The Independent Development Trust told the Committee that it was not dependent on government grants for its funding and was constantly working towards growth within the departments. Its key projects were focused on local development and job creation. It was reviewing and reforming its supply chain management (SCM) structure and had renewed its management development capacity over the past financial year. It was, however, experiencing difficulty from clients who were not paying money due to it on time. It had reduced its head count from 441 to 299, and was considering automating some of its processes to further cut costs related to salaries, as this component accounted for most of the expense budget.
Its qualified audit opinion represented an improvement from the previous year’s disclaimer. However, it had managed to spend only R3.775 billion (62%) of its R6.1 billion budget. It had completed 70% of the 2018/19 projects within its budget scope and set time frames, and this served as a sign of the improvement in the work ethic of the board. The payment issues between the IDT and its clients were resulting in court actions, and the entity was looking at improving its risk management. A total of R62 million was still due for payment from its clients.
The IDT had put plans in place to improve its presence across the nine provinces, but was experiencing difficulty, as some provinces did not deal with it for various reasons. Gauteng had competitive alternatives to the IDT, but a collaboration agreement had been signed with the Western Cape, so its presence would be improved there. It was also looking into improving the representation of women, youth and disabled persons among its contractors, in accordance with the Presidential mandate.
The Chairperson opened the meeting with the acknowledgement of the presence of the Deputy Minister of Public Works and Infrastructure, Ms Noxolo Kiviet, and acknowledged an apology for the absence of the Minister.
Mr E Landsman (ANC, North West) asked where the chairperson of the Independent Development Trust (IDT) was, as he had not been introduced.
After the IDT delegation explained that the chairperson was running about five minutes late, the delegation was excused so that the Committee could deal with some internal matters.
The Minutes from the Committee’s last meeting were reviewed.
Mr M Dangor (ANC, Gauteng) moved for their adoption, with amendments.
Ms H Boshoff (DA, Mpumalanga) seconded the motion.
The Chairperson acknowledged the adoption and asked to be excused for a couple of minutes while he went to another venue to be sworn in. He requested Mr Landsman to chair the meeting in his absence.
The rest of the IDT delegation arrived and the meeting restarted, with Mr Landsman as the Acting Chairperson.
Annual Report: Independent Development Trust
The Deputy Minister said the IDT had been provided with a large sum of start-up capital for the development of communities, but was seemingly not living up to its mandate. As a result, the Presidency had ordered a relook at the IDT in order for it to realise its infrastructure mandate. There were deliberations between the Presidency and other departments already in progress. She asked the IDT to present its report.
Mr Coceko Pakade, Chief Executive Officer (CEO): IDT, said that the IDT was not dependent on government grants for its funding and was constantly working towards growth within the departments. Its key projects were focused on local development and job creation. There were challenges within the entity, but the management had redirected it to work towards the new mandate that had been set out by the Minister.
The IDT was reviewing and reforming its supply chain management (SCM) structure and had renewed its management development capacity over the 2018/19 financial year. The entity was, however, experiencing difficulty from clients who were not paying money due to it on time. The IDT had reduced its head count from 441 to 299, and was considering automating some of its processes to further cut costs related to salaries, as this component accounted for most of the expense budget.
Mr Pakade said the entity had achieved 40% of its key performance indicators (KPIs). The entity had awarded 15% of its projects to women, which was a 5% decline from the previous year, so it was working towards engaging more women contractors in its projects.
The IDT had completed 70% of the 2018/19 projects within its budget scope and set time frames, and this served as a sign of the improvement in the work ethic of the board. However, it had received a qualified audit opinion, which was accounted for by the opening balances of the previous financial year.
He promised the Committee that improvements within the entity were on their way, and the 2019/20 financial year would be a more fruitful one, with improved risk management. They would be working towards an unqualified audit opinion.
Mr Moitswadi Mofokeng, Chief Financial Officer (CFO): IDT, said the entity had spent R3.775 billion, compared to the R6.1 billion target, by 31 March 2019, the end of the financial year. 75% of the expenditure had gone to salaries. The entity had spent R261.337 million in operating expenditure, of which 73% was paid from the IDT’s own financial resources.
The IDT had R12.327 million in its possession going into the new financial year, and had acquired R123.2 million from trade and other receivables. However, the entity was still awaiting a sum of R62 million due from its clients. Although, it had received a qualified audit opinion, it had improved from a disclaimer in the previous financial year.
Mr Pakade closed the presentation by stating that the IDDT was going to adopt the new policy on employment equity, as there were employees who had just left work voluntarily, and the entity was looking to improve the working conditions. It was also working towards creating a balance between the number of men and the number of women it employed. Improvements in risk management had been put in place to ensure that clients paid it on time.
Mr Dangor was concerned that no more money was going to granted to the IDT by the Finance Minister, and encouraged the IDT to consider a different approach towards its financial affairs so as to always stay within budget.
The ITD had informed the Committee that clients had not paid money due to the entity, and he asked if this might be because it was not correctly invoicing its services to the clients. Did the IDT have any marketable scarce skills that it could use to its advantage?
Ms Boshoff asked why people were resigning while the report claimed that the IDT had a healthy working environment. What were its plans to add disabled, women and youth to its programmes?
Mr Landsman congratulated the IDT on its improvement from receiving a disclaimer audit opinion to a qualified audit opinion. He encouraged it to work towards helping the poorest of the poor while developing technology to retain relevancy in the 4th industrial revolution. He also congratulated the entity for managing to stay out of the negative light, and emphasised that it was doing well for a non-government funded entity.
The Chairperson requested clarity from the IDT on its recapitalisation agenda to the value of R1.2 billion. He asked if it had a presence in all nine provinces, and whether or not it had enough resources to empower its regional offices.
Mr Pakade the IDT was being re-evaluated to see whether or not it should be a Schedule 3 government component. It was exploring new clients in an attempt to spread its presence, and it would be putting more focus on its work in the districts.
Regarding consequence management, reports had been reviewed and action had been taken to recover money that was due to the entity. However, some of the debt was from earlier than 2012. It was going to review its cash flow constraints and reorganise them. There was an initiative under way to develop scarce skills within the entity.
The portfolio growth of the IDT showed that its major client was the education sector, and it was looking into restructuring its relationship with the sector so as to minimise risk.
Responding to the question about presence across all nine provinces, Mr Pakade said that the IDT had a poor presence in the Western Cape, the Free State, North West and Mpumalanga. However, projects were being put in place to improve its presence. Projects from 2014 were being resuscitated in those regions where there was a low presence. Its major challenge in Gauteng was that the region had strong alternatives to the IDT. A collaboration agreement had been signed with the Western Cape government to further improve its presence.
Experts had been commissioned to improve the number of youth and women contractors in order to improve on the current positive performance trajectory. Regarding any money that was still due to the entity, claims had been made and companies were being taken to court for not paying the IDT. In that regard, the entity had asked for help from the Treasury.
Mr Devan Pillay, Chief Director: Expanded Public Works Programme (EPWP), Department of Public Works and Infrastructure (DPWI), said that the IDT was embarking on projects to construct special schools and developing its special skills set, but would need oversight and support from professionals. However, with the current system, it took a candidate/professional about four years to register on the system.
Ms Nomvula Rakolote, IDT interim board member, said provinces had declared that they were not going to give the IDT work, and seemingly the successfully executed project in Mpumalanga was the last. The relationship between the IDT and the provinces could have been improved by the building of hubs, but this had been stopped. The hubs could have created a presence in the area and encouraged remote collaborative work between provinces. The IDT was working towards developing social infrastructure in an attempt to boost its competitive edge.
Mr Mofokeng told the Committee that the entity would be looking at improving three major tasks in the new financial year, those being:
- Project verification;
- Irregular expenditure reviews;
- System modifications.
The 25% gap for the current financial year was being reviewed in order to improve risk management. The entity had found that service providers had difficulties when completing the local content form.
He emphasised that sub-contracting was necessary, but the problem was that some entities were sub-contracting to related parties, and an inquiry had been made into the matter to ensure fairness.
The Chairperson asked for the rest of the IDT’s responses to the questions to be in written form.
The Deputy Minister stated that the challenges that were discussed in the meeting should be addressed and the solutions be designed in order to help the nation. There needed to be some changes within its SCM in order to tackle some challenges within the entity. She emphasised that transformation was required to increase the number of women, youth and the disabled.
She highlighted the fact that that the country was producing engineers at a ratio 1:2 600, as compared to industrialised countries producing engineers at 1:40. The country had to focus on the production of more engineers. There were also gender disparities within the discipline, with 21 000 registered positions of which 1 130 were female.
She ordered the IDT to review its registration and application processes, and implement changes where necessary. She appreciated the quality of the report presented by the IDT.
The meeting was adjourned.
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