable President of the Republic of South Africa as Act No 11 of 2015. The organisation was now in the transitional phase to be a fully operational going concern on 1 April 2018. The National Department of Public Works in leading the Transitional Task Team that oversaw the formation of the newly formed public entity has handed over the operational tasks of human capital, finance, legal, communications and facilities management to management. The total certificates granted in 2016/2017 were 38, 185 total active certificates and 32 inactive certificates. There were 35 applications that were received in the 2016/17 financial year compared to 28 in the previous financial year. There were 32 evaluations that were offered and accepted. There was a total of four board meetings as per the requirement.

Ms Inge Viera, Chief Financial Officer (CFO), ASA, explained that the entity accumulated R15 million total income and contract income was R4 million. The employee remuneration was currently sitting at more than R7 million while operational expenditure was more than R7 million. 

Discussion

Mr K Sithole (IFP) appreciated the presentation as it was an eye opener to many things that were done by ASA. He said that the Committee should also congratulate the entity for achieving an unqualified audit opinion. It was unclear as to whether there was any reason for the absence of the Chairperson of the Board as there was no apology that was forwarded to the Committee. Why was the Chairperson always absenting from Committee meetings? The Council for Scientific and Industrial Research (CSIR) was the entity under the Department of Science and Technology. It would be important to know when the ASA would fall under the Department of Public Works.

Mr M Figg (DA) also expressed concern about the absenteeism of the Chairperson of the Board as this was an important meeting dealing with topical issues affecting the entity. He felt that the Committee should also probe as to whether the Chairperson would remain in the position for the foreseeable future. Was the entity meeting the international standard in terms of certification? It was important for the Committee to be provided with the number of technical people that were employed by the entity. What was the total number of people working for the entity? Why was the operational expenditure higher than the total expenditure?

Mr D Ryder (DA) asked whether the entity was not duplicating functions of other entities within the Department. What was so special about ASA that was not available from the Department? Why did the entity decide to go independent as from 2018?                                                  

Ms E Masehela (ANC) commended the presentation as it was good and covered a number of areas.  She said that the Committee would like to congratulate the entity for achieving an unqualified audit opinion. The absenteeism of the Chairperson of the Board was a major concern to the Committee as this was something that should be addressed directly by the Department. The Committee should be provided with a breakdown figure of the certifications that was done by the entity. The Committee should be briefed as to whether there were products that the entity tested and certified but which still did not meet the standard and why was that the case. It was unclear as to whether there was any innovation that was aimed at assisting rural people. Was the entity ready to be an independent entity in 2018?

Ms L Mathys (EFF) appreciated the unqualified audit opinion, although she felt like this should not be congratulated as it was the mandate of any entity. She asked ASA to write to the Committee on any interventions to be made in regard to the operation of the Board, especially on the absenteeism of the Chairperson. The absenteeism of the Chairperson from Committee meetings was a noticeable trend. Was there any value for money on the operation of the Board? It was unclear as to whether the operational expenditure included salaries and management fees. What made the entity so special to other entities within the Department? In relation to the products that were certified, she felt it was important to ascertain if there was any support that was provided to by government departments and private sector in terms of buying the products.

Dr Mahachi responded that slide 9 of the presentation detailed the responsibilities of all entities within the Department including ASA. The CSIR was doing well and focused on conducting research on new products. ASA, on the other hand, focused on certification and approval of new products. There were indeed technologies and products that were certified and approved by ASA, but still did not meet the standards. He said that the South African Bureau of Standard (SABS) was focused on writing down standards of the products that were introduced to the market, while ASA was mostly focused on certification and approval of the products. He said that the World Federation of Technical Assessment Organisations (WFTAO) was an international organisation that the entity belonged to as the body of certification on the international level. He stated that the entity chose to go to CSIR precisely because of institutional memory and historical competence of the entity. In short, CSIR had technical knowledge that was lacking from ASA at the time. The entity would be independent as from 1 April 2018. There were a number of government departments that were using products that were certified and approved by ASA and these included the South African National Road Agency Limited (SANRAL) and Department of Human Settlements. The focus on SANRAL was on approval of sophisticated road infrastructure while with the Department of Human Settlements the focus was on housing approval.  

Ms Viera replied that the entity had a total of 18 employees and all the employees were qualified and competent in their positions. There are a number of technically qualified employees including the surveyors.

Mr Joe Odhiambo, CEO, ASA, responded that there were no oversight failures that were encountered due to lack of competence and skills from the entity. There were a number of innovative products that was approved by ASA and the Committee could be provided with a list of those products. He said that the road industry was mainly dependent on ASA for approval and certification of infrastructure. South Africa was considered as one of the countries with sophisticated innovation in the world especially in the road infrastructure. There were 29 certifications and approvals that were made in the current financial year. There was no need for any intervention from the Committee to the Board as everything was in order with the entity operating efficiently and effectively. The failure in the products that was certified by ASA was usually on the implementation, rather than on competence. 

The Chairperson also expressed concern about the absenteeism of the Chairperson of the Board as this seemed to be the trend.

Mr Ryder said that the Department should be the one answering the question as to why the Chairperson of the Board was absent from most meetings.  

Ms Sophy Molete, CS Manager, ASA, responded that the Chairperson of the Board was sick for a year but he has now recuperated and was expected to resume his duties soon.

Briefing by Construction Industry Development Board (CIDB)

Ms Bongiwe George, Acting Chief Operating Officer (COO), CIDB, mentioned that the strategic goals of the CIDB was to strengthen and enforce the CIDB regulations to reduce construction risk, all forms of fraud and corruption in the sector, build and capacitate the industry to deliver quality infrastructure and contribute to the transformation of the construction industry. She said that the position of the entity was to be a knowledge authority in the industry.  The entity had 38 targets in place, achieved 27 and 6 targets were not achieved while 5 targets still had queries because of unreliable performance indicators. The overall performance of the entity was 71%. In terms of achievements, the Executive Committee was able to develop and approve the progress report to combat fraud and corruption. The implementation of Phase 1 of the customer satisfaction survey system continued and progressed well from the implementation of the pilot phase.

Ms George highlighted that the Annual Assessment Report on the state of implementation of CIDB Best Practice Contractor Recognition Scheme was submitted to Board Secretariat. The Standard for Contract Participation was submitted to DPW on 1 December 2016. An assessment report on the state of implementation of the prescripts for prompt payment was made available. The Final Research Report on the Contract Management challenges of the client was submitted to Board. She said that the annual and quarterly report on implementation of the Compliance Strategy was made available. There was on-going monitoring of policy implementation. Bursary awards limits were reviewed effective January 2017. The bursaries for the January 2017 academic year were awarded in-line with the policy.

Ms George also highlighted the non-achievements, and these included on achievement of the target 94 % compliance with the legislated turnaround time on processing compliant Grade 2 to 9 applications by end of March 2017. There were 27 043 Grade 2 to 9 applications activated in the 2016/2017 financial year of which 22 274 were processed within a period of 21 working days. This equated to 82% compliance with the prescribed turnaround time. She said that the non-achievement was attributed to a lack of adequate human resources to effectively administer the register of contractors. There was also non-achievement on the target on the implementation of phase 1 of online contractor registration comprising the annual update of particulars by 31 March 2017. The online contractor registration comprising the annual update of particulars was not implemented. A strategic decision was taken to reassess software solutions and platforms. Therefore, planned registration software projects were halted

Mr Sfiso Nsibande, Acting CFO, CIDB, indicated that the entity received an unqualified audit opinion with area for attention which were:

• Reliable and accuracy of the POE
• Effective steps were not taken to prevent irregular expenditure amounting to R1 477 599 as disclosed in note 29 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA.
• Management of vacancies
• Daily and monthly processing and reconciling of transactions
• Non-compliance matters that required monitoring

Mr Nsibande stated that the total revenue generated was R144 497 and it was the same as the total current expenditure. The administrative expenditure was R63 million. The personnel expenditure was R81 million. The registration fees were R84 million compared to R75 million in the 2015/16 financial year. The accumulated surplus was R113 755 million.      

Ms George pointed out that in terms of corrective actions, the AGSA developed a dashboard document which listed the key control matters that the CIDB had to take care of during the course of the new financial year (2017/18) in order to improve on the audit outcome. The CIDB Internal Audit unit was to do follow up on the matters raised by the AGSA in the management letter report. The issue tracking would be used to monitor the action plans.  

Discussion

Mr Ryder appreciated the unqualified audit opinion as this was part of accounting for taxpayer’s money. It was worrying to see that the entity spent 94.6% of the budget that was allocated but most of the targets were not achieved. The issue of non-compliance needed to be dealt with within the entity as even highlighted by the Auditor-General. There were cases where the project would be halted but the allocated budget was already spent. The entity was clearly spending money but not achieving the stipulated targets. He said that the issue of the slow rate of transformation within the sector was the main concern but the entity could not blame the sluggish economy for this as registration from the contractors was extremely high. This was simply pointing to the demand from capable contractors out there who were willing to uptake any projects. The unreliable POE’s was pointing to the problem of lack of internal controls. The entity should focus on improving on some of the areas that were highlighted by the Auditor-General in order to achieve a clean audit.

Dr Figg asked whether there was any specific reason for having an Acting Chairperson of the Board within the entity. It was unclear as to why the targets for programme 4 were not covered in the presentation. The progress report on programme 5 was vague and needed to be clarified and explained in detail. The issue of irregular expenditure was problematic and the Committee should be provided with a follow-up on those responsible for this irregular expenditure. He said that there should be punitive action taken against those officials who resigned after committing any misconduct within the entity. What was the financial position of the entity? Was the financial position sustainable?

Mr Sithole wanted more information on the number of black contractors that were upgraded from lower grade (from grade 6 to 9). It was clear that there was absolutely no transformation in the construction sector and this was something that the Committee needed to engage the Department on. It was unclear if there were any systems in place to respond to this lack of transformation within the construction sector. He stated that the Auditor-General highlighted the problem of high vacancy rate within the Senior Management Level. What was being done to address this problem? He highlighted that page 85 of the Annual Report of the entity pointed to the problem of unaccountability and lack of consequence management for those who committed misconduct, even if they left the entity. How was it possible for the entity to award a contract to the contractor without any tax clearance?

Ms Mathys appreciated the presentation that was made and the unqualified audit opinion achieved. She said that it would be important to know about the effectiveness of the School Programme in investing on young people from primary school up until the tertiary level. It was unclear as to why the entity increased fees registration for contractors while there was no capacity in place to process these registrations. The entity should be moving towards online registration as this was a faster and quicker process. The targets for women within the sector were a resounding failure and there should be measures in place to address this problem. What was being done to attract young women in the sector? In relation to disciplinary actions, the Committee should be briefed on the number of employees that was disciplined. What was being done to recover the money that was spent irregularly? She said that the dismissal of employees was not enough as it meant that there were minimal consequences for misconduct. It was also evident that those employees that were dismissed still benefited from the unlawful contracts that was awarded to their friends or peers.

The Chairperson asked what action was taken against corrupt officials within the entity as this was a major problem. It was clear that there were a lot of employees within the entity that were in acting positions. What was done to address this problem? The Committee should be provided with a list of number of officials that were blacklisted.

Mr Lufuno Nevhutalu, Chairperson of CIDB Board, mentioned that it was a regulatory entity and the entity was looking at the role of being a regulator. The decision was taken that the entity needed to move beyond being simply a regulator but play a meaningful role in transforming the industry. The Special Investigative Unit (SIU) was permanently placed within the entity to deal with issues of corruption and fraud.

Mr Mfezeko Gwazube, Acting Chief Executive Officer (CEO), CIDB, replied that it did not have a Schools Programme but there was Skills Programme in place to deal precisely with skills shortage. The CIDB was not involved in the side of professionals but rather on artisans and other critical skills to be recruited. The Skills Development Agency was taking 0.07% to go within the entity and this was meant to improve the entity in terms of critical skills like artisans and engineers. The registration fees did not increase but the participation of people who were registering increased and it was important to make the distinction between the two. He said that the entity was trying to look at ways in which money for registration could be collected in advance and not after the service was rendered. The CIDB was currently going through an organisational framework design in terms of skills that were required. He said that there was cognizance of the fact that there was a skills shortage within the entity and this was a contributing factor to a number of challenges that were being experienced. 

Mr Gwazube highlighted that the analysis was done and the conclusion was reached that the entity was at maturing stage and this was not the stage to be at the moment when considering the long existence of the entity. The CIDB was developed organically and the Minister of Public Works asked to participate in the organisational framework design. He said that there was no clear competence framework within the entity and all those challenges like not getting value for value were inherently linked with a lack of competence framework. The problem of irregular and unauthorised expenditure was related to the issue of lack of controls in place and this was to be dealt with in the next financial year. Programme 4 did not have any targets as it was speaking to the issue of registrations. He stated that the Committee would be provided with the number of black professionals that were upgraded from grade 6 to 9 in writing.

Mr Gwazube explained that there was no system in place to deal with the problem of lack of transformation within the sector. The most important factor to be addressed when looking at the problem of lack of transformation was to deal with social demographics of the country. In essence, the social demographics of the country should be correlated with registered professional councils. The entity was merely mandated to set up standards and therefore could not “dish out” work to the contractors to ensure that there was transformation within the sector. He highlighted that the construction industry was currently in recession and this was even confirmed by Statistics South Africa (Stats SA). He said that the sluggish economy was another limiting factor towards transformation. The reality was that “the pie was not growing but rather getting smaller and smaller”. The Minister asked the Department to set up a Task Team that would look closely at the problem of lack of transformation within the sector.

Mr Ryder mentioned that the website of CIDB contained no vision and mission of the entity and even the goals were vague and required a strategic review. The entity should bring together the Department so as to have clarity in regard to the vision and mission of the entity as this would be helpful for the entity to be known by the general public.

The Chairperson said that some of the issues that could not be responded to could be provided in writing and the entity was always been co-operating in this regard. The Committee would engage with the entity on a quarterly basis so as to get to the bottom of the challenges in place.   

Briefing by the Independent Development Trust (IDT)

Mr Coceko Phakade, CEO, IDT, mentioned that the entity had a target of building 20 schools but only managed to build 5 schools and therefore this was a 20% achievement. The delays in the roll-out of schools due to rationalisation and merging of schools in certain provinces, as well as capacity constraints within IDT, impacted on timeous delivery of projects. The general fiscal challenges faced by a number of client departments had an adverse impact on turnaround time for payments which in turn resulted in delays in projects completion and the below-par expenditure. The entity had a target of creating 15 000 work opportunities but only created 7 102 and therefore this was a 47% achievement. The entity created 58 637 of Expanded Public Works Programme NSS work opportunities out of the 55 000 targeted and therefore this was 107% achievement.

Mr Phakade stated that the entity achieved zero on the 65% target for women contractors participating in Contractor Development Programme. He said that there was also another zero achievement on the target of 4% value of programme contracts awarded to Contractor Development Participants as a percentage of total value of contracts awarded. The Contractor Development Programme was being reviewed. He said that the new participants intake was planned for the 2017/18 financial year. He stated that the entity received a disclaimer audit opinion. The causes of previous year’s disclaimers, i.e. take-on balances; cut-off on programme expenditure; reconciliation on programme balances, liabilities and receivables; accruals of management fees on retention balances; and provision for impairment on receivables, were successfully addressed. Unfortunately, inability to estimate the stage of completion as reliable as at 31 March was due to insufficient technical input on projects where progress certificates overlapped between financial years, resulted in the disclaimer. The entity achieved 64% achievement on average number of days for payments from date of invoice receipt which was 30 days. The entity also achieved zero on the target to develop an approved business continuity strategy and plan. The business continuity strategy development was deferred to 2017/18 financial year due to financial constraints.

In relation to the target for the implementation of risk management framework, Mr Phakade highlighted that the entity achieved 70%. The enterprise risk management strategy and plan was in place and implemented. The risk management strategy review was undertaken after year-end, missing the February 2017 target. The delay in risk management strategy review was due to the expiry of the Board’s term and the need to allow the new Board time for orientation prior to the strategic risk review. The operational strategy was however continuously reviewed by management to respond to emerging risks. The process of developing the human capital plan was to be restarted after the conclusion of the organisational re-structuring exercise during the 2017/18 financial year. He said that there were negotiations with clients on the implementation of the Treasury instruction note on management fees which took longer due to client budgeting constraints, impacting on the average management fee level.

Mr Phakade said that programme spend by 31 March 2017 was R4.384 billion against the annual target of R6 billion. He explained that this represented a variance of -R1.616 billion (23% below planned expenditure). Management fees collected amounted to R210.6 million; this represented a decline of 24% compared to 2015/16. He said that this was related to the decline in programme spending during the reporting period. The closing bank balance at the moment was R720 073 million. There was a total of R4 701 418 million in terms of funds received from client departments. Total management fees collected for the year was R210.5 million against total operating expenditure of R369.3 million, representing a 56.9% self-funding rate. He stated that the management fees collection showed a slight decrease compared to the previous year, due to a decline in programme expenditure level. Mitigation measures were underway to address the shortfall in revenue through portfolio growth and new revenue streams. The average management fee rate achieved was 4.8% against a target of 6.5%.

Mr Phakade said that the IDT was facing cash flow challenges due to the shrinking revenue base and the funds invested decreased by 43.9% as a result of withdrawals to the value of R42 million during the fourth quarter. The cash reserves size exposed the IDT to liquidity risks which in turn created uncertainty regarding financial sustainability. In terms of measures that were put in place to address the deficit, National Treasury approved an allocation of R111 million for the 2017/18 financial year to assist in addressing the funding deficit. He said that the Minister instructed the IDT to develop a Revised Operating Model and Turnaround Plan aimed at addressing service level gaps and the funding viability challenge. The Revised Operating Model advanced the retention of the Schedule 2 PFMA Listing in order to protect agility in service offering. Efforts to regain the lost business portfolio in order to improve revenue generation were underway with engagements in progress or scheduled with key stakeholders.

Mr Phakade mentioned that the filling of critical vacancies in Finance and Supply Chain Management would enable the organisation to address most of the financial governance gaps. The procurement of an ICT system that was responsive to the needs of the organisation would enable performance and reporting on programmes. The partnerships with the Association of Quantity Surveyors of South Africa and the CIDB assisted with capacity issues. The IDT obtained a disclaimer audit opinion for the 2016/17 audit. The basis for the audit disclaimer related to overlapping expenditure on project progress certificate i.e. work in progress relating to year under review as at 31 March 2017 and the new financial year. Although there were findings in the previous year relating to the affected account balances, the findings driving the 2016/17 audit disclaimer were induced by different causes. He said that all previous drivers of the audit disclaimer were resolved. These related to reconciliation of programme balances, liabilities and receivables; accruals of management fees on retention balances; cut-off in relation to programme expenditure; and provision for impairment on receivables.

Mr Phakade said that there were measures in place that were implemented to deal with disclaimer and these included:

• Capacitate regions with suitable financial and technical skills by the 31 December 2017 through the Organisation Development process that the IDT embarked on.
• Enforce the practice of monthly project certificates issue effective from 01 October 2017 and initiate a special project to quantify the opening balances for 2017/18 on a case by case basis.
• Explore the introduction of automated controls to ease the monitoring of compliance.
• Implement consequence management in cases of non-adherence to standard operating procedures.
• Include review of compliance with its reduced corrective measures by internal audit.

Discussion

Ms Mathys said that in relation to the Expanded Public Works Programme (EPWP), the Auditor-General did not give a good report on the programme and this was something that needed to be given serious attention. There were reported cases of dead beneficiaries, women who were asked to offer sexual favours and people who were murdered for these EPWP jobs. She highlighted that the EPWP jobs were usually given to the councillors and this problem of killing each other and women being asked to offer sexual favours usually became worse during the elections, as this was evident from the previous local government elections. The 40% beneficiary from EPWP was extremely low as most of the people were sometimes depended on these jobs in order to survive. It was important to know how the entity ended up with a deficit on the allocated budget. Was the deficit related to the failure of payment from client departments? The country was already operating under a deficit and therefore the entity needed to be prudent in handling of finances. It was shocking to notice that the entity only managed to build four schools out of the 20 targeted. What were the names of the 4 new trustees?                                                                             
The Chairperson requested that the Department, together with the entity, engage with client departments so as to deal with this lack of payment as it was hampering the performance of IDT.                                                           

Mr Figg said that the Committee was aware of the challenges faced by the entity and the reality was that the situation on the ground was really dire and gloomy for an implementing agency. The building of schools and creation of working opportunities were key social areas that needed to be fast-tracked and prioritised. The lack of payment of invoices within the stipulated 30 days was the major problem that needed to be addressed. The fact that the entity had a 36% record on payment of invoices was rather disappointing. The lack of payment of invoices within 30 working days was killing small businesses. He said that the statement from the CFO that the entity nearly achieved an unqualified audit while obtaining a disclaimer audit opinion was a shocking complacent statement and showered awareness of the monumental problem within the entity. What was the salary structure of IDT? How many employees were employed by IDT?

Mr Figg asked for the Committee to be briefed on the income of R210 million. The issue of deficit of R141 million was a long historical issue that proved that there was lack of consequence management for failure to achieve the targets. The deficit could also be caused by the fact that there was a lack of budget for possible litigation for failure to pay the suppliers. The decrease in cash flow was rather concerning. Why was there such a decrease in cash flow? It was disturbing to notice that the entity was now budgeting for litigation. The amount of R110 million that was allocated to IT was deeply concerning. There was an understanding that the country was in recession but this should not be used as an excuse for poor performance.

Mr Ryder was deeply concerned by the fact that the CFO of the entity seemed oblivious of the scale of the problem that was experienced by IDT. He highlighted that there was a huge difference between a disclaimer and unqualified audit opinion. The Auditor-General highlighted that the entity failed to adhere to the Supply Chain Management prescripts. The revenue management of the entity was absolutely bad and the report of the Auditor-General was rather damning. The role of the entity was enormous as was dealing with social infrastructure and poor people were often let down because of the dismal management of the entity. It was unclear as to why there was a need for a Litigation Management Team within the entity. The Committee visited a clinic in the Eastern Cape during the oversight visit where the clinic was not handed over because of lack of payment of the contractor. It was clear that the entity required to turnaround the accounting system in place to deal with management of finance.

Mr Ryder said that the problem of R1.6 billion under expenditure was rather a concern that needed to be addressed. The Minister yesterday was dismissive of the importance of EPWP without realising that this programme mattered to poor people without any form of income. Why was the entity now stopping to focus on building schools?                                   

Mr Sithole reminisced that the entity promised to get an unqualified audit opinion but this promise did not materialise. He said that the entity once again obtained a disclaimer audit opinion and this was “the elephant in the room”. The Committee would need to sit down and look at the way forward in regard to IDT and its perennial problem of non-performance. It was rather disappointing to notice that the entity only managed to build four schools out of the 20 targeted. The reality was that IDT was performing poorly for a while and the toilets and schools that were built by the entity were not in quality state, as this was the case in most areas of Nkandla. It was confusing as to why the entity was having high targets while not being able to achieve those targets. It must be said that the Committee was going nowhere with IDT.

Mr Nhlanhla Ngubane, Chairman, IDT, responded that the entity needed to be realistic about the problems facing it and it was not helpful to blame each other for this non-performance. It was crystal clear that there was a lot that still needed to done in terms of coming up with solutions to address the issues of disclaimer audit opinion and salary structure of IDT. He said that the entity indeed had a huge responsibility in terms of providing basic social services to the people. The entity would need to go back to the drawing board and come up with strategies that would get to the bottom of the challenges that were identified. The entity should brief the Committee on a quarterly basis in terms of progress that was made on the stipulated targets. The Board should be shown the door if unable to achieve the required standard.

Mr Phakade mentioned that the disappointment about the fact that the entity obtained a disclaimer audit opinion was welcomed. There was a plan was put in place to deal with a number of challenges. He said that there was a lot of effort that was made in terms of addressing the challenges that was identified. The entity would require extra patience from Members and the Board was accountable and responsible for the challenges that was identified. He agreed that there was lot of abuse of EPWP and manipulation of power which was not only limited to the EPWP. The problem was patriarchal in nature and aimed at controlling women. The entity would work extremely hard to fight the scourge of patriarchy that engulfed the EPWP. The issue of deficit was about spending more than the generated income and the problem was linked to the litigation cases. The client departments often took their own time in paying back what was due or not paying at all and this contributed largely to the deficit. There would be a reduction in cases that were being litigated and the entity was already having a conversation with the State Attorney in order to get to the bottom of this problem. IDT was unable to attract more work that would be able to generate more profit and stimulate the economy. There was a problem of the right people sitting in wrong positions and this was a historical problem that needed to be addressed.

The Chairperson said that the Committee should be provided with written responses on some of the questions that was not answered in the meeting

The meeting was adjourned.