National Development Agency and Disaster Relief Fund: Budget briefings

Meeting report

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
8 March 2005
NATIONAL DEVELOPMENT AGENCY AND DISASTER RELIEF FUND: BUDGET BRIEFINGS

Chairperson: Ms T Tshivase (ANC)

Documents handed out:
National Development Agency PowerPoint presentation
National Development Agency Budget Executive Summary
Disaster Relief Fund documents
PowerPoint presentation: Provinces Affected by Disaster for the Financial Year 2005 –2006
Expenditure outline for the Financial Year 2004 –2005

Summary
The Committee received presentations from the National Development Agency (NDA) and the National Disaster Relief Fund. The bulk of the meeting was devoted to discussions with the NDA. The disciplinary proceedings against its former CEO and the recent fire at the NDA filing rooms received much attention. The NDA initially presented a global picture of its budget but later provided more detail as requested.

The National Disaster Relief Fund then conducted a brief presentation on the drought currently gripping South Africa, as well as the spending of disaster relief funding of R60 million across the various provinces. The Fund was keen to outline the constraints in providing immediate assistance to victims of natural disasters and expressed their hope to streamline the administrative processes relating to disaster relief.

MINUTES

National Development Agency briefing
The NDA listed as some its achievements the extensive research conducted, improved turn around time of funding requests, the appointment of a new CFO and the significant reduction in staff turnover. Among the key challenges for 2005/ 06 the need for greater synergy with other poverty eradication initiatives was singled out.

Mr D Willcox, Company Secretary, said the NDA was in the process of negotiating with the preferred candidate for the post of Chief Executive Officer and said he hoped the process would be concluded shortly. The former CEO, Mr D Mtembo, resigned the previous year; thus necessitating the appointment of a replacement. He said the Disciplinary Hearing into Mr Mtembo ran its full course despite the aforementioned resignation, and that the NDA Board’s legal representatives were looking at possible disciplinary measures emanating from the Disciplinary Hearing. Mr Mtembo had subsequently resorted to legal action through the High Court, thus making the forensic report on the recent fire in the NDA offices sub judice.

Concerning the investigation into allegations that Mr Zwane, an NDA employee, was moonlighting Mr Willcox said that a recent reported indicated no evidence of moonlighting could be ascertained.

The CSIR was called in to conduct a forensic investigation into the fire that occurred in the NDA building on 1 July 2004. The CSIR then subsequently forwarded the report to SA Eagle, the NDA’s insurers. Despite various request from the NDA they had not received a copy of the forensic report. Approximately 80 project reports which were being audited as part of the normal auditing process, were also lost in the fire. Additionally a large number of historical accounting documentation was also lost in the fire. However backup copies of most of these documents were kept offsite, and were therefore not lost in the fire.

Discussion

Ms Rajbally (Minority Front) asked whether the cause of the fire had been established as yet.

Mr Willcox said that despite numerous requests from the NDA for a copy of the forensic report, no response was yet forthcoming on the cause of the fire.

Mr M Waters (DA) asked whether Mr Zwane had elected to become a state witness.

Mr Willcox said Mr Zwane was questioned in the same manner that many other NDA personnel members were, but was not requested to witness on behalf of the state.

Mr Waters asked when the NDA requested the forensic report.

Mr Willcox said the Forensic Report on the fire was forwarded to SA Eagle on 9 January, and discussions commenced soon thereafter.

Adv. Masutha (ANC) asked whether attempts were made to settle the matter with Mr Mtembo without recourse to the court system.

Mr Willcox said Mr Mtembo had initiated the High Court action and the NDA was merely responding to his course of action.

Adv. Masutha asked whether interim management arrangements had been initiated to accommodate for Mr Mtembo’s absence from the office of CEO.

Mr Willcox said as mentioned earlier Mr Mtembo, had voluntarily resigned and there was no need to arrange for an interim CEO. Instead a permanent candidate would be appointed before the end of March 2005.

Adv. Masutha asked whether Mr Mtembo was disputing the findings of the Disciplinary Hearing.

Mr Willcox said Mr Mtembo had filed a 50-page complaint alleging procedural irregularities in the Disciplinary Process.

Adv. Masutha said that it appeared that Mr Mtembo was arguing a case of ‘constructive dismissal’.

Mr Willcox agreed that the aforementioned could be a possible interpretation.

Adv. Masutha asked whether the NDA would release the report concerning the allegation of moonlighting against Mr Zwane.

Ms T Tshivase ANC asked for more detailed statistics on the NDA’s programs in the respective provinces.

Mr R Magano, Projects Director, said a breakdown of Provincial programs was available and would be forwarded to the Committee.

Ms H Weber (DA) asked what the NDA was doing to prevent corruption and fraudulent claims from members of the community. She also asked whether the NDA had programs to assist unemployed youth.

Ms L Makhuzela, Director: Research and Development, said the NDA delegation would ensure that the Committee was fully appraised of the outcome of the various research projects conducted by the NDA. She said the NDA had been assisting the Limpopo Youth Commission with research into youth economic empowerment by providing the conceptual and support activities for the Commission’s research. Youth Commissions from all the other provinces have shown interest in similar cooperative arrangements.
Similar youth empowerment projects had been initiated throughout the country but as yet no integrated module had been formulated to integrate these varied activities.

During the first part of 2005, the NDA had completed an internal Impact Assessment focussing on how to improve the role of the NDA as a conduit for information between Government and civil society.
Mr Magano said there was a disparity between the financial demands and available resources. He added that the NDA was in the process of investigating the best manner in which to process applications for assistance. There were three different methods of lodging an application with the NDA.

First, request for a proposal – this method involved the NDA inviting proposals for specific projects in the news media, and discussing the criterion by which applications will be considered. Second, Program Clustering / Project Formulation- in particular municipalities various individual projects were all dealing with the same community need but often worked independently from each other. In such cases the NDA encouraged the greater cooperation and integration of these projects rather than funding each individually.

Third, Special Projects- this category entailed initiating new projects as the needs and opportunities in various communities allowed. Industries such as BEE farming had been initiated in this manner.

Mr Waters asked what interim financial management arrangements were affected before the recent appointment of a new Chief Financial Officer.

Mr M Mofokeng, Chief Financial Officer, said Mr F Cassim was employed on two consecutive three-month contracts as the interim CFO and KPMG assisted the NDA for the remaining 6 months of the previous year.

Ms Rajbally asked whether the NDA programs and funding for Training and Food Security respectively were adequate to meet the needs of the community.

Mr Magano said was difficult to categorise projects as they were often multi-dimensional and resulted in benefits in various aspects such as food security and health. The projects and categories raised by Ms Rajbally should be viewed in this context.

Adv. Masutha said it was unclear whether the key achievements listed in the presentation document were the only tangible outcomes for all the various initiatives embarked on by the NDA. He said if this was not the case, he would like to see the tangible outcomes of each of the activities listed in the presentation.

Ms Dudley asked for more clarification on the rate of staff turnover at the NDA.

Mr Magano said during the previous 18 months of instability not one single employee resigned from the NDA. This was testament to the Board’s ability to engender confidence in the organisation as well as the level of commitment of NDA staff.

Ms Tshivase asked what the NDA was doing to reinvigorate certain projects in the rural areas that have become stagnant.

Mr Magano said funding had been set aside for exactly that purpose. However he added that the completion of projects were usually delayed due to a lack of community ownership and stewardship. He referred to five large-scale irrigation projects that were reactivated by the NDA in the manner suggested by Ms Tshivase. He appealed to the respective communities and the Portfolio Committee to assist the NDA in making the most of the available financial resources.

Mr M Mofokeng said the presentation provided a summary of the budgetary allocation to the NDA, as they were reluctant to burden the Committee with excessive detail. The budget was drawn up to clearly stipulate the financial requirements of each key objective of the NDA. For this reason, the allocations for various projects were listed individually per project rather than as a specific category.

Mr Masutha said it was precisely the details omitted from the presentation that the Committee needed to investigate to make an informed decision on the budget.

Mr Magano said of the 21 000 projects the NDA was currently dealing with, the turn around time from receiving an application to receiving a conclusive response had been reduced from 12 to 4 months.

After the tea break, the NDA returned with a more detailed presentation of the budget.

Ms Dudley asked how this budget compared with that of the previous year, 2004-2005.

Mr Mofokeng said he was reluctant to compare the two budgets as the previous budget was not constructed to reflect spending per Key Objective as the 2005 budget did and this could result in inaccurate comparisons being drawn between the two documents.

Mr Waters asked what the functions of the Provincial NDA offices were.

Mr Magano said the provincial offices played a vital role in the NDA structure as they enabled greater accessibility both to local communities and the respective Provincial Governments. They also played a vital role in championing and ensuring community participation in local projects.

Ms Tshivase thanked the NDA for their presentation and asked them to stay for lunch as the Committee still had to listen to the Disaster Relief Fund’s presentation.

Disaster Relief Fund Presentation
The national Disaster Relief Fund outlined the spending on natural disaster relief for the year 2005 –2006:
Western Cape R2.5 million; KwaZulu-Natal R12 million; Northern Cape R6 million; North West R6 million.
Mr M Nhlapo, Chairperson, said it was difficult to budget for natural disasters given the unpredictable nature of their occurrences. The Disaster Relief Fund was not a listed public entity, however it was still obliged to conform to the same financial management processes as listed public entities.

One of the key difficulties for the Fund was the long delay before the Fund could assist communities with disaster relief. He explained that the Fund had to wait for a number of processes to be completed before they could render assistance to disaster ravaged communities. The Board first had to send a fact finding mission to the affected area, await a provincial request for assistance, approval by the Minister and lastly a formal declaration of a ‘disaster’ by the National President was required before the Board could authorise assistance. This process often delayed much needed assistance to communities by up to 4 months. Various other administrative challenges further delayed assistance to affected communities such as the consideration of criteria of potential beneficiaries, the identification of corporate partners, service providers to disburse funds to beneficiaries and in some cases the identification of suitable field workers.

He said in 2004, an unprecedented number of seven provinces were declared disaster areas in South Africa and this had placed additional burdens on the Fund’s resources.

Discussion
Mr Masutha asked what happened to unpaid funds designated for certain ‘disasters’ and what criteria were applied to ascertain potential disaster relief beneficiaries.

Mr Nhlapo said the Board set up criteria based on the nature of the disaster and determined what it deemed fair assistance. He emphasised that the assistance provided to communities was not proportional to their losses in a manner an insurance provider may provide. The assistance was merely a contribution intended to help victims of natural disasters cope with their pressing needs. He added as a result of dwindling resources the Fund had resorted to allocating a flat rate to all natural disaster victims.

Mr Waters asked who was entitled to assistance from the Disaster Relief Fund in the context of the ongoing drought in South Africa.

Mr Nhlapo said the Department of Agriculture had received R120 million, while the Disaster Relief Fund was allocated R60 million to assist victims of the ongoing drought in the country. The Department of Agriculture was responsible for rendering assistance to Commercial Farmers and the Disaster Relief Fund focussed on subsistence farmers, farm workers who were terminated as a result of the drought and other similar categories of people.

Mr B Solo (ANC) asked how the Fund functioned as there appeared to be no administrative costs mentioned in the budget.

Mr R Molifi, Director, said the Fund was not a listed entity and was operating through a secretariat housed in the offices of the Department of Social Development. The Secretariat and the Disaster Relief Fund Board met on a monthly basis.

Adv. Masutha asked whether the Fund was wholly dependent on the state for funding.

Mr Molifi said the Fund was entirely dependent on the state for funding, as the lack of resources had thus far rendered fundraising impossible. He said the Fund was aware of abuse by some community members and were doing their best to address this matter.

Mr Nhlapo said the Fund had initially intended to contribute funds to the victims of the South Asian Tsunami, but had since reevaluated this position in light of the dire needs within South Africa.

The meeting was adjourned.