Independent Development Trust: Annual Report briefing

PUBLIC WORKS PORTFOLIO COMMITTEE
24 October 2007
INDEPENDENT DEVELOPMENT TRUST: ANNUAL REPORT BRIEFING

Chairperson: Ms T Tobias (ANC)

Documents handed out:
Independent Development Trust Annual Report [available shortly at www.idt.org.za]
Independent Development Trust Annual Report Presentation
Research Analysis of Annual Report [awaited]

Audio recording of meeting[Part 1][Part 2]

SUMMARY
The Committee was briefed by the Independent Development Trust on their annual report highlighting their achievements and challenges. The vision and mission statement of the Trust had been re-aligned as a result of interactions between the executive authority and changes to the new plan would become evident in the next financial year. The Board had an extended term of office, to build on the momentum and consolidate. The Trust had achieved an unqualified audit report for the fifth consecutive year. The performance report indicated that the last year had been a turning point. Key achievements included the R1 billion expenditure achieved in this financial year without any rollovers. It had supported an NGO into the Tunisia and Chile study tour, which was influential in the development of the anti-poverty strategy. The Development Finance Institutions review process was successfully concluded. The strategic objectives focused on eradication of poverty, measured by output rather than the number of facilities put in place. Challenges included problems arising from late payment and development of proper monitoring tools. There would also be focus on local areas, promoting people-centred development and empowering citizens. The Trust would further contribute to African development solutions. A further strategic objective focused on processes and efficiencies. Systems had been transformed and the Trust had filled all executive posts, despite having had a high staff turnover.  The financial statements were tabled. The portfolio of the Trust grew to R1.2 billion in the current financial year.

Members suggested that it would be useful to see clear and measurable targets, and would also appreciate having sight of the report from Tunisia and Chile. They questioned how far South Africa had moved to meeting millennium development goals, the criteria for selection of municipalities assisted, the average wage rate used for the Expanded Public Works Programme employees, the challenge on skills, the need for further interaction with the Department of Education in the Eastern Cape, and the capacity to monitor. Further questions related to monitoring of consultants, the direct intervention with municipalities in the different provinces, the tracking of beneficiaries, the long term sustainability of Public Works programmes, cost recovery, the Trust’s intervention into mud schools, the possibility of partnerships with tertiary institutions. The Committee Researcher then commented upon her analysis of the report, and noted that some programmes were contained in the Annual Report, but not on the strategic plan, and this aspect was explained.

MINUTES
Independent Development Trust (IDT) Annual Report Presentation.
Ms Thembi Nwedamutswu, Chief Executive Officer, Independent Development Trust noted that there had been a change in the last financial year to the dates on which the Corporate Plan, Quarterly Reports and Annual Reports were lodged with the Executive Authority. Quarterly performance reports were now submitted 31 days after the end of the quarter, as the previous 21 days had been too tight a time frame.

The vision and mission statement of the Independent Development Trust (IDT) had been re-aligned as a result of interactions between the executive authority and changes to the new plan, and this would become evident in the next financial year. The Board had an extended term of office, to build on the momentum and consolidate. The IDT had achieved an unqualified audit report for the fifth consecutive year. The Trustees took pride in serving the nation, and their report was more fully set out on pages 17 to 27 of the Annual Report. This report summarised compliance and number of meetings, the mandate, and corporate governance initiatives.

The performance report in the Annual Report comprised of the Chief Executive Officer’s report and the corporate performance matrix. She summarised the statement of intent given when she had taken office over 1 000 days ago, and noted that the last year had been a turning point. Key achievements included the R1 billion expenditure achieved in this financial year without any rollovers. The IDT supported an NGO into the Tunisia and Chile study tour, which was influential in the development of the anti-poverty strategy. The Development Finance Institutions (DFI) review process that was led by National Treasury to review the parastatals of departments had been concluded but the report was not yet examined in detail. 

The first strategic objective of the IDT focused on the eradication of poverty as reflected through long-term goals. The programmes would be looking at the output, not the number of facilities put in place, measured in terms of actual improvement of quality of life. Ms Nwedamutswu provided a breakdown of expenditure and indicated that the biggest challenge experienced, especially by the Small and medium and micro enterprises (SMMEs) was late payment, which had affected their sustainability. IDT was working on improving the issue. IDT would have a customised monitoring tool for all programmes since the previous manual systems had not been effective.

The second strategic objective would focus on local areas, promoting people-centred development and empowering citizens in areas where IDT operated. Diverse strategies would be used and would target 10% of Project Consolidate municipalities. The capacity building models were described and it was noted that civil society partnerships would be used.

The third strategic objective was to contribute to African development solutions. This aimed to reposition the IDT so that it would function as a development agency for national and regional agendas. It would design a strategy of participating on the New Economic Partnership for African Development (NEPAD) programmes, and look at participation with other countries for information sharing. An example was the study tour to Tunisia and Chile to view how these countries had tackled poverty eradication.

The fourth strategic objective focuses on processes and efficiencies. IDT’s mandate had been refocused, as guided by the Executive Authority, on rural areas and women. It had approved 13 policies, and was aiming to institutionalise and sustain effective and efficient internal business processes.

The IDT has transformed its systems through the Kitimang project and had filled 100% executive posts. It had had a high staff turn over at executive levels, dismissals due to non-performance, and deaths in the organisations and would provide a breakdown later. Outcome-based reporting and monitoring tools were being used. It had addressed the queries raised in the previous audit report and had in the last year received an unqualified audit opinion. The IDT had spent about 97% of their operational budget this financial year and had effectively managed the DFI review. It had a head office and also offices in the provinces and had implemented a scorecard within the organisation.

Challenges remained the effective work around the anti-poverty strategy, where progress was slow at the moment, but was expected to result in a fundamental shift in the approach to poverty eradication.

The financial statements of the IDT were contained in the annual report. She stated that the balanced scorecard provided for output and long term targets. She indicated that there were contingent liabilities, arising from legal actions in which IDT was defendant. Legal disputes were inevitable in its type of business and were covered by risk management processes.

Mr Ayanda Wakaba, Executive Head; Development Programme Services: IDT, emphasised the social infrastructure facilitation, noting that in the previous years the portfolio of the IDT was R 660 million, and grew to R1.2 billion in the current financial year, This growth had impacts on capacity development and service delivery. He drew the Committee’s attention to page 43 of the Annual Report where the key performance indicators were set out, and explained the statistics to the Committee. The schedule of the portfolio and expenditure was contained on page 45 of that Report. 

The Chairperson mentioned that those were the same figures as last year’s annual report.

Mr Wakaba agreed that the assumptions were the same, but not the development indicators. The development figures beneath the assumptions were new.

Discussion
The Chairperson appreciated that IDT had to look at the impact of the measurable outputs whilst focusing on the quality of life. She appreciated that the performance audit status put the scale higher for government, and that would have a positive impact, although she expressed some doubts about Tunisia and Chile where they would make sure they meet the standard of the Millennium Development Goals (MDG). She congratulated IDT on its unqualified audit report but noted that there were some issues of processes that would need to be addressed, especially control measures. The Chairperson suggested that it would be useful to see clear and measurable targets. The alteration to the mandate was permissible, especially in view of the change of management.

Mr S Opperman (DA) thanked the CEO for the clear presentation of the vision and implementation and her emphasis on both inputs and outcome. He noted that the Committee would like to see the report from Tunisia and Chile.

Mr Opperman requested an indication of South Africa’s status towards achieving the MDG.

Ms Nwedamutswu answered that IDT was currently examining this aspect. Although South Africa might have done more than Chile and Tunisia regarding their anti poverty strategy, it had reported in a fragmented way. South Africa did not have a coordinated anti-poverty campaign, but was instead approaching poverty at different levels. She mentioned that it was not easy to respond to the status of South Africa in achieving the MDG, unless it began to deal differently with issues. She further mentioned that there was improvement in South Africa although she could not quantify the results and both Statistics SA and the Presidency were beginning to look at those areas.

Mr Opperman referred to the municipalities selected in deepening the intervention and wondered what was the criteria used to determine those municipalities.

Mr Wakaba replied that the IDT used the Integrated Sustainable Rural Development Programme (ASRDP) to identify the municipalities that needed assistance.

Mr J Blanche (DA) referred to average wage rate, which was mentioned in the report as R50 per day. This was labour’s rate ten years ago, and it should be R100. He pointed out that using this different figure was distorting the figure for jobs created. 

Mr Wakaba responded that this was a negotiated Expanded Public Works Programme (EPWP) rate, which was targeted at expanding volumes; although it did seem to indicate that more people were employed, in fact more people would benefit.

Ms Nwedamutswu added that one should consider the compulsory training within the EPWP implementation. When balancing the implementation and pay with time to be taken off, the contractor in effect subsidised the training, since he could only claim once the training was complete. The negotiations with NEDLAC on the implementation of the EPWP had agreed that there was a need for negotiation on the rate, to promote the other objectives of the EPWP bearing and balance out the contractors’ needs.

Mr Blanche indicated that the IDT staff was being paid higher salaries, but the workers were paid low salaries and wondered if IDT was achieving anything.

Mr Wakaba answered that the negotiated rate was R50, as set by EPWP, and there had been much investment had been on training. He further mentioned that he was not sure how that linked with the IDT staff salaries.

The Chairperson explained that the advantage to the lower rate was the ability to employ more people, although there was a disadvantage to the individuals. She suggested that IDT should focus on whether they adhered to the EPWP principles and whether or not such measures were assisting with job creation.

Mr H Cupido (ACDP) stated that the challenge on skills was a big problem. He requested the difference in budget should the IDT move to pay market related salaries and if it had incentives they intended on retaining skills.

Ms Pinkie Maesela, Executive Head: Corporate Services, IDT replied that IDT had a number of interventions and was now on phase two of the interventions whilst still implementing the recommendations from phase one. She further mentioned that IDT was paying at median rate plus 10% and would introduce the premium salary to retain the scarce skills. She added that IDT had introduced benefits although people were employed on a contract basis.

Mr L Maduma (ANC) congratulated the IDT on the comprehensive presentation and its swift response in constituency work. He gave an example of a school in the Eastern Cape where the classrooms had been burned down. The next time he visited the school IDT had rectified the situation. However he commented that there could be more interaction between IDT and the Education Department in the Eastern Cape. 

Mr Maduma referred to the monitoring tools and wondered if there was sufficient capacity to provide feedback to see the quality of work done.

Mr Wakaba replied that monitoring was a general problem in the country. He further mentioned that IDT had instituted a robust management system, which assisted in evaluating projects and reporting on quality issues. 

Mr Maduma wondered to what extent was the IDT able to monitor engineers who were consultants.

Mr Wakaba answered that IDT did monitor consultants through the social infrastructure management programme. The challenge it experienced was securing adequate project managers and this would require more capacity.  

Mr Maduma mentioned that the Committee had visited the Northern Cape’s Kuruman district Municipality, who did not interact with IDT. He requested an explanation on the direct interaction that the IDT had with the municipalities, the challenges experienced and how they might address them.

Mr Wakaba responded that representation of the IDT varied for two reasons. IDT would move proactively to provinces where it was required. Secondly, the support in the provinces was constrained by the budget.

Ms N Ngcengwane (ANC) referred to the EPWP tracking of beneficiaries, specifically on the co- ordination of activities. She wondered how closely the IDT worked with the Construction Industry Development Board (CIDB), in the context of being a public works entity, in particular in relation to promoting upcoming contractors.

Mr Wakaba replied that the IDT did have links and had recently developed a strategy although there was a need for improvement.

Ms Ngcengwane wondered about the long-term financial sustainability of future plans and whether or not IDT planned to operate on full cost recovery from the Department.

Mr Wakaba answered that the IDT worked on a full cost recovery and the DFI review process would partly respond to that process. Most of the current funding came from interest endowment from government. 

Ms Nwedamutswu added that IDT had not yet achieved the full cost recovery plan and mentioned that they should not lose sight of the mandate of the IDT to be the development arm of government. She further mentioned that she would need assistance from the Committee on how to best position the IDT. 

Ms Ngcengwane asked the challenges the IDT was facing, since it was directly accountable to the public.

Ms C Ramotsamai congratulated the CEO on the Annual Report. She further mentioned that the main legislative mandate of IDT was to assist in reducing unemployment by 2014. There was still enormous unemployment and poverty in the rural areas, with the result that rural people migrated to the cities to find jobs.  She therefore wondered if there were future plans by the IDT to create jobs in the rural areas, so that people were not forced to come to the cities to find jobs.

Mr Wakaba replied that there was a policy shift taken by the IDT to focus on women and rural development. Policy decisions were taken to focus on other areas.

Ms Ramotsamai stated that government set guidelines but no tools to monitor them. She further mentioned that government consulted with big companies but did not provide the terms for them to work..

Ms Maesela replied that IDT had a contract manager system that was used to support the dashboard system.

Ms Nwedamutswu explained that IDT did not have the technical skills that blended with the implementation, but they did have the technical people.

Mr Wakaba mentioned that there was a system of tracking beneficiaries. They had created about 48 000 jobs; the exact figure could be picked up in the Annual Report.

Ms Ramotsamai referred to mud schools, and requested an explanation of how funds would be allocated for their eradication. This was an important aspect on which there must be a breakdown of progress, and the Committee would be paying a visit to some of the schools.

Ms Ramotsamai mentioned the job for growth project and that the Committee  would like to see the implementation of that.

Ms Nwedamutswu responded that IDT launched a project at the end of July, but the challenge had been access to markets. The job for growth tried to address that by linking those markets with challenges of funding. She further mentioned that IDT had been working closely with the EPWP.

Ms Nwedamutswu indicated that challenges rose when schools were built, but then it would be found there were no proper roads leading from home to school, or children would have to cross a river and be placed in danger. The IDT did not have a comprehensive budget for all that was required.

Mr Maduma referred to the scarce skills in the transformational agenda, and mentioned that there was a challenge in regard to these skills. He further mentioned that consultants were usually the advantaged people.

Ms Nwedamutswu replied that the Joint Initiative for Priority Skills (JIPSA) programme addressed that by providing skills and experience training to people from disadvantaged groups who had been excluded before. She further mentioned that MinMEC was looking at those standards.

Mr Maduma suggested that IDT set partnerships with Walter Sisulu University and that it could absorb graduates. It would be ideal to have interventions in redressing challenges of unemployment for black graduates. He further mentioned that graduates were trained but lacked experience.

Ms Nwedamutswu  agreed that the interaction with tertiary institutions needed to be strengthened.

The Chairperson wondered how the EPWP project worked regarding placement.

Mr Blanche requested a breakdown of the amount used to run the IDT and money for jobs created.

Mr Blanche wondered if skills were transferred or there was sustainable development.

Ms Nwedamutswu answered that sustainability of jobs was dependent on the type of job, since in the EPWP project there were both sustainable and unsustainable jobs. 

The Chairperson suggested that Parliament should come up with recommendations for all government departments, since most people were poached from the Department.

A representative from the Department of Public Works mentioned that the Presidency was reviewing all second economy programmes, and would report on the findings regarding poaching of staff.

Parliamentary Researcher’s analysis of the Annual Report
The Parliamentary Researcher  indicated that when analysing the report she had looked  at the strategic plan and last year’s Annual Report for purpose of comparison. The corporate plan of the IDT should speak to the three-year plan. She referred to page 43 of the Annual Report and suggested that it would assist to give more substance to the report. She found that there were more programmes on the report that were not budgeted for, and wondered where the funding for that emanated. She mentioned that there were 40 programmes on the strategic plan, but 51 on the Annual Report, and suggested that this should be explained clearly in the Annual Report for consistency. She further requested an insertion of programmes to explain whether or not they were sustainable.

Ms Nwedamutswu acknowledged these comments and explained some of the interpretations to the report. She mentioned that the IDT facilitated the factory of bicycles, and they had no goods taken to Japan. She mentioned that the high staff turnover opened up growth. She stated that in future all the information would be mentioned, so that it would be easier to follow.

Mr Blanche stated that 1200 students were sent oversees and wondered if there was contact with them or any follow up strategies.

Mr Wakaba replied that the students did come back to South Africa once they hade completed their programmes. The challenges IDT experienced was with people confirming at the early stages but on the day of departure decided not to go oversees.

Ms Nwedamutswu mentioned that the IDT paid the stipends and the companies just gave them room for experiential training.

The meeting was adjourned.