ATC141031: Budgetary Review And Recommendation Report of the Portfolio Committee on Telecommunications and Postal Services, dated 24 October 2014
Sport, Arts and Culture
The
Budgetary Review and Recommendation Report of the Portfolio Committee on Telecommunications
and Postal ServiceS, dated 24 October 2014
The
Portfolio
Committee on Telecommunications and Postal Services (PCTPS)
, having
considered the performance and submission to National Treasury for the medium
term period of the Department of Communications (DoC)
[1]
.
The BRRR being presented is for the former DoC as it covers the period 01 April
2013 to 31 March 2014, reports as follows:
1.
Introduction
During the year under review, two entities were
transferred from the Department of Public Service and Administration (SITA) as
well as the Department of Public Enterprises (Broadband Infraco) to the
Department of Communications (DoC). At the same time, one entity (SABC) and the
Regulator (ICASA) from
DoC were also moved to
the Department of Government Communications and Information System (GCIS). To
this end, whilst the Committee did not engage with newly-joined entities during
the 2013/14 Strategic Plan and Budget presentations, the entities appeared
before the Committee to account on their Annual Reports and Financial Statement
for 2013/14.
2.
Committees Overview of Telecommunication and Postal
Sector
2.1.
Telecommunications and Broadband
In 2010, International Telecommunications Union (ITU), in conjunction
with
United
Nations Educational, Scientific and Cultural Organisation
(
UNESCO
)
,
launched the Broadband Commission for Digital Development. The aim was to
encourage governments to implement national broadband plans and to increase
access to broadband applications and services.
Broadband
[2]
has become a key priority of the 21
st
Century, and its transformative power as an
enabler for economic and social growth makes it an essential tool for
empowering people, creating an environment that nurtures the technological and
service innovation, and triggering positive change in business processes as
well as in society as a whole. Increased adoption and use of broadband in the
next decade and beyond will be driven by the extent to which
broadband-supported services and applications are not only made available to,
but are also relevant and affordable for consumers. And while the benefits of
broadband-enabled future are manifest, the broadband revolution has raised up
new issues and challenges.
Broadband, however, represents a new challenge for researchers and
governments. First, its deployment has proceeded at an incredibly fast pace.
Within 12 years, broadband has been adopted by over 62 per cent of households
in the United States, 80 per cent in the Netherlands and 96 per cent in Korea. Consequently,
the length of time series data of broadband adoption is considerably shorter
than for voice telecommunications. Second, only the countries that have
understood early on its economic potential have proceeded to collect statistics
at the beginning of the diffusion process. Third, since broadband is an access
technology for data communications, it only has an economic effect in
combination with the adoption of information technology, and the implementation
of organisational and process changes in enterprises.
2.2.
The
South African Postal Sector
The Committee
acknowledges and noted that instability in the South African Post Office
environment has resulted in the Group posting an operating loss before tax in
the past. For instance, in 2012/13 financial year, there was a sharp decline in
revenues by 0.09 per cent. This emerged largely from the post office employees
strikes during August 2012, February 2013 and March 2013 which contributed to
approximately R100 million losses in mail revenue.
The strike action by
the road freight industry and SA employees in general as well as other sectors
such well as the cash-in-transit security industry also negatively impacted
operations and customer service.
Additional costs, are also incurred to clear
backlogs resulting from the strike action.
Notwithstanding the
above, however, todays business environment indicates that SAPO competes with
DHL and FedEx; at the same time, its real competitors are companies like Apple,
Mobile operators, Google, Microsoft, Yahoo, and Verizon, or more accurately
e-mail, broadband, and computers. In other words, SAPO is competing against
digital communications. Social network use (including Mxit, Whatsapp, etc.) has
exploded, with worldwide Facebook users growing from 12 million in 2006 to over
a billion today.
The need for change could not be clearer.
The development of the digital economy has stimulated
the need for Posts to innovate and to develop postal electronic services.
However, the pace, scope and degree of success of innovation differs among
countries, regions and markets. Decision-makers and strategy experts within the
sector need this understanding to determine the appropriate strategy and
portfolio of e-services that should be developed by Posts. In many developed
economies, on average, postal e-services contribute only around 1.5 per cent of
a Posts total revenue.
The South African
Post Office Group posted an operating loss before tax of R 206 million in
2012/13 resulting from a sharp decline in revenues of 0.09 per cent to R5.7
billion. Moreover, year 2013/14 financial year marked the beginning of SAPO
operating without the governments annual subsidy allocation for the year
ending in March 2014. The allocation has been used to fund the marginal post
offices in the under-serviced areas so that it can meet the universal service
obligation.
In addition, mail volume
(especially letter mail), which constitutes 70 per cent of the revenues, is
down. And while some of the decline is due to the slow economy. Most is due to
the switch from paper to digital (e.g., electronic bill delivery and payment)
is one reason why the Boston Consulting research,
for example, predicts that mail volumes may decline 34 per cent from 2009 to
2020.
During the 2013/14 financial
year, the Portfolio Committee on Telecommunications and Postal Services (the
Committee) carried out its legal mandate while responding to challenges that
may have negative impacted on the ICT sector. The report
also highlights the major activities the Committee
dealt with during the period under review namely:
(i)
second round of public hearing on
the high cost to communicate;
(ii)
digital migration programme;
(iii)
passing the
technical amendments of the ICASA Amendment Bill ,
(iv)
passing the
technical amendments of the Electronic Communications Bill ; and
(v)
passing the
technical amendments of the Post Bank Bill
as well as South African Post
Office Bill;
3.
Legislation
enacted during the 2013/14 financial year
The Committee
undertook legislative process of conducting public hearings and passed
what predominantly were technical amendments to the
four Bills that were referred to it for consideration. Public hearings were
held in Sandton, Gauteng, to enable greater public and stakeholder maximum
participation.
-
The rationale for the
South African Postbank Limited Act
to be amended was to amend provisions that may negatively affect the
operational autonomy and independence of the Office for Banks; to remove
any inconsistencies with the Banks Act 2010; as well as to provide for
matters connected therewith;
-
The rationale for
the South African Post Office
State-Owned Company Limited Act, 2011
,
to be amended was to improve governance provisions between the Boards of
the South African Post Office SOC Ltd and the South African Postbank
Limited; to amend the Post and Telecommunication-related Matters Act,
1958, as to provide for the payment of pension benefits to a former spouse
of a member on divorce or the dissolution of a customary marriage; as well
as to provide for matters connected;
-
The rationale for the
Independent Communications Authority Act, 2000
,
to be amended was to insert new, amend existing and repeal obsolete
definitions, to provide for further clarity on the powers and duties of
the Authority; to introduce mechanisms to ensure the accountability of the
Authority, including that of councillors and committees; and to confirm
the use of electronic communications networks and services for the purpose
of electronic transactions, as well as to provide matters connected
therewith;
-
The rationale for the
Electronic Communications Act 2005
,
to be amended was to insert, amend, or delete certain definitions; to
align the Act with broad-based black economic empowerment legislation, to
refine provisions relating to licensing; to make further provision towards
ensuring effective competition amongst persons licensed under the Act; and
-
To remove bottlenecks,
to require the Minister of Communications to establish a council to advise
the Minister on broadband policy and implementation; to make further
provision for the discounted rate at which Internet services must provided
to schools, educational institutions and public health establishments, to
authorise the Minister to require that certain information be submitted to
the Minister; to make provision for the fiduciary
duties of members of the Board of the
Universal Service and Access Agency of South Africa; to provide afresh for
the appointment and conditions of the chief executive officer of the
Board; to make further provision for the utilisation of money in the
Universal Service and Access Fund, as well as to provide matters connected
herewith.
4.
Mandate of Committee
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 and also facilitate public participation.
The Committee may also investigate any matter of
public interest that falls within the ICT area of responsibility
.
The Committee is required to
consider legalisation referred to it and to consider all matters referred to it
in terms of the Constitution, the Rules of the National Assembly or resolutions
of the House. It is also required to respond to matters referred to it by
Government within its mandate. Moreover,
the
role of the Committee is to consider the Budgets, Strategic and Annual Performance
Plans of the Department and its entities that fall within its portfolio.
5.
The Department
5.1.
Department
of Communications (DOC)
5.1.1.
Overview
of DoC
The DoC is mandated
to create a vibrant ICT sector that ensures that all South Africans have access
to robust, reliable, affordable and secure ICT services in order to advance
socio-economic development goals and support the Africa agenda and contribute
to building a better world.
The
mandate is further embedded in legislation as well as other policy frameworks.
The
legislative framework for the work of the DoC is contained mainly in the:
·
Broadcasting Act (Act
No.4 of 1999);
·
Electronic Communications and Transactions Act (Act
No. 25 of 2002);
·
Electronic Communications Act (Act No. 36 of 2006);
·
Independent Communications Authority of South
Africa Act (Act 13 of 2000);
·
SENTECH Act (Act No. 63 of 1996);
·
Postal Services Act (Act No. 124 of 1998);
·
South African Post Office SOC Ltd ( Act No. 22 of
2011); and
·
South African Postbank Limited Act (Act No 9 of
2010).
5.2.
Description of core functions of the Department
The Department is mandated
to perform the following issues:
·
To develop ICT policies and legislation that create
conditions for an accelerated and shared growth of the South African economy,
which positively impacts on the well-being of all our people and is
sustainable;
·
To ensure the development of robust, reliable,
secure and affordable ICT infrastructure that supports and enables the
provision of a multiplicity of applications and services to meet the needs of
the country and its people;
·
To contribute to the development of an inclusive
information society which is aimed at establishing South Africa as an advanced
information-based society in which information and ICT tools are key drivers of
economic and societal development;
·
To contribute to e-Skilling the nation for
equitable prosperity and global competitiveness;
·
To strengthen the Independent Communications
Authority of South Africa (ICASA), in order to enable it to regulate the sector
in the public interest and ensure growth and stability in the sector;
·
To enhance the capacity of, and exercise oversight
over, State Owned Companies (SOCs) as the delivery arms of Government; and
·
To fulfil South Africas continental and
international responsibilities in the ICT field.
In executing its role, the DoC is also guided, amongst others, by:
·
The Constitution of the Republic of South Africa,
1996 (Act 108 of 1996);
·
The Public Service Act, 1994 (Act 103 of 1994) as
amended; and
·
The Public Finance Management Act, 1999 (Act 1 of
1999) as amended.
5.3.
During the 2013/14 financial year, the Department
focused on the following strategic programmes
:
·
ICT
Policy Review
- which will lead to an adoption of a
White Paper on an Integrated ICT Policy Framework;
·
Finalisation
of Broadband Policy, Strategy and Implementation Plan
-
to facilitate the deployment of broadband backbone and access infrastructure
especially in rural and under-serviced areas;
·
Broadcasting
Digital Migration Policy
-
in this financial year, Department concentrated on three main
goals: reaching maximum signal coverage; getting digital decoders in the
market; and a comprehensive public awareness campaign);
·
Postbank
- Corporatisation of the Postbank Division of
SAPO as a legal entity, that
seeks to provide
banking and savings opportunities among the public; and
·
e-Skills
- prioritising the establishment of single
integrated entity for e-skills training.
5.4.
Purpose of the BRR Report
According to section
5 of the Money Bills Amendment Procedure and Related Matters Act, the National
Assembly, through its Committees, must annually asses the performance of the
each national Department. These should be considered by the Committee on
Appropriations when it is considering and reporting on the Medium Term Budget
Policy Statement (MTBPS) to the House and should be submitted to the Minister
of Finance and the relevant portfolio Minister. Therefore, the annual
assessment of the Department provides the starting of the procedure for the BRRR.
The Act also requires
Committees of the Assembly to annually submit the BRRR after the adoption of
the Appropriation Bill and prior to the adoption of the reports on the Medium
Term Budget Policy Statement (MTBPS). The BRRR and the reports on the MTBPS
serve as an indication whether amendments might be proposed to the fiscal
framework and the budget bills when these are introduced the following year. In
fact, when the Minister of Finance introduces the National Annual Budget, a
report to Parliament setting out how the Division of Revenue Bill and the
national budget give effect to, or the reasons for not taking into account, the
recommendations contained in the BRRR and the reports on the MTBPS.
The purpose of this
report is to provide an account of the PC on TPS work during the 2013/14
financial year and to highlight issues pertaining to the oversight and
legislative programme over Department and its portfolio organisation especially
weakness the entire financial and non-financial service delivery value
chain.
The focus will be to highlight
key achievements made as well as challenges encountered during the 2013/14
financial year, as reported in the 2013/14 Annual Reports and Annual
Performance Plans of Department and entities. The review seeks to establish
whether the DoC and its entities have achieved their aims and objectives, set
out in their Strategic Plans, as well as whether they continue to fulfil their
constitutional mandates.
5.5.
Methodology
The previous Committee
on Communications considered the Strategic Plan and Budget of the Department on
10-11 April 2013. The newly established PC on Telecommunications and Postal
Services after the 2014
national General
Elections considered both the 2013/14 Annual Reports and Annual Performance
Plans of Department and entities and audit outcomes on 21 October 2014.
The Committee met
with the DoC and the following entities: SENTECH, National Electronic Media
Institute of South Africa (NEMISA), State Information Technology Agency (SITA) and
.ZA Domain Name Authority (.ZADNA). Prior to this prologue of the meeting, the
Minister of Communications had written to the Speaker of the National Assembly
requesting an extension for the tabling of the South African Post Office (SAPO)
and Broadband Infraco Annual Reports. However, out
of
the two entities, Broadband Infraco still managed to table and present before
the Committee in line with the Public Finance Management Act.
In addition, the Committee
consulted various sources, in order to make objective and informed assessment
and recommendations on the Departments performance during the 2013/14
financial year. The source documents consulted are:
·
The 2013 State of the Nation
Address (SoNA);
·
The Department of
Communications Strategic and Annual Plans 2013/14;
·
The Department of Communication Annual Report
and Financial Statement for 2013/14;
·
The Strategic Plans and
Annual Performance Plans of the entities that fall under the Department of Communications,
as well as their Annual Reports and Financial Statement for 2013/14;
·
Quarterly reports of the
Department;
·
Auditor-General
of South Africa reports presented before the
Committee on the audit outcomes of the Department;
·
National Development Plan;
·
National Growth Plan;
·
National Treasury Section 32
Reports;
·
2012/13 BRR Report;
·
2013 Legacy Report:
Recommendations by the previous Committee on issues that require follow by the
new Committee on the DoC and entities;
·
Oversight/ Public Hearing
Reports on the Cost to Communicate; and
·
Committee meetings.
5.6.
Outline of the contents of the Report
The BRRR comprises broader government policy framework,
which is enshrined in the National Development Plan. The report reviews the key
programmes and targets undertaken by the Department to ensure that the
priorities of the given financial year are realised. Furthermore, the report
also makes reference to the previous financial years (2012/13) BRRR to
ascertain whether they have been acted upon.
It also looks at the recommendation by the Committee
during the 2014/15 Budget Vote process. The report then assesses the financial
and service delivery performance indicators to ascertain whether the budget
allocated to the Department was spent in line with the Public Finance
Management Act and Treasury Regulations prescripts as well as the achievement
of targets as had been envisioned in the Annual Performance Plan (APP).
Finally, it summarises the observations made by the
Committee after considering all necessary supporting documents, presentations
and oversight visits and or public hearing before making recommendations aimed
at improving service delivery.
6.
Overview
of the key relevant policy focus areas
6.1.
State
of the Nation Address (SoNA)
During 2013, in his
State of the Nation Address (SoNA) President Jacob Zuma highlighted the need
for intervention to develop the Second Economy as means of addressing a lack of
opportunities and under development in South Africa. Such pronouncement
included:
-
The call for government
to reduce the cost of communications; and
-
100 per cent Broadband
roll-out by the year 2020.
6.2.
Contribution
to the Outcomes approach (Outcomes 6)
and Five
Priorities of Government
In terms of the DoCs
contribution towards achieving the 5 Priorities of Government, which are
creating decent work, health, education, fighting corruption and combating
crime and rural development, during the 2013/14 financial year, it implemented
the following:
Education
:
The Department finalised the Broadband Strategy and Plan-
SA Connect
in December 2013. One of the focuses of the Broadband
Strategy is to connect schools and educational institutions. The Broadband
Strategy has specific targets related to the education system. During year
under review, Telkoms project connected 1650 schools.
SENTECH reported that
it had connected 14 schools across provinces for the period under review
Between 19-24 August
2013, the Deputy Minister of Communications and the Deputy Minister of Public
Enterprises led a delegation to China in which an MoU was signed between the South
African government and the government of the peoples Republic of China through
its Information Industry Ministry. The MoU focuses on communications policy and
regulatory framework including sharing experience in satellite as well as focus
on rural schools connectivity.
Job Creation
:
The South African government through the DoC signed an MoU with the Finnish
government and the focus of this is to enhance the delivery and implementation
of the provincial growth and development plan for poverty alleviation in
Limpopo and Northern Cape.
To this end,
the partnership resulted in Finland providing software applications to the
Eastern Cape and Limpopo provinces.
In addition, the DoC
signed another MoU with South Korean Ministry of Public Administration on the
establishment of the South Africa-Korea Information and Communication Centre in
South Africa. The government of Korea has offered training opportunities to the
government of South Africa.
Out of a planned
total target of 500 ICT SMMEs, the Department only managed to capacitate 129
ICT SMMEs to take up opportunities in the Broadcasting Value Chain.
In addition, the
Department created 865 jobs, 549 of these were youths.
Health:
The Broadband Strategy and Plan commonly
referred to as SA Connect targets hospitals, clinics and health institution.
Fighting Crime
:
Although the National Cyber Security Advisory
Council (NCAC) was appointed the Department failed to establish the Virtual
Cyber Security Hub as planned.
Rural Development
:
In its infrastructure deployment to expand access to ICT services throughout
the country, the Department facilitates universal access to ICT networks and
applications for schools, health and government centres.
During the year under review, the SABC
resolved not to expand its FM Low Power
project meaning that are still many people especially those in rural areas who
still have no access to terrestrial broadcasting services.
At the same time,
SENTECHs DTT network rollout population coverage increased to 82.1 per cent
after a construction of 46 signal transmission sites. As part of efforts
supporting rural development various existing community radio stations were
also provided with expanded geographic coverage and value-added services.
Other initiatives include Broadband upgrades and
construction initiated in two local municipalities in Kwazulu-Natal (uMsinga)
and the Eastern Cape (Emalahleni).
6.3.
National Policy Frameworks
It has taken less than two decades for the commercial Internet
and broadband to go from innovation to indispensable, from fun to fundamental.
About 2.5 billion people are connected to the Internet today, a third of the
worlds population; there are projected to be about 4 billion users by 2020, or
more than half the global population.
The year 2020 is
significant in South Africa because of the two pillars that drive policy
development for government (National Development Plan, 2013 State of the Nation
Address by President that pronounced 100 per cent connectivity in South Africa
by 2020
as well as the Departments own 2020 vision document.)
Therefore, c
ontinuous access to
information, commerce, communication, friends and entertainment among a myriad
of other things has become a daily fact of life for billions and will soon
become a reality for billions more. As the Internet and Broadband makes its
full weight felt in more high-impact areas such as healthcare, education and
government services, access to digital services will only become more essential
for everyone in the years to come.
6.3.1.
The
National Development Plan (NDP
)
Government
has a number of key policies and these include the long-term plan, the NDP,
which aims to eliminate poverty and reduce inequality by 2030. South Africa can
realise these goals by drawing on the energies of its people, growing an
inclusive economy, building capabilities, enhancing the capacity of the state,
and promoting leadership and partnerships throughout society. It
envisioned the creation of about 11 million additional
jobs by 2030. The NDP identifies the ICT sector as one of the main contributor
to job creation by reducing the cost to communicate as well as putting policies
and regulations.
6.3.2.
The New Growth Path (NGP)
The medium term policy plan, NGP, is the government's key programme to
take the country onto a higher growth trajectory. The New Growth Path focuses
on creating the conditions for faster growth and employment through government
investment, microeconomic reforms that lower the costs of business (cost of
communications for poor households and business), competitive and equitable
wage structures, and the effective unblocking of constraints to investment in
specific sectors.
Furthermore,
the telecommunications sector has committed to create over 1 million jobs in
the sector by 2020 through the DoCs own vision 2020 programme.
The NGP,
the
Industrial Policy Action Plan (IPAP) and the NDP
are complementary policies in the
effort to lower costs in the economy, as high costs contribute towards limiting
employment growth and increase hardship for poor households.
6.3.3.
Medium
Term Expenditure Framework
The BRR Report also includes the assessment of
performance and is guided by the Medium Term Expenditure Framework (2009-2014).
6.3.4.
National
Broadband
[3]
Policy
South Africa Connect
, the national broadband policy and the associated
strategy and plan, gives expression to South Africas vision in the National
Development Plan (NDP) of a seamless information infrastructure by 2030 that
will underpin a dynamic and connected vibrant information society and a
knowledge economy that is more inclusive, equitable and prosperous.
In this regard, the Department contributes to the development of an efficient,
competitive, and responsive economic infrastructure network (outcome 6) by
developing ICT policies and legislation as well as overseeing the operation of
public entities within the sector.
7.
Structure
of Programmes in 2013/14 and 2014/15 (if there
ARE
any changes after the elections
)
During
the 2013/14 financial year, the Department had five programmes; Programme 1:
Administration; Programme 2: International Affairs; Programme 3: Policy,
Research and Capacity Development; and Programme 4: Broadcasting and
Communications Regulations and Support; as well as Programme 5: ICT
Infrastructure Support.
The Programmes were
supported by the Regulator and six entities SENTECH, National Electronic Media
Institute of South Africa,(NEMISA) Universal Access Agency of South Africa (USAASA),
South African Broadcasting Corporation (SABC), Independent Communications
Authority of South Africa (ICASA); South African Post Office (SAPO) and ZA
Domain Name Authority (Zadna).
However, the aforementioned administrative powers and functions of
the Departments and
entities would not remain as is in the
fifth Parliament.
On 07 May 2014, upon
his re-election into Office, President Jacob Zuma pronounced that the Ministry
of Communications will now be divided into two ministries, namely:
-
Ministry
of Communications headed by Minister Faith Muthambi; and
-
Ministry
of Telecommunications and Postal Services headed by Minister Dr Siyabonga
Cwele.
The
appointment of the Executive by the President on the 26 of May 2014 (Presidents
Act No. 135 and No. 136) various administrative and legal steps were taken to
give effect to the new Executive portfolios. The National Macro Organisation of
the State (NMOS) Steering Committee was established comprising the Director
General: Presidency as the Chairperson, Directors General of all affected Departments;
the Department of Public Service and Administration, National Treasury,
Government Communication Information System and Department of Public works.
The
MNOS process is limited to giving effect to the Presidential proclamations
regarding the establishment of a new or amended Executive portfolio, the
remaining and establishment of new departments, and the transfer of the
legislation between Ministers in terms of the Constitution.
In this regard the following has happened;
-
The
President issued Proclamation No. 43 of 8 July 2014 to amend Schedule 1 of
the Public Service Act to establish new and renamed Departments;
-
A
second
Proclamation was issued
Proclamation No. 47 of 15 July 2014 to
transfer
the administration of
legislation and entities from one Minister to Another in terms of section
97 of the Constitution;
-
Proclamation
No. 27 of 26 September 2014) was gazetted to transfer powers and functions
entrusted to the Minister of Public Enterprises by the Broadband Infraco
Act, 2007 to the Minister Telecommunications and Postal Services;
-
The MNOS process was to be concluded by
October 2014; and
-
Practically
the GCIS became a new Department of Communications with its Vote and the
current Department of Communications became the Department of
Telecommunications and Postal Services.
In
terms of transfer of functions and entities to new Department the following is
worth noting:
-
Government
Communications and Information System functions;
-
ICASA
moves from old Department of Communications to New Department of
Communications;
-
SABC
moves from old Department of Communications to new Department of
Communications;
-
Broadband
Infraco moves from Department of Public Enterprises to new Department of
Telecommunications and Postal Services;
-
State
Information Technology Agency (SITA) moves from Department of
Public
Service and Administration to new Department of Telecommunications
and Postal Services;
-
USAASA
moves from old Department of Communications to new Department of
Telecommunications and Postal Services;
-
NEMISA
moves from old Department of Communications to new Department of
Telecommunications and Postal Services;
-
Universal
Service Fund moves from old Department of Communications to new Department
of Telecommunications and Postal Services;
-
SENTECH
moves from old Department of Communications to new Department of
Telecommunications and Postal Services; and
-
South
African Post Office Limited moves from old Department of Communications
to new Department of Telecommunications and Postal Services.
8.
Evaluation
of Response by the Department and Minister of Finance
In tabling the MTBPS in 2013, the Minister of Finance
raised the following generic issues and agreed with recommendations made by all
Committees BRR Reports:
·
Accelerated
recruitment
: Departments must speed up the process
of filling vacant positions, especially the recruitment of high-level staff;
·
Realistic
targets
: Departments need to establish feasible
targets in their annual performance plans that are aligned to their core objectives
and budgets;
·
Auditor-General
Recommendations
: Departments should work more closely
with the Auditor-General and abide by its recommendations;
·
Performance
agreements
: All Departments should have staff
performance agreements in place;
·
Strengthen
information and communication technology:
Departments need to strengthen their information and communication technology
to improve the quality of data on spending and performance;
·
Disabled
workers
: Departments must remain committed to
employing people with disabilities;
·
Monitoring
and evaluation
: Departments must establish mechanism
for monitoring and evaluating their programmes, with measurable objectives and
clear timeframes;
·
Better
supply chain-
Departments should focus on proper
supply chain management to combat corruption;
·
Abide
by previous BRR Reports:
Departments should abide by
the BRR Report recommendation; and
·
Stronger
internal audit and financial controls
: Internal
Audit capacity and risk-management systems should be strengthened in a number
of departments to ensure compliance with relevant legislation. Financial
controls are needed to reduce irregular or fraudulent spending.
9.
2014/15 Committee Budget
Report
On 11 July 2014, the
Committee considered the Strategic Plan of the DoC and its public entities for
the 2014/15 financial year, and it was satisfied with the Strategic Plans 2014
2019 and Annual Performance Plans for 2014 2015 of the Department, USAASA,.ZA
Domain Name Authority; SAPO, SENTECH, ICASA and INeSI. The Committee, however,
recommended that the Minister:
(i)
ensure DoC and all its
entities fill all funded vacant positions especially those at Senior Management
Service (SMS) level;
(ii)
ensure the finalisation of
new policy directive on Transparency Pricing Policy to an effort to deal with
the cost of communications;
(iii)
ensure the finalisation of
new policy directive National Spectrum Policy that will support the digital
dividend;
(iv)
ensure that sub-programmes,
Research, Market and Economic Analysis are allocated sufficient resources;
(v)
submit a detailed report
with timelines on how to address negative audit findings by the Auditor-General
of South Africa (AGSA) in the past financial years, as well as in both the
Budgetary Review and Recommendation Reports (BRRRs) and the fourth Parliaments
Legacy Report;
(vi)
should ensure that the
mandate and funding of SABC, funding model and budget of SAPO and funding of
ICASA are reviewed;
(vii)
should ensure that all
entities include timeframes against their targets;
(viii)
ensure that the Department
and its entities have existing Disaster Recovery Plans;
(ix)
ensure that USAASA mandate is
reviewed to be in line with the modern broadband and data services; and
(x)
ensure that INeSI develops
new marketing strategy to ensure that more people are aware of the e-skills
initiative.
10.
Overview and
assessment of financial performance
Budget
Allocation of the Department of Communications
The Department programmes comprised
the following:
Programme
1
-
Administration
;
Programme
2
-
International
Affairs
;
Programme 3
-
Policy, Research and Capacity Development
;
Programme
4
-
Broadcasting
and Communications Regulations
; and
Programme 5
-
ICT Infrastructure Support
10.1.
Entities of the DoC reporting to the Committee
The Department has six (6) State-Owned Companies
(SOCs) and the regulator that report to it under Programme 6 whose aim is to provide
strategic leadership to international agreements and monitor the implementation
of South Africas ICT foreign policy as well prioritising Africas development
through the:
·
Positioning
of South Africas ICT sector as an economic hub;
·
Fulfilment
of South Africas ICT responsibilities within Multilateral Institutions of
governance (Geneva focal points: ITU, UPU, OECD);
·
Fulfilment
of South Africas ICT responsibilities towards the socio-economic development
on the African continent; and
·
Fulfilment
of South Africas International ICT responsibilities within Bilateral
Institutions of governance.
Name of Entity
|
Mandate of Entity
|
Independent Communications Authority
of South Africa (ICASA)
|
To license and regulate electronic
communications and broadcasting services and the postal sector.
|
South African Broadcasting
Corporation (SABC)
|
To supply broadcasting and
information services and services that are ancillary thereto, to the general
public in the Republic of South Africa and beyond its borders and to achieve
the objectives as set out in the Broadcasting Act 4 of 1999.
|
Sentech
|
To provide the Electronic
Communications and Electronic Communications Network Services as stipulated
in the Electronic Communications Act No 36 of 2005.
|
Ikamva National e-Skills Institute
(iNeSI)-launched in February 2014
|
A merger between the former National
Electronic Media Institute of South Africa (NEMISA), Institute for Satellite
and Software Applications (ISSA) and the e-Skills Institute. All were
entities of the Department which were merged in order to
address
existing overlaps and avoid duplication and undue competition within the
Department.
iNeSI
is a national collaborator and facilitator to develop e-skills within the
country for equitable prosperity and global competitiveness. A
multi-stakeholder collaborative network ensures impact.
|
Universal Service and Access Agency
of South Africa (USAASA)
|
USAASA is established in terms of an
Act of Parliament. The existence, functions, duties and mandate of the
Agency are governed by sections 80 91 of the Electronic Communications Act
No 36 of 2005 (the EC Act) which came into operation on 19 July 2006.
ASAASA promote the goal of universal service access and construct
infrastructure in under-serviced areas.
|
.za Domain Name Authority
|
The za Domain Name Authority (za.DNA) was
established to assume responsibility for the za Domain Name Space. The
entity was established in terms of Chapter 10 of the Electronic
Communications and Transaction Act(ECTA), 2002
|
South African Post Office (SAPO)
|
To provide affordable and accessible
postal and financial services to South Africans.
|
10.1.1.
Telkom
In addition to the
State-Owned Companies mentioned above
,
Telkom historically evolved as part of the then
Department of Posts and Telecommunications that existed prior to the demise of
Apartheid. It is now a
listed company on the Johannesburg Stock Exchange
(JSE). Government is a majority shareholder. As at 31 March 2011, the
shareholding structure at Telkom was
:
·
Government
39.8
per cent
;
·
Public
Investment Corporation 10.9
per cent
;
·
Telkom
Treasury 2.0
per cent
; and
·
Free
Float 47.3
per cent
.
10.2.
departments
Financial performance 2013/14
10.2.1.
Programme 1: Governance and Administration R216.4 million
The
purpose of this programme is to provide strategic support to the Ministry and
overall management of the Department
. In the 2013/14
financial year, programme was allocated R216.1 million compared to R196.0
million which was an allocated for the previous financial year. In nominal rand
changes, this allocation has increased by R19.1 million or 9.70 per cent,
however, in real rand change which takes into account the projected inflation,
the amount rather indicates an increase of R7.6 million or 3.88 per cent. This
programmes amount also constitutes about 14 per cent of the overall
allocation.
10.2.2.
Programme 2: International Affairs R36.6 million
The
purpose of this programme is to ensure alignment between South Africas
international activities and agreements in the ICT sector and the countrys
foreign policy.
It has since
become a norm for this programme, as evident from the previous three financial
years
(2011/12 ; 2012/13) and the current financial year(2013/14), to be allocated
the least amount, which constitutes an average of 2 per cent of the total
budget. In the current financial year programme 2 was allocated R 36.6 million
compared to the previous years adjusted allocation of R 47.8 million.
Programme 2 budget has declined from R47.8 million in 2012/13 to 36.6 million
in 2013/14 financial. This shows a nominal change in programme 2 of about R-11
million.
10.2.3.
Programme 3: Policy, Research and Capacity Development R88.9
million
The programme
develops legislation that supports the development of an ICT sector that
creates favourable conditions for accelerated and shared growth of the economy.
It also develops strategies that increase the uptake and use of ICTs by the
majority of the South African population in order to bridge digital divide.
The Policy, Research
and Capacity Development programme receives about 4.15 per cent of the total
budget. This programme was allocated R88.9 million compared to the previous
financial year allocation of R112.9 million. Over the last two financial years
this programmes allocation has steadily declined from R107.9 million in
2011/12; R122.9 million in 2012/13 to R88.9 million in 2013/14
.
The
purpose of this programme is to oversee and manage governments shareholding
interests in the ICT public entities. This programme also facilitates growth
and development of Small Micro Medium Enterprises (SMMEs).
In
the last financial year, the programme was allocated the most funds which
constituted 45 per cent of the total Communications budget. During the 2013/14
financial year it was allocated R1.2 billion compared to the 2014/15 allocation
of R719.2 million.
The
programme was allocated most funds which constituted 66 per cent of the total Departmental
budget. During the 2013/14 financial year, this programme received
R1 075.0 billion compared to R1 070.6 billion allocated in
2012/13 financial year. Of the allocation for 2013/14 financial year,
R1 062.7 billion was transferred to entities through sub-programme: Public
Entity Oversight.
10.2.5.
Programme 5: ICT
Infrastructure Support R580. 0 million
The purpose of this
programme is to promote investment in robust secure reliable ICT infrastructure
that supports the provision of a multiplicity of applications and services
.
This programme has
received the second largest allocation of R580.9 million of the Departments
total budgets previous allocation of R227.5 million. However, the amount
reflected in the DoCs Annual Report 2013/14 is R959.3 million, which suggests
that there was a major shift of funds or virements during the 2013/14 financial
year which affected this programme.
10.3.
FINANCIAL ALLOCATION TO
Entities of the Department of Communications
The following shows
the transfer of funds to entities and agencies reporting to the Minister of
Communications and the ICT regulatory authority.
10.3.1.
South African Post Office
R0-00
[4]
SAPO
is a schedule 2 public entity in terms of the PFMA. It is a government business
enterprise established to provide postal and related services to the public,
and derives its mandate from the South African Post Office SOC LTD Act (Act 22
of 2011) and the South African Postbank Limited Act (No 9 of 2010). The Postal
Services Act (Act 124 of 1998) grants SAPO the exclusive mandate to conduct
postal services. This Act further makes provision for the regulation of postal
services and the operational functions of the postal company, including
Postbanks universal service obligations and associated financial services.
SAPOs
strategic goals over the medium term are to:
·
maintain good corporate
governance principles;
·
remain customer centric by
providing quality services;
·
invest in employees by
building capacity and implementing transformation programmes;
·
attain financial
sustainability while delivering on governments social mandate;
·
provide affordable postal
and related services that meet the needs of customers;
·
remain environmentally
conscious by promoting green practices;
·
provide a secure, efficient
and integrated infrastructure for better responses to its stakeholders; and
·
continue the corporatisation
of Postbank and the upgrading of its banking system.
In
addition, the key focus areas will be on: property evaluation, balance sheet
structure, funding solutions, capital adequacy, implementation of turnaround
plan, and Postbank Corporatisation.
10.3.2.
Sentech
R535 304 million
Sentech
Limited is an SOE established in terms of the Sentech Act (Act 63 of 1996) and
is listed as a schedule 3B public entity in terms of the PFMA. Its mandate is
to provide broadcasting signal distribution for broadcasting licensees, with a
particular focus on accelerating the implementation of government ICT
interventions within the framework of the NDP and the strategic integrated
project for expanding access to communication technology.
Sentechs
strategic goals over the medium term are to:
-
align
its strategic roadmap with shareholder programmes to enable the
development of open access government participation in the communications
industry through infrastructure based investment;
-
continue
working to support and realise governments ICT vision and goals,
including innovation in broadcasting and media services and content
management distribution;
-
create
solutions that enhance the customer experience and are in line with
governments mandate of providing all citizens with access to
communication services; and
-
repackage
social responsibility interventions and create community social investment
ICT programmes that improve lives, create value and are sustainable.
10.3.3.
Universal Service and Access
Agency of South Africa R60 090 million and USAF R285 046 million
USAASA was
established in terms of section 80 of the Electronic Communications Act (ECA)
(2005) as a statutory body and is listed as a schedule 3A public entity in
terms of the PFMA (1999). Its sole mandate is to promote universal service and
access to electronic communication services, electronic communications network
services and broadcasting services.
In order to contribute
to the achievement of government priorities and outcomes; USAASA is to pursue
the following strategic goals over the medium term:
-
facilitate the rollout
of broadband infrastructure in the 250 identified underserviced areas;
-
ensure that all identified
needy households are subsidised in the switch to digital broadcasting;
-
ensure the effective
and efficient administration of the USAF;
-
enhance the strategic
and operational capacity of the agency and maintain good corporate
governance;
-
facilitate connectivity
in primary health care facilities and government institutions; and
-
facilitate connectivity
in all schools, including schools for people with disabilities.
10.3.4.
NEMISA/ Ikamva National e-Skills
Institute (INeSI) R 50 746
million
The
Broadcasting School of South Africa was established in 1988 as section 21
Company in terms of the Companies Act to deliver requisite skills for the
broadcasting industry (radio and Television. In 2001, the school was renamed
National Electronic Media Institute of South Africa (NEMISA) and was
re-launched in 2006 to include qualifications in animation and graphic design. The
entity was established as a non-profit institute in terms of the Companies Act
(1973) and is listed as a schedule 3A public entity in terms of PFMA (1999).
Formed
as part of governments initiative in 1998 in response to the White Paper on
Broadcasting Policy, the institutes main purpose is to train previously
disadvantaged individuals, particularly women, to equip them with the necessary
skills to play significant roles in the constantly changing broadcasting
environment.
In contribution to
this broader mandate of DoC, NEMISA provides much needed skills training at an
advanced level for the broadcasting industry. It is accredited by the Council
for Higher Education and offers diploma courses, short courses and internships
in three subjects: TV production, radio production and creative multimedia.
In the 2013/14 financial year, the Department
merged NEMISA with e-Skills and ISSA into a single entity called Ikamva
National e-Skills Institute (iNeSI). The following are the strategic objectives
of NEMISA:
·
Transforming NEMISA into a
technology, research, training and development Centre of Excellence on ICT
;
·
Ensuring financial viability
and institutional sustainability;
·
Having a secure, efficient
and effective organisation with key outcome; high performance organisation;
·
Improving and aligning
stakeholder and strategic partnerships both internally and externally; and
·
Expanding the accessibility
and reach of NEMISAs product offerings with
key outcomes;
a recognised training institution of choice from all
over South Africa.
10.3.5.
SABC (R127 055 million
and R44 673 million and ICASA - R390 661 million
During the 2013/14 financial year, both ICASA and SABC
were transferred to GCIS. As a result, the Portfolio Committee on
Communications established after the 2014 general election will reflect on the Annual
Reports and Financial Statements of the entity and the regulator for 2013/14 in
its BRR Report.
10.3.6.
za
Domain Name Authority R1.6 million
The za
Domain Name Authority (za.DNA) was established to assume responsibility for the
za Domain Name Space. The entity was established in terms of Chapter 10 of the
Electronic Communications and Transaction Act (ECTA) 2002.
za
Domain name was allocated a budget of R1.6 million for the period under review.
The transfer payment did not flow due to the entity being self-sustainable.
11.
New Entities that joined the
Department as a result of the Presidential Proclamation
11.1.
State
Information Technology Agency - No allocation from Programme 4 of Vote 11: Department
of Public Service and Administration.
[5]
The government of the Republic of South
Africa is the sole shareholder of the State Information Technology Agency SOC
Limited (SITA) and the shareholder representative is the Minister. A
shareholder performance compact is concluded annually between SITA and its
shareholder that details the agreed key performance objectives and indicators
for the organisation.
SITA was established in 1999 to consolidate
and coordinate the South African Governments information technology resources
to achieve cost savings through economies of scale, increased delivery
capabilities and to enhance the interoperability system.
SITA is committed to leveraging Information
Technology (IT) as a strategic resource for government, managing the IT
procurement and delivery process to ensure that government receives value for
money, and using IT to support the delivery of e-government services to all
SITA is governed by the founding State
Information Technology Agency Act (Act 88 of 1998), as amended by the SITA Act of
2002 (Act 38 of 2002). Section 6 of the Act states the following as the
objectives of the agency:
·
To improve service delivery
through the provision of information technology, information systems and
related services in a maintained information system security environment to
government departments and public bodies; and
·
To promote the efficiency of
government departments and public entities through the use of information
technology.In addition, the Act separates SITAs services into mandatory
services (services that SITA must provide) and non-mandatory services (services
that SITA may provide).
The agencys
strategic goals over the medium terms are to:
-
Significantly
improve service delivery to its client;
-
Prioritise
citizen-focused projects;
-
Attain
best practice in people management and leadership;
-
Overhaul
internal and external communications to improve transparency, visibility
and image; and
-
Build
an appropriate organisational structure and team to achieve its strategic
objectives.
11.2.
Broadband
Infraco
R0 00 (No Allocation from Vote
12: Department of Public Enterprises)
Broadband Infraco SOC
Limited (Infraco) is a state-owned company (SOC) in the telecommunications sector
intended to improve market efficiency in the long-distance connectivity segment
by increasing available long-distance network infrastructure and capacity to
stimulate private sector development and innovation in telecommunications
services and content offerings, as well as to provide long-distance national
and international connectivity to previously under-serviced areas.
Broadband Infraco is majority owned by
government with 74 per cent while the Industrial Development Corporation owns
the remaining 26 per cent.
Broadband Infraco was
created as a State Owned Company (SOC) in 2007 to provide Information
Communication Technology (ICT) infrastructure and broadband capacity. In
October 2009, the company obtained an Individual Electronic Communications Network
Services (I-ECNS) licence, and launched commercially in November 2010 in order
to broaden its customer base to other licenced operators.
By March 2013,
Broadband Infraco had deployed and commissioned 13 125 kilometres of
network. In 2006/07, a capital transfer of R1.3 billion was made to Broadband
Infraco for its establishment and operational costs. This was made up of R627
million in 2006/07, R377 million in 2008/09, R208.5 million in 2009/10,
and a final transfer of R138.6 million in 2010/11. There have been no further
transfers to the company since 2010/11 and the company has been able to
generate cash to complement shareholder funding. The company is also to play a
significant role in terms of broadband infrastructure roll out and the
objective of achieving universal broadband access by 2020. This will require
the company to have access to additional resources to contribute to this goal.
Expenditure Trend of the
Department
The spending focus over the
medium term will be on the digital terrestrial television awareness campaign,
expediting the rollout of infrastructure for digital television by providing a
subsidy scheme for Set-Top-Boxes, and accelerating access to ICT by
coordinating the participation of the government in specialised ICT agencies. As
a result, the former Presidential National Commission programme was merged into
the Policy, Research and Capacity Development programme and the ICT
Infrastructure Support programme was restructured, leaving only broadband and
digital terrestrial television related activities including capital transfer to
SENTECH in the programme.
12.
3
rd
Quarterly
spending trend of THE DEPARTMENT (2009/10 - 2013/14)
Table
1 on: Expenditure Trends for 2011/12 - 2013/14 Third and Fourth Quarter
Expenditure
Department
Name
|
2011/12
|
2012/13
|
2013/14
|
|||
|
3rd
|
4
th
|
3rd
|
4th
|
3rd
|
4th
|
Communications
|
45.15%
|
66.78%
|
65%
|
99.8%
|
83.2%
|
99.8%
|
Source: National Treasury (2010/11-2012/13)
Graph 2 below shows: Expenditure Trends for
2009/10-2013/14 Third Quarter Expenditure
13.
Department of
cOMMUNICATIONS Adjustments for 2013/14.
Though section 43 of
the Public Finance Management Act (No 1. of 1999) makes provision for virements
and the shifting of funds from one programme to another, as well as the
movement of funds within a programme, there are certain requirements that need
to be met by an Accounting Officer. These conditions are as follows:
Section 43(2) of the
Public Finance Management Act provides that the amount of a saving under a
main division of a vote that may be utilised in terms of (1) may not exceed 8
per cent of the amount appropriated under that main division. Moreover section
43(4) states that this section does not authorise the utilisation of a saving
if: (i) an amount is specifically and exclusively appropriated for a purpose
mentioned under a main division within a vote; (ii) an amount appropriated for
transfers to another institutions; and (iii) an amount appropriated for capital
expenditure to defray current expenditure.
During the year under
review, virements were effected from all programmes on most of the items to
defray/augment excess expenditure. This is mainly due to some savings being realised
from different items in different programmes. Virement was done in accordance
with section 43(1), (2) and (4) of the Public Financial Management Act (PFMA)
and was effected as follows:
Virement per
programme
|
|
|
|
|
|
|
|
Description
|
Budget
|
Expenditure
|
Variance
|
Shifting
|
Virement
|
Available
budget
|
Balance
|
|
R`000
|
R`000
|
R`000
|
R`000
|
R`000
|
R`000
|
R`000
|
DCM: Administration
|
|
|
|
|
|
|
|
Compensation of employees
|
78,114
|
70,233
|
7,881
|
(2,226)
|
(5,655)
|
70,233
|
-
|
Goods and services
|
136,581
|
137,918
|
(1,341)
|
1,238
|
-
|
137,815
|
(103)
|
Interest and rent on Land
|
-
|
6
|
(6)
|
6
|
-
|
6
|
-
|
Payment of financial
assets
|
-
|
555
|
(555)
|
555
|
-
|
555
|
-
|
Provincial and Local
Government
|
-
|
9
|
(9)
|
9
|
-
|
9
|
-
|
Departmental Agencies and
Accounts
|
249
|
4
|
245
|
4
|
-
|
253
|
249
|
Public Corporations and
Private Enterprises
|
-
|
46
|
(46)
|
47
|
-
|
47
|
1
|
Non Profit Institutions
|
-
|
300
|
(300)
|
300
|
-
|
300
|
-
|
Households
|
-
|
71
|
(71)
|
71
|
-
|
71
|
-
|
Machinery and Equipment
|
1,122
|
1,230
|
(108)
|
-
|
1,601
|
2,723
|
1,493
|
Software and Intangible
assets
|
-
|
72
|
(72)
|
-
|
72
|
72
|
-
|
TOTAL
|
216,066
|
210,444
|
5,622
|
-
|
(3,982)
|
212,084
|
1,640
|
DCM: International Affairs
and Trade
|
|
|
|
|
|
|
|
Compensation of employees
|
11,944
|
12,469
|
(525)
|
-
|
525
|
12,469
|
-
|
Goods and services
|
4,629
|
7,688
|
(3,059)
|
-
|
3,048
|
7,677
|
(11)
|
Foreign Gov &
International organ
|
16,161
|
20,902
|
(4,741)
|
-
|
-
|
16,161
|
-
|
Machinery and equipment
|
537
|
346
|
191
|
-
|
(180)
|
357
|
11
|
TOTAL
|
33,271
|
41,405
|
(8,134)
|
-
|
3,393
|
36,664
|
-
|
DCM: Policy Development
|
|
|
|
|
|
|
|
Compensation of employees
|
59,617
|
53,388
|
6,229
|
(6,229)
|
-
|
53,388
|
-
|
Goods and services
|
28,269
|
33,833
|
(5,564)
|
5,238
|
-
|
33,507
|
(326)
|
Non-profit Institutions
|
-
|
99
|
(99)
|
99
|
-
|
99
|
-
|
Households
|
-
|
892
|
(892)
|
892
|
-
|
892
|
-
|
Machinery and equipment
|
1,512
|
582
|
930
|
-
|
(433)
|
1,079
|
497
|
TOTAL
|
89,398
|
88,794
|
604
|
-
|
(433)
|
88,965
|
171
|
DCM: ICT Enterprise
development
|
|
|
|
|
|
|
|
Compensation of employees
|
11,723
|
8,431
|
3,292
|
(252)
|
(3,040)
|
8,431
|
-
|
Goods and services
|
10,198
|
11,134
|
(936)
|
250
|
686
|
11,134
|
-
|
Departmental agencies
& accounts
|
788,126
|
786,543
|
1,583
|
-
|
-
|
788,126
|
1,583
|
Public Corporations &
Private
|
267,120
|
256,570
|
10,550
|
-
|
-
|
267,120
|
10,550
|
Households
|
-
|
2
|
(2)
|
2
|
-
|
2
|
-
|
Machinery and Equipment
|
1,131
|
69
|
1,062
|
-
|
(935)
|
196
|
127
|
TOTAL
|
1,078,298
|
1,062,749
|
15,549
|
-
|
(3,289)
|
1,075,009
|
12,260
|
DCM: Infrastructure
develop
|
|
|
|
|
|
|
|
Compensation of employees
|
33,597
|
25
,
162
|
8,435
|
(8,435)
|
-
|
25,162
|
-
|
Goods and services
|
385,323
|
398,469
|
(13,146)
|
8,402
|
4,436
|
398,161
|
(308)
|
Public corporations and
priv ent
|
535,304
|
535,304
|
-
|
-
|
-
|
535,304
|
-
|
Households
|
-
|
33
|
(33)
|
33
|
-
|
33
|
-
|
Machinery and equipment
|
860
|
427
|
433
|
-
|
(125)
|
735
|
308
|
TOTAL
|
955,084
|
959,395
|
(4,311)
|
-
|
4,311
|
959,395
|
-
|
|
|
|
|
|
|
|
|
13.1.
ROLL OVERS
A request was made to
National Treasury in terms of applicable guidelines to roll over unspent funds
on machinery and equipment. A roll-over request of R1,4 million was submitted
mainly to finalise the implementation of Microsoft software licences by the
Information Technology (IT) section and to pay for assets acquisitions that
were not yet delivered.
14.
Summary of key
issues contained in report(s) of Finance/ Appropriation Committees
14.1.1.
Standing
Committee on Appropriations
The Department did not
appear before the Standing Committee on Public Accounts (SCOPA) 2013/14 financial
year.
14.1.2.
Financial
and Fiscal Commission Recommendations to the Department
In September 2004,
the Department of Basic Education was the first government department to
publish a
White Paper on e-Education which sought
to ensure that
every
South African learner in the general and further education and training band
will be ICT capable (that is, use ICTs confidently and creatively to help
develop the skills and knowledge they need to achieve personal goals and to be
full participants in the global community) by 2013.
This policy goal
is supported by the Information Society and Development (ISAD) Plan of the
Department of Communications 2006, which gives e-education as one of three
priorities. Paragraph 4.1.1. of its Strategic Plan of the Department states:
The education
systems of this country, therefore, have an obligation to support the
development of a citizenry that can actively participate in this new
(information) society and deliver on public expectations of delivering quality
education for economic growth and social development . Two of the main targets
for e-education are:
-
All schools connected and using ICT for
teaching and learning; and
-
All provinces have budget allocation for e-education.
According to the Financial
and Fiscal Commission (FCC), there are 24 861 public schools in South
Africa with almost 12.1 million learners. Most of these learners and schools
have not yet benefited from the White Paper on School Connectivity. Based on
this and in light of the 10-year anniversary of the White Paper on e-education
which stipulated that all schools should be connected in 2013. The FCC put
different financing and non-financial proposals to all stakeholders.
14.1.3.
FCC
recommends the following
:
·
South African government
needs to find long-term, sustainable ways of financing e-learning in public
ordinary schools;
·
The assumptions of the e-education
model (physical buildings, desktop and laptop computers) can be amended towards
a much less costly infrastructure approach and a stronger e-education approach (tablet-type
devices and content);
·
Requirement for explicit
budget allocations for e-education at national and provincial levels;
·
Supporting strategies and
funding from institutions such as the DoC, ICASA, telecoms operators; and
·
Building public
accountability for policy implementation into the education ecosystem.
14.2.
2015/16 MTEF financial allocations of the department
The graph
below shows the summary of funding submissions to National Treasury for the 2015/16
MTEF:
15.
Overview and
assessment of service delivery performance
Overview
of the Vote allocation and spending
FINANCIAL YEAr
|
2012/13
|
2012/13
|
2013/14
|
2013/14
|
2013/14
|
201/14
|
Name of Programme
|
Final
Appropriation
|
Actual Expnditure
|
(Over)/Under
Expenditure
|
Final
Appropriation
|
Actual Expenditure
|
(Over)/Under
Expenditure
|
|
R'000
|
R'000
|
R'000
|
R'000
|
R'000
|
R'000
|
Administration
|
196 011
|
195 959
|
52
|
213 083
|
210 443
|
1 640
|
International Affairs
|
47 866
|
44 190
|
3 676
|
36 664
|
41 405
|
(-4741)
|
Policy, Research and Capacity
Development
|
112 966
|
113 262
|
(-296)
|
88 965
|
88 794
|
171
|
Policy, Research and Capacity
Development Support
|
1 070 604
|
1 070 223
|
381
|
1 075 010
|
1 062 749
|
12 261
|
ICT Infrastructure Support
|
227 577
|
227 577
|
0
|
959 395
|
959 395
|
0
|
Total
|
1 655 024
|
1 651 211
|
3 813
|
2 372 117
|
2 362 786
|
9 331
|
15.1.
Financial
PerfoRmance of THE DEPARTMENT FOR
2012/13
In the past, the Department
of Communications emerged as the worst spending Department with the lowest expenditure
recorded of only
66.8 per cent (i.e.
R1.4 billion against an available budget of R 2.1 billion) spent in the 2010/11
financial year.
It has since improved on
this.
The spending for the 2012/13 financial year amounted to
R1.651 billion which equates to 99.8 per cent, however, there was an
under-spending of R3.8 million.
The
under-spending is mainly on transfer payments to the New Partnership for
Africas Development (NEPAD) e-Africa Commission. The huge spending is mainly
under programme 4, which constitutes 73 per cent of the budget on transfer
payments to entities.
Programmes 1, 2
and 3 were the culprits in contributing to the under-expenditure. At the same
time, Programme 4 (Broadcasting and Communications Regulations and Support)
overspent its budget by R296 000. Programme 5 is the best performing
programme in terms of financial expenditure, having spent 100 per cent of all
its allocation for the year.
However,
while 2012/13 marked a year with highest expenditure for a financial year to
date for the DoC, none of its programmes achieved 100 per cent of its planned
targets.
Overall, the DoC achieved a total of 21 targets or 54 per
cent of out of the total of 39 planned targets. In addition, some of the
reported achieved targets, though few, were achieved in either late April or in
May which can be assumed to have not been achieved at all, as the projects
implemented dates fall outside of the financial year which starts in 1 April
and ends on 31 March each financial year.
15.2.
Financial
PerfoRmance of THE DEPARTMENT FOR
2013/14
During the 2013/14
financial year, DoC received a total budget allocation of R2 billion which
excludes the adjustment appropriation. During the adjustment period, the Department
received R328.2 million). The final allocation amounts to R2.3 billion, which
represents a nominal increase of R717.1 million or 43 per cent from the 2012/13
financial year.
The actual
expenditure amounted to R2 .3 billion, representing 99.6 per cent of the
allocation spent by the Department, however, in the process the Department has
recorded an under-expenditure of R 9.3 million or 0.2 per cent compared to the
previous years R3.8 million under-expenditure.
This shows that in terms of under-expenditure
of the allocation, the Department has regressed by over R5 million.
The under-expenditure relates to Programmes 1,
3 and 4. It should be noted that Programmes 2: International Affairs overspent
its allocation by R4.7 million. The good thing is that Programme 5:
Infrastructure Support continues to spend all its allocation, including the
previous financial year.
However, as was
the case in the previous financial year, not a single programme achieved all
set targets.
Overall, the DoC achieved a total of 17 targets or 51 per
cent of the 28 planned targets. These included partially achieved targets.
16.
SUMMARY OF THE 2014/15 FIRST
QUARTER BUDGET AND EXPENDITURE OF THE DEPARTMENT
Graph below shows the 2013/14 vs 2014/15
16.1.
Overview
of the Departments spending patterns
The Department of Communications has an available
appropriation of R1.6 billion for 2014/15 which represents a nominal decrease
of R799.4 million or 42 per cent from the 2013/14 financial year. Transfer and
subsidies account for R1.1 billion and the department has so far transferred
R345.2 million, or 31.8 per cent mainly to departmental agencies and accounts.
This means that the Department has an available budget of R508.9 million for
operations. Of this, the Department has spent R99.8 million or 19.6 per cent,
the majority of which has been used on goods and services and compensation of
employees. Whilst the first quarter expenditure for the current year is almost
2 per cent better than the 17.3 per cent spent in the previous financial year, departments
are, however, required to spend 25 per cent of this allocation per
quarter.
16.1.1.
Operational Expenditure per programme 2014/15
The largest element of operational expenditure to the end
of quarter 1 in 2014/15 was R 55.7 million under the Administration mainly on
goods and services and compensation of employees. The next largest element was
R27 million under programme Policy, Research and Capacity Development. The ICT
Infrastructure Support programme spent R 7.8 million also mainly on goods and
services and compensation of employees.
16.1.2.
Expenditure
per programme for 2014/15 compared to the 2013/14 financial year
Programme 1:
Administration
A total of 55.9 per cent of operational expenditure from
April to June was on Administration, representing R 55.7 million. The
expenditure under this programme has decreased by R24.2 million or 30.3
per cent when compared with the same period during the last financial year
primarily due to lower spending on goods and services.
Programme 2:
International Affairs
Operational expenditure at the end of quarter 1 was R5.4
million. Expenditure under this programme has increased by R0. 7 million or
14.2 per cent, when compared with the same period in the last financial year
primarily due to additional spending on goods and services mainly on travel and
subsistence. The main cost drivers were international travel including
associated cost for accommodation and subsistence allowance.
Programme 3: Policy,
Research and Capacity Development
Operational expenditure at the end of quarter 1 was R27
million. Expenditure under this programme has increased by R6.4 million or 31.2
per cent, when compared with the same period last in the financial year primarily
due to additional spending on goods and services. The main cost drivers were
for payments to consultants for project management, particularly the ICT Policy
Review project and the study on broadband value chain market analysis. In
addition, payments were made for the e-skills summit that was held in 2012 and
there was an outstanding amount of R2 million paid in the current financial
year (all these services were implemented in the previous financial year but
most of the invoices could not be paid in 2013/14 due to budget constraints.
Programme 4: ICT
Enterprise Development and SOE Oversight
Operational expenditure at the end of quarter 1 was R3.9
million. Expenditure under this programme cannot be compared to the previous
financial year due to the departments
change
in structure in 2013/14.
Programme 5: ICT
Infrastructure Support
Operational expenditure at the end of quarter 1 was R7.8
million. Expenditure under this programme has decreased by R10.4 million or
57.2 per cent, when compared with the same period in the last financial year
primarily due to lower spending on goods and services. The main cost drivers were
for payments for legal advice by external consultants to provide legal opinions
regarding Broadcasting Digital Migration (BDM) policy amendments in 2013; the payment
of SITA for Internet service charges for the upgrade of infrastructure on
Microsoft licences, as well as travel expenses.
16.2.
Service
delivery performance for 2013/14
Key
reported achievements recorded in the year under review include the following:
·
The Department established
the National Broadband Policy and appointed its Council as well as National
Broadband Strategy.
·
The Department ensured that the
Public Broadcasting Policy Review was completed and a position paper was
developed and consulted upon
·
The migration of all Senior
Management Service (SMS)
and non-SMS
employees into the revised organisational structure;
·
The Cabinet approved the National
Integrated ICT Policy Review Green Paper;
·
The appointment of staff in
critical positions such as Deputy Director-General: SOCs Oversight and
Enterprises Development;
Deputy
Director-General: Information Society Development and Research and Deputy
Director-General: ICT Infrastructure Support, ensuring the full complement of
DDGs;
·
The Department improved on
the use of consultants - the Department contracted a total of 24 consulting
companies/individual consultants, in the process costing just over
R10.4 million
for an average of
over 360 days work, compared to the 2012/13 financial years total of 124
individual consultants, who worked on 10 projects at an average of 115 months
costing the DoC
R44.6 million
;
·
Targeted e-Skills courseware
was developed in line with the National e-Skills Curriculum Framework;
·
Technical
Amendment of Bills
The ECA, ICASA, SAPO,
Postbank which required technical amendments were all made.
·
The integrated Ikamva National
e-Skills Institute was officially launched;
·
The e-Strategy framework was
developed in line with the Electronic Communications and Transactions Act (ECT
A) and the National Development Plan;
·
The applications for a Banking
Licence was submitted to the Registrar of Banks and names of Board members have
also been submitted to the Reserve Bank for fit and proper assessment.
16.2.1.
Key
reported challenges recorded in the year under review include the following:
·
The financial allocation/
transfer from the Department to NEMISA was done towards the end of the 3
rd
Quarter of the financial year.
·
The Community Broadcasting
Support Strategy was not finalised.
·
The Department failed to
create a conducive policy environment to ensure that, as part of the DTT, it
achieves its planned objectives of getting digital decoders to the market; as
well as
conducting a comprehensive public
awareness campaign.
·
No signed performance agreement
of the Director-General was submitted to the Public Service Commission.
·
Out of a total of 86 Senior
Management Service (SMS) employees, only half
, 40
signed a performance agreement, which is the basis for bonus
rewards against individual and collective achievement of targets against the
overall Department strategic objectives.
·
The Department awarded
performance rewards
to 177
employees
out of the total staff establishment of
333
at an average cost per employee of R16.998
.
·
The Department put four
employees on precautionary suspension which exceeded 30 days with an average
of 150 days
spent by an employee
costing the Department
R1.07 million
in the process,
·
The 2013/14 financial year
also marked the highest expenditure to date (99.6 per cent) for the DoC,
however, none of the five programmes achieved 100 per cent of all their planned
targets.
·
Overall, the DoC achieved
many of its targets, however, there are still issues with editing and proof
reading the Annual Report for 2013/14. There appears to be minimal errors. For
instance, pages 39, 44, 62, 76, 80, 86, etc contain different font sizes to
other pages.
·
All achieved targets are not
dated and because in the past the Department had indicated targets achieved in
either late April or in May, it can be assumed that they were not finalised at
all.
It is imperative to indicate
timeframes of the achieved targets as the projects implemented dates fall
outside of the 2013/2014 financial year.
·
The vacancy rate still
stands at
19.4 percent
in the
current financial year compared to
37.1 per
cent in the outer year,
however, the vacancy rate is still too high when taking into consideration that
the Public Service and Administration standard is below
8 per cent.
·
Under
the International relations programme the Committee observed that despite the
cut in budget allocation in the programme, the department did not amend and reprioritise
its international relations programme, hence the unauthorised expenditure.
·
In the 2010/11 financial
year, Cabinet issued a directive to all departments to have 50 per cent gender representivity
at Senior Management Service (SMS) level. The DoC has neither achieved this
target nor has it achieved the 2.2 per cent representation of people with
disabilities. Only 1.7 per cent of the total staff establishment comprises
people with disabilities and 37. 7 per cent are females at SMS level.
·
During the 2011/12 financial
year, the DoC appointed technical advisors for a feasibility study on 112
Emergency Call Centre projects and the tender was advertised in March 2012. The
project was meant to be implemented as soon as possible in 2012/13 but it was
cancelled altogether in the 2013/14 financial year.
·
The implications of the non-establishment
of the 112 Emergency Centre is a major contravention of Chapter 13 of the
Electronic Communications Act, Act No. 36 of 2005), based on the following
reasons: (a) section 72-79 of the Electronic Communications Act. Section 72 of
the ECA instructs the Director-General of the Department to establish and
manage a museum that depicts the evolution and history of the
telecommunications and information communication technology sector in South
Africa; and (b) section 76 calls for the establishment of the public emergency
communication centres and the protection of the national public emergency
number which has not happened. This could have been part of South Africas 20
Years celebration activities of democracy.
·
Non-financial audit outcomes
and steps taken to address adverse audit findings, if any.
16.3.
Report of the AGSA audit outcomes of the Department 2013/14
Table
3: Irregular, fruitless, wasteful and unauthorised expenditure
Year Incurred
|
Irregular Expenditure R000
|
Fruitless and wasteful expenditure R000
|
2011/12
|
R
116 701
|
R
11 553
|
2012/13
|
R 44 910
|
R 1 075
|
2013/14
|
R 73 55
|
R 774
|
Source: DoC (2010/11-2013/14)
The DoC obtained a qualified report for the 2009/10
financial year, and improved to an unqualified opinion with findings in last
four consecutive financial years, (2010/11, 2011/12, 2012/13 and 2013/14).
However, there is still room for much
improvement in order for the Department to get a clean audit.
While
the DoC has consistently acquired an unqualified audit opinion during the
2013/14 financial year, it incurred
R73 550
in irregular expenditure. This is a major improvement from the amount incurred
in the 2012/13) financial year, namely R5. 2 million.
On
fruitless and wasteful expenditure, during the 2013/14 financial year the DoC
incurred R774 000 compared to the previous financial year amounting to R1 075
million.
In addition to
irregular, fruitless and wasteful expenditure, the Auditor-General has also
emphasised other recurring matters in his reports on the DoC. These include the
following:
·
Annual
financial statements, performance and annual reports
-
The financial statements submitted for auditing were not prepared in accordance
with the prescribed financial reporting framework as required by the section
40(1)(a) and (b) of the Public Finance Management Act.
·
Human
Resource management and compensation
-
Not all senior managers had signed
performance agreements for the year under review as required by Public Service
Regulation 4111/8.1.
·
Expenditure
management
- Contractual obligations and money owed
by the Department were not settled within 30 days or within the agreed period,
as required by section 38(1)(f) of the Public Finance Management Act.
·
Leadership
- Inadequate leadership capacity prevented
consistent oversight over compliance with laws and regulations and accurate
financial reporting.
·
Financial
and performance management
- lack of adequate controls
over daily and monthly processing of and reconciling of transaction; and
·
Investigations
- An investigation into the Media Corner
contract was initiated by way of a proclamation issued by the President during
the year 2014. The investigation was still not finalised at year end.
Similarly, the AGSA found the following in
the Department in the previous financial year which also exist in the current
financial year:
·
Non-compliance
with legislatio
n - The DoC consistently failed to
adhere to the requirements of the PFMA, Treasury Regulations and Public Service
Regulations.
·
Irregular
expenditure
has been the result of the DoCs
failure to follow proper procurement procedures (payments to suppliers were not
made within 30 days as required by Treasury Regulation). This was also reported
in the
2010/11, 2011/12 and 2012/13
Annual Reports.
·
Funded vacant positions were
not filled within 12 months which was in contravention of Public Service
Regulation 1/VII/C.1A.2. This was also reported both in the
2011/12 and 2012/13
Annual Reports.
·
Leadership
-
The
accounting officer did not always exercise an oversight responsibility with
regard to putting proper processes in place to ensure compliance with laws and
regulations.
·
Financial
and Performance Management - Management did not adequately review and monitor
compliance with applicable laws and regulations to prevent non-compliance.
16.4.
Service delivery performance for 2014/15
During July 2013, the Committee conducted public hearings on the Cost to
Communicate in Gauteng, Eastern Cape and KwaZulu-Natal.
16.4.1.
Cost
to communicate programme
The high cost of
calls amongst other factors has been attributed to the high interconnection
rates that operators charge to terminate calls on mobile and fixed line
networks.
ICASA acknowledges reductions in the mobile
and fixed line telephony retail prices as a result of the introduction of
Mobile Termination Rates glide path. However, the Authority is still concerned
that the costs of communication are still high, and competition is this market
is still inadequate.
Recent regulatory
intervention in reducing the cost to communicate in South Africa include the
collection and analyses of information and communications technology indicators
from licences regarding the provision of communication products and services,
including broadband, voice and data.
ICASA also announced the launch of its Cost
to Communicate Programme on 7 June 2013, promising an extensive review of the
South African telecommunications sector. The Programme specifies five projects
expected to be completed by June 2015 and serves as a formal notice from the
regulator of its intention to complete these projects:
-
A
broadband value chain analysis;
-
Review
of the market for call termination services;
-
Local
Loop Unbundling (LLU);
-
ICT
indicators; and
-
Finalisation
of the review of the market for wholesale transmission services for
Digital Terrestrial Television (DTT).
ICASA stated boldly that it intends to
address information disparities between itself and the industry so as to
improve planning for policy and regulation. This information can also be used
to benchmark South Africa against its peers in respect of communication cost
and quality and is required to be submitted to the ITU. Aside from these
specific projects ICASA also wishes to:
-
Stimulate
public debate around the cost to communicate in South Africa;
-
Establish
regulatory needs to address the cost to communicate in South Africa; and
-
Stimulate
enhanced competition in the telecommunications sector which should result
in:
-
Increased
consumer choice;
-
Enhanced
ability to switch suppliers;
-
Increased
transparency in product pricing offers (which currently are regarded as
being generally opaque); and
-
Fair
and reasonable wholesale and retail.
The notice provides a basis for the statement
that the current cost to communicate in South Africa is too high by citing
reports from the World Economic Forum, Research ICT Africa and others which
show the high cost of mobile tariffs in South Africa relative to its regional,
continental and global peers.
In the next financial year, ICASA will conduct
a study on the South African broadband value chain to determine what causes
high prices, and then develop regulations to address problem areas.
16.4.2. Other Sources of Information
16.4.2.1.
Industrial Policy Action
Plan (IPAP II)
Set-Top Boxes and
Digital Televisions (TVs)
Although the
Conformance Lab has been completed and is ready for operations, the Department
did not implement Public Awareness programmes to reach 75 per cent of the
population as well as the planned target of allocating 1.5 million subsidised
STBs to subsidy scheme recipients.
Under the
competition policy of IPAP 20132015, Telkom was fined R449 million for market
abuse.
16.3. Findings of the BRR Report by the
Previous Committee
The Committee analyzed the Departments 2013-2015 Strategic Plan; the
2012/13 Annual Report of the Department of Communications and its entities; the
2012/13 Estimates of National Expenditure Reports; the Report of the Standing
Committee on Accounts; the Industrial Policy Action Plan, and Committee oversight
reports.
The
Committee noted the following:
-
While
the 2012/13 financial year marked a year with the highest expenditure for
a financial year to date for the Department, none of the six programmes
achieved 100 per cent of their planned targets.
-
The
vacancy rate still was at 37.1 per cent.
-
The
Department has not achieved the 50 per cent gender representation at
Senior Management Service (SMS) and that the Department and its entities
have not achieved the 2.2 per cent target of representation of people with
disabilities.
-
During
the 2011/12 financial year, the Department appointed technical advisors
for a feasibility study on the 112 Emergency Call Centre project. The
tender was advertised in March 2012, so that the project could be
implemented as soon as possible in 2012/13. However, the project is yet to
be implemented.
-
The Department and its entities were not
adequately following supply chain management processes when procuring
goods and services as required by the Treasury Regulations.
-
In spite of the Department and its entities being
unable to achieve its set targets for the year under review, performance
bonuses were nonetheless paid to senior managers and staff.
16.
4 LEGACY
REPORT:
Recommendations BY THE PREVIOUS
COMMITTEEE ON ISSUES THAT REQUIRE FURTHER FOLLOW UP BY THE NEW committee
·
Respond to
2012/13 BRRR recommendations;
·
Status
report following the Presidents signed proclamation authorising the SIU to
investigate certain matters relating to the affairs of the Department;
·
Status report on SAPO SIU report;
·
Status report on Cost to Communicate programme of
ICASA;
·
Status report on the legal litigation by the
dominant operators (MTN and Vodacom) regarding the recently published Call
Termination Rates (CTRs);
·
Status report on price transparency issues;
·
A report on the development
of a comprehensive plan on ICT and disabilities, in addition to the scope of
the National Universal Access and Service
strategy;
·
Status report on the
Regulatory Impact Assessment (RIA) framework to the Committee;
·
Status report on DTT State
of Readiness;
-
ensure
that corrective and remedial measures are taken against the accounting
officers and other senior managers for failing to comply with the relevant
sections of the PFMA and Treasury Regulations;
-
set
realistic achievable targets for the
Department in line with SMART principle;
·
Status
report on Spectrum Audit;
·
Status
report on cyber security initiatives by the Department;
·
Status Report on ICASA consumer advisory panel;
·
Status report on USAASA investigations;
·
Status report on issues of people with disabilities
in terms of DTT;
·
Status report on launch of DTT in rural areas;
·
Status report on Auditor-General recommendations;
·
Status report on role of Department as identified in
the Cabinet 2007 Free and Open Source Software (FOSS) Policy; and
·
Status report on National
Treasury, the DoC and SAPO negations on the issue of the government subsidy for
the entity.
17.
Concluding comments on service delivery performance
2013/14
During the period
under review (2013/14), the Department indicated that it will focus on
implementing the consumer and education awareness campaign, and monitoring the
DTT infrastructure roll-out-84 per cent population coverage both of the later
has achieved by SENTECH. Some of the achievements recorded by the Department
are achievements that were implemented by entities, and it makes double
reporting on the same target by the Department and its entities.
The other important issue is that while it is
imperative for the Department to facilitate workshops at all levels, including
international level, this is hardly a full achievement of targets. The fully
achieved target is the implementation of the recommendation/resolutions of
those meeting in all spheres of government and society.
The targets by the Department which relate to
the implementation of service delivery at provinces must be specific. For
instance, the Department lists a target of celebrating World Telecommunication
and Information Society Day in KwaZulu-Natal.
It not clear whether this was done in a certain city, township or rural
area or the entire province or at least spend days in different parts of the
province.
S
ervice
industries play a crucial role in national economic development.
Telecommunications, transportation, financial services and so forth are not
only important in their own right, but are also important inputs into other
industries. Because service outputs feed into other industries, economies with
highly priced and inefficient service sectors will find their competitiveness
in extractive and manufacturing industries affected as well.
A key performance
indicator for telecommunications in South Africa is the relative price
structure of services, in an international context. Relative prices affect the
competitiveness of the South African telecoms industry in export markets. High
telecommunications prices have a negative effect on economic activity.
The limitations of
mobile-broadband networks in terms of capacity and speed need to be taken into
consideration, and fixed-broadband technologies, in particular fibre-optic
networks, need to be deployed in order to build reliable backbone
infrastructure and to cater for data-intensive users and urban areas where
internet users are concentrated. Governments need to review the progress made in
terms of privatising and liberalisation all the building blocks of broadband
internet access, particularly in countries where prices are high and
penetration rates remain low like South Africa.
The successful development of e-commerce and e-government
requires that business and government have efficient telecoms links with
consumers and citizens. If the majority of the population is either not
connected or cannot afford to use the services, e-commerce and e-government
initiatives will falter, economic growth will be restricted, and South Africas
Information Society will be confined to an elite minority. If people are not connected,
they cannot participate.
In January 2010,
Government, together with the other African Union heads of State, declared the
Information and Technology sector as a top priority and adopted a declaration
that a called on all African countries to prioritise ICTs as a vehicle for
driving Africas Development Agenda. Based on the performance of the Department
over the period under review, which encompassed a slow pace in implementing
DTT, in many areas the targets as contained in the Departments Strategic Plan
were also successfully met.
Parliaments oversight over the Departments is
critical to ensure that departments spend according to their strategic plans
and cash flow projections. It should ensure that departments and Stateowned
enterprises have plans in place for spending the funds before the financial
year commences, and proceed to monitor implementation of these budgets and programmes
to ensure that departments adhere to their strategic and expenditure plans.
18.
COMMITTEES Observations and response 2013/14
Under
Programme 2:
International Affairs, the
Committee observed that despite the cut in budget allocation in the programme,
the department did not amend and reprioritise its international relations
programme, hence the unauthorised expenditure.;
Signing of Performance
Agreements by SMS members as on 31 May 2013
Only 40 of the 86 SMS
had signed the performance agreement for the year under review. No valid
reasons were received for late or non-submission of performance agreements. HR
only received, recorded and filed the Pas. However, HR issued reminder
circulars and letters to both supervisors and employees as well as respective
DDGs.
Performance Rewards
To encourage good
performance, the department has granted the following performance rewards
during the year under review. The information is presented in terms of race,
gender, disability, salary bands and critical occupations (see definition in
notes below).
Table
3.8.1 Performance Rewards by race, gender and disability for the period 1 April
2013 to 31 March 2014 (PLEASE NOTE: Performance Cycle was 2012/2013 but paid in
2013/2014)
Race and Gender
|
No. of
Beneficiaries
|
No. of Employees
|
% of
total within a group
|
Cost
(R 000)
|
Average
cost per employee
|
African
|
|
|
|
|
|
Male
|
47
|
124
|
37.9
|
751
|
15 972
|
Female
|
86
|
150
|
57.3
|
1 459
|
16 969
|
Asia
|
|
|
|
|
|
Male
|
1
|
7
|
14.3
|
17
|
16 987
|
Female
|
3
|
5
|
60
|
57
|
18 911
|
Coloured
|
|
|
|
|
|
Male
|
2
|
5
|
40
|
14
|
6 774
|
Female
|
11
|
14
|
78.6
|
186
|
16 942
|
White
|
|
|
|
|
|
Male
|
7
|
13
|
53.8
|
170
|
24 219
|
Female
|
12
|
13
|
92.3
|
215
|
17 956
|
Employees
with disability
|
1
|
2
|
50
|
21
|
20 949
|
19.
Summary of reporting requests
The Committee requested additional matters
from the Department to report on:
Reporting matter
|
Action required
|
Timeframe
|
Turnaround strategy
to address AG recommendations
|
Written plan from
the Department, NEMISA, Broadband Infraco, SITA
|
Within 90 days of
the adoption of this report
|
Development of a
draft funding strategy
|
Written plan from
Broadband Infraco, IKamva
|
Within 90 days of
the adoption of this report
|
Strategy to
strengthen supply chain and procurement issues
|
Written plan from
Department Broadband Infraco, IKamva
|
Within 90 days of
the adoption of this report
|
20.
Overview
of key developments in the organisational and service delivery environments of
the Department for the 2013/14 and 2014/15 MTEF cycles
The organisational restructuring exercise was introduced
in the 2010/11 financial year. According to the DoC, the approval of the new
organisational structure will strengthen [the] capacity to ensure alignment
between it and SOEs and the structure establishes a dedicated branch that will
be responsible for oversight of SOEs.
Initially the Department planned to finalise[d]
organisational review process during the 2012/13 financial year but it has now
completed the migration of the structure during the 2013/14 financial year.
21.
Summary of previous key financial and performance
recommendations of Committee
21.1.
2013/14 BRRR recommendations
[6]
Achievements of Entities
In respect of Sentech the
Committee noted the following:
·
Sentech had received a clean
audit for the 2013/14 financial year.
The company is liquid and operating as a going concern and has a healthy
balance sheet. The Committee praised this achievement as a clean audit has been
received for the second year in a row.
·
Sentech has achieved 90.9%
of its objectives, which represents 10 out of 11 targets.
·
The roll-out of Digital
Terrestrial Television (DTT) is the only key performance indicator not
achieved. However, certain targets have been set by National Treasury for the
next financial year.
·
A key highlight for Sentech
was that the DTT network population coverage increased to 82.13% after the
construction of 46 sites.
·
The number of new
Direct-To-Home Satellite customers and Multi-channel Content Distribution
Platform users exceeded the target by 60%.
·
Customer satisfaction
improved and network availability exceeded its annual target.
·
The vacancy level is too
high and needs to be addressed. Sentech needs to address its employment equity
numbers as it does not have enough females employed at a professional level.
-
Broadband
Infraco is the only entity that has a viable structured strategy for SMMEs
development; diversification of the sector in terms of suppliers as well
as an intensive internship programme.
-
Sentech
must work towards diversifying the sector through a strategy that seeks to
benefit the
ICT SMMEs.
In respect of .ZA Domain
Name Authority the Committee noted the following:
·
An unqualified audit was
received by .ZA Domain Name for the 2013/2014 financial year. The entity has
received clean audits before this financial year.
·
The Committee noted that the
entity is doing well but a closer work relationship and support needs to be
created.
·
The Department and .ZA
Domain must work together to develop a strategy that mitigates against the
risks associated with inadequate financing of the entity.
In respect of SITA the
Committee noted the following:
·
SITA has received an
unqualified audit opinion for the 2013/2014 financial year. Irregular
expenditure has been reduced from R120 million to R28 million.
·
SITA has 39 performance
targets. Ten of these targets were achieved, ten were partially achieved and
eighteen were not achieved.
·
The Board must expedite the
process of appointing the CEO and other critical positions in order to bring
about leadership stability in the institution.
·
SITA is a defendant in
various lawsuits that are being opposed. The outcome of these lawsuits cannot
be determined and no provision for liability has been made.
·
According to the Auditor-General
of South Africa (AGSA), several instances of non-compliance with laws and
regulations pertaining to procurement processes, contract management, adherence
to internal controls, financial and performance management, expenditure
management and various investigations have been identified. The report of AGSA
was of concern to the Committee.
·
Effective steps to prevent
irregular expenditure as per the requirements of the PFMA were not taken. The
Committee strongly cautioned that the issue of non-compliance of entities in
respect of the laws that govern it will not be tolerated.
·
Internal control
deficiencies were identified.
·
Concern was expressed about
the lack of SMME support and poor service delivery of SITA.
·
Performance contracts should
be addressed and accountability and clarity of responsibilities of staff in
respect thereof should be ensured.
In respect of NEMISA the
Committee noted the following;
·
The report of AGSA on the
financial statements of NEMISA presents fairly in all material aspects.
·
The appointment of the CEO
is currently underway.
·
NEMISA has a budget of R37
million and works in close collaboration with the Department and the private
sector. The private sector contributed towards the largest amount of the budget
in the amount of R 32 million.
·
NEMISA has experienced
challenges in respect of the integration of three institutes, namely Ikamva, the
e-Skills Institute and the Institute of Space and Software Applications (ISSA).
·
NEMISA was advised to go
back to the drawing board and interact with all stakeholders, including the
Department, to establish consensus around its mandate.
·
The Committee resolved to
have further interaction with NEMISA in its 2015 programme to determine the
status of the merger.
In respect of Broadband
Infraco the Committee noted the following:
·
The legislative mandate of
Broadband Infraco as set out in the Broadband Infraco Act (Act 33 of 2007) has
at its core the main objectives to expand the availability and affordability of
access to electronic communications.
·
Broadband Infraco boasts an
open access network and supports public and private investments in the
telecommunications sector. The public-private partnerships were regarded in a
positive light by the Committee.
·
The company engages and
collaborates with various stakeholders such as SITA, USAASA, Eskom, etc in line
with both the National Development Plan (NDP) and the Broadband Policy.
·
In terms of digital development
the broadband roll-out is aligned to other departmental programmes and various
provinces have been engaged in this regard. Broadband Infraco requires urgent
support in its engagement with the provinces.
·
The challenge experienced by
Broadband Infraco in respect of receiving an Electronic Communications Service
(ECS) licence needs to urgently be addressed with the Minister in order to
prevent the entity from losing further revenue.
·
A further challenge of
joining the ICT Review Panel should also be addressed by the Department.
·
The use of credit cards by
the company is contrary to National Treasury regulations and will be done away
with.
·
The role of Broadband
Infraco needs to be defined and better co-operation with the Department is
required.
In respect of USAASA
and USAF the Committee noted the following:
With regard to
USAASA, both the Chairperson of the Board and the Chief Executive of the Universal
Service and Access Agency of South Africa (USAASA) were not available and did
not formally communicate their intentions of not presenting before Parliament
in time. As a result, both USAASA and the Universal Service Fund (USAF) are not
included in the current report for the year under review. Notwithstanding this,
USAASA and USAF tabled their 2013/14 Annual Reports and Annual Performance
Plans on time and the Committee noted the following:
-
USAASA
did not achieve the 6 per cent (3000 000) target of installations of
Set-Top-Boxes in approved households;
-
USAASA
developed the Fund Manual to comply with the USAF requirements;
-
There
is a 30 per cent under achievement on planned targets;
-
There
is an under spending of R240 million due to the DTT project;
-
USAF
received an unqualified audit opinion with no matters of emphasis;
-
The
Universal Service and Access Strategy was published;
-
Most
of the planned targets for risk, human resources and safety;
-
All
targets were achieved under Legal and Information Technology;
-
All
targets were achieved under Supply Chain Management and Finance ;
-
Overall,
70 per cent of the targets were achieved; and
-
USAASA
received an unqualified audit opinion with matters of emphasis.
In respect of SAPO the
Committee noted the following:
Whilst the Committee did not engage with SAPO as per the
submission date of Annual Reports and Financial Statement for 2013/14 in
accordance to the PFMA, however, Committee is concern that SAPO must expedite
the implementation of the turnaround strategy to ensure long-term financial and
non-financial sustainability in order service the general public.
22.
BRRR
Recommendations for 2013/14 BY THE COMMITTEE
The Committee recommends that the Minister of Telecommunications
and Postal Services should:
-
Ensure that the
Department
and all entities respond
to the previous and the 2013/14 BRR Reports;
-
Ensure that the Department
and its entities review outdated legislation;
-
Ensure that transfer
from the Department to entities are not done towards the end of the 3
rd
Quarter of the financial year;
-
Ensure that Broadband
Infraco and all entities receive adequate financial injections in order to
sustain and develop themselves;
-
Ensure SMME support and
issues of ICT transformation are clear;
-
Ensure that all SMS and
all staff members have signed performance agreements and are assessed
quarterly before the payment of bonuses;
-
ensure that the
Department and its entities have existing Disaster Recovery Plans;
-
ensure that the
establishment of broadband access points in major cities and
under-serviced areas from the current
number which is 5 to 18 in the 2014/15 financial year;
-
Ensure that the
Department and all entities have realistic targets; and
-
Ensure that the Department
together with its entities fully implement the DTT Public Awareness
Campaign.
Report to
be considered.
Glossary of Terms
|
|
AENE
|
Adjusted Estimate of National Expenditure
|
AFCON
|
African Cup of Nations
|
AGSA
|
Auditor-General of South Africa
|
APP
|
Annual Performance Plan
|
BDM
|
Digital
Migration Policy
|
BRRR
|
Budget Review and Recommendations Report
|
CAPEX
|
Capital Expenditure
|
CTRs
|
Call Termination Rates
|
CIO
|
Chief Information Officer
|
DBE
|
Department of Basic Education
|
DoC
|
Department of Communications
|
DPSA
|
Department of Public Service and
Administration
|
DTI
|
Department of Trade and Industry
|
DTT
|
Digital Terrestrial Television
|
GCIS
|
Government
Communication and Information System
|
GDP
|
Gross Domestic Product
|
ICASA
|
Independent Communications Authority of
South Africa
|
ICT
|
Information Communication Technology
|
ISSA
|
Institute for Software and Satellite
Applications
|
MIS
|
Management Information Systems
|
MTRs
|
Mobile
Termination Rates
|
MTSF
|
Medium
Term Strategy Framework
|
NDP
|
National
Development Plan
|
NEMISA
|
National Electronic Media Institute of
South Africa
|
NEPAD
|
New Partnership for Africas Development
e-Africa Commission
|
NGP
|
National Growth Path
|
OECD
|
Organisation
for Economic Co-operation and Development
|
OFCOM
|
Office
of Communication
|
PCC
on TPS
|
Portfolio
Committee on Telecommunications and Postal Services
|
PCC
|
Portfolio
Committee on Communications
|
PFMA
|
Public
Finance Management Act
|
PPR
|
Preferential
Procurement Policy
|
SABC
|
South African Broadcasting Corporation
|
SAPO
|
South African Post Office
|
SCM
|
Supply
Chain Management
|
SCOA
|
Standing
Committee on Appropriations
|
SOCs
|
State Owned Companies
|
SoNA
|
State-of-the-Nation
Address
|
STB
|
Set Top Box
|
The Institute
|
NEMISA
|
TR
|
Treasury
Regulations
|
USAASA
|
Universal Service and Access Agency of
South Africa
|
USAF
|
Universal Service and Access Fund
|
USO
|
Universal Service Obligations
|
.zaDNA
|
.zaDNA
|
ITU
|
International
Telecommunications Union
|
UNESCO
|
United Nations Educational, Scientific and Cultural Organisation
|
[1] After 2014 May General Elections, President Jacob Zuma published a proclamation dissolving the Department of Communications and transferring its administrative powers and function to a newly-created/ established Department of Telecommunications and Postal Services( Government Gazzette No. 2889). For the purposes of continuity, this BRR Report will reflect the DoC as the lead department to the new DTPS and refer to all the new entities as instructed by the Presidential Proclamation.
[4] In 2013/14 financial year and in the outer financial years, government decided not to fund the Universal Service Obligation(allocation) to SAPO
[5] SITA is registered a schedule 3A Company, therefore the Agency does not receive any funding from government and is self-sustaining.
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