Presidential Employment Stimulus 3 progress by NAC & others; Sport, Arts, Culture BRRR

Sports, Arts and Culture

25 October 2022
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary


The National Arts Council (NAC) reported on the Presidential Employment Stimulus Programme (PESP3) outcomes; adjudication and approval process and way forward. It had more demand than supply for the Presidential Employment Stimulus Programme (PESP3) as it received more than 4 000 applicants but it lacked the resources. There were several applicants who demanded reasons for their denied application. This led to the closure of its offices because of people storming the offices demanding answers.

Members noted that the NAC had vacancies in crucial positions that were filled in an acting capacity. It was taking long to fill those positions and they asked for its policy on extensions of acting positions. The vacancies were not helpful for the progress of the Council.

Members stated that the NAC was seen to be reactive instead of proactive in how it operated because it would react to media reports instead of staying ahead by giving the public regular updates on what was happening. They asked why it did not develop a threshold for financial support to ensure equitable distribution and to include more artists. The 3% outcome of applicants supported by PESP3 reflected the financial gap in funding artists. They asked what sustainable development model or ecosystem could be developed to support artists. They asked what the  implementing challenges were.

The Department of Sports, Arts and Culture (DSAC) gave a progress report on the five Department entities that had agreed to administer and distribute PESP 3 funds: National Heritage Council; National Museum; Business and Arts South Africa; National Film and Video Foundation; National Arts Council.

Members requested reassurance about the capabilities of these five entities to deliver within 2022/23 and for the specific challenges each were faced with. 

Meeting report

NAC PESP 3 report
• In 2022, The Presidency made the third Employment Stimulus Programme available to the sector through the Department to be disbursed via the National Arts Council (and other funding agencies)
• The PESP 3 programme would strive to meet government's objectives of job creation, with a clear focus on targeted groups (women, youth and people living with disabilities)
• The PESP 3 is also aimed at promoting human capital development
• Unlike PESP 1, this call did not include heritage projects as the National Heritage Council (NHC) was tasked to manage heritage PESP projects
• The NAC was allocated R180 million
• 4% was allocated as PESP management fees
• R172.8 million was allocated for disbursement

The NAC made a PESP 3 industry announcement in which it thanked industry for recognizing the efforts and strides made by the NAC towards being an organisation that intends to work closer with the artists. It requested industry to be cognizant of the compliance requirements of the PFMA and policies that bind the NAC. The NAC Council and management noted with great concern the number of applications (60.3%) that did not proceed to adjudication due to administrative non-compliance and failure to adhere to the call requirements such as uncertified copies of identity documents; unsigned and undated reference letters with no addresses; and incorrect confirmation of banking details.

To address this compliance barrier, management embarked on capacity-building initiatives to assist the sector with the application process from 4 to 15 July 2022. Physical as well as virtual workshops were held on the Grant Management System and what to submit. NAC informed industry that due to being a public entity that must adhere to the PFMA, it is unable to interfere/influence applications by contacting applicants to submit correct information after the closing date. Doing this may expose the NAC to being accused of unfair practice by applicants who were not able to be reached to correct their documents.

PESP 3 DSAC Overview Progress Report
The Department of Sports, Arts and Culture (DSAC) received R440m for 2022/23 and R462m for 2023/24 for the Presidential Employment Stimulus Programme 3. It identified the following entities to roll out the implementation of the programme:
• National Arts Council (NAC) – R180m
• National Film and Video Foundation (NFVF) – R152.3 million
• National Heritage Council (NHC) – R65m
• National Museum – Art Bank – R20m
• Business and Arts South Africa (BASA) – R20m
• Project Management Office (PMO) – R2.7m
• Total – R440M

Progress - National Heritage Council (NHC)
• NHC made the open call for PESP funding on 12 July 2022 and closed on 16 September 2022.
• The administration cost of R2 869 000 was transferred to NHC.
• NHC has not yet disbursed any funds as it has just completed appointing the review committee.

Progress - National Museum (NM)
• NM made the PESP funding call on 12 July closong on 12 August 2022 for two of their streams.
• DSAC concluded the contract and the administration cost of R883 000 was transferred to NM.
• The signed MOA was sent to the National Museum for record keeping purposes.
• NM closed all its open calls for all three programmes of their funding streams on 23/09/22.
• NM has just issued appointment letters for Work Based Experience Programme on 10/10/22 and the Art Creating and Mentorship Programmes are being pre-screened.

Progress - Business and Arts South Africa (BASA)
• BASA made the call for PESP funding on 01 July 2022 and closed on 29 July 2022.
• DSAC concluded the contracting process and payment of R883 000 was made to BASA.
• BASA has submitted its monthly expenditure report for September.
• BASA completed its adjudication for the first open call and has not yet disbursed any funds.
• BASA review panel completed adjudication and recommendations sent to BASA board.
• BASA board has sent a motivation memo to DSAC for first cycle of funding. The list of recommended beneficiaries has been requested.

Progress - National Film and Video Foundation (NFVF)
• NFVF made the open call for PESP funding on 24 June and closed on 5 August 2022.
• The first tranche of administration costs was paid on 22 September 2022.
• The new PESP3 expenditure template was concluded and emailed to entities.

Progress - National Arts Council (NAC)
• NAC made the open call for PESP 3 funding on 20 June 2022 and closed on 29 July 2022.
• The PESP3 expenditure template was provided to entities
• NAC briefed DSAC on PESP3 results on 29 September that were announced .
• The 30 September 2022 online NAC webinar announced the list of successful applicants across music, literature, visual arts, crafts, theatre, dance and multi-disciplines.
• The Department has received information that news is circulating on social media platforms about NAC which has been made aware of this. DSAC requested it provide a detailed explanation.

Update on Application Submissions
• NAC received a total of 4810 applications for the PESP.
• 2 Applications were submitted through the Grant Management System plus manual submission
• 4 465 applications received online through the Grant Management System and 345 submitted manually
• Total applications received valued at R6 333 722 602.50

Mr T Mhlongo (DA) started with the question the Chairperson initially raised. The NAC was not proactive but reactive. The NAC gave a media statement four hours later after his media statement on the NAC office closure. It showed it was not proactive but reactive. Its duty was to inform the Committee of anything that came to its attention. The Committee should not receive it from other sources such as the closure of the NAC office. Its mission statement was clear that artists should access the office. He was not going to read his media statement but how many people were there that made you decide to close the office? Why did you not open a case for gender-based violence (GBV)? How many letters have you issued that indicated either declined or approved? When did you workshop, educate or develop artists on the PESP3 application what was needed and the requirements? Where were they? How many people attended? Something was not done accordingly to have such a non-compliant rate.

How many vacancies are in the NAC? What does the NAC policy say on extend their acting appointments? How many and in what capacity are those currently acting? Why was it taking so long to fill those positions and what is the Council’s involvement? What happened to the previous marketing and communications manager and who is filling the position right now? He asked for the resolution date when the Council approved the PESP3. How much is utilised to date?

Mr Madlingozi was concerned about the NAC and litigation. He was worried it could be using money earmarked for artists to cover and bulletproof itself. The entire year, DSAC came to the Committee with a negative story to tell. Could NAC enlighten the Committee on these dubious invoices that the media is talking about? Why are they happening? Could the NAC tell the Committee if it is true that it is paying money for lawyers to answer its questions? If it was like that then they were definitely incompetent. The Department and the NAC were both incompetent if it let the NAC do that. It came to the Committee and diddle-daddled about compliance not wanting to respond to such things. What are the binding remedial actions the Public Protector gave the NAC? That had to be clear because nothing was clear. Artists were dying and suffering from depression. The NAC called the police to protect it when artists and creatives wanted questions to be answered.

The Department concluded the administration costs came to R883 000 for the National Museum. Simultaneously, it concluded the very same amount for BASA. Why was it looking as if the Department was automatically copying and pasting these figures as though it did not respect the Committee? The Committee would become a toothless entity. The NAC had to report properly to the Committee to ensure it was happening in the right way. On this point, he knew there was a Council member called Bongani Tembe. What is Tembe’s position in the KwaZulu-Natal (KZN) and Johannesburg Philharmonic Orchestras? Why is it raking in so much money for his organisation while at the same time being on the NAC Council? Can it be clear what his position is? DSAC vehemently refused to answer anything that involved him.

Ms V van Dyk (DA) noted the information on social media and wanted clarity on that. It was shared on social media that the approved PESP3 list was published late and asked NAC to confirm this. It said on social media that the Council spent two hours fiddling with the final adjudication decisions of the advisory panels. Can the NAC provide reasons for the delay if there was one? Section 11(2) of the National Arts Council Act states that advisory panels shall consist of persons who have achieved distinction, who have special knowledge or experience in the field of arts. Section 11(3) said that the panel shall advise the Council on the merits for the application for grants. She was a bit confused. If there was a Council member chairing this committee and this panel of experts decided on the funding merits which she assumed the Council chairperson approved, why would there be a need for the Council to change this afterwards? Was this not done by a management team that actually had arts development officers? She requested the terms of reference of the NAC Panel of Chairpersons Committee (POCC) as approved by the Council that governs the mandate and responsibilities of the POCC. What policy guidelines allow for Council members to review a decision of the advisory panel, which was meant to be made up of experts? She asked if the Committee could receive the original funding list, along with the list with the changes to see the reasons for the changes. After the Council met, were projects on this list declined afterwards? Did it receive letters from the panels that did the adjudication for the PESP3 funding and if it received any letters. She asked if this could be shared with the Committee. It was important it knew what the concerns were that it raised. She had a concern on the PESP3 post-announcement that it said it wanted to further educate the adjudication panel members on their role. She thought their role should be clear from when they were appointed in the first place. She was concerned about this. If it could respond to the questions she asked she would appreciate it.

The Chairperson welcomed the Deputy Minister Nocawe Mafu who had arrived from a previous meeting but was now with the Committee.

Mr D Joseph (DA) referred to the Department project management office (PMO) which had a two year appointment. He asked if the allocated R2.7 million was for the two years or only until March 2023. He asked who the PMO reported to that would take responsibility for that work. Do the NHC and BASA review committees have a specific time period and does it coincide with that of the PMO?

Ms R Adams (ANC) asked why NAC did not develop a threshold for financial support to ensure equitable distribution and to include more artists. How does the NAC monitor and evaluate the progress and outcomes of projects and artists supported by PESP3 to develop evidence-based decision-making on ensuring the most impact? Which arts disciplines are more economically impactful? She asked when NHC will disburse the funds and if it is within its project timeline.

Mr M Zondi (ANC) asked what significant challenges are affecting the entities in implementing the programme and what support is the DSAC providing to assist.

He still had confidence in the NAC leadership irrespective of the challenges raised before. Steadily they were doing well and addressing some of the challenges raised by the artists. It was understandable that the NAC could not satisfy all artists at once, but the programme assisting the artists was much appreciated. A difference could be seen. The guidance and management from the Department could also be seen. He believed the NAC had the will to do good. He asked the NAC what are the criteria for the equitable distribution of finances across the provinces.

The Chairperson thanked the Department and the NAC. The outcome of only 3% of the applicants supported by PESP3 reflected the financial gap in funding artists. What sustainable funding model or ecosystem could be developed to support artists? Which policy changes were made to avoid the problems faced in the first PESP? From this process, what policy matters have to be reviewed to strengthen the process and ensure internal controls hinder abuse from the adjudication team? The Committee acknowledged the NAC recognised the financial gap and appreciate that it saw that.

Ms Malomane asked why the NHC total was for just 376 projects when the applications were valued at over R8 billion? Why does NHC not develop a threshold for financial support to ensure equitable distribution and include more artists? The NAC outcome of only 3% of PESP3 applicants supported reflected the financial gap in funding artists. What sustainable funding model can be developed to support artists?

NAC response
Ms Celenhle Dlamini, NAC Chairperson, said she would hand over to the CEO to do the first part.

NAC Acting CEO Ms Julie Diphofa thanked Members and noted the NAC always strived to improve its operations.

The Chairperson asked that she identify herself and switch on her video.

Thereafter, Ms Diphofa replied that the capacity building workshops had nothing to do with the PESP. Prior to running any project funding, it would begin with capacity building workshops. It did both virtual workshops and physical workshops in KZN, Gauteng, Free State, and Northern Cape. It released 617 grant notification letters. The three that were left out it was still conducting risk assessment before it could release those. This was part of its M&E pre-allocation, pre-award, and post-award.

The Chairperson welcomed the Minister who had joined the meeting.

Ms Diphofa continued that the NAC had three acting positions – her position, acting Chief Financial Officer and acting Marketing and Communications Officer.

The Council did the approval of PESP in two phases. The first meeting it had with Council was on 28 February. When Council made the commendation for the approval list and eliminations, there was a very high budget allocated to applicants. Initially, it had a list of 585, but with the eliminations and reduction of the funding allocation, it ended with 619. This meant more beneficiaries would benefit. It had the potential of the creation of 3 386 additional jobs.

The NAC had been releasing the decline letters in batches. With over 4 000 decline letters to be issued, it was a process. It could not just click a button and release them. It could do that if it was giving out one standard letter. Unfortunately, the sector asked for specific reasons why the applications were declined. It had to update information on the grant management system and thereafter release the letters in batches.

There was information in its policies that it tried to improve from the first PESP. This was the vetting of applications as they came through and were being declined. There was a second group that went through those applications and ensured they were correctly declined. In the case an application was incorrectly declined, it was referred to the panel for review.

Ms Diphofa replied that the Public Protector had given four remedial actions to the NAC: 1) It needed to issue a letter of apology to the complainant, which it did. Two letters were sent, one in June 2021 and one in July 2021. 2) It was required to revise the policy which it did as well the legal vetting of the policy before final approval. Those processes were completed in 2021. 3) The Public Protector requested management develop a standard operating procedure, which it did and signed it in 2021. 4) It needed to declare conflict of interest emanating from 2015 onwards for projects initiated. It had completed all those processes.

Ms Diphofa replied that the NAC announced to the sector it would announce the application results at 16:00 but it announced them at 17:00. This had nothing to do with the list being changed. However, once it started uploading the information there was a lot of traffic on its website surpassing 60 000 visitors. People could not even access the website because of this. In the meantime, when this was being corrected, it elected to post the information on Facebook for artists to access the information.

Its advisory panels were inducted from the time they started working with the NAC. Induction itself could not be a once-off activity. As it continued with panels, it hosted post-funding feedback sessions with panel members to ensure they were constantly on the same page.

The POCC did not recommend any funding. Its role was to recommend to the Council the approved applications. The POCC itself reviewed applications and ensured the proper processes by the panels were in place before recommending those approved applications to Council.

There was a question about monitoring and evaluation and how it managed the progress and looked at the outcomes of funding it provided. It dedicated M&E staff to assist with PESP. In addition, there were development officers responsible for managing the projects internally. The development officers also made inputs on specific risks in projects and informed the M&E staff. It had a risk and compliance officer who also assisted with implementing and monitoring what people were doing on the ground. The NAC set up a reporting template in a manner that allowed it to obtain quality information that the applicants reported on. There was a quality assessment of the necessary proof applicants had to submit. This included proof of expenditure, financial statements evaluated by independent accountants or chartered accounts depending on the funding threshold.

With the research done last year, the visual arts were playing an important role, especially for products accessing markets overseas and ensuring there was financial gain.

On the significant challenges it encountered as it implemented PESP3, the funding deficiency was a major problem. With any funding the NAC dealt with, the demand exceeded the supply. One could assume if it had sufficient funding, it would not have disgruntled people. Over 60% of the people had not complied. With the funding workshops it did, these issues were addressed. Compliance did not actually emanate now, but had been a problem before. Hence, it had capacity building and initiatives prior to the closing date to ensure it assisted the applicants. She asked the Committee to be mindful of the fact that since the Council was aware of compliance issues, it lessened the compliance requirements. It also made it less cumbersome for applicants to submit documents. IDs that were certified for a period of one year were still acceptable. This was one of the examples showing it was trying to lessen the compliance requirements. The tax clearance certificate was only required at the contracting stage. This meant nobody could be precluded from entering the system if they did not have a tax clearance certificate. This included removing financial statements as a requirement at the time of applying.

These were the challenges it faced. The funding deficiency was the most important, because even if people complied and it had more than 3 000/4 000 complying, it could not fund all of them.

On equitable distribution across provinces, through observing what National Treasury allocated as an equitable share to each province, it set up those guidelines. These were shared to the panels which told them how much could be allocated to each province. It was trying to remain within those thresholds. However, there were minimum percentages that had to be allocated to provinces. Applications in Gauteng were huge in numbers, and the quality of these applications deserved funding. Unfortunately, if it were to fund on a merit-based method, it would mostly fund Gauteng. However, it was conscious of spreading the funding across provinces equitably no matter how small the batches of applications from provinces were. It needed to ensure they were supported.

On being able to fund only 3%, the NAC could propose another model like introducing partnerships and having partnerships with international markets. This was to ensure artistic products and services could be showcased to access these markets. This would ensure further dissemination of South African artwork and financial gain. This could be proposed; however, it would not necessarily solve the issue. The issue was that it needed an allotment increase.

On the changes it implemented from learning from PESP1, the first was having enough internal resources to deal with the applications and ensure the turnaround time was as it had published. It needed to ensure all applications were completely reviewed. No application could be left without a proper review, either from the panel or the NAC office. Hence, it had a vetting system in the office. It also ensured it monitored every application that went to the panel to see how they were being reviewed and scored. This was to ensure all applications were seen and completely scored. The panel has five members who all had to review each and every application unless it was an application they declared an interest in. This application would be taken away from them. It learned from PESP1 and ensured in PESP3 all the checks and balances were in place. From the time applications reached the NAC office to the time they reached the panel, it monitored timelines and deliverables within the staff and the panel. It ensured there was an assessment report at every panel meeting.

On the review of policy on conflict of interest, it made significant strides to ensure all applications reviewed had minimal conflict of interest. Where panel members declared direct interests, the application did not receive funding.

The NAC Chairperson, Ms Dlamini, replied that the NAC was really concerned about individuals storming its office and threatening its staff, especially in the way they did last week. What was important was ensuring the safety of the staff and the CEO. She did not want a situation where it only took the matter seriously once something really bad happened. The way violence escalated when the individuals approached the CEO and the staff was very concerning. She stressed the importance that the NAC would not just lock the doors. Effectively, it was not locking its doors because the services continued. It continued to work. There was not a single beat it had missed. She highlighted the real safety issues that it was dealing with but that it was taking its role seriously and was continuing to work even though there were limited staff present at its office. There were staff at the office but it was not operating at full capacity to try and minimise the risk.

The NAC was allocated R180 million for PESP 3, 4% was allocated for management fees, which left R172.8 million to be disbursed.

Ms Dlamini clarified that the Council was not using funds meant for disbursement to do litigation. These were operational funds. Those two budgets were separate. It was not taking money that was allocated directly for funding and using it for litigation. These were completely separate funds and she wanted to give the Committee that comfort. It saw the allegations about invoices and other aspects in the media. It wanted to recognise the fact that sometimes what the media said and what was reality were two completely different things. The article mentioned by Mr Madlingozi that came out last week listed a lot of invoices and suppliers that were paid out. When that particular journalist approached the NAC and asked questions about this, any of the information eventually printed was not included. The NAC was never given the right to respond. What it would have asked for was proof of these invoices, to be allowed the right of some form of reply. It was finding that journalists would print stuff in the media that was contrary to the truth. It came to accept that due to the nature of the entity, it did make headlines. It found itself in the papers continually because people wanted to read about the NAC regardless of information accuracy. One thing it did do was respond to media queries. It had found the response it gave to the media was not what was published. It decided to publish the responses it gave to the journalists on its own website. This was for transparency and for people to see what it said to journalists versus what was printed.

She thanked Mr Zondi who acknowledged the strides the NAC had made over the last year and a half. It was appreciative of the Committee members acknowledging the difficulties it experienced as an entity since they came into the Council last year. And the fact that it really was trying as a Council and management to stabilise the NAC as best as possible. It was a difficult entity, but they enjoyed what they did and were captured by the arts and would continue to serve it the way it deserved. All this because it loved the artists it served. On the POCC, she introduced the NAC board member who chaired the PESP3 session and who has worked hard alongside the Acting CEO. She gave him the floor to say a say a few words.

Dr Sipho Sithole, NAC Board member, responded as the chairperson of the POCC saying its role was to receive a report from a panel member, who was also a Council member. The POCC then looked at whether the panel was performing according to its mandate and objectives. There were eight disciplines represented including bursaries. It dealt with music, crafts, theatre, visual arts, dance, literature, and multi-disciplines. All these applications from projects and artists were equally important individually. One was not more important than the other. Once the POCC received the budget, it allocated it according to each discipline. It looked at how much was available, which the adjudicating panels could work with.

The frustrations of aspirations was something it was concerned about. It also understood there was no amount of funding to satisfy all the requests from the industry. There was no other distributing agency that received 4 000 applications to the tune of R5.2 billion. So when it saw artists coming to the NAC and storming the offices demanding to be funded, they were basically saying all 4 000 applicants should be funded by the NAC. They were basically saying it should have the R5.2 billion regardless. That was the message it was receiving when these people stormed the offices. Even the 40% that went to adjudication and passed the compliance test were over R2.08 billion against the R132 million the NAC had to distribute. It was a challenge. It wanted the Committee to work with it in addressing this.

There was a question about its funding model and the gap. One aspect the NAC highlighted in its strategy meetings with DSAC was that the private sector wanted to fund the industry in the form of donations. It was made to understand that SARS did not issue Section 18A certificates for donations received towards the arts. That was one aspect it wanted the Committee to help with as Members of Parliament to look at the law so that it could be funded in this way. It also requested this in its meetings with DSAC. For instance, in rare countries like France, the budget at national, provincial and local level, had a certain percentage of it by law already declared for the arts sector. This way it did not have to wait on the minister of finance and treasury to decide to make these allocations to the arts because it was part of the law that a certain percentage should go to the arts. This was where it wanted to move to.

He spoke about thresholds for funding support. As it had limited funding, what then happened with the adjudication was that they agreed according to the highest scoring applicants. People who did not score as high but were approved could not be funded because the funds had been exhausted. One of the interventions it made as Council was to opt to reduce that threshold so more applications could be funded. Its intervention resulted in 84 additional projects that had been adjudicated and approved by the panellists, being funded. This was possible because it put a limit on how much each project could be funded. Due to this, it was able to create an additional 3 385 jobs and ended up with just over 40 000 jobs overall created by PESP 3.

The NAC was equally concerned with the number of applications it received against the money it had and the decisions that were made and prioritisation. It was trying its best to ensure it funded more people. It was this Council that removed all the hurdles of tax clearance certificate and financial statements. Why do you want financial statements from a company when you have not given them money – because they must report on the money you have given them? All the NAC asked was if they existed as a company and ensured they had all the necessary paperwork. It would ask for tax clearance if approved. That was why it could receive more applications. However, the compliance matter remained an issue. It appealed to the Committee to work with it in finding mechanisms to increase funding for this sector, because these people chose nothing else but to be artists, whether they were crafters, or in theatre, or visual artists. That was all they wanted to do; they did not want a 9 to 5 job and the industry employed over 1.3 million people before COVID-19. This contributed 7% of the country’s total employment. It was growing faster than any other sector other than agriculture and mining. It was an important sector, contributing R74.3 billion to GDP. It could not be ignored.

DSAC response
Dr Cynthia Khumalo, Deputy Director-General: Arts and Culture Promotion and Development, noted the comment that the department had no good story to tell this whole year. It was just a statement. However, she noted that the results of PESP 1 and 2 were reported to the Committee and more than 38 000 jobs had been created either directly or indirectly. There was direct employment and there were testimonials to this. There was also indirect employment as translated by the employment multiplier model it used. This explained what the NAC did where it gave funds in line with the project proposal. It was in no way saying it met all its expectations where the creative industries applications were concerned.

Another Committee member indicated that its report was a copy and paste with specific reference to the National Museum and BASA receiving the same amount of R800 000 for administration costs. She assured the Committee that it was not a copy and paste. The allocation of administration costs was explained. Of the total R440 million, it had to calculate the 5% first which translated to R22 million. National Treasury guidelines stated that of the R22 million, R2.7 million went towards the project management office (PMO). That left a balance of R19.3 million that went towards administration costs. The directive was that it did not exceed the 5% of the total. That was how it came to 4% plus as it had to stay within the 5%. The reason the National Museum and BASA had the same amount was because they had the same allocation. Their allocation was R20 million which translated to the exact same amount for administration costs. There was definitely no copy and paste.

On the question of the PMO that was set up in the Department, it wanted to bring on board extra capacity because from experience of the PESP first and second round it did not have the set up for doing oversight. This was modelled against what the Presidency did. As the confirmed allocation for now from National Treasury was only for two years, the contracts it signed could only be aligned to that. From the time the PMO was set up, this would translate to two years minus a few months because of the recruitment it had to do, which was an open recruitment process. The R2.7 million was only for one financial year. It was not just for salaries but for setup costs including resources these three officials used. The PMO reported directly to the DDG of Arts and Culture Promotion and Development. She was given the responsibility to do PESP oversight. Hence, she was making these reports to the Committee.

The NHC had come on board for PESP 3 to distribute R65 million. It was falling behind due to some challenges. It has been mostly experiencing problems in ensuring its system was operational, that it had capacity and the right skills and competency to manage and administrate this funding where they had been assisted. It did its best. The Department had a meeting with the NHC Board which committed to playing its oversight role and to monitor management. As she indicated, the NHC was falling behind. The NHC projected it would disburse the funds on 5 December 2022. However, in its meeting the Department raised its concerns and requested NHC revisit the process flow timelines to see if it could cut the time without compromising its quality of work. It was assured through the NHC Board and CEO that NHC was doing their best in delivering this project – having learned from the bi-monthly meetings it had with the entities where they identified some tips for improvement and best practices.

A process was followed to deal with the significant challenges the five entities were experiencing. The Department had agreed with National Treasury and the Presidency on the five entities that would be implementing agents. Grant letters were issued to confirm each had been appointed to administer PESP in 2022/23. Subsequently, the entities submitted concept documents on how they would execute the work including process flow maps using their systems. Before signing the contracts, the entities submitted project plans with timelines and risk mitigation plans. The bi-monthly meetings take place on Thursdays where the entity CEO and project manager table a report to the Department. They talk about risk management of the plans. That was when it would identify if they were falling behind and looked at how turnaround could be achieved.

The main challenges, over and above general and operational issues, were the same issues spoken of by Dr Sithole and the NAC which was the high demand versus what was available as budget. The high level of demand had become a challenge. Each entity came up with verification and adjudication processes for implementation which the Department could monitor.

Dr Khumalo replied about the NHC total of 326 applications and why it stated an amount of over R8 billion. This amount was based on the total sum requested. That sum was based on what was contained in each and every individual proposal. That was how that figure was reached.

Follow-up discussion
Mr Mhlongo said the NAC had not answered his questions. He asked about implementation of the initial Committee recommendation that the letters should go out with immediate effect. The Committee heard that they will only be out today. Obviously you would expect chaos. When will the office be open again at full capacity? When will the outstanding money be used and for what? It did not reply about the NAC policy on the extension of acting positions. He needed the names of those currently in acting positions. What is the involvement of the Council chairperson about vacancies? Is she involved or not? If so, in what capacity is she involved in appointments? Why was the previous marketing and communications manager moved from another unit? Who at the NAC is managing the call centre number (011) 010 8855 and email for the corruption watch line? What is the status and how many emails does it have? He was told such emails were not responded to.

Mr Mhlongo pointed out that people were not going to the NAC office to say it should increase the money; they went there because they had not been responded to. They only received the letter today. It was not because they believed they were entitled to funds. The NAC was taking the Committee for a fool. If one applies and did not comply, then obviously one would fail and not receive the money. When he came to the NAC office, it was not because he needed correspondence but nobody responded. Communication was poorly done. This was even in his media statement that nobody responded. Only after he released his statement did the NAC tell the media that its office was closed. That was not proactive but reactive. He recommended the NAC tell the Committee or go to the media if there was anything to say – before things got out of hand which they did in this case of the office closure.

Is the NAC adhering to the Department of Labour legislation and requirements for its own staff? What is the process followed to submit approval for and motivation of the payroll? Another question it did not answer was about the virtual and physical workshops before the PESP started. Where was it? When? Venue? How many people attended? He asked that the Committee get those answers later. When are the three acting positions going to be advertised? Could it get permanent people in those positions.

The Chairperson said the network was bad as some of the questions asked by Mr Mhlongo had been answered. Those who answered could repeat their answers in the follow-up response.

Mr Madlingozi said he would be a broken record but had no choice. The NAC was comprised of competent members appointed by the Minister through transparent public participation. Was Bongani Tembe’s appointment transparently made? A Council member could not serve on the Council and be a staff member because it constituted a conflict of interest. He was not fighting with Mr Tembe but these were questions that needed answers. He could see this question was sidelined and was not answered. He did not know why. It had been said that the construct of Mr Tembe’s seat was not with the NAC but the Department. He asked for clarity.

Ms D Sibiya (ANC) had tried to speak but her network was bad. More than six questions from Mr Mhlongo were not answered. Was it possible to get those responded to in writing to save time?

The Chairperson repeated that Mr Mhlongo’s questions were responded to. There were those that he posed in his follow-up that needed to be answered.

Ms Adams asked what sustainable funding model can be developed to support artists. What work is the Department undertaking about this? The BASA distribution is unlike the other PESP programmes as it is mainly skewed to Gauteng and KZN. Why is there low inclusivity in these programmes? Was this adequately communicated to the public?

NAC follow-up response
Chairperson Dlamini replied to Mr Mhlongo that operations at the NAC were at full capacity and there was not a single service down because of limited staff. She cautioned against making a big deal about having limited staff in the office. The NAC was responsible and ensured that the critical PESP process and its own core funding were making disbursements. It was cognisant of the fact that each and every service should continue uninterrupted. That had been the case since the 18 October when the office closed. It would not condone violence and threats to its staff where there could be loss of life. It would always ensure it protected its staff against any form of violence that threatened its staff.

She replied that she was not involved in appointments of operational staff unless it related to a Council member. Only then did the Council come in. She confirmed again that as NAC chairperson, she was not involved in any operational appointments done by the CEO and staff members. They had been handling that very well to date.

She asked that any question about the Mzansi NPO and staff, the Committee should get DSAC to handle those questions.

Ms M Khawula (EFF) referred to the artists that ended up passing away with nothing. When will South Africans see their own artists being assisted and looked after? There could be a meeting where they state all their problems. She referred to sport as well such as soccer players. It could see that Kaizer Chiefs Football Club (FC) was going into the bush. They could meet and look at where the problems were that led to their underperformance. In her day, sports were played in schools, children were seen playing soccer, making music, singing in schools. When will we see the dream we are trying to revive in schools where children can achieve and compete in big competitions? When you look now, the doors are closed and when some saw they were not performing, they want to commit suicide. She asked for schools to have facilities for sports and the arts.

Ms Dlamini repeated her response about informing those whose PESP application had been declined. If there was one standard letter of decline, the NAC would click a button and submit all 4 000 in one go. It could not do this because every artist wanted specific answers on why their applications were declined. The process was modelled in a specific way. Once applications were vetted and declined by the panel or the office, those specific reasons had to be uploaded on each individual’s profile on the Grant Management System (GMS) before the letters could be released. It was not something that could be released at the blink of an eye. Respectfully, it was a process it had to follow and ensure people received the correct reasons.

On the outstanding money still to come from the Department, the first instalment already sent to the NAC was for administrative purposes which was about R19.7 million. The second instalment it was waiting for would be used for the funding disbursements of the beneficiaries it approved. She believed the money was en route.

The NAC policy stated that one could be in an acting position for three months, thereafter the position should be rotated if there was another incumbent that could do the work. If not, the position could be extended until that position was actually filled. It was currently assessing and looking for a new CEO. Any positions that were open would be advertised and filled.

Mr Mhlongo interjected and asked when are these positions going to be advertised. He did not receive an answer. Do we have an ETA or not?

NAC Acting CEO Ms Diphofa replied that the process for securing the appointment of a new CEO was in progress. Once it had the CEO in place, then those other vacant positions could be advertised. Unfortunately, she did not have a date.

On the corruption watch line, it did have a log of all the complaints received. There was somebody manning that responsibility as assigned by the office. A question was asked about the individual who was removed from a position. She was not in the position to respond to that directly as the individual had already accepted a new position offered by the NAC.

DSAC response
Mr Sibusiso Tsanyane, DDG: Corporate Governance Unit, replied that he was working with the entity oversight unit responsible for the process of appointing councils and boards. The appointment of the National Arts Council members was done in compliance with Section 4 of the NAC Act. One of the requirements was that the Minister appointed an independent panel which made a shortlist and interviewed all the nominated candidates or applicants in public. Then the recommendations went to the Minister for appointment. Mr Tembe was one of the people nominated who went through the public participation process and was interviewed by an independent panel. His name was subsequently recommended and sent to the Minister for appointment. There was no objection to Mr Tembe as per the requirements of the Act and hence he was appointed as a Council member. The provision on who was not allowed to be appointed as a Council member was clearly captured in the Act. The question of employment of Mr Tembe as CEO of the KZN or Johannesburg Philharmonic Orchestra was not one of the reasons that could be used to appoint him to be a Council member. The process that was followed was not in contravention with the NAC Act. He was duly appointed by recommendation of the independent panel to the Minister like all other Council members.

Ms Mandisa Tshikwatamba, DDG: Corporate Services, added that governance principles made provision for conflict of interest If it so happened that a Council member would find themselves conflicted in some of the work or discussions of the Council. The provision would mean they recused themselves. This was applied even in the case of Mr Tembe as it related to orchestras that would need to be discussed or decided on by the NAC Council. That provision was applied by the NAC Council.

Dr Khumalo replied about the concern that the distribution was skewed. The five entities did their best to have outreach and awareness campaigns over the whole country so all provinces were properly represented. They did them virtually where they could and also physically. However, the trend continued. If the individual applications from provinces that did not come forward if looked at closely, there was a slight increase in applications but not where it wanted it to be. If she looked at BASA she saw there were 38 applications from Gauteng, 15 from KZN, nine from Eastern Cape, and eight from Western Cape and it went down like that. This was partly why BASA opted to go for a second cycle and three open calls. Those would be going out during November. Although they finalised the received applications, that was categorised as cycle one. Cycle two and three were to ensure that the outreach was intensified as much as possible. At the end of the day, it was incumbent upon the applicants to submit their applications. But equitable distribution was a focus area – it was not at an adequate level. These cycles intended on reaching out as best they could.

She noted the comments from Ms Khawula about intensifying their programmes and also venturing into schools in both the creative arts and sports. While it did have programmes for creatives and sport that went into schools as part of its intervention programmes in partnership with the Department of Basic Education (DBE), it wanted to finalise the signing a memorandum of agreement (MOA) with DBE. This way it could really streamline and align the programmes better in both these areas.

Mr Mhlongo said that NAC did not respond to the Committee’s written questions. It took time to respond to the written questions. For the Committee to do oversight did not need a written letter. It only sent written questions to the Minister and not the officials. For the question he asked, the NAC did not need a scientist to write it down. Who was manning the call centre? The name of the person was not mentioned. When will the office be opened? It did not need a scientist. At that moment the roller door was closed. He was in Johannesburg. He asked who was fooling who by saying it was working, it was not open. The mission statement of the NAC was that people should access the office.

The Chairperson said she wanted the NAC to respond, especially to those that wanted that answer. She pleaded with the DDG.

Dr Khumalo said Mr Mhlongo’s questions were very specific. She asked if Ms Dlamini of the NAC could come in and answer.

Ms Dlamini said she wanted to address the points made by Mr Mhlongo and where he said it did not respond to questions posed to it. She disputed this and said it did respond to the question. As a matter of fact, today there was not a single question that was not responded to by the entity. She said the acting CEO could confirm this, because at least it was aware of all the questions the Department sent it from the Committee. She wanted to confirm this. She asked the acting CEO if she wanted to respond to any of the comments made by Mr Mhlongo.

The Acting CEO said the name of the individual assigned to corruption watch line was Ms Palesa Mopedi.

Dr Khumalo said the name for the person on corruption watch line was provided. She was not sure if the Chairperson heard. She thought there was a second question from Mr Mhlongo that was specific. She was losing a bit of audio, she hoped those questions were responded to.

Mr Mhlongo said the last question was not captured.

The Chairperson asked the Committee members, especially Mr Mhlongo, if it could ask the Department led by the deputy director-general and then the chairperson of the NAC to answer those questions. Mr Mhlongo would indicate those questions and it would expect those responses. She did not know why the questions were not fully responded to.

Mr Joseph said he heard the offices would be opening in the next few days, but if a direct question was asked on what a person’s name was who worked in the call centre, it was a straightforward question. It was either someone was working and had a name, or nobody was working there.

The Chairperson when she was kicked out she heard the acting CEO was naming that person.
The acting CEO said she would repeat the name. The name was Ms Palesa Mopedi.

The Chairperson asked Mr Mhlongo to forward the outstanding questions and the Department would follow up for written responses from the NAC.

Deputy Minister’s remarks
Deputy Minister Nocawe Mafu appreciated that there had been some improvement in how the questions were responded in the interaction between the NAC and the Portfolio Committee. Although there could still be areas that needed improvement, there was better interaction compared to previous ones.

The NAC should take the questions and comments and see them how it could improve how it functioned. One observation Mr Mhlongo made was that the NAC was reactive and not proactive. She wanted the NAC to take this positively and improve how it shared information to the community of creatives. Instead of it using only its website to respond to the public, it should also interact with the media and release media statements on how it was working. This would ensure there was a healthy relationship between the creatives and the NAC and there should be continuous communication. That would improve how people looked at the NAC in general.

When the NAC responded about the acting positions, the Acting CEO said she did not know when the posts would be advertised. At some point the Committee should be given a timeframe. It was not fair for the Department and NAC to come to the Committee and say they did not know when some posts would be advertised. It should state the NAC allowed people to act for example for a period of six months. It was important to clarify that and ensure there was comfort given to the Committee on how the NAC was managed in general.

One area she really wanted to comment on was the threshold for the support of the artists. This was to ensure that one individual received R10 million while others received R100 000. How do we manage the threshold? That also helped the Department in how it managed the NAC. It was important that even if the Committee comments were critical that it took the suggestions and used them to improve how it functioned.

She wanted to take what Dr Sithole raised about a percentage of the GDP being given to creative artists. When it interacted with Treasury on the PESP implementation and looked at the way forward, this was a recommendation that should go forward. We should be able to say what we have learned from the PESP and what we can improve as the NAC interacting with the creatives. It should say what it was going to do better as the NAC and Department to ensure that moving forward, NAC served creatives better and the Department helped the NAC to do some of those things better. That was why she did not want to look at the interaction as negative. Committee members were raising what could help it do better. She appreciated the questions that were raised. The NAC and the Department responded to the questions. Some might appear tedious or repetitive but when looked at objectively, they were meant to assist them in doing their work better.

The Chairperson called on the Minister to speak but he seemed to have technical problems. She thanked the Department and NAC. When the NAC started the programme, the Committee criticised it constructively and put forward suggestions. However, the Committee was aware of the reality that the five entities were given little money. This was not just the Department’s challenge but also the Committee's. Coming to the BRRR, could Treasury do more than what it was doing? Dr Sithole had mentioned France. The Australians were doing the same thing for sport. With the PESP it knew how they all struggled to meet the high demand and felt for the artists. The problem was that the money was not enough to satisfy everybody. They can only try their best. The Committee would constructively criticise but it was not in their shoes so she appreciated that.

Sports, Arts and Culture Budgetary Review and Recommendations Report
The Chairperson assumed the Committee members had read the report. She had read it twice. It was a long report and it took more than one day to absorb it. It would be brought up on the screen and the Committee would go through it. She thanked the content advisor for the report. She asked if Members wanted to add to the recommendations.

Mr Joseph supported the Chairperson in thanking the content advisor and everyone else who contributed to the high standard of the report. He had raised certain questions over the weekend and had received clarity from the content advisor. In general, he noted the previous BRRR recommendations, particularly on the Winnie Mandela House and the Sarah Baartman Centre of Remembrance. They were two outstanding projects that had not been completed. The lead provided by the White Paper that was approved by Cabinet and the work that would come from that would guide the Committee on the way forward. In general, he appreciated the detailed, high quality BRRR report.

Ms Adams seconded the proposal on the adoption of the very well-structured BRRR report.

The Chairperson noted that Mr Mhlongo said the DA reserved it right until the vote in the House. On that note, the report was adopted. This was a detailed and good report.

The Committee adopted the minutes of 14 and 18 October 2022 and the meeting adjourned.


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