National Skills Fund & ETDP SETA Annual Report 2022/23 with Deputy Minister

Higher Education, Science and Innovation

18 October 2023
Chairperson: Ms J Mananiso (ANC)
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Meeting Summary


National Skills Fund

Education, Training and Development Practices Sector Education and Training Authority (ETDP SETA)

The Committee highlighted the challenges of the National Skills Fund and the Education, Training and Development Practices (ETDP).  They played a critical role in South Africa and they were urged to implement necessary actions rather than "continuously planning"  They are expected to address their underperformance and their delays promptly. The need for an integrated information management system was highlighted to tackle problems of funding the same learners, deceased learners, and learners with ID discrepancies. The Committee stressed the urgency of resolving certification backlogs and the importance of consequence management for skills development providers not submitting required information.

Meeting report

Opening remarks
The Chairperson emphasized the importance of consequence management, particularly on irregular and wasteful and fruitless expenditure. He noted Committee concerns about late submission of presentation documents which affect the Committee's ability to conduct oversight effectively.

The Chairperson highlighted the ongoing dissatisfaction with the National Skills Fund performance and the need for it to commit to and execute its promises. NSF tends to over commit but Program 3 continues to face delays even if the Committee believes it should receive more focus.

The Chairperson discussed the recurring management challenges, especially on record-keeping and proper planning, within the National Skills Fund and the Education, Training and Development Practices (ETDP) SETA. The Committee stressed the need for adherence to SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) principles and the Public Finance Management Act (PFMA).

There was incapacitation within both entities, suggesting that personnel not fit for their roles be redeployed to more suitable positions.

The Chairperson called for active engagement and advice from Committee members to address these concerns.

Deputy Minister remarks
Deputy Minister Buti Manamela acknowledged the ongoing challenges with the National Skills Fund and noted that the Committee had discussed these challenges at length. The Deputy Minister highlighted that the Ministry had intervened in response to the NSF challenges.

The National Skills Fund provided an overview of NSF operations, performance, financial health, and plans for the future. It noted achieved targets and significant milestones. The financial overview focused on revenue, expenditure, budget allocation, audit results, and irregularities. Human Resource Management discussed the workforce, staffing, capacity-building, challenges. Lastly, NSF detailed its Audit Action Plan for 2022/23, outlining steps to address findings and implement recommendations.

ETDP SETA highlighted achievements, challenges, and performance outcomes. It responded to concerns raised by the Committee about the qualified audit opinion, deviations from the targets in the Annual Performance Plan (APP) and the Service Level Agreement (SLA) with the Department of Higher Education and Training (DHET); irregular and wasteful and fruitless expenditures and its audit action plan.

Ms D Sibiya (ANC) expressed concern over the reported high dropout rate of learners from various programs. She asked for the reasons for this elevated dropout rate and requested detailed information on the matter.

Ms Sibiya pointed out the AG's assessment of the quality of statements and non-compliance, raising doubts about the assurance on the backlog issue and its impact on the NSF. What steps would the NSF take about Skills Development Providers (SDPs) not submitting their performance reports. NSF needed to ensure a thorough investigation process for all its SDPs and the provision of documentation on payment processes to ensure accountability.

Shifting the discussion to program three for ETDPSETA, an inquiry about the plan to address delays in procuring service providers for training unemployed learners enrolled in entrepreneurial and digital skills programs Also recommended that opportunities for bursaries be extended to students in need.

Mr W Letsie (ANC) expressed frustration about the entity's performance in the AG's reports, noting that they had consistently performed well in previous years, but not this time.The importance of appointing capable women to positions of power was emphasized, as they would continue to make the organization proud.

On the entity's performance, on page 51 of the annual report, it was reported that only 591 out of 1,227 unemployed graduates completed an internship program. The reason given for this was inadequate monitoring of entry requirements for these internship programs. Who was the responsible party for monitoring this process, why the issue was not noticed during the review period, and where this reporting occurred within the organization?

On the same page of the annual report, it was reported that a [inaudible] unemployed learners enrolled in the Entrepreneurial and Digital Skills Program, as opposed to the planned 1,000. The delay was attributed to the procurement of the service provider for the training. There is need forexplanation on the reasons for the delay in procuring the service provider.

Moving to page 52 of the annual report, it was noted that a sizeable number of bursaries were not awarded to students, with only 220 out of the planned 1,944 awarded. What factors contributed to the lower total for applications and the basis for the target of 1,944. How was this number determined?

On page 55 of the annual report, the target for the number of CBOs, NGOs, and POs supported with training intervention was not achieved due to the removal of one organization that had been incorrectly characterized as an NGO. He asked about the verification process of this finding and if a vetting process was in place and how it worked; if not, an explanation of how this impacted the entity.

Mr Letsie acknowledged the NSF success in exceeding some targets, such as university students completing their qualifications and TVETs completing their programs for workplace experience and exposure. However, he questioned the commendable aspect of placing most students and graduates within the allocated time, asking how this was achieved and whether it was due to over budgeting in this area.

Mr Letsie expressed concern about the NSF, particularly on their instruction to provide 3.3 billion toward the NSF shortfall, which he found understandable. However, objections were raised towards the fruitless and wasteful expenditure, pointing out numerous issues. Why could it not provide evidence for the claims of proper accounting and receipt of services, which led to the AG's qualified opinion.The lack of internal project monitoring and expenditure approval processes was not a valid excuse. Service providers should have internal mechanisms for project monitoring.

Mr Letsie mentioned that on the annual performance report, the AG engaged to evaluate the usefulness and reliability of the reported performance information according to criteria developed from the performance management and reporting framework. The AG found material misstatements on compliance with specific methods and legislation in the annual performance report submitted for auditing. These material misstatements pertained to program 2, the skills development fund, and program 3, the PSA system improvement fund. He questioned why these misstatements were not corrected by management, suggesting that this indicated a lack of proper systems in place.

On the annual financial statements, Mr Letsie noted that the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and were not adequately supported by full and proper records, as required by Section 551A and B of the PFMA. While some material misstatements of current assets and current liabilities were corrected, there were uncorrected material misstatements and supporting records that could not be provided, leading to qualified opinions on the financial statements. He emphasized the need for improvement in these areas and suggested that internal and external auditors should detect and address such issues before the AG's arrival.

Mr Letsie expressed concerns about NSF's performance in the audit opinion for 2022-2023. Of the 38 planned targets, they only achieved four, which amounts to just 11%. He criticized the attempt to categorize their performance as "partially achieved" when the primary issue was whether targets were met or not. This performance marked its worst year compared to the previous three financial years and noted that NSF had consistently reported poor performance over the past four years, with two disclaimer audit opinions and two qualified audit opinions.

Mr Letsie questioned whether NSF had paid bonuses and performance-related payments to its employees, as indicated in the annual report. If so, he asked for the justification for these payments, given the entity's poor performance of only achieving 11% of its targets.

In Program 1, the target of addressing 100% of audit findings was not achieved. Mr Letsie noted that last year, NSF had mentioned a target of addressing 100% of audit opinions, which they failed to meet. The actual achievement was only 14%. He highlighted that in the previous financial year, they achieved just 13% against the 100% target, with reasons cited such as the time it takes to finalize actions identified by the business unit. For 2022-2023, non-achievement of the targets was attributed to the lack of integrated systems and capacity constraints, resulting in delays in implementing the action plan.

Mr Letsie questioned the realism of NSF's audit action plan in addressing the AG's findings, suggesting that it may have been poorly planned or lacked commitment to implementation. He also mentioned reports of actions being postponed until the entity recommendations were implemented.        `

Mr Letsie requested that NSF provide specific details about the audit actions that were postponed until the implementation of the MTT recommendations and asked for timeframes for their implementation. He expressed concern that despite engaging with NSF multiple times in 2022 on their turnaround strategies and action plan to address audit findings, the performance did not reflect significant efforts to resolve these issues, as evidenced by the entity's continued receipt of qualified audit opinions and poor performance in addressing their needs.

Mr Letsie pointed out that, despite the reported establishment of an HR unit, capacity challenges within the entity persisted, including its progress towards achieving targets, compliance with the PFMA, and adherence to applicable regulations.

Mr Letsie discussed NSF's challenges in implementing approved standard operating procedures and policies, noting that the reasons for not achieving full compliance had evolved over the years. A suggestion that these issues may be indicative of poor planning.

Mr Letsie emphasized the need for NSF to be transparent about the postponed audit actions, address capacity challenges, and provide clear information about the performance of their HR unit. A call for honest and comprehensive assessment was made for the issues at hand to ensure the effective and efficient functioning of the organization.

Mr Letsie highlighted that the reason for the deviation in performance changed, rendering it hard to measure, due to the unavailability of the approved list of standard operating procedures and policies. He suggested that this situation pointed to a lack of foresight in the NSF's planning process.

Additionally, Mr Letsie expressed deep concern about Program 2, which had a substantial number of planned targets for 2022-23. Despite having 63% of the 38 planned targets, the program consistently achieved 0% of these goals. He noted the critical importance of Program 2, which focuses on skills development funding and plays a central role in improving the skills base of South Africans, thereby enhancing their prospects for economic activity. This program received the bulk of NSF budget and was intended to fund 228,000 learners in various skills programs, but only managed to fund 59,000. He also expressed great concern about the failure of all three targets for SMME or cooperative interventions to achieve any level of success.

Mr Letsie picked out the need for a candid and thorough conversation with NSF to address these critical issues. He sought to understand the timeframes and processes involved in the approval of funding proposals, emphasizing that it was vital to overcome any obstacles that hindered the effective utilization of the surplus budget.

Mr K Pillay (ANC) expressed his disappointment at ETDP SETA's qualified audit. It was particularly disappointing because it was an organization had previously performed optimally and then suddenly faced such a setback. He hoped that ETDP SETA would take corrective actions to return to its previous status.

Mr Pillay inquired about the percentage of unemployed young people accommodated in the program. He highlighted the significant gap that exists between students studying at tertiary institutions and those who are employed, leaving a group of young people who are neither working nor studying and are unemployed.

On NGOs, it was noted that there was only an average of one per province. Mr Pillay questioned the adequacy of this number and asked about ETDP SETA's plans to increase the presence of NGOs.

Mr Pillay mentioned the AG's report of noncompliance on consequence management within the entity and asked about the plans in place to implement consequence management effectively.

Mr Pillay stressed the importance of regular monitoring in addressing the issues raised. He expressed his concern about the need to provide NSF with a significant amount of 3.3 billion due to the shortfall, and he inquired about the impact this had on NSF, considering the substantial financial injection.

Mr Pillay sought information about the steps NSF planned to take on Service Delivery Partners (SDPs) that were not submitting their performance reports. Additionally, in Program 3, he suggested that an investigation might be necessary to address external criminal forces affecting project flows, considering the seriousness of this issue.

Finally, Mr Pillay raised the question of whether consideration had been given to interdicting construction mafias, as it appeared to be a route taken by many entities to ensure they could still complete their work. He emphasized the need for proactive measures in dealing with such challenges.

Ms Ncobo raised several observations and questions, particularly on the Auditor General's findings on NSF. First, the inquiry about the AG's statement that they were unable to obtain sufficient appropriate evidence that disciplinary steps were taken against officials who had indicated irregular expenditure, as required by Section 51. Why were these investigations not performed and what were the reasons for this?

Next, Ms Ncobo focused on Program 3, the PSA System Improvement Funding, which had only achieved 4 out of 11 targets for 2022-23. She expressed concern about the low achievement, especially considering that this program received the second-highest budget within the entity. She asked for explanation for this underperformance.

Additionally, Ms Ncobo asked about the disbursement of R5 million toward university infrastructure development and 9 million rand toward public development infrastructure, as indicated on page 77 of the annual report. Which universities had benefited from the R5 million, the type of infrastructure funded, how these universities were selected, and for what kind of infrastructure development was the R9 million allocated?

Lastly, Ms Ncobo inquired about the capacity development projects that had not achieved their planned targets. She sought information about the nature of these projects and their locations.

Ms C King expressed her concern about NSF's performance, particularly with the Auditor General's report indicating that only four targets were achieved. It was even more unsettling that NSF struggled in the program directly related to its core mandate of skills development training.

Ms King emphasized the need to address issues related to ICT systems Instances of double dipping where students were benefiting from multiple sources of funding, such as Funza, NSFAS, and SETA bursaries. It was also mentioned that there is anomaly of students receiving funding despite having incorrect or non-existent ID numbers. These discrepancies and inefficiencies in the ICT systems needed attention and resolution.

Ms King raised concerns about NSF's ICT system and its interface with the Department of Home Affairs, NSFAS, and Funza.The importance of strengthening the ICT systems to prevent errors and issues, such as double dipping and funding discrepancies was raised. NSF had been in discussions with these departments to improve their ICT systems and wanted to know the progress made in this regard.

Ms King also mentioned the Nexus investigative report and inquired about the status of its implementation into the Annual Performance Plans (APPs) of NSF. The information on the progress made in implementing the report's recommendations and the outcomes achieved was sought.

Ms King expressed her concern about NSF's spending and its alignment with their targets. While the spending was not a major concern, the issues raised by the Auditor General on consequence management strategies and irregularities in material misrepresentations needed attention. There was room for improvement within the SETA and hoped that the implementation of audit action plans would yield positive results. The importance of presenting a proper plan before the audit outcome is needed to address these issues.

Ms King found it concerning that both entities, NSF and the SETA, had issues despite submitting their annual performance plans before the audit outcome was released. She questioned the value for money provided by these SETAs if their APPs were not aligned with the AG's instructions and if their spending was disconnected, ultimately affecting students and future unemployed workers. There is need for a thorough examination of these concerns and their impact on the intended beneficiaries.

The Chairperson conveyed the written questions from Ms Khaukhau to NSF, asking the entity to provide a detailed breakdown of projects that led to expenditure, along with the reasons for the expenditure, contract details, and scopes of those tenders. Several issues had been discussed by Members during the meeting, including underspending, payment to service providers for services not rendered, and underperformance.

Ms Khaukhau (DA) also asked about the underperformance and the payment of bonuses to those who had not met their targets, describing this as barbaric. The DA strongly condemned this practice in all its forms and emphasized the need to discourage such behaviour.

The Chairperson also raised the issue of double dipping and requested a detailed report on the number of individuals engaged in this practice and their geographical locations. This information would help in addressing the issue in various constituencies.

The Chairperson mentioned that other members had already covered issues related to targets that were not achieved by the entity. They questioned why the entity continued to set more targets when they had a history of not meeting their previous targets.

The Chairperson requested that NSF address the recurring issues related to management and planning, emphasizing the need for these issues to be resolved. Issues about individuals who receive training but do not effectively implement it, leading to a lack of value for money and accountability were raised.

Serious concerns on the audit outcomes and misstatements were noted by members of the Committee. It was pointed out that if the internal audit system was functioning correctly, there should not be a need for the Auditor General to address issues with service providers, highlighting the importance of internal controls and departmental responsiveness.

The Chairperson emphasized the need for effective internal controls and accountability, as well as the importance of individuals in management positions being capable of executing their mandates. They called for a revised report on specific individuals in management to assess the need for a review or a change in deployment based on their skills. This information would enable the Portfolio Committee to make informed decisions and hold the entities accountable for their improvements.

On delays in appointments, clarity was sought on the specific reasons causing these delays. The Chairperson requested information on whether there was a program of action with clear timeframes in place to address the vacancy issue. This was important because the presentations and reports indicated a lack of human capital to execute the work effectively.

The Chairperson then inquired whether both entities had a policy related to the Fourth Industrial Revolution (4IR). Having a 4IR policy was seen as essential for improving the IT systems and regulating the work within the context of the Fourth Industrial Revolution. Information on the existence and details of such a policy was requested from both entities.

On ETDP SETA, the Chairperson sought reaffirmation and confirmation of the claim that there was no certification backlog. They emphasized the importance of certification as an enabler for personal development and wanted to ensure that beneficiaries did not have any outstanding certifications. The goal was to have zero backlog and clarity on this matter was requested.

For NSF, the Chairperson acknowledged that members were tired of encountering the same issues in meetings with the entity. They emphasized the need for NSF to demonstrate their ability to respond to critical issues raised by the Committee. The Chairperson stressed the impact of NSF's operations and that it take note of the concerns raised by Committee members.

The Chairperson asked if there was a set timeframe for the completion of ongoing investigations, suggesting the 30th of November as a potential deadline. Timely investigations and effective consequence management is needed. The Chairperson requested a commitment from the entities to provide a comprehensive report on the status of investigations after the specified date to ensure these issues were resolved.

Additionally, the Chairperson requested a detailed report on investigations for each project, covering topics such as beneficiary duplications and cases involving service providers and beneficiaries. The Committee role is to oversee and holding entities accountable and ensuring corrective actions were taken

The Chairperson emphasized the Committee's commitment to inclusion and requested that when entities make presentations, they should provide information without the need for the Committee to ask about the inclusion of women, youth, and persons with disabilities. The goal was to receive complete and comprehensive information in their presentations.

On ETDP SETA, the Chairperson asked for more information on how pensioners were identified as beneficiaries and questioned the necessity of programs for individuals aged 60 years and older. They suggested that the funds allocated for these programs could potentially be better utilized to support more vulnerable and marginalized groups in the economy.

The Chairperson requested that NSF and ETDP SETA indicate which topics they would be able to provide detailed reports on and to be mindful of the seven-day response deadline when submitting their responses.

NSF response
Mr David Mabusela, Acting NSF CEO, addressed several key issues. On program three's underachievement and the universities that benefited from infrastructure projects, he assured the Committee that this information would be provided in accordance with the requested timelines and protocols. This response indicated the commitment to transparency and accountability in sharing relevant data.

On consequence management, Mr Mabusela explained the delay in the process, noting that it must be preceded by a determination test to ensure compliance. He reported that determination tests had been completed in the previous year, leading to disciplinary actions against internal officials and consent SDPs. He also highlighted the example of an SDP repaying NSF due to duplicate standards, showcasing efforts to address non-compliance effectively.

On SDPs not submitting reports, Mr Mabusela outlined the steps taken by NSF to encourage compliance, such as giving SDPs time to respond to inquiries. If non-compliance persists, the flow of funds is frozen, and legal processes, including the involvement of the state attorney, are initiated to recoup the money from the concerned SDPs. This response underscored the importance of accountability and the consequences for non-compliance.

On the high dropout rate, he explained the reasons behind beneficiaries switching programs based on stipend amounts, leading to program abandonment. He emphasized the need for a common system to detect beneficiaries based on their IDs to help address this issue. This response recognized the challenges faced and the steps being taken to improve program continuity and effectiveness.

Concerning the backlog of certification, Mr Mabusela mentioned ongoing communication with the Quality Council for Trades and Occupations (QCTO), the custodians of certification, who have assured that they are addressing the backlog. This response highlighted collaboration with relevant authorities to resolve certification-related issues.

On the inquiry about the 3.3 billion allocated to NSFAS, he noted that the matter had been categorized and closed as regular expenditure according to National Treasury procedures. This indicated that proper procedures were followed in handling financial matters.

In summary, Mr Mabusela's responses reflected the commitment of NSF to address concerns, improve accountability, and provide clear information to the Committee, while also following the required procedures for financial categorization and closure.

Mr Mabusela offered additional insights and clarification on several important points. Firstly, he acknowledged the value of differentiating between total achievement and partial achievement, explaining that this approach helps them determine the appropriate strategies or interventions to improve performance based on the level of achievement. Whether performance is 4 out of 28 targets or achieving 70% or 80% of the required targets, it informs their response. This highlights their strategic approach to addressing performance issues.

On the topic of performance bonuses, he emphasized that the NSF follows public sector regulations, and senior management does not receive performance bonuses. Instead, they adhere to normal progression practices, where some SMS members may advance from one notch to another due to their increased responsibilities and capacity constraints. This ensures transparency and compliance with public sector guidelines.

On the ministerial task team report, Mr Mabusela clarified that they are not waiting for full implementation but are actively working on implementing some recommendations. For instance, they are enhancing their ICT system and infrastructure. Collaboration with other entities, like PSETA, helps them leverage best practices and optimize their existing IT systems He also mentioned the challenge of relocating to a new venue and the potential impact on the expenditure process. This explanation shed light on their ongoing efforts to improve their operations and technology infrastructure.

Mr Mabusela elaborated on the capacity challenges in the HR unit, emphasizing the progress made within a relatively short timeframe. He noted that they have advertised additional posts and are currently in the interview process for candidates. For outstanding posts, they provided a status update and emphasized their commitment to maintaining continuous communication with the community to keep them informed of recruitment progress. This proactive approach indicates their efforts to address capacity challenges and enhance human resources.

On project planning and turnaround time, Mr Mabusela highlighted their efforts to improve efficiency. They have decentralized the evaluation and processing of proposals, allowing them to speed up the application process. Previously, all applications went through the central office, which posed capacity limitations. Decentralization, with the approval of the DG, has allowed them to process proposals at the provincial level, significantly reducing turnaround times. He noted that the full cycle should ideally take no longer than three to four months, emphasizing their commitment to efficiency in this aspect of their operations. This demonstrates their focus on streamlining processes and improving performance.

Mr Mabusela acknowledged the significant difficulty and delays in processing the Request for Proposals (RFP) from the previous cycle due to capacity constraints. He explained that the RFP involved 150 service delivery partners (SDPs) with a total budget of about 3.5 billion rand. These delays have caused a backlog in project disbursement, impacting the previous year's projects. He highlighted that the current year aims to address this backlog, indicating their commitment to improving project disbursement.

On the interdicting the construction mafias affecting TVET college infrastructure projects, Mr Mabusela noted that they have taken note of the advice and agreed that these disruptions pose a real challenge. He also admitted that their ICT systems currently face limitations, particularly in interfacing ID numbers between programs and dealing with applications. However, he assured that by the end of the 2024-25 financial year, they plan to have a fully functional system in place, and they are collaborating with the P SETA on utilizing Microsoft Dynamics.

Mr Mabusela provided an update on the Nexus report, which is a forensic investigation. He noted that progress has been made, with one dismissal already in process, and two outcomes that require officials to repay funds received improperly. Additionally, two senior disciplinary hearings are scheduled for October and November. This demonstrates a commitment to addressing the issues raised in the Nexus report.

Mr Mabusela also mentioned that the investigation looked into ten projects, and one of them has been completed with submissions made to the National Prosecuting Authority (NPA) for possible prosecution. He emphasized the importance of providing regular updates to relevant Committees as projects are completed, rather than waiting until all ten are finished.

This response indicates a proactive approach to addressing issues raised in the Nexus report and a commitment to accountability and transparency in handling the investigation's findings.

Mr Zama Kubheka, NSF Chief Financial Officer, responded to questions on finances. He addressed three main issues, starting with the 3.3 billion related to NSFAS, which he mentioned had been resolved.

Mr Kubheka discussed the misstatements in the financial statements, emphasizing the need for an integrated and automated commitment schedule. He explained that many expenditure-related transactions are linked to this schedule, including payables, receivables, deferred expenditures, and provisions. Using a manual commitment schedule can lead to human errors and formula errors, which can result in material misstatements in the financial statements. Mr Kubheka also mentioned that, as soon as they have the automated commitment schedule in place, both the NSF and the HU (Human Resources Unit) will have access to the system, which will simplify transaction tracking and contribute to better internal controls. Mr Kubheka highlighted the importance of transitioning to an automated commitment schedule, which would help track transactions more accurately and reduce the risk of errors. This transition is in line with the recommendations from the Ministerial Task Team (MTT).

ETDP SETA response
Mr Duncan Hindle, ETDP SETA Board Chairperson, shared the disappointment on the audit outcome, acknowledging that it represented a regression from previous years. He emphasized their commitment to correcting the situation and implementing any necessary consequence management measures to address the issues raised in the audit.

Ms Sesi Nxesi, ETDP SETA CEO, noted that they were categorizing and taking note of the areas that needed attention, including underperformance, under-expenditure, targets and completions, 4IR issues, policies, and plans. In response to the issues of fruitless and wasteful expenditure, she committed to providing a written report on the progress of investigations by the 1st week of December and would coordinate with the secretariat of the portfolio Committee.

Ms Nxesi addressed its underperformance and the challenges faced by unemployed individuals in the country. She discussed the actions taken to address procurement delays, their future plans to avoid such delays, the vetting of reports, and strengthening monitoring aspects. She highlighted that the dropout rates were a significant challenge, particularly when unemployed individuals found employment or better opportunities before completing their training. She mentioned that they were working on mechanisms to address this issue and ensure that funds reached a broader group of beneficiaries rather than double payments to the same individuals.

Ms Nxesi spoke to measures taken to address procurement delays, emphasizing their commitment to sound financial management to protect the organization's resources. She also noted the issues raised by the Auditor General (AG) related to unsolicited proposals, which had contributed to these delays. To resolve this, they planned to establish a pool of service providers for three to five years to ensure effective service delivery.

Ms Nxesi discussed the challenges related to dropouts, particularly focusing on the issues of underperformance and subsequent under- expenditure. She explained their payment system, which involved multiple stages, including award letters, memoranda of agreement, and alignment with the Annual Performance Plan (APP) before payments could be made. She emphasized that payments were made as deliverables were met, and they reported on this by the end of the financial year. She acknowledged that not all deliverables were achieved by March 31, and further payments were contingent on the progress of programs and projects.

Ms Nxesi highlighted the challenges related to program and project timing and the alignment of financial years with academic years. She mentioned that the financial year vis-à-vis the academic year could lead to spending challenges. They typically issue bursary payments for students, including lecturers and officials in the first quarter of the academic year (January to March). Delays in registration and documentation can result in later payments to ensure accuracy and that the right individuals are receiving the funding. She emphasized that they aim to pay for the right services at the right time and that their approach is conservative to ensure value for money.

Ms Nxesi addressed supporting NGOs and mentioned that while they currently support nine individual NGOs, these are just a fraction of the NGOs they collaborate with. They work in partnership with the National Association of Social Change Entities in Education (NASTI) and a joint education and training collaboration, both of which involve multiple NGOs. She expressed a willingness to provide the Committee with more details on how they support these NGOs and the criteria for selecting them.

Ms Nxesi discussed their ICT policies, digital transformation strategy, and the ICT governance Committee. She mentioned their collaboration with technical vocational education and Community Education and Training (CET) institutions to establish digital learning platforms. They are also working on establishing centres of excellence in ten TVET colleges, and she invited Committee members to visit Vhembe TVET College to see their work in enhancing the 4IR centre.

Ms Nxesi mentioned their efforts to support the audit outcomes of TVET colleges, including providing training to college managers in supply chain management and finance. She noted that their work contributed to improvements in the audit outcomes of TVET colleges. Additionally, they conducted research on the Fourth Industrial Revolution (4IR) and are currently implementing recommendations to address the challenges faced by TVET colleges in this context.

Ms Nxesi discussed certification backlogs. She mentioned that while there had been backlogs in the past, they have implemented a new automated system to address this issue. The new system is expected to make it easier for service providers to access and print certificates, reducing waiting times. She acknowledged that there are still a few challenges to overcome but emphasized their commitment to addressing the certification backlogs.

Ms Nxesi discussed several issues, including dealing with irregular expenditure. She mentioned that they have addressed the issue related to vetting three board members and have also dealt with the matter of a contract that expired 5005. There have been efforts to implement consequence management, although some of the issues were still being resolved as of March 31. A more detailed report on these matters would be provided to the Committee.

On fruitless and wasteful expenditure, she explained that they would conduct a determination test after November 30 to ensure that there were no fraudulent or criminal activities associated with the expenditure. Consequence management would involve recovering the funds and possibly involving the police if necessary.

Ms Nxesi mentioned that they are addressing qualifications and explained the steps they are taking. They are implementing an invoice repository to address disputed invoices and ensure that all invoices are properly vetted before payment is made. The goal is to improve compliance and performance to meet the requirements of their service delivery. They are committed to addressing issues like delayed payments and will provide further responses on the matters raised.

Closing remarks
The Chairperson noted that both ETDP SETA and NSF acknowledge the challenges they are facing. They are expected to address issues of underperformance and delays promptly. The need for an integrated information management system was highlighted to tackle problems related to funding the same learners, deceased learners, and learners with ID discrepancies. The Chairperson also stressed the urgency of resolving certification backlogs and emphasized the importance of consequence management for skills development providers not submitting required information.

The Chairperson underlined the critical role of these entities in addressing the country's challenges and urged them to implement necessary actions rather than continuously planning. It was also noted that while having an intergenerational workforce is commendable, transformational outcomes are essential, and the entities were encouraged to work towards achieving those outcomes.

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