Brand South Africa 2016/17 Annual Report, with Minister

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Communications

11 October 2017
Chairperson: Mr C Maxegwana (ANC)
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Meeting Summary

Annual Reports 2016/17 

Brand South Africa (BSA) achieved 44 out of 52 targets set in the 2016/17 financial year. The entity received an ‘unqualified’ opinion without findings in the 2015/16 financial year and maintained this outcome in 2016/17. In terms of financial management, BSA’s current ratio – reflecting the organisation’s ability to pay its short-term debt obligations - improved from 0.43 in the 2014/15 financial year to 2,66 in the 2016/17 year. BSA reported an average creditor payment period of 25.7 days.

In terms of BSA’s employee demographics, 88.46 percent of employees are black South Africans, 5.77 percent are coloured South Africans, 0 percent are Indian South Africans, 5.77 percent are white South Africans, and 1.92 percent are persons with disabilities. In terms of gender equity, 60 percent of BSA employees are female, while 40 percent are male. Top management features 60 percent males and 40 percent females, middle management features 100 percent males and 0 percent females, while 100 percent of unskilled employees are females. In terms of youth employment, 38 percent of BSA staff are under the age of 35, while 62 percent are 35 and older.

During the 2016/17 financial year, BSA implemented a campaign to promote Constitutional awareness. The campaign utilized SABC Radio, Campus Radio, billboards and social media to convey the principles of freedom of expression and freedom with responsibility. BSA also launched its Play Your Part cube, wherein the organization went across the country to interact with South African youth. BSA were present at the World Economic Forum (WEF) conference in Davos to provide leverage and promote the country’s interests. BSA worked with the Department of Mineral Resources (DMR) and the Department of Trade and Industry (DTI) to position South Africa as a competitive investment during the 2017 Mining Indaba. During this time, BSA engaged in a media and communication programme, reaching an estimated listenership of 700 000. During the 2016/17 year, BSA undertook a television campaign on SABC and CNN to promote BSA’s strengths in the domestic and international markets. The BSA Chief Executive Officer (CEO) stated that the advertisement had featured in a slot during the inauguration of President Donald Trump in 2017. The chairperson of BSA highlighted that BSA had won a Gold award at the 2017 Loeries Awards for its Drinking and Driving campaign.

Domestic challenges to the BSA included economic transformation discourse; social cohesion; governance capabilities, sustained low economic growth; downgrades by international ratings agencies; travel advisories against South Africa issued by the USA, UK and Australia; and protests in Pretoria and other cities. International challenges included the internationalization of regional conflicts in Syria, Libya and Ukraine; international perceptions of growth underperformance; rising right-wing nationalism and protectionism in developed markets; the Brexit decision; and the election of Donald Trump, whose views on multilateralism is likely to put a strain on North-South cooperation.

One member raised concern at BSA’s use of performance indicators, specifically highlighting the distinction between “performance indicators” and “impact indicators.”, the latter being a measure of change created. Furthermore, the member criticised BSA’s use of narratives to justify non-achievements and graphs to report positive performance, and suggested that BSA should have a more detailed discussion with the Portfolio Committee on performance indicators. The same member inquired as to the ‘yellow’ audit outcome for Information Technology in the report of the Auditor-General of South Africa. noted that it began implementing the  Enterprise Resource Planning system in the 2015/16 year, which is still ongoing. As a result, the AGSA chose not to do a general control review on BSA’s IT programme until the ERP system was fully implemented, and therefore left the outcome on the default colour code of ‘yellow’. Another member raised concern at the fact that despite BSA’s positive review of the 2017 World Economic Forum (WEF), South Africa had regressed 14 positions in the WEF global index.

BSA noted that the entity had conducted a detailed analysis on the rise of the far-right ideology and intolerance in the global political environment. He stated that the theme of intolerance had a direct impact on South Africa’s performance as a nation brand, and that BSA were beginning to witness the stigmatization of the country. With this considered, BSA intends to turn the tide in terms of perceptions of emerging markets to highlight the potential for growth.

Meeting report

The Chairperson welcomed members of the committee, the Minister of Communications, and the delegation from Brand South Africa (BSA). He noted that there were insufficient coloured documents available to members, and requested that this be resolved before the Committee proceeds. He stated that if the Committee had an insufficient budget for coloured copies, then the matter should be taken up with the office of the House Chairperson for Committees, as the current availability is not up to standard.

The Chairperson noted the absence of three members, namely Ms N Tolashe (ANC), Mr W Madisha (COPE), and Mr M Ndlozi (EFF). He stated that the Committee could not accept the apology of Ms P Van Damme (DA), as she had furnished a verbal and not a written apology to the Chairperson.

The Minister of Communications, Ms Ayanda Dlodlo introduced the Chairperson of BSA Board, Ms Khanyisile Kwenyama. She requested that the Chief Executive Officer (CEO) of BSA introduce the delegation.

Dr Kingsley Makhubela, CEO, BSA, thanked the Chairperson for allowing the BSA delegation to present its annual report. He introduced the delegation as Adv S Nyoni, Mr T Mdau from the Office of the CEO, Acting Chief Financial Officer (CFO) Mr K Seripe and Chief Marketing Officer Ms L Sangaret.

Ms Kweyama announced that the Director for Corporate Services at BSA had recently completed his PhD in Financial Management.

Remarks by Minister

The Minister stated that BSA had achieved 44 out of 52 targets set in the 2016/17 financial year. Those targets that may be considered ‘partially achieved’ were categorized as ‘not achieved’ for the purpose of the performance review. The performance indicator for Programme 1 – a diversified case to securing funding - had been omitted, owing to a change in BSA’s business plan. BSA could not achieve its target of a 1 percent budget variance, as the entity had concluded significant media partnership contracts during the 2016/17 financial year. Some of these services overlapped into the 2017/18 financial year, resulting in pre-payments of R17.7 million. The Minister noted that there was also a shift in the timelines of some projects, hence the budget variance target of 1 percent was not achieved.

BSA could not achieve its target of registration in 60 countries, as the pace of the registration process in foreign jurisdictions is beyond BSA management’s control. However, registrations have taken place in 44 of the 60 countries targeted, and where registrations have been declined, appeals have been lodged. During 2016/17 year, BSA attempted to introduce the Preamble of the Constitution of the Republic on the first Monday of each month in targeted schools and provinces. This was not achieved, as the target was amended to incorporate the broader deliverable of Outcome 14 – to promote the Constitution with schools and the broader public. BSA attempted to implement its social media and radio campaign to promote the first Monday of each month as Constitution Monday for South Africans. BSA failed to achieve this, as the target was also amended to incorporate the broader deliverable of Outcome 14. The amendments to these objectives were approved by the Department of Planning, Monitoring and Evaluation (DPME) as well as the Executive Authority.

BSA had attempted to maintain and deepen the Global South Africans (GSA) programme, but failed to achieve this objective, as National Brand Ambassadors were not identified from the GSA network. This target has been carried over to the current financial year. BSA had also attempted market activations in the United States of America (USA), China, Canada, the United Arab Emirates (UAE) and on the African continent. BSA’s environmental analysis prompted the prioritisation of markets with larger numbers of South Africans. Market activations therefore took place in the USA, United Kingdom (UK), China and Australia. The USA activation was postponed by UAE stakeholders, and was therefore beyond BSA management’s control. BSA had attempted to identify and utilize Ad Hoc international reputation management agencies to service the international markets of Russia, India, Brazil, Germany, Kenya, Nigeria, the Democratic Republic of the Congo (DRC) and Angola. BSA failed to achieve this target, as its environmental analysis prompted a change in the priority countries. BSA found no reputational issues in Kenya, Nigeria, the DRC and Angola, and therefore funds for public relations support were diverted to programmes in China, Australia, the UK and the USA. The Minister noted that China had been prioritised because of the G20 Summit, while Australia, the UK and the USA were prioritized because of the negative publicity highlighted in these countries.

The Minister stated that BSA had attempted to communicate BSA research outputs to key stakeholders during the 2016/17 financial year. She noted that this objective was contingent on the publication date of research reports. All indices and analysis were delivered with the exception of the Open Budget Index due to an external dependency that was beyond management’s control.

Briefing by Brand South Africa (BSA)

Ms Kweyama stated that in terms of reputation, BSA had come under attack locally and internationally in the 2016/17 financial year, and that BSA had effectively “ridden the storm.” BSA had previously ranked well in the Open Budget Index; however the company that conducted the research had chosen not to run the index for the 2016/17 financial year. This company was an independent entity; therefore, this indicator was out of BSA management’s control.

Ms Kwenyama stated that the trip to the UAE had not taken place during the 2016/17 financial year as the hosts were not ready to accommodate the BSA delegation. As an alternative, BSA had engaged with South Africans in Mozambique instead. She highlighted that BSA had won Gold at the 2017 Loeries Awards for its Drinking and Driving campaign, which did not appear in the report as the achievement did not take place in the year under review.

Dr Makhubela stated that BSA was grateful for the support it had received from the Department of Communications (DOC), the Director-General and the BSA board. had always received wonderful support from the Portfolio Committee in navigating its challenges during the 2016/17 financial year. He noted that BSA had amended some of its performance targets as the Minister had already highlighted.

Dr Jonty Tshipa, Director: Corporate Services, BSA, stated that the entity had exemplified “the spirit of resilience” in its 2016/17 performance. BSAs management of the National brand domestically and internationally rested on three pillars; namely reputation management, coordinated communication and marketing. The Auditor-General of South Africa (AGSA) had given BSA an ‘unqualified’ audit opinion with findings in the 2014/15 year. In the 2015/16 year, BSA received an ‘unqualified’ opinion without findings and maintained this outcome in the 2016/17 financial year. In terms of the ‘yellow’ audit outcome for Information Technology (IT), Dr Tshipa noted that during 2015/16, BSA began the implementation of its Enterprise Resource Planning (ERP) system. As a result, the AGSA chose not to do a general control review on BSA’s IT programme until the ERP system was fully implemented, and therefore left the outcome on the default colour code of ‘yellow’.

Dr Tshipa stated that BSA had achieved 85 percent of its targets for 2016/17. He noted that the Minister had elaborated on the targets that were not met; however some of these targets were in fact met at a larger scale. In terms of the 1 percent budget variance target, the non-achievement of this target posed no risk to the organisation, and came as a result of timelines that were changed which resulted in pre-payment by BSA. In terms of registration in 60 countries, the non-achievement of this target posed no risk to the organization, and BSA is in the process of registration in the 16 outstanding countries. The introduction of the Preamble and the Radio and Social Media campaign had been expanded to incorporate the general public. In terms of the GSA programme, several engagements were conducted, however National Brand Ambassadors had not been identified, as the BSA’s specific criteria was not met. In terms of the international market activations, the BSA’s environmental analysis led to the concentration of efforts to China, the USA, the UK and Australia. He noted that the Open Budget Index had not been published in 2016/17, which was out of management’s control.

In terms of the key highlights from the 2016/17 financial year, Brand SA implemented a campaign to promote Constitutional awareness, primarily targeting South African youth. The campaign utilised SABC Radio, Campus Radio, billboards and social media to convey the principles of freedom of expression and freedom with responsibility. BSA also launched its Play Your Part cube, wherein the organisation went across the country to interact with South African youth. BSA were present at the World Economic Forum (WEF) conference in Davos to provide leverage to promote the country’s interests. Dr Tshipa noted that BSA’s stakeholder engagement session and above the line session were well received. BSA worked with the Department of Mineral Resources (DMR) and the Department of Trade and Industry (DTI) to position South Africa as a competitive investment during the 2017 Mining Indaba. The BSA engaged in a media and communication programme during this time, reaching an estimated listenership of 700 000. BSA also undertook a television campaign in the 2016/17 year, and featured on SABC and CNN channels.

Dr Makhubela stated that BSA had produced a television advertisement during the 2016/17 year. He noted that the advertisement captured the infrastructure, industry, people, fauna and flora within South Africa, and received good ratings locally and internationally. He stated that the advertisement had featured in a slot during the inauguration of President Donald Trump earlier in 2017.

Dr Tshipa stated that BSA had used research to inform its strategies during the 2016/17 financial year. Domestic challenges included economic transformation discourse; social cohesion; governance capabilities, sustained low economic growth; downgrades by international ratings agencies; travel advisories issued by the USA, UK and Australia; and protests in Pretoria and other cities. International challenges included the internationalisation of regional conflicts in Syria, Libya and Ukraine; international perceptions of growth underperformance; rising right-wing nationalism and protectionism in developed markets; the Brexit decision; and the election of Donald Trump, whose views on multilateralism is likely to put a strain on North-South cooperation.

BSA conducted research on international investor perceptions during the year under review, with the full details available in the annual report. The purpose of this study was to identify the positive and negative reputational drivers of doing business with South Africa. In terms of media engagements, BSA reached 27 local and international media platforms, including the hosting of media at the 2017 WEF, the launch of Mandela Day 2016, the launch of the Industrial Policy Action Plan (IPAP), and a pre-WEF Africa workshop. BSA also attended the 2016 BRICS Summit in New Delhi, India. During the Summit, South African trade took center stage, with 33 companies showcasing their value propositions to investors from the BRICS block.

In terms of the BSA’s employee demographics, 88.46 percent of employees are black South Africans, 5.77 percent are coloured South Africans, 0 percent are Indian South Africans, 5.77 percent are white South Africans, and 1.92 percent are persons with disabilities. In terms of gender equity, 60 percent of BSA employees are female, while 40 percent are male. Top management features 60 percent males and 40 percent females; middle management features 100 percent males and 0 percent females, while 100 percent of unskilled employees are females. In terms of youth employment, 38 percent of BSA staff are under the age of 35, while 62 percent are 35 and older. In terms of the BSA’s workforce qualification status, only four employees have not obtained a Matric Certificate, namely two cleaners, a driver and a receptionist. A recent skills audit found that the BSA has a highly competent workforce.

In terms of financial management, Dr Tshipa noted that BSA’s current ratio had improved from 0.43 in the 2014/15 financial year to 2,66 in the 2016/17 year. He noted that the current ratio could be interpreted as the organizations ability to pay its short-term debt obligations, and that the figure reported in 2014/15 had been highlighted by the AGSA as an area of concern. In terms of expenditure management, BSA reported an average creditor payment period of 25.7 days.

Dr Makhubela noted that after scanning the global market, BSA had conducted a detailed analysis on the rise of the far-right and intolerance, as well as how this impacts BSA. It found that businesses and individuals in the same environment had shown particular interest in this analysis. Intolerance had a direct impact on South Africa’s performance as a nation brand, and BSA was beginning to witness the stigmatization of the country. Moreover, the challenges highlighted at the WEF all related to the broader theme characterized by intolerance and the stigmatization of developing countries. With this considered, BSA intends to turn the tide in terms of perceptions of emerging markets to highlight the potential for growth.

Discussion

The Chairperson asked why there were no details of BSA’s financial information included in the presentation.

Dr Tshipa stated that the full details were contained in the Annual Report, and that these details were summarised in the section on liquidity management.

The Chairperson asked why BSA was attempting to condense this information.

Dr Tshipa replied that there was no need to duplicate these details. BSA had included the section on liquidity management as this had been previously highlighted by the AGSA as an area of concern.

The Chairperson asked if the BSA had the report by the AGSA. He further asked why the AGSA had found no material findings during 2016/17; however the outcome for IT systems is ‘yellow.’ He requested that BSA explain this regression.

Dr Tshipa clarified that the AGSA had decided not to audit BSA’s IT systems as it was still in the process of implementing its ERP. He further explained that the IT governance and IT systems control indicators were both linked to this.

The Chairperson thanked Dr Tshipa for the clarification, and allowed Members to pose questions to BSA.

Ms V Van Dyk (DA) congratulated BSA on its performance, but noted that South Africa’s performance had regressed 14 positions in the WEF global index. With this considered, BSA did not have the impact it was expected to have. In terms of the analysis on the rise of the far-right, has BSA conducted an analysis on the political situation in South Africa, specifically how this has impacted the regression in terms of image? In what provinces did the Read to Lead campaign take place, and what did this programme entail? Considering the high levels of youth employment in BSA and the high level of youth unemployment in South Africa, what is the BSA doing to promote skills development domestically?

Mr M Gungubele (ANC) stated that BSA had produced generally impressive work, however he highlighted that it had expressed all its positive achievements in the form of graphs, and its non-achievements in the form of narratives. He stated that it was necessary to be consistent in the articulation of performance outcomes, specifically with reference to the AGSA’s findings on IT. It may be necessary for BSA to have a more detailed discussion of performance indicators with the Portfolio Committee. He stressed the distinction between a “performance indicator” and an “impact indicator”, with the latter being an indication of change made. This was an issue concerning the language used to create performance indicators.

Ms M Matshoba (ANC) congratulated BSA on its performance, expressing her satisfaction with the level of employment of disabled persons at the organisation. In terms of gender equality, she highlighted that 100 percent of unskilled workers were female. Why is this the case? In terms of the four employees without a Matric Certificate or tertiary education, what is BSA doing to address this issue? Does BSA provide skills development courses for such individuals?

Mr R Tseli (ANC) requested information on the award mentioned by the Board Chairperson. Why is this award not reflected in the performance information for 2016/17? In terms of the roadshows conducted by BSA during the period under review, the entity only mentions the Play Your Part programme in the North-West and Free State Provinces. What is the distribution of these visits per province? He stated that this point was of importance, considering that politicians need to know the impact of such programmes, specifically in rural areas.

The Chairperson stated that he could not thank BSA for its positive performance, as one “cannot thank fish for swimming.” He requested that the Minister respond to some of the questions raised.

The Minister stated that there were a number of reasons that South Africa had regressed in the WEF Global Index, some being domestic and some international. Notwithstanding the role of domestic reasons, the rise of the far-right ideology and the challenge this poses to the developing world should be considered. She asked the CEO to respond to some of the other questions.

Dr Makhubela stated that the ‘yellow’ outcome for IT was not a finding by the AGSA. The AGSA had requested the internal audit team do an assessment of IT systems instead, which produced no findings. Because BSA was in the process of revamping its IT system, the AGSA recommended that the organisation keep this indicator, considering the prevalence of IT issues in government. He stated that BSA will conduct a more detailed analysis during the current financial year. BSA had a detailed debate with the AGSA as to why this indicator stayed ‘yellow’, and the AGSA responded that this was a potential problem area.

The Chairperson asked why the AGSA labelled this indicator as a regression, considering the reasonable explanation of the BSA. He commented that labelling it as such was misleading.

Dr Makhubela stated that the AGSA explains its rationale for this in the Annual report. In terms of why performance targets were selected, he noted that the introduction of the Constitutional preamble emanated from BSA’s Outcome 14. There had been an agreement with the Minister of Communications and the Minister of Arts and Culture to focus this introduction on children in schools; however the target was expanded to include adults using social media platforms. In terms of measuring this indicator, BSA considers the reach in terms of how many people the message was conveyed to. Addressing Ms Van Dyk’s question on the Read to Lead campaign, he noted that this programme belongs to the Minister of Basic Education in partnership with BSA. In terms of research into the political system in South Africa, he stated that BSA had never ventured into a detailed political analysis of South Africa, while acknowledging that this would have an impact on external perceptions. In terms of GSA brand ambassadors, Dr Makhubela stated that these are influential people in all segments of society. He asserted that people do not follow people, but follow brands. He used the example of Nike sponsoring footballers to explain this point, and stated that brand ambassadors have the potential to have a positive influence on their communities.

Dr Tshipa stated that the four BSA employees without matric certificates were two cleaners, a driver and a receptionist. The bursaries were given to two of these individuals to pursue their matric certificates. BSA had trained these individuals to become multi-skilled employees, so that any cleaner can take the job of the receptionist when necessary, for example. BSA is also conducting personal development plans with the aim of capacitating its staff members.

Dr Makhubela stated that the 2017 Loeries award was presented to BSA in the 2017/18 financial year; therefore BSA chose not to include it in the presentation, as it did not pertain to the year under review.

Ms Kwenyama stated that the Play Your Part campaign attempted to drive national pride and induce patriotism. The programme was rolled out in 9 provinces, including rural communities, in partnership with various radio stations.

Mr Gungubele stated that it would be necessary to have a more detailed discussion on the quantification of performance indicators. He asked about the purpose of the Play Your Part campaign.

Dr Makhubela stated that it was crucial that BSA and the Portfolio Committee were on the same page in this regard. He stated that BSA aims to teach South Africans about the Bill of Rights, so that once people understand their rights, then they can exercise them. He agreed with Mr Gungubele’s point regarding the quantifiability of performance indicators.

The Chairperson stated that BSA and the Portfolio Committee required a further discussion on performance indicators, as well as the matter of IT control systems with the AGSA. He stated that BSA and the Committee may have a different view to the AGSA as to why that item is categorized under ‘regression’. He thanked the BSA delegation, the Minister and the chairperson of the BSA board.

The meeting was adjourned.

 

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