PCComBRRR18

2. Budgetary Review and Recommendation Report of the Portfolio Committee on Communications, dated 6 November 2018

The Portfolio Committee on Communications (the Committee), having considered the performance and submission to National Treasury for the medium term period of the (i) Department of Communications (the Department); (ii) Government Communication and Information System (GCIS); (iii) Films and Publications Board (FPB); (iv) Independent Communications Authority of South Africa (ICASA); (v) Media Development and Diversity Agency (MDDA); (vi) South African Broadcasting Corporation; and (vii) Brand South Africa (BSA), reports as follows:

1.         Introduction

Chapter 4 of the Constitution of the Republic of South Africa, Act 108 of 1996 (the Constitution) gives a mandate to Portfolio Committees to legislate, conduct oversight over the Executive Authority and also facilitate public participation.

1.1.      Purpose of the report

The Money Bills Amendment Procedure and Related Matters Amendment Act (Act 9 of 2009) sets out the process that allows Parliament to make recommendations to the Minister of Finance as well as the cabinet Minister responsible for the vote to ensure the effectiveness and efficiency of the use of resources to ensure optimal service delivery.

According to Section 5 of the Money Bills Amendment Procedure and Related Matters Act, the National Assembly, through its Committees, must annually assess the performance of each national Department. The Committee must submit an annual Budgetary Review and Recommendation Report (BRRR) for the Department as it falls under its oversight responsibilities, for tabling in the National Assembly. This process happens every October of each year where the Committee assesses service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on the forward use of resources.

The BRRR also sources documents from the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS). The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process. The Standing Committee on Appropriations (SCOA) should consider these when it is considering and reporting on the MTBPS to the National Assembly.

Lastly, this performance report is also in line with Section 195 of the Constitution and other legislative prescripts that guide performance management in the public sector to display and promote transparency and accountability to stakeholders and the general public concerning matters under their control. 


2.         Role and mandate of the Committee:

• Consider legislation referred to it;
• Exercise oversight over the Department and it entities;
• Consider International Agreements referred to it;
• Consider Budget Vote of the two Departments;
• Facilitate public participation process; and
• Consider all matters referred to it in terms of legislation, the Rules of Parliament and resolutions of the House.

3.         Organisational environment

In June 2018, President Cyril Ramaphosa announced a new cabinet following his elective conference win of the ruling party over former President Jacob Zuma. The Department of Communications (the Department) received a new Minister, Ms Nomvula Mokonyane, and Deputy Minister, Ms Pinky Kekana. In the current Medium Term Expenditure Framework (MTEF) period, the Department, through its Minister, tabled an Annual Performance Plan (APP) which will set a strong foundation which the next administration can utilise in alignment with the demands of the Fourth Industrial Revolution.

4.         Methodology

For the period under review, the Committee, in exercising its oversight role, considered the 2017/18 Annual Reports and Financial Statements of the Department and GCIS on 09 October 2018, ICASA and FPB on 10 October 2018 and (iii) SABC, BSA and MDDA on 11 October 2018.

The Auditor-General of South Africa (AGSA) also presented the audit outcomes of the Department, GCIS, ICASA, SABC, FPB, BSA and MDDA for the 2017/18 financial year. The Committee also considered the 2017 State-of-the-Nation Address (SoNA), National Development Plan (NDP), Committee meetings, oversight reports and the 2016/17 Estimates of National Expenditure (ENE). There was no report from the Standing Committee on Appropriations (SCOA) nor was there a report from the Standing Committee on Public Accounts (SCOPA).

4.1       Outcomes of the report

This report is aligned to broader government policy framework, New Growth Path (NGP), NDP and the governing party’s priorities (job creation, poverty alleviation, combating crime and corruption, rural development, education and health). It reviews the initiatives taken by the Department to ensure that the priorities of the plan are realised. Furthermore, noting that the recommendations made in the previous year’s BRRR have not been responded to entirely, this report therefore will review and seek to address this challenge and ensure that recommendations are responded to in a systematic manner.

The report also looks at the recommendations made by the Committee regarding the 2017/18 budget vote report. The report then assesses the financial performance against service delivery performance to ascertain whether the budget allocated to the Department was spent as envisaged in the APP. Finally, it summarises the observations made by the Committee after considering quarterly reports, all other necessary documents, presentations generated using oversight instruments, before making service delivery recommendations.

5.         Mandate and legislative framework of the Department

The legislative framework for the work of the Department is contained primarily in the following legislation which it must administer and implement:

• Broadcasting Act, 1999 (Act 4 of 1999);
• Electronic Communications Act (ECA), 2005 (Act 36 of 2005);
• ICASA Act, 2000 (Act 13 of 2000);
• Films and Publications Act, 1996 (Act 65 of 1996); and
• MDDA Act, 2002 (Act 14 of 2002).

The Department is also guided, amongst others, by:

• The Constitution of the Republic of South Africa of 1996;
• The Public Service Act, 1994 (Act 103 of 1994), as amended;
• The PFMA of 1999, as amended;

• International Telecommunications Union including International bilateral and multilateral agreements;
• National Treasury’s Framework for Strategic Plans and APPs; and

• World Intellectual Property Organisation (WIPO).

5.1       Description and core functions

The NDP recognises that the ongoing development of quality communications infrastructure, services, content and applications is key to the rapid economic, social and cultural development of the country.

Chapter 15 of the NDP[1] focuses on Transforming Society and Uniting the Country. The NDP notes that inequality and inequity are still prevalent in the country despite the work being done in uniting the country since 1994. The NDP further envisages an active citizenry that participates in the socioeconomic life of the country, and the Department’s work contributes in particular to outcome 14 (nation building and social cohesion) of the 2014-2019 medium term strategic framework.

Therefore, the Department has a vital role to play in fostering unity and “Forging a new overarching identity.” Nation-Building and social cohesion matter; both as an end-state and as a facilitator. A balance needs to be found between healing the divisions of the past, broadening economic opportunities (particularly for black people) and building a sense of inclusion and common purpose among all the South Africans.  It should be emphasised that communications plays an essential part in the development process. There is therefore the continuous need to strengthen existing forums of people’s participation and enable our people to play a greater role in development, as well the fact that “the democratic government supports the right of citizens to express themselves.

Every citizen irrespective of their social class (where ever located, rural or urban, poor or rich) should have access to a choice of a diverse range of media and impart information. This is guaranteed by chapter two, the Bill of Rights of the country’s Constitution.  Access to communications and information empowers citizens to facilitate participatory democracy, and assists in defending, advancing and deepening democracy. Moreover, in South Africa’s old media (industry in general and radio sector in particular) is not comparable to it in 2014; it has changed for the better and for deepening democracy. The media informs, educates and entertains society and continues to empower citizens with alternative information.

Print media also plays an important role in the attainment of the goals set out in the NDP. On its own, this sector (despite the negative economic climate) still plays a significant role in facilitating democratic discourse. It should be acknowledged, however, that this is often constrained by skewed patterns of ownership and control. In addition, there is a need for diversity of local content across different platforms and to fast-track realisation of a diverse media environment.

Through its entity oversight unit, the Department analyses funding requests and ensures that transferred funds are properly used. Accountability instruments include quarterly and annual reports, monthly and quarterly accountability forums, and shareholder compacts. Majority of the spending is in the Entity Oversight programme.

Apart from administering the transfers it makes, the Department researches and develops broadcasting policies for the communications cluster, which comprises Budget Vote 3 of the Department of Communications, GCIS, SABC, BSA, ICASA, FPB and MDDA.

The activities of the Department are structured into four programmes, which are:

1. Programme 1: Administration
2. Programme 2: Communication Policy, Research and Development
3. Programme 3: Industry and Capacity Development

Programme 4: Entity Oversight

5.2       Key strategic objectives per programme

During the period under review the Department continued to allocate spending to the four programmes. Noting that there were no new activities during the year under review nor were there adequate funds allocated to the Department to ensure that it successfully delivers on its mandate.

5.2.1    Programme 1: Administration

The purpose of the programme is to provide strategic leadership, management and support services to the Department. The corporate services function provided support services to the Department through HR, information technology (IT), security, facilities, strategic management and legal services.

The strategic objectives for the year under review was to ensure compliance with statutory requirements and good governance practices by 2019.

5.2.1.1 Programme Performance

Among others and within this programme, the Department reported the following achievements on strategic objectives:

• The sub-programme Human Resource Management and Development submitted the HR Plan (HRP) Implementation Report to the Department of Public Service and Administration (DPSA) and the Annual Targeting Report.
• The Department reduced the vacancy rate from 16 % to 14 %.
• The Legal Services unit continued to provide services to both the GCIS and Department, and compiled reports on contracts, Memorandums of Understanding (MoU’s), litigation cases and legal opinions received during the reporting period.

In the first of its kind, the Department commissioned its first Evaluation Study to assess the effectiveness of the implementation of the Broadcasting Digital Migration (BDM) Communication Strategy and how it can be enhanced.

5.2.2    Programme 2: Communications Policy, Research and Development

The purpose of this programme is to conduct research and develop communications and broadcasting policies. During the year under review. The programme planned to improve universal access to broadcasting services by 2019 as well as broaden access to information to all citizens by 2019. The functions of the programme are organised into (i) Broadcasting Policy; and (ii) Technology and Engineering Services.

5.2.2.1 Programme Performance

Within this programme, the Department reported the following achievements and reason for deviation:

• The finalisation of the White Paper on Audio-Visual and Digital Content Policy for South Africa was not processed; hence the delays in the development of the Audio-Visual and Digital Content Bill for South Africa. As a mitigation factor, the Department plans to submit the draft White Paper to Economic Sectors, Employment and Infrastructure Development (ESEID) Cabinet Committee during the 2018/19 financial year for approval to conduct public hearings.
• The Department compiled two monitoring reports on Community Broadcasting Support Strategy on broadcasting infrastructure and signal distribution.
• The programme developed a 13-chapter discussion document on the Media Transformation and Diversity Policy as a means to guarantee the transformation of the media sector. However, the document is awaiting Executive Authority approval.
• The submission of the draft Concept Paper on the Regulatory Policy Framework of the SABC to the Minister was delayed as a result of further consultations. However, it will be submitted to the Minister during the 2018/19 financial year.

5.2.3    Programme 3: Industry and Capacity Development

The purpose of this programme is to manage enterprise development, BDM Policy and industry research and analysis. The programme functions are organised into (i) Enterprise Development; (ii) BDM; (iii) Industry Research and Analysis; and (iv) Intergovernmental Relations and Stakeholder Management.

The strategic objectives for the year under review were:

• Support the growth and development of the creative industries by 2019;
• Manage digital broadcasting migration by 2018/19;
• Strengthen support and interrelations with stakeholders by 2019; and
• Market the country locally and Internationally to provide enabling environment for investment by 2019.

5.2.3.1           Programme Performance

Within this programme, the Department reported the following achievements during the 2018/19 financial year:

• During the period under review, the BDM Programme remained a flagship programme and continued with the installation process of DTT STB’s and related devices. There was an increase in the number of awareness campaigns in order to circumvent non-delivery borne out of a lack of resources.
• A partnership with the Department of Public Works (DPW) to train installers resulted in 50 installers (out of a total target of at least 2 700 young people) being trained in the Free State during the period under review.
• The Intergovernmental Relations and Stakeholder Management has engaged the Premiers’ offices in targeted provinces such as the Free State and the North West to solicit support for the DTT programme to further extend intergovernmental collaboration. To this end, as a direct result of these engagements, a DTT rollout steering committee for district municipalities has been established to, among other activities, fast-track the public registration processes.

5.2.4    Programme 4: Entity Oversight

The purpose of the programme is to monitor the implementation of policies by state-owned and regulatory institutions and to provide guidance and oversight on their governance matters. The programme’s functions are organised into (i) Broadcasting and Community Media; (ii) SOE Communication and Branding; (iii) Regulatory Institutions; and (iv) Strategy and Policy Alignment.

The strategic objectives for the year under review were:

• Improve capacity of the entities to deliver by 2019; and
• Ensure viability and sustainability of SOEs by 2019.

5.2.4.1 Programme Performance

Within this programme, the Department reported the following achievements and non-achievements:

• During the period under review, the Department finalised the accountability instruments but could not get them signed off by the Executive Authority owing to a prolonged discussion in order to ensure effective oversight.
• Performance agreements could not be signed off by the Executive Authority owing to an inherent need to enhance agreements in order to ensure effective oversight.
• Public entities’ governance policy was implemented and a report was compiled on entity governance forum coordinated as per governance policy.
• An over-achievement by 16 of a total 29 funding requests were processed and funds were transferred to the respective SOEs.
• A total 20 oversight reports of entities (SABC, MDDA, BSA, FPB and ICASA) were submitted to the Executive Authority as per the intended target.

5.3       Technical quality analysis

The Department’s annual report is within the prescribed format and most of the targets are clearly set, thus making it possible to determine whether they have been achieved or not. And while some progress is noted in some entities in properly articulating strategic objectives, the Department’s budget remains a concern for Members in that it has a mammoth responsibility yet the minimal allocation is not reflective of such responsibility. The Committee has committed to engaging the its counterparts to resolving the budgetary impasse.

5.4       Strategic outcome-oriented goals

The Medium Term Strategy Framework (MTSF) suggests that for the progressive attainment of nation building (unity of purpose and social cohesion) the following must be done:

1. The populace must have broad-based knowledge about and support for a set of values shared by all South Africans – Constitutional Values. These values provide the basis for a new South African identity;
2. Reduction of inequality of opportunity: reducing the impact of factors such as gender, ethnicity, place of birth and parental income and wealth and family background on people’s life chances. Success in life should depend on people’s choices, effort and talents, not their circumstances at birth. This can be done through reversing apartheid geography by establishing new spatial norms and standards – densifying cities, improving transport, strengthening the social wage and social security such that no South African lives below a minimum standard of living, growing the economy and employment and implementing a rural development strategy;
3. Redress including language, economic, spatial and cultural redress;
4. Increased interaction between South Africans from different social and racial groups for people to discover in each other a common humanity. Public interaction is important for building trusting societies and debunking stereotypes. The sub-outcome includes improving the quality of public services; providing clean, pleasant localities for people to enjoy recreational activities; ensure there are adequate facilities for the majority of the population to play sport and that these are adequately maintained;
5. Growing strong leadership across society and a mobilised, active and responsible citizenry; and
6. Fostering the creation of meaningful, sustainable social contracts, which could help propel South Africa onto a higher developmental trajectory.

Outcome 14 is crosscutting and has an impact on all other 13 outcomes of government in that it inculcates a feeling of belonging, accountability and responsible behaviour necessary to build trust, which is associated with stronger economic performance. Admittedly, the lack of expansion in the economy is placing a strain on employment and on budgets of government Departments.

The Department plays a role in implementing Outcome 14: Nation-Building and Social Cohesion.

As illustrated by table 1 below, the Department plays a role in implementing Outcome 14: Nation-Building and Social Cohesion. The Department has a role in “forging a new overarching identity”. It needs to influence citizens to be proud of being South African and it has to improve the target from 75 % to 80 % of South Africans reflecting to be South Africans. The actual achievement for 2017/18 is 62.3 %. The SABC has showcased the percentage of local content broadcasted and has improved from 70 % to 72 % of content reflecting a South African perspective and cultural diversity that was showcased on SABC 1, 2 & 3 platforms.

Brand South Africa conducted a study to measure the percentage of South Africans taking pride in the national sporting teams and this revealed that 71 % of South Africans are proud to be participating in such activities. Details are illustrated in the table 1 below:

Table 1: Strategic Outcome-Oriented Goals (Key Achievements for Outcome 14: Nation-Building and Social Cohesion)

Source: DoC Annual Report 2017/18

5.6       Overview of financial performance   

As reflected in table 2 of the following page, the Department received an allocation of R1.428 billion for the 2017/18 financial year and there was underspending of R9 346 million totalling a 99.3 % in total expenditure as a percentage of final appropriation. It (the Department) realised a net underspending of R9 346 000 or (0.07 %).

There was a budget increase of R78 580 million when compared to the 2016/17 financial year. There was an increase of R78 226 000 in total revenue for the financial year compared to 2016/17 totalling R1 430 525 000.

The majority of the budget of R1 326 billion is allocated to Programme 4 (Entity Oversight). However, Programme 3 (Industry and Capacity Development) and Programme 1 (Administration) experienced less expenditure of R4 656 000 and R3 895 000 respectively.

The budget allocation per programme was as follows:

• Programme 1: Administration: R69 359 million
• Programme 2: Communication Policy, Research and Development: R6 642 million
• Programme 3: Industry and Capacity Development: R26 045 million
• Programme 4: Entity Oversight: R1 326 254000

Table 2: Appropriation per programme

Source: DoC Annual Report 2017/18

5.7         Reasons for under/over expenditure

• Under programme 1, there was a variance of R3 895 000. The underspending is on compensation of employees as a result of delays in filling the vacant positions during the financial year;
• Under programme 2, there was a variance of R806 000. The underspending is on compensation of employees as a result of delays in filling the vacant positions during the financial year;
• Under programme 3, the underspending is mainly due to slow spending on marketing and increasing awareness campaigns on the DTT project; and
• There was no underspending in programme 4 for the financial year.

5.8       Department Virements / Rollovers

Reprioritisation was applied within the Vote mainly to fund the Executive Management in the Department. The Department did not require to effect major virements between programmes after the AENE. As a result, R 1,974 million was shifted to Programme 1: Administration from the other programmes. The virements effected after the AENE are reflected in the table 3 below:

5.8.1    Rollovers/Additional Money

Approval had been obtained to rollover an amount of R11,3 million from the 2016/17 financial year to the 2017/18 financial year. There funds were exclusively used to fund commitments towards Digital Terrestrial Television (DTT) awareness in Programme 3. The GCIS was allocated as additional R3,1 million based on the self-funding strategy that was formulated and approved by National Treasury un respect of Vuk’uzenzele newspaper. The ultimate goal is to use the advertising revenue to steadily increase the print run and also double the frequency of the newspaper without compromising its primary aim.

5.9       AGSA report

This section analyses the financial statements, the Auditor-General’s report, and final appropriation and expenditure for 2017/18. Table 4 below illustrates the audit outcomes of the last three financial periods beginning with the 2015/16 financial year. Although the Department received a clean audit opinion from the Auditor-General for the 2017/18 reporting period, there was a total eight findings.

          Table 4: Summary of Audit Outcomes for the last three financial periods

According to the Auditor-General’s report, procedures were performed to determine whether the reported information was properly presented and whether performance was consistent with appropriate performance planning documents.

Further procedures were conducted to determine whether indicators and related targets were measurable and relevant, and the reliability of the reported performance information was assessed to determine whether it was valid, accurate and complete. However, the Auditor-General did not raise any material findings on the usefulness and reliability of the reported information for the following programmes for the year ended 31 March 2018:

• Programme 2: Communication Policy, Research and Development
• Programme 3: Industry and Capacity Development; and
• Programme 4: Entity Oversight.

The Department received an unqualified opinion based on usefulness and reliability of the reported performance information in this regard.

The consistent clean audit outcomes illustrate the department’s commitment to key pillars of sustainability towards clean audits.  Firstly, these include, the appointment of adequately skilled administrators at the levels of Heads of Department (HoD) and Chief Financial Officer (CFO) whose task would be to produce credible reports, which are validated on a monthly basis. The second pillar is the appointment of adequately experienced internal auditors and audit committees whose task it will be to review the credibility of information and objectively report to the leadership.

In monitoring the effectiveness of internal controls, emphasis needs to be placed on these critical areas of government operations, effective management of human resources, information technology, and the administration and reliable reporting on financial management, service delivery and compliance with laws and regulation, particularly supply chain management.

6.         GCIS

6.1       Mandate and legislative framework of the GCIS

The GCIS was formally established in terms of section 239 of the Constitution of the Republic of South Africa of 1996 and as a strategic unit in The Presidency in terms of section 7 of the Public Service Act, 1994 (Act 103 of 1994). Furthermore, GCIS’s mandate is derived from section 195(g) of the Constitution of South Africa (1996), which stipulates that the public should be provided with information that is timely, accurate and accessible. This is in support of the constitutional principles of freedom of expression, and transparency and openness of government.

In a variety of ways, information held by the government can be used to bring people together. Public record information can provide both the media and others with valuable information that identifies people who live in a certain area or who are involved in a certain line of business. State records can link individuals to specific information (such as genealogical records, financial needs, hobbies, and business interests) and provide interested parties with the information necessary to make valuable contacts.

Many important benefits come from public access to information held by the government. Access to government records is needed for effectively monitoring government activities. The ability of citizens to hold government accountable may be directly related to their ability to see what information is collected, how it is maintained, who it is about, and how it is used.

Access to government information also may smooth the flow of commerce and create economic efficiencies. Insurance companies, credit bureaus and, direct-marketing organizations use government records to obtain a large volume of information that may otherwise not be cost-effectively available. They use it to offer people products that benefit them. When business can collect information about potential customers from a central repository like a government database, they can pass the savings along to consumers.

Access to government information also protects public safety. Records of arrests and convictions, for example, help people determine whether they want to hire prospective employees for sensitive jobs. They may help people learn of and respond to dangerous people living in their communities. Access to government information may also protect against crimes like identity fraud by enabling people and companies to confirm who they are dealing with.

6.2       GCIS strategic overview

The GCIS’s mandate for the period under review was to coordinate, guide and advise on government communication. This includes media liaison, development communication and marketing. It provides an integrated, coordinated and coherent communications function between government and the public. It seeks to enable the public to be involved in the country’s transformation and drives coherent messaging across the three spheres on the key priorities of government.

During the 2017/18 financial year, the GCIS achieved 96 percent of targets set in the Annual Performance Plan (APP). There was underspending which was largely attributed to money not spent under Compensation of Employees because of vacancies not being filled. Challenges highlighted by the GCIS includes budgetary constraints and aging infrastructure and equipment.

The general performance of the GCIS is summarised below in terms of its strategic outcomes goal and it is followed by the assessment of each programme’s performance.

The GCIS provides strategic communication support to the implementation of governments 14 outcomes. However, the GCIS is responsible for delivering on Outcome: Nation-building and Social Cohesion

6.2.1    Sub-outcome 4: Promoting active citizenry and leadership

Table 5 below highlights key performances, which particularly relate to the sub-outcome promoting active citizenry and leadership. The GCIS over achieved with regard to the programme indicators of the strategic outcome-orientated goals.

Table 5: Sub-outcome 4: Promoting active citizenry and leadership

Source: GCIS Annual Report 2016/17

The organisation exceeded the targets for all the outcome indicators except for the number of radio products and services. These outreach communication campaigns reached over 53 million people.

6.3       GCIS overall programme financial performance

This section analyses the financial statements, Auditor General’s report, final appropriation and expenditure for 2017/18.

6.3.1    Financial Report

The GCIS received and allocation of R401 450 million for the financial year 2017/18 and there was underspending of R7 610 million. There was a budget increase of R16 194 million when compared to the 2016/17 financial year. There was a reduction of R163 000 in revenue when compared to the 2016/17 financial year.

Revenue generated for the reporting period was R3 832 million. The projected revenue was R4.8 million. This means that the GCIS had less to spend. The Under-recovery was mainly because of lower self-financing expenditure in respect of the Vuk’uzenzele newspaper as well as the under-recovery of debt.

The GCIS spent 98.1%of the final appropriation, with a net under spending of R7.6 million or 1.9% of the total appropriation. Though the GCIS has spent in line with National Treasury Regulations, when compared to the previous financial year there was percentage reduction in spending of the final appropriation. Expenditure for the 2015/16 financial year was 98.6%.

The budget allocation per programme was as follows:

• Programme 1: Administration: R158 868 million
• Programme 2: Content Processing and Dissemination: R140 307
• Programme 3: Intergovernmental Coordination and Stakeholder Management: R104 275 million

Underspending by the GCIS was because of vacant posts, under collection of self-financing expenditure of advertising revenue of vacant posts and subsistence and travel, property payments as well as advertising costs that were lower than projected.

In order to curb projected over expenditure in programme 1 the GCIS applied for a budget reduction through the Adjusted Estimates of National Expenditure. The Original budget was therefore reduced by R3.3 million. 

6.4       Performance information by programme

6.4.1    Programme 1: Administration

The purpose of this programme is to provide overall management and support for the GCIS. This programme has five sub-programmes. These are Strategic Management; Human Resources (HR); Information Management and Technology; Chief Financial Officer; and Internal Audit.

6.4.1.1 Programme Performance

Within this programme, the GCIS reported the following achievements:

• The GCIS complied with National Treasury frameworks by reviewing and tabling the 2018/19-2020/21 APP in Parliament during the 2017/18 financial year;
• Compiled and submitted the four quarterly performance reports within the legislated time frames;
• During the 2017/18 financial year, the GCIS had an approved risk management framework with implementation plans, and a risk register comprising the strategic, operational and fraud and corruption risks;
• The vacancy rate was kept under the legislated percentage (10%) throughout the financial year. The average rate was kept at 8.18%;
• GCIS partnered with Boston College to provide in-service training to 10 students;
• 15 out of 35 bursary holders who registered for various qualifications have completed their studies;
• Four gender awareness sessions were held;
• The Information Management and Technology subprogramme continued to ensure that the IT Infrastructure and Information Management Systems were maintained and available within the required service levels;
• All regulatory deadlines as regulated were met alongside procuring prudently and confining expenditure within available means;
• Staff shortage, work pressure and high workload continue to impact on service delivery, turnaround times, and also increase the risk of making errors; and
• Internal Audit continued to provide Internal Audit services to the Department as per the MoU.

6.4.2    Programme 2: Content Processing and Dissemination

The purpose of this programme is to provide strategic leadership in government communication to ensure coherence, coordination, consistency, quality, impact and responsiveness of government communication. There are three sub-programmes and they are Products and Platforms, Policy and Research; and Communication Service Agency.

6.4.2.1 Programme Performance

• A total 30 000 copies of the Pocket guide to South Africa 2016/17 were printed and distributed to target audiences;
• The South African Government Twitter account increased its followers from 64 614 to 126 801;
• The government news agency published more than 300 news and feature articles per month on governments Programme of Action;
• A total 23 500 000 copies of Vuk’uzenzele newspaper were produced and distributed;
• A total 11 editions of the PSM magazine were produced;
• A monitoring and evaluation report on the Oceans Economy was produced which involved a number of departments;
• A total 158 key messages on key government priorities and 78 opinion pieces on emerging and developing issues in the media environment were produced;
• 101 advisory reports were produced, which provided expert research advice in developing key GCIS communication campaigns on government interventions and information dealing with unemployment, crime and corruption as well as service delivery;
• Finalised the appointment of a community print panel to ensure that support for the sector increases;
• A total 276 media buying campaigns were implemented on behalf of other government departments and entities; and

288 radio products were provided, including radio broadcasts, live link-ups, community radio phone-in programmes and recordings of government events.  

6.4.3    Programme 3: Intergovernmental Coordination and Stakeholder Management

The purpose of this programme is to implement development communication through mediated and unmediated communication and sound stakeholder relations and partnerships. There are three sub-programmes and they are Provincial and Local Liaison; Cluster Communication; and Media Engagement.

6.4.3.1 Programme Performance

• During the period under review the GCIS provided strategic leadership and communication support in the planning and implementation of major government campaigns in each cluster;
• The clusters held 17 engagements with communicators as part of ensuring proper coordination of governments PoA and major campaigns;
• Over 53 million people were reached through direct and unmediated communication engagements with government messages;
• A total 331 outreach programmes focussing on economic opportunities, GBV and fighting crime has been implemented;
• A total 1959 community and liaison engagements content work sessions took place where information and content were shared with stakeholders;
• Sustained and enhanced critical direct communication platforms, particularly through its provincial and district offices;
• A total 74 activities were implemented for the fourth Annual Thusong Service Centre Week; Through these events a total of 202 362 beneficiaries were reached;
• Held 27 strategic engagements with senior journalists on the PoA; and
• A total 18 post-Cabinet media statements/ briefings were issued.

6.5       GCIS Virements / rollovers

Virements totaling R6.177 million were applied after the AENE. Money was moved from programme 2 and 3 to Programme 1 to fund projected deficits owing to contractual obligations.

No rollover of funds was effected between the 2016/17, 2017/18 and 2018/19 financial years respectively.

6.6     GCIS AGSA report

Table 6 below illustrates the audit outcomes of the previous five financial years of the GCIS. The GCIS has over the past three financial years successfully instilled fiscal discipline on expenditure trends that are non-core to the business of the department. Over three financial years the GCIS has received clean audits from the Auditor General.

In line with National Treasury instructions, the GCIS successfully implemented cost-containment measures.

Table 6: Summary of Audit Outcomes for the last four financial periods

The Auditor-General performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the GCIS for the year ended 31 March 2018:

• Programme 2: Content Dissemination and Processing
• Programme 3: Intergovernmental Coordination and Stakeholder Management

The GCIS received an unqualified opinion with no findings based on usefulness and reliability of the reported performance information in this regard.

7.         Public entities reporting to the Department

Government recognizes State-Owned Companies (SOCs) as strategic instruments of industrial policy. This, among other things, means that SOCs’ key programmes must be integrated into the broader industrial policy and economic cluster programme of government, both in terms of funding and policy support. SOCs are to reflect in their mandates the socio-political objectives of government. To do so, they will need to create a delicate balance between SOCs’ strategic purposes and SOCs’ commercial viability.

Thus SOCs need to reach towards the twin goals of attaining the country’s socio-economic developmental goals and maximising operational efficiency and financial sustainability.

7.1       FPB

Derived from the Films and Publications Act (Act 65 of 1996), as amended in 2004 and 2009, the FPB is mandated to:

1. regulate the creation, production, possession and distribution of certain publications and certain films by means of classification;
2. regulate the imposition of age restrictions and giving consumer advice; and
3. make exploitative use of children in pornographic publications, films, or on the internet punishable.

Therefore, the mandate of the FPB can be summarised as follows:

1. Regulate the creation, production, possession and distribution of films, games and certain publications by way of classification;
2. Protect children from exposure to disturbing and harmful material and from premature exposure to adult material;
3. Render the use of children in and exposure of children to pornography a punishable offence.

The FPB does not have a direct constitutional mandate as it is a classification body, a regulator, and a quasi-judicial body, as it licenses, regulates, adjudicates and issues sanctions. However, the FPB carries out its work with due regard for the rights contained in the Constitution of the Republic of South Africa, which recognises and protects the rights of every citizen, thereby ensuring an open and democratic society.

Of particular importance are the following provisions, i.e. Sections 16, 28, 32 and 36 of the Constitution of the Republic of South Africa, which stipulate that everyone has the right to freedom of expression. This includes freedom of the press and other media, artistic creativity and the freedom to receive or impart information or ideas, the right to have access to information, the right to human dignity, and the right to freedom of choice.

The FPB’s work is aligned to Outcome 14 of the National Development Plan, which seeks to achieve social cohesion and nation building. As a sub-outcome, fostering constitutional values forms part of what the FPB does in schools with its key messaging regarding cyber safety, which outlines the right to privacy and integrity.

The Council provides leadership and strategic oversight, and oversees the internal control environment sustaining value to the company’s shareholder and stakeholders. The Council also ensures adherence to principles of good governance and accountability as espoused in King III[2] and its board charter.

7.1.1    Financial performance

The total revenue of R100 298 878 received by FPB for the year came from operating subsidies granted by the Department (R91 684 000), regulation fees (R7 741 329), interest received (R863 674) and other income (R9 875). This income was, however, not sufficient to meet the rising operating costs.

A grant subsidy increased by 6% on the R86 472 000 received in the previous financial year. Regulation fees of R7 741 329 were generated in the current financial year compared to R6 718 708 in the previous financial year, an increase of 15%. The increase on regulation fees is attributable to online licensing fees and classification fees.

Operating expenditure increased by 7%, the main cost driver being personnel. Administrative costs were brought down by 5%, from R32 752 165 to R31 091 309, and an accounting surplus of R7 466 311 was recorded compared to R3 840 748 in the previous financial year.

There was a slight increase in employee costs for the reporting period. Employee costs increased by R6 513 774 when compared to the 2016/17 financial year. Expenditure under employee costs for the reporting year was R56 782 270.

There was an increase in Fruitless and wasteful expenditure. Fruitless and wasteful expenditure refers to expenditure that was made in vain and could have been avoided had reasonable care been exercised. The Auditor-General’s audit opinion is based on issues surrounding expenditure management. For the reporting period fruitless and wasteful expenditure incurred was R2 998 005. A total amount of R2 880 068 accounted for most of the fruitless and wasteful expenditure attributed to the settlement of the former five employees. No funds were written off nor recovered during the year under review.

The FPB incurred irregular expenditure of R114 912 in respect of website maintenance. The FPB requested proposals in 2016. Although the terms of reference do not make reference to the duration of the contract, all proposals were for a 12-month period. However, the SLA is for a 24-month period. The termination date according to the PO and SLA is July 2017 and April 2019 respectively.

The FPB incurred irregular expenditure of R1 105 952.76 in respect of after-hours call routing by not terminating the contract with a service provider and the service provider continued to render the service outside the contract. The amount to be paid to the service provider is still under dispute.

The programmes aligned to achieving the performance outcomes are discussed below:

7.1.2    Overview and assessment of strategic outcome performance

The activities of the FPB are categorised into five strategic outcomes. Overall performance of the FPB was 78 % of performance targets achieved and 27% not achieved, see chart below. Needless to say that this is a regress in performance when compared to the 2016/17 financial year.

Strategic Outcome 1: Effective and visible monitoring of industry throughout the entire value chain (content creators, producers and distributors of FPGs) for the protection of consumers and primarily children and adults through information.

The FPB achieved 76% of its annual targets, a slight improvement when compared to the 2016/17 achievement by 2%.

100% (1886) of eligible submissions were classified and all 4 trend analysis reports on the rate of classification submissions, registrations and renewals compiled.

Classification Governance Framework was reviewed, approved and implemented. However, the drafting of revised guidelines was not achieved owing to the second round of public consultations on the revised classification guidelines which will be done in Q1 and Q2 of 2018/19 financial year.

The request by industry to extend consultation period granted led to delays in the approval of the tariffs by Council and Minister, meaning the tariff structure has not been finalised.

Strategic Outcome 2: Informed consumers, general members of the public and industry about the mandate, programmes and operations of the FPB.

Access to broadcast interviews, print/online articles published nationally meant that the FPB exceed its target with 287 broadcast interviews conducted and 1 597 print/online articles published. However, because management failed to table the annual evaluation report for approval by the Executive Committee (Exco), meant that the target for the roll out cyber safety and child protection initiatives could not be achieved. Furthermore, management failed to exercise oversight in sending newsletters internally

The Digital Literacy Campaign and Outreach Plan was developed, approved and implemented resulting in safer schools while 3 multi-unit campaigns were also conducted.

Strategic Outcome 3: Effective and efficient management of FPB Operations.

Exco’s decision to defer implementation of additional posts to the OD exercise in 2018/19 meant that the recruitment in response to turnover trends as a target for the financial year could not be achieved.

While four remuneration analysis reports were developed and values workshop for the purpose of change management in the organisation were convened, the overall target to implement all 3 phases of FPB change management programme could not be achieved. Furthermore, delays in commencing procurement process resulted in 3 coaching sessions for successor candidates not being achieved.

Lastly, there was 100% compliance with the Annual Corporate Governance Framework in the organisation.

Strategic Outcome 4: Effective and innovative regulation of the content distributed on online, mobile and related platforms for the protection of children, youth and adults through information.

During the year under review, all 4 phases of OCR system were implemented and there was 98% availability of critical systems as per the set target. The implementation of the INHOPE action plan was achieved and an MoU with WASPA was signed while the child protection and online monitoring team was relocated to a bigger office space.

Strategic Outcome 5: Expansion of the FPB footprint and a qualitative impact made through effective partnerships and stakeholder relationships in pursuance of our mandate.

Stakeholder engagement sessions at ten different platforms were hosted as per the planned target while the plan of action in maintaining partnerships with two universities to leverage research capacity and assist with FPB knowledge creation was not achieved owing to delays in advertising for prospective university partners.

The FPB managed to achieve its target to attend at least five film and gamin festivals. And a total of four continental engagements were held meaning this target was overachieved by two engagements.

7.1.3    FPB AGSA report

Table 7: Summary of Audit Outcomes for the last three financial years

The FPB has received the same audit opinion from the Auditor-General for three consecutive financial years. For 2017/18 financial year, the FPB had no material findings for finance. The basis of the audit opinion in the reporting period is as follows:

Leadership

Leadership did not exercise adequate oversight responsibility regarding performance reporting and related internal controls resulting in the APP not being reviewed timeously and sufficiently. This has resulted in some targets not being measurable.

Financial and performance management

The financial statements present fairly, in all material respects, the financial position of FPB as at 31 March 2018, and its financial performance and cash flows for the year then ended in accordance with Standards of Generally Recognised Accounting Practice (Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA).

Performance

While the FPB obtained a clean financial report, it received findings on the performance. The planned targets for some indicators were not specific in clearly identifying the nature and required level of performance and were therefore not measurable: There was no material findings on the usefulness and reliability of the reported performance information for the programmes 1 and 4 respectively.

Adjustment of material misstatements

There were material misstatements in the annual performance information report submitted for auditing. While some of the misstatements were corrected, not all were resolved at the time of reporting.

7.2       Independent Communications Authority of South Africa

ICASA is established pursuant to section 192 of the Constitution and in terms of the ICASA Act of 2000, as amended.

ICASA’s mandate is derived from:

• The Constitution, 1996;
• ICASA Act, 2000;
• EC Act, 2005;
• Broadcasting Act, 1998;
• Postal Services Act, 1998; and
• ECT Act, 2002.

In addition to legislative requirements based on a public entity’s enabling legislation, and the Companies Act, corporate governance with regard to public entities is applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King Report on Corporate Governance. Parliament, through the Portfolio Committee on Communications (PCC); the Executive Authority (the Department of Communications); and the Accenting Authority of the public entity, are responsible for corporate governance.

Linked to good corporate governance is ensuring that a regulatory authority is efficient and effective. Oversight by the Committee must ensure that the regulator remains independent in order to:

• Remedy the shortcomings in competition and ensure that competition works effectively;
• Prevent regulatory capture and ensure that regulation serves as a response to demands of interest groups and public choice theory; and
• Prevent market failure because of self-regulation.

It is through good corporate governance and oversight (amongst many other factors) that we can guarantee an effective and efficient regulator.

The Authority is mandated to regulate the ICT sector in the public interest. As such, the advancement of consumer welfare should be the key measure of ICASA’s success as a sector regulator. Advancement of consumer welfare should, therefore, be inculcated in everything that ICASA does. To this end, some of the key measures implemented by ICASA in the 2017-18FY in the fulfilment of its mandate include the following:

Consumer protection – as part of the first phase of the cost to communicate program the Authority published the draft amendments to the end user and subscriber service charter regulations. The objective of the amendment was to bring much-needed relief to consumers against unfair or unconscionable business rules in the sector relating to the expiry of data bundles, out of bundle charging and lack of transparency in the provision of services, particularly data services. The Authority consulted extensively with stakeholders and as such delayed finalisation of the amendments until after the end of the 2017-18FY.

The cost to communicate – the Authority extended the measures imposed in the wholesale call termination market to regulate the interconnection rates for voice calls until September 2018, pending finalisation of the market review study. The extension was necessary to ensure that the benefits of lower retail voice prices emanating from the wholesale call termination market regulations remain in place for the vast majority of consumers for whom voice remains a significant mode of communication.

7.2.1    Strategic Overview 2017/18

The general performance of ICASA is summarised below in terms of its strategic outcomes goal and it is followed by the assessment of each programme’s performance.

In alignment with the lead department and broader government priorities and policies, ICASA contributes directly to Outcomes 12 and 14 in the following ways:

It further contributes to Outcome 14 to create decent employment through inclusive economic growth.

As technology advances and convergence becomes an unescapable reality, information technology becomes an important tool for providing service delivery. Equally, as we bridge geographical boundaries because of improved technology the sharing of common spaces across race and class will be enabled through instituting community dialogues. It is befitting for the country to also have a robust regulatory environment that can enable the broader economy to exploit opportunities of the fast technology-driven globe. Being tasked with the responsibility to regulate an ever-evolving ICT sector, ICASA ‘s main role is to serve the public interest at all time and do it independently and impartially.

A robust regulatory environment is even more important for guaranteeing universal access in a country with a daunted past dictated to by the Apartheid regime. The task of an effective regulatory system for South Africa in particular, spurs far broader than just regulating the technological space; it also has an enormous task to facilitate for the protection of our sovereignty in as far as culture, heritage, language diversity reflective of our democracy and the plurality of all our airwaves. All these are key and protected principles in the supreme document of the country, the Constitution.

There was a 14.5% increase in the overall performance of ICASA when compared to the performance of the previous financial year. For the period under review ICASA’s overall performances was 89% or 54 targets and outputs not achieved was 11% or 7 targets. Whereas performance for the 2016/17 financial year was 74.5%.

For the year under review, ICASA was guided by the long-term Strategic Outcome Oriented Goals as per the 5-year Strategic Plan 2015/16-2019/20 as illustrated below:

In terms of performance, table 7 below seeks to illustrate performance per Strategic Outcome Oriented Goals (SOOG’s):

Table 7: Deliverables per Strategic Outcome Oriented Goal

The activities of the regulator are structured into four programmes, and during the year under review were structured in the following manner:

• Programme 1: Administration
  • Corporate Services
  • Finance
  • Human resources
  • Internal Audit
  • Legal & Risk and Complaints Compliance Committee (CCC)

• Programme 2: Licensing
• Programme 3: Policy Research and Analysis
• Programme 4; Engineering and Technology
• Programme 5: Regions
• Programme 6: Compliance and Consumer Affairs

In terms of performance per programme, Administration, specifically the Corporate Services and Finance achieved 67% respectively, see table 8 below:

Table 8: Programme Performance per Programme

Source: Annual Report 2017/18

7.2.2    Programme performance

Programme 1: Administration

The purpose of this programme is to provide coordinated strategic leadership, management and support to the organisation to deliver on its mandate. There are five sub-programmes namely Corporate Services, Finance, Human Resources, Internal Audit, and Legal, Risk Complaints and Compliance Committee.

Programme Performance

Within this programme, the regulator reported the following achievements:

• During the year under review, the sub-programme Corporate Services the target of 30% stakeholder satisfaction was achieved;
• However, in terms of establishment of provincial offices, 7 of 8 offices were established owing to the building no being found despite two tender processes;
• Under the sub-programme Finance, the target (of 95% for the financial year under review) for payment of suppliers within 30 days after all documentation received was missed by 1% to 94% owing to the higher volumes of invoices for the financial period which included processing of adhoc invoices and newly finalised contracts which took longer than usual;
• A total 99% of revenue collected was realised during the year under review;
• The Human Resources sub-programme managed to get approval for the Training and development Strategy;
• The target to reduce the vacancy rate by 7% was only partially achieved by 5.9%, however the reason for variance as stated in the annual report is misleading as stated that it is an over-achievement to its target.  
• The Internal Audit sub-programme report that the actual target of 3 the number of continuous monitoring of high-risk processes reported could not be achieved owing to the third risk that could not be completed because of resignations in the institution;
• Within the same sub-programme, there was an over-achievement from 27 to 28 in the number of audits completed; and
• The Risk Complaints and Compliance Committee sub-programme over-achieved in its target of 65% to 82% of the percentage of cases received, assessed and investigated for adjudication by CCC in accordance with CCC handbook.

Programme 2: Licensing

The purpose of this division is to authorise, issue, renew, amend, transfer and revoke broadcasting services, electronic communications services, electronic communication network services, postal services and spectrum licenses, process applications for numbering resources, equipment type approval and channels authorisations; as well as authorising license exemptions for the purpose of socio-economic development and promotion of competition.

Programme Performance

Within this programme, ICASA reported the following achievements:

• Following the Authority’s publication of an Invitation to Apply (ITA) with the intention of licensing viable spectrum in the 2600/700/800MHz bands for providing access to national wireless broadband services, the Authority set a target of 50% decision of Council of the First Phase of the IMT Licensing process of which this was achieved;
• In terms of class broadcasting license applications, renewals, amendments, transfer and broadcasting channels authorisations processing, ICASA managed to overachieve the set target of 92% for the financial year to 95% in terms of processed applications;
• ICASA promulgated regulations on the dynamic use of TV White Spaces during the 2017-18 financial year;
• ICASA has received applications for the licensing of additional individual commercial free-to-air television broadcasting services and a radio frequency spectrum licence for 55% on multiplex 3 frequencies; and
• During the year under review, ICASA initiated an inquiry into subscription broadcasting services with the intention to assist us in defining markets and market segments, the effectiveness of competition in the relevant markets, determining dominant licensees, and possible appropriate pro-competitive license conditions that may be imposed.

Programme 3: Policy Research and Analysis

The purpose of this programme is to conduct research and policy analysis into all the regulatory sectors in line with the mandate of the Authority to promote competition.

Programme Performance

Within this programme, the Department reported that achievements for the year under review that all targets were achieved with the exception of the target of 1 the number of findings documents on subscription broadcasting owing to the stakeholders’ request for extension to the submissions deadline.

Programme 4: Engineering and Technology

The purpose of this programme is to develop, coordinate and manage the regulatory framework for management of radio frequency spectrum including the development of equipment technical standards and representing ICASA at international regulatory forums.

Programme Performance

Within this programme, ICASA reported the following achievements:

• According to the Annual report, the Authority increased its affiliation to international fora from five affiliations to six to improve its brand image;

• A 50% National Frequency plan migration plan work was completed;
• Two research reports on dynamic and opportunistic spectrum management were completed;
• Delays in finalising the findings document on the use of digital sound broadcasting meant that the programme could not produce the final document; and
• In line with the target of six provinces monitored for Quality of Service, ICASA achieved the set target.

Programme 5: Regions

The purpose of this programme is to enable uninterrupted national provision of electronic communications, broadcasting and postal services through compliance monitoring and enforcement.

Programme Performance

Within this programme, the Department reported the following achievements:

• ICASA overachieved with regard to resolution of interference cases from a target of 94% to 99%;
• ICASA further overachieved from a set target of 30% for the year under review to 91% in conducting broadcasting compliance inspections on a basis of a predetermined list; and
• There was an overachievement of 1721 from a set target of 2000 in the number of type approval compliance inspections conducted during the year under review.

Programme 6: Compliance and Consumer Affairs

The purpose of this programme is to ensure compliance by licensees with the terms and conditions of their licenses, regulations and requirements of the relevant legislations and to protect the interest of consumers in the ICT sector.

Programme Performance

Within this programme, ICASA reported the following achievements:

• An increase in percentage of consumer complaints resolved from a target of 85% to 93%;
• Because there were no Inter-Licensee disputes lodged between 1 April 2017 and 31 march 2018, no assessments could be undertaken;
• In general, the monitoring targets under this programme were overachieved significantly; and
• This is an important milestone in the interest of protection of consumers that this programme is able to overachieve. Licensees must not be afforded an opportunity to disregard compliance standards geared towards guaranteeing the quality of services for the South African population.

7.2.3    Financial Performance

As reflected in table 9 below, the total budget for the year under review was R490 465 064; whilst expenditure was R452 189 502 representing an under expenditure of R38 275562 when compared to the over expenditure experienced during the 2016/17 financial year of R1 036 968.

Table 9: Expenditure per Programme

There was a total revenue from both exchange and non-exchange transactions totalled R451 559 174. A deficit of R13 188 844 was experienced following a total expenditure of R464 784 018 for the year under review. As at 31 march 2018, the balance for accumulated surplus was R162 086 084 as compared to R 301 675 081 during the 2016/17 financial year.

Fruitless and wasteful expenditure decreased from R 12 146 726 reported in 2017 to R 7 379 427 in the year under review. of that, a total amount of R 5 469 479 was condoned by Council during the financial year under review. The details pertaining fruitless and wasteful expenditure vary from settlement paid to the former CEO to payment of additional 1 month to Council Furthermore the payment of salary increases for 5 employees which was in contradiction with the Performance Management and Development Policy as well as the remuneration Policy.

Other details provided in the Annual Report refer to fruitless and wasteful expenditure of the previous financial year and identified in the financial year under review. As explained above, some of the expenditure was condoned by Council and details provided in the Annual Report.

Irregular expenditure increased from R27 287 048 in 2016/17 financial year to R39 429 922 during the year under review. And when one includes the R27 287 048 which has yet to be recovered, the total irregular expenditure is R66 574 096.

7.2.4    Auditor-General’s report

                        Table 10: Summary of Audit Outcomes for the last three financial periods

ICASA has received the same audit opinion from the Auditor General for three consecutive financial years. The basis of the audit opinion in the reporting period is non-compliance on the following:

• Some of the commodities designated for local content and production, were procured from suppliers who did not submit a declaration on local production and content as required by the 2017 preferential procurement regulation;
• Sufficient appropriate audit evidence could not be obtained that commodities designated for local content and production, were procured from suppliers who met the prescribed minimum threshold for local production and content, as required by the 2017 preferential procurement regulation 8(5);
• Some of the contracts were extended or modified without the approval of a properly delegated official as required by section 44 of the PFMA and Treasury Regulations 8.1 and 8.2;
• Some of the goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by Treasury Regulation 16A6.1;
• Some of the quotations were accepted from prospective suppliers who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state, which is prescribed in order to comply with Treasury Regulation 16A8.3;
• Some of the goods and services of a transaction value above R500 000 were procured without inviting competitive bids, as required by Treasury Regulation 16A6.1; and
• Bid documentation for procurement of commodities designated for local content and production, did not meet the stipulated minimum threshold for local production and content as required by the 2017 preferential procurement regulation 8 (2).

7.3       Media Development and Diversity Agency

Between 1990 to 1993 South Africa’s civil society, the trade unions and liberation movements participated in a number of campaigns and conferences (the Campaign for Open Media, the Free the Airways Campaign, the Jabulani! Freedom of the Airwaves Conference etc.) that looked at the policies and principles that would guide media transformation and that would inform the role the media would play in the newly emerging democratic society.

Up until this point, apartheid media had been concentrated in the hands of a few, there was little or no plurality or diversity of content / voices, restrictions had been placed on both publishing and broadcasting institutions and there was limited freedom of movement for journalists. These restrictions were of particular concern to the democratic government who made freedom of expression and the press as well as media development and diversity issues central tenets of policy. These principles are reflected in media projects and programmes today. They are important principles as they are the foundation upon which the community sector is built.

The MDDA was set up in terms of the MDDA Act No. 14 of 2002 and established in 2003 in order to enable historically disadvantaged communities and individuals to gain access to the media. It started providing grant funding to projects on January 2004

It is a statutory development agency for promoting and ensuring, media development and diversity, set up as a partnership between the South African government and major print and broadcasting companies to assist in among others developing community and small commercial media in South Africa.

The mandate of the MDDA is to

• create an enabling environment for media development and diversity which reflects the needs and aspirations of all South Africans;
• redress the exclusion and marginalisation of disadvantaged communities and people from access to the media and the media industry;
• promote media development and diversity by providing support primarily to community and small commercial media projects;
• encourage ownership and control of, and access to, media by historically disadvantaged communities as well as by historically diminished indigenous language and cultural groups;
• encourage the development of human resources and training, and capacity building, within the media industry, especially amongst historically disadvantaged groups;
• encourage the channelling of resources to the community media and small commercial media sectors; and
• raise public awareness with regard to media development and diversity issues.

The overall objective of the MDDA is to ensure that all citizens can access information in a language of their choice, and to transform media access, ownership and control patterns in South Africa.

7.3.1 Programme Performance

Outcomes 6, 12 and 14 of the MTSF are relevant to the MDDA

• Outcome 6 relates to an efficient, competitive and responsive economic infrastructure network. This highlights the role of the MDDA in assisting community media to harness the power of a rapidly changing telecommunications environment;
• Outcome 12 relates to an efficient, effective and development orientated public service. This speaks to the character and nature of the MDDA as an institution and the values it should champion; and
• Outcome 14 relates to nation building and social cohesion as it envisions a society where South Africans will be more conscious of what they have in common than their differences. It directs the MDDA’s approach when supporting and enabling content and production elements.

Below is an illustration of the alignment of the Departments’ Strategic Goals to those of the MDDA:

The activities of the MDDA are structured into five programmes, which are:

• Programme 1: Governance and Administration;
• Programme 2: Grant and Seed Funding;
• Programme 3: Partnerships, Public Awareness and Advocacy;
• Programme 4: Capacity Building and Sector Development; and
• Programme 5: Innovation, Research and Development

As illustrated in the pie-chart, overall, the MDDA achieved 45% (or 20 of 44 key performance indicators) of its target in the year under review, which is a drastic regress from the previous 2016/17 financial year where it achieved 69 per cent of its targets, see chart below:

According to the annual report, targets for 24 KPI’s (55%) were not achieved mainly due to the Board being unable to form a quorum for a significant part of the year

In terms of performance per programme, the MDDA did not achieve any targets under programme 4 and generally failed to achieve most of its targets in programme 5, 4 and 2 respectively as illustrated in graph 1 below:

Graph 1: Performance per Programme

Programme 1: Administration

The purpose of this programme is to ensure effective leadership, strategic management and administrative support to the MDDA through continuous refinement of organizational strategy and structure in line with appropriate legislation and best practice.

The programme has 4 sub-programmes which are: Human Resource Management; Legal and Regulatory Affairs, Financial Administration, Risk and Internal Audit, and Information Management and Technology.

Programme Performance

Within this programme the Agency target to train 17 employees as per the development plan was not achieved owing to the delays as a result of conducting related competency assessments to enable structured personal development plans aligned to the organisations’ strategic objectives. However, 15 employees did undergo some training.

Other targets not achieved within this programme include:

• A total of 26 number of policies reviewed and updated was not achieved owing to the non-quorate of the Board, which is their sole responsibility;
• Only 1 out of 4 compliance registers was produced also owing to the non-quorate of the Board; and
• Capacity constraints in the legal unit and non-quorate of Board contributed to a 3-month turnaround time for contract vetting and approval;

Among others under this programme, the targets to approve 1 annual internal audit plans approved by Audit and Risk Committee 1 month before internal audit cycle, as well as to recruit 5 interns were achieved. There was an overachievement of around 7 from a target 5 the number of approved IT external projects supported and reported on within one month of quarter end

Programme 2: Grant and Seed Funding

The purpose of the programme is to promote media development and diversity through support for community and small commercial media projects. There are 3 sub-programmes under this programme; these are Community Broadcast Media; Print and Digital media and Monitoring and Evaluation.

Programme Performance

Within this programme, the MDDA reported the following performance outcomes:

• Only 2 out of 10 targets of the number of community radio stations approved by the Board for strengthening were achieved as a result of a non-quorate Board;
• The number of direct jobs created in community broadcast sector was overachieved from a target of 100 to an actual achievement of 104 jobs created;
• The project to implement a social engagement strategy for communities using broadcast platforms was temporarily suspended due to concerns by ICASA over moratorium on issuing of new licences and the need to review strategy in light of various stakeholder interests. The project is being reinstated; and
• Under this programme, most indicators required the approval by the Board which at the time was not quorating. This does not include targets from the Monitoring and evaluation subprogramme which was able to achieve all its targets

Programme 3: Partnerships, Public Awareness and Advocacy

The purpose of this programme is to position the MDDA as an authoritative leader and voice on community and small commercial media by proactive advocacy and lobbying interventions and established stakeholder relationships. The programme has 2 sub-programmes, namely Strategic Programmes and MDDA Brand Building.

Programme Performance

Within this programme, the MDDA reported the following performance outcomes:

• Capacity constraints meant that the target to review the community media digital migration strategy could not be achieved;
• Stakeholder engagement policy and plan as well as the communications plan could not be implemented because approval was not possible owing to a non-quorate Board;
• The production of newsletters, outreach programmes and publicity campaigns targets were all achieved; and

• A Board decision in 2015/2016 to cancel further media awards pending outcomes of Media Awards and Impact Study resulted in the target to host media awards not being achieved.

Programme 4: Capacity Building Sector Development

Purpose of the programme is to encourage the development of human resources, in community media based projects through capacity building and media literacy training. The programme is specific to capacity building and sector development

Programme Performance

• The target to conclude partnership agreements with accredited learning and training institutions was not achieved due to capacity constraints, resulting from vacancies, within the unit;
• A total of 2 MoU’s aimed to enhance the projects’ environment were signed with partners as per the set target; and

No media literacy workshops were conducted owing to capacity constraints, resulting from vacancies, within the unit.

Programme 5: Innovation, Research and Development

Purpose of the programme is to champion research, development and innovation to create a media development and diversity body of knowledge.

Programme Performance

Within this programme, the MDDA reported the following performance outcome:

No research projects were commissioned and no updates to the content hubs were produced owing to capacity constraints, resulting from vacancies, within the unit.

7.3.2 Financial Performance

This section analyses the financial statements, Auditor-General’s report, final appropriation and expenditure for 2017/18.

As at March 2018, the total revenue was R83 555 000 as compared to R74 245 000 for the previous reporting period. Revenue comprised of government grants and subsidies increased to R30 005 000 from R 23 814 000 during the previous reporting period.

Revenue from non-exchange transactions- broadcast funders was R48 257 000 when compared to R45 615 000 during the previous reporting period.

A grand total of R5 022 758 was used for consultancy services of various components of the Agency as illustrated in graph 10 below:

Table 10: Use of Consultants during 2017/18 Financial Year

MDDA incurred R82 000 fruitless and wasteful expenditure in the 2017/2018 financial year; and while it is a negligible amount, it is a regress when compared to the non-existence of such expenditure during the previous reporting period. And still warrants the organisation to be held accountable of the taxpayer’s money. There was an increase in Irregular expenditure; for the reporting period, Irregular expenditure was R3 214 000 and mostly caused by non-compliance with the Supply Chain Management Regulations. However, when compared to the previous reporting period, the Agency can be commended halving the irregular expenditure.

Lastly, the contingent liabilities and litigations refer to a legal dispute between MDDA and Joburg Post in respect of the funding agreement signed between the two parties. The financial exposure was R384 600 depending on the outcome of the dispute. The case is currently being heard by the courts.

7.3.3    Auditor-General’s Report

Table 11: Summary of Audit Outcomes for the last three financial periods

The MDDA has received the same audit outcome (unqualified with findings) for four different reporting periods. The basis of the audit opinion in the reporting period is as follows:

• There was a poor control environment and vacancies at the senior management level resulted in poor oversight of compliance with applicable legislation; and
• AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure as required by section 51(1)(e)(iii) of the PFMA. This was due to proper and complete records that were not maintained as evidence to support the investigations into irregular expenditure.

Leadership

• The accounting authority failed to quorate and meet regularly, as a result, the decision making processes and consistent and effective oversight was inadequate to ensure the provision of effective leadership; and
• The accounting authority did not provide adequate monitoring and oversight to ensure that the accounting officer was able to provide credible financial and performance reports and ensure compliance with relevant laws and regulations. This was due to the long outstanding vacancy in the accounting officer position and the continuous change in acting accounting officer.

Financial and performance management

• The senior management responsible did not have sufficient controls in place over financial and performance reporting and compliance with laws and regulations. Errors and omissions were identified in the financial statements, actual achievements on performance targets reported in the performance report did not always agree to supporting information and compliance with laws and regulations was not adequately monitored.
• The chief financial officer and director strategic monitoring and evaluation positions have been vacant for more than 12 months, impacting credible financial and performance reporting.

Governance

Internal audit plans did not always progress as planned and the integrated risk management strategy and risk assessment plan was not approved due to the inability of the accounting authority to quorate and meet regularly.

7.4       BSA

BSA was established as a trust in 2002 and gazetted as a schedule 3A public entity in accordance with the PFMA No.1 of 1999. Its purpose is to develop and implement a proactive and coordinated international marketing and communications strategy for South Africa; to contribute to job creation and poverty reduction; and to attract inward investment, trade and tourism.

BSA aims to make an indirect contribution to economic growth, job creation, poverty alleviation and social cohesion by encouraging local and foreign investment, tourism and trade through the promotion of Brand South Africa.

Its mandate is to manage South Africa’s Nation Brand reputation in order to improve the county’s global attractiveness and competitiveness. Brand South Africa’s mandate is delivered through two strategic programmes, namely (i) Brand Marketing and Reputation Management, and (ii) Stakeholder Relations.

The BSA has three main programmes namely:

Programme 1: Administration

Supporting Strategic Goal 4: Sound governance, high performance and the optimal utilisation of available resources.

Programme 2: Brand marketing & reputation management

Supporting Strategy Goal 1: Proactive and coordinated reputation management of the nation brand. And supporting Strategy Goal 2 and Strategy Goal 3: Proactive and coordinated communication of the nation brand value system and value proposition as well as a proactive and coordinated marketing of the nation brand and the nation brand identity respectively.

Programme 3: Stakeholder relationships

Supporting Strategy Goal 1: Proactive and coordinated reputation management of the nation brand.

7.4.1    Programme performance

The general performance of BSA is summarised below by assessing overall performance as well as each programme’s performance and budget. In total the BSA achieved 100% of its set targets for the year under review as illustrated in chart below:

In terms of performance per programme, BSA managed to optimally perform in alignment to the set strategic goals as illustrated in the 2 diagrams below:

This is a demonstration of consistency and steady improvement in targets achieved for the Agency. During the 2016/17 financial year, BSA achieved 85% of their set targets while it had previously achieved 84% of its set target for the 2015/16 financial year.

Some of the highlights of the achievements for the Agency include:

• The Open Budget Index 2017 where South Africa ranks 3/102 nations. This means South Africa is far more open and transparent in its public institutions than some of the most so called ‘advanced’ nations on the planet;

World Press Freedom Index 2017 where South Africa ranks 31/180 nations. This, together with the Open Budget Index, indicates strengths in transparency and public accountability in the context of a democratic constitutional order;

Ranking 38/50 in 2017, the Nation Brand indicates that South Africa’s international standing remains in good shape;

• South Africa outperforms Nigeria and Kenya with a perception score lead of 3.5 and more on all indices;
• During the 2017/18 period the research team hosted three South African Competitiveness Forum (SACF) interventions. These included consultations with stakeholders on: 
  • The credit ratings downgrade and its implications for Nation Brand reputation;
  • Consultation with South African corporates, exporters and multinationals on the role they play in shaping the Nation Brand’s reputation in international markets; and 
  • Consultation with mining sector stakeholders on positioning the Nation Brand in the context of mining.
• Brand South Africa supported the Department of Telecommunications & Postal Services at the 2017 International Telecommunications Union Forum & Expo in South Korea;
• 33 stories of ordinary people doing extra ordinary work in their communities told on the PYP documentary;
• 21-million audience reach PYP airs on SAA regional flights in the country and the continent generating broader awareness levels;
• The Brand South Africa Road Safety radio adverts wins at Pendorings. The winning advert was aimed at promoting the message of road safety with a no drinking and driving message during the Easter holiday season;
• Nine activations to promote constitutional awareness were hosted. These include student dialogues at universities and various activations executed in collaboration with Constitution Hill;
• Several domestic and international events and platforms were supported through communications and public relations (PR) activities;
• Brand South Africa, in partnership with Foreign Policy(FP), continued to develop and publish the South Africa Now! newsletters in the USA; and
• Overall, newsletter subscribers have grown by 8% over the 2017/18 fiscal year, from 841 to 906.

Brand South Africa partnerships/public relations for the 2017/18 financial year included:

• BBC Online;
• CNBC Africa;
• SAFM;
• Base Media;
• FTI Consulting; and
• TIME Inc.

BSA coordinated and implemented in- Market Activations for the year under review included:

• World Economic Forum Africa Meeting 2017;
• ITU World Exhibition;
• Mining Indaba 2018; and
• South African Premier Business Awards.

7.4.2    Financial Performance

Income, excluding grant income, increased by 17%.  Government grants increased by 7.24%. A total of R4.7m was received from the DTI for the SAPBA Awards hosted in January 2018 and R750,000 was received from Multichoice as partnership income for WEF Davos.

Other income comprised mainly of the recoupment of bursaries from staff members that had left Brand SA as well as refund of a deposit for WEF Davos expenses in 2017.  This is not likely to reoccur.

Total revenue for the year under review was R201 806 490 as compared to R187 607 158 for the 2016/17 financial year, see explanatory table below:

Savings were realized under employee related costs due to vacancies that had to be filled during the year. Due to play your part activations and the international perceptions studies conducted, brand and communication costs increased significantly from the prior year. Capital expenditure on the cash basis did not include the accruals for the year and will be paid from the funds rolled over in 2018/2019.

The personnel costs expenditure reported savings amounting to R2,3-million which is attributable to the vacant posts and recently filled positions are at lesser package than previous incumbents.

There are currently two pending litigation cases in arbitration proceedings which are made against the entity by employees and involve financial exposure. Brand South Africa’s lawyers and management consider the likelihood of success of the action taken against Brand South Africa to be unlikely to succeed and the cases are expected to be resolved within the next financial year. The estimate of the financial impact for both cases is R868,779.

7.4.3    Auditor-General’s Report

Table 12 below illustrates the audit outcomes of the previous three financial years of Brand SA. The entity has maintained a clean audit opinion; further testament to practice of good governance at the Agency.

Table 12: Summary of Audit Outcomes for the last three financial periods

The Auditor-General performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of BSA Trust for the year ended 31 March 2018:

Material misstatements in the annual performance report submitted for auditing indicated misstatements on the reported performance information of Programme 2: brand, marketing and reputation management. As management subsequently corrected the misstatements, AGSA did not raise any material findings on the usefulness and reliability of the reported performance information.

Expenditure management

Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R10 706 316 as disclosed in note 37 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA.

Irregular expenditure

The irregular expenditure condoned relates to the non-compliance with Brand South Africa’s supply chain management policies and procedures. Other irregular expenditure relates to non-compliance with National Treasury Instruction Notes and National Treasury SCM Practice Notes.

Irregular expenditure incurred in the prior year and identified in the current year, relates to a tender awarded in October 2014 for R18-million. The tendered amount was R18-million but the signed memorandum of agreement and service level agreement was R22,640,400. There was no supporting documentation to support the increase in the tendered amount of R4,640,400.

In addition to this, procurements for media partnerships with radio stations and newspapers were found to be single source procurements during the 2017/2018 audit. These procurements were considered to be sole source procurements by the entity and as result, were approved by the Accounting Officer as opposed to National Treasury in the case of single source procurements. This was then deemed irregular. The cost of these procurements amounted to R555,770.

As a result of the above, the total irregular expenditure incurred in the prior year for the two items above is R5,196,170 (R4,640,400 + R555,770).

The irregular expenditure incurred was due to breaches of the supply chain management policy and policies and procedures of the entity. The authority was with the Accounting Officer to approve such incidences, therefore, the Accounting Officer was the relevant authority able to condone such expenditure. This expenditure was condoned by the Accounting Officer.

Financial management

The entity’s established processes were not adequate to ensure that the performance information reports are accurate and complete. The annual performance reports submitted for audit contained numerous misstatements. These misstatements were as a results lack of supervision and review of the annual performance reports.

Leadership

The entity has established oversight structures, however the leadership did not exercise oversight responsibility by monitoring controls designed to ensure that the submitted annual performance report is complete and accurate. Furthermore, designed controls to ensure compliance with laws and regulations were not regularly monitored.

7.5       SABC

Broadcasting is one of the most important mediums through which the right to freedom of expression, i.e. to receive and impart information and ideas[3] freely and without interference, is realised. The role of broadcasting on a continent such as Africa, with its high levels of illiteracy, is critical to the building of a democratic ethos and human rights culture. 

Development and democracy cannot thrive without open and free public space where all issues concerning people’s lives can be aired and debated and which gives them space and opportunity to participate in decision making. With that being said, the SABC as the public broadcaster is the only broadcaster tasked in terms of the law with making its services available throughout South Africa.

Other broadcasters have their respective coverage areas prescribed through their licence conditions. The SABC has special obligations with regard to universal service and access. The Broadcasting Act, No. 4 of 1999, stipulates that the SABC has to “make its services available throughout the Republic” (Section 8(a)) and in all official languages (Section 10(1)).

The definition of universal access to broadcasting as formulated by the then newly established broadcasting regulator, the Independent Broadcasting Authority (IBA)[4], in 1995 is quite broad:

“(Access) refers to the availability of services to all citizens. …. The concept … extends the notion from simply who receives information to what kind of information, to what degree and on what terms. ... Genuine access depends ….. not only on the existence of channels, but on their effective distribution, availability and affordability….

Access to choice … relates not only to the range of information, education and entertainment available but also … to access to a diverse range of language, cultural, religious and regional programmes[5].”

The SABC remains a vital source of information for the majority of people in South Africa. It is critical that the SABC, as the public broadcaster, provides viewers and listeners with content that not only reflects the diverse nature of South Africa but also helps South Africans to learn and react to the world and issues around them.

In order to ensure that the SABC meets its commitments to quality and diversity[6], the Board, as the primary mechanism of accountability, should promote accountability through oversight rather than through interference in day-to-day operations. The Board is an important governance structure at the SABC, bound by fiduciary duty to ensure it operates not only in the Broadcaster’s best interests but also in the public’s interest. One of the ways of doing this is ensuring that good corporate governance practices are embedded in the management of the organization.

Given the huge public interest mandate of the SABC, the challenges facing the SABC have placed its mandate at risk. However, the new Board has had a positive impact in stabilising the organisation by filling key vacancies, implementing consequence management and reviewing all commercial agreements, regulations and licence conditions that impact on the viability of the SABC.

The SABC Board now has a full complement of the Executive team, and this will go a long way to ensure that it delivers on its mandate, notwithstanding the financial predicament also spurred by the unfortunate negative economic environment over and above legacy issues caused by governance challenges and leadership instability.

The general performance of the SABC is summarised below in terms of its strategic outcome goals and is followed by the assessment of each programme’s performance.

The SABC’s bouquet of services includes 18 radio stations, five television channels as well as a digital media offering. Channel Africa, the 19th Radio Station, is managed by the SABC on behalf of the DoC.

The Public Broadcaster’s three terrestrial television channels attract, on average, 28 million South Africans in a typical month. The SABC News channel and SABC Encore channel are delivered through DStv’s digital satellite platform and reach 3 878 million and 4 259 million viewers respectively in a typical month. Seventeen of the nation’s top 20 television programmes are broadcast by the SABC’s television channels.

The SABC provides radio services to all South Africans in their preferred language through its 18 radio stations. The combined average of 28 328 million SABC radio listeners per week is based on a richly diverse offering.

By its own admission, the past two fiscal years were particularly difficult for the SABC on many different levels. Against the backdrop of legacy governance and management failures that have impacted the SABC over many years, the Corporation was unable to successfully implement key strategies and continued to suffer from reputation and credibility issues.

For the reporting period the SABC placed emphasis on four key areas, namely (i) Financial Sustainability; (ii) Content and Platforms; (iii) Human Resources; and (iv) Governance.

7.5.1    Programme performance

The general performance of the SABC is summarised below in terms of its strategic outcomes goal and it is followed by the assessment of each programme’s performance.

For the reporting period the SABC placed emphasis on four key areas:

• Financial Sustainability
• Content and Platforms
• Human Resources
• Governance

Goal 1: Financial Sustainability

There are two strategic objectives under goal one namely, (i) to be a financially sustainable organisation maintaining profitability; and (ii) to meet its financial obligations through adequate cash management. There are three performance indicators under goal one.

The SABC reported a total net loss of R622 million, meaning it did not achieve its target to achieve annual Net Profit before Tax as per the approved budget. The SABC’s financial situation meant that its target for 60 average creditors payment days could not be achieved. Instead, it takes a dismal 205 days’ turnaround time for the SABC to pay its creditors. The Corporation reported that it was unable to settle outstanding accounts within the prescribed period because of insufficient funds.

Initiatives such as early settlement discounts contributed to the lower debtors’ collection days of 39 days against a target of 60 average debtors’ collection days.

While expenditure was within budget, tough economic conditions, advertiser cutbacks, the decline in audience share and households’ low disposable income contributed to revenue targets not being met according to the SABC, hence the net loss of R622 million.

Goal 2: Content and Platforms

The purpose of this programme is to acquire and schedule compelling and quality programming, spanning a range of genres, in all official South African languages, and exceeding mandate objectives across traditional and digital media platforms.

During the year under review, the SABC performed very well in its objective of contributing to nation building by acquiring and scheduling content that reflects the South African story. Local content quotas on all three television channels were exceeded. PBS radio stations also exceeded all their genre quotas in terms of news, current affairs, informal knowledge building education, children and drama ensuring that the nation is informed, educated and entertained in the language of their choice.

Furthermore, high quality local programmes that reflect the diverse cultures, languages, life experiences, interests and needs of its audiences contributed to the public broadcaster over achieving in this strategic objective to meet local content requirements of SABC licences as per the ICASA regulations.

During the 2017/18 financial year, the Public Broadcaster commissioned content from Provinces outside Gauteng. Approximately 50 such programmes were broadcast during the year under review. An increase in the hours of content broadcast in marginalized languages was also noteworthy.

In respect of the strategic objective to ‘Embrace diversity in television broadcasting through the production of provincial content and marginalised language programming,’ the SABC was able to commission / procure more provincial programmes than expected; however, it was unable to achieve its target to meet ICASA’s marginalised language targets on Public Broadcasting Platforms (PBS) platforms owing to a lack of adequate funds.

• The service provider that was contracted for the project was handed over to SIU for investigation as well as the insufficient SABC capacity for website development and content delivery contributed largely to the Corporation not meeting its targets to upgrade the SABC websites to increase consumer and commercial appeal. Furthermore, the SABC committed to a percentage of 5% of audience growth on the SABC’s website but this target too was not achieved as there was a 24% decline in audience growth for SABC website services.

Goal 3: Human Resources

The purpose of this programme is to develop a dynamic and motivated fit-for-purpose workforce that embraces learning and is sufficiently adaptable to migrate into the digital age. Attracting and retaining staff through effective talent management, embedding a high performance culture and optimising learning and development were the main objectives during the period under review.

Performance management was put in place for top and senior management with the majority of performance contracts having been signed off (70%) by the end of the financial year. However, performance contracting will only be cascaded down to the rest of staff in the 2018/19 financial year, meaning this target was also not achieved.

Financial constraints experienced by the Corporation contributed to the non-delivery on the Workplace Skills Plan (WSP) training owing to financial constraints experienced by the Corporation. As a result, only 1.3% of an 80% target of training needs were addressed. The financial status of the Corporation contributed largely to this non-achievement according to what is reported in the Annual Report.

The approval by the Board of the Career Progression Framework as a target was not achieved owing to a decision taken to pause further approval and implementation until such time that the SABC’s operating model review was finalised.

During the year under review, various executive appointments were made including that of the Chief Audit Executive (CAE), Group Executive (GE): Radio, GE: News and Current Affairs, GE: Human Resources and Chief Operating Officer (COO). Positions of the Group Chief Executive Officer (GCEO) and Chief Financial Officer (CFO) were also filled by July 2018. Positions of GE: Media Technology Infrastructure, GE: Corporate Affairs and Head of Legal were all advertised prior to the end of the 2017/18 financial year and the recruitment process will be finalised in the next financial year. These appointments will go a long way in providing the necessary stability to the Corporation from a group executive leadership perspective.

Goal 4: Governance

The purpose of this programme is to ensure compliant governance practices complemented by effective risk management and internal controls.

In an effort to strengthen the Corporation’s internal controls, for the period under review, additional effort went into clearing previous internal and external audit findings. Significant progress was made on both these deliverables, however, it should be noted that this is an ongoing process that will continue in the new financial year.

There was a renewed focus on the use of funds to ensure spending in an efficient and cost-effective manner, as well as adherence to good corporate governance practices that are continually benchmarked against the risk management framework issued by National Treasury.

During the period under review, 76 risk management plans were completed for identified risks. The plans are monitored and evaluated on an ongoing basis.

A total 49% of a 50% target of previous Auditor-General findings were resolved during the year under review. To be specific, a total of 146 findings were issued by the by AGSA on its final management letter dated 8 August 2017; 69 findings have been resolved, 77 are still in progress and 7 findings have not been started.

Lastly, the number of completed risk management plans target was exceeded by 24 from a set target of 16 for the financial year to a total of 40.

7.5.2 Financial Performance

The Corporation reported a net loss of R622 million (Total comprehensive loss of R1.2 billion) for the year.

The Corporation still faces tough economic conditions which sees expenses exceeding the revenue generated. The audience share and TV licence collections have not yet stabilized to result in a sustainable upswing in the revenue generation.

Trade and other payables have therefore significantly increased by 58% from the previous financial year, even though cash reserves grew by R49 million (60%). The Corporation maintained its solvency, however it declined into a net current liability position.

It is important to note that the turnaround strategy that was approved subsequent to the financial year end is designed to ultimately return the Corporation to financial sustainability.

The SABC maintained its solvency (assets exceeded liabilities) as at the end of 31 March 2018. The solvency decreased over the past three years. This is due to the liquidity constraints faced by the Corporation. The cash levels dropped significantly, coupled with increases in liabilities. The net losses experienced over the years have also negatively affected the equity of the Corporation. Furthermore, the liquidity challenges have resulted in the Corporation being in a net current liability situation (current liabilities exceed current assets). It is without a doubt that liquidity challenges will continue to affect business continuity.

The first instalment of R7 million for the perpetual government debt of R27 million was repaid to the DoC. The Corporation has held this debt since 1972. A further R6 million is scheduled to be paid in two instalments over the next two financial years. The Corporation also paid R12 million towards the finance lease arrangement for a fleet of motor vehicles.

It should be noted as a positive that the net loss of R622 million for the year under review is far lower than the previous financial year (2016/17) net loss of R1 billion. However, the total comprehensive loss of R1.2 billion was due to the negative actuarial valuations on post-employment benefits and long-service awards which amounted to R570 million.

The total revenue and income performed better than the previous year by R56 million (1%), whilst the Corporation contained its expenditure amounting to a reduction of R453 million (6%) from the previous year (see graph below). The advertising revenue still contributes a significant portion towards the Corporation’s revenue mix (71%). The licence fees comprised 14% of the total revenue in both financial years. In line with advertising revenue trend, sponsorship generated 6% towards the revenue mix. Collectively, the commercial revenue generated 77% of the total revenue for the Corporation. The Government grant revenue slightly decreased by a per cent.

The major savings were reported on the amortization programme, film and sports rights and other expenses (operational).

The overall total expenses decreased by R453 million from the previous financial year. Amortisation of content was a major contributor of this decrease. This is directly linked to the liquidity constraints faced by the Corporation.

Employee costs still constitute the major portion of the total expenses (exceeding an average of 40% or R3 billion). It is also equally important to recognize and applaud that the Corporation yielded savings by lowering usage of consultants and legal services among others. Furthermore, marketing campaigns were suspended due to low cash flows during the period under review (see graph below):

7.5.3 Auditor-General’s report

The Auditor-General issued a disclaimer of audit opinion to the Corporation. The basis for a disclaimer of opinion is mainly attributable to three core areas excluding the previous year’s qualification areas, namely (i) uncertainty of the going concern assumption used as basis for the preparation of the financial statements; (ii) property, plant and equipment; and (iii) irregular expenditure.

1. Going Concern

Noting the net loss of R621 676 000 as at 31 March 2018 and at that date, the SABC’s current liabilities exceeded current assets by R291 643 000. According to the AGSA, the entity was therefore commercially insolvent because it was not able to pay its debts as and when they were due, even though its assets exceeded its liabilities.

Additionally, AGSA was unable to obtain sufficient appropriate audit evidence to confirm the reasonableness of the cash flows forecasted and the related assumptions, conditions and events to support management’s assessment of the entity’s viability in the foreseeable future. The solvency of the public entity and the reasonability of the cash flow forecast is also impacted by AGSA’s further qualifications on property, plant and equipment and programme, film and sports rights as these assets may not be properly valued. Consequently, AGSA was unable to confirm or dispel whether it is appropriate to prepare the consolidated and separate financial statements using the going concern assumption.

1. Property Plant and Equipment

According to AGSA, (i) capital work in progress was overstated and the related classes of completed assets were understated by R106 427 627; and (ii) AGSA was unable to determine whether any further adjustments were necessary to capital work in progress stated at R184 038 000 because the public entity did not assign unique identifying codes to assets classified as capital work in progress in the asset register, among others.

1. Irregular Expenditure

The entity did not implement adequate internal control systems to identify and record all instances of irregular expenditure in both the current and previous years, meaning that irregular expenditure disclosure was understated during the year under review. Important to note is that AGSA could not confirm the full extent of the misstatements identified, nor could they be quantified resulting in AGSA not being able to confirm the amount of irregular expenditure to be disclosed by alternative means. Lastly, AGSA was unable to determine whether any further adjustments were necessary to irregular expenditure of R4 405 804 000 relating to the previous year.

Table 13: Summary of Audit Outcomes for the last three financial periods

Some of the other findings of the AGSA are as follows:

• Despite weaknesses identified in the supply chain management control environment, the entity did not implement adequate consequence management processes for transgressions against applicable policies, laws and regulations.
• While noting that the SABC is in the process of negotiating for additional support from the DoC and the National Treasury as well as various financial institutions, it did not prepare reliable cash flow forecasts.
• The property, plant and equipment register was not properly maintained to ensure that all assets were recorded at the correct value.
• Management did not implement adequate review procedures to ensure that indicators and targets included in the corporate plan were useful and that information reported in the annual performance report was adequately supported with appropriate evidence.
• In addition, where the controls did not prevent non-compliance with supply chain management legislation, detection controls were also deficient as not all irregular expenditure was disclosed.
• There was a lack of appropriate risk management activities to ensure that threats affecting the entity were effectively identified, monitored and responded to on a strategic level.

8.         Standing Committee on Appropriations (SCOA)

The Department did not appear before SCOA.

8.1       Standing Committee on Public Accounts (SCOPA)

The Department did not appear before SCOPA.

9.         Committee observations and recommendations

9.1       Observations of the Department and the GCIS

The Committee commended the Department and GCIS for obtaining clean audits. However, it was concerned that the Department only achieved 83 per cent of its targets and noted (i) that Cabinet was scheduled to discuss the DTT roadmap on Wednesday, 10 October 2018 and thereafter a plan would be available for presentation to the Committee; (ii) the appointment of DG’s was awaiting the alignment of Departments by the President ahead of 6th Parliament; (iii) that the Audio-Visual policy was before Cabinet and was likely to be approved before the end of the 3rd Quarter of the 2018/19 financial year;  (iv) that Cabinet have approved Government Communication Policy; (v) that GCIS coordinated Izimbizo events of political leadership in Vhuwani to ensure proper engagement with communities for participatory democracy;  and (vi) that the underspending on programmes 2 and 3 was due to vacant positions of DG and two acting DDGs.

9.2       Observations of the FPB

The Committee noted: (i) with great concern that FPB had achieved only 78 per cent of its targets for the year under review; (ii) that 93 raids were conducted together with law enforcement and 41 559 discs confiscated and 60 cases opened through the South African Police Service (SAPS); (iii) that 11 686 discs (R11 268 600 street value) confiscated through compliance activities were destroyed; (iv) that FPB received an unqualified audit opinion with findings on performance information.

The Committee condemned the type of content shown on Television, particularly on Mzansi Magic as it does not promote the values as enshrined in the Constitution.

9.3       Observations of ICASA

The Committee noted: (i) that the moratorium on the licensing of broadcasters was sustained pending the Regulatory Framework review; (ii) that those community radio stations who applied for a broadcasting licence before the moratorium was imposed, were not affected by it; (iii) with great concern data prices remained relatively high; (iv) the settlement of the long-standing industrial relations dispute; (v) that ICASA achieved 89% of its planned targets; (vi) the reduction in the vacancy rate from 10.3 per cent in 2015/16 to 5.9 per cent in 2017/18; and (vii) with concern the non-compliance in the broadcasting space by community radios.

Furthermore, the Committee noted with concern: (i) the fruitless and wasteful expenditure of R7.3 million and irregular expenditure of R39.4 million for the year under review; (ii) that 16 employees left the regulator during the year and review and 8 were terminated; (iii) that People Living With Disabilities (PLWD’s) at ICASA are not on senior echelons of the organisation and therefore not able to influence decisions; (iv) that while they welcome the equity statistics as presented, they should not be inclusive of Council despite that it is a permanent Council and present at work daily; and (v) that exit interviews were conducted for the 16 staff members who resigned.

9.4       Observations of the BSA

The Committee commended the work done by BSA in promoting the country both locally and abroad and was encouraged to continue with the commendable work. However, it noted with concern that BSA had regressed and as a result received an unqualified audit opinion with matters relating to non-compliance with laws and regulations.

The Committee welcomed the undertaking by BSA to provide Nation Alignment Brand Training to members and staff.

9.5       Observations of the MDDA

The Committee expressed its satisfaction on the approach by the Board and Management to stabilize and improve MDDA performance.

The Committee identified funding as one of MDDA’s key problems, particularly following the withdrawal of the funding contribution of the print media.

The Committee welcomed the decision by the MDDA to approach the Khoisan community radio stations to find out what kind of assistance they require and assist where it can.

The Committee noted: (i) that all vacant positions at the MDDA had been advertised and by the end of 2018, the entity would have a full staff complement, currently only 10 vacancies exist; (ii) MDDA does not receive any support from print media but are working on encouraging the sector to make contributions to the entity; (iii) the ongoing engagements with COGTA to assist community media projects with accommodation; and (vi) that MDDA received an unqualified audit opinion with findings on non-compliance with laws and regulations.

The Committee noted with concern: (i) that MDDA only achieved 20 of the 44 targets for the 2017/18 financial years and that this was as a result of the Board not forming a quorum for a significant part of the year; (ii) that staff benefits were the reason people did not stay long in the entity; (iii) that a total of R3,2m of irregular expenditure was incurred in the 2017/2018 financial year; (vi) that MDDA incurred R82 000 fruitless and wasteful expenditure in the 2017/2018 financial year; and (v) there was a legal dispute between MDDA and Johannesburg Post in respect of the funding agreement signed between the two parties, with a financial exposure of R384 600 depending on the outcome of the dispute.

9.6       Observations of the SABC

The Committee commended the Minister and the Board for an honest, reliable and informative presentation as well as the reduction in the irregular, fruitless and wasteful expenditure.

The Committee encouraged the SABC and Ministry of Communications to move with speed in the implementation of DTT, particularly with the Parliamentary Channel broadcasting on DSTV and not accessible to the general public.

The Committee assured the SABC Board and the Minister of Communications that they had its full support in terms of the implementation of the turnaround strategy.

The Committee noted: (i) the continues engagement with the unions regarding section 189 of the Labour Relations Act; (ii) the SABC, through the Special Investigative Unit (SIU) was in the process of recovering monies lost as a result of fruitless and wasteful expenditure; (iii) the Cabinet resolution that DTT must put SABC at the center so that it was easily accessible and affordable; (iv) that the Board had eight meetings from 1 April 2018 and only five of the eight were paid meetings; (v) SIU had not finalized the report on the security tender; (vi) that retrenchments at the public broadcaster should be the last resort after exploring all other possible solutions; and (vii) that there was an ongoing Broadcasting Review.

The Committee noted with concern: (i) that the SABC received a Disclaimer Audit Opinion and the basis for a disclaimer of opinion is mainly attributed to three core areas excluding the previous year’s qualification areas, these are (a) uncertainty of the going concern assumption used as basis for the preparation of the financial statements; (b) property, plant and equipment; and (c) irregular expenditure; and (ii) that the mandate of the SABC is very broad yet not adequately funded.

10.       Recommendations

The Committee recommends that the Minister should ensure that:

1. the Department and entities present their plans to mitigate AGSA findings;
2. the Department’s Entity Oversight Directorate plays its role on overseeing entities;
3. the Department and entities consistently respond to issues raised by the Committee;
4. the DTT roadmap must be presented to the Committee as soon as Cabinet had approved it;
5. the Department proposes budget with estimated figures based on the shortfall in order to enable the Committee to devise a strategy to engage relevant counterparts to better fund the Department and its entities; and
6. the Department presents to the Committee an oversight strategy before the end 2018/19 financial year;
7. GCIS uses constituency offices for information dissemination;  
8. GCIS provides a breakdown of government Izimbizo events held in the financial year under review within 7 days; and
9. GCIS strengthens programmes in rural areas.

The Committee further recommends that the Minister should provide a detailed report responding to all recommendations within 30 working days after the adoption of this report by the House.

10.1     ICASA

On ICASA, the Committee recommends that Minister should:

1. provide a full report on the resignations and terminations of employees;
2. provide a report with statistics on employment equity as advised;
3. provide an update on the matter of Iqhayiya FM by 23 November 2018; and
4. regularly provide the Committee an update on issues raised by Members during Committee sittings.

The Committee commended ICASA for an establishment of a successful Graduate Development Programme (GDP).

10.2     SABC

On the SABC, the Committee recommends that the Minister should:

1. provide a comparison study with other broadcasters around the world in terms of a suitable funding model of the SABC;
2. present a plan on collection of TV licences as the current one was not producing the required results;
3. table a report on the investigation into the security tender;
4. together with the Board, come and brief the Committee on the multi-disciplinary approach that will take the SABC forward;
5. present an action plan on how the SABC was responding to AGSA findings as well as an asset register for the broadcaster;
6. together with the SABC Board, provide regular progress reports on the implementation of the turnaround strategy;
7. ensure that all employees in the SABC value chain become part of the transformation of the organisation;
8. ensure that government takes responsibility to fund the public mandate, conduct research and provide alternatives on how the other public broadcasters generate revenue other than through Advertising and licence fees collection;
9. together with the Board, appear before the Committee to report on the progress on the use of Section 189 of the Labour Relations Act before the end of 5th Parliament; and
10. conduct an independent skills audit before embarking on the Section 189 processes and provide progress reports back to the Committee as and when the Committee invites the Board.

10.3     FPB

On FPB, the Committee resolved that the Minister ensure that:

1. the FPB should provide an adequate response on the question of disciplinary hearings involving three Human Resources employees;
2. the FPB expand its programmes and partnerships in order to protect children more extensively in the face of continued and increased attacks; the FPB should continue to seek to harmonize and improve collaborative activities of entities reporting to the Department in as far as the type of content and regulations needed to protect the heritage, culture and dignity of South African communities; and
3. ICASA must report to the Committee on the investigations report and processes followed during the disciplinary proceedings.

10.4     BSA

On BSA, the Committee recommends that the Minister ensure that BSA:

1. increases the number of employees of people living with disabilities;
2. shares its whistle-blowing policy with other entities in the portfolio; and
3. addresses the increase in patterns of fruitless and wasteful expenditure.

10.5     MDDA

On the MDDA, the Committee recommends that the Minister should:

1. put measures in place to recover amounts that are deemed recoverable from the respective employees;
2. ensure that a legislative requirement mandating print media to make 30% contributions to the MDDA is in place as soon as feasible;
3. encourage the GCIS enforce district and local municipalities to use community media when advertising;
4. encourage the MDDA to visit Karabo FM to ascertain what challenges the station was facing, how it planned to assist with the challenges and report back on or immediately after the adoption of this report by the House;
5. provide a detailed report on the accusation that the Company Secretary did not possess the necessary qualifications as well as the situation regarding Ms Faith Morokane on or immediately after the adoption of this report by the House;
6. speedily resolve the impasse between MDDA management with staff;
7. ensure that the MDDA employs critical skills for strategic positions in order to mitigate costs associated with procuring services of consultants;
8. ensure that the MDDA expedites its plan as recommended by the Committee to ensure that there is a media project in every municipality in the country; and
9. ensure that the Board conducts a forensic investigation into the maladministration at the Agency.

10.6     Recommendations emanating from the Budget Vote report 2017/18

The Committee recommended to the Minister and entities reporting to her on the following:

10. 6.1 DoC

10.6.1.1  that the Minister undertake a parallel process with the Committee’s intention to engage all relevant organs of the State in an attempt to resolve the insufficient funding for the budget vote on the basis that the lack of funding threatens the existence of the Department as well as its legislated mandate as per the Proclamations by the President to redress the imbalances and fast-track the transformation of the communications environment of South Africa;

10.6.1.2  that the Minister put a hold on efforts by the Department to purchase vehicles for the new incumbent Ministry, taking into consideration that there are existing cars, and rather prioritize service delivery objectives of the Department;

10.6.1.3  that the Minister expedites resolving the challenge of the sharing of office space and other resources between the Department and GCIS in order to mitigate potential risks;

10.6.1.4  that the Minister fast-tracks the filling of critical, funded vacancies across the portfolio;

10.6.1.5  that the Minister should, in consultation with relevant departments, develop uniform reporting systems that will be standard and consistent across the Department and entities reporting to it, paying particular attention to the structure and language used in the strategic and annual plans such that they reflect the applications of the ‘SMART’ principles which ultimately impact positively on the service delivery objectives of the NDP and enables the Committee members to conduct oversight with more ease;

10.6.1.6  that the Minister urgently resolve the crisis relating to the litigation by eTV and civil society organisations on the country’s BDM policy, taking into consideration that (i) she has already upheld the Cabinet policy decision on encryption of STBs; and (ii) South Africa has already missed the ITU deadline and as such the DTT programme needs to be expedited;

10.6.1.7  that the Minister fast-tracks the current slow pace in the transformation of the media of the country by among others prioritizing the implementation of the COMTASK Report;

10.6.1.8  that the Minister collaborates with relevant structures of government and stakeholders to review the current funding structure of the public broadcaster in line with the COMTASK recommendations to ring-fence funding for public mandate purposes;

10.6.1.9  that the tensions between ICASA and the Department created as a result of ICASA being a Chapter nine institution be attended to;

10.6.1.10  that the Minister addresses, as a matter of urgency, the general lack of an information-sharing culture between the Department and all entities reporting to it;

10.6.1.11  that the Minister ensures that both the Department and GCIS are well-positioned to enforce advertising in community media projects by other government departments;

10.6.1.12  that the Minister facilitates an engagement amongst organs of the state to review the current funding arrangement of the Department and its entities in support of the proclamation; and

10.6.1.13  that the Minister should ensure that there is consequence management for deliberate flouting of government policies across all Department’s entities.

10.6.2  GCIS

The Committee recommends that the Minister should ensure:

1. that a coherent community media framework is implemented with urgency and in reference to the NCS and NDP goals for the medium term;
2. that the GCIS develops mitigating strategies to the contradictory statements published by various organs of the same government;
3. that the GCIS reviews the skewed patterns of citizens’ access to government information in the country based on geographic and socio-economic status;
4. that the GCIS develops a turn-around strategy to circumvent the falling advertising revenues;
5. that the GCIS develops or procures a system that will enable the Department to quantify, track and monitor moneys spent outside the GCIS system by government;
6. that the GCIS develops a strategy to engage the public at large about the dangers of the recent rise in fake news and its adverse impact on the dictates of the South African Constitution;
7. that the GCIS shares the report with the Committee on its internal audit and viability study of Thusong Service Centres; and
8. that the GCIS presents a comprehensive strategy on how it plans to integrate active participation of the Members of Parliament to become proactive agents to profile the work of the Department in support of the NDP goals.

10.6.3  SABC

The Committee recommends that the Minister should ensure:

10.6.3.1        that the interim Board of the SABC continuously communicates progress of the implementation of their mandate at the SABC taking into considerations that only four months remain and the general public expects that Parliament will within this period, have made considerable progress in an attempt to restore public confidence of the Corporation;

10.6.3.2        that the interim Board seeks to urgently circumvent the imminent collapse of financial sustainability of the broadcaster;

10.6.3.3        that the interim Board ensures that there is no intimidation of staff members at the broadcaster;

10.6.3.4        that the interim Board clarifies the Committee regarding the ambiguity relating to the dates when the new Company Secretary was appointed versus when the former Company Secretary resigned including the human resource processes relating to these staff member’s redeployments;

10.6.3.5        that its financial resources meet the broadcaster’s contractual obligations; and

10.6.3.6        that the interim Board expedites the implementation of the SABC Board Inquiry report recommendations.

10.6.4  FPB

The Committee commends the FPB for having begun to implement some of the Committee recommendations.

The Committee recommends that the Minister should ensure:

1. that the FPB seeks to bring stability at the leadership of the Board, especially in filling the CEO, COO, CFO and Shared Services Executives vacancies;
2. that the Board reports back to the Committee on the investigation within 30 days after the adoption of this report by the House;
3. that the Board addresses the concern raised by the Committee on the slow pace of improving on the Employment Equity Quotas of People Living With Disabilities (PLWD);
4. that the Board develops and presents to the Committee during this term an intergovernmental collaboration plan;
5. that the FPB establishes a clear and structured relationship with the Department of Social Development and the Department of Women as they have the infrastructure and common objectives respectively, that the FPB can utilize; and
6. that the Board works on an inter-departmental public campaign to improve its visibility (so that there is greater public awareness about the work of the FPB) and develop a plan that can be easily monitored and measured by the Committee.

10.6.5  ICASA

The Committee recommends that the Minister should ensure that:

1. relations between SALGA and ICASA, with measurable intended goals of the relations, are improved;
2. ICASA engages local government on conducting public campaigns to communities that contribute to blocking the installations of base stations for signal distribution;
3. ICASA engages in solutions outside of the courts that would resolve the deadlock between ICASA and the Department of Telecommunications and Postal Services on frequency spectrum auctioning;
4. ICASA makes available to the Committee its report on the 2016 local government elections as a means to monitor and evaluate the relevance of the current regulatory systems; and
5. ICASA conducts an impact study and develop an intervention report to mitigate the proliferation of digital TV for South Africa.

10.6.6  MDDA

The Committee recommends that the Minister should ensure:

1. that the Agency expedites the filling of vacancies at senior management level to mitigate further instability at the Agency.

11.       Conclusion

The Department should be commended for its smooth running in its third year of establishment and also for receiving another unqualified report. However, as was the case for the previous financial year, concerns remain for the MDDA, ICASA, FPB and most importantly the SABC which continues to regress further. The BSA has also for the first time regressed in terms of AGSA’s finding. While the BSA was regarded as an ideal entity model to emulate, it will have to improve its performance for the coming financial year.

The consistent underfunding of the Department will remain questionable and a challenge for the next administration. The Minister is encouraged to continue to work closely with other organs of State and particularly with the Portfolio Committee on Communications in order to turn the portfolio towards a positive trajectory and in turn better service delivery for South Africa.

Media transformation remains a challenge, especially in consideration of the growth of fake news and collaborative efforts by some media houses to detour the country from its growth path. There seemed to be no focus during the year under review to engage the big media houses in attempt to ensure continued support for the very important aspect of our democratic dispensation, the community print media.

The over-dependency of the Department to GCIS resources will continue to have a negative impact on both Departments, and while the separation is desirable, it is increasingly becoming difficult to advocate for the separation of resource-sharing between the departments if adequate budget allocations are not forthcoming.

Lastly, the DTT programme will remain a key programme of the Department, and as such it is encouraged that the Department improves its spending patterns on the programme in order to ensure sustained and incremental funding allocation to the realisation of a digital era for South Africa. The Department cannot continue to highlight budget constraints as its main challenge whereas when moneys are allocated to the programme, then the Department fails to utilise all the funding to that effect.

Lastly, the Committee will pay particular attention to the DTT programme in order to ensure that government can realise the true economic potential and translated to true benefits for citizens Migrating to digital platforms has the potential to position South Africa as a leader in the continent in adopting technology and realising the potential of the 4th Industrial Revolution.

Report to be considered.

[1]National Development Plan (2014)

[2] King III is a corporate governance standard to be implemented by all businesses to ensure standardised corporate governance practices in South Africa.

[3] Constitution of the Republic of South Africa. Chapter 2: Bill of Rights. Section 6 (1)(b)

[4] Now the Independent Communications Authority of South Africa

[5] Triple Inquiry Report, p. 16, point 7.1.3

[6] As espoused in the Constitution of the Republic, Broadcasting Act (Act 4 of 1999), Electronic Communication Act 36 of 2005, SABC Charter, ICASA License Conditions and SABC Editorial Policies