The Eastern Cape Department of Social Development reported back on their performance with the Early Childhood Development Grant, as a follow-up to their engagement with the Committee in May.
The national and provincial Departments of Social Development (DSD) and National Treasury (NT) presented the expenditure performance of the province from the first quarter to date. The conclusions from this were:
- That the increase in the limit to be spent at each ECD centre – from R100 000 to R180 000 -- should assist the Department, which was experiencing challenges with quotations.
- At an overall spending of 11.8% by the provinces for the first quarter of 2018/2019, the grant was performing poorly, with the Eastern Cape having spent only 1.2% of the grant. Performance should increase going forward, given the appointments made.
- A service level agreement (SLA) for the Eastern Cape had been signed, so performance was likely to Improve in the following months.
The province faced numerous challenges. There were delayed payments of non-profit organisations (NPOs) due to the technical challenges during the migration from the old to the new non-governmental organisation (NGO) payment system. As a remedial action plan, the Department had decided to process payments through the “Procure to Pay” system while the model for the payment of NGOs was being tested. The NPO payment system had been centralised at the provincial office, and as a remedial action plan, the NPO system had been decentralised to the districts. Determining the need to effect changes to existing SLAs for the ECD expansion grant only during June 2018 had contributed further to delayed payments benefiting ECD centres.
As a remedial action plan, the Department had drafted an addendum increasing the number of subsidised days from 209 to 237, which had been signed by all the ECD centres. Consequence management action had been initiated for breaches of the signed financial management pledge, and for failure to ensure timeous payments were made to ECD centres benefiting from the ECD expansion grant.
Members were concerned about the Province’s lack of progress since their last engagement. There had been zero expenditure of the grant, and they expressed their disappointment and emphasised the effect of failing to spend the money. The Department had appointed more staff for technical infrastructure, but Members were concerned that nevertheless the situation had still not improved. They urged the Department to produce tangible results at their next engagement.
Early Childhood Development Grant: National Treasury report on E Cape performance
Ms Ogalalatseng Gaarekwe, Chief Director: National Treasury (NT), said she would not to repeat what had been said at their last meeting, but would highlight important aspects.
The importance of the Early Childhood Development (ECD) Grant had been stressed previously. Given the inadequate provision of ECD, a National Integrated Plan had been adopted as a policy in 2005. The Eastern Cape had been among the lowest spending provinces in the first and second quarters. NT was worried about the performance of the province.
The Eastern Cape subsidised learners for a lower number of days than the set target. In the current financial year, all provinces had to subsidise for 264 days, and the Eastern Cape had not met their target. It was unclear how the strike had affected the numbers.
The Eastern Cape had had the largest under-spending, and had had to surrender a large amount to the National fund. The Eastern Cape had been unable to spend their grant entirely due to certain challenges:
- Service level agreements (SLAs) between the provincial Department of Social Development (DSD) and ECD centres had been concluded late due to challenges with the format. The format was being reviewed by the DSD to address the challenges.
- There had been late appointments due to delays in the recruitment process, with appointments being made late into the financial year.
- The appointment of staff to manage the grant had been slow in provinces. This made management of the grant, with the existing poor capacity in infrastructure units, difficult.
- There had been delays in the supply chain management (SCM) processes for the appointment of contractors.
- The limit of R100 000 per centre was not sufficient in certain cases due to high quotations from contractors. The limit had been increased to R180 000 per centre in 2018/2019, but this may still pose similar challenges.
In conclusion, it was outlined that:
- The increase in the limit to be spent on each ECD centre -- R180 000, up from R100 000 -- should assist the Department experiencing challenges on quotes.
- At an overall spending of 11.8% for the first quarter of 2018/2019, the grant was performing poorly, with the Eastern Cape having spent 1.2% of the grant. Performance should improve going forward, given the appointments made.
- The SLA for the Eastern Cape had been signed, so performance was likely to improve in subsequent months.
The Chairperson stated that the Committee wanted to hear what the action plan was for the identified challenges. Its objective was to assist the Department, which was the primary objective of the National Council of Provinces (NCOP), to strengthen intergovernmental relations.
Ms Susan Shabangu, Minister of Social Development, said that this was an area where particular intervention had been requested. There were regular interventions that the national Department had taken, and the presentation would outline those interventions.
Early Childhood Development Grant: National DSD report on E Cape performance
Ms Conny Nxumalo, Deputy Director General (DDG): Welfare Services, DSD, said she would focus on the interventions adopted since the last meeting before the Committee.
The performance of the Eastern Cape was worrying. However, they had deployed a team that was working with the Head of Department (HOD) as well as a provincial team. Meetings had been held in the last two months in which a project plan to try and turn around the situation had been developed, with strict time frames. The presentation by the Provincial Department would get into detail about the interventions.
As much as there was zero spending in the first quarter, it could be acknowledged that work had been done to improve the situation, and there had been expenditure in the second quarter. With regard to the compliance issues that had to be addressed, which were related to the key responsibilities of the provinces, most issues had been addressed.
Even though it seemed as if there had been no movement in terms of expenditure, this should change with the new systems put in place. At the previous meeting, the Eastern Cape had mentioned the challenges that they faced, and in their presentation they would speak to the improvements made in terms of special technical skills that they required, as well the assessments of various projects. The issue of procurement processes would also be dealt with, as it was overshadowing the delivery of the grant in the Eastern Cape in particular, but in other provinces as well.
They had indicated that they would reduce the allocation of R12million to R5 million, so that they would provide the Eastern Cape with an opportunity to begin to start spending, and then the allocation would be reviewed. The allocation had been reduced to allow them to implement the adopted systems.
In terms of monitoring and support, they had had a workshop to work through the systems and the project plan to improve the performance of the province, and there was also a task team that met on a regular basis to keep on monitoring. The province’s presentation would tell of the weekly activities that were taking place as well, because the situation was in need of weekly monitoring – at the national level, it was monthly.
For 2028/19, it was all systems go in terms of the compliance matters. The conditional grant framework had been finalised and all the necessary documentation had been submitted to NT.
There were 900 children who benefited from the subsidy grant (see document), but there had been zero expenditure by the province. The reason given by the provincial Department was that the 900 was additional, and there were already children who benefited. They stated that when they did the journal, it would show how the 900 was catered for, since there had been zero expenditure.
The target was 264 days, and they had not met their target. The HOD would give reasons as to why they had not met their target.
It was recommended that the Committee
- Note the presentation in respect of the performance of the grant in 2017/18, the reasons for under-performance in the EC, and the intervention by National; and
- Not the first quarter progress on the implementation of the grant in 2018/19.
The Chairperson said that the DDG had highlighted strict time frames, and that was an intervention was about. One needed to know what was happening when, by whom, what the result was, corrective actions and excellent monitoring.
ECD centres were part and parcel of the foundation phase in primary schools, and the under-spending meant something was not happening at ECD centres. That was how crucial the Committee’s oversight work was at their constituencies. Members had to go and see how they could contribute in making the lives of learners in ECD centres better. Government could not do everything, and participation with the private sector was key.
Dr Pumza Dyantyi, MEC: Eastern Cape DSD, said that the province was aware that in the recent past, the Committee had expressed some serious concerns about its under-spending, and they were also aware that there had not been much improvement since their last appearance before the Committee in May. They were not here to lament on the challenges -- they had a plethora of challenges -- but they were there to provide strategies on how best to solve these challenges. The HOD would present on the strategies and efforts developed to try and change the current situation.
Early Childhood Development Grant: Provincial DSD report on E Cape performance
Ms Ntombi Baart, HOD: Eastern Cape DSD, said that as much as the expenditure did not reflect progress, there had been progress on the ground in terms of the work that was being done.
With regard to the maintenance component, there had been no performance in reaching the set target of 96 ECDs due to supply chain challenges. There had been procurement issues, but they had recently appointed a director for technical infrastructure and had called the service providers for a briefing session, and adverts had been sent out for calls for proposals as well. They had developed a template with the technical expertise that they had just procured, and they would brief the service providers on this.
The province faced the following challenges:
- Delayed payments of non-profit organisations (NPOs) due to the technical challenges during the migration from the old to the new non-governmental organisations (NGO) payment system which was meant to enhance the version of the NGO payment electronic system. As a remedial action plan, the Department had decided to process payments through the Procure to Pay system while the model for the payment of NGOs was being tested.
- Centralisation of the NPO payment system at the Provincial Office. As a remedial action plan, NPO units had been established and capacitated in all districts; and the NPO system had been decentralised to the districts.
- Determining the need to effect changes to existing SLAs for ECD expansion grants only during June 2018, which had contributed further to delayed payments benefiting ECD centres. As a remedial action plan, the Department had drafted an addendum increasing the number of subsidised days from 209 to 237, which had been signed by all ECD centres. Consequent management action had been initiated for breaches of the signed financial management pledge and failure to ensure timeous payments made to ECD centres benefiting from the ECD expansion grant.
Included in what the Department was doing differently were weekly meetings, where the HOD received progress reports from the DDG regarding the state of affairs at the ECDs.
She said that another challenge they faced was the retention of staff. This was due to the one-year contracts, as staff members left to seek longer contracts.
It was recommended that the Committee:
- Note the presentation
- Note the intervention that the Province had put in place to ensure compliance to the grant framework and achievements of the set targets.
She said that the misallocation was related to money taken from the grant instead of being taken from the equitable share, and vice versa. Those were issues in the system that they had to address.
The Chairperson said that there needed to be a hands-on approach when dealing with ECD centres, and not a reliance on email reporting. Monitoring and evaluation must also be filtered down to the district level, closer to the action.
He asked whether quality checks were done when buildings were renovated.
Mr F Essack (DA, Mpumalanga) said that they had to take cognisance of the report, and that the NT had highlighted the crux of the matter -- that there were some huge dysfunctionalities in the Department. It was uncertain what monitoring was in place. Nothing had happened since the report in May, and in fact the Department had regressed. They were failing the children. If they were really having weekly updates, then they would not have regressed.
How could the Committee accept that there were misallocations -- how was it possible? In the earlier meeting in May, the Department had given assurances that the scenario was going to change, but in terms of the business model they were using, that was unlikely.
The Chairperson said that the national Department had to go into detail about their intervention.
Mr O Terblanche (DA, Western Cape) expressed his disappointment, saying there had been no progress since their last meeting. NT had mentioned that they had increased the amount, but that it was still not sufficient. It should maybe be increased to R200 000 to make the execution of the project easier.
He asked why there were still calls for proposals at this stage, and who the service provider spoken about was, and what service they were rendering. He commended them for appointing pre-qualified contractors as well as a technical director; and wanted to know what change there had been since these appointments. He wanted to know who was responsible for determining the need for a project and what the process was from there. At what stage were pre-contractors appointed and what was the basis for appointing them, and who signed off on the project?
He expressed serious concerns about the ability of the people involved in these projects, as they needed expertise and they did not have it. They were failing the children. There was serious hunger in the Eastern Cape, as had been seen from a number of visits there, yet the money was being underspent. This was not how they should be operating.
The Chairperson said that Members had to be mindful, when assessing progress, that it had been eight weeks since their last engagement with the Department.
Mr M Chabangu (EFF, Free State) said that the province had been relaxing for quite a long time, and action needed to be taken. There should be time frames because the children were suffering. The EC was a former homeland, and former homelands seemed to be neglected. Where did they get service providers, because they had mentioned there had been a protest from the community about the service providers in the Alfred Nzo District? Service providers should be local.
Mr M Monakedi (ANC, Free State) said he was gravely concerned about the performance of the EC regarding the ECD issues highlighted at the meeting. His concern stemmed from the knowledge that the EC was still behind, and one would have expected them to grab opportunities like this grant to catch up with other provinces. They needed to try to make sure that they caught up. The area discussed was very important and needed to be given the necessary attention. It was therefore unacceptable that they had lost their allocated money, because money that should have been used to improve the lives of the people had ended up having to be sent back. They had to make sure that they brought tangible results when they came before the Committee again.
He enquired why they had not reached the target of 264 days stipulated by the national Department. They needed to ensure that there were timeframes for each of the steps stated in the process flow. The issues faced in the districts, such as that of protests in Alfred Nzo, should have been addressed long ago. The leadership seemed not to be taking this seriously. At some point, the DSD would need to collaborate with the Department of Health to ensure that mothers were also taken on board ,to ensure that there was proper development of the children, so that even when they were at home they were cared for.
Mr L Nzimande (ANC, KwaZulu-Natal) asked whether the advertisement was for the new financial year, or whether they were attempting to correct what they had failed to do in the previous year. Were there were new plans in place for the projects, or was the Department still in intervention mode? He said that what the Department had been told to do in the meeting in May, they had done. They had been told to come up with strategies on how to solve their challenges, and they had done that. They had also appointed staff to solve their technical infrastructural incapacity.
The Chairperson said that what had been presented today was a roadmap. When there was an intervention, there needed to be a diagnostic analysis -- identify the problem, come up with a plan, implement that plan and then monitor the implementation of that plan.
There would be a third engagement with the province, but he wanted to know whether the provincial Department had the capacity to implement the plans outlined today, because that had been their problem in May.
Provincial Department of Social Development’s response
Dr Dyantyi said that the Committee required them to advise the type of support they were giving the Province. In addition to the technical team that they had deployed to the Eastern Cape, she would personally ensure that the HOD was fully supported in implementing the plans. On a monthly basis, the Minister should receive a monthly report from the MEC, so that they knew what the progress was at the national level.
Ms Nxumalo said that they appreciated the guidance that they received from the Members, and gave a commitment that they would not disappoint them. They were trying by all means not to fail the children. They had visited some of the ECDs and could attest that a lot still needed to be done. They would adhere to the time frames, and by the end of September they would have dealt with a number of issues needing attention.
Ms Baart said that the request had been for quotations, and not proposals. The service providers referred to were building contractors. As a Department, they had been required to do work that was not within their scope, and they were also dependent on the Department of Public Works to pull its weight.
There was a project charter, and in terms of that, the maintenance and the subsidy grants both had time frames. They collaborate with other departments, and that assists them. As disappointing as the situation was, there had been a significant improvements and there new plans in place for 2018/19.
There was limited capacity in terms of technical infrastructure, but they had employed in-house technical infrastructure staff who had already formed relationships with Public Works. Capacity for in-house management of NPOs was also limited. She said that next time there would be more tangible results.
National Treasury’s response
Ms Gaarekwe said that NT could not commit to an increase in funding because of the national financial constraints. It would mean that the equitable share needed to be augmented.
The Chairperson said that the Eastern Cape should look at the Northern Cape’s implementation processes, and learn best practices from them.
The Chairperson made his closing remarks, and proceeded with the consideration of minutes.
The meeting was adjourned.
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