Independent Development Trust 2009-2011 Corporate Plan & Agrément South Africa 2008/9 Strategic Plan and Budget

Meeting report

Independent Development Trust (IDT) 2009-11 Corporate Strategy Briefing
Ms Pumla Radebe, Chairperson of the Board, IDT, made some opening remarks regarding the Board and when it had been appointed. She noted that the IDT operated in an anti-poor environment. This was to enable poor communities to have access to resources. The Board had taken the decision to focus on women as beneficiaries, leaders and contractors. It was believed that this focus on women would lead to the betterment of communities.

Ms Thembi Nedwamutsu, CEO, IDT, continued with the presentation. She touched on the IDT’s governance and stated that it was a responsive organisation that had changing roles. The IDT’s mandate tied in with its business model, which was anchored in the eradication of poverty and unemployment. The idea was to close the developmental gap between donors, government and the private sector, and the target populations who were to be reached by the institutions.  Ms Nedwamutsu proceeded with an overview of the IDT 2009/2011 Corporate Strategy. She noted that the initial step was that an environmental scan had been done, the findings of which had led to the development of strategic objectives. The strategic objectives henceforth guided the strategy. A compliance statement had also been prepared in line with National Treasury (NT) guidelines. The result was a three-year Corporate Plan, which had started on 1 April 2008 and ran up until 31 March 2011. The plan was directly in line with the IDT’s mandate and legislative and fiduciary obligations. It was derived from a vigorous analysis of the international, regional and national development environment. The plan additionally reflected a number of strategic choices on how best to position the IDT and to apply its resources to optimise its developmental impact.

Ms Nedwamutsu furthermore provided the Committee with insight into its developmental perspectives globally, regionally, nationally and provincially. The IDT also did a stakeholder analysis and undertook an internal scan of the organisation. Hence it was able to assess itself and was able to identify its strengths and weaknesses.

Discussion
Ms C Ramotsamai (ANC) stated that in the Eastern Cape (EC) and Limpopo provinces the existence of mud schools was still a huge problem. She was disappointed that the Committee had been unable to undertake an oversight visit to the EC to check the situation was regarding mud schools. She asked whether the IDT or the provinces were in a better position to provide the committee with a report.

Ms Ramotsamai said that when the Committee had visited Gauteng it had seemed that this province did not need the services of the IDT. The issue was about developing underdeveloped areas. She pointed out that even a modern city such as Cape Town had underdeveloped areas.

Ms Ramotsamai stated that empowering of women would lead to empowering of the nation.

The Chairperson said that the Committee would have the opportunity to undertake oversight visits.

Ms Nedwamutsu responded that the IDT had been given mandates in certain provinces to eradicate mud schools. She noted that often provinces were late in contacting the IDT and hence this resulted in backlogs. The IDT had asked MinMEC to give it timeous notice on the issue of eradication of mud schools in the provinces.

Ms Nedwamutsu said that the IDT had experienced challenges in Gauteng. Large and established contractors had built most of the schools in Gauteng. The issue was consequently discussed with MECs and the result was that black contractors had built 23 new schools.

Mr Ayanda Wakaba, Chief Operations Officer, IDT, noted that it was easy to empower black contractors for projects ranging between R2 and R5 million. The building of comprehensive schools was however in the range of R20m-R40m. Joint ventures between large contractors and smaller black contractors had been started. He said that there was a need for effective strategies to empower black contractors at higher levels.

Mr S Opperman (DA) stated that the IDT’s emphasis on outcomes was welcomed. He referred to the recent xenophobic attacks taking place in the Alexandria Township and asked whether the issue was on the IDT’s agenda.

Mr B Radebe (ANC) said that the annual growth rate in Brazil and Argentina was higher than in South Africa. He asked whether the initial capital investment into IDT at its inception was still sufficient, in view of the work it would have to do in the years ahead. Mr Radebe felt the funds would not be sufficient to carry the IDT through. He also asked whether the IDT had tried to source additional funding and felt it was high time that it did so.

Ms Nedwamutsu agreed that there was a need to look at how the IDT was capitalised.

Mr Radebe noted that the IDT’s strategic objectives placed specific emphasis on women and asked what the intention in the long-term was.

Mr Radebe furthermore referred to the IDT’s budget of R1.6 billion and asked for the figures for the projected targets for number of people to be employed.

Ms N Ngcengwane (ANC) was also keen to visit the EC. She stated that there had been 917 mud schools and asked how far the process of its eradication was. She also asked how the IDT used smaller contractors from local communities for the building of schools and clinics. Ms Ngcengwane additionally asked how close a working relationship the IDT had with Construction Industry Development Board (CIDB) and Agrimor. She lastly referred to nodal projection points and asked how far the projects were. 

Ms Nedwamutsu said that a report on the progress of mud schools would be forwarded to the Committee. She noted that R150 million had been committed to the project. The delay in implementing the spending of the R150 million was because of the need to identify the mud schools. Progress was however being made. Ms Nedwamutsu pointed out that the building of new schools had taken place in certain provinces such as Mpumalanga.

Ms Nedwamutsu said that the IDT did work well with other entities. CIBD had assisted the IDT in setting up a database of women contractors. She stated that the IDT had to assist nodal points with their integrated development plans (IDPs). Funding problems had surfaced and the result was that a great deal of progress had been made in planning, although many gaps occurred in the rollout.

Mr J Blanche (DA) was concerned whether the IDT was doing what it was supposed to do. He asked what was happening and what progress had been made in using its funding. Mr Blanche wanted specifics on monetary allocations to various programmes and hoped that much of the funding was not only used on the running costs of the organisation.

Mr Tom Moyer, Chief Financial Officer, IDT, said that the actual spend in the past financial year had been R1.2 billion on infrastructure and that R250 million had been applied for the IDT itself. Overhead expenditure was between R110 and R120 million. The rest of the expenditure was on capacity building and similar programmes.

The Chairperson said that the various programmes would still be presented to the Committee.

Mr Blanche was concerned about areas like Alexandria and Hillbrow that had seen better days in the past. He asked what the IDT was doing to stem the flow of the poor to areas like these.

The Chairperson felt it unfair to expect the IDT to answer political questions like the ones asked about Hillbrow and Alexandria. She said that the questions should be directed to the right people who were in a position to answer them. The key objectives of the IDT lay in the fields of anti-poverty and eradication of unemployment.

Mr Blanche stated that SA was experiencing the same phenomena as had Latin America. After finishing school, people migrated to the cities in search of work and in many instances would move from one city to another. He asked if this trend had been noticed by IDT. Mr Blanche felt that the issue of people coming across the borders looking for jobs needed to be addressed, and said that the Committee would assist in any way it could.

Dr S Huang (ANC) asked why, given that expenditure on school buildings and furniture for 2006/07 was R730 million,  only R12 million of that R730 million was spent on local employment. He also asked for more clarity on the programme of eradication of mud schools.

Mr L Maduma (ANC) referred to the business model slides and asked for clarification on the comments made about private sector experience. He also referred to infrastructural development outlined in the strategic objectives of the IDT and asked what was being done about the problem of access roads to schools. Many learners experienced great difficulties in getting to school. Some had to walk great distances while others had to cross rivers. Mr Maduma pointed out that many of the municipalities lacked the capacity to deal with the issue. He hoped the IDT could assist in the matter.

Ms Nedwamutsu said that the private sector did have experience, but the only problem was that its targeted communities could not reach them. She stated that the Minister had set out a programme addressing the issue of access roads. The IDT must, however, identify where there was a critical need for roads.

The Chairperson praised the IDT for submitting such a comprehensive document on its strategic plan to the Committee. It complied fully with the requirements of the Public Finance Management Act. She was impressed with the effort that had been put into compiling the document. She also commended the IDT for giving 3% of its work to women and for creating 100 000 jobs. She did, however, point out that the issue of vacancies in the organisation needed addressing.

Ms Radebe thanked the Committee and said that the IDT was always available to discuss issues with the Committee.

Agrément   SA Strategic Plan and budget 2008/9
Mr Joe Odhiambo, CEO: Agrément SA, noted that the business plan had been presented to the Minister and had been approved. He noted that the new Board had been set various goals by the Minister for the coming year. Institutional arraignments were under way to turn Agrément   SA into a fully fledged public entity. It was currently functioning under the Council for Scientific and Industrial Research (CSIR), and was situated at the CSIR premises as well as being managed by the Council.

Mr Odhiambo discussed the exact role and work of Agrément SA. He said the organisation handled the technical assessments of new products for the construction industry. It tested the outputs of research and determined a product’s fitness for use and certification. In regard to the life cycle developments of products, Agrément formed the link between research carried out by bodies like the CSIR and standards testing by the South African Bureau of Standards (SABS). It would test truly novel products and as a result, part of their work was developing new testing methods for new inventions.

He outlined the vision and mission to perform a world class technical assessment and to promote economic development, good governance, and raise living standards and prosperity. He followed this by summarising the impacts, achievements and outputs recently.  He highlighted the widespread use of the Agrément SA certificate and its excellent international recognition. He said that this was shown by Agrément's membership of the World Federation of Technical Assessment Organisations (WFTAO) and would be hosting their next annual general meeting.

Challenges and opportunities included improving technical assessment and project management skills The ageing status of the technical committee was highlighted and he added that there were opportunities for skills development up to doctorate level to train new members. Additional problems mentioned were the lack of research capability and lack of a marketing branch to create awareness in the public domain.

The financial statements were tabled, which set out the total allocations. The total allocation for 2007/8 showed a 56% allocation for human resources. He also reviewed the operational expense breakdown. The budget allocation for 2008/9  was R 8, 9 million, with a drop in the human resources allocation to 45%,which was due to rightsizing within the organisation. He also discussed the 2009/10 - 2011/12 allocations briefly.

The shared reporting structure with the CSIR was creating multiple reporting lines and the duplication was confusing. As a result, Agrément had requested a separate audit and were awaiting feedback from the  Auditor-General. He remarked on their compliance with Public Finance Management Act (PFMA) and Treasury regulations. Key initiatives were to improve the technical infrastructure and working environment of staff, with special reference to HR transformation. He discussed the new board and also the role of the technical committee, saying that there was a peer review process consisting of specific experts for the approval of certificates. Lastly he outlined Agrément's Vision 2015.This included promoting the use of modern construction technologies, making Agrément more visible and meeting the housing provision challenge by using innovative construction systems.
 
Discussion
The Chairperson asked where the budget and strategic plan documents were.

Mr Odhiambo responded that they had been made available to the Committee.

Mr Blanché congratulated  the Board on their report on innovations in building. He said that certain buildings needed to be condemned. As an example he referred to containers used as police stations in certain areas. He asked if some of these buildings could get some attention. He pointed to the lack of provincial administration buildings. These buildings were inadequate, needing renovation, heating and cooling systems. These outdated rented buildings needed to be replaced with energy efficient and secure premises. The current situation created inertia amongst the staff working there and must be addressed. He was very pleased that Agrément was paying attention to energy efficient building and hoped they would help address the need for proper classrooms and police stations.

Mr Radebe referred to the financial statements and asked about an apparent mismatch of figures, and requested the reasons for the dramatic rise in figures at a point.

Mr Odhiambo responded that  the apparent mismatch in figures  was due to costing differences between the CSIR and shared services .

Mr Opperman asked about the housing provision challenge. He asked the Board if they had heard of the “grow your own home” programme using hemp to as building material.

Mr Odhiambo responded that he had not heard of it and said that Agrément would do research and get back to the Committee on that.

Dr Huang asked about the sudden rise to R25 milion and asked why this was shown for the total budget allocation. He also asked where the funding for the Annual General Meeting of WFTOA came from and who participated.

Mr Odhiambo responded that the jump from R 8 million to R25 million in total budget allocation from 2008/9 to 2009/10 was due to the Vision 2015. Mr Odhiambo added that human resources had a direct bearing on the amount and a more detailed report on this would be submitted to Parliament at the next sitting.

Mr Odhiambo added that there would be limited expenditure on the upcoming WFTAO meeting, as the members would be covering their own travel and accommodation costs. Funding for the expenditure was to come from the operational budget.

Mr N Magubane (ANC) asked about Agrément's presence in the rural areas, and what their plans were to advance knowledge in these areas. He asked what assistance was provided to Small, Medium and Micro Enterprises. He had not heard people talking about Agrément and felt that it must be more visible to give people assistance.

Mr Cannon Noyana, Board Member, Agrément, responded that  there was a need to look at housing. The idea of a generic certificate system for this housing needed to be explored. He said Agrément must consider energy efficiency and initiatives such as fortifying the foundations of rondawels to make them more technically secure. That would transform this form of traditional home into a bondable asset.

Mr Maduma hoped to see the impact in South Africa. He welcomed the co-operation and closeness proposed. He asked about the scarcity of black and female candidates and mentioned bursaries. He wanted to know what the strategy was to attract more female staff.

Ms Ngcengwane asked also about increasing black female staff. She also queried Agrement's impact on service delivery and how it planned to target rural communities.

Mr Odhiambo responded by giving figures on staff representation. He said that currently no disabled staff were employed, but that there were 3 black female staff  members, 5 black males and 3 white males, giving a total of 11 staff. Agrément proposed to increase the staff complement to 21.

The Chairperson wanted the relationship between Agrément SA and the CSIR to be more clearly defined. She mentioned Eskom’s exhibition of the solar system at Parliament and raised the issue of energy efficiency. She raised prototyping of new inventions and innovations produced by young people at universities. She said Agrément should be doing something similarly innovative, seeking to introduce a new niche into the building environment. She asked how Agrément  proposed to encourage interest in the building industry. She then referred to the composition of the technical committee, particularly their ageing status and the fact that they did not have access to or interest in new technologies. This showed a lack of innovation and yet this committee had the power to reject new inventions, which was surely a mismatch. She asked why investment on Research and Development was so little. She concluded by proposing that the Committee do an oversight visit.

Mr Edwin Kruger, Chief Financial Officer, Agrément SA, said there were younger members of the technical committee, but that Agrément must not throw away the expertise of the older members. In this case Agrément found that retention of technical staff was a problem. Serious consideration into salaries must take place. The problem arose when these experts were promoted to management positions, meaning they were no longer used in the technical environment. As to the question on prototyping, he said that the dilemma for inventors was marketing their product to make it profitable. A different skill set would be needed and their role would be to link inventors to people with the marketing skill set.

Ms Khomotso Choma, Board Member: Agrément SA dealt with the issue of developing entrepreneurs. Ms Choma said it was key for Agrément to ensure innovation. Ms Choma said this would be achieved by making entrepreneurs aware of Agrément  and letting them know that Agrément could assist them in getting their inventions into the market.

The meeting was adjourned.