Early Childhood Development Grant: follow-up with Eastern Cape Department of Social Development

NCOP Appropriations

13 February 2019
Chairperson: Mr M Monakedi (ANC, Free State) (Acting)
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Meeting Summary

The Eastern Cape Department of Social Development appeared before the Committee to provide feedback regarding progress they had made with regards to implementing the early childhood development grant. National Treasury as well as the National Department of Social Development were also present and gave inputs.

The meeting proved to be insightful because there were three rich sources of information about the matter at hand. In the 2017/18 financial year, the Eastern Cape had performed below par as far as implementing the early childhood development grant was concerned. However, the province has grown by leaps and bounds in terms of its performance in this area.

ECD conditional grant Medium Term Expenditure Framework (MTEF) allocations showed that R 317 612 000 was allocated for ECD in 2017/18, R490 800 000 was allocated for 2018/19 and R518 228 000 for 2020/21. Allocations for the Eastern Cape specifically were R56 365 000 in the 2017/18 year, R78 788 000 in 2018/19, with MTEF estimates of R83 196 000 for 2019/20 and R88 771 000 for 2020/21. In terms of the provincial allocations subsidy and maintenance, a total of R78 715 000 was allocated to the Eastern Cape, with R72 727 000 being allocated for the subsidy, R3 336 000 for maintenance and R2 652 000 for administration. As at the end of December 2018, 63% of the Provincial allocation was spent. The total amounts allocated were for Subsidies at R72 727 000. During Q2, 23% of subsidy allocation was spent, reaching 20 429 children, and 66% in Q3 benefiting the same number of children (20 429). Maintenance allocation amounted to R3 336 000. There was 0% expenditure. 30% was spent in Q3 where 2 centres were completed. Administration received R2 652 000. There was 28% expenditure on remuneration in Q2 and 22% in Q3.

National Treasury noted what President Cyril Ramaphosa had said at the State of the Nation Address which took place on 7 February 2019, about the importance of early childhood development and that it will move to basic education. Over the first 2 quarters of the 2018/19 year, Eastern Cape expenditure on ECD by the Department was not doing well. However, by the end of the third quarter (31 December 2018), they had managed to move to 58.2% from 21.7% spending as at 31 December 2017. The Eastern Cape had in fact outperformed the Gauteng Province as at 31 December 2018, which had spent 49.6%. The best performing province as at 31 December 2018 was Mpumalanga, with 74.4% spent, followed closely by KwaZulu Natal at 73.2%. Other provinces such as the Free State achieved 69.4%. The Western Cape achieved 68.5%. Limpopo had achieved 64%. The North West had spent 50.7% and the Northern Cape spent 47.1%. The Eastern Cape had improved significantly from the first quarter. National Treasury hoped that the Eastern Cape’s performance would continue to improve.

An analysis of the Eastern Cape’s ECD performance on expenditure over 3 quarters in the 2018/19 year shows that at the end of June 2018, the province had achieved poorly at 1.2%. This improved to 21.8% by the end of September 2018, followed by another drastic improvement to 58.2% expenditure as at 31 December 2018. This was a significant improvement from the end of the third quarter 2017 year, where they had achieved 21.7%. The Eastern Cape had achieved their targets in terms of subsidies in September and December 2018 as opposed to June 2018. However It was a concern for National Treasury that the Eastern Cape was the only province providing a subsidy for 237 days, when all other provinces were providing a grant for 264 days as per the grant framework. This was an area where the Department needed to improve on.

Some major concerns raised by the Committee related to matters of capacity by the provincial department. The committee members probed about progress in this area, amongst other, in implementing an early childhood development grant. Other issues raised by the Committee included the state of the Alfred Nzo district, which even necessitated MEC Dr Pumza Dyantyi calling the police and the Provincial Commissioner due to an impasse between the Alfred Nzo Business Forum and the government. The MEC remained unwavering in her stance that the municipality needed to follow procurement processes. The government would provide support to all parties concerned.

Meeting report

Mr T Motlashuping (ANC, North West) indicated the Committee was without a Chairperson. He suggested that Mr M Monakedi (ANC, Free State) should chair the meeting.

Mr M Chabangu (EFF, Free State) seconded the proposal.

The proposal was upheld by the Committee.

The Acting Chairperson welcomed everyone and indicated the purpose of the meeting was to engage about issues previously engaged about pertaining to performance of Early Childhood Development (ECD) in the Eastern Cape. Following previous engagements, he hoped that there was progress made in mitigating the various challenges discussed and that money would have been spent accordingly. After all the presentations, Members would then be able to engage the relevant party of interest. He asked for apologies received for absenteeism by Members.

Mr Lubabalo Nodada, Committee Secretary, said that apologies were received from the Minister Social Development, Ms Susan Shabangu and other absent Members.

Mr Chabangu asked if the Chairperson had written an apology.

Mr Nodada confirmed this.

The Acting Chairperson then requested the Department of Social Development to give their presentation.

National Department of Social Development presentation

Ms Conny Nxumalo, DDG: Welfare Services, National Department of Social Development, said that the purpose of the presentation was to brief the Committee on the implementation of the ECD Conditional Grant in the Eastern Cape Province with specific focus on performance during  2018/19 and support provided by the National Department of Social Development.

Financial Allocations, payments and expenditure: 2018/19

The report was for quarter 2 of 2018 (which ended in September 2018) and the Department had also taken the liberty to report for quarter 3 of 2018. ECD conditional grant Medium Term Expenditure Framework (MTEF) allocations show that R 317 612 000 was allocated for ECD in 2017/18, R490 800 000 was allocated for 2018/19 and R518 228 000 for 2020/21. Allocations for the Eastern Cape specifically were R56 365 000 in the 2017/18 year, R78 788 000 in 2018/19, with MTEF estimates of R83 196 000 for 2019/202 and R88 771 000 for 2020/21. In terms of the provincial allocations subsidy and maintenance, a total of R78 715 000 was allocated to the Eastern Cape, with R72 727 000 being allocated for the subsidy, R3 336 000 for maintenance and R2 652 000 for administration. Of the R72 727 000 provincial subsidy allocated for 2018/2019 as at 30 September 2018, R36 364 000 was transferred and R16 643 216 was spent (23%). Of the R3 336 000 allocated for maintenance, 0% had erroneously been recorded as spent when the Department appeared before the Committee on 15 August 2018. However, the Department has made journals and corrected this figure to 30%. R736 490 (28%) of the amount allocated for administration had been spent in the same period of the R2 652 000 allocated. R1 326 000 was the amount transferred for administration in this period. By 31 December 2018, there was a slight improvement. R54 546 000 of the subsidy allocation had been transferred. R47 956 497 (66%) had been spent. 30% of the total maintenance figure of R3 336 000 had been spent. R588 077 (22%) of the administration allocation had been spent.

In summary, the Eastern Cape was allocated R78 715 000 from the total allocation of R490 800 million. As at the end of December 2018, 63% of the Provincial allocation was spent. The total amount allocated was as follows:

  • Subsidy: R72 727 000-allocated; During Q2 23% of subsidy allocation was spent reaching to 20 429,  66% in Q3 benefiting the same number of children (20 429)
  • Maintenance: R3 336 000 – allocated; 0% expenditure, 30% was spent in Q3 where two centres were completed.
  • Administration: R2 652 000- allocated; 28% expenditure on remuneration in Q2; 22% in Q3

Performance pertaining to the Subsidy

In quarter 1, there was an annual target of 20 472. The number of children which had benefited was 900 in 237 days. In the second quarter, 20 429 children had benefited in 237 days and remain constant in the third quarter.

Performance Pertaining to Maintenance

There was an annual target of 26 ECD centres in the first quarter. Zero ECD centres benefited in quarter 1. In quarter 2, zero ECD centres had benefited once again. In quarter 3, there were two ECD centres which had benefited.

As at February 2019 with regards to the maintenance grant, with an annual target of 26, nine were completed. Work had commenced on nine, eight were advertised on 1 February with a closing date of 15 February 2019. There was a completion rate of 35% in the interim and this would rise to 69% by 15 February 2019.

Work for the fourth quarter was in progress. A total amount of R3 336 000 was allocated. Invoices in hand to be paid on 7 February 2019 amounted to R376 721. Total projected expenditure by 20 February 2019 amounted to R2 035 166. Total projected expenditure by 20 February 2019 was 63%. There were nine completed centres, with nine where work had commenced and were expected to be completed by 15 February 2019.

Outstanding work up to 31 March 2019 comprised the following:

  • There are eight centres still outstanding.
  • The advert went out on the 1st of February 2019.
  • The advert will be closing on the 15 February 2019.
  • Evaluation and appointment will be completed by 22 February 2019.
  • Handover by 1 March 2019.
  • Work will be completed by 19th of March 2019.
  • The invoices will be paid by 26 of March 2019.
  • All 26 centres and 100 percentage expenditure on the grant will be achieved by the 31st of March 2019.

Some reasons or challenges for underperformance were met with mitigating factors. The review of the Service Level Agreement (SLA) on an annual basis was mitigated by the standardisation of the signing of the 3-year SLA. Noncompliance with the framework on the implementation of 264 days will be mitigated by the Eastern Cape Province implementing the 264 days as per the framework in 2019/20. Utilisation of the incorrect code in the first quarter for 900 children who benefited from the grant has been mitigated by the province creating a journal to correct the misallocation. There was intervention by the National Department to address the Eastern Cape’s poor performance. A turnaround strategy was developed to look at the following:

Reduced Allocations

  • The allocation on the maintenance grant for 2018/19 was reduced from R12 million to R5 million to enable the province to address their challenges and fine tune their processes.

Monitoring and Support

  • The task team continues to meet to monitor the implementation project plan that was developed.
  • Meetings have been held to assess progress and provide guidance on the intervention to implement the grant.

The following engagements took place:

  • National Meeting with ECD grant provincial team on the 15th-17th of October 2018.
  • Site visits were undertaken to check progress on the 3rd- 4th of December 2018 and 5th- 6th of February 2019.
  • A task team meeting has been scheduled to take place on the 25th of February 2019.
  • These interventions from National are working because the grant progress moved from 0% in the second quarter to 30% at the end of the third quarter and to a projected expenditure of 61% by the 20th of February 2019.
  • The National Department is continuing to work with the Eastern Cape Province to ensure that 100% will be spent by the end of the 4th quarter.

The 2019/20 Conditional Grant Framework was reviewed and consulted with provinces. It was finalised and signed off by the Acting DG and submitted to National Treasury in December 2018. Provinces have to submit their signed off Business Plans to National Department by 31 March 2019.The plans have to be signed off by the Acting DG and submitted to National Treasury in April 2018. A meeting with provinces to prepare for quarter 1 implementation is scheduled for 26 February 2019. Quarterly meetings are held with provinces to monitor implementation of the grant. Recommendations by National Department were that the Committee note the implementation of the Conditional Grant in the Eastern Cape Province with specific focus on: performance made during 2018/19; and support provided by national DSD.

The National Department concluded their presentation.

The Chairperson thanked the National Department for their presentation. He also acknowledged the presence of the MEC for Social Development in the Eastern Cape, Dr Pumza Dyantyi, The HOD in the Eastern Cape for the Department of Social Development, Mrs Ntombi Baart as well as the Eastern Cape Provincial Treasury HOD Mr Daluhlanga Majeke. National Treasury was invited to make their presentation.

National Treasury presentation

Ms Ogalaletseng Gaarekone, Provincial Budget Analyst, National Treasury, said National Treasury had noted what President Cyril Ramaphosa had said at the State of the Nation Address which took place on 7 February 2019, about the importance of early childhood development and that it will move to the Department of Basic Education. Over the first 2 quarters of the 2018/19 year, Eastern Cape expenditure on ECD by the Department was not doing well. However, by the end of the third quarter (31 December 2018), they had managed to move to 58.2% from 21.7% spending as at 31 December 2017. The Eastern Cape had in fact outperformed the Gauteng Province as at 31 December 2018, which had spent 49.6%. The best performing province as at 31 December 2018 was Mpumalanga, with 74.4% spent, followed closely by KwaZulu Natal at 73.2%. Other provinces such as the Free State achieved 69.4%. The Western Cape achieved 68.5%. Limpopo had achieved 64%. The North West had spent 50.7% and the Northern Cape spent 47.1%. The Eastern Cape had improved significantly from the first quarter. National Treasury hoped that the Eastern Cape’s performance would continue to improve.

An analysis of the Eastern Cape’s ECD performance on expenditure over 3 quarters in the 2018/19 year shows that at the end of June 2018, the province had achieved poorly at 1.2%. This improved to 21.8% by the end of September 2018, followed by another drastic improvement to 58.2% expenditure as at 31 December 2018. This was a significant improvement from the end of the third quarter 2017 year, where they had achieved 21.7%. The Eastern Cape’s ECD spending by component showed that as at 31 December 2018, R1 989 000 had been transferred for administration. R588 000 had been spent. The amount transferred for maintenance was R3 336 000 and R1 014 000 had been spent. The amount for subsidies transferred equalled R54 546 000 and R47 956 000 had been spent. The province had done well in terms of expenditure in the area of subsidies as compared to administration and maintenance.

The Eastern Cape had achieved their targets in terms of subsidies in September and December 2018 as opposed to June 2018. However it was a concern for National Treasury that the Eastern Cape was the only province providing a subsidy for 237 days, when all other provinces were providing a grant for 264 days as per the grant framework. This was an area where the Department needed to improve on. With regards to ECD maintenance, National Treasury acknowledged that the Department was currently working on 9 centres. By the end of December 2018, only 2 were completed, but that number now stood at 9 centres being completed. Due to poor spending by the Eastern Cape in the 2017/18 year, approved rollovers for the ECD grant in the Eastern Cape amounted to R6 378 000, but R22 672 000 had to be surrendered. The latter was the largest amount of all 9 provinces surrendered, and was greater than all the other provinces combined, with the least amount surrendered being from the Western Cape at R380 000. Some challenges faced by the province were as follows:

  • SLAs between the provincial DSD and ECD centres concluded late due to challenges with the format. The format is being reviewed by the DSD to address the challenges.
  • Delays in the supply chain management processes for the appointment of contractors, likely to impact on the completion of all projects at the end of the financial year.
  • Some contracts not awarded in time due to contractors not responding to request for quotations.
  • Some projects are experiencing delays due to a lack of connections for services (water and sanitation)
  • There has been improvement in spending and performance in the third quarter, however, the maintenance component has been lagging, which could result in under spending and underperformance at the end of the financial year.
  • The department has only completed two of its 26 maintenance projects as at December 2018, although the department indicated that they would complete by the end of March, given the procurement delays experienced in the past, this might not be realised.
  • Although the department is meeting its target in terms of providing subsidies to children, there is a shortfall in the number of days 237 versus 264.

National Treasury did acknowledge that there had been an improvement in this quarter as compared to previous quarters. There had also been an improvement in this financial year as opposed to the previous financial year.

Conclusion and recommendations

  • SLAs signed between the national department and provinces tend to be protracted and also hinder performance.
  • Supply chain management delays must be addressed to improve spending and performance. Planning must be done properly to ensure that there is enough time to procure and complete projects.
  • Planning should also include interactions with municipalities early in the process to ensure that services (water and sanitation) or a lack thereof, does not delay projects.
  • Eastern Cape is the only province that provides subsidies for less than the prescribed 264 days. A concerted effort must be made to increase the number of days that children and subsidised for.

Ms Gaarekone thanked the Acting Chairperson.

The Acting Chairperson in turn thanked National Treasury for their presentation.

Eastern Cape Department of Social Services presentation

Dr Pumza Dyantyi, MEC, Eastern Cape Department of Social Development, said that the Department appreciated the opportunity to come and report about their progress in fulfilling their mandate in line with the commitment they had made in August last year.

Ms Ntombi Baart, HOD, Eastern Cape Department of Social Development, said that the purpose of the presentation was to brief the Select Committee on ECD conditional grant performance since their last engagement in August 2018, to share the progress on implementation of operational Strategy in 2018/19 and to share progress on grant performance specifically in terms of the Quarter 2 & 3 reports to date. She also said they would reflect on the challenges they faced as a Department as well as remedial action.

As previously stated, the ECD conditional grant allocation for the Eastern Cape in the 2018/19 year was a total of total of R78 715 000. R72 727 000 was allocated for subsidies. R3 336 000 was allocated for maintenance and R2 652 000 was allocated for administration. 0% was achieved for all 3 components in quarter 1 in terms of expenditure. However, in quarter 2: 45.7% was spent on the subsidy, maintenance was still at 0% and administration was at 45.5% expenditure. In quarter 3 (30 December 2018), 87.9% had been spent on subsidies, 30% had been spent on maintenance and 22% had been spent on administration.

The revised operational strategy by the province for implementation of the grant in 2018/19 looked at how to deal with the backlog of ECD in 2017/18 because they could not say they would do away with it, depriving children, particularly on the maintenance side of being catered for. They also had to look at a maintenance grant process review in order to ensure that ECD centres meet the appropriate norms and standards and also how through subsidies, increased access to ECDs would be realised. This would be done in compliance with the grant framework and governance and reporting structures.

Backlog and Planned Projects in 2018/2019

A conditional grant allocation amount of R3 336 000.00 was made for 26 ECD centres. In order to cater for the backlog, an equitable share amount of R5 000 000 was allocated for 38 ECD centres. A total of 64 ECD centres were identified for infrastructure maintenance in the current financial year. Of the 64, only 48 have been implemented. The total planned number of 64 has been reduced to 48 due to the estimated costs by the Department of Public Works per ECD centre which exceeded the threshold and therefore required a top up. 22 out of 48 centres formed part of the backlog to be addressed which was reduced from the 38, funded through the equitable share of R5 million. 26 out of 48 centres formed part of the current financial year’s priority, funded through the conditional grant.  

Maintenance component

There was a finalisation of the appointment of technical staff; namely Construction Project Manager and 2 Projector Managers effectively from November 2018. There was also improved technical capacity in validating technical assessments done by the Department of Public Works. The Procurement Strategy was revised to follow the quotation route as opposed to a tender process which results in a quicker turnaround time to award. The Province has engaged with the Provincial Treasury and Public Works to establish a database of pre-qualified contractors in each district to enable a more efficient process.

The status of the maintenance component was that nine were complete, nine were under construction and eight were in a tender process, closing on 15 February 2019. The estimated completion date was 22 March 2019. Information regarding projects (ECDs) per district was as follows:

There were three projects in Alfred Nzo which were all under construction. There were seven projects in Amathole: four were completed, two were under construction and one was re-advertised (closing 15 February 2019). There were zero projects in Buffalo City Municipality (BCM). Chris Hani had four projects: one was completed, one was under construction and two were re-advertised (closing 15 February 2019). Joe Gqabi had five projects: two were completed, three were under construction. Nelson Mandela Municipality had one completed project. There were none in the OR Tambo district. The Sarah Baartman district had six projects: one was completed, while five were re-advertised (closing 15th February 2019).

Expenditure and projected expenditure as at 11 February 2019 were that revised cash flows for quarter 1 and 2 were R0, R650 000 for quarter 3 and R2 686 000 for quarter 4. Total expenditure to date equated to 52%. Invoices on hand to be paid by 15 February 2019 amounted to R2 102 247 (63%).

Subsidy: Increased access to ECDs:

  • 20 429 children in 1 094 ECD Centres are benefitting from the grant in 2018/19, subsidizing 234
  • In-loco inspections are conducted whenever necessary in order to confirm grant compliance.
  • The province has rectified the misallocations of Q1 & Q2 by creating journals paying beneficiaries from the conditional grant.
  • Engagements were made with those municipalities where there were challenges with environmental and operational health (EOH) Certificates.
  • ECD massification strategy is a guiding a systematic strategy to accelerate ECD registration targeting the rural ,semi - urban and urban areas being biased towards rural areas that are under serviced

The Strategy has been implemented in four districts last and currently is rolled out in two districts, viz: OR Tambo and Chris Hani.

Subsidy component

There was an annual target of 20 472 children subsidised on 237 days. 900 children benefited in quarter 1, with 20 429 children benefiting in the second and third quarter respectively.

Subsidy-journalised payments as at 11 February 2019 were as follows:

  • Quarter 1 invoices paid equalled R17 812 619,50
  • Quarter 2 invoices paid equalled R17 310 002,00
  • Quarter 3 invoices paid equalled R15 159 584,63
  • Quarter 4 invoices paid equalled R4 237 640,75

Governance and administration

War Rooms were established at both Provincial and District levels and are sitting weekly on Fridays evaluating progress on payment of NPOs amongst other issues. The Provincial War Room is chaired by the Deputy Director-General whilst District War Rooms are chaired by the District Directors. The Provincial War Room reports to the Head of Department and the Executing Authority respectively. Monitoring of progress on NPO payments was also taking place monthly through an In-Year Monitoring meeting. Ad hoc meetings and in-loco inspections are conducted whenever necessary in order to confirm grant compliance. There was enhanced capacity of NPO Management at District levels through transfers and appointment of 42 officials in Alfred Nzo, Joe Gqabi & Sarah Baartman. These officials were then reoriented on NPO Management functions. There was a migration of the payment of the ECD Conditional Grant from Programme 3 to the NPO Management Directorate effectively on August 2018. In the interim, the province uses a Procure-to-Pay system for NPO payments until final upgrading of the new system. System-generated NPO payment reports are issued weekly, assisting in the analysis and managing progress. There was completion of a Pilot on Revised Facilities (NGO Management) Module which is aligned with Policy for Financial Awards requirements and other National legislative including conditional grant compliance requirements. The capturing of NPO Processes for the next financial year is currently taking place in the upgraded system which will enhance the Department’s capability in monitoring of NPOs’ performance and ultimately processing of NPO payments.

Challenges and Remedial Plans for ECD Grant Subsidy 2018/19

The challenges were that there were delays in implementation due to the discrepancies in the assessments conducted by the Department of Public Works. The assessments that were done by the Department of Public Works (DPW) which have been used as Bill of Quantities on the awarded tenders did not reflect the true state of the work to be done – which then incurred variations in the works.

Remedial action plans were that there were technical human resources: Construction Project Manager for the ECD grant assumed duties on the 6th November 2018 and 2 Project managers assumed their duties on the 12th November 2018. Thereafter, they undertook re-assessments on the 26 ECD centres to target the completion of centres funded by the conditional grant. The rest of the 22 assessments for the backlog were conducted while construction was underway and some are currently also on tender. 

Challenges and Remedial Plans for ECD Grant Maintenance 2018/19

One of the challenges was that the lower Construction Industry Development Board (CIDB)- graded  contractors delay the hand over process and execution of  projects due to the financial capacity of their companies and inability to submit post-award compliance requirements. The remedial action plan for this was that the Eastern Cape Department of Social Development (ECDSD) through the Eastern Cape Department of Public Works (ECDPW) was to develop a database of general building contractors in each district. The prequalified contractors will be requested to urgently provide quotations expediting the procurement process. The tender for this database is currently on tender and closes on the 1st March 2019.

Another challenge was that the Alfred Nzo business forum was stopping projects in the Alfred Nzo district. Remedial action plans for this were that after several engagements held in an attempt to resolve the impasse were not successful, a political intervention has since been sought through the office of the MEC.  A meeting between the Department and the Alfred Nzo District Business Forum took place in August 2018 to resolve the impasse. The EC Provincial Treasury is now undertaking an investigation with regards to the allegations emanating from the riot complaints.

Another challenge was that in some cases, during hand over, the structures that have been awarded cannot be renovated but rather require new construction. Such centres are being replaced. The 2019/20 ECD conditional grant framework makes an allowance for new buildings.

Plans for ECD Maintenance grant implementation in 2019/20

Planned projects included a Conditional Grant allocation amount of R5.7 million for 31 ECD centres. The operational strategy was that the province has engaged with the Provincial Treasury and Public Works to establish a database of pre-qualified contractors in each district to enable a more efficient process. The database is currently on tender through EC Department of Public Works and closes on the 1st March 2019. The department was to conduct a contractor workshop with contractors on the Independent Contractor Development Program (ICDP) list.

In conclusion, with the intervention of the province and support from national DSD, expenditure and performance had improved from 0% in August 2018 to overall expenditure of 63% in the third quarter. The Province will continue to intensify efforts to ensure that the expenditure and performance on the grant is improved by the end of the financial year.

Discussion

The Chairperson thanked the Departments for their presentation and invited engagement from the Committee.

Mr Chabangu said given that the DSD was unable to complete maintenance of the centres in nine months, how was it possible that eight centres can be completed in two months?  Was this not part of fiscal dumping, which would lead to wasteful and fruitless expenditure?

Mr F Essack (DA, Mpumalanga) noted that DSD had said that there was an advert that went out on 1 February 2019 and would close on 15 February 2019. They would appoint by the following week Friday, hand over and two weeks later, the project would be completed and invoices would be paid two weeks later.  He found it difficult to believe that there were 11 months to take care of this, but they somehow believed they would be able to complete it now. He also asked if they believed that they had qualified personnel in terms of the PFMA for this task. He believed that this would still be an issue this time next year. This was something DSD seriously needed to think about. He also asked if there was an exit plan with regards to this when National withdrew. Were they going to run with this? Were they satisfied that they were in a position to put checks and balances in place to run this matter? He also spoke about slide 12, where they alluded to some 900 children who benefited from the subsidy out of a possible 20 400 which was the target. Suddenly in quarter 2, more children benefited, even more than the total annual target. He asked for clarity about this.

Mr L Nzimande (ANC, KwaZulu-Natal) wanted clarity with regards to the revised down figure of R3.3 million. This was a question of capacity, a question they had all been occupied with. He and his colleagues have been saying that the capacity has not been there. All of a sudden, it rocks up. He asked who would be doing what in order to review the decision of revising down the figure from R12 million to R5 million. Was there a commitment that they would give them the money? Was there another condition which would be placed that they were keeping the money elsewhere and that when they came back on the 26 March they would give it back? He sought clarity regarding this.  Also, in order for the Committee to be satisfied, the eight minor projects needed to be specified in order to allay fears of promising to finish eight projects in two weeks and not finishing. Were the projects of the scale of putting a fence, window etc.? An indication needed to be provided.

The Acting Chairperson asked about the performance information. There was clarity given with regards to spending. However there needed to be clarity as far as performance with regards to the target was concerned. Maybe the HOD could provide clarity with regards to the correlation with the target they had set for themselves. On challenges emanating from the Alfred Nzo Business Forum,

there was an indication that the MEC had met with the forum in order to try resolve their issues. However, there was no indication as to how far the Department had gone to address this item. He asked for assurances that the Department was on top of this. To the National Department of Social Development, with regards to the allocation which had to be reduced, from R12 million to about R3.3 million as part of their support, how was the amount reduced and termed as ‘support’. He wanted clarity regarding the support to the Provincial Department that they were given in terms of refining their processes and other challenges which they had managed to identify. He wanted to know what was being done to address those challenges in the provincial department.

Dr Dyantyi responded to various concerns and questions raised. The eight centres would be completed by end March 2019. Some of the work was minor, for example in Joe Gqabi, there were things such as a ceiling which needed attention. Some of the work could be done in a week. Some of the work could be done in a month.  She said they were allaying the fears of the Committee about the performance of the department. Previously, they did not have technical capacity. They were recruiting. Now there was technical capacity within the department, hence they were sure that the work which was being done was work which was being followed through. She also said that there was someone who was reporting regularly. On other qualified personnel, it was indicated to the Committee that they were capacity problems. Supposedly qualified people, who were supposed to be in charge, were supposed to be doing their job. Some of these were found wanting. Consequence management was being exercised. For example, both National and Provincial Treasury had complained about their supply chain management challenges. They had since addressed some of those issues, with the CFO on cautionary suspension. This showed that the department was not shying away from applying consequences where they thought the job was not being well done. Some of the questions would be answered by the HOD.

Ms Baart, on projects not done within first nine months, said this pertained to the technical aspects of the work and had to do with the set threshold. These were minor projects which would now be completed. On projection and estimation, a Request for Proposal was sent and the process was not elongated as a normal bid. There was a Price Quotation Committee which sat at the department every day to consider the request. These were the arrangements in place to ensure that as soon as the evaluation was completed by the Price Quotation Committee, they would meet with service providers on sight and the work would be done. Additionally, the capacity they had would be supplemented with that from the Department of Public Works. Public Works had now given each district its technical support. When the Department went to the field, Public Works’ support was present. There was also a need to hire cars because these were unemployed technical graduates. The Department was now also allowed to purchase some 4x4 vehicles from the grant. There was strict monitoring which would be happening and projections being made. With regards to qualifications, the teams were qualified. All technical staff, starting with the Director technical level, were qualified. The Committee would recall that the payment function of NPOs was removed from the social workers. The challenge was that they relied on the social workers to do technical assessments. They were not actually doing technical assessments. They looked at the norms and standards, what was not being met to qualify for full registration of an ECD. They gave that report. In terms of the work, Public Works relied on this.  Social Workers did the professional work, monitoring and standards and let the payment function be done by a dedicated directorate. Technical personnel were to do the technical work. In December, all members of staff, whether new or old, were subjected to a competency assessment as a group. The results of this would be received within the following week from the meeting and would be able to measure the efficiency of a group. These were mechanisms which were used to measure the qualifications or capabilities of the group.

Ms Baart outlined plans to deal with orders that were filling up. What they were concerned about was the technical assessment. There was also communication with Provincial Treasury and Public Works. 31 ECDs were identified. Planning for the technical assessment would be done by the end of the month, which meant that the department had pre-qualified service providers per district. Therefore, they were looking forward to receiving more than the R5 million. On the highlighted performance, due to an anomaly from equitable share, they took 900 children to benefit from the conditional grant instead of the equitable share, hence one has the 900 being shown. The target was 20 472. In quarter 2, one had 20 429. This was the case in quarter 3 as well.  There was now consistency in terms of the actual reaching of performance targets. There was evidence in this regard. Further, the Alfred Nzo situation was very difficult to deal with. They even had to call the police and the Provincial Commissioner. They do this with all government departments, they want to be given work out of hand. They did not want to comply with supply chain requirements. Excuses such as that the requirements were for established businesses would be given. The MEC had to explain that at the end of the day, they would comply with the rules.   When there were allegations of corruption, she requested written evidence. This was then taken to Provincial Treasury to go and evaluate. They did not stop work due to this. They would advertise and appoint the right people.  She said they did not relent with regards to what was meant to be done. Workshops would be provided to support the municipality, but there would be no service providers appointed who were not compliant.

Dr Dyantyi added that they also called upon the Alfred Nzo Municipality to look at other avenues in which they could get work, and not seek to be given work out of hand by the government.

The Acting Chairperson thanked them for the responses.

The National Department of Social Development was given an opportunity to provide input.

Ms Nxumal explained that every year, the grant allocations were reviewed. In the next financial year, there was a process of improving the allocation. Reducing the R12 million to R5 million was done to ensure they deal with challenges. The management of the grant was important. The National Department believed that reducing the allocation had been important in motivating the province to work on putting in place capacity, their turnaround and systems to be able to show that they were really improving. The National Department was monitoring 8 other provinces. They felt that the Eastern Cape Province Department was now at par with other provinces which were implementing the grant.

She said that all other provinces, including the Eastern Cape, would be supported. With regards to the exit plan, she believed the grant would continue for the next 3 years.

The Acting Chairperson asked if National Treasury wanted to respond. They did not. He also acknowledged the presence of the Acting DG of the Department of Social Development, Mr Fhumulani Peter Netshipale.

Mr Chabangu asked if there was any among them who would like to add to the presentations.

The Acting Chairperson said he was the only chairperson.

The Acting Chairperson referred to the presentations and said there seemed to be progress being made. The entities needed to make sure that they do not regress and continue monitoring. With regards to issues of supply chain, the entities needed to remain on track and to ensure that there was prior planning and prior procurement in order to avoid problems faced previously. He asked if the MEC wanted to add anything.

Dr Dyantyi said she was grateful for the support they had received from the Committee, National and Provincial Treasury and that they would keep their commitment.

The Chairperson thanked all and adjourned the meeting.

 

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