Department of Arts and Culture Quarter 3 & 4 Performance, with Deputy Minister

Sports, Arts and Culture

27 August 2019
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary

The Deputy Minister of Arts and Culture was present and the Department of Arts and Culture spoke to its achievements and challenges for the third and fourth quarter of 2018/19.

Members were concerned DAC achieved only 23 of 30 targets in Quarter 3 and 24 of 33 in Quarter 4. There was a trend of underachieving targets in the first two quarters as well and it seems to be a major challenge for DAC. Another challenge is being able to stick to its budget as there a mix of overspending and underspending amongst entities and programmes. Systems and processes needed to change to ensure more specific performance targeting and budget allocation. The 61 vacancies in DAC during that period was also a concern. DAC pointed to the lack of qualified and credible applicants but said that the merging of the two Departments currently under way would solve the matter of vacancies.

Legal challenges facing DAC include court cases on the Mzansi Golden Economy, the Isicathamiya Fund, Living Legends Legacy Fund, and Opiconsivia. The Department was thoroughly questioned on these as these legal challenges led to increased fruitless expenditure, as well as the delay in allocating funds. Written reports were promised on the legal matters.

Meeting report

Deputy Minister of Sports, Arts, and Culture, Ms Nocawe Mafu, noted the overall achievements of DAC in the third and fourth quarter. Her attitude was to achieve good work and ensure cooperation between DAC and the Portfolio Committee.

Department of Arts and Culture Quarter 3 Performance
Mr Vusumusi Mkhize, Director General for DAC of Sports, Arts, and Culture (DCAS) noted DAC achieved 23 out of the 30 targets. The seven targets unachieved were:
- Completion of report regarding the consultation on draft feasibility and due diligence
- Coordination of cultural diplomacy engagements
- Provision of support to six flagship projects
- Provision of support to professional artists’ projects
- Provision of support to cultural/creative sector projects through Mzansi Golden Economy (MGE)
- Provision of support to community arts projects
- Documentation of one living human treasure.

A comparative analysis illustrated that from the first to third quarter, there has been an increase in targets being unachieved, from four to seven targets. These trends however are not illustrated in the big picture. In 2017/18 the percentage of unachieved targets in Q3 was 40%, while now it is down to 23%.

Programme-specific performance for targets achieved were: Administration 100%, Institutional Governance 71%, Arts and Culture Promotion and Development 67%, Heritage Preservation and Promotion 86%.

Highlights for Q3 were noted such as the Minister hosted a delegation of BRICS Ministers of Culture to provide strategic leadership and guidance on how governments can best strengthen collaboration amongst member states, market access, and to promote cultural diplomacy. This was followed by a gala that showcased South African music and tradition, exposing BRICS members to South African culture.

The Department, in collaboration with many other South African bodies, hosted the South Africa Cultural Season in Accra, Ghana. This included a delegation of South African artists. This programme was aimed at strengthening Africa bilateral relations, promoting regional integration, strengthening cultural relations, and laying a basis for expanded trade and the promotion of cultural diplomacy.

In the third quarter, there was also the achievement of musicians, for the first time, receiving their needle time royalties.

Finally, President Cyril Ramaphosa described the Day of Reconciliation as a day on which the country reaffirms the commitment to eradicate poverty, hunger, homelessness, and unemployment. South Africans across the country were encouraged to reach out to each other and build unity during this event, strengthening the cultural bond.

The various targets that were achieved were listed and reported on. Som targets were overachieved. This would allude to an overspending as overachieving requires more resources and time. Targets that were overachieved are:
- Number of Izimbizo held: Target five, achieved 12
- Percent of procurement awarded to BBBEE-compliant service providers: Target 70%, achieved 78.66%
- Number of bursaries awarded to develop qualified language practitioners: Target 300, 509 awarded
- Number of flags installed in schools: Target was 200, 275 were installed.

The reasons for the targets unachieved were explained which included budgetary and capacity constraints, and many challenges with signatories and such.

The Chairperson requested that the focus be on the Q4 report and that Q3 be concluded quickly.

Q3 financial report
Mr Makoto Matlala, CFO for Department of Arts and Culture, said DAC underspent by 7% in total. Some programmes like Administration overspent at 117% while Arts and Culture Promotion and Development underspent at 77%. None of the other programmes managed to spend their budget and break even, leading to underspending.

Details were given on expenditure of specific economic classifications: compensation of employees was 98%. This underspend was due to multiple vacancies in the department.

For goods and services, 128% was spent. This was due to:
- DPW claims for lease of Sechaba House for the month of April to August 2018
- GCIS claims for the marketing of Heritage and Women’s month celebrations
- Payment to the service provider appointed for the implementation of Heritage Day celebration
- Payment for international travel claims received from DIRCO
- Payment to the event manager company for the SA/Ghana Cultural Seasons hosted in Accra, Ghana

- Provinces and municipalities (conditional grant on community libraries) together overspent by 6.4%. Northern Cape spent 160.4% while North West spent 59.6%.

- Departmental agencies, non-profit institutions and public corporations  spending was analysed (see document).

Department of Arts and Culture Quarter 4 Performance
Mr Mkhize said the targets achieved were 24 out of 33. The targets not achieved were:
- Development of an approved work study report
- Development of an approved feasibility and due diligence report on amalgamation of DAC public entities
- Provision of support to six flagship projects
- Provision of support to 10 cultural and creative sector projects through MGE work streams
- Provision of support to five market access platforms
- Provision of support to 65 community arts projects
- Provision of support to six sector organizations
- Provision of support to 13 capacity-building programmes
- Digitization of three collections
Six targets were unachieved due to budget reprioritization following the Opiconsivia court order settlement.

Of the programmes, administration achieved 6/7 targets, institutional governance achieved 6/7 targets, arts and culture promotion and development achieved 6/12 targets, and heritage preservation and promotion achieved 6/7 targets.

Highlights from the fourth quarter were noted. The Minister launched the Ethekwini Choir League in Durban aimed at uplifting the state of choral music in KwaZulu Natal. The Department hosted the second South African Film Summit at Skyrink Studios in Johannesburg. This would be a game changer in the film industry, helping spread South African culture. The Cape Town Carnival showcased and celebrated the diversity of Cape Town and South Africa.

The achieved targets showed some problems with overachieving.
- Percent of procurement to BBBEE-compliant service providers overachieved by 0.78%.
- The number of Izimbizo held overachieved by 80%
- Percent of interns enrolled against funded posts overachieved by 1.8%.
- Number of social cohesion projects implemented overachieved by 33%.

Once again, the unachieved targets were mainly due to budgetary, time and capacity constraints.

Q4 financial report
Mr Matlala said total spending was 117%. In this quarter, the most overspending amounted to 563% for higher education institutions while the most underspent economic classification was heritage assets at 14%. Reason were provided for this (see document).

- Compensation for employees was at 97% due to vacancies.
- Goods and services spent 95% due to outstanding claims, invoices, resignation of one community library consultant, and less than anticipated invoiced amount from Nelson Mandela Metropolitan University.
- Provinces and municipalities spent 100%. Some provinces overspent while others underspent therefore equaling the budget allocation.
- Departmental agencies, non-profit institutions and public corporations  spending was analysed (see document).

The fourth quarter incurred an expenditure of R1.1 billion (117%) versus a projected budget of R934.2 million. In total, the annual budget of R4.3 billion reflected an actual spending of R4.2 billion (98%).

Discussion
Mr T Mhlongo (DA) asked for more information about the Market Theatre. Who is the director of the theater? What were the challenges in appointing the director? He requested DAC honestly and clearly to give information about its accounting and the audit. What is the status, what were the challenges, and why was it delayed? On the Isicathamiya Fund, how much was it allocated per year? Is Mzansi Golden Economy beneficial programme and how much has it been allocated? How much of its budget was used? How much is allocated to the National Empowerment Fund (NEF)? How much of this was approved by the Committee and how much was spent that was not approved by the Committee? Is DAC involved with creating a new song for President Ramaphosa? Finally, of all the beneficiaries, were the targets achieved? For this financial year are there any investigations the Committee needs to be aware of?

Mr L Ntshayisa (ANC) asked why there are so many vacancies in DAC and if this would be the main cause of underspending. Why is it taking DAC so long to fill these vacancies? He congratulated them on achieving and implementing three of the 12 social cohesion projects and asked DAC to give one or two examples of these successful social cohesion projects.

Mr B Madlingozi (EFF) asked if the underspending is due to human error in calculation or if it is simply caused by laziness. How do the artists receive royalties? What are the criteria to receive these royalties? On slide 23, the money allocated to installing could have been put towards better uses in schools, like installing sanitary toilets, something that will actually help them especially since DAC overspent on this. On slide 38, are the delayed submissions ongoing or has this been resolved? If it is resolved what was the solution and cause of these delayed submissions? The access to the Robben Island Museum is important. This is a central piece of South African history and those who were directly affected, black children, have little access to this museum due to financial constraints. What is DAC doing to address this? Is the cause related to suspense accounts that were created due to corruption in DAC? On slide 12 in the fourth quarter, there are many important historical figures in South Africa being ignored. Figures that have had profound effect on South Africa and their legacies need to be taken seriously as well. The festivals for social cohesion are run by the same people every year. Are there any plans to bring new people into this process, the development of youth, for instance, could be involved to increase social cohesion?

Mr M Seabi (ANC) asked why the department continues to over perform some targets while under achieving  other targets. The process of creating targets needs to be looked at because there has been consistent failure in achieving the targets whether it be through surplus or underachievement. Over delivery is costly and uses funds budgeted for other programmes. The Committee needs more detail on where and how often money is transferred to entities and provinces. Is there a regulation that you cannot transfer all the funds at once or why are there issues? In the case of under expenditure, where does this surplus money go? How is it classified in the financial statements? Seeing the trend of under expenditure, it may be time to look at the systems being used and make a change to be more efficient. The same goes for how targets are calculated. Both systems need reform. Has DAC considered this?

Ms V van Dyk (DA) asked how the royalties are allocated to artists and how would the Committee be able to address this process and assist. On slide 20, the number of target group programmes is mentioned, what exactly was achieved and where were they held? On page 22 it shows there was an overachievement of 209 bursaries while on slide 45 under Households the bursaries were reflected as overspent. Where did the extra budget come for this overspending? If the target was 300 and achieved was 509, this is a lot of extra funding that is unaccounted for. What was the breakdown per province for flags and what was the overall cost of the project? Where there specific challenges for this project as this was also overachieved? DAC speaks on the South Africa Public Library and Information Bill, when will this be tabled as there is a reference to a court order. What is the background to this court order?

Ms van Dyk asked for updates on all the investigations in DAC, specifically the National Arts Council and Robben Island? On the international travel for DIRCO. Can DAC provide a detailed report of all flight information, where they went, what class was flown, and the total costs? Slide 40 reflects Q3 and 4 overspending by the provinces. Did they underspend in the first two quarters or from where did the extra funds come? Why are they not held to their allocated budget? On slide 16, the ISO projects indicate more events were held than was intended and budgeted for. What were the financial implications of this and who made the decision to host these extra events? In programme 2, are there any other entities that are currently functioning with proper councils in place? Slide 19 speaks to social cohesion, what do social cohesion programmes exactly entail? On slide 22, what is the status of Mandela House in Bedford? Slide 27 speaks of projects supported but no mention of where these are taking place and if there are any court challenges. What are the financial implications of these court cases?

The Chairperson also asked about exceeding the targets, what are the adjustments to compensate the overspending? She said that committee members had been sending her questions directed at the department. Members should not be sending these questions to the Chairperson and she assumes this is happening because they are getting no response from DAC. She urged DAC to look into this because if a question is sent to the Minister or Deputy Minister, a response is expected.

Department Response
Mr Mkhize replied that the creative director for the Market Theatre is Mr James Ngcobo. The director is not appointed by DAC but by the Market Theatre and therefore we have no involvement in this process.

Mzansi Golden Economy has been studied in terms of economic and employment development contribution by DAC. We do have reports of these contributions that can be provided to the Committee. Impact assessment has already been done in the past by the South African Cultural Observatory (SACO).

The Department does have a contract with Ladysmith Black Mambazo over three years with a budget of R12 million per year. The programme establishes a mobile academy. This would include the identification of talent and new groups as well as the training on Isicathamiya. The Department does have reports of what they have done to date and a breakdown of how much funding has been allocated can be provided to the Committee.

The National Empowerment Fund (NEF) is provided venture capital and is in partnership with DAC. The budget is R110 million over three years. There is a problem with access to resources like tech platforms because of money constraints and capacity building. R75 million has been transferred to NEF, with R25 million being transferred this financial year. They have submitted a very detailed report of all projects and projects they are involved in. The venture capital is also being managed professionally in its accounting.

There was a realization that artists and creatives around the world are revered in African countries. South African artists have achieved many things as well but are only recognized once they have passed away. This is because the government does not actually push rewards and recognition as they should be doing. For the Living Legends Legacy Trust, R20 million was allocated to the trust, of which only R8 million has been transferred. Money was moved out of the account and a fraud case was opened and investigated. One of the board members was arrested and the matter is sub judice. Therefore, during this investigation and court process, the remaining R12 million had never been transferred.

The Department is not involved in creating a new song for the President.

Investigations and suspensions in DAC was an issue. When DAC receives reports of such matters, investigations are triggered. Officials who are on suspension, in some cases the case has been finalized while others are still ongoing. There is the matter of two senior members suspended and one other where the case has been closed. The Special Investigating Unit (SIU) conducted some investigations which report was given to DAC. One example is one specific entity was requested to be checked whether they were complying with beneficiaries and money that was being transferred. This investigation is currently ongoing.

On targets not being created efficiently and not being achieved, we have been breaking down the reasons to show what corrective measures can be done. The Department has been realigning measures to ensure contracts are followed and targets that are not being achieved are being adjusted. We will also look into how exactly they are decided on and get back to the Committee.

Royalties are distributed by collection societies. The SABC and a collection society had a dispute, but the DG was unaware of what exactly was being disputed. One of the biggest problems was that artists’ money was not getting to them, and the Minister is pushing to fix this.

On school flags, the money allocated to DAC is used for the purpose it is intended for. The Department has no mandate to address toilets. Its mandate does include the installation of school flags.

Robben Island is difficult to engage with as they have their own models of how costs are determined. There was an indication that there is a sliding scale for ticket prices for tourists and locals. The challenge arises when the funding for Robben Island requires them to use ticket prices to breakeven so changing the price becomes difficult. The CEO was briefed on this as well, so this is being addressed.

On social cohesion festivals using the same people. These are flagship projects. DAC did impact assessments on them. The Minister spoke to the impact of the National Arts Festival previously.

The questions on specific slides and numbers, can be provided in greater detail at a later time in writing.

The audit investigation details can only be provided after the meeting.

Mr Matlala, CFO, replied about the accounting system. The modified cash basis of accounting is a cash accounting system. It is a system that was developed when financial statements are prepared for people to understand them more efficiently.

The total amount the NEF has used so far is R11.38 million as of 1 March 2019.

Suspense accounts cannot be used in government for corruption as each and every transaction is accounted for. All items are listed in suspense accounts and National Treasury monitors this. At the end of the financial year suspense accounts must be brought to a balance of zero. This ensures there is always reconciliation of funds and a good reason why the suspense account is being used.

Overachieving and underachieving targets is a challenge but there is a reasonable demand to do certain projects. Requests are received to continue projects, and when DAC has been underspending these extra funds are allocated to be able to breaking even in terms of the budget. There will be a presentation of the annual financial report in October which will illustrate this.

The provincial grant is operated under what is called a conditional grant framework. This stipulates dates and amounts that each province is allocated. Payment dates must be complied with to ensure accountability.

He said from one financial year to the next, there is a rollover system to ensure all payments are paid off for an outstanding project, which is sometimes categorized as late payments.

Mr Vusithemba Ndima, DAC Deputy Director-General: Heritage Promotion and Preservation, spoke about the South African Information Services Bill. It was presented to Cabinet last year. However, due to the significant budget cuts, the Provincial Treasuries would need to be engaged with before the Bill could be submitted to Parliament. This is because the Bill may not be able to be implemented with these budget cuts.

The Department does have a list of funding for the flags installed in schools, as well as details about which schools received flags. This can be made available to the Committee.

On the Mandela House project, the contractor was appointed on 18 April 2019. The projected completion date is 4 November 2019. The rate of work at this time is 65%, and specifics of what exactly has been built is provided. The project is still set to finish in November 2019.

Ms Sizakele Shongwe, Acting DDG: Institutional Governance, replied that there are records that have the information on all entities that DAC is involved with who have a fully-fledged and functional councils. This can be provided.

On the social cohesion projects, this is related to social cohesion advocates who are established by outstanding members of communities. One of these advocates for instance spoke about issues with truck drivers and has been involved in the project to address these specific issues.

People with disabilities and those who are older are also considered by creating different programmes. For instance, there are drama performances specifically for the disabled to take part in. After school programmes were also established to encourage high self-esteem, protective sex, and other concerns amongst the youth.

Mr Matlala spoke about the court settlement. In terms of the MGE framework, one of the beneficiaries submitted unaudited financial statements. Based on this there was a dispute between DAC and MGE the beneficiary. The Department has the requirement that financial statements needed to be unqualified in order to receive funds.

Mr Mhlongo made a point of order. He demanded to know the name of the beneficiary.

Mr Matlala explained that the beneficiary is Opiconsivia. Opiconsivia brought this qualified financial statement to court. The Department tried to fight the case but lost. The outcome is that DAC would pay R8 million to Opiconsivia. Added to this, the court calculated a high interest rate as well, leading to DAC needing to settle R28 million to Opiconsivia. This was not budgeted for and is listed as fruitless expenditure in the 2018/19 Annual Report to be presented later this year.

Mr Charles Mabaso, DAC Acting DDG: Arts and Culture Promotion and Development (ACPD), explained each province was committed R4 million to develop activities in 2013/14. The provinces themselves would then identify people who implemented these projects through their own systems. The contract was signed between the province and organizers, DAC did not sign. The projects are then implemented, and a report is provided to the province who then submit it to DAC to receive funding. A festival from last year followed this process, that DAC still has not funded. The contractual agreement is between the beneficiary and province and therefore DAC has no commitment and did not pay.

The Deputy Minister gave her closing remarks. In the last financial year, DAC had 61 vacancies. Out of those 27 have still not been filled. They are being advertised and some are being finalized. Some posts have not been filled because there were no suitable applicants with the correct qualifications and credibility. Added to this, the merging of the two Departments, means some posts are disappearing or are already filled through the merger.

The Deputy Minister noted the comment that the Minister is not responding to Members’ questions and she will speak with the Minister to ensure in future Members will have access to qualitative and fast responses.

Flags being a waste of money and the recommendation of putting this money towards something like school toilets instead is an issue. Each Department is given a mandate of what they may undertake. Toilets is not in the mandate of Arts and Culture. At Cabinet level, however, this concern can be brought up to ensure funds are allocated to the department that is responsible for this.

Questions that require more detailed information will be provided in the form of written reports. This will allow members to take their time and fully understand the issues and impacts.

Of the DAC budget, 80% goes towards entities. The provincial budget has not been overspent or underspent as the spending of each specific province evens out in the big picture.

Further Discussion
Mr M Seabi (ANC) proposed a rationalisation given of the entities in the written report to be submitted. She suggested an induction workshop as well, and perhaps a new template to show what corrective measures are being taken to ensure reports are more effective in the future.

Mr Mhlongo asked for more details about these entities. For instance, he wants more detail into the Isicathamiya Fund. How much was allocated to date and how much was spent so far by the NEF and what the challenges are in terms of the transfers. Who appoints the board for the Living Legends Legacy? What is the total budget for the Mandela building? What is the name of the law firm dealing with the Mzansi Golden Economy cases?

Ms V van Dyk (DA) requested more clarity on the bursaries. The Department must give a written report on all investigations on maladministration and corruption. She also asked about the Living Legends Legacy board.

Response
The Deputy Minister replied about the Living Legends Legacy Trust and that it was sub judice. R20 million was allocated but only R8 million transferred due to the investigation into the fraud allegations. The rest of the R12 million cannot be transferred until the case is closed.

Mr Mhkize explained that the entities are agencies of DAC and each have a board. This board appoints their CEO, and the CEO appoints the staff. The Department is involved as an oversight agent. The Department receives reports from the entities but it is not involved in appointing staff.

The Director General explained that the Mzansi cases are unavailable to him and therefore he cannot give details on this.

Mr Matlala explained the bursaries on slide 22 show an achievement of more than 70%. The overspending and budget allocation for this will be provided in the Annual Report that will presented at the end of the year.

Mr Mabaso explained that the Isicathamiya Fund details can be provided in greater detail to the Committee in the form of a written report.

The Chairperson thanked the delegation.

The meeting was adjourned.

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