Question NW436 to the Minister of Higher Education, Science and Innovation

Reply:

1. With regard to the objectives and purposes of the Skills Development Act, Act 97 of 1998, what total amount has been paid by employers in skills development levies since the inception of the Skills Development Levy, National Skills Fund (NSF) and the implementation of the specified Act;

Employers have the direct relationship through the mandatory grant process. The NSF as a catalytic funder focuses on skills development across the value chain of SA and has a direct relationship with stakeholders and/or implementing agents such as Skills Development Providers, Government Departments, PSET institutions none of which pay a levy to the NSF.

 

2. what (a) total amount has been raised by the NSF in reliance upon the Act, in particular section 27, and (b) is the source of the funding in reliance upon section 27(2)(a) to (f);

The pilot project underway through the Presidency called the Presidential Youth Employment Initiative (PYEI) is the only source of additional funding and this has been included in the MTSF (through DHET).

Background

“Section 27 (1) of the Skills Development Act (SDA) states that the National Skills Fund is hereby established and section (2) further state that the Fund must be credited with:

• 1. 20 per cent of the skills development levies, interest and penalties collected in respect of every SETA, as required by sections 8 (3) (a) and 9 (a) of the Skills Development

Levies Act (SDL Act);

• 1. the skills development levies, interest and penalties collected by the Commissioner from employers which do not fall within the jurisdiction of a SETA, as required by section 8 (3) (c) of the SDL Act.
  2. money appropriated by Parliament for the Fund;
  3. interest earned on investments contemplated in section 29 (3);
  4. donations to the Fund; and
  5. money received from any other source.”

2 a) The total amount has been raised by the NSF in reliance upon the Act, in particular, section 27.

With reference to the Act and the question raised, the NSF was established in 1999 in terms of section 27 of the SDA without legal persona.

From that period of its establishment to the period of 2010, the NSF was placed under the Department of Labour (DOL) as a chief directorate /Directorate and the total amount that was raised by the NSF during this period was R 8 439 078 000.

In 2010-11 NSF was transferred to the Department of Higher Education and Training (DHET) and in 2011-12 the NSF was listed as Schedule 3A Public Entity in terms of the PFMA, retrospectively effective from 1 April 2012. From the period of 2011 to 2023 the total amount that was raised by the NSF during this period was R49 464 097 000.

In summary and in total considering the period when the NSF was in DOL and the NSF in the DHET, the NSF received a total amount of R57 903 175 000.

 

2 b) The source of the funding in reliance upon section 27(2)(a) to (f)

With reference to the section 27 of the SDA and the question raised, the NSF current main revenue sources are:

1. 20% of the skills development levies as contemplated in the SDL Act; and
2. Interest earned on investments held at the Public Investment Corporation (PIC); and
3. Money received from any other sources - uncommitted surplus from the SETAs and to certain extend interest received from the Skills Development Providers (but the amount is not material).

The NSF may also receive revenue from the following sources as per section 27 of the SDA (but this is not prevalent as NSF has not received any of the amount listed below):

1. The skills development levies collected and transferred to the NSF, in terms of the SDL Act in respect of those employers or sectors for which there is no sector education and training authority (SETA)
2. Money appropriated by Parliament for the NSF
3. Donations to the NSF

With reference to the 20% of the skills development levies as contemplated in the Skills Development Levies Act, 1999 (Act 9 of 1999) (SDL Act) as per section 27 (2) (a), the NSF has accounted for R45 996 000 000.

With reference interest earned on investments contemplated in section 29 (3) of the SDA and as per section 27 (2) (d), the NSF has accounted for R6 789 000 000.

With reference to the funds received as a results uncommitted surplus from the SETAs that are transferred to the NSF in terms of SETA grant regulation 3(12) the NSF has accounted for R4 126 000 000.

With reference to section 27 (1) (f) “money received from other sources” / Other income the NSF has accounted for R 992 000 000 (for example transfers from DHET for special projects and

Finance income from advance payments to skills development programmes and projects)

3 a) Current value of the total amount raised.

The current value from 1 April 2023 to 31 Dec 2023 is the total of R4 152 000 000.

1. 20% of the skills development levies as contemplated in the SDL Act is R 3 313 000 000 and
2. Interest earned on investments held at the PIC as per section 27 (2) (d) is R838 000 000.

3b) The total monetary value of unspent skills development levies being held by NSF is R14,916 billion.

in terms of Section 29(3) of the SDA, the unexpended balance in the NSF at the end of the financial year must be carried forward to the next financial year as a credit to the NSF.

The unspent funds are currently invested investments held at the Public Investment Corporation (PIC) as per section 29 (2) of the SDA that state that Any money in the Fund not required for immediate use may be invested in accordance with an investment policy approved by the Director-General that complies with the requirements of the Public Finance Management Act and may be withdrawn when required.

The total value of the unspent skills development levies being held of R14 916 000 000 is intended to be utilised for:

• 1. The 200 committed skills development programme and projects that the NSF has entered contract with the cash commitment of R 11 196 000 000.
  2. The 204 earmarked committed skills development programme and projects that have not yet been contract of about R 10 000 000 000.

The NSF in terms of its strategic plan and annual performance plan intends to support and respond to the National Skills Development Plan (NSDP)/MTSF/WP-PSET/NP-PSET and also responding to the other projects of national priorities by funding projects that are :

• 1. Identified to increase production of occupations in high demand (skills development programme and projects such Artisanal development etc)
  2. Link education and the workplace (skills development programme and projects - Work integrated learning /Learnerships/ Internships etc)
  3. Improve the level of skills in the South African workforce (skills development programme and projects such Worker education related interventions)
  4. Increase access to occupationally directed programmes (skills development programme and projects with the 50 TVET Colleges / 9 CET colleges / State SOCs such as NECSA etc)
  5. Skills development support for entrepreneurship and cooperative development (skills development programme and projects such SEDA related interventions),
  6. The human resource development strategy (support to the secretariate work of NSA /HRDC)

4. what is the total number of accredited qualifications that have been funded by the (a) skills development levies and (b) NSF;

The National Skills Fund has funded various programmes in relation to the Skills Development Act and National Skills Development Plan. The table below provides the reader with number of qualifications in the financial years 22/23 and 23/24.

 

Qualification	22/23	23/34
	Number	Number
Learnerships	10775	10818
Apprenticeship / Artisans	7071	5888
Bursaries (incl. Int)	813	1426

 

In addition to the numbers above, as a value add included are learners trained in:

• • • Occupations in High Demand (OIHD),
    • Persons with Disability and
    • Beneficiaries coming from rural communities.

5. What are the reasons that the money, raised through levies on employers and other sources of funding, has not been spent on skills development

1. Currently NSF has skills development programme and projects of contract values of R23 264 000 000 and cash commitments of R11 196 000 000 that still need to be disbursed based on the budget projections beyond 2024 financial year and
2. The NSF also has earmarked skills development programme and projects of 204 earmarked committed skills development programme and projects that have not yet been contract of about R10 000 000 000 disbursed.

The NSF in terms of its strategic plan and annual performance plan intends to support and respond to the National Skills Development Plan (NSDP)/MTSF/WP-PSET/NP-PSET and responding to the other projects of national priorities by funding projects that are:

1. Identified to increase production of occupations in high demand (skills development programme and projects such Artisanal development etc)
2. Link education and the workplace (skills development programme and projects - Work integrated learning /Learnerships/ Internships etc)
3. Improve the level of skills in the South African workforce (skills development programme and projects such Worker education related interventions)
4. Increase access to occupationally directed programmes (skills development programme and projects with the 50 TVET Colleges / 9 CET colleges / State SOCs such as NECSA etc)
5. Skills development support for entrepreneurship and cooperative development (skills development programme and projects such SEDA related interventions),
6. The human resource development strategy (support to the secretariate work of NSA / HRDC)