Department Internal Audit Strategy: briefing; Expanded Public Works Programme: Development Bank briefing

Meeting report

PUBLIC WORKS PORTFOLO COMMITTEE
24 August 2005
DEPARTMENT INTERNAL AUDIT STRATEGY: BRIEFING; EXPANDED PUBLIC WORKS PROGRAMME: DEVELOPMENT BANK BRIEFING

Chairperson: Mr F Bhengu (ANC)

Documents handed out:
Risk Management and Fraud Prevention Strategy: Department PowerPoint Presentation
Risk Management and Fraud Prevention Strategy: Department Report
Overcoming Underdevelopment in South Africa’s Second Economy: PowerPoint Presentation ( see www.dbsa.org.za)
DBSA/HSRC/UNDP Development Report 2005: Overcoming Underdevelopment in South Africa’s Second Economy
Department Response to the Critique of the EPWP in the DBSA/HSRC/UNDP Report

SUMMARY
The Department delegation began by noting that the basis of the Department’s internal audit policy was their Risk Management and Fraud Prevention Strategy. This strategy focused of various challenges, which included financial challenges, technological issues, operational challenges, and fraud and corruption. These challenges had arisen because of the nature of the Department’s operations, inadequate financial resources and an increase in the property maintenance backlog. The Department had implemented various programmes to deal with these challenges, which included implementing a proactive disposal programme, strengthening financial controls, and improving security. The delegation then discussed the implementation timeline of the Risk Management and Fraud Prevention Strategy.

In the ensuing discussion, Members enquired about
- how many unused government properties had been disposed of through the proactive disposal programme;
- whether local governments could become responsible for unused government buildings;
- how the Department was dealing with employees that colluded with companies around tenders;
- how large the properties maintenance backlog was;
- what types of fraud, asset abuse and theft the Department had experienced;
- whether there was a programme to ensure that new buildings were not vandalised; and
why client departments were dissatisfied with Public Works’ services.

The Development Bank of SA (DBSA) delegation outlined the critique of the Expanded Public Works Programme (EPWP), which had been presented in the ‘Development Report 2005: Overcoming Underdevelopment in South Africa’s Second Economy. The DBSA believed that due to the temporary nature of EPWP employment, it was failing to provide the necessary skills required in the economy. DBSA felt that the EPWP was not effectively addressing the unemployment problem. In addition, they stated that the EPWP had not adequately linked up with other poverty alleviation initiatives. The DBSA suggested that the EPWP should extend the length of employment that it offered to people, and it should be expanded to include a greater percentage of the unemployed population. Finally, the delegation noted that the DBSA supported the EPWP though funding, training and resource provision.

The Department delegation responded to DBSA’s critique that it contained certain misconceptions. For example, the EPWP had never been implemented to address structural unemployment; it was rather intended as a relief programme. It did not only aim to offer temporary employment and, in certain cases, offered long-term employment. Members also raised certain concerns and questions about the DBSA’s critique. These included: whether the DBSA knew that the EPWP was not only located in the Public Works Department; whether communities benefited from the study that the DBSA had funded in the social sector; why the DBSA had tended to focus on the social sector; whether the DBSA had discussed its views of the EPWP with the Department; how DBSA assisted the EPWP; and whether the DBSA was involved in capacity building at a municipal level.

MINUTES

Department briefing
Ms Z Mxunyelwa (Department Chief Audit Executive) commented that, in 2004, the Department had implemented a comprehensive Risk Management and Fraud Prevention Strategy. It was planned that this Strategy would run until April 2007, at which point it would be revised. She noted that the risk management aspect of the Strategy focused on certain key challenges, which included:
- Strategic challenges. These included the need to address the Department’s mandate, corporate governance issues, and the communications strategy;
- Financial challenges. These challenges included improving internal controls, building financial management capacity, and managing financial resources;
- Technological challenges. These included improving Information and Technology (IT) governance, formulating a data recovery plan; improving data integrity and strengthening access controls.
-Operational challenges. These included service delivery issues, implementing black economic empowerment (BEE), applying legislation, implementing the EPWP, implementing human resource strategies, and dealing with lawsuits against the Department;
-Fraud and corruption challenges. These included the problems of staff colluding with service providers, BEE fronting, payroll fraud, CV fraud, theft, and abuse of state assets.

Ms Mxunyelwa added that the fraud prevention aspect of the Strategy included several plans that focused on addressing fraud and corruption. These plans also outlined the code of conduct and the Department’s fraud policy.

Ms Mxunyelwa then outlined some of the reasons why these challenges had arisen, which included the nature of the Department’s operations; inadequate financial resources; outdated IT systems; and the growth of the state properties maintenance backlog. Ms Mxunyelwa highlighted some of the controls that the Department had implemented in order to address the challenges it faced. These included implementing the 1997 White Paper; communicating more effectively; providing development and training to personnel, revising the organisational structure; consulting stakeholders around policy development, implementing a proactive disposal programme; developing IT policies; improving financial controls, undertaking a fraud awareness workshop; and verifying BEE credentials.

Ms Mxunyelwa outlined the timeframe of the Risk Management and Fraud Prevention Strategy. She noted that the Department would focus on critical risks during the initial phase of the Strategy, which was from 2004 to 2006. This would be followed by a focus on medium term risks during 2005 and 2006. In 2006 and 2007, the Department would be focusing on low-level risks. Added to this, risk management would be reviewed annually, over the 2004 to 2007 period in order to identify new emerging critical risks

Discussion
Mr J Blanche (DA) asked how many underused government properties had been disposed of through the Department’s proactive disposal programme. Many government buildings were unused, and none of the government departments seemed to be maintaining these buildings.

Dr S Phillips (Department of Public Works: Chief Operational Officer) responded that, in the past, the Department had been disposing of underused government properties on a reactive basis. This had recently changed, and the Department was now actively identifying unused or underused government properties, which could be disposed of. Indeed, the national Department had requested its regional offices to provide reports on government properties that were unused or underused. Added to this, the Department’s Asset Management Branch also identified unused/underused properties. On the basis of all these reports, the Department had identified three groups of properties that would be part of the proactive disposal programme.

The first group consisted mainly of 200 to 300 empty government owned residential houses. The Minister had already approved the disposal of most of these properties. The second group comprised of unused foreign properties, which the Department of Foreign Affairs had requested Public Works to dispose of. The third group comprised 2000 properties, which needed to be researched in order to establish whether they should be disposed of; or whether they could be used for service delivery in the future. Group three also included vacant land that could perhaps be used for land restitution rather than being disposed of. For all the three groups of properties, the Department needed to liase with relevant stakeholders to ensure that the properties were not required by any of the spheres of government.

The Chairperson noted that some municipalities were refusing to provide access to state asset registers. Specifically, some municipalities in the Wild Coast area were not disclosing the number of unused government houses that existed, because municipal officials wanted benefits from the development of the area. As a result, the Chairperson felt that there were far more than 200 government houses that could be disposed of.

Dr Phillips replied that the national Department of Public Works only possessed a register of properties that were owned by the national government. Properties that were owned by other departments, the provinces and local municipalities did not appear on the national register. Indeed, the national Department was not responsible for the disposal of properties that were owned by provincial departments or local authorities. As a result, the figure of 200 houses only applied to those that were owned by the national government. There were far more houses that were owned by provincial departments and local authorities.

Ms C Ramotsamai (ANC) asked whether the Department acted on information provided by ordinary citizens about unused government properties. Dr Phillips responded that the Department did follow up on information provided by members of the public about underused/unused government properties.

Mr G Anthony (ANC) stated that he had requested a regional state assets register from the North West Public Works Department, but they had failed to send it to him. He wanted the register because, in his constituency, there were certain problems surrounding a number of houses that had been built for teachers by the Bophuthatswana Department of Education. For example, a number of the teachers were renting these houses out to other people. Some of these houses were also being sold. He was unsure whether they were being sold by the Department of Education, or the province, or the municipality. He asked whether the National Department of Public Works could investigate this situation.

Dr Phillips replied that the Department had a register of properties that were owned by the national government in the North West; however, it would not include properties that were owned by the provincial government or the local authorities. Dr Phillips noted that the houses to which the Member had referred, were probably owned by the provincial government. He would assist the Member to obtain the information that was required from the North West Public Works Department.

The Chairperson knew of a situation where the Eastern Regional Disposal Committee had instructed a local municipality to evict people from houses that were situated on an old military base. The municipality did undertake the evictions, but he was unsure whether they had the legal authority to carry them out. He added that local municipalities needed to be involved in the asset disposal process.

Mr Blanche commented that there were many unused buildings around South Africa that were owned by other government departments, such as the Department of Labour. These buildings were in a state of neglect and had been vacated by the government departments. The Department of Public Works was burdened with the responsibility of maintaining these buildings. He felt that local authorities should be given the responsibility of identifying these buildings. They could then rent out such buildings and use the proceeds for maintenance.

Dr Phillips replied that the Department had often transferred properties to local authorities. Such properties would then be used by the local authorities for municipal purposes. The Department was, however, responsible for all other unused or underused government properties, and it was to blame if such properties were in a state of neglect. It was for this reason that the Department had initiated its proactive disposal programme. This would also reduce the costs of maintaining such buildings.

Ms T Nwamitwa-Shilubana (ANC) commented that during a visit to the Limpopo province, the Committee had discovered that some of the provincial Department’s staff colluded with companies to ensure that they won tenders. She asked whether the Department was aware of this problem and how were they addressing it.

Dr Phillips replied that the Department was implementing a new Supply Chain Management System, which would allow for tighter control over tendering processes. The Department had ensured that tendering functions were divided amongst its staff to make collusion more difficult. Tenders also needed to be assessed by a project manager, a member of the Procurement Section, and other officials. Once this was complete, they would make a recommendation on the tender to an independent Bid Committee. He stated that these precautions would make collusion difficult.

Mr K Moomsamy (ANC) asked for more details on the state properties maintenance backlog. Dr Phillips replied that the Department had undertaken a detailed study on the issue, and had found that there was an estimated R12.5 billion maintenance backlog. This backlog was a risk because certain government buildings could deteriorate even further, and this could impact on occupational health and safety. The Department was attempting to prioritise maintenance that addressed occupational health and safety issues. Nonetheless, the Department had a limited budget.

Mr Moomsamy asked how payroll fraud occurred. For example, were the fraudsters registering ‘ghost’ workers on the payroll? Ms Mxunyelwa replied that the Department had developed a verification register to ensure that ‘ghost’ workers were not on its payroll. She added that payroll fraud was not a certainty, but a risk. The Department also conducted employee background checks to ensure that it did not employ undesirable people.

Mr Moomsamy enquired about the kind of theft that took place in the Department. He also asked whether the Department had mechanisms to deal with theft. Ms Mxunyelwa replied that equipment, furniture, and computers had been stolen from the Department. The Department was currently installing an electronic security system at its Head Office in a bid to stop theft. Added to this, the Department had hired a reputable security company to reduce theft.

Mr Moomsamy asked what form the abuse of state assets took. Ms Mxunyelwa responded that the Department had discovered a number of cases of petrol card fraud. The Department had implemented a system to establish whether employees were using petrol cards for Department business or for illegal private use. Added to this, in some of the provinces, the Department’s cars had tracking systems to monitor where, and how, they were being used. Employees also used telephones for personal calls. In response, the Department had initiated a system to address this problem. Some senior managers had also been dismissed for staying in Department houses without paying market related rents.

Mr L Maduma (ANC) asked whether the Department had had a code of conduct before the implementation of its Risk Management and Fraud Prevention Strategy. Ms Mxunyelwa noted that the Department had a code of conduct prior to the launch of the Strategy. Indeed, the Strategy aimed to strengthen the code of conduct. The Department was also educating its employees about the code of conduct.

Mr Maduma noted that in some government departments, senior officials would attend expensive training conferences, but would avoid participating in internal training workshops. He asked whether such instances occurred in the Public Works Department.

Ms Mxunyelwa acknowledged that this issue had also been a problem in the Public Works Department. However, the Department’s human resource (HR) section had developed a control document, which stipulated that an official could only attend training programmes that had been approved by HR. Officials also had to provide motivating reasons for wanting to attend certain courses. Added to this, once an official had completed a course they were required to make presentations on the course content. The HR section, along with the University of Pretoria, had also implemented formal courses such as management skills development, which officials were encouraged to attend.

Ms M Ntuli (ANC) enquired whether the Department had mechanisms to ensure that newly built buildings were not vandalised before they were handed to other government departments. Dr Phillips responded that properties should not be left vacant before they were handed over by Public Works to other departments. If there was a case where a property had been left vacant, and vandalised, he would investigate it.

The Chairperson commented that Correctional Services had taken over the responsibility of maintaining their own buildings from the Department of Public Works. He asked why they had done so: were they dissatisfied with the Department’s service? The Department of Public Works should be responsible for maintaining all government buildings.

Dr Phillips responded that Correctional Services was not maintaining its own buildings. Indeed, Public Works was still managing the maintenance of Correctional Services’ buildings. The 1999 White Paper on Public Works stipulated that all public works related budgets should be decentralised to client departments for accounting purposes. The client departments would then have to pay Public Works rental charges, which it would use to provide maintenance services. Therefore, decentralising budgets did not mean decentralising the functions of the Public Works Department. The South African Police Services (SAPS) had, however, requested that it be allowed to undertake its own maintenance work. The reason for this was that it possessed its own work maintenance section.

The Chairperson enquired whether other departments would attempt to follow the example of the SAPS. Mr Phillips answered that other departments might attempt to follow the example of the SAPS. Some client departments wanted to undertake their own maintenance functions because they were dissatisfied with Public Works’ service. One needed to consider whether it was sustainable to provide services to client departments that no longer wanted them from Public Works. Public Works needed to improve its service delivery in order to increase client satisfaction. If departments were satisfied with Public Works, they would no longer want to undertake their own maintenance functions.

Mr H Maluleka (ANC) and Mr Anthony proposed that the Committee invite provincial Public Works Departments and local authorities to provide briefings on the properties which they owned. Mr Anthony added that it seemed as if the Department was functioning well at a national level; however, the regional offices might be problematic.

The Chairperson commented that the Committee needed to have ongoing contact with the Department around issues such as the disposal of government properties. The Committee needed to develop suggestions on how the disposal of state properties could be effectively addressed.

Development Bank of SA briefing
Ms J Nhlepo-Hlope (DBSA Corporate Strategy Planner) began by noting that the DBSA’s critique of the EPWP was outlined in the ‘Development Report 2005: Overcoming Underdevelopment in South Africa’s Second Economy’. The DBSA, the Human Science Research Council (HSRC) and the United Nations Development Programme (UNDP) had produced the Development Report because they were mandated to address poverty and underdevelopment. Added to this, the second economy involved approximately 6.2 million people and was an important aspect of South African society.

Ms Nhlepo-Hlope outlined the structure of the Report. She then discussed the various interventions that the government had made in the second economy, which included establishing the EPWP; redistributing land for agricultural development; supporting small enterprises; undertaking poverty alleviation projects; implementing a rural loan schemes; and implementing urban renewal programmes.

Ms Nhlepo-Hlope then discussed the DBSA’s critique of the EPWP. The reason why the EPWP had been implemented was due to massive unemployment, which had resulted from slow economic growth; the shrinkage of the labour-intensive sectors; and slow employment creation. She noted certain authorities assumed that if the economy grew at four percent per annum, jobs would be created. Added to this, it was assumed that improved education would allow prospective employees to take up the opportunities offered by this growth. It was also believed that many of these prospective employees would come out of the EPWP, where they would have gained certain skills.

There were, however, certain problems with the above assumptions. These included the fact that high levels of unemployment existed amongst the unskilled sector of the population, and even if the economy grew at four percent per annum, these people would not benefit. Added to this, the EPWP was not providing people with the skills that were required in the economy. Indeed, the short period that people spent in the EPWP was insufficient for any meaningful skills development to take place. Thus, most of the people that had graduated from the EPWP remained unemployed.

Ms Nhlepo-Hlope commented that the EPWP delivered about 200 000 temporary jobs per annum, which only helped between two and four percent of unemployed people. Added to this, because these jobs were only temporary, the beneficiaries were unable to save any meaningful amounts of money. The EPWP was not linked to other poverty alleviation strategies such as the promotion of small and medium sized enterprises (SMMEs).

Ms Nhlepo-Hlope outlined the DBSA’s suggestions on how the EPWP could be improved. These included a suggestion that the time that beneficiaries spent in the EPWP should be extended so that meaningful skills transfer could take place. The scale of the EPWP should also be expanded: this would result in an increase in domestic demand in the economy.

Ms Nhlepo-Hlope discussed the support that the DBSA offered to the EPWP. This included funding certain projects that adhered to the EPWP’s principles; providing a substantial grant for a study on the job and institutional audit that had occurred in the social cluster; assisting the social sector to extend EPWP jobs to a two year period; and developing partnerships with the economic and environmental sectors.

Discussion
Dr Phillips felt that the DBSA’s criticism that the EPWP was an insufficient response to the unemployment problem was unfair. The EPWP, on its own, was not designed to eradicate the problem of structural unemployment; it was rather a relief programme. Indeed, the EPWP was one of a range of programmes that arose out of the Growth and Development Summit. The social partners, including labour, had agreed to special conditions of employment around certain EPWP initiatives. For example, it was agreed that payment in the construction sector EPWP would be task-based on condition that workers were employed on a temporary basis and were provided with training. Under these conditions, workers could be employed for up to two years even though construction work, by its nature, was temporary. One could not extend employment after the construction work was finished. The EPWP, however, was not designed merely to provide people with temporary employment: wherever possible the EPWP aimed to provide people with long-term employment. In the social sector EPWP, people were being employed, and given training, in child care services and home care. Once they had exited the EPWP they could graduate to permanent employment in the non-governmental organisations (NGOs) and community-based organisations (CBOs), which offered these services. Certain EPWP initiatives were also offering long-term work opportunities for independent contractors. For example, there were already independent contractors undertaking routine road maintenance work.

Ms Nhlepo-Hlope acknowledged that people could not be employed by the EPWP forever. Nonetheless, the two-year period that a person was employed in the social sector EPWP was more viable than the average six-month employment that was offered in other sectors’ EPWPs. In two years one could provide skills to an individual. She agreed that the EPWP initiatives around independent contractors offered more permanent employment, but the majority of other EPWP jobs were short-term.

Dr Phillips stated that the Development Report’s critique of the EPWP contained certain generalisations and misconceptions. It failed to provide a broad picture of the EPWP. The EPWP had been designed as a long-term programme, which had initial five-year targets. It was, therefore, not an initiative that would only run for five years. Building the capacity to implement the EPWP had taken time due to its shear scale. Indeed, the Department had focused on building capacity during the first year of the EPWP. The EPWP was now expanding and new five-year targets would be established in the future.

Dr Phillips noted that there was a policy debate taking place around how the public and the private sectors could create more employment. A Task Team was established to investigate initiatives that could be implemented to increase economic growth, and bridge the divide between the first and second economy. This included examining initiatives that could be applied in the second economy. The Task Team was also considering how the impact of the EPWP could be strengthened.

Dr Phillips stated that the DBSA’s criticism that the EPWP was not linked to the promotion of SMMEs was inaccurate. There were 500 emerging contractors that were being developed through EPWP learnerships. These contractors would gain long-term employment through managing labour-intensive construction projects. The EPWP was also involved in developing SMMEs in the environmental and economic sectors.

Dr Phillips noted that DBSA had stated that the EPWP needed to extend beyond the construction and social sectors. He commented that the EPWP was designed to provide service delivery in a labour intensive manner. This was why construction was an important sector in the EPWP. Added to this, there was a huge backlog in the social sector, which the EPWP was attempting to address.

Dr Phillips felt that the DBSA’s criticism that the EPWP was not providing skills that were needed in the economy was unfair. The EPWP was not created in order to provide all the skills that were required by the growing economy. Added to this, even if an unemployed person was only given temporary work through the EPWP, they would gain some skills. For example, they would gain some work experience and some knowledge of the labour market. This would at least increase the possibility of them becoming employed after they had left the EPWP. Mr Maduma noted that certain individuals had gained skills through the EPWP that had enabled them to start SMMEs.

Ms Nhlepo-Hlope responded that the DBSA had conducted a study around EPWP graduates. Most of the EPWP graduates remained unemployed because there were simply not enough work opportunities in the economy. The skills that were required in the economy were technical skills. Most of these could not be provided through the EPWP.

Ms J Thorne (Development Bank of Southern Africa: Policy Researcher) acknowledged that much of what Dr Phillips had stated in response to the critique on the EPWP was correct. The analysis that was presented in the Report was perhaps rather superficial. The Report could perhaps have been more nuanced. Ms Nhlepo-Hlope added that the DBSA was aware of the challenges that South Africa faced.

The Chairperson was concerned that the delegation had stated that the critique of the EPWP, presented in the Report, was superficial. If the report was superficial, and full of blanket statements, it was highly problematic, and could mistakenly create misconceptions in the public arena. Most people employed in the EPWP felt it had been beneficial. If the DBSA felt that there were certain problems with the EPWP, they should have raised these at the Growth and Development Summit.

Ms J Thorne commented that this was the fourth Development Report that the DBSA had produced. Each of these reports had dealt with sensitive issues and had offered constructive criticism. The DBSA was pleased that government was willing to engage with it around these issues. The DBSA viewed its critique of the EPWP as part of this tradition of constructive criticism. Indeed, the DBSA had been contacted by a Member of Parliament to be involved in furthering the debate around the second economy and developmental issues. It was partly for this reason that it had produced the Development Report.

Mr Maduma stated that the EPWP was not only located in the Public Works Department: other departments had their own EPWP initiatives. The length of employment offered to individuals differed between these various initiatives. He asked whether the DBSA had considered this when it had stated, in its critique, that the EPWP only offered short-term employment. Ms Nhlepo-Hlope responded that the DBSA was aware that the EPWP was not only located in Public Works, but also in other departments.

Mr Moomsamy stated that the DBSA’s Development Report appeared to be pouring cold water on the initiatives of the government. He and Ms Ramotsamai remarked that it was not the state’s responsibility to create employment; it was the market’s responsibility. However, the market was failing to create the promised employment. South African corporations were also not investing in South Africa; they were rather investing in other countries. The government had implemented the EPWP in order to provide relief to unemployed people, but due to limited funds, the government could not eradicate unemployment. Nonetheless, if government had not intervened, the poverty and unemployment situation would have been far worse. Mr Moomsamy felt strongly that the time had come for big business to create employment.

Ms Thorne responded that the last thing the DBSA wanted to do was pour cold water on the government’s initiatives. The DBSA viewed itself as part of government and, therefore, agreed with its gaols and principles. The DBSA was passionate about development and wanted the EPWP to succeed.

Ms Ntuli enquired what could be done to ensure that people benefited from labour intensive EPWP initiatives.

Ms Ntuli felt that the EPWP should focus on providing people with construction skills. Once these people left the EPWP they would be in a position to maintain the projects that the EPWP had initiated in their communities.

Mr S Opperman (DA) noted that in 1999 there was a decrease in the exponential growth of unemployment. He asked why this decrease had occurred.

Mr Opperman asked whether a general relaxation of labour laws would lead to greater employment creation.

Mr Blanche remarked that the DBSA should be involved in increasing the pace of skills transfer through the EPWP. Indeed, the DBSA could be involved in offering resources and funding for skills transfer in certain EPWP projects.

Ms Nhlepo-Hlope replied that the DBSA would be sending employees to administer skills development training in local municipalities.

A Member commented that the DBSA had provided R100 million in funding for a study on the social sector. He asked the delegation to provide more details about the study. For example, how did communities benefit from the study?

The Chairperson asked why the DBSA was only focusing on the social sector. The DBSA perhaps needed to undertake a study on how the entire EPWP could create more employment.

Ms Nhlepo-Hlope responded that the social sector was the only sector that had approached the DBSA for assistance. The DBSA could not demand to intervene in the other sectors; it could only help in the sectors that wanted assistance. The DBSA had attempted to implement a capacity building programme in the environmental sector. However, rolling out an initiative was a difficult undertaking because one needed to develop systems and capacity. The DBSA was also attempting to create links in the economic cluster.

The Chairperson stated that the DBSA needed to proactively approach the other sectors to offer assistance. Had the DBSA approached the Department to offer assistance or to discuss the issues around the EPWP? The Department was open to suggestions on how the EPWP could be improved.

Ms Nhlepo-Hlope responded that DBSA met with all the government departments that were involved in the EPWP on a quarterly basis. At these meetings, critical issues surrounding the EPWP were discussed.

Ms Ramotsamai observed that thousands of people were being retrenched in the mining sector. These people would probably never be absorbed by the EPWP. She asked whether the DBSA had any programmes to intervene in mining sector retrenchments.

Ms Ramotsamai noted that the DBSA had stated that the length that an individual was employed in the EPWP needed to be increased. Would this mean that the number of people, which were employed in the EPWP, would decrease? Ms Nwamitwa-Shilubana added that government was attempting to reach as many people as it could through the EPWP programme.

Ms Thorne responded that the EPWP reached 200 000 people, which was two to four percent of the unemployed. She and her colleagues had debated whether this was enough people. However, if you were one of the 200 000 people, the EPWP did have a positive impact on your life. Ms Nhlepo-Hlope added that even if people were employed in the EPWP, it was only on a temporary basis.

Ms Nwamitwa-Shilubana asked the delegation to provide more detail on the DBSA’s interventions in the EPWP. Ms Nhlepo-Hlope replied that the DBSA had been involved in the construction of the N4 highway. It had insisted that the project should be labour intensive. In addition it had stipulated that SMME contractors should be hired to undertake certain support services. Nonetheless, labour intensive projects took longer and were more expensive than mechanised projects.

Mr Maduma asked whether the DBSA was involved in assisting municipalities with capacity building. Ms Thorne replied that the DBSA had established a R480 million development fund. The purpose of this fund was to build capacity at a municipal level. DBSA had funded a project that was undertaken by the SA Local Government Association (SALGA) to train local government officials. The DBSA had also launched an academy to provide training of client stakeholders, which included municipal officials, communities, government officials, donor agency workers, and NGO workers. The training had been accredited by the SA Qualifications Authority (SAQA). The courses that had been offered by the academy included risk management, and monitoring and evaluation courses. DBSA had also established the Local Government Network, which was an electronic network that was linked to several local government departments and municipalities. Through this network, DBSA provided online assistance to municipalities around issues such as employee disciplinary procedures. Added to this, the DBSA was undertaking a research project into how municipalities could recover their debts.

The Chairperson observed that the DBSA had only spent/disbursed 40% of the R480 million development fund. In the light of this, he enquired whether the municipalities were receiving sufficient grants from the fund.

Ms Thorne acknowledged that, to date, the DBSA had only disbursed 40% of the grants. Projects needed to be established before the grants could be disbursed, and this was time consuming. Nonetheless, the remaining money in the fund would be disbursed in the near future. She added that even though the DBSA was a development bank, it had been under pressure to be more financially self-sustaining. Recently, government had encouraged the DBSA to provide more grants and become actively involved with municipalities. The DBSA was also undertaking smaller projects in more municipalities. In the past, the DBSA tended to work with the wealthier municipalities, but it was now working with smaller, less well-funded municipalities. It would be assisting these smaller municipalities to become financial viable. However, such an undertaking was expensive in terms of money and manpower.

Mr Maduma commented that the DBSA needed to improve its public profile. The public was unaware that the DBSA was funding certain projects. Ms Thorne acknowledged that the DBSA needed to enhance its public profile.

The Chairperson commented that the Committee wanted to have ongoing contact with the DBSA. This would allow the Committee to gain more knowledge about the DBSA’s functions. The DBSA should also produce further ideas on how the EPWP could be improved. The Committee would also want to engage the DBSA around the future reports that it would be producing. There needed to be a close relationship between the Committee and DBSA.

The meeting was adjourned.