WRC, Inkomati-Usuthu Catchment Agency & Breede-Gouritz Catchment Agency 2022/23 Annual Reports; with Deputy Minister

Meeting report

Water Research Commission: 2022/23 Annual Report

Dr Rethabile Melamu, Chairperson, WRC board, asked Dr Jennifer Molwantwa, Chief Executive Officer (CEO) of the Commission, to deliver the presentation.

Dr Molwantwa summarised the desired outcomes of the performance environment, which were:

• A water-secure country;
• A knowledge and innovation-driven and responsive water sector;
• A transformed society that uses and supports sustainable development solutions for evidence-based decision-making in planning, policy development, and implementation;
• Economic growth and partnerships;
• Community development; and
• A high-performing and financially sustainable organisation.

She summarised the Commission’s performance highlights in each of its four programmes:

Research and development

The strategic objective of research and development was to generate new knowledge and innovation through enhanced human capital, and skills development for sustainable water management. The research and development was undertaken through three business units, which were:

• Water resources and ecosystems;
• Water use, wastewater and sanitation futures;
• Water utilisation in agriculture.

The total number of launched and completed research, development and innovation (RDI) projects in the financial year 2022/23 was 121, which exceeded the objective of 95 projects. Dr Molwantwa also mentioned the 432 students who had been assisted during the financial year.

Innovation and Impact

The Commission had improved science-based decision-making solutions for the water industry to influence policy and decision-makers with research-based knowledge. It was also responsible for creating and demonstrating sustainable, innovative and smart technology. New water and sanitation products have also been developed. Briefings with stakeholders and communities facilitated advanced and inspired water talks.

Corporate services

The Commission deployed improved information technology (IT) tools to allow for a dynamic and agile work style. The legal and regulatory framework was also complied with.

The Commission continued to develop a moral culture while supporting the progress of people's empowerment. It had welcomed diversity via its tenacious work to alter and rectify.

Finance

The WRC had been given a clean audit, which was an unqualified audit opinion without any significant findings about the financial statements or the accomplishment of performance goals and related reporting.

By adhering to the necessary accounting and auditing standards and statutory requirements, the WRC continued to focus on obtaining unqualified audit results. The Commission's liquidity position was shown by the WRC's current ratio -- it could satisfy its present financial obligations as they become due, as the ratio was 2.5 to 1.

The WRC was a solid business, and had a healthy financial situation, according to the statement of its financial position.

 At year's end in 2023, the total net asset worth was R286 million.

Since 2022, there has been a decrease in receivables, which was a sign that debtors were paying. Cash and cash equivalents have risen by R100 million from 2022 to the present. Current liabilities had decreased from R214 million to R189 million due to prompt payment to creditors.

Financial Performance

The WRC's primary source of income, which had accounted for 75% of its overall revenue over the last four years, was the Water Research Levy (WRL).

In order to fund research and innovation projects, partnerships with other organisations might generate leverage income. Compared to the preceding years, there had been a significant increase in 2022 to R131m (mirrored in RDI costs of R236m). Due to the cost of professional fees associated with risk management, WRC strategy, ICT strategy and legal fees, general expenses in 2023 climbed dramatically. Depreciation, personnel costs, finance costs, leases, and RDI expenditure trends were in line with inflation.

See attached for full presentation

Inkomati-Usuthu Catchment Management Agency (IUCMA): 2022/23 Annual Report

Ms Linda Zulu, Chairperson, Inkomati-Usuthu Catchment Management Agency board, requested the CEO, Mr Charles Mohalaba, to present the annual report.

Mr Mohalaba said the Inkomati-Usuthu water management area covered four main catchment areas -- Crocodile, Sabie/Sand, Usuthu and Komati. He also provided an overview of the Agency’s vision, mission, and values, together with the outcomes alignment.

2022/23 surface water storage status

He stated that compared to the past hydrological years, the WMA water resource status (levels of rivers and dams) was high during the financial year under review. Prior to 2021, dam levels were typically below 80%; however, starting in 2021, they had risen above 100% and even started spilling. Water users had no water use restrictions in the 2022/23 financial year since most dams were 100% full due to above-average rainfall. Groundwater use and water use efficiency were still being encouraged in an effort to minimise the strain on surface water resources.

Groundwater availability status

Except for the Sabie-Sand Catchment, the general groundwater availability was still high in the other three catchments (Komati, Usuthu, and Crocodile). However, since 2006, there has been a 16-year drop in the availability of groundwater resources.

Water availability status

Based on 2022 water requirements, the CEO advised the Committee that demand in the WMA continued to exceed surface water supply, hence alternate sources were being sought to satisfy future demands.

Mr Mohalaba also thoroughly discussed the water quality issues for each catchment.

Under transformation, he covered the following topics and the outcomes:

Job creation

For the vegetation programme, the Agency had filled 75 posts and 75 posts for the river rehabilitation programme. There were also 18 graduates for the graduate programme.

Wards 2 and 3 in Tonga's Nkomazi Local Municipality, and Dr Pols in the Mkhondo Local Municipality, had participated in corporate social investment (CSI) initiatives, and there were workshops for historically black individuals' (HDIs') empowerment, water use authorisation workshops, and resource protection roadshows to support HDIs.

The CEO informed the Committee that the aim of the IUCMA's strategic outcome in 2022/23 had been 40% of total spending allocated to broad-based black economic empowerment (B-BBEE) suppliers, but 51% was achieved. In partnership with a key strategic partner, the Agency had held two empowerment workshops for small, medium and micro enterprises (SMMEs). It would continue to hold free seminar seminars for SMMEs.

Human resources

Mr Mohalaba reported that 115 of the 144 approved positions had been filled. According to a workforce profile, females occupied 49% of occupations (56 of the 115 filled positions), and the Agency continued to empower its staff, with a total of 20 internal bursaries issued in the fiscal year. It also continued to empower external students, awarding a total of four external bursaries in the 2023 academic year.

The annual performance of the IUCMA has been 100% achievement of its targets. Seven of its 13 targets had been met, and the remaining six had been exceeded.

Financial Performance

Ms Sandra Mabunda, Chief Financial Officer, IUCMA, said that the Agency had met all its statutory obligations in preparing the annual financial reports for 2022/23, as well as having implemented GRAP 1 presentation of the financial statements, and GRAP 104 (Financial Instruments) early. Early adoption had had no major influence on the reporting processes, and non-compliance involving irregular expenditure totalling R119 018 had been incurred in the financial year, compared to R732 970 the previous year. No prior adjustments or changes in accounting estimates were made. The Agency reported a net surplus of R42.8 million, up from R8.7 million in 2022. It had prepared the financial statements on an accrual basis, and as a going concern.

An external audit review of the financial accounts had been initiated in May, and had been conducted since then.

The audit findings included administrative issues brought up to enhance the control environment.

The opinion provided made 2022/23 the 13th year in a row that the IUCMA had received an unqualified audit opinion.

Mr Mohalaba concluded the presentation by describing the financial and technical challenges experienced by the Agency, together with water resource management challenges.

(Please see attached document for details).

Breede-Gouritz Catchment Management Agency (BGCMA): 2022/23 Annual Report

Mr Jan van Staden, CEO, BGCMA, provided an overview of the Agency’s performance on seven strategic objectives:

Water resource planning

This target has been given more attention. The improvement in help desk capacity depended on the quantity of verification and validation (V&V) confirmation letters obtained from the service provider selected to carry out the V&V project. As a result, every letter that was received was completed.

Water use management

Two water use authorisations applications had errors, and were not prepared for capture. The target for licences recommended in accordance with law, and the confirmed percentage of general authorisations, had been achieved. The targeted number of completed audit reports for water use compliance was surpassed. The target for municipal wastewater treatment works (WWTW) that discharged into water resources was exceeded in terms of the number of water quality compliance reports. Due to the volume of letters written, there were delays in the V&V project's completion.

Institutional and stakeholder relations

All targets set for this strategy were met or exceeded.

Water allocation reform

All targets were met, and some were exceeded.

Water resource protection

All targets were met, and some were exceeded.

Strategic support

Regarding compliance with audit recommendations, the Agency discovered that some unresolved audit findings took longer to address. Nevertheless, it was making every effort to do so. Further, due to the demarcation area, obtaining 100% B-BBEE enterprises for the intended procurement budget was difficult.

Management and governance

All set targets were met, and some were exceeded.

Financial performance report

Ms Zanele Ngoma, CFO, IUCMA, said the Agency had received an unqualified audit report, with findings on revenue management, irregular expenditure, and consequence management. There had been non-compliance because effective and proper measures were not made to recover all revenue owed, as required by section 51(b)(i) of the Public Finance Management Act (PFMA). The audit had revealed accounts from long-standing debtors. Global gross debtors had grown year after year, and the provision for dubious debts had grown along with them. This directly affected how well recoverability techniques and risk management procedures for accounts receivable worked.

The procurement of travel services during the 2022/23 financial year resulted in irregular spending of R1 741 423, where the bid documentation lacked the criteria for bid evaluation and adjudication, including those required by the Broad-Based Black Economic Empowerment Act of 2003 and the Preferential Procurement Policy Framework Act of 2000. This unauthorised expense was related to the unauthorised expense of the 2021/22 financial year.

In accordance with section 51(1)(e)(i) to (iii) of the PFMA, the Agency was unable to gather sufficient acceptable audit proof indicating disciplinary action had been taken against officials who had incurred irregular spending. This was due to a lack of inquiries into erroneous spending.

According to the CFO, there was no act of fraud, corruption, or other criminal wrongdoing for all the unauthorised expenditures made. No money had been wasted, and value for money was obtained.

(See attached document for details).

Deputy Minister's comments

Ms Judith Tshabalala, Deputy Minister of Water and Sanitation,  said the IUCMA had received its 13th consecutive unqualified audit report, a sign of its dedication to transparency and accountability in carrying out its mandate. Its revenue of R182 million was 11% higher than the previous year, and was a result of its expansion and additional R21 million in funding. She also noted that BGCMA's revenue collection had increased from 79% in the previous performance year to 89%, which was commendable.

She said the WRC's mandate included encouraging coordination, cooperation, and communication in the field of research and development, in addition to producing new information from the nation's water research. It was an organisation that fell within the purview of the Ministry. It could help with issues related to improving efficiency, exchanging and upgrading knowledge and technology, and capacity building within the water sector.

The CMAs' mandate was to manage water resources in collaboration with local stakeholders, with a specific focus on involving local communities in decision-making regarding meeting basic human needs, promoting equitable access to water and facilities, and social-economic development. She remarked that the CMAs continued to operate within their delegated mandate, which had resulted in the achievement of their primary strategic outcomes, for which they should be applauded.

Deputy Minister Tshabalala said that the processing of water usage licences, which had been highlighted as one of the measures for achieving change in the water sector, had helped the IUCMA rank among the best performers in 2023. The Agency had demonstrated commitment to working toward the sector's transformation, something the Ministry emphasised, and this had included encouraging young people and people with disabilities to participate in their activities and seize opportunities. She commented on the involvement of female executives in key strategic roles.

She highlighted the challenges that the government and agencies faced, such as the financial strain that had been placed on the Department as a result of water users' non-payment. The water boards would have recognised the difficulties that government faced in providing financial resources when the demand exceeded what it could actually provide. She urged the Ministry and Parliament to seek partnerships in dealing with pollution, and also to be involved in educating and ensuring that the communities in municipalities took matters of pollution seriously and dealt with them quickly. The pollution of water resources by users continued to be a significant challenge.

The Ministry would like to find a solution to the issue of the verification and validation process of water licence applications not being finalised because of ongoing litigation, which was a major challenge. She praised the BGCMA for processing water user licences within the allotted time frames. She also praised the Agency for cooperating with partners on projects like river rehabilitation, alien vegetation removal, the extensive monitoring of water resources, the application of water-related grant policy projects, and awareness-raising campaigns.

The Deputy Minister also made the point that, despite the high rates of unemployment in the nation, there was still a shortage of skilled workers in South Africa. This issue needs to be addressed to ensure that this gap in the labour market is filled, and the Ministry is serious about doing this. The DWS was grateful for the support of the Portfolio Committee and the leadership of the WRC, the IUCMA  and the BGCMA.

Discussion

Ms M Mohlala (EFF) said the CEO had let the Committee know that the annual report was the last one to be given under the organisation's existing name, the Breede Gouritz Catchment Agency, and that from the following year, it would be known as the Breede Olifant Catchment Agency. She wanted to know why there had been a change. Had the scope of the task been widened, and what effect would it have on how the Agency was now operating? She noted that while the Department and catchment management agencies (CMAs) had both had difficulties with the processing of applications for water use licences, there had been numerous difficulties with the process overall, and asked if the strategies used by the CMAs regarding this issue had produced any results.

She observed that the IUCMA, which asserted that it had successfully implemented its debt management strategy, should offer quantifiable data on the debt situation in the area in which they were working, and wanted to know whether the number of debtors had dropped in recent years. She also inquired about the Agency's legal actions against any of its clients, and the role of the CMAs, IUCMA and BGCMA in helping the Department determine water losses.

She was interested in learning how serious the under-billing problem at IUCMA was, how it was likely to affect revenue in the near future, and whether it would threaten the organisation's capacity to remain solvent. She also asked the IUCMA about how it had handled some of the difficulties it had in dealing with transboundary management resources.

What had been the WRC's findings and recommendations following the Commission's first international Water Non-Sewerage Sanitisation conference?

Mr G Hendricks (Al Jama-ah) said he was quite impressed that a new Water Research Commission had been established, and that they appeared to be excited about what they were doing. 

Water tanks were utilised to respond to several situations across the nation, and it was crucial for individuals who used these tanks to know the water was safe to drink. He wanted to hear from the WRC if scientific analysis and research extended to testing water in water tanks. He also wanted to know if the WRC would be ready to suggest using water sanitisation pills, and whether they would be effective given that there had been instances of tainted water coming from the tanks that could cause cholera in humans. According to professors from Cape Town universities, the norms and standards used to test water had long been out of date. He asked the WRC if it had any plans to review these standards in order to comply with international standards and requirements.

He said that as a member of the African bloc, he had been involved with a water project in Ghana. Ghana had the World Bank as one of its donors, and if good management of donated monies and results were accomplished, Ghana would be the first country in Africa to have clean water. He asked if the WRC would be interested in learning about this project and gaining access to it. He later urged the Portfolio Committee to take some of the tactics employed in Ghana into consideration.

Ms N Sihlwayi (ANC) expressed her admiration for the entities' accomplishment of clean audits. She noted that each of them had implemented progressive programmes that were transparent in terms of their effectiveness. It was crucial to monitor the development of all existing structures and their effects, and she asked the WRC to cite one policy that the Commission had influenced. She referred to the 200 monitoring sites for quality and quantity monitoring, and wanted to know how these sites affected water quality and what they meant.

She asked the IUCMA about the drop in the number of groundwater users. She suggested that this meant the organisation needed to develop a clear plan and offer support to users, and asked if the Agency had a strategy in place. 

She asked the BGCMA whether there was a way to persuade HDIs to participate in the process again, as it was not a regular procedure, but a redress procedure. She expressed concern over the slow uptake of farming, and enquired whether the Agency had determined the cause. She also wanted to know if the Agency planned to reassess its service delivery goal, and what steps it had taken in response to the audit's reference to irregular expenditure. How did the BGCMA involve the community in its efforts, outside of employment?

The Chairperson referred to the WRC's percentage of total revenue spent on research (48%) and human resources (26%), and said the Commission should increase the proportion spent on its true job, which was research.

He was at ease with the report of the IUCMA, but the BGCMA's decision to resolve its financial difficulties by raising collection levels from 77% to 89%, despite the economy's negative trend, concerned him. He praised them for their employment fairness, particularly concerning the proportion of women to men.

Responses

Deputy Minister Tshabalala responded on the impact of combining the two agencies, and said the Minister would have given consent for the Breede-Gouritz region to be expanded to include the entire Western Cape, which incorporates the Berg-Olifants operational area. The Ministry had decreased the number of entities from nine to six CMAs, which was also in accordance with the Presidential Committee on reforming state entities. This allayed the concerns regarding skills parity and assured that the Ministry regulates hydrological borders and river flow. It was sensible in terms of cost-effectiveness to have one CMA in the Western Cape to maximise the Ministry's resources.

Through the involvement of local groups, issues relating to pollution and risks were being protected, and the Department was focusing on that policy as far as development was concerned.

She said the Minister had given all irrigation boards 90 days to submit proposals regarding transformation. This would provide access to water use for those who were previously disadvantaged.

The IUCMA's 200 monitoring stations showed the value of CMAs at the local level, because they could assess the water quality in the serviced areas.

Testing was a problem in water research, because there were numerous non-chemical ways to purify water. Deputy Minister Tshabalala asked the WRC to elaborate if they had conducted research on this.

Dr Melamu said the Non-Sewerage Conference was the first of its kind, which the WRC was honoured to host. It was being held in partnership with the International Water Association. She said the CEO, CFO, and board secretary were participating in the Portfolio Committee meeting from the conference, as it was the second day of proceedings. Several new ideas were coming to light, with the first being that cleanliness must be at the top of the political agenda, which the WRC wished to embrace.

It was crucial to recognise, in light of the problems caused by climate change, such as the floods currently being experienced, that would be harder to manage sanitation infrastructure. To supply adequate energy and ICT solutions, countries must adopt a decentralised approach to implementing various service delivery models.

Dr Molwantwa stressed the significance of developing the infrastructure in terms of sanitation to acquire and apply these innovations and technology at the local government level. It was essential to modify procurement policies, which should then address how National Treasury handles procurement. Government focus on the sanitation economy should be a precondition for a stimulus in this area, as methods of plumbing and engineering had altered, and there were new manufacturing and installation options and opportunities.

The WRC had developed guidelines with municipalities on how to test the water in water tanks. As municipalities obtained the tanks, they were responsible for providing guidelines to the communities. However, the drinking water standards adhered to by WRC members were recognised on a global scale, and some of their criteria were even stricter than those set out by the World Health Organisation (WHO).

The WRC had had an impact on government policies, particularly through the South African Local Government Association (SALGA) and its collaborations on innovation and technology. It also contributed to the Department's and the Minister's support for the new water service delivery model.

Deputy Minister Tshabalala responded to Ms Mohlala's question about transboundary concerns, and said the Department was in charge of transboundary matters, and that the CMAs engage in that operational arrangement. They also collaborate with Eswatini and Mozambique to monitor the flow of water from South Africa to Mozambique.

Ms Lindiwe Lusenga, Deputy Director-General: International Water Cooperation, DWS, spoke about the reform of drinking water norms and standards. Drinking water standards were last published in 2001, and a draft was issued in 2007, but only after going through various processes and consultations. The sanitation framework was also absent, but it had now been amended, and the draft had been submitted to the Department of Planning, Monitoring and Evaluation (DPME) for a social environmental effect assessment. It was therefore ready for publishing, once the Director-General had signed it off.

China study trip

Ms Mohlala referred to the communication sent to Committee Members about the cancelled study trip to China from 3 November to 11. She asked whether the Committee had any legislation to finalise during this particular period, and which came first -- the legislation or the study tour.

She posed these questions because she was concerned that because the China trip was part of the fourth quarter term schedule, the Committee might modify the decision made at the meeting on 10 October. She was also concerned that the Committee was overlooking the difficulties in the Northern Cape and Free State by prioritising a research tour to China. Why not prioritise those two provinces, which had significant challenges, instead of going on a study tour to China?

The Chairperson replied that the application for the Committee to go to the congress in China had been denied by the House Chair, due to financial and other timing issues. However, they could still re-submit their application to visit China, and if the dates of the China study tour clashed with the dates of visiting the Northern Cape and Free State, the dates would be altered.

The fourth term programme would go ahead as planned, and he would officially submit the application to go to China to the Chair of Chairs on Thursday, even if certain Members may not be available for the revised dates. The Committee would not compromise the processing of legislation, and the programme would be altered if the trip to China was permitted. They would await the Chair of Chairs' response regarding the China trip.

The meeting was adjourned