Special Pension Board; National Development Agency: annual reports (afternoon session)

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Finance Standing Committee

21 August 2000
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Meeting report

FINANCE PORTFOLIO COMMITTEE
22 August 2000
SPECIAL PENSIONS BOARD; NATIONAL DEVELOPMENT AGENCY: ANNUAL REPORTS


Documents handed out
Special Pensions Presentation by National Treasury [text outline of slides]
National Development Agency Presentation [text outline of slides]

SUMMARY
Only 15% of applications have been paid in five years since the Special Pensions Board came into being. It processes the special pension applications of liberation movement members who were in exile, banished or imprisoned for political crimes. The Board's current members serve only on a part-time basis which results in this becoming "weekend-work". The Board has made recommendations as to how to solve the delay and is acting on these.

The Chair said that the processing delay is unacceptable. She proposed that the Board provide a written report to the committee on a two-monthly basis as to progress and that if special legislative action becomes necessary, this should be done.

The National Development Agency reported on its activities since its inception on 1 April 2000. Its progress report covered its transition from the Transitional National Development Trust, its challenges, objectives and focus of operations, sources of funding and funding criteria. This was followed by discussion in which the Minister and Deputy Minister participated.

MINUTES
Special Pensions Board
The Chairperson of the Special Pensions Board, Mr Makopo, accompanied by the CEO, Mr Makhasa, presented a report on the Board's activities (see document). Points made were:
· The Special Pensions Board came into being on 1 December 1996.
· This report looks at applications received, processed, rejected or accepted, as well as actions and problems that the Board has faced and innovations that have been made in order to address these.
· The Board was created to recognise the fact that as a result of specific experiences during the struggle for liberation, people would have failed to provide for their pensions.
· Pensions are able to be granted to three categories of people, who would have to be more than 35 years of age and have served 5 years as a full-time member of a liberation movement:
- people who were in exile
- people who were banished
- people who were imprisoned for political crimes.
· In addition, pensions can be granted to people younger than 35 years of age where death or disability arose as a result of full-time involvement in a liberation movement.
· Many difficulties have been experienced by the Board, owing mainly to the fact that current members serve only on a part-time basis, which results in this becoming "weekend-work". The Board is paying special attention to these problems and aims to settle all claims in a short time period through the appointment of 5 full-time Board members.

Their recommendations were:
- Accept the premise that information available in the application files cannot be improved upon.
- Appoint five full-time members to the Special Pensions Board
- Appoint two additional members to its Review Board
- Board to adjudicate on all available files within nine months

Discussion
The Chair, Ms Hogan, underlined the urgency of this matter, and stressed the need for a speedy resolution to pending claims. She noted that the backlog of applications facing the Board is quoted as 17 984 cases. Was this the total number of applications or are there more files expected to arrive?

Mr Makopo replied that there are about 10 000 files awaiting Board attention, including some files which will be rejected due to non-fulfilment of criteria for eligibility. The remaining 7698 files are files for which further information is required - only application forms and copies of the applicant's ID document have been furnished. Four or five letters have been sent to these applicants requesting further information and a final letter will be sent shortly stating that as a result of no further information being supplied by the applicant, the Board will adjudicate these files on the strength of what documentation has been supplied.

Ms de Lille (PAC) asked the following questions:
- Is it realistic to imagine that the remaining outstanding claims will be paid anytime soon? She had in her possession a letter from the CEO of the Board dated 11 February 2000 informing her that 4106 applications had been processed. In the report presented, a figure of 4671 applications processed is quoted, meaning that between 11 February and 30 July, only 565 applications have been dealt with.
- What about people who have died in the time between application and processing - are their pensions still paid out, and if so to whom?

Mr Makopo replied that this question captures the essence of the problem facing the Board - slow processing as a result of the fact that members are serving on a part-time basis. Applications are processed speedily enough, but a blockage forms at the stage of Board approval. Having 5 full-time members will help deal with applications faster, and will provide sufficient capacity to allow this process to be completed within this financial year (9 months).
He noted that the Act provides that dependants of the deceased are entitled to receive a lump sum payment of the equivalent of 2 years' annual pension as a result of eligibility. However, the Act provides that pensions are paid as of date of adjudication, and dependants can therefore not claim benefits from any subsequent years.

In answer to Ms Hogan's query as to whether further applications were expected, Mr Makopo said that the closing date for applications had passed; only cases referred by the Review Board would be considered.

Mr Andrew (DP) referred to the category 'Other' on the graph marked "Number of members paid according to political party". He asked what was the make-up of this group of applicants, as other groups with as few as three applicants had been depicted as a separate "slice" of the pie chart.

Mr Makopo answered that there have been applicants which were not members of liberation movements, but who nevertheless worked for the struggle, for example, under the auspices of a student organisation, and who spent time in prison or exile as a result of these activities. Although they cannot be classified under a liberation movement, they are entitled to a claim under the Act.

Prof Turok (ANC) asked whether it was a requirement of the Act that each individual case go before the Board, and that as a way of speeding up the process it would not be better to categorise like cases and approve them in principle.

Mr Makopo relied that he was unable to comment on this according to the strict application of the Act, but noted that during processing, applications are 'packaged' according to categories - for example, those relating to people older than 65 years.

Mr Ramgobin (ANC) asked whether it wouldn't be better to adjudicate claims as if the person were alive, and that these benefits should be paid if the person had passed away.

The Chair added that there are many people eligible for these pensions who are being kept waiting due to the backlog faced by the Board and are therefore experiencing loss. When is it the intention to bring the suggestion of back-payments (as mentioned by the presenters earlier) before Cabinet for approval?

Mr Makopo replied that the matter was currently with the State Law Advisors.

Dr Davies (ANC) asked how many invalid or fraudulent applications had been received, and asked whether any pattern had been noted in terms of a specific region or organisation. Is there any possibility for pre-screening so that these cases do not even go before the Board and can therefore help lighten the load of cases awaiting approval?

Mr Makopo replied that pre-screening and investigation happens with every case, but that every file is put before the Board, who then have the right to reject them on the basis of conflicting evidence. He added that when fraudulent cases are found, they are not approved, although some do slip through and are paid for a few months, while some are caught before payment is made. The question then becomes one for the Treasury Department as to what is the appropriate action to be taken against these people.

The Chair asked if the Review Board's members are also part-time members?

Mr Makopo replied that this was the case and that the Review Board constituted only one member currently. Two new full-time members for the Review Board are currently being recruited, as well as the four full-time places being filled on the Special Pension Board itself. Cases are currently being adjudicated by the single member of the Review Board and her decisions are awaiting ratification by the two new members.

A member stated that as only 15% of applications have been paid in 5 years, committee members find it difficult to go back to their communities and face people without having any results. He pleaded with the Treasury and the Board to make their intentions for action known to the people.

The Chair added that they were all in agreement that this is an unacceptable situation and that they are aware of the desperation of the people affected. She proposed that the Board provide a written report to this committee on a two-monthly basis as to progress in the process, and that if special legislative action becomes necessary, this should be done.

The Chair asked for clarification regarding the statement that Cabinet had approved that what information is on file be accepted. Surely this would lead to a situation where false information leads to an award of a pension, which would then have to be recovered in due course. Has any provision been made for research, and if so what has been done in this area? Have relationships been forged with any other "record-keepers" such as the Justice Department, Robben Island Museum, Truth and Reconciliation Commission and Human Rights Commission in order to aid people with the compilation of their files and clarification of their applications. There are many people who deserve to get their pensions, but who do not have the time or the backup documentation to settle any queries.

The Board replied that they understand that many people have had difficulty in completing their applications, but at the same time they cannot simply rule that people qualify. However, if the available information cannot be improved upon, the Board will work from the information as it stands and due process will apply. They are no longer able to hold applications back as a result of an attempt to complete the gaps in the information.

The Chair added that the possibility exists for secondments from other departments, and that a relationship should be forged with people in other departments who kept files during that era such as the Security Police and the Justice Department.

The Minister, Mr Manuel, stated that this was not an administrative issue as administration has done its best, but that there are instances where not all the information required is in the files or available. The slide shows that interdepartmental co-operation has been forged as an action against the problems facing the Board, but there are still a small percentage of instances where the information cannot be completed, and special attention will be given to these cases by the Review Board and the Auditor General. Missing information should no longer be an obstacle in processing applications. Discretionary power is vested in the Board, and they review files of 20 - 40 pages at a time. This might be work being done on a part-time basis, but he said that they had faith in the discretionary power of the Special Pension Board to make the correct awards. The Review Board forms a further safeguard and oversight. However the bottleneck between administration and Board adjudication can no longer occur as the situation is already dire.

Ms de Lille appealed to the Board to notify applicants about the process, and to ask for volunteers to assist in moving the process forward.

The Chair asked for the Board to provide the name of a reliable liaison person who can deal effectively with requests and queries forwarded by MPs as they are being besieged by people needing assistance. She concluded by thanking the Special Pensions Board and said that although the committee would have liked to congratulate the Board on completing its work, the committee is encouraged that plans are in place to move forward. The committee looks forward to receiving a report in two months.

National Development Agency
This was the NDA's first opportunity to report to the committee on how far the process of the NDA has come. Ndalane Mthembu, Chairperson of the Board, and Toahlane Toahlane, CEO, were present as well as Shaid Rajie. See report for full presentation. As background, the following points were highlighted:
· The NDA was created as a legal agency to channel funds to NGOs who work against poverty.
· The NDA has been in existence since mid-1999, and has embarked on a process of creating structures for disbursements and addressing and targeting sources of funding.
· The allocation of funds by the NDA does not preclude donor money being sent directly to the NGOs
· The NDA seeks to grant money to NGOs independently, but also aims to be able to grant money from government.
· Shahid Rajie does not deal directly with the day-to-day running of the NDA, but remains in touch from the Treasury side.

Mr Mthembu clarified current funding sources and, on the request of the Chair, the lack of funding as reflected in the report:
Funding from the Minister of Finance 1999/2000: R 100 million
Funding from the Minister of Finance 2000/2001: R 90 million
Other sources:
Once-off grant from IDT (outstanding but expected soon): R 100 million
EU grant - 3 year contract (first grant in process of being paid): R 92 million
Lack of funds as reflected in the report relate to applications received each year, but which could not be accommodated due to all funds having been paid out. Such applications were carried over to the next year.

Discussion
Dr Rabie (NNP) asked whether, once an organisation has received funding, there are any performance output targets which need to be reached.

Mr Mthembu replied that the NDA is using a Project Tracking System as well as financial computer software which supports this. Projects are funded according to how well the project can meet contractually stipulated outputs, and only 60 projects currently have outstanding elements for compliance. The NDA Board is currently working on strict Key Performance Areas to ensure that they are able to be held accountable to their mandate - and these will be finalised this weekend at a strategic planning workshop. An evaluation of the experiences of the Transitional National Development Trust (TNDT) will also be undertaken, and this will help give indications to the NDA on areas which need improvement.

Mr Andrew (DP) asked the following questions:
- Are the NDA funding criteria formal criteria which have been adopted by the Board, or are they general criteria which have been implemented?
- In the presentation the Eastern Cape Region is not allocated any finding during the 2000 year, and in the 1999 year, the Northern Cape Region does not receive any funding. Is there any reason for this?
- Is there any scope for rationalisation between the Lottery and NDA Boards as part of the National Lottery money is being allocated to poverty relief and this may result in duplication of mechanisms for investigation?

Dr Toahlane replied as follows:
- These criteria have been adopted from the TNDT, but will be reviewed at the weekend's workshop.

Mr Mthembu added that the TNDT did not allow for proactive engagement between the communities and the projects. Now that the NDA can assess the poorest areas and address them, the picture will change as to the projects which are funded in each province. Projects which are currently only funded on an annual basis will also be funded on a project basis. Dr Toahlane added that the Board will look for indicators which are able to compare households in differing rural areas. The data is out there, but has not been tapped. The NDA wants to establish a database which maps out poverty.

Mr Manuel cautioned the Board not to undertake work of a magnitude that it cannot manage - the data that they are looking for will be produced by Census 2001. He replied to the question relating to the Lottery by stating that discussions are underway to establish systems with the NDA to disburse money from the Lottery as well.

Dr Koornhof (UDM) asked as to how provinces are adjudged as the poorest provinces.

Mr Mthembu replied that the NDA has up until now only been reactive to requests , but that the Board would be looking at ways in which they could assess which provinces are poorest and how these criteria can be applied to the applications.

Mr Booi (ANC) asked how the NDA are communicating with the poor to inform them of the money available as well as methods for application.
Ms Taljaard (CP) asked if there were any criteria relating to the profile of organisations making application?

Mr Mthembu replied that during the transition period between September and March, meetings have been held with all stakeholders working for eradication of poverty to discuss the possibility of partnerships with the NDA to work with complimentary strengths. There are also possibilities for management of the volumes of applications through other organisations, although care has to be taken that the autonomy and identity of the NDA is not relinquished.

Dr Toahlane replied that the process of application is firstly prioritisation and then assessment. The Board looks at the nature of the organisation, as they will only fund organisations that are community based and must change and develop the community. The Board also monitors the project's workings, structure, systems and governance. Projects are also only given 60% of their allocation, and the remainder is paid out on fulfilment of contractual obligations with the NDA.

Mr Ramgobin (ANC) noted that it is refreshing to see that most of the money has been spent. He asked:
- Have interdepartmental relationships been forged to ensure that all other money available is disbursed, for example, between Health and the NDA?
- Have any progress reports been received relating to the outcomes expected of the projects. Are there standard mechanisms for these report-backs to be done?

The Deputy Minister asked the committee to note that the last five years have mostly been the activities of the TNDT. Since the transition, an agreement has been concluded between the TNDT and the NDA ensuring that due diligence is practised in the management of finances of the TNDT. Members of the TNDT will remain available to the NDA to deal with matters relating to the TNDT.

Dr Manuel asked the committee to note that Dr Toahlane and Mr Mthembu were not at all involved with the TNDT. Dr Rajie stated that he has a closed report relating to the activities of the TNDT

Ms Joemat (ANC) asked whether the NDA has any project managers to ensure that the administrative costs of the projects do not swallow the entire budget allocated to the project. Dr Toahlane replied that this question has been answered in answer to an earlier question on process.

Prof Turok asked how the NDA will fit into the 'holistic approach' to development in the country, where interaction between organisations is encouraged. He further asked:
- What is the likely source of future funds?
- Will the Board be marching in broadly the same direction as the government development policy?

The Deputy Minister noted that this is a large issue, and some areas have to develop as the Board goes about its work. He replied as follows:
- The NDA has current funding from the fiscus and the MTEF to provide funds (which do not come from allocated governmental poverty relief funds). Government funding does not preclude direct funding to the NDA, and the NDA as registered interest in receiving money from Lottery proceeds.
- The concern relating to the management of projects is that the NDA needs to be involved in the management of projects while still maintaining their autonomy and aiding the developmental agenda of the country. Government is working on the idea of integrated development and consolidated delivery.

Mr Manuel added that part of the establishing principles of the NDA was to ensure that a relationship of trust is established with the NGOs, and this will also aid with the interrelationship of projects. The NDA will not be able to become government outside of government, and cannot create the exclusivity of requests by defining their own policy. There is a large untapped capacity in NGOs who do not have the finance to run their projects, and the NDA must allow the finance to get through to these projects. A synergy must be fostered with regard to poverty relief and priority areas to ensure that there is an intersection of areas of commonality. The NDA will not undertake the work of the line functions of government, but through the interaction of the NDA with a range of bodies in the country, they will be accountable to the constituency they serve. Government will engage with the NDA on issues, but the Board will be autonomous.

Mr Nair (ANC), referring to the 60 reports outstanding, asked what the costs and ages are of the projects?

Mr Mthembu replied that there are 69 projects have outstanding criteria within their contract agreements, but that these are subject to extensions as a result of reports not having been completed. No further funds have been made available until these reports are supplied, and most are in default only as a result of their reports not having been handed in timeously. This is not necessarily due to negligence on the part of the projects as auditor reports have to be prepared by accredited auditors, which are not readily accessible in rural areas.

In answer to the question are there any unspent funds from the TNDT, Dr Toahlane replied that there is unfortunately no money to be carried over, but rather deserving projects without budget. He clarified that
"EDEV" as used in the graphs stood for = economic development.

Ms Taljaard (DP) asked the following:
- Will the Official Development Assistance (ODA) report of the Department of Finance be at all useful to the NDA as a list of possible donors?
- Will the Revenue Service's database relating to the taxation of NGOs provide scope and prospects for information sharing?
- Can the decline in Good Governance and Democracy allocation allocation and Education and Training allocation be seen as wise?

Mr Rajie replied that a United Nations Development Programme (UNDP) report had been published pre-1994. Since 1994 a more detailed report has been requested relating to how much money has been granted in terms of loans, credit guarantees and technical support, what institutional arrangements have been made with civil society, provinces and government as well as an impact assessment in critical areas. Recommendations regarding better institutional arrangements will be ready by the end of August 2000 and will be given to the committee.

Mr Manuel added that the ODA report will be available in 3 weeks. The committee should not get the impression that there are billions of rands lying in unspent ODA in the Department of Finance. A distinction should be made between pledged money and direct grants. The committee should not set its sights too high as to the taxation database as the South African revenue Service is protective of the information of taxpayers. SANGOCO and SANGONET should provide better space for donor information and networking.

The Chair, in closing, welcomed both Mr Mthembu and Dr Toahlane to their new positions and requested that they develop a mechanism for reporting to Parliament.

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