USAASA progress report on Mpumalanga oversight visit recommendations

Telecommunications and Postal Services

28 November 2017
Chairperson: Mr J Mahlangu (ANC)
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Meeting Summary

The Universal Service and Access Agency of South Africa (USAASA) presented the findings from their oversight visit to the Mpumalanga municipality, which showed there was an issue with the current service providers that the Agency had outsourced to provide connectivity in Mpumalanga. Upon investigation, it had been discovered that the service providers were failing to meet targets. Furthermore, there had been very limited effort from the Department to monitor the work of service providers.

On 22 March 2017, the Portfolio Committee had conducted an oversight visit to the Carolina, Badplaas and Silobela sites. Their visit reflected that there was no internet at Carolina and Silobela, and that there were some infrastructural issues with these two sites. An audit team headed by the Independent Communications Authority of SA (ICASA) had highlighted many failings on the part of the service providers. The service provider had been given time to rectify the situation and had been bound by new contractual obligations.

USAASA continued to target the installation of broadband connectivity facilities at clinics in the Mpumalanga municipality, and hoped to extend this to schools.

Members asked pressing questions regarding the awarding of the tender for broadband development in Mpumalanga and Limpopo, and called for more transparency and accountability for the financial activities involving USAASA and the service providers they outsourced. The Chairperson suggested that they should provide more frequent updates on their activities in the municipalities. This would effectively enforce more accountability and frequent assessment 

Meeting report

USAASA progress report: Oversight visit to Mpumalanga

Mr Nqaba Nqandela, Board Member: Committee on Operations, Universal Service and Access Agency of South Africa (USAASA), Universal Service and Access Agency of South Africa (USAASAapologised for the mismanagement of the projects in Mpumalanga. The presentation would address the progress of USAASA’s activities in Mpumalanga and an overview of their last site visit. Two slides had been added to the previous presentation that contained information that would give the Committee a full picture of their activities.

The Chairperson said this information had been added to the presentation documents that the Committee received. He stressed the need to highlight only the important information regarding this site visit so as to ensure adequate time was spent on the last document in the presentation.

Mr Lumko Mtimde, Chief Executive Officer: USAASA, briefed the Committee. On the broadband rollout programmes, there had been rapid deployment and broadband connectivity. In the three years up to the 2016 financial year, there had been broadband connectivity at 165 sites. Between the 2016 and 2017 financial years, 609 sites had received broadband connectivity. Broadband connectivity had been focused on clinics in Mpumalanga, as the National Health institutions were a main priority. Only one school had been targeted in the broadband project. There was a need to look at OR Tambo’s broadband connectivity programme for inspiration, because it was an example of how they had been able to extend the networks to reach out to schools. 536 schools had been able to benefit from connectivity and this was a move in a positive direction in preparation for the fourth industrial revolution.

Sites visited included the Carolina town clinic, the Silobela clinic and Prince Mkolishi clinic. Nhlazatshe 6 clinic and Phumlani Primary School were not visited by the Portfolio Committee.

In the Albert Luthuli Municipality, the starting date for the project was 1 May 2015, and the planned closure 4 January 2016. On 22 March, the Committee had conducted an oversight visit to the sites at Carolina, Badplaas, and Silobela. Upon several assessments of this Municipality by different stakeholders, the conclusion focused on the following crucial issues: poor workmanship, incomplete infrastructure installations, poor quality of connectivity at connected sites, and a lack of training for end users. There was thus an underutilisation of the network, with poor or minimal support provided for end users, and no obvious sustainability plan in place beyond 24 months.

The biggest lesson from Mpumalanga was the need to strengthen monitoring systems. With other service providers in the Northern Cape and Western Cape, there had been a close relationship which had allowed for close monitoring of the service providers.  The hope was that this would be the case in all other provinces.

There had been a change in sign-off procedures. This was being monitored to ensure there was no similar problem as experienced in Mpumalanga. The hope was to improve on accountability from the service providers.  This would be achieved by making payments to service providers based only on the connected sites. There was also a commitment to making sure that deliveries were strictly monitored.

Regarding the resuscitation of Mpumalanga connectivity, the presentation provided a more focused picture of where things were. Installation had been completed in Carolina. In Silobela clinic, there was no connectivity, but there was sufficient infrastructure to solve this. Since the visit, there was now connectivity, and speed tests were used to check the capability of the connectivity. The infrastructure in many of the sites had been corrected, as this had been a huge hindrance to the broadband problem. The goal was to switch from broadband to wireless connectivity by March 2018. There was a licensing issue with the service provider that should be resolved by 8 December. This would allow for the contracting for the project to be done.

The Chairperson thanked Mr Mtimde for his succinct presentation.

Mr C Mackenzie (DA) referred to the broadband connectivity project in Limpopo. The project in Limpopo had cost roughly R43 million. He wanted to know when the tender had been awarded and when the full payment had been made. In the event that the tender was paid out without the service being delivered, how many people were responsible for the Mpumalanga project? Was there a penalty for the failure to meet the terms of contract? He sought insight on the compliancy issues.

Ms D Tsotetsi (ANC) asked what had been done to improve the security of the erected infrastructure. There was s a need to have written agreements on the action to be taken in the event of failure in delivery from the service providers.

Ms N Ndongeni (ANC) referred to the roll-out data presented for the 2013 to 2016 period, and asked what other facilities, apart from schools and clinics, had been connected.

Mr C Mackenzie (DA) asked how the Department could possibly trust people after the failure to deliver in Mpumalanga.  There was a need to coordinate intervention, because nothing would have happened if there were no oversight visit. This was a problem that needed to be solved. 
He appealed for USAASA to verify the information from the period of 23-25 November.

The Chairperson requested details of the programme for the 2016-2017 financial year. He referred to the figure of 609 for connectivity projects in the presentation, and asked if this was a reflection of what they planned to achieve, or what had been achieved. More clarity was required on the rapid deployment. Increasing connectivity bridged the gap with urban areas, and this could target inequality in the schooling system. What was the plan beyond 2017? There was no clarity about where the Department was going, and this should be provided.

USASSA’s response

Mr Nqandela responded that the discrepancies observed by the Committee had been noted. USAASA had decided that oversight reports would be done more actively, and this would help to make monitoring systems more efficient.

Mr Mtimde said there had been an emphasis on engagement and evaluating the consequences that the service provider would face in the event that they failed to meet their targets. The solution had been that the Department would stop connectivity if the service provider failed to reach targets. Furthermore, after having decided what should be done and the deadlines set for this, the service provider was required to use their own resources to cater for the gap in their service delivery. 609 installations had been made, but given the rationalisation of schools, the figure was now 608.

In the current financial year, USAASA was focusing its operations on the Eastern Cape and OR Tambo. The annual performance plan (APP) details for the period January 2019/2020 would be determined by the Minister. Regarding USAASA and its future, its work would be taken over by BroadBand Infraco (BBI) once USAASA was dissolved. The two had been working closely together, so the taking over of the broadband connectivity project would be easy for BBI.

Mr Mtimde responded to Mr Mackenzie’s question regarding the discrepancies with the project in Limpopo. The project did not have R43 million dedicated to it. The Chief Finance Officer would elaborate further, but roughly R13 million had been dedicated to Limpopo and R10 million to Mpumalanga. There were projections made in May, but the audited information was different.

Mr Mahomed Chowan, Chief Financial Officer (CFO): USAASA, addressed Mr Mackenzie’s question on the amount spent on the projects in Limpopo. In the previous financial year, R14. 5 million in total had been paid out for this project.  This figure was inclusive of VAT payments of R1.2 million, paid out on 7 June 2015, and another payment of R5.2 million made out on 16 November 2015.

Mr Mackenzie continued to inquire about the overall total paid out by the Department to the service provider.

Mr Chowan responded that the final payment was made on 15 February 2016. There were two payments made, valued at R2.37 million and R4.4 million.

Mr Mtimde confirmed that there were no subsequent payments following these.

On the issues of congestion with access to broadband connectivity, the number of users would grow, so the network in Mpumalanga could be better utilised. The current capacity was too much for 21 clinics, so there was a need to get the best value out of this investment. He acknowledged that there had been engagements hosted with the Mayor and there was a plan to also include traditional leaders in the overall plans.

Mr Papama Nkukwana, Acting Director of Operations, USAASA, referred to the safety of the infrastructure and potential thefts, and said there had been engagements with the service provider to build sustainable structures that would ensure their equipment was secure and protected.

Ms Tsotetsi appealed to USAASA to focus their resources on ensuring that the infrastructure erected in all their targeted areas was secured properly.

Mr Mackenzie reiterated the importance of clarity on the financial transactions with service providers. The digital gap was still growing, therefore there needed to be more vigilance on following up on tenders awarded and service providers.

Mr Nqandela informed the Committee that the deadline given to the Independent Communications Authority of South Africa (ICASA) was 8 December 2017.

The Chairperson advised that quarterly updates should be provided per financial year to avoid long question and answer sessions.  

Committee programme: First Quarter 2018

The Committee discussed the programme for the first quarter of next year’s programme, from 23 January to 29 March. A strategic planning session was scheduled from 30 to 31 January. The Chairperson requested that Members assist in suggesting the crucial points necessary to add to the strategic plan.

Mr Mackenzie asked whether the Department had the financial capacity to provide stipends for invited guests. The strategic planning session required the inclusion of experts on the fourth industrial revolution.

The programme was adopted.

After adopting Committee minutes, the meeting was adjourned.

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