Department of Higher Education and Training 2017/18 Annual Report; with Deputy Minister

NCOP Education and Technology, Sports, Arts and Culture

24 October 2018
Chairperson: Ms L Zwane (ANC)
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Meeting Summary

Annual Reports 2017/18

The Deputy Minister of Higher Education and Training said that the 2017/18 year had been very eventful. The Department had been in recovery mode since the student protests which had been centred on the demand for free higher education, and the broad transformation issues within the sector. The President’s announcement of the free higher education policy had meant that the Department, universities, colleges, the National Student Financial Aid Scheme (NSFAS) and other bodies had all had to realign their objectives and refocus their resources in order to ensure the achievement and implementation of the policy. This had been the primary goal for the financial year.

The six branches within the Department reported on their achievements against the annual targets, focusing on areas where they had fallen short. These included challenges with the national plan for post-school education, delays in issuing certificates to qualifying students at technical and vocational education and training (TVET) colleges, the number of enrolments at TVET and community education and training (CET) colleges, and the national artisan learners’ trade test pass rate. The Department had received an unqualified audit opinion on its financial statements, and had marginally underspent its annual budget of R68.6 billion.

Giving an update on the situation at NSFAS, the Deputy Minister said that after receiving received a resignation letter from the NSFAS chairperson in August, the Minister had appointed an administrator, and the appointment of senior managers had recently been finalised. Within about 12 weeks, the backlog of unprocessed student payments had been reduced from over 68 000 to about 8 000 students. More than 200 000 NSFAS applications had been received for next year, and the processing had been begun, pending the students’ results for eligibility evaluations. There would be a challenge in respect of the number of students that could actually be funded, and the administration would be encouraging some applicants to explore other funding options.

Members were concerned about the suspended construction of education facilities at Nkandla and Vryheid in KwaZulu-Natal, as well as in Giyani and Balfour. Other issues raised were the filling of vacancies in the Department, staff at colleges not being qualified in the subjects they taught, lack of oversight of leadership, application fees being required for all universities, and the recovery of loans from students who had completed their studies.

Meeting report

Department of Higher Education and Training Performance Report

Overview

Mr Buti Manamela, Deputy Minister: Department of Higher Education and Training (DHET), said the 2017/18 year had been very eventful. The Department had been in recovery mode since the events of student protests which were centred on the demand for free higher education and broad transformation issues within the sector. The objective of the Minister’s office had been to ensure that the strategic focuses and priorities of the Department were effectively implemented. The former President had announced the free higher education policy, which meant that the Department, universities, technical and vocational education and training (TVET) colleges, the National Student Financial Aid Scheme (NSFAS) and other bodies had to realign their objectives and refocus their resources in order to ensure the achievement and implementation of the policy. This had been the primary goal for the financial year. The Department had continuously engaged the Committee, keeping it updated on the progress.

The Department had set itself a total of 120 annual targets, of which 86 had specific deliverables. The other targets were essentially what other agencies and structures, which were related to the Department, were supposed to pursue under the supervision and oversight of the Department. These targets included issues around system funding, infrastructure development and the workings of the post-school education and training system - teaching and learning support, partnership development, and the question of the performance, governance and financial management of the system. Part of the process of developing an annual plan had been to review and improve on the achievements and to also strategise on resolving the challenges and failures. There had been commendable progress overall. He concluded by stating that the Department was in the process of finalising capacitation.

The Chairperson requested a brief, synoptic update about the current state of the NSFAS body.

NSFAS

Mr Manamela indicated that after the Minister’s office received a resignation letter from the Chairperson of the NSFAS Board in August 2018, the Minister had since appointed an administrator, whose mandate primarily was to restore systems of governance within the entity, maintaining stability in labour relations, dealing with the NSFAS payment backlog, and optimising the system ahead of the subsequent financial year. Other key weaknesses were pertaining to risk management and data management of the organisation. According to the weekly reports from the administrator, the appointment of senior managers had recently been finalised. Within a period of about 12 weeks since the appointment, the backlog of unprocessed student payments had been reduced from over 68 000 to about 8 000 students. This progress was commendable.

The NSFAS administration was currently preparing the system for the 2018/2019 year and engaging the universities – vice chancellors, student representative councils, and financial aid offices. More than 200 000 applications had been received for next year and the processing had been begun, pending the students’ results for eligibility evaluations. There would be a challenge in respect of the number of students that would actually be funded, and the administration would be encouraging some applicants to explore other funding options. There had been concern about the Auditor General’s (AG) reports regarding the employment of personnel who were competent enough to turn around the financial management issues that were plaguing the entity, so there had also been frequent meetings with the Chief Financial Officer (CFO).

The Chairperson said the Committee was satisfactorily aware of the achievements of the Department, and requested that the presentation should focus on the challenges it faced, the reasons for the shortcomings, as well as the mechanisms that were in place to ensure that they were addressed.

Key target areas

Ms Thandi Lewin, Chief Director (CD): University Governance and Management Support, DHET, said that the focus of the university education branch included the oversight on the university system performance in respect to areas such as access, success, transformation, etc. Another was the development of mechanisms aimed at addressing deficiencies in specific areas within the system, as well as the management of various funding grants.

The branch had set a total of 20 targets for the year, of which 18 were achieved. The most crucial shortfall was related to the national plan for post-school education that the branch was developing on behalf of the Department. By November 2017, a draft of the plan was produced for consultation purposes. At that point, the former President had announced the free, subsidised education bursary scheme, so the plan that had been tabled had not accounted for the imminent changes that were implied by the policy. The other challenge was due to the fact that there was another overlapping process which related to the National Skills Development Plan. The plan was, however, being finalised after an extensive consultation process.

The other target related to the production of a collaboration agreement framework between the professional bodies, the Department and the quality councils. The DHET’s mandate was to form an agreement on how to produce more professional graduates. The project was delayed because the Chief Director, who was driving it, had resigned from the Department at a critical time. However, there had been a consultation workshop and the framework draft had been completed. It would be published for public comments after approval by the Minister.

The branch had set some performance indicator targets for the Higher Education (HE) sub-sector, to be achieved over a five-year timeline, or cumulatively. Out of the 16 annual targets, 11 were achieved. A notable achievement was the total number of doctoral graduates from universities, which exceeded the target. The success rate at universities and other HE undergraduate institutions had also seen commendable improvement.

Mr Zirk Joubert, Chief Director, Financial Planning and Coordination: TVET Branch, DHET, indicated that the TVET college programme had established 10 targets for the year and had managed to achieve seven. The three that were not achieved included the headcount enrolments in TVET colleges, which was due to a lower intake for the occupationally-directed programmes. Another was the number of months taken to issue certificates to qualifying candidates, where there had been slight delays due to the large volume of certificates that were being handled, some of which had to be couriered to the students. The last one was the poor percentage of TVET institutions evaluated on the implementation of proposed best practice policies and guidelines issued by the DHET. The cause for this was that the uptake of one of the governance standards for the TVET colleges, where the DHET had recommended the adoption of about 30 financial policies, had been slower than expected. To improve this, the DHET would now develop regulations, according to the Community Education and Training (CET) Act, with the approval of the Minister’s office. These would be mandatory requirements for the TVET colleges in order to ultimately align the colleges with the Public Finance Management Act (PFMA).

Mr Zukile Mvalo, Deputy Director General: Skills Development, DHET, said there were eight planned DHET-specific targets for the financial year, and all of them had been achieved. The most significant one was the progress target of the National Skills Development Plan, which was scheduled to be finalised by 1 April 2020. Moreover, five of the six targets in the skills development system were achieved during the year. The only challenge was related to the national artisan learners’ trade test pass rate.

Dr Bheki Mahlobo, Acting DDG: Community Education and Training (CET), DHET, said that the CET college system performance had failed to achieve both its targets. The first one was to obtain a 310 000 enrolment at CET colleges, and the other was to reach a 38% certification rate in formal CET qualifications. The branch had engaged with the Services Sector Education and Training Authority (SETA) to use more infrastructure -- for example, in Kokstad and Cala, to allowr CET students to occupy the premises on a full-time basis. They would also be using schools that were available for use in the afternoons and evenings. The certification rate was due to the fact that about 38% of lecturers and teachers did not meet the minimum requirements to qualify for the jobs, as many had skills that were not directly relevant to the courses they teach. The unattractive conditions of service made the teachers who have been trained, want to leave for better situations. The learning, teaching and support material was procured from TVET colleges, and it usually took a while for the centres to receive it.

Dr Hersheela Narsee, Acting DDG: Planning, Policy and Strategy, DHET, said that the branch had 12 annual targets planned, and had managed to achieve all of them. The most notable undertaking that the branch was currently in the process of implementing was the National Qualification Framework (NQF) Amendment Bill, and it had already been approved by Cabinet for submission to Parliament. The Act was being amended to ensure that there was a proper system in place to eliminate and prevent misrepresentation of qualifications, with incriminating consequences.

The branch had produced a ‘List of Occupations in High Demand’ to guide and signal enrolment planning within the institution, and also to provide career advice to students. This was ultimately to support the Department’s planning processes with regard to resource allocations as well. The branch also finalised the strategic policy framework on disability, which aims to guide universities and colleges on how to create an enabling environment for people with disabilities, and also to ensure that at least 2% of the people with disabilities had the right skill sets and obtained the relevant qualifications.

Ms Gladys Mapheto, Chief Director: Human Resources Management and Development Unit, DHET, said that the administration branch had the mandate of providing strategic leadership, management and support services to the Department. Its focus areas in 2017/18 were to ensure the filling of funded vacancies, improve the human resource recruitment and selection process, the management of disciplinary cases, as well as creditor payments. The branch had achieved nine of the 12 performance targets it had set for the year.

The first shortfall was the number of days it took to fill vacancies -- it took an average of 188 days to process appointments, instead of the targeted 180 days. It was an improvement from the 222 days taken the previous year. The main reason for underachievement was the high volume of applications received, which delayed the response-handling process. To mitigate this, an improvement plan had been developed and approved, which involved the implementation of an e-recruitment system,.

Secondly, only 97%, instead of the targeted 100% of disciplinary cases, were resolved within 90 days. This was also an improvement from the previous year’s performance of only 22%. The shortcoming was attributed to the postponement of cases and the shortage of trained chairpersons, investigators and initiators. The corrective action that had been taken had primarily been to conduct training on initiating, investigating and chairing disciplinary cases for the current workers. Furthermore, it included the appointment of additional staff at the head and regional offices in order to increase capacity.

The third underachievement was the 97.96% success rate of invoice payments within 30 days. This was caused by delays in the processing of invoices which were eventually rejected due to incorrect banking details. This would be alleviated by the implementation of an electronic system that works through the supply chain management to all the users, to ensure more efficient creditor payments.

Financial performance

Mr Theuns Tredoux, Chief Financial Officer, DHET, said that the report of the audit committee had expressed its views on the effectiveness of internal controls within the Department, the quality of reporting in terms of PFMA requirements, as well as the operations of internal audit and risk management within the Department. No material misstatements had been identified in the financials and no material non-compliances were identified, according to specific legislative requirements. Improvements in controls were specifically identified in supply chain management and the disclosure of financial information. Based on the information contained in the report, the Department had received an unqualified audit opinion on its financial statements. The reason for not obtaining a clean audit was because of misstatements that were identified in the presentation on the usefulness and reliability of some of the performance information, specifically in the university education branch, TVET and CET colleges. The findings were mainly related to inappropriate management of records which prevented the Auditor-General from confirming the reported achievements.

Mr Tredoux said the appropriated budget was estimated to be approximately R68.6 billion, and the actual expenditure was R68.589 billion. This had resulted in a surplus of only R12 million (0.018%). The under-spending had been mostly on goods and services, capital equipment, transfers of payments, as well as the compensation of employees. The total irregular expenditure amounted to R149.2 million, of which R92.4 million had been carried over from 2016/17, as reported in the 2016/17 annual report. An amount of R2 million from 2016/17 had been condoned during the current year. During the current year alone, the Department had incurred irregular expenditure of about R228 000. This was as a result of an illegal transaction by the Communications Chief Directorate. The service had already provided the service, so it could not be reversed. However, the matter was currently being handled by the labour relations unit in terms of the disciplinary action that had been requested by the Director-General.

Each branch had completed an audit action plan to address the control deficiencies based on the audit findings. These plans address the areas raised in the audit report in conjunction with all other matters identified during the audit, resulting in audit queries. The action plan had been approved by the Director-General and progress would be reported on a regular basis to the Minister, the Director-General and audit committee. The first report from the branches had been received and was currently being reviewed and consolidated by the Office of the CFO.

Mr Tredoux concluded by stating that the level of spending had not had a negative impact on the operations of the Department, but strict measures had to be set in place to prevent overspending. However, if the results of provisions, accruals and commitments were also taken into account, the Department could have overspent. The outcome of expenditure within the current economic climate was already placing similar pressures on the Department for the 2018/19 reporting period. Significant pressure was still being experienced due to the additional responsibilities and functions brought about by the TVET and CET function shift, including the regional presence and the monitoring of the entire system.

Discussion

The Chairperson commended the Department for the unqualified audit, but encouraged it to aim for a clean audit.

Mr D Stock (ANC, Northern Cape) appreciated the clarity he gained from the explanation given by the CFO about irregular expenditure. He was glad that the AG had reported that the transaction had not involved fraudulent activities. The Committee was looking forward to the verdict of the forensic investigation that was being undertaken. He recalled that a recommendation had been made by the Committee concerning the filling of vacancies. The Department had been advised to not centralise the process at a national level because this hampered the filling of the vacancies. Instead, it should be decentralised down to the TVET colleges and regional offices. In the annual report, it had been stated that out of 41 vacancies for senior management, only 20 had been filled. The centralisation could have been the main cause of this. He asked what progress had been made with the consideration of this proposal, and if there any alternative measures.

Ms T Mampuru (ANC, Limpopo) commenced by congratulating the University of Fort Hare on having its first IsiXhosa PhD graduate. She said this achievement was important for preserving the identity and heritage of South African culture, heading into the future. On a different note, she asked why the two contracts for Giyani and Balfour had been cancelled. Since there was still a dilemma of unqualified educators, what might be the worst challenge that still had to be faced? There may be a need to pursue agriculture as on one of the economic bases -- in what ways had the Department encouraged students to consider this sector?
Mr M Khawula (IFP, KZN) said that departments usually set targets that were easily attainable for the sake of ensuring reaching most, if not all of them. He asked what impact these reports had on the performance management system (PMS), which was related to the bonuses an employee receives? He commented that five-year cycles seemed to never end, because every year they were still regarded as five-year plans and they were not converging. Why were there only about 20 000 teachers employed, instead of the targeted 22 000? There was a bitter struggle between the Department and the TVET colleges regarding the backlog on certification. Had this been reported? Was there a plan to clear the backlog? What had happened with the plan to construct TVET colleges in Nkandla and Vryheid, in KwaZulu-Natal? Was the NQF Amendment Bill to be declared achieved by having it submitted to Cabinet, or with the Bill having been signed by the President?
Ms P Samka (ANC, Eastern Cape) requested clarity from the Department on the lack of oversight from the leadership that was mentioned on page 202 of the annual report.
The Chairperson reckoned that the Department would not manage to do justice to the shortlisting process if the estimate of job applications received was about 55 000 for every advertisement that was published. She suggested that the adverts be staggered and for them to clearly indicate the location of the vacant post. She added that the inability to give the AG evidence to corroborate its findings was problematic. Obtaining a list from the TVET colleges should not be difficult.
Why were B Tech students not receiving assistance from the NSFAS? What progress had the Department made with the implementation of open-learning? This structure could resolve the issue of accommodating students. Did NSFAS assist students who were repeating courses? Were students meant to contribute in paying a portion of their expenses, or did the government subsidy cover all expenses?

Using the central applications method, did students pay application fees for all the universities? What mechanisms had been put in place to ensure the recovery of the funds that were loaned to students, particularly those who were either unemployed or worked in the private sector, in order to assist current or potential students? The monitoring reports should be availed to the Members of the Committee, so that it could be updated about the rate at which students were completing their studies or dropping out. Were the courses done by students correlating with the requirements of industry? How were TVETs going to be populated? Were CETs managing their own funds or were they managed by TVETs? Were the CETs being capacitated to manage them?

DHET’s response
Deputy Minister Manamela indicated that the process of setting targets was open to the input from the different committees. The targets were also intensively interrogated by the Minister’s office to ensure that they met certain standards. He affirmed that the MTSF was indeed a five-year period, and that it would be ending after the subsequent financial year.
The certification rate had an alarming backlog. The reasons included the communication between the Department and the colleges, or students having outstanding subjects, missing personal information, etc. They were being dealt with on a case-by-case basis. The Department hoped to be piloting a fluent system by the beginning of next year.
Mr Mvalo said he believed that the e-recruitment system would really ease the process. The point of delegating some posts down to decentralised management levels was also noted. He pointed out that agriculture was actually one of the sectors mentioned in the job summit, as part of those sectors that were identified to have an impact on poverty, unemployment and inequality. Others included mining and manufacturing. Agriculture was an area that the Department would pay more attention to, now that the drought situation in the Western Cape had improved.
Regarding artisan development, there were over 300 trade test centres across the country and they were predominantly owned by the private sector, making them expensive. The only state-owned one was at Indlela Trade Test Centre, located in Johannesburg. A typical test at this centre costs only between R150 and R300. The accommodation fee was between R120 and R150 per day, including two meals. As a result, there was always a congestion of the tests conducted, because they were very affordable. The Department planned to produce at least 30 000 artisans by the year 2030. At present there were 21 155 of them.
Ms Maphetho addressed the suggestion of decentralising the filling of vacancies, indicating that with the current published adverts, all the applications that had been received in the colleges had been decentralised to regional managers, who would convene selection panels. Also, the principals had already been delegated to deal with certain, lower salary levels. The adverts had financial implications and were kept brief where possible. But they had now been published and posts had been grouped per branch. In most cases, the vacancy rate was not about new posts, but a reflection of vacancies being recycled within the system.
Ms Lewin pointed out that the university branch did have an enrolment planning process with the universities. It engaged every six years, and steered it from a high-level involvement. The target of educators had actually been exceeded.
She clarified that there were some B Tech degrees that were funded through the NSFAS, but the qualification was currently being phased out with the new NQF. It was funded in certain professional fields where a student required a B Tech in order to enter a profession.
She agreed with the need to reduce duplicated application fees to allow potential students to apply at multiple institutions. NSFAS had not lost the mechanism of recovering loans from students who had graduated before the Free Education Bill. A new set of policy guidelines had been requested because there had been a lot of funding structure changes. The interim policy was based on the Frequently Asked Questions (FAQs). The bigger focus had been on implementation, and on ensuring that students were being funded.
The University Capacity Development Grant was in the region of about R1 billion for the current year. Universities had to submit three-year plans to be screened and evaluated for eligibility. The grant focused on staffing issues, staffing support capacity, curriculum development and student support.
Mr Joubert acknowledged the questions and comments on the infrastructure programme. He said that the branch had not been able to get qualifying contractors through the tender process for the Nkandla and Vryheid sites. For Balfour, the contractor that was appointed had gone into liquidation, therefore the process could not continue. For Giyani, the contractor had been engaged but during the contract phase they had revealed new terms and conditions that deviated from the original contract. Therefore, the current status of all the work would have to be re-evaluated, and then the process of re-advertising would follow.

Repeating students could receive funding only if they passed, and the results formed a critical of element for qualifying for the following year.

There was currently a five-year plan being developed and implemented by the TVET branch. Additionally, centres of specialisation would be rolled out from January 2019, with 13 dedicated trades which were specifically aligned to industry requirements. There was a baseline allocation of R400 million from Treasury for next year. The budget for the construction of all the sites had not been finalised.
Dr Mahlobo said that the listing was not the problem -- the data that was available was aggregated data, but the AG wanted unit record data. The aggregated data did not allow for the verification of an individual student. This year, six colleges had already submitted their data for auditing next year.

The capacitation project for CETs was targeting readiness for full control of funds by February-March 2019, to fully comply with the PFMA, so that in the next financial year, both the subsidy and operational budget would be transferred to the CETs. There were internal financial managers and oversight committees that would ensure that it was spent accordingly.

Mr Tredoux explained that the lack of oversight that was reported by the AG specifically referred to the inability to address all the audit action plan matters, and due to the fact that there were repeat findings on performance information.

Dr Narsee said that the planning, policy and strategy branch were in the process of developing an open learning web platform called the National Open Learning System. This platform would have an open education resource repository, where open learning material would be available for a range of different programmes, especially TVETs and CETs. The branch was also in the process of developing material for the National Occupational Certificate for Electricians. This was part of the programme that would be offered at the centre for specialisation. Furthermore, material for four subjects was being developed for the National Adult Senior Certificate. There was also the consideration of an open licensing framework for intellectual property and copyright registration. There was a strong need for enabling conditions for these systems to work efficiently and effectively. Internet coverage was still a challenge in rural areas. At the institutions, there also needed to be internet access.  TVETs had embarked on supplying it to their students. There was also a need for devices such as small laptops.

The meeting was adjourned.

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