17 Jun 2020
04 Jun 2020
SANParks presented a report to the Committee in a virtual meeting on the performance of its national parks during the past two quarters, and revealed that the COVID-19 lockdown had had a major impact on its revenue and resulted in the highest deficit in its history. The closure of tourism activities -- its main source of income – had been a huge challenge, as 80% of its revenue was dependent on tourism. Targets and budgets had had to be revised and adjusted to ensure that minimum legal obligations were maintained, and that the organisation was able to continue operations.
The Committee was concerned about the over-expenditure of the budget in the context of the lockdown, and the effect on infrastructure maintenance in the parks. Members asked how this was being addressed and where the money would come from. They were told the government and the Department of Environment, Forestry and Fisheries had been providing major support, to assist SANParks to carry out its obligations during this difficult time.
Regular engagement between the chief financial officers of the Department and SANParks on how the money flowed between these two entities would ensure a better outcome for both entities, and avoid audit risks that could add to the financial strain resulting from the Covid-19 situation.
The national lockdown and closure of South Africa’s borders had brought some relief from rhino and elephant poaching in the national parks, as there had been a direct correlation between the decrease and the closing of borders. Corrective measures to deal with this issue included improved radio communication, off-road mobility, air support, and partnering with rangers to develop an infrastructure for planes to be placed further north in the KNP, where there had been an increase in poaching.
SANParks was hopeful that it would be able to generate sufficient revenue, as tourism activities were slowly increasing with the easing of lockdown restrictions. It had implemented various measures to reduce its expenditure and ensure that operations could continue, so that targets would be achieved by the new financial year.
The Chairperson was not present to commence the virtual meeting due to technical difficulties. Deputy Minister Maggie Sotyu asked Mr Shonisani Munzhedzi, Deputy Director-General: Biodiversity and Conservation, Department of Environment, Forestry and Fisheries (DEFF) to take the Committee through the presentation.
Mr Munzhedzi said that the presentation by South African National Parks (SANParks) would be led by the Chairperson of the Board, Ms Joanne Yawitch, who would work with the Chief Executive Officer (CEO), Mr Fundisile Mketeni. The focus would be on the outstanding matters of quarter four that had not been raised at the previous sitting, as well as the first quarter performance and financials. The second part would focus on fisheries and related matters, as requested by the Committee.
SANParks 4th Quarter Performance Report for 2019/20
Ms Yawitch said that the six-month period of the fourth and first quarter under review had been one of the most challenging times in the history of SANParks. The impact of COVID-19 had been extremely challenging for the organisation to manage, as 80% of its revenue was dependent on tourism. The impact of the lockdown had been felt before South Africa’s official lockdown in March due to the international lockdowns starting with China, and followed by other countries. The issue of SANParks’ finances had been challenging over the last six months, as the organisation had been forced to operate on an essential service basis. This would be reflected in Mr Mketeni’s presentation.
Ms Yawitch thanked the Minister, the Deputy Minister and the Department for the provisions made to support SANParks over this period. The reprioritisation in the DEFF had enabled SANParks to carry out its function and to continue paying staff.
Mr Mketeni focused on the five goals of the SANParks and its performance against objectives in the fourth quarter. COVID-19 was identified as one of the main reasons for objectives not being achieved. A two percent reduction in annual water consumption was not achieved in the Kruger National Park (KNP) due to old pipelines. The corrective action undertaken was to review the water tariffs, to reduce irrigation hours, and to explore the provision of raw water for irrigation, rather than using purified water. Water issues were being reviewed in the infrastructure plan that had been submitted by SANParks, and would be further explored if funding was provided by Treasury.
The rhino plan was not fully implemented. One of the challenges was a report on socio-ecological research that was dependent on key staff members who were committed in other areas. This area would be accelerated in the new financial year. There had been a huge reduction in rhino poaching due to the persistence and commitment of the rangers with the support of dogs, and air and ground mobility. The challenge was that very little was known about poaching syndicates and the forces at play within and beyond the borders. All intelligence and enforcement structures were needed to assist in this matter. Funding was the main reason for the issue on elephants still being in progress.
The global economic meltdown and fuel price had affected visitors to parks, as people could not afford to travel. The initial target was to get seven million tourists to visit the national parks, but just above six million tourists had been achieved. The lockdown had affected the plans to implement proper marketing and the provision of special packages to meet targets in this area. Covid-19 had also impacted targets for accommodation occupancy towards the end of the financial year.
National SANParks week was usually in September, but would be pushed back to November to allow South Africans free access to national parks.
More than R100 million had been fund-raised by donations from various partners.
There was a need to improve the number of employees from designated groups at management level to retain staff and to recruit according to the employment equity (EE) plan. The recruitment of a non-female manager was central to the chief operating officer’s (COO’s), office to improve this area. The percentage of people with disabilities had not been achieved due to new requirements. People were required to provide a medical certificate as confirmation of their disability. Information sessions were rolled out for staff to obtain this certificate and to encourage them to declare, as many were reluctant to declare a disability.
The Auditor-General (AG) was finalising the audit of SANParks.
The provision and adjudication of a service provider for the recapitalisation of infrastructure had been delayed due to the Covid-19. A service provider was now in place to develop this system so that there was greater awareness about key issues in relation to infrastructure.
In terms of the overall implementation of targets, 68 percent had been achieved, 15 percent was a work in progress, and 17 percent was not achieved.
Mr Dumisani Dlamini, CFO: SANParks, presented on the financial performance. He indicated that this was unaudited information for quarter four reporting purposes, and that the annual report would include the final figures that took into account year-end processes, and the audited financial information.
The preliminary statement of the financial performance indicated the financial result of SANParks as at 31 March 2020. An infrastructure grant that had not been materialised, and the tourism income which was less than budget due to the decrease in visitors, were the main reasons for the unfavourable variance of R25 million. These factors, such as the decrease in the number of visitors, as well as the occupancy rate in the accommodation facilities, had impacted on the financial results. If the Expanded Public Works Programmes cost was excluded, the income cost ratio was 1.11 to 1, which was viewed as a good financial ratio.
The total revenue to date was R2.6bn against the R3bn target, and would hopefully be closer to the indicated target amount when the final figures were finalised. The total expenditure reflected a favourable variance, but human resource (HR) costs were identified as the biggest expenditure, while all other costs had decreased.
Exchange revenue generated by SANParks had increased every year, despite the challenges. On the grant side, this had decreased from around R700 million to approximately R600 million in the year under review. This indicated that more efforts must be made by SANParks to generate income. Expenses had increased from R2.5bn to R2.8bn due to three line items -- employee costs, depreciation, and operating expenses.
SANParks had generated the most cash this year through its operating activities, as well as some funding received from the government. The net cash increase in the financial year under review had helped SANParks to survive some of the Covid-19 challenges.
Mr Mketeni asked the Chairperson if the Committee could move on to quarter one and take questions thereafter. The Chairperson agreed.
SANParks 4th Quarter Performance Report for 2020/21
Mr Mketeni said there had been no talk of Covid-19 when the annual performance plan (APP) for 2020/21 was presented, and this had been revised and the budgets readjusted. The closure of tourism facilities had shut down income in national parks and the activities, which had been one of the quarter’s challenges. Many employees could not perform their tasks due to connectivity issues, with the parks being situated in rural areas. Employees had gone home and salaries were still being paid, and the organisation was left with only essential staff to perform duties, although connectivity had remained an issue.
The factors affecting quarter one included compliance work that had to be done to implement all the regulations, directives and guidelines to address the Covid-19 situation. Daily work was also affected, as human and financial resources were currently all directed towards Covid-19 work. Plans had to be reviewed, and the annual targets had to be amended due to these factors.
Surveys had been planned to deal with rhino poaching in the Kruger National Park. The initial target was fewer than 60 rhinos and fewer than 10 elephants poached in the KNP, but the revised target had increased these numbers. There was a correlation between the decrease in poaching and the lockdown, as the increase was linked to the moving of lockdown alert levels.
There had been a call for the initiation of a tender process for social legacy projects. The focus was on facilitating partners to deliver food parcels around all national parks and water tanks. SANParks had partnered with the Siya Kolisi Foundation and the Wilderness Foundation to supply food for six months to some of the people who had lost jobs around the Addo Elephant National Park.
Fundraising initiatives would continue, as SANParks had accomplished R10.3 million in fundraising, as opposed to the initial target of R10 million.
Corrective actions had been needed as the internal auditing process commenced. There had been a delay in appointing internal auditors, but 80 percent of the identified challenges had to be corrected before this process.
The aim was to increase revenue in terms of investment plans. The terms of reference had been approved by the investment committee. Advertisements had been placed, and shortlisting would commence, as the goal was to have an infrastructure investment committee in place in SANParks to advise where to invest in terms of infrastructure.
The overall summary of targets for the first quarter stood at 34 percent achieved, 21 percent work in progress, and 45 percent not achieved. These figures would change with a revised plan and budget that took the Covid-19 challenges into account.
Mr Dlamini, presenting on the finances for quarter one, said that this period was extremely challenging for SANParks, as all the parks were closed and there were no tourism activities taking place. The year-on-year revenue had shown a 74 percent decrease. There was concern, as the legal obligations and expenditure remained the same, despite the revenue that was generated under difficult Covid-19 circumstances. Employees still needed to be paid about R327 million for three months, and infrastructure needed to be maintained. Some maintenance operations had had to be suspended under the lockdown restrictions, but had resumed under the easing of lockdown restrictions.
The organisation had been forced to undertake major cost cutting due to the challenges around generating revenue in order to maintain the minimum legal obligations and to keep the organisation sustained. The deficit of R337 million was the highest in the history of SANParks, and various measures were being implemented to ensure that this was mitigated.
All other work had continued, even at the time when certain activities could not be done. Payments were made, including to the Expanded Public Works Programme’s employees.
There had been assistance from the government, as indicated by the grant closely aligned to the tourism activities’ revenue. Government had rescued SANParks so that obligations and operations could be maintained.
Cash resources had been depleted, as revenue could not be generated under the Covid-19 and lockdown restrictions. SANParks anticipated generating enough revenue, as tourism activities had slowly picked up with the easing of lockdown restrictions, so the organisation would be able to meet their obligations and move into the new financial year.
Ms A Weber (DA) asked for clarity about the two percent reduction of water use in the KNP. She asked if the water infrastructure was needed only for the accommodation, or if the waterpipes also included the provision to the animals. When would the waterpipes be fixed, and if they were for the animals as well, how long would it take? If the water infrastructure was going to be changed, would it be more feasible to include it while refurbishments were currently being done? Where would the money come from, as there was already a deficit regarding maintenance?
The revised targets for the wetlands and the land growth had more than doubled, which did not seem feasible as there were already challenges to meet the current targets.
Mr J Lorimer (DA) asked what proportion of overnight accommodation in the KNP was currently not available to guests, and when it would be available. What proportion was unavailable, and for what reason, as there had been many reasons for accommodation being offline, including refurbishment, animal damage, and people who were not guests staying in guest accommodations?
Ms T Mchunu (ANC) asked what prevented SANParks from achieving the EE targets, particularly the target of women and the designated groups, when there was an EE plan that provided guidelines and directions. Why was there an unspent grant? What had caused the increase in employee costs, while EE targets were not being met? Had depreciation been budgeted for? There was concern about the delay in appointing internal auditors - who was assisting in achieving the internal audit? How long would it take to maintain the unqualified audit and to move forward to a clean audit?
The CFO of the Department had presented a good process plan, which could assist an organisation or entity to achieve a better audit, and it could assist SANParks to achieve a clean audit if it was adhered to. She asked if had been engagement between the CFO of the DEFF and the CFO of SANParks in terms of the auditing and the process plans.
Mr N Singh (IFP) was encouraged to know that the organisation had received various donations, and asked whether it was possible to receive the list of donations, as it was good to know which corporations were involved in order to give thank. Considering the amount of money that SANParks had spent on salaries during lockdown, was the HR aspect being investigated in terms of the number of employees that were actually required? Had the integrity of the infrastructure been restored, or was there a lot of dilapidation that would require additional funds?
He appreciated that the numbers were decreasing regarding Project Ivory, but the aim should be for a no-poaching approach, rather than a decreasing approach. Was there any thinking currently along these lines?
Ms Yawitch responded to the question regarding the internal audit and the relationship with the Department’s CFO. The CFO of the Department sat on the auditing risk committee of SANParks, so there was a direct relationship, as the CFO was fully informed of SANPark’s financial affairs. With regard to the internal audit, there was an internal audit function and a chief audit executive in SANParks, and some of the work was outsourced. The issue was that this capacity was not adequate, and there was a need for additional senior capacity to assist in running this function, and to evaluate whether the outsource function was adequate. The issue was not that the work was not being done, but rather how SANParks could do it in a more robust way than what it was currently able to do, and with staff at more senior levels. This was the process that had been delayed, but the existing internal audit function had carried on.
Mr Mketeni responded on the water pipelines. It had been indicated that the Pretoriuskop main pipeline was faulty, so this would be prioritised and inspected with the money that would be received from government, but there was no set date for this as maintenance was an ongoing process. A conditional assessment of infrastructure would be undertaken as a reactive measure to understand the state of pipelines and infrastructure.
SANParks did not have enough capacity to spend, and the challenge was that there were not enough engineers and technicians. Contractors had been dispatched to the KNP despite Covid-19 conditions to fix accommodation for staff and tourists, and other forms of infrastructure. This work was ongoing, and there was no timeline to finish the pipelines. There was an interest in investing in raw water rather than using purified water, even for animals. This was one area where the conditional assessment would be able to assist in how the organisation dealt with maintenance issues, including the KNP.
Mr Dlamini responded to the comment on the wetlands. He explained that this work was done by the technicians, and depended on the speed of delivery and how resources were diverted. He suggested that SANParks respond to this comment in writing as it required more technical information to respond adequately to the Committee.
The organisation was busy compiling a full report for the issue on the accommodation in the KNP, as the public did not understand the gravity of the challenges under Covid-19. There was no opportunity under lockdown conditions to do maintenance on the infrastructure of the parks, as the regulations did not allow for this even, though there was the opportunity to do so. A phased-in approach would be undertaken, as there were high risk parks because of huge crowds. Precautions had been considered in order to open all parks at once, as most of the Eastern Cape parks were in the red due to Covid-19. The organisation’s readiness level was still a challenge, as staff had to be screened and assessed as they were phased back into work. Precautions were in place to avoid becoming an epicentre of the virus.
Some staff were housed in the tourist accommodation for their safety while major renovations were being done during lockdown. A report in writing would be useful to provide more details about this information, to indicate which camps were open and at what proportion.
Ms Lize McCourt, COO, SANParks, responded to the question on the EE targets for women, and said there was an element of women not applying for every job, as there were no applications from women for jobs that were advertised. The remoteness of the parks was identified as one of the reasons why women did not apply, as young women were not willing to work in remote areas.
Mr Mketeni agreed to make the list of donations available to the Committee. Supplementary projects were part of the recovery plan, as minimal maintenance work was done during the lockdown, and they were still a work in progress. Infrastructure that had been closed was prioritised, as animals, insects and rodents tended to infiltrate unoccupied buildings.
Operation Ivory was mainly dealing with elephant poaching in the KNP. There had been a lull in elephant poaching for ten years before 2014. There had been a few incidents of poaching arising from 2014, which had increased to 67 elephants that were poached in 2017. This operation was launched in the north of the KNP to respond to the poaching. Corrective measures to deal with this issue included improved radio communication, off-road mobility, air support, and partnering with rangers to develop an infrastructure for planes to be placed further north in the KNP, where there had been an increase in poaching.
There was a correlation between poaching activity and the moving of the lockdown alert levels, as there had been a decrease in rhino poaching at the start of the lockdown, but it had increased as the country had moved to level two. The closing of the borders had provided relief from poaching activity, as ivory could not be exported. The organisation was working with rangers and external communities to maintain readiness levels for the reopening of the borders, which might see an increase in poaching activities again.
Ms McCourt responded to the comment on the wetlands situation. The revised target reflected in the presentation was the annual target, while the target that was reported against was the quarterly target. The annual target had been reduced for all the Expanded Public Works Programmes, including the working for wetlands and the clearing of vegetation. All of these annual targets had been reduced.
An employment equity plan, that had been approved and submitted, was in place. Quarter one’s budget for human resources expenditure had been exceeded in quarter one, but the overall HR budget for the year had been largely reduced. This had been done by increasing the vacancy levels, reducing the amounts budgeted for skills development and for overtime, among other measures. The current vacancy rate was 22 percent, which would have to be maintained to remain within the current HR budget. The over-expenditure against the quarter one budget had been a result of overtime before the implementation of a 50 percent reduction in the overtime allowance in the budget. This had been the main contributor to overtime in quarter one. It had been identified as the reason for not meeting EE targets in the current financial year, as there were no vacancies that could be filled, unless new vacancies were created, but the organisation was currently operating with critical staff.
Between 75 and 80 percent of staff were in category levels A and B, which were labour intensive areas of work. Rationalisation of staff had been considered only in the remaining 20 percent. Systems improvement and doubling up of functions within the remaining 20 percent of staff was being explored. The overall organisational design exercise that had been completed indicated that there were areas in professional jobs, where the organisation was under-capacitated. The drive for transformation within this area of work meant that it came at a premium to attract young black professionals into the organisation.
Ms McCourt said a reason for not meeting targets for women was because there were no vacancies in the management cadre. The organisation was working with the Council for People with Disabilities to provide a list of short-listed people, and was maintaining the drive to have protected disclosure of the medical certificates to enhance compliance with the percentages in this area.
Mr Dlamini responded on the issue of depreciation, internal audits, and the relationship between the CFO’s of the Department and SANParks. He explained that depreciation reduced the value of an asset that was being used. Due to its nature of being a non-cash item, it could not be used to fund any expenditure such as infrastructure, which meant that funding such as the infrastructure grant had to be used to for infrastructure, but depreciation could not be used.
He clarified that there was regular engagement and communication between himself and the Department’s CFO. This engagement looked at how the money flowed between the Department and SANParks, especially on projects, as this had been a challenging process which had led to the Department receiving adverse audit findings from the Auditor General (AG). SANParks had compared and synchronised the figures that were reported in its financial statement with the Department’s, to ensure a better outcome for both entities. The AG had been included in the discussion to maintain common ground in the way both entities treated their accounting, and to reduce audit risks. There had been no major findings to date in the ongoing audit, which had been in progress for the past month.
The upgrading, renovations and building of staff accommodation units in the KNP was in progress, as well as the upgrading of guest accommodation. This work maintained the integrity of the infrastructure and restored the condition of the infrastructure to the level that was expected by the guests of SANParks.
Mr Mketeni responded to the suggestion of zero poaching activities, and said that this was the ideal that was desired, but it could be achieved only by commencing with an upfront number. Ongoing poaching against a target of zero might affect the public’s confidence in the work of SANParks. The end goal was to get to zero poaching by reducing the number each year, but it was not realistic to include a target of zero killings at this point.
DEFF responses on small-scale and commercial fisheries
Mr Munzhedzi asked Ms Sue Middleton, Chief Director: Fisheries Operation Support, DEFF, to take the Committee through the responses, based on the questions that had been raised on this matter.
Ms Middleton was experiencing some technical difficulties in sharing her presentation on screen.
Mr Singh asked about the process of responding to those who had presented, so that the organisation could use the inputs that had been raised in the meeting.
The Chairperson noted his suggestion.
Mr Lorimer asked if the written report offered by Mr Mketeni could be made available by lunchtime on 3 September.
The Chairperson said that there must be an agreement on a reasonable timeframe for SANParks to present its written report. He proposed a minimum of seven days for the organisation to provide this report, and said this point would be discussed after the presentation on the Department’s responses on fisheries.
Ms Middleton explained the background to the presentation. On 4 June, the Committee had received presentations and representations from organisations in the small-scale fisheries sector. On 17 June, it had received presentations from the aquaculture and commercial fisheries sectors. The first part of the presentation would deal with the small-scale issues raised by the various organisations, and the second part would look at the aquaculture and commercial fisheries.
She informed the Committee that she was accompanied by Mr Belemane Semoli, Chief Director: Aquaculture and Economic Development, Mr Saasa Pheeha, Acting Chief Director: Marine Resources Management, and Mr Abongile Ngqongwa, Acting Director: Small-Scale Fisheries, who would assist with the technical aspects and respond to questions.
Moving to the first set of questions, she clarified that the country had still been at level three of the national lockdown on 4 June, as there were many issues regarding Covid-19 challenges. Other issues were related to legislation, permitting and rights, access and safety, and services of the Department. A detailed account of the questions and responses were provided in the presentation. Contestation around the recognition and definition of a small-scale fisher and forms of fishing was raised as a common issue associated with the concerns of legislation, permitting and rights. She agreed that many of the issues raised were valid, and were influenced by the timing of the lockdown.
Issues of employment and growing the domestic industry, rather than relying on foreign markets, was raised as an underlying concern in aquaculture, as well as the viability of this industry in in-land provinces such as Gauteng.
Capacity and support issues, particularly support to previously disadvantaged people in the sector, was a common issue in commercial fisheries. Gender transformation was important, as more women needed to be supported in the industry.
She concluded her presentation, and handed over to the Chairperson.
The Chairperson was dealing with technical difficulties at the time.
Mr Singh suggested the Committee should note Ms Middleton’s detailed and comprehensive presentation, and engage further at another stage. This would provide an opportunity for those who had presented to receive responses that could assist the Committee.
Ms Mchunu and Mr Lorimer agreed with this suggestion.
The Chairperson returned and noted the suggestions. He said that the Committee would have its own meeting at another stage to go through the responses, and to ask questions.
The meeting was adjourned.
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