The Department of Traditional Affairs (DTA) presented its 2017/18 annual report, and highlighted that it had achieved 87% of its annual targets. It had not fulfilled its objective to determine if 350 traditional councils (TCs) were functional, as there was a need to first conduct an assessment of their functionality. It had therefore changed its focus to developing and monitoring implementation of the support plans for the 466 TCs in seven provinces which had been assessed in 2015/2016 and 2016/2017, as well as capacitating them. The assessment of the 350 TCs would be conducted in 2020/21 to evaluate the effectiveness of the provincial support plans in improving their functionality.
With regard to its financial performance, the Department had under-spent its R152.5 million budget by R12.9 million. Delays in filling vacancies had resulted in the compensation of employees being under-spent by R6.6 million, while the under-expenditure of R6.1 million on goods and services had been mainly due to the late receipt of invoices from various service providers. The Department had received a clean audit opinion from the Auditor-General of South Africa (AGSA).
Members asked whether the DTA could afford to delay the Traditional Leadership Governance Framework Amendment Bill, as the Department had been clear about the dysfunctionality of a large proportion of these councils and their legitimacy. Could the DTA therefore afford to delay this for three years in order to allow for a provincial process? Had it been the right thing to do, to shift the objective in the middle of the year? They questioned whether research on the regulation of the faith sector was part of the DTA’s mandate, rather than the Commission for Cultural, Religious and Linquistic Rights (CRLR). Had the AG’s concerns about supply chain management (SCM) processes been addressed, and corrective measures put in place to address under-spending and the late payments of invoices? They also wanted to know how many casualties resulting from cultural initiation practices had been recorded during the year in question.
The Municipal Infrastructure Support Agent (MISA) reported it had achieved 21 of its 30 performance indicators in 2017/18. Key performance highlights included providing ongoing technical support to at least 60 municipalities; the roll-out of the Regional Management Support Contractors Programme in three pilot regions; the training of 303 apprentices towards qualifying as artisans; the training of 557 municipal officials in various aspects of municipal infrastructure delivery; and the placement of 102 qualified artisans and water process controllers in low capacity municipalities. Total expenditure for the year had been R302.8 million, which was 79.4% of the annual R381.5 million budget. Internal capacity challenges had contributed to a relatively low performance level and the concomitant under-spending of the allocated budget. This challenge was being addressed through the ongoing recruitment of additional staff, in line with the approved structure.
MISA had not incurred any fruitless and wasteful expenditure, and the irregular expenditure amounting to R12 156 825 was related mainly to non-compliance with procurement processes in prior years. Through an order of court, MISA was recovering funds that had been misappropriated by two former officials convicted of payroll fraud amounting R252 000. MISA had received an unqualified audit opinion on both its annual financial statement (AFS) and the audit of predetermined objectives (AoPO), with one matter of emphasis -- material under-spending of the allocated budget.
Members wanted to know whether any plans had been put in place to minimise the SCM concerns raised by the AG; why the appointment of Deputy Directors General (DDGs) was set to take place only in January; and whether the internal audit function was functional.
Minister’s opening remarks
Minister Zweli Mkhize, Department of Cooperative Governance and Traditional Affairs (COGTA) said the Department would be tabling two reports instead of the three. The Demarcation Board and the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities (CRL Commission) had tabled their reports already, and the only remaining ones were the Municipal Infrastructure Support Agency (MISA) and the Department of Cooperative Governance (DCOG), as well as the Department of Traditional Affairs (DTA). The Department had a challenge with the report on DCOG, and had therefore requested a postponement of its tabling. There had been some delays in the report emanating from various challenges in the auditing process, as the Auditor General (AG) was conducting the audit and the audit committee’s work programme had had challenges which necessitated a lot delays in terms of verification. Part of the problem was inaccessibility to sites and community protests in the area, which made it difficult to reach them. There were logistical problems regarding the changes in the implementing agents. There were much deeper issues in this programme, and hopefully the Department would have some time in the near future to provide more details on them.
The Community Works Programme (CWP) had always had challenges in a number of areas. and the AG had raised a number of issues around the accuracy of data regarding remuneration, amongst others, which needed verification. There were also issues related to accruals, and the auditing process of timeliness was not achieved. There were a number of assets that needed to be verified, and there was a structural problem in this programme that would require the Department to review it, specifically on the disposal of assets. Due to all of these issues, the deadlines for audit could not be met. Therefore, the Department would like to request the Committee’s approval to present the report once the audit process had been concluded.
The Chairperson said that the Committee accepted the explanation. The Department had already submitted a letter of explanation to the Speaker, and the extension had been granted.
Ms B Maluleke (ANC) said the Members were disappointed, although the explanation was accepted. Hopefully, the Department would speed up the process to conclude that DCOG report.
The Minister said that the DTA was a small Department, and up to now there had been no significant and material issues of concern. It had tried to achieve all its targets set for the year, and had achieved a clean audit. Over the past years it had tabled three Bills which focused on regulating the management of the traditional leaders’ space. The Khoisan Bill had been referred to the National Council of Provinces (NCOP), and the focus in the past had largely been on supporting and strengthening traditional leaders and the House of Traditional Leaders.
Department of Traditional Affairs: Annual Report
Mr Dan Mashitisho, Director General (DG): COGTA, said the DTA had reached an overall 87% achievement of its annual targets. It had not achieved its Institutional Support and Coordination programme because in order to determine if 350 Traditional Councils (TCs) were functional, there had been a need to conduct an assessment of their functionality. The Department had therefore changed its focus to developing and monitoring the implementation of the support plans for the 466 provincial TCs in seven provinces which had been assessed in 2015/2016 and 2016/2017, as well as capacitating them, as opposed to starting the assessment of the new 350 TCs as planned.
The corrective action for the non-achievement of the target stipulated that the assessment of the 350 TCs would be conducted in 2020/21, to evaluate the effectiveness of the provincial support plans in improving the functionality of those TCs supported from 2017/2018 to 2019/2020.
Under the programme performance indicators (PPIs), 86% was achieved. The objective of reducing the number of traditional leadership disputes and claims by 31 March 2020 l by cutting the number of customary laws of succession for kingships/queenships endorsed by royal families down to one, had not been achieved. A genealogy for the Balobedu Queenship had been developed, but the Queenship had not endorsed the genealogy due to non- agreement amongst the members of the Royal Family.
With regard to financial performance, the highlighted reasons for under-spending were:
During the year under review, the Department had been appropriated a total budget of R152.5 million and had spent R139.6 million (91.5%), resulting in the under-expenditure of R12.9 million.
The main under expenditure was on compensation of employees, where the Department recorded under-spending of R 6.6 million. The term of office for the Commission on Traditional Leadership Disputes & Claims had expired on 31 December 2017, and this had contributed to the under-expenditure on compensation of employees.
The Department had also under-spent by R6.1 million on goods and services, mainly due to late receipt of invoices from various service providers.
As for the audit outcome for the year under review, the 2017/18 annual financial statements were timeously submitted to the Office of the Auditor-General, in line with the Public Finance Management Act (PFMA). The Department had received a clean audit opinion from the AG on both the annual financial statement (AFS) and annual performance plan (APP) targets. The Ag had assessed the reliability, validity, accuracy and completeness of the performance information and had not identified any findings on the usefulness and reliability of the information.
The Department had not incurred any irregular expenditure during the year under review.
Lastly, on issues previously raised by the Commission on the Cultural, Religious and Linguistic (CRL) Rights Act particularly on S24(1)(a), the recommendation stipulated that the Committee must engage the Minister to make funds available to enable the Commission to convene a national consultative conference, in compliance with the CRL Rights Act. In terms of the progress made, discussions had taken place between the DTA, DCOG and National Treasury (NT) to explore ways in which transfer payments to the DTA could be increased through the adjusted estimates of national expenditure (AENE) process. The Department was awaiting the formal outcome in the form of an allocation letter from NT in this regard.
Mr K Mileham (DA) congratulated the Department on its clean audit. With reference to the objective that was not achieved about the Traditional Councils, and Members were aware that the Department planned to assess them in 2020/21. When the Committee was processing the Traditional Leadership Governance Framework Amendment Bill, the Department had been clear about the dysfunctionality of a large proportion of these councils and their legitimacy. He asked whether the DTA could therefore afford to delay this for three years in order to allow for a provincial process. Had it been the right thing to do, to shift the objective in the middle of the year?
The Department had referred to researching the regulation of the faith sector. Surely that was something for the CRL to deal with, rather than the Department, because it fell directly within their mandate?
Lastly, the AG had identified a concern in the supply chain management (SCM) process -- that the criteria and valuation that were applied had differed from what was originally specified in the bid documents, so he wanted to know whether that had been rectified or not.
Mr J Dube (ANC) also congratulated the Department on the clean audit. He asked how many casualties resulting from cultural initiation practices had been recorded during the year in question. The R6.1 million in under-expenditure on goods and services had been attributed to the late receipt of invoices, so what corrective measures had been put in place to avoid this from recurring?
Mr C Matsepe (DA) said 350 Traditional Councils were said to be functional, so what percentage did this represent of the total number of Traditional Councils? Could the Department provide the Committee with a list of the functional Councils?
Ms N Shabalala (ANC) said that where the targets were not met, she was happy with the reasons provided by the Department. She wanted to know why the Department expected Bills to be passed which would prevent councillors from carrying out their duties.
The Chairperson said the Committee was happy with the clean audit. However, the Lobedu Kingship matter was something that the Department was planning to apply to all kingships and queenships – the customary law of succession. The Sekhukhune Kingship had gone to court because of this, and the Ndamase coronation last week. It seemed that there were a lot of problems on this issue of the law of succession. The Department had dealt with the Lobedu matter, but hopefully the fighting over succession matters would be stopped.
Mr Matsepe said that in addition to the matter brought up by the Chairperson, there was no clarity about who the King in KwaNdebele was, Could the Department shed more light on this?
Minister Mkhize responded to the last issues, and said that it would be ideal to have records of kingdoms by kingdoms and chieftaincy by chieftaincy, so that there was a clear line about the laws of succession, the genealogical lineage and succession issues. What tended to be a problem was having two heirs within the same lineage. Hopefully the Committee could provide a date on which the Department could come and present on these in detail, with lawyers present to provide legal opinions.
Regarding initiation, there were other issues related to that, and the Department would like to come back and present on these matters in greater detail.
Deputy Minister Obed Bapela, commenting on the initiation matter, said that the available statistics were only the winter numbers for the 2017/18 financial year. Usually the Department combined the winter and summer statistics, but summer statistics were not yet available because the summer initial period started in November/December. Summer was the most difficult period, because there were a lot of initiates as opposed to winter. In some areas such as Kokstad, they had never had any deaths in summer, and the Department was engaging the communities in that area to ascertain what it was that those communities did to avoid deaths at the initiation school.
The Chairperson said that the Department should meet soon with the Committee to have a thorough discussion on traditional leadership matters, before the clause by clause exercise on the proposed Initiation Bill, because there would be a lot of other matters that would be complex. If the Committee went through the bill clause by clause, it would know exactly where to tighten it up. All the Amakhosi now wanted Parliament to go and bow to them, and that would set Parliament backward. Hopefully, the Committee would meet soon to have a discussion and take a view on this matter.
The Chairperson asked whether the Department paid the suppliers on time.
The Department responded to the question about payments and receipts of invoices. This information was not submitted on time, but the Department had engaged the service providers with a service level agreement in place to ensure that all invoices that were due to it were submitted and paid within the prescribed period. The accounting system used by the government was on a cash basis, which made it difficult for the Department to sometimes pay what was due to the suppliers or to recognise payables, because it was unknown when the suppliers would submit their invoices. There were plans in place to ensure that the suppliers were paid.
Regarding payments to suppliers within 30 days, this was indeed the case for the Department. With the current system, on average the Department paid within 13 days. Mr Mashitisho said the invoices that were received were paid, but the problem was where one had a contract with a stipulated amount and when the invoice arrived, the amount was different. Invoices that were not disputed were paid within 30 days.
On legislation, there were three bills before Parliament. The latest one was the Customary Initiation Bill, which had gone to the National Assembly and the Committee had undertaken to conduct the public hearings on this Bill already. The second one was the Traditional Leadership and Governance Framework Bill, which had gone through the National Assembly (NA) and the National Council of Provinces (NCOP). Earlier this week, the Select Committee had been considering the negotiating mandates from provincial delegates, so the expectation had been that the process would be concluded, but some amendments had been proposed. Lastly, on the Traditional and Khoisan Leadership Bill which was introduced in 2015, the NCOP had completed its public hearings and it was at the stage of considering negotiating mandates. On 11 September, the Select Committee had convened to consider the mandates from provinces and discussed the proposals, and then asked for feedback from the Department. The expectation was that the Select Committee would reconvene to consider the feedback from provinces again so that the process could be concluded.
With regard to the Traditional Councils, the challenge facing the Department was that there were over 800 TCs, and that 350 represented around 40%. However, more than 400 of them had already been assessed in terms of their functionality. The assessments showed areas of weaknesses in their functionality, so with the capacity available, the Department had tried to find ways to support them. The Department had formed a governance forum of traditional affairs structures in the provinces to assist, and assigned people to be part of that forum. It convened quarterly, and with limited resources, it attempted to ensure that the Department could work with provinces. The main thing was to assist in improving the capacity and working together with the provinces to support the councils.
Regarding research into regulation of the faith sector, the CRL Commission did not have regulatory powers. It dealt with conflicts, research and recommendations, but for regulation and policy making, the Department would have to be in a position to advise the Minister. The Department had looked at various scenarios in other countries to see what could be introduced in this country.
Lastly, the Department would provide a list of the work that had been done by the Traditional Councils. As for the kingships and queenships, it was the Department’s approach to look into this, and it intended to assist in this area.
The Chairperson acknowledged the responses. He thanked the Department for achieving a clean audit and encouraged the team to keep it going. Another challenge was that the Department needed to address the fighting among people in the mining towns.
He hoped that everyone would have some form of a qualification to be a priest, because the culture of people opening up churches without regulatory measures employed should be put to an end.
With regard to the initiations, the intervention was hopefully going to assist in reducing the number of deaths in initiation schools. It was usually the poor communities that were confronted by this dilemma, but the government needed to make itself visible to assist those communities. The Committee would meet with the Ndunas and Kings, as well as the Congress of Traditional Leaders of South Africa (Contralesa) on this matter before going through the Bill clause by clause.
Municipal Infrastructure Support Agent (MISA): Annual Report
Minister Mkhize said that MISA had had favourable outcomes. Since last year it had focused on supporting about 60 municipalities with capacity building, and the training of a number of apprentices and officials in various municipalities. The Agency had also tried to consolidate itself by having a programme management office, and in this year’s report, Members would see how it had expanded its infrastructure delivery projects. From the beginning of the year, recruitment of technical expertise had commenced.
The current report was limited regarding the scope of the projects that the Agency had embarked on.
Mr Goodman Vimba, Chief Executive Officer: MISA highlighted the Agency’s performance for the year under review, and said it had achieved 21 of its 30 (70%) performance targets in the 2017/18 annual performance plan.
Key performance highlights for the 2017/18 financial year included providing ongoing technical support to at least 60 municipalities; the roll-out of the Regional Management Support Contractors Programme in all three pilot regions -- Amathole, OR Tambo and Sekhukhune Districts; the training of 303 apprentices towards qualifying as artisans; the training of 557 municipal officials in various aspects of municipal infrastructure delivery; and the placement of 102 qualified artisans and water process controllers in low capacity municipalities.
Internal capacity challenges had contributed to relatively low performance levels and a concomitant under-spending of the allocated budget. This challenge was being addressed through the ongoing recruitment of additional staff, in line with the approved organisational structure.
The total expenditure for the 2017/18 financial year had been R302.8 million, which was equivalent to 79.4% of the total allocation for the year of R381.5 million. The reasons for the under-spending were:
A delayed start to the implementation of the Regional Management Support Contractors (RMSC) programme and the Project Management Office (PMO) project had contributed significantly to the overall under-spending on goods and services.
The revised organisational structure was approved only in January 2017, which led to high vacancy rate and thus under-spending on the compensation of employees.
Mr Vimba reported that MISA had not incurred any fruitless and wasteful expenditure in the course of 2017/18 financial year. There had been irregular expenditure amounting to R12 156 825, relating mainly to non-compliance with procurement processes in prior years. Numerous steps had been taken to obtain condonation of the irregular expenditure, among which were:
Submission of a comprehensive application for condonation of irregular expenditure to the Office of Chief Procurement Officer at National Treasury;
Various engagements and subsequent submission of supporting documents;
Opening of a case with the law enforcement agencies in relation to the findings of the forensic investigations;
Implementing consequence management on affected employees; and
Formally raising concerns with the Director-General of National Treasuryü regarding excessive delays in responding to MISA’s application for condonation.
Notwithstanding these efforts, the Agency was still awaiting the final decision on its application for condonation from National Treasury.
Through an order of the court, MISA was recovering funds that had been misappropriated by two former officials convicted of payroll fraud amounting to R252 000. Irregular expenditure relating to legal fees would be recovered from the opposing litigants after MISA won a costs order against them in the high court.
MISA had received an unqualified audit opinion on both the annual financial statements and the audit of predetermined objectives (AoPO) for 2017/18 financial year, with one matter of emphasis -- material under-spending of the allocated budget. (See document for a detailed analysis)
With regards to progress on the recruitment process, the position of Chief Executive Officer had been filled with effect from 1 July 2018. Short listing for the two Deputy Director-General positions was currently in progress, and the appointment process was likely to be completed by January 2019. Management was continuing with the filling of positions in the revised structure with a view to reducing the vacancy rate to an acceptable level. From the total of 220 posts on the approved structure, 124 posts had been filled to date. The appointment of technical professionals and provincial managers was receiving priority attention, and to date 71 out of the 93 positions had been filled. This number was comprised of 35 civil engineers, 14 electrical engineers, 13 town and regional planners, and nine provincial managers. 53 of the 96 vacant posts had already been advertised and the appointment process for these posts was likely to be concluded by the end of January 2019. Upon reaching this target, MISA would have increased the number of filled posts to 177, representing about 80% of the total staff establishment. It was envisaged that the vacancy rate would be brought to below the 10% threshold by the end of the second quarter of 2019/20 financial year.
Ms Maluleke commended the MISA report, and said that she had a lot of questions regarding the Agency’s audit outcome, as it had been unqualified with audit findings. With that said, the Agency had included remedial actions in its report, and hopefully next year this would not be case.
Mr Mileham also welcomed the report, and shared his concern that in the engagements that took place last year the Committee had highlighted supply chain management as a big issue, and the presentation had stated that significant progress had been made in mitigating SCM issues. His main concern was that the AG had highlighted the SCM as a going concern -- such as contracts extended without approval, bids advertised for a shorter space of time than required by regulations, and the non-stipulation of a minimum threshold for local content on bid adverts. He wanted to know what the Agency was doing to minimise those matters.
He acknowledged that there had been an improvement in the follow up on irregular and unauthorised expenditure, and the investigation in that regard. However, he was concerned about whether any consequences had been implemented, and whether any necessary actions that the investigation recommended had been undertaken. The AG had reported that “MISA does not respond to the required urgency to its correspondence about addressing risk and improving internal controls.” It had highlighted internal controls at the Agency as a significant threat. The Agency needed to ensure that the problem of filling the vacancies did not continue. Why would the appointment of the DDGs take until January, because the appointment of these DDGs would assist the Agency to resolve its internal control issues, so it needed to be done as soon as possible?
He urged the Minister to look into the various levels of assurance – senior management, executive authority, etc – which were not strong enough in the Department, as this had been highlighted by the AG.
Lastly, he wanted to know whether the internal audit function was in place, functional and effective, because the AG had also highlighted this, particularly in respect of the staff.
Mr N Masondo (ANC) said that MISA was a relatively small organisation, and it should not be experiencing some of these issues. In the presentation, the words “delaying procurement” spoke to some of the problems that existed in the organization. He suggested that the Agency needed to look into this, as perhaps that could mitigate some of its challenges.
Mr Vimba welcomed the comments, and said that the Agency was addressing all the matters that had been highlighted by AG. The SCM issues were related to the previous financial years, and the Agency had addressed most them. If one perused the irregular expenditure, there were two new irregular expenditure items and those were related to attorneys who had been appointed to reverse the default judgment which the Agency had suffered at the hands of the State Law Attorney. The second irregular expenditure related to the extension of the lease of the building the Agency occupied, which had been found to be irregular through the forensic investigations that had been conducted. The lease was ending last year in November, so the Agency had approached Treasury to approve a new procurement strategy in relation to the building so that the Agency did not continue incurring the irregular expenditure. Unfortunately, Treasury had opted for an extension, with the understanding that there was a process of condonation that they were busy with.
All the other issues related to the previous years.
On the investigations into the payroll fraud, there were two officials who had been convicted and the Agency was recovering the money. In addition, some of the officials had been implicated in non-compliance with procurement processes, and the Agency had issued warning letters to them, and some were paying back the money.
The AG’s inputs were very helpful, and the Agency had ensured that it strengthened its SCM. As for the appointment of DDGs, the process was unfolding.
With regards to the concern on the internal audit matters, the Agency had one only person -- the chief audit executive -- who was working alone. However, currently the Agency had appointed audit firm SizweNtsalubaGobodo, as well as a deputy director and a risk officer, so the capacity was available now and the challenges would be mitigated.
The Minister thanked the Members for their concerns and comments. The Department would start responding promptly to the matters that had been raised.
The meeting was adjourned.
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