NDA 2020/21 Annual Performance Plan; AGSA input; with Minister

Meeting report

AGSA comments on DSD and NDA Annual Performance Plan
Mr Faizel Jogee, AGSA Senior Manager, stated a review of the final draft 2020/21 Annual Performance Plan (APP) for the Department of Social Development (DSD) was not performed as the APP was not finalised and submitted by 31 January 2020 deadline. Outcome 3 of the APP to improve customer experience did not include the key risk and mitigating factors as required. DSD needs to focus on oversight and monitoring as it is at a level of concern where the accounting officer needs to urgently intervene to prevent audit failure. Vacancies in key posts still exist including Director-General and Head of Supply Chain Management.

Mr Jogee said that the NDA's compliance management, procurement, contract management, performance management and financial management are also at a level of concern where the accounting officer needs to urgently intervene to prevent audit failure. In-year changes to the NDA APP for the previous year were not approved by the accounting authority and executive authority. NDA does not have an adequate system for the facilitation of effective performance monitoring. Supply Chain Management (SCM) procurement processes should be done timeously to prevent extension of contracts. There was inadequate monitoring of quarterly reports submitted to National Treasury, of investigations and consequence management on prior irregular expenditure. The previous NDA board term expired on 31 March 2020.

Discussion
Ms L Arries (EFF) asked why the deadline was not met by DSD for the submission of the APP final draft to AGSA. DSD has regressed in its oversight and monitoring; what interventions have been implemented? AGSA reported that there has been inadequate record keeping of beneficiaries receiving social grants. What system is in place to ensure that the right people get their social grants? The vacancy of the Director General has been filled; when will the position of Head of Supply Chain be filled?

What are the punitive measures for senior officials who failed to reconcile SASSA and South African Post Office (SAPO) for double payment of grants? What measures are in place to fast track the cases under investigation, as well as consequence management measures? Does the NDA have an asset management register in place? How far are the investigations and consequence management for the prior irregular expenditure?

Ms A Abrahams (DA) asked AGSA if DSD and its entities are ready to weather the COVID-19 crisis. What were the Auditor-General recommendations to the Department on COVID-19?

Ms N Mvana (ANC) ask why DSD did not meet the deadline for the submission of the APP final draft.

Ms D Ngwenya (EFF) said the Auditor-General's findings are similar to the previous year which is concerning. Little change has been made by the NDA in terms of non-compliance and consequence management. What is the consequence management that will ensure NDA will comply with what is expected? The regression of DSD oversight and monitoring is concerning; hence the same problems are faced year after year. What needs to be done to reverse this regression? When will the NDA board be appointed?

Mr D Stock (ANC) asked what practical measures the Auditor-General believes should be put in place to ensure that SASSA can execute the leased accommodation process that is becoming a headache? What factors contribute to NDA inadequately submitting quarterly reports to National Treasury and the inadequate investigations of prior irregular expenditure? What are the implications of this and how will it be remedied?

Ms M Gillion (ANC, Western Cape) noted the media reports that some SASSA beneficiaries received a double payment in May whereas some received no payment. How will this be rectified and what will be done for the people who did not receive a SASSA payout?

Minister’s Response
Ms Lindiwe Zulu, Minister of Social Development, replied that there was a technical glitch that resulted in SASSA social grant payment errors, especially in the Western Cape and KwaZulu Natal. SASSA and the Minister were made aware of the glitch the day before the 4 May payout. She has a preliminary report on the glitch and is awaiting the final report to explain why the glitch occurred. The grant payouts are not yet complete for this month. SASSA is ensuring that social distancing measures are being followed for employees and beneficiaries queuing for their payout. There are serious discussions on what will be done differently in the future to ensure that South Africans are given dignity and spend less time and resources collecting their grants. These are long term goals which SASSA is looking into. COVID-19 has pushed the Department and SASSA into speeding up these processes. Minister Zulu would get back to the Committees on the reason the Annual Performance Plan was not submitted to AGSA in time as the final draft was worked on well before the deadline. The Minister excused herself to attend another meeting.

AGSA Response
Mr Lourens van Vuuren, AGSA Business Executive, replied that NDA board term had expired on 31 March 2020. AGSA raised this from a good governance point of view as well as remaining compliant with the NDA Act. The Auditor-General will be doing a special audit on the additional grants created for COVID-19 relief. AGSA will engage with SASSA on proactive controls that they believe should be in place.

Mr Jogee replied that the APP was supposed to be submitted by the 31 January 2020. Towards the end of February, DSD advised that it was still in the process of developing the APP. However, by then, it had passed the allocated time set aside for AGSA to review the APP. There were no reasons or explanation given by DSD for why it was late.

Follow-up questions and comments
Ms B Masango (DA) said that there is a sense from DSD that the AGSA review of the final draft of the APP is optional, why is this the case? Why is it not mandatory as the findings from these reviews are critical? After the reviews were done, it seems as if the items that needed correcting were indeed corrected. Were those corrections done in line with the way the Auditor-General wanted them to be done?

Mr M Bara (DA, Gauteng) said some of the AGSA findings are recurring issues. To what extent can AGSA intervene? He noted that on 4 and 5 May 2020, grant beneficiaries did not receive their grants and, as a result, slept at the pay-stations waiting to receive their grants. This has been raised before but unfortunately nothing has been done. How is AGSA dealing with DSD's failure to address recurring problems?

Mr E Nchabeleng (ANC, Limpopo) said that AGSA writes management letters to Departments after audits. What goes into these management letters and who gets copied into the management letters? Concerns are raised in the management letters but they do not reach the Minister's desk.

National Development Agency 2020/21 Annual Performance Plan
Ms Thamo Mzobe, NDA CEO, stated that in the fight against poverty there are four different types of civil society organisations (CSOs) with the common goal of promoting public goods and/or services to varying degrees. However, over 60% of the total registered NPOs are non-compliant. In the past 10 to 15 years, the civil society sector has deteriorated in its effectiveness to support development discourse in South Africa. Rand value of resources raised to fund CSO development interventions was R55m for 2019/20 estimated performance and the 2020/21 estimated performance is R100m.

The number of work opportunities created as a result of CSOs development interventions in 2020/21 is 450 job opportunities. The number of CSOs capacitated in organisational management in 2019/20 was 5500. This is expected to decrease to 3 400 in 2020/21.

Ms Karen Muthen, NDA CFO, presented the Annual Performance Plan quarterly targets and budget and the implications of COVID-9 on the APP. The presentation outlined that NDA volunteer support would support the DSD community programmes for food distribution from Community Nutritional Development Centres (CNDC) to vulnerable households. The NDA volunteer stipends will cost R10.8 million for six months.

Statistics indicate an increase in gender based violence and femicide over the lockdown period. There is an increase in grant funding to CSOs involved in the GBV sector in 2020/21 to R2 million. In response to COVID-19, NDA is required to implement health and safety measures for staff during the pandemic. This includes office deep cleaning, screening of employees, PPE, sanitizers and surface disinfectants to minimise risk of infection to staff during phased return to work. The budget required is R5 million for 2020/21. Research and monitoring and evaluation costs are R2.8 million.

A significant number of KPIs will be reviewed as a result of the budget reprioritisation due to Covid-19 such as for CSO capacity building and research. Some service delivery based activities such as grant funding to CSOs will be exponentially increased to broaden Covid-19 support on the ground. NDA will review the APP to ensure that it is COVID-19 responsive. The APP will be re-tabled and presented to the Committees.

Discussion
Ms Abrahams asked why NDA did not request an APP review to be conducted by AGSA. What is the CEO’s opinion on the relevance of the Strategic Plan and APP going forward as the plans will surely change due to COVID-19? What is NDA doing to support non government organisations (NGOs) that are facing closure due to COVID-19? The main mission of NDA is to reduce poverty and many of these organisations are partners in reducing poverty. For the Criminal Assets Recovery Account (CARA) grant for GBV, how many applications were received and which organisations have been approved for this grant?

Ms Masango referred to slide 8 which states that civil society is fragmented and poverty eradication policies are not responsive to poverty reduction. What are these insights based on? She said that these insights do seem true. A fragmented civil society falls within the core mandate of NDA. How is NDA trying to ensure that these insights are turned around to the positive? She asked for clarity on the new indicators.

Ms A Maleka (ANC, Mpumalanga) noted that in 2019/20 it reported that 5 500 CSOs partnered with NDA in the fight against poverty. In 2020/21 there are 3 400. What is the reason for this decline? The NDA planned to create 450 work opportunities through CSO development. How did NDA come up with the target of 450?

Mr Stock asked what the factors are that cause a delay in procurement supply chain processes. What is the plan to improve this moving forward?

Ms Ngwenya said that the Portfolio Committee has previously expressed concern about the visibility of NDA especially in rural and poor communities. The NDA experienced challenges with NGOs and CSOs that were non-compliant. Are these organisations working during the COVID-19 pandemic? If so, were regulations put in place to ensure compliance by these organisations? Are there monitoring tools to ensure that funds from the Solidarity Fund are spent correctly? Does NDA have a plan to continue working with the volunteers after the six months to ensure that they have a way to generate an income?

Ms M Suckers (ACDP) asked for the current NDA vacancies. She noted the Head of Procurement position is vacant. What is the status of the new board appointments? She also noted that the Portfolio Committee raised concern about NDA brand awareness last year. She requested an indication of the locations of CSOs involved with food distribution. The Committee had received a list of CSOs that are being guided by NDA. However, it has been difficult to do oversight as the Committee needs to know where they operate in the different provinces. Monitoring and evaluation of funded CSOs by NDA is a component which both the Committee and AGSA have stressed. What is NDA's internal capacity to ensure they improve on that?

Ms Arries said that the Community and Nutrition and Development Centres (CNDCs) are one of the few projects that does have a developmental programme or exit plan for people. People have been a part of this programme since the inception of the programme and it is really just a glorified soup kitchen. The distribution of food parcels has been a huge burden on DSD. What is the plan to help people exit from this project by giving them the necessary skills? Ms Arries asked that the Committee be provided with a list of projects showing how many people have exited the CNDCs. She asked which are really CNDCs and which are just soup kitchens. A large percentage of money is spent on employee compensation, can that money not rather be redirected to developmental programmes? Considering that CNDC employees are being given a stipend, can they be absorbed into the COVID-19 volunteers? On the WhatsApp line where people apply for the R350 grant, there is no acknowledgement of the application which leaves people uncertain.

Ms D Christians (DA, Northern Cape) asked why the budget for the capacitation of CSOs has decreased. Based on the 2018/19 audit by AGSA, what progress has DSD made on the findings and recommendations? Why does NDA budget for monitoring and evaluation when DSD has a monitoring and evaluation component?

Ms N Ndongeni (ANC, Eastern Cape) asked how NDA came up with the target of 450 job opportunities created through CSO development interventions.

NDA Response
Ms Mzobe replied that resource mobilisation and fund-raising had not been at the level where NDA can conduit those funds. The mandate does allow NDA to conduit funds from their own funds from their allocation per annum. The NDA asks Members to help obtain more resources so NDA may comply as it is channeling funds for things that would not ordinarily be in their budget.

In 2019, DSD requested NDA to implement the CARA programme. No Memorandum of Understanding (MOU) was signed. There was an appointment letter. However, there was no transfer of funds for NDA to start implementing the programme. The NDA published an advertorial for which they received thousands of responses. The Interim Steering Committee which includes the NDA, the Department of Women, the Presidency and other departments, shortlisted 169 CSOs. However, the lockdown began before there was verification on the ground to confirm what has been submitted,. The process began in January and was disrupted by the pandemic. None have been funded as yet. The transfer from the Department was only received a week ago. The verification has still not taken place.

The board has been extended for six months and the recruitment of the new board is currently in the process. The closing date was the end of March. On the slowness of SCM procurement, the CFO was appointed in December 2019 and has come up with a plan on how to deal with these matters. The NDA will provide the Committee in writing with a list of the volunteers, CNDCs and NGOs to which they are linked. The CNDCs and soup kitchens are there for people to receive a meal. The volunteers take the food parcels to identified beneficiaries and households that were previously dependent on the CNDCs.

The new indicators were created with guidance from the internal audit and AGSA. When transferring them to the new APP, we had to label it as a new indicator as they were crafted differently.

Ms Muthen replied that the slow SCM process was mostly to do with the leasing of office accommodation across all provinces. The NDA struggled to get responses despite advertising, that were responsive to the NDA requirements. In a number of the areas, there were high security risks. The tender process has to then be started again. To fix this, NDA is trying to reduce their fixed costs in terms of the operating leases. A lot of the leases will not be renewed and NDA will partner with stakeholders and CSOs in finding accommodation for staff. In provincial offices there are few staff. Irregular expenditure will be cut once they have exited these leases as this has contributed to the NDA's historical irregular expenditure. That was caused by people who have since left NDA. Much of the procurement slowness will be addressed as tenders will not be advertised in these areas.

NDA has complied with the Treasury Instruction Note 8 issued March 2020 that relaxes supply chain management (SCM) requirements to speed up procurement of goods to control the spread of the virus. PPE for the volunteer programme was procured from the correct suppliers.

Due to time constraints, NDA was unable to sufficiently respond to the questions. It was agreed that NDA will respond to the remaining questions in writing.

Meeting adjourned.