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FINANCE SELECT COMMITTEE
21 February 2005
SOCIAL DEVELOPMENT CONDITIONAL GRANT EXPENDITURE: HEARINGS
Chairperson: Mr T Ralane (ANC; Free State)
Documents handed out
Department of Social Development Conditional Grants 2004/05
Northern Cape Department of Social Services presentation
Northern Cape Department of Social Services information
A delegation from the Department of Social Development (DSD) detailed the three conditional grants managed by the Department, and gave a breakdown of spending by province for the 2004/05 financial year. The first grant, the HIV/AIDS programme, a national integrated plan for children infected and affected by HIV/AIDS, was on track in most provinces. Overspending had been noted in Gauteng, but could be attributed to erroneous allocation of expenditure. There was under spending in the Eastern Cape and North West, partly owing to their financial systems. They were now on track for full spending.
The second grant, the extension of the child support grant, highlighted the need for a revision of targets. Current targets were based on the 1996 Census. Disparities were noted in the Western Cape, Gauteng, Eastern Cape and Limpopo, owing to movement of persons between the provinces. There was thus considerable under spending in both the Eastern Cape and Limpopo, and the Western Cape and Gauteng had projected deficits.
The third grant, the food emergency relief programme, was the biggest challenge. There had been delays in the tender process, and tenders had just been awarded in some provinces. The tender had been re-advertised in the Western Cape, and the Department was investigating alleged irregularities in the Eastern Cape and KwaZulu-Natal. The Minister had requested a rollover and this would be considered.
National Treasury expressed concern at the slow uptake in spending on grants, and particularly at the problems with the food emergency relief grant. Representatives from the Eastern Cape, Limpopo and the Northern Cape agreed that the food emergency relief programme was problematic, and that it was causing divisions in communities. There was general agreement that the programme needed to be re-visited and the sustainability aspects in particular addressed. The Committee reiterated the need for timeous reporting and stressed its oversight function.
Department of Social Development briefing
Dr J Benjamin (Deputy Minister of Social Development) said that the conditional grants had been discussed by the Minister in a press briefing the previous week, but that some issues might require further clarification.
Mr K Pakade (Chief Financial Officer, DSD) introduced the three conditional grants, namely the HIV and AIDS Programme (National Integrated Plan for Children Infected and Affected by HIV/AIDS), the extension of the child support grant and the food emergency relief programme.
The purpose of the HIV/AIDS grant was to provide social welfare services to orphans and vulnerable children infected and affected by HIV/AIDS, in partnership with non profit making organisations, and to develop and support institutional structures and professionals through targeted training programmes, in order to ensure effective delivery of services. The outputs set included an increase in the number of orphans receiving appropriate care and support, essential material assistance for fifty per cent of identified children and families and alternative care for fifty per cent of the identified vulnerable children. Capacity building would be addressed through training and support of sixty per cent of caregivers identified from communities, non-governmental organisations (NGOs), community-based organisations (CBOs), faith-based organisations, families and volunteers. Counselling and support services were to be provided to seventy per cent of the identified children and families and the number of co-ordinating structures and partnerships for management and maintenance of social welfare services to children was to be increased.
The monitoring mechanisms set out included monthly expenditure reporting by provinces, quarterly performance evaluation and reporting by national and provincial coordinators, quarterly provincial visits to evaluate implementation of the programmes and structured site visits at least twice a year by a team of both DSD and Department of Health officials on the national and provincial levels. R70.18 million had been transferred and 77,1% of this had been spent as at 31 January 2005. The projected spending was close to 100%. Slow spending by the Eastern Cape and North West was noted, while Gauteng had already almost exceeded its budget. The Gauteng overspending was mainly due to an erroneous allocation of provincial normal HIV/AIDS expenditure against the conditional grant. This was being corrected and the projected deficit would be addressed. In the Eastern Cape, funds budgeted for co-ordinators would be used to strengthen home and community-based carers (HCBC). Approximately R2 012 997 would be transferred to seven organisations and the province was now ready to make these payments. The balance was for contract personnel whose appointments had been delayed. These funds would be used for training of community liaison officers. In the North West, remaining funds had been committed for transfer to NGOs and CBOs, but their financial system would only allow transfer of these funds in February and March 2005.
Nationally, a total number of 116 811 orphans and 5 041 children living in child headed households had been identified and were receiving appropriate care and support services. Exactly 169 663 families had been reached and were assisted with food parcels, alternative care referrals, school uniforms and material assistance, and 115 income generating projects had been strengthened. 627 Child care forums had been established, and psychosocial support was provided to children and families infected and affected by HIV/AIDS, with 465 support groups established and strengthened.
The challenges identified included the urgent need to scale up the response to meet the needs of vulnerable children and families, the lack of dedicated staff in some provincial departments, the need to establish firm partnerships with NGOs and CBOs as implementing agencies and capacity building of implementation support organisations. The lack of a coordinated database for orphans and vulnerable children (OVC) had also been identified as a challenge. Significant increases had been allocated to provinces over the next medium term expenditure framework (MTEF) cycle to ensure a rapid scale up of the programme. Provinces had been requested to appoint more contract workers, and the Department would be capacitating CBOs and NGOs over a period of four years, with DFID funding. The OVC policy framework and guidelines were due to be finalised by the end of March 2005.
The second conditional grant was to fund the extension of the child support grant to eligible children between the ages of 7 and 14 years, phased in over three years, and to cover associated administrative and payment costs. The tasked output was to phase the number of children between the ages of 7 and 14 accessing the grant as follows: children under the age of 9 years in 2003/04, children under the age of 11 years in 2004/05 and children under the age of 14 years in 2005/06. Generally, provinces under spent during 2003/04 because they had initially funded transfer and administration from their own resources and were only able to recruit additional capacity by June/July 2003. As the initial growth was fast, Treasury anticipated the over expenditure and adjusted the budget from R1.1 million to R1.2 million. Home Affairs initiatives to address backlogs in birth certificates were also expedited later in the year. In 2004/05, R3.65 million had been transferred and provinces had spent 79.9% of this by the end of January 2005, with the projected spending at 100% by the end of the financial year. There was projected under expenditure by the Eastern Cape, Free State and North West, while all other provinces were expected to overspend, particularly Gauteng, Limpopo, Western Cape and Mpumalanga. Targets had been based on the 1996 Census, while Census 2001 had indicated significant migration to Gauteng and the Western Cape from North West and the Eastern Cape respectively. Where overspending was projected, provinces had requested additional funding in adjustment estimates. A national project team and a monitoring team were looking at the integrity of applications. There was also ongoing work with other role players, such as Home Affairs, and others in civil society. Most significantly, the model informing targets was under revision.
The purpose of the third conditional grant, the food emergency relief programme, was to provide food relief to vulnerable individuals and households. R388 million had been transferred, but only 17,8% had been spent so far, with a predicted under expenditure considerably below the total. Administration was also the main component of the funds spent so far. The distribution of food parcels in 2003/04 had been largely successful despite numerous challenges. Government services to the poorest of the poor had been increased, and the programme responded to immediate household needs. Challenges in respect of the programme in 2003/04 included lack of commitment and insufficient joint planning by other members of the stakeholder forum, the inadequacy of the allocated 3% of the total budget for administration purposes, and the lack of transport and limited human resources. The nature of the programme made it susceptible to possible abuse and manipulation and difficult to control, while limited food supply compared to the number of poor households in need caused serious tensions amongst communities. In 2004/05, it had been found that the lack of sustainability of the programme itself was problematic, as the current delivery model was a short-term relief measure for the poor, and had initially been conceived as emergency relief.
The challenges were being addressed through the development of a comprehensive policy on social relief of distress, and a new service delivery model had been conceived focusing on integrated social development services. A new conditional grant that was less restrictive to provinces had also been proposed. It was accepted that the food emergency relief programme was the least performing of the grants.
Mr V Madonsela (Director General) said that the food emergency relief programme was timed to coincide with periods in which people needed food most. It was a limited intervention, with spending over a three month period in any twelve month cycle, and the Department targeted December, or at latest January, to March in each financial year.
The social cluster of Directors General had presented a proposal seeking clarity on whether this grant was a permanent feature or short-term measure. Cabinet had indicated that it was not intended to be a permanent feature of government interventions and should be terminated at the end of the cycle. This caused considerable uncertainty, with some provinces understanding the end of the cycle to be the end of March 2004, and others the end of the MTEF period in March 2006. In 2004, the Cabinet Commission had commented that the programme was seen as creating dependency and had negatively affected local businesses in some areas. In October 2004, tender specifications had been put out to enable local business people to participate effectively in delivery, with the specifications requiring companies to demonstrate that they had formed consortia with local businesses. Approximately 1 189 bids had been received, and a tender evaluation team had been convened to process them in late December 2004. The evaluation team had not paid full attention to the new requirements, and the work had been sent back for revision. The Department had taken to mid-February to consider bids, and it was now able to award bids to six provinces, including the North West, Gauteng, Limpopo, the Free State and the Northern Cape. No successful bidder had complied with requirements in the Western Cape, and there had been allegations of irregularities in the bidding process in the Eastern Cape and KwaZulu-Natal. The Office of the Public Service Commission had been approached to investigate these allegations and their report was expected that day, and if there was no substance to the allegations, the bid would be awarded. The tender had been re-advertised in the Western Cape.
In view of the delays in awarding the tender, the Department anticipated a need to have the allocations rolled over to the next financial year. The Minister had already requested this and it appeared that, provided the allocations had been committed, the prospects of a rollover were favourable.
Eastern Cape Department of Social Development briefing
Ms N Mamase (MEC) said that the HIV/AIDS grant had been distributed in accordance with the equitable share programme. 44 000 orphans had been identified by December, and the province was on course to spend its full allocation. The way in which funds were dispersed to provinces posed a challenge, as if the province depended on the conditional grant monies, there would be periods where nothing was spent. In the first quarter, for example, finances might not be available unless the province had extra funds in terms of provincial allocations. The Public Finance Management Act stated that no spending could be done until funds had been received.
In terms of the child support grant, the demographics of the Eastern Cape had changed. According to Census 2001, one million inhabitants had been lost. A team had been established to register children from school to school, but some areas had not been covered, such as the OR Tambo Metropole. The level of illiteracy in the region was a significant problem and an aggressive back-to-school campaign had been launched to address this. The province projected a R100 million shortfall, but there were still two months until the end of the financial year.
It was essential to re-look at the food emergency relief grant. It not only encouraged dependency but also had an element of dividing communities. The Eastern Cape would support the discontinuation of the grant, possibly with immediate effect. The focus should be on poverty and the improvement of social welfare services.
Limpopo Department of Social Development briefing
Dr H Manzini agreed with the National Department on the HIV/AIDS grant, and said that the province was spending in accordance with the Division of Revenue Act. It would be at 100% by 31 March 2005. Spending was in line with NGOs and CBOs. It was, however, a challenge that stipends were funded through the equitable share, not the conditional grant. The province was concerned about the escalating number of orphans, and R16 million had been spent from the equitable share to meet this challenge.
Spending on the extension of the child care grant was already at 99,07%, and there was a project over-expenditure of R60 million. At present, this was funded from the equitable share. National targets for 2004/05 had already been exceeded. It was a challenge that the need was far greater than the funds allocated, and distribution costs were also being funded from the equitable share.
If the spending on the food emergency relief grant in 2003/04 was compared with 2004/05, it would be seen that there was a 99% spend in 2003/04, with the remaining 1% spent on planning. The province was waiting to start with distributions for the 2004/05 year and awaited the tender award.
Northern Cape Department of Social Development briefing
Mr G Akharwaray (MEC) reminded the Committee that the National Government determined the conditions and criteria for the grants, the province had the job of implementing these decisions. The National Department did monitoring, and reports were submitted regularly. Under spending on the HIV/AIDS grant and the extension of the childcare grant in 2003/04 had been due to understaffing, particularly in respect of data capturing. For 2004/05, spending was on track for these two grants, but the tender for the food emergency relief programme had not yet been finalised, and only 4% had been spent, in comparison with the 99% spend in 2003/04.
In terms of the HIV/AIDS grant, 488 home based caregivers had been trained, 800 oriented, and 399 were receiving stipends. Working agreements had been concluded with other role players to avoid duplication. There was increasing pressure from municipalities to provide burial support, although this was being resisted. In terms of the food emergency relief programme, additional funds had been allocated from provincial funds, and 10 100 households had been targeted and reached in 2003/04. In 2004, 9 550 households had been targeted for assistance. The information gathered would be used as a database of known needy families for the future, and communal skills for income generating projects had been identified. In terms of the child support grant, there had been a backlog in processing applications in 2003/04, due to understaffing, and this backlog should be cleared by the end of February 2005. For the year 2004/05, the province was 70% on target at December 2004, and there had been a drop in the application rate. This was yet to be researched.
National Treasury briefing
Mr D Plaatjies (Director: Social Security and Welfare Services, National Treasury) agreed that spending on the grants was slow. He cautioned that the extension programme was demand driven and suggested that this, with some administrative problems, might have caused sluggishness. The HIV/AIDS programme was more than five years old, and there should be a good sense of the requirements. The Treasury would like more cogent reasons for the slow spending. Conditional grants indicated a national priority and these were funded from national funds, and should not be drawn from the equitable share. The Government was committed to the programme.
In respect of the extension of the child support grant, provinces needed to give an idea of the number of eligible children, and the demographics of the children in the provinces. The level of performance had increased.
Serious concerns were expressed about the food emergency relief programme. It linked into a number of other programmes, such as the Agriculture programme and other Social Development programmes. He confirmed the request for a rollover but said that this request could only be considered on 6 April 2005, in terms of Treasury regulations. He agreed that it would depend on commitment of funds. The Government was looking at re-defining the programme and expanding its interventions, with food relief becoming one element of this. There should also be serious debate in the Social Development cluster about conditional grants as there was a mismatch between need and capacity.
The Chairperson reminded the provinces that they should take accountability seriously and said that the situation would be monitored with keen interest.
Mr Z Kolweni (ANC; North West) expressed concern at the view of the Eastern Cape MEC on the food emergency relief programme and surprise that the other provinces did not echo this.
Ms H Lamoela (DA; Western Cape) expressed concern at the division in communities caused by the food emergency relief programme.
Mr Madonsela replied that one of the difficulties of immediate termination of the programme was that monies had already been appropriated to it. Destitute households needed aid, despite all the problems. The Department was aware of the need to re-structure the programme, and channel resources in a different way, rather than terminating the programme.
Ms Mamase replied that she had used objective figures. According to Census 2001, there had been a 45 – 50% unemployment rate in the Eastern Cape in 2001, with 32,2% of the population economically active. The remainder were thus pensioners and children. The money allocated was insufficient, and had to be found elsewhere. Most people met the criteria, and discrimination caused problems. If the food emergency relief programme was treated as a stand-alone programme, it would further entrench ‘welfarism’.
Mr S Sekoati (MEC: Limpopo) agreed that there were problems with the programme, particularly in respect of families who felt they qualified but were not receiving aid. The province was also trying to increase the programmes, for example by making the programme sustainable by training family members, and enriching the programme.
Mr Akharwaray said that the real question was whether the money was appropriately spent. The programme did create dependence, but if there were no job prospects, there was no way out. It was important to be able to use the programme to create a level at which people were no longer hungry and were able to address making money. The problem lay in the way the programme was implemented, for example in the criteria.
Mr Kolweni asked whether all provinces complied with reporting requirements, and remarked on the absence of the North West province. The Chairperson said that the other provinces fell within an acceptable target range, and were thus not at the meeting.
Ms F Nyanda (ANC; Mpumalanga) noted that the National Department relied heavily on monthly reports from the provinces and asked how reliable these were.
Mr Pakade replied that various types of reports were submitted, including financial reports drawn from the financial management system, and reports from other systems, such as the social pension system. It was possible to verify information and query discrepancies to a large extent. The National Department relied on information from the provinces, and these had improved in terms of reporting. Workshops had been held and reporting formats sent out, but there were still delays from some provinces.
Mr M Robertson (ANC; Eastern Cape) agreed that the food emergency relief programme was open to abuse and misuse and asked whether the Department had already instigated service delivery models, and if not, when these could be expected.
Ms Lamoela referred to a recent oversight visit to the North West and said that food parcels had been used by some councillors to canvass votes.
Mr Madonsela replied that, as far as he was aware, tenders had just been awarded and no food parcels had been distributed. Local government was not involved in food parcel distribution in any way and he would be very surprised if any local councillor was involved. During December 2004, food parcels had been distributed to specific communities who had petitioned the Minister, including some in KwaZulu-Natal, the Eastern Cape and Gauteng. These were initiatives directly from the National Department, which took the allegations very seriously and would investigate.
Ms Lamoela said that delays in foster care referrals were incurred because of a limited supply of magistrates, and asked whether this was the reason for some delay in spending.
Mr S Jehoma (Director: Grant Administration) replied that problems had been experienced in respect of processing applications two to three years ago. A lot of blockages had been addressed in discussions with the Department of Justice. The foster care grant was the fastest growing grant after the disability grant.
Ms Mamase said that the delays in the justice system were problematic. Caseloads were 99% criminal, and there was a need to address the issue of children’s courts.
Ms D Robinson (DA; Western Cape) asked how accurate the figures were, in light of recent disclosures of inaccuracy by Statistics SA.
Dr C Kganakga (National Director of Social Development) replied that the Department used antenatal statistics of women who went for antenatal care and these were accepted as reliable. Other statistics, such as those of children infected or affected by HIV/AIDS, had not yet been validated.
Ms Robinson asked whether the money was going to the right people and on the right things, and what checks and balances were in place.
Mr Sekoati said that funds were being efficiently directed. The shortfalls that resulted in overspending were, however, a challenge.
Mr Pakade said that the bulk of the money was a conditional grant to provinces from National Government. Both sectors of Government had requirements with which they had to comply. When NGOs entered into agreements, the business plans submitted would stipulate exactly what services were to be rendered and the documents required. Each accounting officer had to receive a certificate before money was transferred. Due diligence was done on site, and the NGOs were assessed in terms of these criteria. Action to be taken if the NGO was not compliant was also stipulated, such as the suspension of funding. There were sufficient tools. Where issues of capacity arose, the Government was obliged to assist with capacity building.
The Chairperson noted that spending in KwaZulu-Natal was below 40%, yet there was no explanatory statement. The reliability of data was critical. He questioned the capacity of CBOs and NGOs to account for fair and accurate distribution in terms of the guidelines, and the capacity of the organisations in the Eastern Cape that had been appointed under the HIV/AIDS grant.
Dr Kganakga replied that the business plans sent to the National Department through the Provinces were informed by the process followed to assess the capacity of NGOs. The National Department met with provincial departments on a quarterly basis to validate the reports. All CBOs in the business plans had been assessed and fulfilled certain criteria.
Ms Mamase replied that the Department had approached this in three phases. The first phase, in 2003/04 had been to identify and assess existing NGOs and CBOs. The second phase, in 2004/05, was to assess the difference capacities and define compliance standards, and the third phase was nodal development. Social problems had been identified, and patterns of different issues were assessed. These would be reassessed together with the NGOs. 2005/06 would be the year of professionalisation with NGOs and CBOs. These had been awarded one-year contracts and would be assessed on these.
Mr Sekoati said that there were certain inherent problems with the capacity and efficiency of NGOs, but that the National Department had allocated funding to deal with capacity.
Mr Akharwaray said that so far it appeared that NGOs had appropriate structures and capacity. They submitted monthly reports, and an NGO had been appointed to monitor the other NGOs in the Northern Cape.
Mr Kolweni asked whether the issue of a lack of dedicated staff had been addressed.
Dr Kganakga replied that there were staff who were contract workers, and that these would fill posts as they opened, so the process started again. The continuity of the programme thus became a problem.
Ms J Masilo (ANC; North West) said that on a recent oversight visit to the North West and Gauteng, the provinces had been unable to supply a list of funded NGOs, and expressed concern at this.
Dr Kganakga replied that the National Department had lists of those funded by the National Department through the provinces, and that she would make these available through the Chairperson.
Ms Mamase said that the figures from 1994 to 2001/02 had been disclaimed as not collated. The numbers were known but not verified. The province financed over 1 400 NGOs.
Mr Akharwaray said that NGO programmes were funded, and the NGOs were required to give reports. In small provinces such as the Northern Cape, there was a very close relationship between the Department and the NGOs, with regular interaction. Certain NGOs were also dedicated to specific things, so it was easy to detect misappropriation.
Ms Masilo requested clarity on the under spending on the extension of the child care grant in the Eastern Cape and North West.
Mr Jehoma replied that the Department was questioning the reliability of targets based on the 1996 Census information. It appeared that incorrect targets had been set, as the targets in Gauteng were almost 100% over the target set. The targets were under revision based on the 2001 Census.
The Chairperson remarked that some conditional grants were quite new, and some challenges had not been anticipated. There would always be an element of trial and error, with big numbers of disadvantaged people wanting to access funding. It was therefore essential to have clear tender processes and dispute mechanisms. The Government and Committees were grappling with the matter of integrated development. The Social Security cluster needed to integrate, as issues could not be isolated. There was also a need to balance requirements for resources with keeping people in their own provinces. He reminded the Committee that it would return to check on the state of the conditional grants in the first quarter of the new financial year.
The meeting was adjourned.