South African Management Development Institute (SAMDI) Briefing on Cost Recovery

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PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE

PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE
18 June 2003
COST RECOVERY IN RESPECT OF TRAINING INTERVENTIONS: BRIEFING BY SAMDI

Acting Chairperson :
Mr R Mohlala (ANC)

Documents handed out :
Cost Recovery in Respect of Training Interventions (PowerPoint Presentation)

SUMMARY
The South African Management Development Institute (SAMDI) briefed the Committee on cost recovery relating to training interventions. Cost recovery had only been implemented since April 2002 and the process was a slow one. However, it was envisaged that SAMDI would eventually become self-sufficient and, therefore, less dependent on donor funding. A major challenge was convincing other Government departments to pay for SAMDI services.

MINUTES
South African Management Development Institute (SAMDI)
www.samdi.gov.za
Ms Mentor (ANC) commented that, in her view, there was no point in SAMDI presenting without linking cost and delivery, since this was how SAMDI's performance would be measured.

Mr Dennis Malekele, Chief Executive Manager: SAMDI, Mr Gerhard Kemp, Chief Financial Officer and Mr André Vorster, Deputy Manager: Cost Accounts, then proceeded with their presentation.

The Committee noted that, since Government departments had been required to pay the full cost of SAMDI services since 2002, SAMDI was moving towards self-reliance and was therefore expected to become increasingly less dependent on donor funding. However, a lack of willingness on the part of some departments to pay for services rendered was presenting challenges and the possibility of securing payment in advance was being considered. Some components of the development programmes relied heavily on input from consultants, with significant cost implications. This, together with the fact that training, when urgently required, was sometimes given free of charge, presented additional challenges.

Discussion
Mr L Kgwele (ANC) said that the briefing should not be taken in isolation and should be seen against the background of previous SAMDI presentations. He asked what percentage of the budget would be met from donor funding and what percentage would be recovered from charging for services rendered. He also asked what, if any relationship, had been formed between the recently established Local Government Agency (LGA) and SAMDI.

Mr Maleleka replied that, as far as he was aware, SAMDI was considered to be a co-ordinating body for management development in Government and would work with the LGA or any other body requiring input in respect of training and development.

Ms Mentor said that human resource development was a priority issue. The public service had a critical role to play and SAMDI needed to deliver on its stated objectives. Perhaps consultants should not be engaged until the system of recovering the cost of training provision from end-users was running smoothly.

Mr Maleleka conceded that mistakes had occurred. However, SAMDI was in the process of consolidating its programmes.

Mr M Sikakane (ANC) asked for more detail on SAMDI's clientele. Did this extend beyond Government departments?

Mr T Abrahams (UDM) queried an apparent discrepancy in the total revenue figures, which Mr Kemp then clarified.

Mr Kemp went on to explain that, currently, donor funding accounted for approximately one third of total revenue. As end-user payment increased over time, so donor funding was expected to decrease.

Mr Abrahams then asked about penalties for late payment and incentives for early payment?

Mr Maleleka said that SAMDI was obliged to charge specific tariffs for the services provided. An attempt had been made to impose penalties, without any success. However, the question of incentives and penalties might need to be revisited.

A member drew attention to the large amount of debt outstanding, asking which departments were involved.

Mr Voster replied that the provincial governments concerned were North West, Mpumulanga, Limpopo Province and KwaZulu Natal. Members would be provided with more detail in due course. There appeared to be a reluctance on the part of Government departments to pay for services rendered by other Government agencies or institutions, despite the fact that increased revenue often meant better quality services.

Ms Mentor suggested that every effort should be made to recover at least a percentage of the amount owed from each province concerned.

Mr Steele (ANC) asked if SAMDI had considered outsourcing specific programmes to tertiary institutions with the necessary expertise. Mr Malekele replied that the University of Fort Hare, Stellenbosch University and Pretoria University had been mooted as possibilities in this regard.

The Chair commented that SAMDI's mandate was to provide management training. If it did not have the internal capacity to do so, outsourcing was the only other option. Training needed to continue despite the problem of outstanding debts. SAMDI would need to make optimal use of its available resources with this in mind.

The meeting was adjourned.

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