MDDA on funding model of community broadcasters and their operations across all provinces; with Deputy Minister

Meeting report

The meeting was delayed as the Committee Secretary informed Members that the Acting Chairperson was struggling with connectivity. A few Members indicated their frustration at the delay.

Mr M Nhanha (DA, Eastern Cape) threatened to leave the platform because he took the Chairperson’s delay as offensive and disrespectful.

Ms T Modise (ANC, North West) explained to Mr Nhanha that the Chairperson indeed had a connection issue and that the delay was not caused deliberately.

Mr J Nyambi (ANC, Mpumalanga) was nominated as Acting Chairperson. He suggested the Committee Secretary should display the agenda for Members to adopt.

The agenda, which was a briefing by the Media Development and Diversity Agency (MDDA) on the funding model of community radio and television broadcasters and their operations across the nine provinces, was adopted.

Deputy Minister's introduction

Ms Thembi Siweya, Deputy Minister in the Presidency, outlined the structure of the presentation.

She said Members would be briefed on the MDDA’s financial performance for the 2019/20 financial year. The institution was on a positive growth trajectory, despite not performing so well in 2019.

The MDDA’s current funding models, which included five broad categories, would be discussed in the presentation in detail. It would also deal with the MDDA’s response to print media, as well as the funding of government and its own investments. It would illustrate what the MDDA was doing to support small commercial media, community broadcasters and digital online media, and to develop its research and development capacity.

The Deputy Minister highlighted the role of digitalisation, which had ushered in new online media, as well as the expectations of society for community media to adapt to this new age.

The presentation would cover the MDDA’s fundraising strategies, and would also explain the MDDA’s measures in relation to the pandemic.

MDDA's presentation

Mr Hlengani Mathebula, Chairperson, MDDA, invited Ms Zukiswa Potye, Chief Executive Officer (CEO) of the entity, to make the presentation.

Ms Potye described the MDDA’s constitutional and legislative mandates, the establishment of the agency, its vision, mission and values, as well as its role in support of the National Development Plan (NDP), to the Members.

The MDDA’s five-year goals were:

• Building a capable, effective and efficient organisation in support of the delivery of the MDDA mandate by 2024;

• Media diversity promoted through the growth of sustainable community-based media in South Africa by 2024; and

• A capacitated, digital responsive community-based media sector by 2024.

The MDDA currently received 63% of its funds from broadcast funders through Universal Service and Access Fund (USAF) levies, 33% from government grants and 4% from interest on investment. What it was considering tapping into was money lawfully accruing from any other sources and foreign donors, as the entity currently did not get any funding from those two areas.

Mr Yaseen Asmal, Chief Financial Officer (CFO), said that due to the macro-economic situation, funding from the fiscus had been reduced. Factors such as Covid, as well as the impact of the Russia-Ukraine war, would be negatively impacting the entity for the next few years.

He referred to the reducing interest from 2019/20 to 2020/21 and said that this was not a good sign for the MDDA, as interest was a source of income for the entity.

Ms Potye also expressed her concern that the 63% of the funding which the MDDA received from USAF could be reduced, so it was important to explore other sources of revenue. She informed Members of the unfair relation which existed between the MDDA and major printing houses, as they had decided to part ways with the MDDA in 2014. The MDDA did not have its own printing capacity, so it needed to explore other means to find affordable means of printing.

(See attached document for details).

Discussion

The Chairperson commented that on some occasions, some community radio stations could not successfully get MDDA funding due to their failure to submit supporting documentation, such as financial statements. She wanted to know whether the situation had improved or if it continued to be the case. What was its plan to help applicants to improve this situation?

Referring to the MDDA’s mandate, with its focus on training personnel and equipping them with the skills to operate community Radio stations, she asked how often the MDDA convened those training workshops, as well as its own assessment of the effectiveness of the training.

Mr A Arnolds (EFF, Western Cape) commended the MDDA on the improvement in the quality of its presentation, on achieving a clean audit, and for managing to reduce its vacancy rate from 27% down to 7.3%. The low vacancy rate was a positive indication of stability at the entity.

He asked about its outreach programme to raise awareness among more potential media applicants who were in need of grant funding and urged the MDDA to do more to assist those potential broadcasters.

He wanted to know whether the MDDA was fulfilling its mandate on capacity building, and observed that many community radio stations were struggling as a result of high operational costs and a lack of financial management. Was the MDDA effectively assisting those radio broadcasters in this regard?

Mr Arnolds appreciated the strict monitoring measures in the R20 million disbursement of emergency grant funding, as mentioned in the presentation, and asked if there had been any mismanagement of the funds.

He requested the MDDA to give an indication of the progress of the entity’s liaison with municipalities. He recalled that it had mentioned previously that expensive premises were one of the key deterrents for the operation of community radio stations, and that the entity would initiate discussions with municipalities to rent their premises at a lower or even zero cost.

He enquired about the MDDA’s engagement with Sentech.

He said that public servants and politically affiliated individuals were not allowed to serve on the boards or the management of media organisations by law, so he wanted to know what the situation at community radio stations was like now and whether any such persons remained on their boards. If so, he wanted a list of those people’s names.

Mr M Nhanha (DA, Eastern Cape) said he would submit the rest of his questions in writing, as he was rushing to catch a flight.

He referred to the importance of sustainability which the CEO highlighted, as well as the entity’s plea of poverty, urging for government intervention. In response, he said that pleading poverty was not very helpful, and urged the leadership of the MDDA to come up with sustainable ideas to ensure that community radio stations were sustainable in the long term. Although the country was facing financial difficulty, it was the Committee’s responsibility to appeal to the National Treasury for more funding, but that could be done only once the MDDA had presented its ideas on more innovative and sustainable solutions.

He asked the entity to confirm whether there were officials at the MDDA who were asking for bribes from community radio station applicants in return for grants. If there were, he also wanted the CEO to give the Committee more details on what action had been taken against those officials.

In addition to his oral questions, Mr Nhanha also posted follow up questions in the chatroom. What did the Public Finance Management Act (PFMA) and Treasury regulations stipulate with regard to the term of office of senior managers, such as the CEO and CFO? What was the term of office of the current CFO, adding: "I understand the sub judice aspect, but am sure the rest of it is not affected.”

Ms T Modise (ANC, NW) understood that the MDDA received its budget from the National Treasury to fund and support community radio stations. Her observation was that over the years, a lot of community radio stations were complaining about insufficient funding from the MDDA. Thus, she wanted to know whether the funds were sufficient to fulfil its mandate.

One of the comments made by community radio station operators was that municipalities and local councillors were not supporting them and using their platforms to communicate with their communities, and were using well-established media instead. Was this still the case, or had the situation improved?

Mr C Smit (DA, Limpopo) enquired about the political influence on community radio stations. He recalled an incident at a Polokwane radio station that had turned into a political battle. He wanted to know what the Department was doing to make sure that this type of situation would not be repeated again.

Deputy Minister’s response

Deputy Minister Siweya assured the Committee that the Department had managed to root out the wrong elements in the system and put in place control measures to prevent such issues from happening again. For instance, the MDDA had previously had incidents where it was paying for non-existent projects. In response to that, the Department had devised a system to verify such programmes, and continued to encourage community radio stations to report such incidents. Furthermore, the Department and the MDDA had made it clear that the chairpersons of the boards of those community radio stations needed to ensure that no politically affiliated individuals may be appointed to the board, or otherwise they may be appointed only with authorisation from the relevant department. She indicated that the selection of board members was a process that was independent of the MDDA.

She said that corruption delayed service delivery, and encouraged the board of the MDDA to continue to root out corruption. She highlighted the importance of the entity and said that the sector would not be able to drive transformation in its absence.

The reason that the MDDA had obtained clean audits was an indication of the success of the control measures that had been put in place.

The Deputy Minister said that the leadership of both the Department and the MDDA were open to constructive ideas, as more ideas would lead to better performance.

MDDA’s response

Mr Mathebula commented on the disciplinary process involving the contract of the MDDA’s CFO. He was aware that this meeting was being streamed live on an open platform, so there were details that he could not divulge. He guaranteed that the Committee would be kept informed of the outcome once all processes were completed.

He said he was not aware of any issue related to MDDA officials asking for bribes, nor had he received any information or tip-off of bribery. If there was such an issue, it would have to go through the MDDA management to ensure such issues were appropriately dealt with.

Ms Potye responded to the Chairperson's questions, highlighted some of the things which the MDDA had done in its outreach programmes to help capacitate interested community radio media applicants. It announced the hosting of programmes in a region by being physically on site to announce them, by making announcements in newspapers, or via the Government Information and Communication System (GCIS). She said that all eleven languages were available to ordinary citizens to guide them on the steps of how to apply for such funding programmes. Applications may be made physically or online, or via email.

She pointed out that the MDDA had made great progress in the disbursement of funds to beneficiaries. In the past, it had been struggling to efficiently disburse funds for five-year contracts, as grant-in-aid contracts were usually for 12 years. The MDDA was now able to disburse within twelve months. The entity no longer had to face a situation when one project was there for five years without being funded.

In addition, to assist small businesses, the MDDA waived some of the cumbersome requirements included in the ten policies for small entities. It understood that for small businesses, it was impossible for a CEO to provide numerous versions of business plans, so it had consolidated those cumbersome requirements into part of its development agenda and provided applicants with templates, working with them hand-in-hand to develop those policies. The outcome was positive, as most small businesses were able to develop those policies at the end of the twelve months.

Ms Potye assured Mr Arnolds that the MDDA was trying its best to fulfil its mandate with limited resources. The MDDA was an entity that certainly did not want to be handicapped, given the important role it played for community radio stations. It was therefore in the process of developing its sustainability model to increase its revenues.

Explaining the MDDA’s use of the R20 million emergency fund, she said R45 000 was given to broadcasters and R45 000 was given to print media for very specific items. It divided the verification stage into two rounds. Those that failed to account -- which constituted only a very small percentage -- would not be eligible for the second round. In the second round, the review would focus on evaluating factors such as a business's bond value, rental etc. The entity had not experienced a high level of mismanagement, but rather had minor issues such as the timeous submission of reports. However, those minor issues could be disregarded since they happened on a daily basis.

Ms Potye said that the MDDA needed to engage with the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA) to discuss cost-effective ways of providing support, such as renting affordable premises in government buildings for community radio stations. It would have to indicate that by renting government buildings, community media stations should not be seen as being captured. The MDDA was very clear that it would not fund beneficiaries who were politically affiliated, but did believe that the government should play a role and avail its resources to assist community radio stations. By law, community radio stations must not be politically affiliated. This point was also consistent with the MDDA Act, which required them to be independent and impartial.

She responded to Mr Nhanha’s question and reiterated that sustainability was a key strategic thrust for the MDDA. She pointed out that there were over 280 community radio stations in South Africa, but there were still a few provinces in the country without their own community television. Those included Mpumalanga, the North West Province, the Free State and the Northern Cape. She recalled an incident in which the late Minister, Mr Jackson Mthembu, had requested her to establish community television in every province. The estimate was that one community television would need approximately R30 million to set up, so she was thinking that perhaps the MDDA could open one community television, and use that to support five stations. She assured him that it was not the MDDA’s intention to plead poverty. The sustainability model which it was working on would secure its funding from the medium to long term. She also wanted Members' input on what a sustainable project should be. She highlighted Jozi FM as a case study and also indicated the entity’s interest in learning from the best practices of other countries, including Europe and the rest of Africa.

Ms Potye was not aware of any bribery incidents.

She explained how the MDDA was able to do away with the previous backlog of applications for grant funding. The selection committee had been confused as to which of the 850 applicants should be granted funding. The selection criteria were not clear. Subsequently, it had devised a grant funding policy, which effectively sorted out the backlog within eight months.

She pointed out the huge progress that the MDDA had made, and assured Committee Members that where there had been issues or allegations related to corruption, she had personally been to the police stations to open cases, as well as approached the HAWKS.

She did not comment on the CFO contract question.

Ms Potye said the MDDA received about approximately R32 million from the National Treasury. As the demands for grant funding were so high, the money was never sufficient to provide funding for all applicants. It received more than 80 applications annually from the broadcasters’ side alone. It was able to provide funding for only 22 to 25 applicants if it was lucky enough. Since the print sector had walked away from community media, the MDDA had been trying to engage the sector and get money from them.

She encouraged more mayors and local councillors to use community radio stations but also wanted them to buy media space, as that would contribute to the entity’s sustainability since advertising was the lifeline of media. In the absence of advertisements, community media would return to the MDDA for more funding, which would constrain its capacity.

She agreed with Mr Smit’s view that the MDDA radio stations should not be used as a political battleground. It walked hand in hand with their beneficiaries, showing them how to be unbiased and present free and fair content during election periods. If there was content that showed political bias, not only the MDDA would intervene -- it would also rope in the Independent Communications Authority of South Africa (ICASA) to investigate such issues.

The Chairperson thanked the MDDA and the Deputy Minister for their detailed responses, which had been to Members’ satisfaction. He commented that the Committee was looking forward to the finalisation of the MDDA bill.

Adoption of committee minutes

The Committee adopted the minutes from a previous meeting.

The meeting was adjourned.