ATC110208: Report Annual Report 2009/10 of Tourism Hospitality & Sport Education and Training Authority (Theta) & Clothing, Textile, Footwear & Leather (CTFL) Sector Education and Training Authority, dated 8 February 2011

Higher Education, Science and Innovation

Report of the Portfolio Committee on Higher Education and Training on the Annual Report 2009/10 of Tourism Hospitality & Sport Education and Training Authority (Theta) & Clothing, Textile, Footwear & Leather (CTFL) Sector Education and Training Authority, dated 8 February 2011

 

The Portfolio Committee on Higher Education and Training, having considered the Annual Report 2009/10 of Theta and CTFL Seta reports as follows:

 

1. Introduction

 

The Portfolio Committee on Higher Education and Training considered the Annual Report 2009/10 of Theta and CTFL Seta on the 03 November 2010. The purpose of the meeting was primarily to assess the annual financial performance of the above mentioned Setas.

 

1.1 Members of the Portfolio Committee on Higher Education & Training

Ms N Gina (ANC), Ms M Kubayi (ANC), Ms N Magazi,  Mr S Makhubele (ANC), Ms F Mushwana (ANC), Ms W Nelson (ANC), Dr J Kloppers-Lourens (DA), Mr A van der Westhuizen (DA)  Ms N Vukuza (COPE) and Mr K Dikobo (AZAPO).

 

Apologies:  Mr M Fransman Chairperson (ANC), Ms W Nelson (ANC), Mr S Radebe (ANC) and Ms C Dudley (ACDP).

 

1.2 Tourism Hospitality & Sport Education and Training Authority officials

 

Mr M Tsotetsi: Chief Executive Officer, Mr C Mabaso: Chairperson, Mr M Mwandla: Skills Development Manager, Ms T Nightingale and Mr E Boomgard:  ETQA Manager.

 

1.3 Clothing, Textile, Footwear and Leather Seta officials

Mr P Naicker: Chief Executive Officer, Ms A Abrahams: Chairperson, Ms G Layzell: Chief Financial Officer and Ms E Baumann: Marketing and Communications Manager.

 

1.4 Other guests

Mr H Hoon: Director, Department of Higher Education and Training, Ms F Kwaza: Parliamentary Media Liaison Officer, Parliament and Ms K Redpath: Monitor, PMG.

 

This report provides a brief summary of the presentations by both Setas which highlight the Setas mandate and mission, strategic imperatives, delivery on the NSDS II, financial highlights and other relevant matters.

 

2. Summary of the presentations

 

2.1 Theta

Mr M Tsotetsi: Chief Executive Officer led the presentation which highlighted the following key issues:

• The general objective of Theta is to facilitate, coordinate and identify skills shortage in the tourism hospitality and sport sector.
• The main challenges of the Seta in the year under review included but were not limited to over commitment of funds as a result of too many programmes in preparation of the 2010 World Cup, 0% performance in critical skills programmes, poor performance in new venture creations, operating without an extended licence, miss-statements and errors and financial reporting and two emphasis on matter reported by the Auditor General in financial management of the Seta.
• The Seta received 4 out of 5 in its performance scorecard rating.

 

2.2 CTFL Seta

Mr P Naicker: Chief Executive Officer led the presentation which highlighted the following key issues:

• The CTFL Seta is responsible for the facilitation and coordination of skills development programmes in the clothing, textile, footwear and leather sector. There are 7000 companies registered with the Seta and 1400 contributing levies. In terms of the profile of the sector, the majority of companies are located in urban provinces namely KwaZulu Natal, Gauteng and Western Cape.
• The CTFL sector employs a total of 130 510 workers of which clothing constitutes 49% of the workers in the sector. A total levy income of R59 million was contributed to the Seta for the year under review.
• 80% of the mandatory grant budget was disbursed to 572 firms, 633 workers were registered for ABET and 533 unemployed people were registered on learnerships.
• No small BEE firms and BEE cooperatives supported by skills development since 2005.
• The Seta received an unqualified audit for the 10th time and there were no material matters reported for the year under review. Utilisation of external consultants is limited since internal staff has capacity to handle key performance areas.
• A total income of R65 million was received with R58 million of total levies in the year under review.

 

 

3. The following formed part of the discussion

Theta

It emerged that during the year under review Theta overcommitted its funds and as a result the SETA incurred a shortfall in its debts.

It was noted with concern that the Seta underperformed against its targets especially on new venture creations, critical skills programmes and Adult Education and Training (AET) while administration expenditures were extremely high.

The Committee wanted to know the reasons for the significant decline in the skills funding from the National Skills Fund (NSF) and mandatory grants during the year under review.

It was noted with concern that remuneration of employees in the tourism hospitality sector was below average compared to other sectors.

The Committee indicated that lack of transformation in the tourism hospitality sector is unacceptable and the Seta needs to prioritise transformation since it’s a national priority of government.

The Committee was extremely concerned with the maladministration and discrepancies in supply chain management discovered by the forensic audit. It emerged that the Theta board were in disagreement with the forensic audit and sought for validity of the findings. Thetha was requested to explain its mechanism in place to deal with the findings of the forensic audit.

The Committee was concerned that Theta operated without a valid license, it has no regional offices for easy access to people in poor rural areas, incurred a bad debt and all of these challenges reflected a state of crisis in the affairs of the Seta.

 

CTFL Seta

CTFL Seta was commended for having an unqualified audit with no emphasis on matter and the fact that the Seta has regional offices in the Western Cape, Gauteng and KwaZulu-Natal.

The Committee was extremely concerned that the Seta did not achieve any targets in terms of BEE firms and that it had no clear policy in Recognition of Prior Learning (RPL).

It emerged that the Seta did not pay its board members for sitting in board meetings and senior managers were remunerated average salaries.

The Committee was extremely concerned with the fact that most learnerships of this Seta are on ABET Level 2 which is even lower than Matric level. It was noted that the clothing sector is facing a huge challenge of capacity to respond to the demand for clothing and for this reason the country is importing a lot of clothes from the east and the economy suffers.

 

4. Responses

 

Theta

• It was noted that the proposed Seta landscape change brought uncertainty in the functioning of this Seta and staff morale was very low to such an extent that some senior managers resigned from their posts.
• The Seta acknowledged the negative impact of over commitment of funds for its financial sustainability. Measures have been taken to ensure such error doesn’t occur again. Two staff members have been dismissed as a part of ensuring commitment to financial sustainability.
• The challenge of quorums for board meetings has been noted and the board has taken a decision to proceed with board meeting without quorums.
• Theta is committed to openness and transparency and it has a toll free line to report bad practices. The board wanted validity of the allegations against certain staff members, this is the reason it requested more information on the allegations. Since then the CEO and CFO have been given a warning regarding administration lapses. The supply chain management policy has been overhauled.
• The Seta is aware that it is currently operating without a license and this matter is in the hands of the Minister.
• The tourism sector has very low salaries compared to the costs of studying for a degree or diploma in its field.
• The decline in mandatory grants is due to the fact that most companies are not claiming back their contributions.
• Theta acknowledged the challenge of transformation in the tourism sector and promised to be involved in changing this situation.
• The dispute between Theta and the small service provider regarding legality has since been solved and there is stability in the organization.

 

CTFL Seta

• The Committee was informed that CTFL was preparing a report on BEE firms and it would implement its recommendations once approved and at the moment there hasn’t been any notable success in terms of SMMEs.
• CTFL Seta acknowledged that Adult Basic Education and Training (ABET) and Recognition of Prior Learning (RPL) were challenges in this sector and the Seta has been engaging with other relevant stakeholders in addressing the issue.
• CTFL Seta board members are not paid for sitting in board meetings. However, they are assisted with travel allowance.
• The Committee was informed that the challenge in the CTFL sector is that most factories are located in urban provinces and hence most learnerships are within these provinces.
• The Seta do not have large financial resources and leasing of buildings is financially viable than purchasing the building.
• It was proposed that Further Education and Training (FET) colleges should offer a National Certificate Vocational (NCV) on clothing and textile to respond to the huge demand clothing in the country.

 

5. Conclusion

One of the main critical outcomes observed by the Committee during the interaction with both Setas was that there is a serious challenge of financial accountability and that access by learners from rural areas to these Setas remains a serious challenge. It was noted with extreme concern that both Setas failed to achieve almost half of their targets even though they received unqualified audits. The fact that Theta achieved 0% performance in new venture creations while CTFL Seta failed dismally in supporting small BBE firms were a major concerns in a country that has 25% unemployment. The Committee requested for a further interaction with both Setas when dealing with their strategic plans 2011/14.