Department of Sport, Arts and Culture Quarter performance; COVID-19 relief fund update

Meeting report

The Chairperson opened the virtual meeting, welcoming the Members, the Committee support staff and the Department delegation present at the meeting. She introduced the meeting agenda, and she handed over to the Department’s Director-General for the presentation.

The Department of Sports, Arts and Culture fourth quarter report

The report was presented by the Director-General, Mr Musa Mkhize, and the CFO, Ms Sibongile Mondile.

The Department planned to implement and achieve 33 performance targets during the fourth quarter reporting period. However, 70% (23/33) of the aforesaid targets were achieved and only 30% (10/33) were not achieved. The non-achieved targets were:

• Conducting of izimbizo;
• Implementation of governance tools for DAC public entities;
• Conducting of CEO’s forum;
• Creation of job opportunities through arts and culture projects;
• Provision of support to sector organisations;
• Provision of support to market access platforms;
• Provision of support to provincial community arts programmes;
• Provision of support to capacity building programmes;
• Completion of multi-year heritage infrastructure projects;
• Drafting of heritage policies.

 

Detailed reasons for deviation, including proposed corrective actions for targets that were not achieved, were provided in the presentation attached.

The fourth quarter performance of the 2019/20 financial year decreased by three percent compared to 2019/20 third-quarter performance.

The overall spending was at R4.356 billion (95%) against the final appropriation of R4.6 billion as of 31 March 2020. This was lower than the spending of the prior year, where an expenditure of R4.238 billion had been incurred. There was hence an increase of 2.8% in expenditure and this was mainly due to infrastructure expenditure resulting in the shifting of funds for transfers to entities, primarily the KwaZulu-Natal Museum.

Compensation of Employees

The spending was at R249.0 million (93%) against the final appropriation of R267.5 million. The expenditure, in comparison to the prior financial year the same period being at R239.0 million, had increased by 4.2% due to several filled positions.

Goods and Services

The spending was at R436.0 million (91%) against the final appropriation of R480.2 million.  Compared to the spending of the prior year, amounting to R375.6 million, there was an increase of 16.1% and that was due to the inaugural year of the Film Summit, the implementation of Cultural and Creative Industries Federation of South Africa (CCIFSA)  regional meetings in nine provinces and the Presidential inauguration.

Provinces and Municipalities

An expenditure of R1.5 billion (100%) was incurred against a final appropriation of R1.5 billion, relating to transfers of Conditional Grant on Community Libraries. Compared to the same period in the prior financial year, an amount of R1.4 billion was incurred, resulting in an increase of 5.4% due to a nominal growth in the appropriated budget

See the presentation for more detailed information.

Sports and Recreation of South Africa (SRSA) fourth quarter report

The Department planned to implement and achieve 27 performance targets during the third-quarter reporting period. However, 89% (24/27) of the aforesaid targets were achieved and 11% (3/27) were not achieved.  Below are details of the targets that were not achieved in the fourth quarter.

Poor performance related to:

• Supporting athletes through the Ministerial Sports Bursary Programme;
• Supporting athletes through scientific support programmes;
• Sport and recreation bodies receiving financial and non-financial support to assist them in meeting their transformation targets.

A high number of athletes were supported in the previous quarters. As such, the annual target had been met despite the fourth quarter target not been met. The overall spending was at R 1.1 billion, which represented 97.6% of the total budget allocation out of a total budget of R1.2 billion. Due to NMOG and high resignations rate, the Department saw just over 1.1% decline in the total expenditure by year end, compared to FY2018/19.

Spending on compensation of employees (CoE) was at 87.7%, totalling R 98.1 million out of a budget of R111.8 million. The expenditure was low due to the vacancy rate in the Department. Expenditure dropped by 2.2% compared to the 89.9% spent in 2018/19. This was due to a high volume of resignations and transfers that the Department had in the current year.

Expenditure on goods and services was at 95%, totalling R 167.2 million out of a budget of R176 million. The Department saw a drop of about 2.9% in the expenditure, compared to 2018/19. The drop was due to an advance payment made to DIRCO during 2019/20 but payment to beneficiary only effected in April 2020. 

Payment for capital assets expenditure was at 99.9%, totalling R 2.9 million out of a budget of R2.9 million. Expenditure trends were in line with that of the previous financial year.

See the presentation attached for more detailed information

Department of Sports, Arts and Culture first quarter performance report

The Department planned to implement and achieve 21 performance targets during the first quarter reporting period. However, 29% (6/21) of the aforesaid targets were achieved and 71% (15/21) were not achieved. The non-achieved targets were:

• Provision of support to athletes by the sports academies;
• Implementation of sport and recreation promotion campaigns and events;
• Active participation of people in sport and recreation campaigns and events per year;
• Active participation of people in organised sport and active recreation events;
• Participation of learners in the national school sports championships per year;
• Provision of technical and management support during construction to municipalities; Provision of financial support to local and international market access platforms.
• Coordination of international engagements;
• Conducting of community conversations/dialogues to foster social interaction;
• Conducting advocacy platforms on social cohesion by social cohesion advocates;
• Development of 1 monitoring report on the implementation of the Social Cohesion Compact;
• Conducting public awareness activations on the “I am the Flag” Campaign;
• Provision of support to projects in the creative industry through the Mzansi Golden Economic programme;
• Submission of a feasibility study report on the Monumental flag to the DG;
• Conducting of workshops to advance knowledge on National Symbols, including the flag.

 

The overall spending was at R1.1 billion (22%) against the adjusted appropriation of R4.7 billion as of 30 June 2020. Compared to the spending of the prior year, an expenditure of R1.2 billion was incurred. There was a decrease of 8.6% in expenditure and it was mainly attributed to the cancellation of departmental events scheduled to take place in the first quarter as a result of the declaration of national lockdown.

 

Compensation of employees

The spending on CoE was at R82.9 million (21%) against the Adjusted Appropriation of R397.8 million. The expenditure, in comparison to the prior financial year over the same period, was at about R88 million and had decreased by 5.8% as a result of the merge of the former Departments; there was now one Minister, Deputy Minister and DG.

Goods and Services

The spending was at R100.4 million (21%) against the adjusted appropriation of R482.1million.  Compared to the spending of the prior year, which amounted to R133.1 million, there was a decrease of 24.6% and it was due to the cancellation of departmental events scheduled to take place in the first quarter, as a result of the declaration of national Covid-19 lockdown.

 

Provinces and Municipalities

An expenditure of R392.2 million (25%) was incurred against an adjusted appropriation of R1.5 billion relating to transfers of Community Libraries and Mass Participation Conditional Grants. Compared to the same period in the prior financial year, an amount of R421.9 million incurred, resulting in a decline of 7.0% due to transfers to provinces made on business plans as submitted by provinces.

See presentation for more detailed information

Update of the COVID-19 relief fund

On the first wave of COVID-19 relief fund applications, the Department had received 5 786 applications, including 500 for sport. A total of 3 608 payments had been made so far. There were 472 duplications and disqualified applications. The total rand value that had been paid was R68 434 741. The lessons learned; the experiences and challenges included the following:

• Provision of required support documents: given the lockdown: many applicants were unable to fulfil the requirements of the criteria of the application call, as they required paperwork confirmed by banks and employers, and technical support at internet cafés, etc.
• Demographics: issues of language, access and urgency for applicants, including geographic issues of urban, peri-urban and rural access were highlighted as challenges, by the sector.
• Differentiation of applications: applications represented both formal/professional and informal/amateur practitioners. Both should have been supported through parallel but different application processes and criteria.
• Amount of funding: the R20 000 Relief Fund ceiling was not widely communicated to applicants in advance. This meant dealing with extremely diverse grant amount requests.
• The readiness of the IT system: the judging process ran parallel to the website as technical issues were being resolved, owing to the need to act with speed. Time spent in advance on training, and dealing with malfunctions, would have been more effective, and ultimately time-saving.
• Data capturing: the process of adjudicating was extremely labour intensive, time consuming and unwieldy.
• Improved collaboration with the sector and other stakeholders: to assist in processing applications, providing access to potential applicants, accessing remote and rural areas, exploring measures to prevent duplication, communication.

• Opportunistic applicants: in some cases, applicants demonstrated opportunistic behaviour and potentially fraudulent behaviour.
• The process between verification and payment: There was a missing reconciliation link between downloading, verification and what was sent for payment. There were now three officials reconciling approved applications received, what was sent to agencies and what came back from agencies.
• Adjudication: Remaining applications would be finalised by 26 August 2020

The second wave for the COVID-19 relief fund

During the Special Adjustment Budget, R250 million was allocated for COVID-19 Relief. Out of this, R177 million was allocated for the National Department and R68m was made up of R58m for Provinces’ Relief funding, and R10m for libraries’ health and safety protocols. The balance of R5m was for the acquisition of PPE and decontamination services for the five DSAC sites/buildings. Out of the R58m, R50m had already been transferred to provinces for relief. Out of the funds at DSAC, R68.4m had been spent, and there were commitments of R31.6m for outstanding beneficiaries. This resulted in an available budget of R77m, of which R11.5m was ring-fenced for a contribution towards partnership with DSBD, which was part of the second wave relief funding; the total number of beneficiaries in the second wave was anticipated to be a total of 11 666 athletes and art practitioners. 

The Solidarity Fund Status

Solidarity Fund had made available 10 000 food or cash vouchers of R700.00 to the Department, amounting to R7m. The Department would, together with provinces, develop a list of beneficiaries who would receive vouchers. Each province would receive 1 000 vouchers. Beneficiaries would be identified as follows:

• 50% urban and  50% rural areas;
• The vouchers would be made available to the athletes, artist, freelancers, sport and art legends, missing middle, etc.
• The vouchers would be distributed by channels identified by the Solidarity Fund.
• Those that are receiving social grants and UIF will be excluded from benefiting

The database would be screened against through the Department of Social Development to ensure that beneficiaries were not recipients of the SASSA grant. Once-off payments were to selected beneficiaries would be done through channels identified by the Solidarity Fund.

See the presentation for more detailed information

Discussion

Mr T Mhlongo (DA) asked if it was legislated for former Ministers and Deputy Ministers to get gratuity.

He asked why documents for the National Arts Council (NAC) and SARA were handed to the Members late. Is it because they are trying to undermine the Committee and the authority of the Chairperson?

He then asked if SARA took the Department to the Public Protector or the court for maladministration and other complaints. Has the Department implemented the outcome from the Public Protector since 2017?

He asked why SARA was not receiving its operational expenses or budget.

He wanted to know why other entities were receiving funds from the Department, yet SARA was not.

He noted that out of R150 million the Department had used R86 million, but he did not see the balance in the books. Why is that?

Ms V Malomane (ANC) congratulated the Department, especially the sports and recreation side, for their 100% target achievement. But she wanted to understand if the targets were correct or they underestimated their targets so that they can overachieve.

She noted that according to the 2017/18 APP, the Department had a quarterly target of attracting at least 5 000 participants for the Unite campaign. In 2019/20, the quarterly target was lowered to 1 000. Why was this?

She asked what the status of the 10 outdoor play parks constructed. Are they complete and operational and where are they situated?

On the Department’s support to the municipality, she noted that the Department should come with information to show what it was doing to support the municipality so that the Members could be able to do oversight in the municipalities near where they were situated.

Mr W Faber (DA) wanted to know how much gratuity was paid to the former Minister and Deputy Minister. For what reasons were they paid?

He asked if there were any investigations on the procurement of COVID-19 funding. Are there people who have received tenders irregularly?

He asked what success could be proved by the LoveLife. He did not see anything happening with LoveLife throughout the past years. There was money that the government allocated for operations. Could the money rather be redistributed to some of the sporting considerations which are in trouble due to the COVID-19 pandemic?

Mr B Madlingozi (EFF) wanted to know at what percentage was the budget cut for the events that were under the Mzansi Golden Economy.

He pointed out that September was a month for heritage and Steve Biko was murdered on the 12th of September 1975. He wanted to know if the road that the murderous police took while they were killing Steve Biko was known, and what is its name and what the Department was going to do about it.

Mr M Seabi (ANC) asked about the merger – if the Department was done with the organogram. Have all the posts been filled? If not, how many are left?

He recounted that in the Department’s last report the CFO of the Department indicated that they had now saved on finances because there were no longer two Ministers, two Deputy Ministers and two DGs, and yet the Department had never had two Ministers and two Deputy Ministers. Mr Seabi asked for clarity on that.

The Department supported only two out of 13 sportings for transformation. He wanted to know why that was.

He pointed out that on slide 61 the Department seemed to be presenting its financials on an adjusted budget instead of the main appropriation. He asked for clarity on that.

He asked how the government handled its procurement of COVID-19 consumables. Are there any possible challenges that they might have experienced?

Lastly, he wanted to know the challenges that were faced by LoveLife.

Ms V Van Dyk (DA) said that she saw that R50 million would be distributed among the provinces. She wanted to know if that R50 million was additional to what was presented to the Members in the previous Committee meetings. She asked if the Members could get a list or a breakdown per province and how the money was distributed or spent within the provinces.

She noted that few people received the R53 000. She asked the Department to provide a breakdown of what the company was and what it stood for.

She expressed her concern about the partnership with the Department of Small Business Development. It seemed that the funding was ring-fenced before a memorandum of agreement was determined and it was not discussed before with the Committee. She wanted to know if the Committee receive a copy of the Culture and Creative Industries Federation of South Africa’s problem statement.

Responses

The CFO indicated that the balance was R67 million. He said that the budget was not presented at a level of economic facilitation. He requested that he present the budget and expenditure for COVID-19 as a report to the Committee, where the spending could be outlined according to the allocations.

He explained that the budget for COVID-19, especially the one for the beneficiaries, was transferred to NAC, to Business Arts South Africa, to Sports Trust as well as the National Film and Video Foundation. These entities were the ones paying the beneficiaries on the Department’s behalf.

The procurement related to COVID-19 referred to when the Department was buying PPE for employees and the decontamination of buildings when there were incidents of infections. There was no tender issued by the Department but it was rather a quotation obtained and through the National Treasury transversal tenders.

On the issue of the merger, he explained that what the Department did was to set up a start-up organogram so that the employees of both former Sports and Recreation and Arts could be included in the structure so that they could perform work as from 01 April 2020. The start-up structure was approved by Public Service and Administration Minister. In that approval, it was also expressed that the Department should now embark on an organisational design which would show what the Department would look like and how many people it would have to perform its mandate. That process was ongoing and would be done with expert help from the Public Service and Administration. Because of the current start-up structure, the delegation could not reliably indicate the current vacancies.

Concerning the issue of savings, he said that if one compared to the previous financial year, there would be a need to combine the trial balance and general ledger of the former two departments so as to see the combined expenditure and it compare to the expenditure of the new Department, which was a new establishment.

The CFO, on the beneficiaries receiving R53 000, he said that it was because there was a category called the ‘digital allocation’ in the COVID-19 relief process. The digital allocation involved a process were applicants applied to do live streaming events. The Department was also empowering other artists by allowing them to perform on their live streaming events.

The CFO confirmed that the gratuity was indeed legislated. This was based on the gazette of 12 November 2008 which allowed servants, after five years of service, to be paid a once-off gratuity. The gratuity was four months’ pensionable salary for every five years of service. The payments for the Minister was R1 759 996 and for the Deputy Minister it was R1 848 826, before tax.

On the outdoor games, this was a programme that had started as early as 2014. From 2014 to 2018, 41 gyms were constructed and they had fortified their information in such a way that it would give a clear indication of where these were situated, including the budget that was spent. From 2019 to 2021, the Department entered into a new contract. It had already achieved the target relating to 2019/20 and 10 gyms were constructed. The list was also available; those gyms were functional.

When the Department delegation went to municipalities, it with a spreadsheet where year-by-year every project that had been allocated and what had been the progress on sight. The Department also improved by ensuring that it even included the districts where these projects were situated so that they were able to account consistently with the districts.

DDG Khumalo, DAC, on the Mzansi Golden Economy, said that the Department had to reprioritise the budget as had been reported. The same thing applied to the output indicator, i.e. the number of projects in the creative industry that were supported through the Mzansi Golden Economy where they had to reduce the annual target from 88 to 12. The delegation could provide further details in terms of content as had been asked by the Members.

Concerning the partnership with the Department of Small Businesses and Development, he said that it was a response to the plea from the Cultural Creative Industry Federation of South Africa. This joint funding was managed by the two departments. There was no transfer to this particular aspect.

Mr Irwin Langeveld, DAC, indicated that the Department had started the Steve Biko Foundation in King Williams Town and at the time the Department spent over R100 million to develop the centre, particularly to be able to implement programmes, to preserve and promote the legacy of Steve Biko, including the commemoration of his murder.

On the road which was used to transport Steve Biko from the Eastern Cape to Pretoria, he said that the Department was in the process of researching to map out the road that was used comprising of all the routes that were used.

The DG, on why the documents were late, he explained that the Department did commit to submitting the document and it did submit the documents on previous Saturday to the Secretary and they were hoping that they were distributed. However, if they were late as per a particular due date they apologised for the inconvenience. 

Concerning SARA, he indicated that the Department believed that it had provided details on the funding it was providing to SARA. SARA had indeed taken the Department to the Public Protector (PP) and the Minister wrote in a letter that the matter of SARA was still being handled by the PP. The Minister had provided a report to the PP on the matters raised by SARA and that matter was awaiting the PP. On whether the Department had been taken to court, he indicated that he was not aware of that as the Department had not yet been served with court papers.

He said that when he came to the Department, he found that there was a matter of the Public Protector and SARA that was dragging and at the time the Department had the intention of taking this matter for review. The Department subsequently decided to engage with both parties. In its engagements with both parties, the Department decided that rather than going to court for all the reviews, it had to look at the value of the project that SARA provided and whether the issue of its funding warranted taking it to the court rather than providing necessary support. As a consequence, the Department settled the matter with the parties. In that settlement, the issues included the matters of the academy. They allowed one of the findings by the Public Protector and they concluded that the DBSA (Development Bank of South Africa) would be responsible for implementing this project and that was honoured, and they were currently working with DBSA of which they were funding an amount of R23 million.

He said that all the funding that the Department issues did cover what it regarded as 10% that it must use for its operational and administrative cost. So when they fund SARA, they separate those costs from the implementation of the project like they do with all other projects.

Concerning whether the Department had honoured the finding of the Public Protector, he said that it believed it had and one of them was that when SARA request for money, the Department provided the money needed.

On how the R23 million was determined before the MOI was signed, he explained that it came about because the Department of Small Business Development already had this allocation that it would normally provide to the cooperatives in the field of craft or visual. The Department agreed that it would work on a matching basis so that it would cover as many people as possible both from the perspective of individuals as well as that of the cooperatives. So the budget of the Department of Small Business Development was R11.5 million and the Department of Sports, Arts and Culture was to match it with R11.5 million. This was how the R23 million was determined.

Follow-up Questions

Mr Mhlongo said that he thought it was deliberate that the Department approved quarter one to quarter four at the same time but on the finances of COVID-19 it had said that it was going to do them separately. He wanted to know what exactly that entailed because it could not approve its finances per quarter and COVID-19 money was not there.

He noted that the outstanding applications were 67 for adjudication and 40 for sport. He asked where the budget on the Department’s finances was to say that it had allocated certain money for the adjudicating process and sporting. He did not see it on its books.

He asked if SARA got any operational funding to date, in FY2019/20.

Lastly, he noted that there was a channel that the Department was going to use for the vouchers for the artists and other sportsmen. What channel is this?

Regarding the IT system, he asked how much the Department had used to get a good IT system for the application work and everything that entailed applications.

Responses

The DG indicated that the budget for SARA under the year 2019/20 under the funding of International relations SARA was provided with around R406 928.61 as a first trench because they were allocated around R452 000. The second project funded for SARA in 2019/20 is the one that is called Life Events Technical Production; they were granted around R1 392 000.

The CFO explained that although the Committee wanted to see what the entities had spent of the COVID-19 funds, the Department had a separate report that it prepared containing information from the public entities to show how much they spent and paid towards COVID-19 beneficiaries. This was the reason why the Department was saying that it would be able to present the report separately.

On the issue of solidarity fund vouchers, she indicated that once the Department had collected the beneficiary list, it would then send it to solidarity and solidarity would take that list and vet through the SASSA system to find out if any of the beneficiaries were currently receiving any grant. Once the Solidarity was verified through the Standard Bank the Department would then be paying out the R700 vouchers. The vouchers were available to athletes and artists; the age group for eligibility was from 14 to 59 – people who had been in the industry for at least three years.

On the issue of LoveLife, the Department indicated that for this financial year it had not yet paid LoveLife because the organisation’s business plan did not have content – it was not addressing any of the programme’s objectives and so the Department sent it back. The organisation had since submitted a solid business plan in the previous week, and the Department was in the process of finalising the service level agreement.

The Department said that it would provide the Committee with other detailed information on some of the questions.

The Chairperson thanked the Members, the support staff and the Department for attending the meeting.

The meeting was adjourned.