EPWP Conditional Grant compliance challenges

Public Works and Infrastructure

03 November 2020
Chairperson: Ms N Ntobongwana (ANC)
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Meeting Summary

The Expanded Public Works Program (EPWP) presented the challenges with EPWP Conditional Grants which led to the holding back of the transfer of these grants to provincial departments and municipalities:
• Non-Compliance to Division of Revenue Act.
• Delays in implementation of grant funded projects.
• Delays on reporting of grant funded projects in EPWP Reporting System.
• Poor spending performance.
• Non-submission of quarterly evaluation reports by some public bodies.

Committee members asked about the capacity of DPWI regional offices to ensure compliance of the 355 state bodies participating in the EPWP; if all these public bodies were using the EPWP Reporting System and if they were properly trained to use this online database system. Members asked about the monitoring of the non-profit organisations (NPOs) with whom public bodies worked with as well as the exit strategy, skills development, length of employment, and remuneration of the participant beneficiaries.

Of particular concern to the Committee was the decision to dissolve the Independent Development Trust (IDT) which had been handling the Non-State Sector NPO EPWP programme. About 330 non-profit organisations and their beneficiaries had been severely let done as it was already the eighth month of 2020/21 and the second year of the Non-State Sector NPO EPWP programme had not yet begun. About 55 000 people were impacted by this. NPOs were embarking on litigation.

DPWI explained that it was creating capacity to transfer the Non-State Sector EPWP programme from IDT to DPWI. The Ministry would be holding a hearing with the affected non-profit organisations.

Meeting report

The apologies of the Minister and Deputy Minister were noted and the Committee communicated its dissatisfaction about the poor attendance of the Minister and Deputy Minister. However, it was decided that the Acting Director General, Acting EPWP Deputy Director General and Chief Directors would be in the best position to respond to the Committee's questions.

Expanded Public Works Program (EPWP) non-compliance challenges
DPWI Chief Director: EPWP Infrastructure Sector, Mr Ignatius Ariyo, spoke about the Auditor General South Africa (AGSA) findings, expenditure, challenges and interventions for 2019/20 EPWP Conditional Grants:
-           EPWP Integrated Grant for Provinces
-           EPWP Integrated Grant for Municipalities
-           Social Sector EPWP Incentive Grant for Provinces.

When these public bodes report to the Department of Public Works and Infrastructure (DPWI), any non-compliance identified, if not resolved, means a visit to the public body to intervene. A customised indicator for participating public bodies in their annual performance plan was also required.

Public bodies were informed of the results of the compliance assessment after each of the 183 public body visits conducted by DPWI in 2019/20. For only a marginal number, proof of evidence was received from the public bodies to resolve the identified non-compliance. During 2019/20 the Deputy Director General for EPWP escalated unresolved non-compliance observed during public body visits to the Accounting Officer responsible through a total of 151 letters, asking for the non-compliance to be resolved and measures to be put in place to stop reoccurrence. Thereafter, a further 67 letters were also forwarded to Accounting Officers on unresolved audit findings, asking for similar intervention.

In 2020/21, DPWI continues to use public body visits as a mechanism to monitor compliance. To enable better control, there is strict adherence to a Standard Operating Procedure (SOP) including:
Intervention register which allocates responsibility and timelines for coordinating and monitoring correction action for any non-compliance observed.
Immediate escalation to Accounting Officer for non-compliance observed for grant-funded projects.
Escalation to Accounting Officer if non-compliance persists.
Failed interventions lead to withholding of grant funding tranches.
Escalation to MECs responsible for EPWP for persistent non-compliance

DPWI is strengthening public bodies to fulfil their responsibility to ensure complete and accurate capturing of progress reports on the EPWP Reporting System (RS) and through monthly reports on the valid EPWP participants on the EPWP RS. The reports list the particulars (Name, surname and ID number) of valid participants per project (name of project, and project reference number specified) and public body. Through the provision of timely information, public bodies are capacitated monthly to reconcile their project records against the EPWP RS. This initiative will lead to the early detection of reporting errors by public bodies. It also re-establishes the responsibility of reporting bodies to verify data captured on the EPWP RS.

Provincial Social Sector EPWP Incentive Grant
The purpose of the Social Sector EPWP Incentive Grant is to provide additional funds to social sector departments to increase job creation by focusing on strengthening social service programmes that have employment potential. To be eligible, only performing provincial departments who have met EPWP reporting requirements in a prior year may enter into an incentive agreement with DPWI to abide by the conditions of the Social Sector EPWP Incentive Grant. The conditions include:
- Provincial departments must report EPWP expenditure on the monthly In-Year Monitoring (IYM) tool according to section 32 of the Public Finance Management Act
- Financial and non-financial performance must be reported on the EPWP RS
- Provincial departments must adhere to audit requirements stipulated in the grant manual
- Provincial departments must submit quarterly non-financial reports on a prescribed template by the timelines stipulated in the Division of Revenue Act
- EPWP branding must be incorporated in signage of funded projects as per manual
- To receive the grant disbursement, they must sign a grant agreement and submit a signed business plan
- Further funding is conditional on reporting significant expenditure and reporting on the EPWP RS.

Interventions to ensure compliance with EPWP Integrated Grant Requirements
Public body and site visits are used to assess non-compliance in EPWP projects including grant funded projects. Virtual or social media engagements are now used to raise non-compliance with public bodies. Emails still remain the main communication through which support is given. Stakeholder engagement is held with Senior Management (CFO / Head of Department) to resolve challenges and bottlenecks. Data capturing training on the EPWP-RS is provided to public bodies and municipalities to improve compliance. Work with Provincial Public Works M&E to capture data on behalf of public bodies that need data capturing support. DPWI conducted six site visits for grant funded projects in 2020/21. COVID-19 negatively affected planned site visits. A total of 44 grant funded projects were visited by public body visit interventions in 2020/21.

Ms S Graham-Mare (DA) noted that EPWP projects were run on construction sites, where construction companies were building on behalf of the department. There seemed to be far greater EPWP compliance on construction sites than in the government sector. Why is there greater compliance with private sector EPWP projects than government EPWP projects?

Her concern about withholding grants for non-compliance is that the only people affected, were the participants. The average person working in government was not directly impacted. There was no incentive for them to comply because their bottom line was not affected. DPWI needs to find another way of enforcing compliance that does not involve the beneficiaries being negatively affected by the non-compliance of the ‘implementers’. DPWI has SOPs and guidelines in place. Are those monitored for proper adherence? Are people properly trained on those? Often it was a lack of training that results in non-compliance. They were doing site visits and there were other mechanisms in place to monitor that. Perhaps they need to start with basic training at the beginning of every year to ensure they understand. Turnover takes place in municipalities and provincial government where new people come in who do not understand the necessity.

She was concerned about the longer duration projects where participants were in for only three months and then they get ‘recycled’. That was a huge problem. She understood that the idea was to give more people the opportunity. What they found was that it was not being properly enforced and people were working for longer, due to special treatment. Or, there were a lot of problems in the community when they start with the recycling. Would it not be better to appoint on a project basis rather than for three months? She understood that the question about permanent employment would then come up, if they were working for a period longer than three months. She believes that three months was very short, especially if they want to up-skill people. Three months was not sufficient time to up-skill and develop a marketable skill. Since EPWP was focusing on poverty alleviation through up-skilling and training, this should still remain the primary focus.

Government is promising about 800 000 jobs in the infrastructure sector. She raised the concern that they were not able to adequately monitor, measure and implement this Infrastructure EPWP currently. How are we going to do it when we have another 800 000 people? What measures are you putting in place to deal with the increased number of EPWP projects coming on board as a result of the infrastructure spend that is coming?

Ms A Siwisa (EFF) did not believe that compliance was only a problem from 2018 onwards as it has been there a lot longer. She requested a proper follow-up on what was going on. They have all these non-compliant public bodies which in turn means certain non-government organisations (NGOs) are non-compliant. She asked if a reliable system was being put in place to curb future non-compliance at provincial and municipal levels. She asked if there was a database of non-compliant NGOs and what they were doing about non-compliant NGOs. Are these NGOs still going to get EPWP work? At the end of the day, the beneficiaries were the ones to suffer. She referred to the R92.30 per day received by the beneficiary. How many days in a month does one beneficiary work? What is the total at the end of the day? She referred to the project site visits. What is the role of EPWP regional offices? Lockdown was given as an excuse. What were the regional officers doing about checking and oversight? What system is DPWI putting in place to ensure that every individual gets a chance and there is no repetition of the same beneficiaries? She knows there are people that have long been EPWP beneficiaries. One of her neighbours has been in EPWP for as long as she can remember. This was causing problems in communities because the same people were beneficiaries, no matter the kind of project. It was very unfair. That was one of the challenges causing projects not to move forward in communities.

Oversight was conducted on 44 of all the projects. She wanted a breakdown of the oversight visits. She requested a list of the 44 projects, their location and what they found. Which 44? Which NGOs, which municipalities, which provinces, which projects were non-compliant and what is being done? She gave the example of an NGO that was given money and the money was used in another province. She wanted answers about the monitoring and the role of the DPWI regional offices. Why should we wait for national, when we have regional offices to do oversight?

Ms S van Schalkwyk (ANC) noted the EPWP DDG retired at the end of 2019. The Acting DG and Ms Abrahams handed over to Mr Ariyo to present. Can we get an indication of who is in charge now? What are the roles of the two individuals in the EPWP branch now?

There were about 1 184 audit findings for EPWP with a lot of non-compliance across provinces. Do you have a uniform system where information was recorded? They need to have credible information that was verifiable and that the AG is able to audit. She felt strongly about the EPWP programme as it was touching the poorest of the poor, creating employment opportunities and putting bread on the table for vulnerable people. One of the challenges in society was unemployment and lack of employability as many people do not have skills. Many young people and women employed by EPWP opportunity do not have skills to be employed after they exit the programme. She asked for an indication of what DPWI was doing about skills transfer, employability and about giving the necessary programmes to the participants, not only to be employable but to start their own businesses, to be entrepreneurs, to start in the Small Medium and Micro Enterprise (SMME) sector to support their families.

She had in front of her the 2018/19 annual performance report presentation the Committee received last year on 8 October 2019. She quoted from slide 16 of that presentation: "997 286 work opportunities against a target of 1 455 840 was reported in the EPWP by public bodies". They had a shortfall concern of more than 400 000 people. Now they get a report as of 30 September with an overall performance of only 52%. There are red flags with certain provinces being as low as 7% with less than 30% expenditure. Her concern was that they end up having the same huge problem of audit findings, while they have a lot of unemployment. They need proper monitoring in this area. What is DPWI doing to fast track expenditure and ensure it is spent on the correct items? What is it doing to ensure work opportunities and sustainable employment afterwards? It is not the intention for people to be forever in this programme. The EPWP is supposed to be a short term, 24 month programme, and then people should have exited, but not exit and be unemployed. The participants should exit and be employable or self-sustainable, so other people can enter the programme. She asked DPWI what they were doing to strengthen this area.

Ms M Hicklin (DA) noted that EPWP had been in operation for a long time, it was not introduced last year or the year before. For DPWI to make the statement: "we must escalate to the MEC in the provinces". Why has that not been done already? Non-compliant provinces should have had the ‘big stick applied to their runts’ a long time ago. It should not be something they were going to do in the future. They have had these audit findings in the EPWP programme for years; it was not getting any better. It appears to be getting worse.

The problem one finds in many areas is that a person employed by the EPWP programme becomes a permanent employee, as opposed to the opportunity being a stepping stone which enables them to be up-skilled. DPWI has to do everything in its power to ensure that this is not the case. The EPWP programme by its very nature must focus on training or up-skilling. She does not believe they were doing that. They need to implement these measures a lot more stringently. People were creating a circle of jobs for ‘pals,’ where if one knows the right people, one can remain within the EPWP system. That was not what this was all about. The EPWP system must be an up-skilling programme. As three months was a very short period of time, they should extend the contract to six months. They need to ensure that at the end of that six months, the person walks out with a piece of paper or certification to move up to the next rung of the ladder. This needs to happen so that they are not kept as unskilled workers for the rest of their lives. They really need to impress upon the employers of the EPWP programme that their job, in addition to providing work opportunities, is to ensure the up-skilling of the workforce. That was the most important basis on which the EPWP programme must continue to function.

Ms P Kopane (DA) acknowledged that the presentation was comprehensive and covered a lot of the concerns they have had. She was a Committee member in the Fifth Parliament, and the same challenges have been debated over and over. It was clear that there was no change. At the end of the day, the problem with DPWI was not that there was no money, but there was a lack of will to do things. From the presentation, there was a clear indication of the challenges and the interventions were taken. There was no timeframe linked to the interventions and when they were going to achieve anything. This suggests that in the Seventh Parliament, these challenges will still be discussed. What are the timeframes for all the interventions highlighted? They need to know that as there was urgency.

The Chairperson asked who the Acting DDG of EPWP was. The previous DDG retired last year, and it was clear that no one has yet replaced him. She requested that the Acting DG answer this question. For the EPWP RS, were the municipalities and provinces using the same reporting system as for national? If they were doing that, they would not have these challenges. DPWI would pick up when they were non-compliant. What is happening? Have you trained them to use this system? She was not part of the Fifth Parliament but she understood that in 2017 DPWI presented a new system to reduce the challenges. In July 2019 in the National Council of Provinces (NCOP), DPWI reported to the Select Committee about the new system. What happened to the new system? Is it implemented yet?

Acting Director General Imtiaz Fazel noted that DPWI advertised the EPWP DDG position some time back, and about two months ago, they held interviews and concluded the process at the ministerial level. It involved ministers from other departments as well. The paperwork was in the process of being tabled in Cabinet. He was not sure precisely where it was but thought that currently it was likely before Cabinet awaiting confirmation. The appointment process for a permanent person had been concluded. Ms Carmen-Joy Abrahams was the Acting EPWP DDG and Mr Ariyo was the EPWP Chief Director responsible for the Infrastructure Sector.

For the EPWP programme, the Auditor General does not use a ‘follow the money’ principle. National DPWI was the repository for all the adverse audit findings of the EPWP programme throughout the country. If you have a municipality that was not recording proper records, the AG audits that municipality but our National Department receives the audit findings. It was important for them to do the following things: site visits and the use of guidelines and procedures that they share with all public bodies to ensure that proper standards were maintained and proper credible reporting was achieved. What was also important was engaging the Department of Planning, Monitoring and Evaluation (DPME), which DPWI did recently, to introduce what they call a customised indicator. Every public body should have a performance indicator on the number of work opportunities reported in the EPWP reporting system. The intention was to ensure that all these reporting bodies were providing credible information, maintaining a proper record and what they report on the EPWP system was accurate. This was also audited by the AG. They had not reached that stage. There were a number of initiatives the National Department put in place to ensure credible reporting. With the conditional grants, where requirements were not met, certain steps had to be taken.

DPWI Acting Deputy Director General: EPWP, Ms Carmen-Joy Abrahams replied about the compliance comparison between the private and public sector. They undertake very similar practices irrespective of whether it is the public or private sector. They provide EPWP guidelines, specifically to promote labour intensity; they also provide training to build environment professionals, particularly in the application of labour intensive techniques. They engage with public bodies on how the ministerial determination is applied and what was required from a law perspective. The ministerial determination was legislation put out by the Minster of Employment and Labour. From a compliance perspective, the Ministry of Employment and Labour, has an inspectorate unit that looks at labour law compliance. The ministerial determination and code of good practice puts out conditions of employment. Within that legislation there is no maximum period. There used to be a maximum, however this ended in 2012. It stated that within any five year period, a participant may not be engaged for more than two years. That no longer applies. In terms of the ministerial determination and the code of good practice, an employment contract was to be given to the participant that states the start and end date for the EPWP participant. In terms of Section 198 of the Labour Relations Act, there was no three-month limitation period that Ms Graham referred to.

On the increased infrastructure spend, at the last Portfolio Committee meeting, there was quite a bit of engagement on this matter. From an organisational perspective, they will ensure not only to look at the packaging of projects, but also how it is made more fundable, and to look at the reporting elements. There were various oversight committees in terms of the infrastructure legislation and the forthcoming policy.

Ms Abrahams replied that they have an EPWP reporting system which looks at the work opportunities created by the various public bodies. There are more than 355 public bodies participating in the EPWP. It looked at the work opportunities created for the previous quarter. They were now in the third quarter of 2020/21. DPWI expects these Quarter 3 work opportunities should be reported by 15 January 2021. She noted that there was an incentive grant management system in place. It covers the projects undertaken by the various committed public bodies in terms of the incentive grant. They expect an incentive grant agreement to be signed prior to the issuing thereof, with project lists. Those lists were monitored by DPWI. They were able to advise on the system generated for reporting on those particular projects. They were able to track on a monthly basis which projects were reported, in terms of that list – whether it was the funding from the incentive grant fully, or only partially funded by Public Works. They were then able to identify how many work opportunities were reported. They then ask for follow-up from their regional offices. One of the responsibilities of the regional offices is to engage public bodies, because each project has a start and end date. When a project has not reported within a certain period of time, they expect a follow-up from their regional offices. There were certain reporting requirements for Division of Revenue Act compliance.

The minimum EPWP wage was R92.31 per day. This was governed by the National Minimum Wage Act in which there was a variation provided specifically for the EPWP. The maximum number of days workers can work per month was 22 days. They do differ and vary and this was therefore determined and specified in the employment contract. They do have participants who sometimes work slightly more than 22 days such as the Working on Fires project, particularly when fires were out of control seven days a week. It comes to R2 030 per month. They monitor which projects pay the R92.31 minimum and those that pay in excess. They do have quite a number of projects that pay ‘far in excess’ of the minimum wage. They were able to provide a histogram to show the spread of wages per sector, even across provinces.

Ms Abrahams replied that the role of the regional offices was they were the ‘foot-soldiers’. They were key in being able to engage on all of these compliance matters. They were required to be executing these public body visits. National head office then consolidates this into a monthly report in which they capture the public body visits. All public body visits were put into an intervention register. The head office will then issue letters to the public bodies that were non-compliant. The regional offices were then supposed to monitor that and do follow-up visits. The regional offices also engage on the signing of the incentive agreements. They inform public bodies of their compliance requirements; they set up governance structures with the Provincial Department of Public Works. They hold regular sessions at sectoral level and at a municipal and district level. They meet the officials in those public bodies to discuss performance and non-compliance. For all provincial sector meetings, they deal with non-compliance of the incentive grants and highlight the non-compliance of public bodies. National head office always addresses the letters to the accounting officer to address the matter. The ‘follow the money principle’ was not followed by the Auditor General, however as DPWI, they comply with the PFMA requirements, and then emphasise the responsibilities of the accounting officers. When they find non-compliance from either the AG audits or the public body visits, they directly write to the accounting officers. They do get some responses from the accounting officers, but the responses were not at a desirable level to be able to say that the matter has been addressed.

They do have a list of the 44 projects and their compliance status in accordance with the public body visits. They have fully functional governing structures from district forum committees for the municipal sphere to provincial steering structures led by the MECs. These would report both to the HOD and then were accountable politically to the MEC within the province. The regional structures lead the provincial steering committees and DPWI participates in those particular structures. The National structure led by DPWI feeds into the technical MINMEC and political MINMEC.

Skills development has always been a priority within EPWP, many of their participants have limited schooling, without matric qualification, which requires extensive interventions. They have skills for on the job training. Many EPWP participants have never worked a day in their lives, which requires certain skills on how to undertake the work they have been given through the EPWP contract. At the same time, they were cognisant that they need to look at skills post the EPWP programme. For this year, a key project was the selection of 400 EPWP participants who will be undertaking an apprenticeship in various trades, from painting, chef work, hairdressing, to various construction related trades across all provinces. They were now faced with the situation where the cost of apprenticeships has gone up and there was a funding shortage. They were now engaging with the Department of Higher Education and Training to advise on this funding shortage. DPWI was going to re-prioritise to emphasise the 400 artisans. They have partnered with the Services Sector Education and Training Authority (SETA) in the past; this was the second year of the Construction SETA partnership in which they were training 98 artisans. It was a continuation of the Artisan Development Programme. However this year they have moved from construction related and expanded to include the chef and hairdressing programmes. They were also rolling out various learnerships and were now in a tender process. They were undertaking skills programmes and training and calling for proposals for 2 000 skills programmes. Skills programmes were shorter than a learnership, shorter than a year. They have a priority course list that the public bodies have to look at. They also encourage public bodies to put funding aside. The environment and culture sector have performed very well in putting in funding and designing programmes where funding was automatically linked for training.

DPWI has always acknowledged that it is a very steep mountain to climb, however exit was important to them, therefore the learnerships and apprenticeships were focused on it. On small business development, there was a very exciting initiative they were engaging with the focus on income generating activities undertaken by people. ‘Our People’ was absolutely innovative, they provide the necessary support within a small business environment such as compliance which DPWI assists with, training EPWP participants on small business modules and independent online modules. They see bakeries, construction firms, clothing manufacturing and vegetable production coming up. They have successfully linked them up with organisations such as the National Development Agency (NDA) and they have received funding from the Small Business Development Department. They need to be able to test how they can access the new funding mechanisms. They were also looking at a partnership with the National Youth Development Agency (NYDA), specifically putting out a funding window for the youth on enterprise development. They have the Vuk'uphile Programme for emerging contractors has been running for years; a number of contractors have been in business for many years through this. The programme has been there for a while; through their MINMEC engagement with the MECs they need to formalise letters to the MECs.

Recruitment was always an issue. This year, she was especially excited about the new project they were undertaking which was the social audit. They were doing social audits, asking the community to verify that the recruitment process was followed as per policy and that the incentive grants were utilised as reported. There were three municipalities that have started the project on whether there was compliance with the recruitment. They have been on the ground from September 2020. From there they shall work out a social audit framework in which communities will tell them what was wrong with the programme and they would engage on how to improve various EPWP practices. It was a global model which they were going to apply to South Africa.

They have had some level of success. The point was, at the end of the year, things always seem to come together, particularly expenditure on the grant. The EPWP reporting system was constantly being adapted. They were looking at facial recognition, it was currently active for laptops; they will be able to help with record keeping in terms of attendance registers. They were currently trying to modify it for cellphones or any other device. For the EPWP reporting system, they have the ability to upload some of the documents as required by the ministerial determination and code of good practice. However, public bodies were not required to utilise it at the moment. Some public bodies use it, but there were functionality challenges such as bandwidth that they were looking at in this particular period. This was with the aim to improve EPWP outcomes.

Chief Director Ignatius Ariyo responded that expenditure stood at 52% for provincial departments in this financial year but they were confident that they will be able to close the gap. They were providing technical support to the public bodies to help them design their projects; they were beginning to see the projects come on stream. Their experience from previous financial years, was that they were able to get their expenditure right. He acknowledged that it was a constant challenge, they have to monitor on a continuous basis.

He replied about the site visits, saying that the timeframe and target for the public body visits was the end of the financial year, but they want to see good progress by the end of February already. They do not want to wait until the end of the financial year to look at their progress.

On the suggestion that they need to engage public bodies on a continuous basis, this was indeed what they already do, and it was very important that, at the beginning of every financial year, they always have workshops. They were affected by Covid-19 this year, but they have been able to have virtual workshops. It did indeed, make a huge difference. Where they have had workshops and engagements, they could see improved compliance amongst public bodies. The challenge was that there was a lot of turnover at local government level. Once you have trained someone, you go back and find out it was now a different person. Training was something they have to do on a continuous basis.

Mr Ariyo replied that public bodies were trained on the EPWP reporting system and they were continuing to train public bodies on it. He affirmed that they all use the one system. It was accessible online; any official who was trained from any public body can access the system and log their projects directly. They were also able to generate reports from the system. They were able to tell what was on the system. With the new system they have been able to resolve a couple of challenges, such as ID copies, which was a challenge in the past, but because of their link with Home Affairs on the new system, they were able to look at the ID copies. They have the ID copies of participants on the system. They were able to tell the number of individual participants that were on the programme, he noted that those were some of the improvements.

The National Contractor Development Programme (NCDP) focused on contractors who had failed at Levels 1 and 2. The Construction Industry Development Board (CIDB) register has people registered at Level 1. Through this programme they have been able to train those individuals and have them sit the programme at Level 3 and 4 and continue to track them even after they have exited the programme. Currently they have 314 contractors in training. They have trained over 987 in the last ten years. Of the contractors who were registered in the programme, more than 500 (28%+) were still active even three years after exiting the programme. They have contractors now at EP Level 6. They want to do much more to expand the programme. They have an enterprise unit providing support for SMME development. In some cases they have been able to help participants open cooperatives.

Chief Director Ms Pearl Mugerwa noted that she and Mr Ariyo were responsible for the EPWP Units managing the implementation of the incentive grants. She was responsible for the Social sector. The budget was voted directly into the implementation bodies budget so they do not normally talk about it as ‘Public Works’, as they were not directly responsible and accountable for it. The DGs of those departments do take that share of responsibility, the National Environment and Culture Sector incentive grant. When they did the evaluation of the impact, and efficiency of the EPWP incentive grants, conducted in 2017/18, that particular model of the national incentive grant came out to be the one that was actually performing and behaving like a real incentive. The incentive grant was a reward for public bodies that were doing EPWP the way they should in terms of compliance and delivering the number of work opportunities allocated.

On the request to find other ways to enforce compliance, Ms Mugerwa explained that holding back the grant does not necessarily affect the public body that they might be penalising. She acknowledged that the objective was to relieve the impact of poverty, ensuring there were income transfers into households, through these incentives. EPWP was responsible for the development of the incentive model to take up the allocations provided for by National Treasury. They contribute toward the development of the Division of Revenue Act as they develop the conditional grant framework for the management of the incentive grant to ensure compliance. In the next round in 2021/22, EPWP will be given the opportunity to revise the conditional grant framework. In that framework, EPWP needs to think hard about consulting processes, and ways to avoid the impact on public bodies such that it affects participating citizens.

Ms Mugerwa spoke about non-compliance when reporting on projects in EPWP Reporting System database. Within the EPWP, they interact with NPOs through two methods:
• Through method one, the NPOs were the delivery arms of the social sector departments such as the Social Development and Health Departments. These departments used the NPOs as delivery arms at local level, such as at Early Childhood Development (ECD) sites and for home-based care. The incentive grant was allocated to the public body to release to the NPO. The public body department enters into a service level agreement with an NPO and ensures and enforces compliance with the incentive grant. Therefore, for those NPOs that were non-compliant, DPWI did not have a direct handle on the NPO. DPWI only handles the public body receiving the EPWP conditional grant. DPWI has to ensure that the implementing public bodies were adherent to all the mechanisms, frameworks and policies as there was no direct involvement with those NPOs.
•Through method two, Public Works implemented a Non-State Sector NPO EPWP programme through the Independent Development Trust (IDT). In creating its database of contracted NPOs, the IDT ensures that the NPO has complied with all requirements such as registration with Department of Social Development as a legal entity and has SARS tax clearance. DPWI transfers the subsidy allocation to IDT which transfers it to the NPOs. After IDT has entered into a contract with an NPO, which clearly stipulates the requirements and conditions, IDT has to the NPOs monitor to ensure they adhere to the contract conditions. Tranches released to the NPOs for monthly payments to participants were received based on their adherence to the conditions.

Ms Mugerwa replied that they often hear of NPOs complaining about delays in payment of their invoice. Sometimes this happens because the report the NPO has submitted was not correctly supported by evidence. There were no attendance registers for the participants or the attendance register was inadequately completed. That was how compliance was managed. If this was missing or the participants have not been working for the required duration, or if the participants have not been paid according to the ministerial determination, those get screened, and then the NPO does not receive the expected amount of money when due.

Ms Mugerwa requested that the Committee member communicate the name of the NPO which received funding in one province but which was utilised in another province. Some NPOs have a national footprint and they act in the Free State, Eastern Cape and KZN for example. From an IDT contracting perspective, the NPO working across provinces may share such resources. She requested information on the particular case so she could investigate and refer back to the Committee and provide clarity.

Further questions
Ms Siwisa referred to the response about NPOs monitored by IDT. There was talk in the media about IDT's exit. It seems as if this was done because Infrastructure South Africa (ISA) was coming on board. Who is going to take over the Non-State Sector EPWP? What is going to happen to the NPOs contracted by IDT in the EPWP? In the DPWI regional offices, is there a specific unit that deals with EPWP and NPOs? These NPOs were not compliant. What intervention is DPWI going to make on non-compliance? Money was held back, yet participants had reported for duty and work was done. When a NPO or NGO was non-compliant and money was held back, the beneficiaries were not going to get their money which causes uprisings, strikes and protests in our communities. What is DPWI doing to ensure that the beneficiaries are not affected? Public bodies were allowing non-compliant NPOs to do projects.

Ms Graham noted that the problem lies with the people down the line, the implementers. IDT had signed a five-year contract with DPWI to implement EPWP in the non-state sector of the EPWP programme. They were in Year 2 of that contract. The COVID-19 Relief that EPWP was responsible for was extra work, not part of the contract, but as it was employing NPOs, that entire programme had to shift to IDT. This was because only IDT had done the procurement and vetting compliance of the NPOs, hence the R11 million fee that IDT charged to manage that process.

In the meantime, Year 2 of the non-state sector NPO EPWP programme has not begun, and they were already into Month 8. She understood that 55 000 people were impacted by this. She asked why DPWI has not given the go-ahead to IDT to start the Year 2 programme. Given that IDT is going to close down, will anything happen with the Year 2 programme from now until the end of March? She had heard that NPOs were embarking on litigation against IDT due to failure to implement the Year 2 non-state sector NPO EPWP programme. Is this true?

Ms Hicklin raised the imminent closure of IDT. The IDT is the NPO programme implementer. Who is going to pick up this EPWP programme? Is it going to be Infrastructure South Africa? Is ISA going to show the same commitment? How are we going to track what is happening to the EPWP programme when IDT closes? They were very grateful that IDT was still around today, but how much longer is it going to be around for? This is Year 2 of a five-year contract, what is going to happen for the remaining time of that contract, when IDT is no more?

Ms van Schalkwyk noted that a lot of information was communicated, but they do not have it on paper. It would be useful for the Committee and the public to receive a proper presentation on the collaboration of EPWP with relevant SETAs, Department of Small Business Development and NYDA with the objective of understanding how beneficiaries graduate from this programme, from being unskilled and unemployed to being empowered businesses and employees in South Africa. That would also show that they have a caring government that was listening to its people and caring about the interests of its people who were vulnerable. It will demystify the issues and negativities that they redirected at the EPWP programme. She urged the Committee and staff to factor that in to the Committee programme, even though it will not be during this term, but early next year, that they receive such a presentation.

DPWI responses
Acting DG Mr Imtiaz Fazel replied about IDT dealing with the NPO programme. The COVID-19 programme was implemented by IDT; the NPO programme has not commenced. What has transpired is that DPWI was creating capacity to transfer the NPO programme from IDT to DPWI. The DDG of Corporate Services and DDG of EPWP were dealing with the necessary human resources infrastructure to house the NPO programme within DPWI going forward.

DPWI will have to create new contracts afresh with the NPOs. It would not be appropriate from a supply chain management point of view to transfer the NPOs from IDT to DPWI. Those NPOs would be free to apply to the Departmental NPO programme going forward. Ultimately, that will result in dissatisfaction amongst those NPOs. They have received correspondence from the NPOs and DPWI has recommended to its principals to give the NPOs a hearing. The Department was in the process of setting up a hearing with the Public Works Minister and Deputy Minister to reach an understanding with the NPOs on transitional arrangements.

Acting EPWP DDG, Ms Abrahams, noted that there was currently insufficient capacity in the regional offices to take over. However, in the past where support was required, particularly in programme management over the years, that was undertaken through the regional office. For the staffing structure they were working on, they were looking at one deputy director with two assistant directors at a regional office level. It was important to have good oversight so the beneficiaries are not impacted. Where non-compliance was evident, they would then intervene. They were still going to be engaging with the NPOs.

Legal papers were served on the IDT earlier this financial year by a group of Mpumalanga NPOs. The matter was then addressed through the IDT. The EPWP programme itself has not commenced yet. They were looking at it from all points of view and engaging Treasury. They have communicated with Treasury, specifically for guidance on the funding earmarked for IDT and have requested a shift of those funds. They were working with IDT to look at various scenarios, so EPWP can advise its political principals about this financial year. The IDT was already looking at the options. EPWP will be advising the Acting DG and Executive Authority on the implications, depending on how the process will unfold, given that 330 NPOs were contracted to IDT. In terms of the contractual arrangements, they have engaged their legal section; they have advised IDT to do the same. The closure of IDT was a bigger matter beyond the EPWP. Infrastructure SA will not be taking this matter forward. EPWP will be looking at creating the capacity within DPWI. It was important to engage the NPOs on this matter and other concerns.

Chief Director: EPWP Operations, Ms Pearl Mugerwa, noted that when a public body enters into a service level agreement with an NPO to deliver services utilising EPWP participants, they allocate their funding from their own equitable share allocation. Therefore if Public Works was withholding the release of the grant, the operations of the NPO at ground level were not affected. The participants would still continue to work and be paid because the NPO was utilising funding from the public body's equitable share allocation.

For the Non-State Sector NPO EPWP programme, however, IDT has had to withhold funding. She acknowledged that they have received many complaints about the participants suffering. DPWI has to find a strategy in which they prevent the impact of withholding the subsidy from the NPOs. They revise the implementing model on an annual or bi-annual basis to respond to circumstances on the ground. They do not adjust the model for management purposes where management was reneging on its responsibilities to manage the incentive as a programme. They would identify the management shortfall and come up with the necessary framework if that was what was needed. They would look into the effects on the participants on the ground, moving forward. They have not been very strict about ensuring the impact on the participants is prevented as a result of non-compliance of the NPO.

Acting DDG Ms Abrahams noted that the NPO programme was one of several EPWP programmes. Even though they do not currently have an NPO capacity at the regional office, EPWP does have capacity to deal with all other sector-related matters, if it be the Infrastructure, Social or the other sectors in collaboration with partnerships with existing national and provincial departments.

Closing remarks
The Chairperson stated that the EPWP deals with some of the most vulnerable people in society. The Department should engage with the NPOs and come up with a solution. Remember that IDT signed a service level agreement with those NPOs. Those NPOs were contracted to DPWI, as much as IDT was. This needs to be resolved seriously and urgently. If EPWP reported quarterly, it would not see as many challenges later on, as they see them now.

As requested by Ms van Schalkwyk, she requested a presentation on EPWP collaboration with SETAs, Department of Small Business Development and NYDA. One of EPWP responsibilities was to ensure that people become skilled or can develop their own small businesses. She also requested a presentation on EPWP Regional Office work as some of the items presented to the Committee today were not in written format. She expressed concern that when they came back they would say something else, not what they presented today. She stressed that they come up with a written presentation on their plans and interventions. She thanked DPWI.

The Committee adopted the minutes of the previous meeting.

The meeting was adjourned.

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