ATC170516: Report of the Portfolio Committee on Telecommunications and Postal Services on the oversight visit to Mpumalanga and Gauteng, dated 16 May 2017

Telecommunications and Postal Services

Report of the Portfolio Committee on Telecommunications and Postal Services on the oversight visit to Mpumalanga and Gauteng, dated 16 May 2017
 

  1. INTRODUCTION

Information and Communication Technologies (ICTs) expand opportunities to communicate information and to build knowledge through a range of innovations that have significantly reduced the cost of communication, both over a distance (using inter alia fixed, wireless and satellite communication networks) as well as through activities involved in handling information through a multiplicity of applications and systems. Research by Statistics South Africa, noted ‘the impact of ICT on society has become very apparent as technological innovations have become part of everyday life.

The National Development Plan (NDP) envisions that “ICT will continue to reduce spatial exclusion, enabling seamless participation by the majority in the global ICT system, not simply as users but as content developers and application innovators.” In so doing, ICT will increasingly form the bedrock of “a dynamic and connected vibrant information society and a knowledge economy that is more inclusive, equitable and prosperous”.

The recent oversight visit by the Portfolio Committee on Telecommunications and Postal Services (the committee) to Mpumalanga and Gauteng from 22 to 24 March 2017 was in line with its role and the mandate as per (i) the Constitution and (ii) and the National Assembly Rules. The oversight visit served as the measurement indicator against the service delivery commitment of the committee in terms of the Strategic Plans and Annual Financial Statements of the department and its entities.

The committee’s oversight approach entailed visiting various projects implemented by entities such as the South African Post Office (SAPO) and the Universal Service Access Agency of South Africa (USAASA) to monitor and oversee the implementation of key national priorities which underpin the NDP. The committee investigated the current status in respect of ICT service delivery by its entities.  The accessibility, affordability and universal availability of ICT services ensure that government fulfils Section 16 of the Constitution which, amongst others, stipulates that everyone has a right to impart and receive information and this has been interpreted to be defined as the means by which access is made possible.  

Thus, the areas of focus of the oversight visit of the committee were as follows:

In Mpumalanga, the committee visited broadband projects connected by USAASA. The entity through the Annual Performance Plan for 2015/16 financial year resolved to roll out connectivity and connect Chief Albert Luthuli Local Municipality of the Gert Sibande District (Mpumalanga). USAASA followed a public bidding process, where after the Service Provider (MENG) was awarded a subsidy to deploy infrastructure in the local municipality. The business objectives for this project, supporting the strategic plan of USAASA were as follows:

  • USAASA was able to issue a once-off subsidy to construct and/or extend broadband infrastructure that provides services to underserviced area of Chief Albert Luthuli Local municipality in the Gert Sibande District of Mpumalanga Province.
  • Broadband services were now available within the coverage of network in both municipalities and given the terrain challenges, only the high population areas were covered.
  • In Gauteng, the committee visited the Johannesburg International Mail Centre (JIMC) and the Greenstone post office. The BRRR 2015/16 recommended that the Department of Telecommunications and Postal Services (DTPS) must ensure SAPO’s outdated technology is adequately addressed by upgrading the IT network infrastructure. SAPO had made a commitment during the briefing to the Committee earlier this year that the JIMC was in the process of being cleaned up and clearing the backlog due to the labour unrest that occurred during 2014.

 

  1. COMMITTEE DELEGATION
    1. The delegation from the Portfolio Committee would comprise seven (7) members and four (4) support staff.

Name

Designation

Organisation

Ms. D. R. Tsotetsi

Acting Chairperson and Leader of the delegation

African National Congress (ANC)

Ms. N. Ndongeni

Member of the Committee

ANC

Ms. J. Kilian

Member of the Committee

ANC

Mr. T. Manyoni

Member of the Committee

ANC

Mr. E. Siwela

Member of the Committee

ANC

Mr. C.  MacKenzie

Member of the Committee

Democratic Alliance (DA)

Ms. M. Shinn

Member of the Committee

DA

Support  Staff

 

 

Ms. H. Salie

Committee Secretary

Parliament

Mr. G. Mankay

Committee Assistant

Parliament

Mr. J. Medupe

Content Advisor

Parliament

Mr. J. Malafo

Communication Officer

Parliament

 

2.2 The Committee received apologies for non-attendance from the following members:

  1. Ms M. Kubayi - African National Congress (ANC)
  2. Ms V. Ketabahle – Economic Freedom Fighters (EFF)

 

  1. Day ONE:  22 MARCH  2017: Visit to CHIEF ALBERT LUTHULI MUNICIPALITY

 

  1. Members briefing with USAASA delegation

 

The committee held a briefing with the USAASA delegation. The members enquired on the coverage of the USAASA broadband network. USAASA noted that the coverage expands to a radius of 55 kilometres and that the network is currently not accessible  by the communities as it would require a once off purchase of Customer Premises Equipment (CPE) and a monthly subscription for connectivity, but that coverage was limited to hotspots which connect the  clinics and schools. USAASA also noted that the target areas were the underserviced communities, although this was subject to funding limitations. In addition, the network would also cover some of the National Health Insurance (NHI) sites with e-health services to be provided to communities. To date, USAASA had connected 21 clinics, one school with 8 network towers installed. The Committee was informed that one of the clinics to be visited, Carolina Clinic, had been vandalised.

Members further expressed concern that the number of schools connected was small and that more emphasis should be placed on schools’ connectivity. The delegation proceeded to conduct oversight as per the programme.

 

  1. Visit to the Chief Albert Luthuli Municipality

The committee met with Cllr DP Nkosi, Executive Mayor, Chief Albert Luthuli Municipality and his mayoral committee of the Chief Albert Luthuli Municipality. The municipality is regarded as a tourist destination and is known for its mineral water and national heritage sites. Mr. L. Mtimde, CEO, USAASA, highlighted during the opening remarks that the entity had a mandate to rollout broadband in underserviced areas. In the policy of broadband rollout guided by SA Connect, DTPS committed to prioritise underserviced areas, which would include sites where the National Health Service was to be rolled out. He noted that USAASA had connected six (6) areas within various provinces.

In Albert Luthuli Municipality, USAASA followed a public bidding process, wherein the Service Provider (MENG) was awarded a subsidy to deploy infrastructure in the local municipality.  The model used was that USAASA would rollout the broadband network to underserviced areas with support and maintenance for a period of two years, after which the project would be taken over by the anchor tenant. The service provider connected 8 towers on the core network with connections to 21 clinics and a school. USAASA suggested to members to visit one of the towers and cancel the visit to Carolina Clinic.   

The service provider, Mr Arthur Mongalo of Mongalo Technologies noted that the company had connected 21 clinics, a library and a school. He noted that the broadband reach and range was limited but that more Wi-Fi hotspots could be added on the network.

The Mayor raised some serious concerns that council was briefed when the project started that the municipality was identified for broadband connectivity but the interaction with the entity had been minimal with no formal reports thereafter to indicate progress on the implementation of the project.

The committee visited three clinics - Selobela, Badplaas and Carolina. The major challenges experienced during the visit Selobela and Carolina was that the network connectivity was down with no access to health patient registration system or the internet. The network at Badplas was working and the staff could have access to the health patient registration system. The major problem highlighted at Badplas was the fast depletion of data during the month due to community members connecting to the Wi-Fi facilities of the clinic with leaked network password. A problem with slow network speed was also experienced regularly.

 

  1. Challenges/Observations

 

  • The members observed that although the municipality was identified for broadband connectivity, it had not derived any benefit from the broadband network as the municipal offices were not connected onto the network at the time of the oversight visit of the committee.
  • The service provider noted that the challenges that hamper connectivity were lightning and strong winds amongst others. The Committee noted that the turnaround to resolve the network outages was too long and this resulted in lack of benefit to the end-users.
  • The committee noted with concerns that it could not access the service level agreement (SLA) between the service provider (MENG) and USAASA. In the absence of this, it was difficult to make any assessment on the performance of MENG on the implementation and support of the network infrastructure.
  • The committee was also informed that some of the challenges in respect of connectivity were lack of reliable power sources and power failures. Solar panels were installed as alternative power sources but almost all of them were stolen and the matter had been reported to the South African Police Service.
  • The committee observed that the sustainability of the project was the responsibility of the anchor tenant after two years of the implementation and support by USAASA. The committee observed that there was a challenge in respect of the budget allocation for this period to ensure sustainability of the project.  

 

  1. The Minister should consider the following:
  • USAASA adopts an integrated approach and coordinate its work with municipalities and provincial governments in order to prevent it from working in silos.
  • Schools should be the hub of communities and engagement with the Department of Basic Education should be paramount during the budget process.
  • A clear service level agreement (SLA) between the service provider, MENG, and USAASA be established in order to ensure sustainability of rollout of broadband networks to underserviced areas.
  • Security be improved to prevent theft of infrastructure such as solar panels and other critical infrastructures.
  • Coordination with relevant provincial department in order to make provision for the budget to ensure sustainability of the project after two years.

 

  1. Site visit to tower in Carolina site

The committee visited the network tower in Carolina. The service provider briefed the delegation and noted that coverage of the tower was within a radius range of 50 to 60 kilometres.

3.3.1. Challenges/Observations

  • The committee noted that the solar panel tower was rusted and that the panels were installed low, which could allow for theft. This was an issue of concern as USAASA had reported that many of the solar panels installed were stolen.
  • Members raised concerns that they could not connect into the network even though they were within the reach of the network tower.
  • The committee tested for connectivity whilst onsite next to the tower but was unable to connect. The committee observed that the service provider had indicated that the tower was connected within a 50 to 60 kilometre radius, but found it illogical that it could not connect even close to the tower. The committee therefore noted that the service provided was inadequate and questioned why such service was needed.
  • The committee was concerned about the cost in excess of R20 million which was paid to the service provider, who had failed in his obligation to provide connectivity.

 

3.3.2. The Minister should consider the following

  • That methods be implemented to reduce theft of solar systems.  
  • That communities and schools in the vicinity of the tower should be allowed to benefit from connectivity.
  • Strong monitoring measures be implemented by USAASA over the service provider in order to ensure value for money on the services rendered.

 

  1. Site visit to Selobela Clinic

The committee conducted a site visit to the Selobela Clinic.  The clinic had two laptops, with one used by the nursing sister and the other by the administration staff to capture patients’ records and files. The committee was informed that the tablet was recently stolen and this was reported to the police for investigation. The committee was also informed that each clinic was allocated with 10 Gigabytes of data per month, but for the last 5 months had been unable to connect to the Wi-Fi network. The staff had to resort to the use of group chat using their personal phones and at their own cost to conduct the work of the community, without any compensation. At the time of the visit of the committee, there was no connection and the clinic was unable to load patients’ records, capture files or communicate with other health facilities, among other functions.

3.4.1. Challenges/Observations

The committee was concerned about the fact that there was no connectivity at the clinic and this prohibited staff from doing the work.

3.4.2. The Minister should consider the following

  • That the service provider ensure that connectivity be restored to the clinic as a matter of urgency.

 

  1. Site visit to Badplaas Clinic

The committee conducted a site visit to the Badplaas Clinic. The Committee was informed that there was connection although the speed was slow. The speed was throttled at certain periods such as towards end of the month or when there were too many users on the network in order to ensure control and usage. The clinic was allocated 10 Gigabytes a month, but experienced the challenge of unauthorised use of the data by the surrounding community members. It is for that purpose that ICT technicians had to constantly change the password and ensure that usage was accurately monitored. 

3.5.1. Challenges/Observations

  • The committee observed that although the clinic was connected, the connectivity speed was too slow and this hampered the work of staff.

 

 

3.5.2. Recommendations of the Committee

  • The committee recommended that the Minister ensure that USAASA look into the issue of reliable network speed at the clinics in order to improve the efficiency of staff.

 

  1. Site visit to Carolina Clinic

The committee conducted a site visit to the Carolina Clinic. The committee noted the behaviour of the USAASA delegation in suggesting that the site not be visited because all was in order; however the committee discovered that the clinic had had no network connectivity since December 2016. The visit to the Carolina Clinic was on the programme of the committee as agreed to by USAASA. After an unplanned visit to the Carolina tower site (which was not on the programme and suggested by USAASA), members were to visit the Carolina clinic as indicated on the programme. The USAASA team, which led the convoy, had without notification avoided the visit to Carolina clinic and took members to Badplaas Clinic which was 40 minutes’ drive away from the site which was initially on the plan. The Acting Chairperson of the committee insisted that the delegation be taken back to Carolina clinic for its official site visit which resulted in wasted time for the delegation as the convoy had to drive back to Carolina. The committee herewith strongly admonishes the behaviour of the USAASA team and cautions USAASA not to mislead Parliament.

At Carolina clinic, the committee was informed by the nursing sister that two laptops and a tablet were provided for the clinic. The committee was informed that the Clinic had been subject to vandalism and theft of equipment and that a case has been opened. As a result, security has been increased at the clinic.

The committee was informed that the clinic was supposed to be connected but the network connectivity had been down at the clinic for a while. The nursing sister used her own personal data to access the internet without compensation.

3.6.1. Challenges/Observations

  • The committee noted with concern that it was informed that the clinic was connected, but found that it was not connected.
  • The committee observed with concern that there was no connectivity, although such connectivity had been paid for by the taxpayers.
  • The committee wanted to know how the removed equipment from the clinic would be recovered in order to restore connectivity and ensure that work at the clinic continues.
  • The committee noted with concern that the clinic was provided by USAASA as part of a list of clinics connected and that to date, of all the sites provided by USAASA as having connectivity, 90% were not connected. The committee therefore raised some serious concerns on the rest of the sites which USAASA indicated it had connected.
  • The committee noted that it would monitor the progress of all the connected clinics.

3.6.2. The Minister should consider the following

  • USAASA provide the committee with an independent audit report on the connected sites which include the school and 21 clinics. The report must include current usage of each site by the end-users and the report should be made available within a month of the adoption of this report by parliament and referred to the department for further action.

 

  1. Day TWO:  23 MARCH  2017: Visit to SOUTH AFFRICAN POST OFFICE (SAPO)

4.1 Visit to Bosbokrand Post Office

The committee visited Bosbokrand Post Office and was welcomed by Mr Kitchner Nkosi, acting regional manager, SAPO north east region, Mr Sidney Sithole, area manager, SAPO, presented to the committee an overview of the Lowveld Area Retail Post Offices.

4.1.1 Opening Remarks by Acting Chairperson

Ms. Tsotetsi, Acting Chairperson of the committee, Portfolio Committee on Telecommunications and Postal Services, made opening remarks and highlighted that the purpose of the visit was a follow up to the similar visit undertaken in Limpopo where a number of areas of concern were identified. She further highlighted that the visit was to ensure that the committee ensured checks and balances against SAPO targets as highlighted in the Annual Performance Plans (APPs).

4.1.2 Presentation by SAPO

Mr. Kitchner highlighted that the area used to fall under the Northern Region but had since been divided into two regions. The Bosbokrand Post Office fell under the Lowveld area which was one of the four areas of the North East Region with about 47 Retail Outlets and 39 Retail Postal Agents (RPOAs). There were 17 outlets situated within the Central Business District (CBD), 19 were situated in rural areas, 7 were situated within residential areas, 2 were outlets are within the Multi-Purpose Community Centres, 1 were situated in an industrial area and 1 was situated in the Kruger National Park.

The outlets risk classification was outlined after a recent security analysis conducted by SAPO and the following risk classification were highlighted:

  • High risk outlets = 13;
  • Medium risk outlets = 29; and
  • Low risk outlets = 5. 

The statics on number of burglaries and robberies were also outlined and it was indicated that some of the most affected branches were Driekop, Hluvukani, Shongwe Mission, Lulekani and Thulamahashe.

The presentation further outlined that Bosbokrand municipality population was estimated at 54 8760 with 13 7419 households with 10 fully equipped Post Offices, 1 MPCC and 5 Retail Postal Agencies. The Bokbosrand Post Office had a staff complement of 8 people with an acting branch manager after an early retirement of the branch manager and the position had already been advertised and the position will be filled soon.

The core business of the Bosbokrand was Postbank with the Small Enterprise Foundation as main clientele. The transaction volume of the Post Office is 5 044 customer interactions in a month with a rental of R15 000.

4.1.3 Challenges/Observations.

  • The committee noted with serious concerns that some of the outlets experienced burglaries and robberies more than once within a very short space of time and this did not bode well given the fact that SAPO was trying to position itself as an alternative for the pension payouts.
  • The committee noted that the rental seemed quite expensive for the Bosbokrand Post Office.
  • The committee raised concerns with regard to additional space to accommodate the distribution of the set top boxes once DTT is rolled out in the area.

 

4.1.4. The Minister should consider the following

  • Measures be put in place to ensure that security risks were minimised, taking into consideration the challenges of branches in the rural areas and that the close relationship with the South African Police Service be maintained.
  • A comparative rental costs be investigated as the current rental amount of R15 000 per month seemed exorbitant.

4.2 Visit to Mafemani Postal Retail Agency

This was a Retail Postal Agency (RPA) under the Bosbokrand branch and is operated by Ms. Thembisile Tlou. The agency is at level three with a fixed allowance of R2 000 excluding transaction volumes. The transaction volume of Mafemani is 44 per month.  The operating hours are from Monday to Friday 8am - 4pm and Saturday 8am – 1pm. The agency had a staff complement of two personnel and did not pay monthly rental. The employees indicated that the place was safe and highlighted that there had not been burglaries for the last few months.

4.2.1 Challenges/Observations

  • The committee noted the limited storage to keep parcels for the RPA and there was a concern that this might have an impact on the smooth running of the operations.

4.2.2. The Minister should consider the following

  • The issue of enough storage be investigated to ensure the smooth operations of the RPA.

 

4.3 Visit to Thulamahashe Post Office

The SAPO offered all the major services such as the Postbank, motor vehicle registration and prepaid services for electricity, airtime and lottery. The biggest challenge for the outlet was robberies and burglaries which were suspected to be an inside job. There had been a number of cases opened with SAPS. It was highlighted that the SAPO had the alarm response which was cut by the robbers before entering the premises during the last robbery. Members wanted to know the effective of the alarm system and if there could be improvement on the system. The SAPO had two of its safes vandalised and broken into and an amount of about R6 000 stolen from the premises. SAPO highlighted that there was an additional safe in the premises to safeguard the valuable parcels such as home-choice and others. The members were worried about the quality of safes used as the models did not look very strong could be easily broken into.

4.3.1 Challenges/Observations

  • The committee noted that the post office did not have air conditioning;
  • There was no alarm system which added to the security risk;
  • The internet connection was a problem.

4.3.2. The Minister should consider the following

  • The security risk to the post office be minimised by the installation of an alarm system.

4.4 Visit to M’lapa Kgomo Retail Postal Agency

The RPA is classified as level 3 with fixed allowance of R2 000 which excluded the transaction volumes. The transactions for M’lapa Kgomo were around 184 per month. The agency also sold lotto, prepaid electricity and airtime. The agency was served by the Thulamahashe post office and all the parcels delivered from Thulamahashe get recorded. The delivery from Thulamahashe was on Monday, Wednesday and Friday. The parcels are collected from the agency by the clients from Monday to Saturday. The slips for the delivered parcels got captured at Thulamahashe and the supplier will then know that the parcel had been delivered. The manager of the agency used personal cell phone for communication.

There was also a security concern as the area was not safe and sporadic break-ins were experienced. One of the added security measures was to store parcels in a secured place in the adjacent store which had better security. Members raised concerns with regard to the career progression of the agency manager and SAPO indicated that there was a regular quality of service agent who moved around to assess the agencies and offered regular training and ensured promotions to positions with more responsibilities where necessary. It was further highlighted that promotion depended on the number of transactions and this would determine whether the manager could be taken to the next level of responsibility. Members noted that the place needed proper support equipment such as the furniture and equipment to make it much more efficient

4.4. 1 Challenges/Observations

  • The committee observed that the building in which the RPA was accommodated was dilapidated. This led to theft of stock which sometimes occurred during the day.
  • The committee noted that the staff members at the RPA were trained regularly by the quality of service agents.
  • The committee enquired on whether there was a clear career progression for the RPA managers.

4.4.2. The Minister should consider the following:

  • Security risks at the RPA be addressed and minimised to ensure that the image of SAPO get preserved.
  • Ensure a clear career progression for the RPA managers.

4.5 Visit to Casteel Post Office

The Casteel branch was operating under Multi-Purpose Community Centre. The branch had a staff complement of two with one part-time postal Assistant position which remained vacant. The core businesses of the branch were photocopies and Postbank. The monthly transactions were around R2000, and the rental was R2600.

4.5.1 Challenges/Observations

  • The committee commended the corporate dress code of staff and also the orderly state of the SAPO.
  • The committee observed that there was a double security door which was not in working condition, air-conditioning was not working and that there were some broken tiles at the SAPO.

 

4.5.2. The Minister should consider the following

  • The security doors, air-conditioning and broken tiles be fixed.

 

  1. Day Three:  24 MARCH  2017: Visit to SOUTH AFFRICAN POST OFFICE (SAPO)

5.1 Johannesburg International Mail Centre (JIMC)

5.1.1 Opening remarks by the acting chairperson

Ms. Tsotetsi, acting chairperson of the committee, Portfolio Committee on Telecommunications and Postal Services, highlighted that the intention of the visit was to explore the challenges within the Johannesburg International Mail Centre (JIMC) and the extent to which those challenges had been resolved. During the briefing to the committee on 31 January 2017, SAPO highlighted that the JIMC had been cleaned-up as this was key for turning SAPO into a logistics hub. The JIMC was cleaned and reorganised by about 45 person team after the labour disruption. This was so that it can run more efficiently and at maximum capacity, with many new systems, scanners and operational practices being used. By getting the JIMC sorted, SAPO was able to start meeting with other companies, who have considered using SAPO as a logistics partner. It was against this background that the committee decided to visit the JIMC as part of the oversight to ensure that the JIMC was fully operational and able to provide services central to SAPO business.

5.1.2 Presentation by JIMC

The international business was a unit within the mail operations of the SAPO. The geographic location of South Africa made it a strategic gateway for Africa. It was thus in an ideal position to provide services for mail imports and exports into and out of Africa, particularly Southern African Countries.

Some of the critical stakeholders highlighted during the presentation were:

  • South African Police Service (SAPS);
  • Independent Communications Authority of South Africa (ICASA);
  • Airlines/Shipping;
  • Universal Postal Union (UPU);
  • South African Civil Aviation Authority (SACAA); and
  • South African Revenue Service (SARS).

The presentation highlighted some various processes which were followed when parcels were processed for both the inbound and the outbound mails. The requirement for the outbound was the “J+2” which required that all the outbound mail and parcels be processed within 2 days. The requirement for the inbound mail and parcels was “J+3” which required that all the incoming mail and parcels should be processed within 3 days.

The financial performance of the International Business Centre was presented and it was noted that the negative recorded operating loss for year to date was due to over expenditure on properties and international charges. The loss was also attributed to the increase on the outgoing parcel volumes, unfavourable bulk mail rates and increase in Special Drawing Rights (SDR) rate which attributed to higher international charges. However, the presentation noted that there was a positive variance of R29 295 million year to date.

The presentation highlighted a number of success factors to ensure that the unit remained sustainable and run efficiently:

  • Improvement of the Systems;
    • Ensure fibre connectivity to the Mail Centre to improve ICT connectivity
    • Implementation of an end-to-end tracking system where parcels can be tracked anywhere in the world.
    • Implementation of Speed Points which was the initiative currently sponsored by UPU.
  • Staff redeployment;
    • The presentation highlighted that the discussion was underway with recognised unions to fill vacant positions and this will result in some of the staff members being redeployed.
  • Improvement on the customer service;
    • SAPO was busy with the preparation for ISO 9001:2015 transition and TOM. These were some of the standards which dealt with the specifications and requirements for a quality management system.
  • Transport to be Optimised; and
    • SAPO highlighted that the discussion was underway to move Express Mail Service (EMS) deliveries to Speed Services.
  • Direct despatches.
    • The International Mail Business highlighted that the discussion was underway with member countries to have direct despatches to Cape Town, Durban and Johannesburg in order to expedite delivery process.

The presentation also touched on the Terminal Dues (TD) which was the means of compensating postal administrations for the costs incurred in handling mail received from each other. This cost is related to the sorting mail, domestic transport, and delivery costs.

There were also number of challenges which were outlined during the presentation and these included:

  • Extra territorial offices of exchange which were the postal operators or companies such as TNT which moved mail across the borders. SAPO highlighted that the mail distribution by these operators was supposed to be regulated by Independent Communications Authority of South Africa (ICASA).
  • The economic instability was also affecting the International Mail Business the mail volumes were being reduced.
  • The fluctuating exchange rate was also highlighted as a challenge.
  • The Mail Integrator poised a serious challenge as most of international mail needed to be sorted in Johannesburg before sent to various destinations. SAPO highlighted that it was considering requesting the member states to sort out their mail bags based on postal codes to expedite delivery.
  • The National treasury regulations were also highlighted as one of the challenges.

 

5.1.2.1 UPU funded projects from the Quality of Service Funds (QSF)

The Quality of Service Fund (QSF) was set up in 2001 following a decision of the 22nd Congress in Beijing in 1999. The Fund finances projects aimed at improving the quality of inbound letter-mail flows, making national postal services and international mail flows more speedy, reliable and secure. QSF has been a stable source of funding for the developing and least advanced countries. Financing was used, amongst others, to purchase software, equipment and vehicles that lead to improvements in mail processing and delivery. QSF also promotes a regional approach and solidarity between countries. Operators can pool their financial resources to set up a joint project for the benefit of an entire region. The way the QSF operates ensures a fair distribution of financial resources to the neediest operators, particularly the least developed.

Some of the funded projects were:

  • EMS Mobile Delivery System
  • Postbus
  • IPS Upgrade
  • Conveyor Belt (Implemented but not commissioned. The final report on this to the UPU is outstanding)

 

  1. EMS mobile delivery system: This project would allow South African Post Office to improve security of mail operations by automating the process of delivery and to obtain a reliable database for international postal accounts and postal statistics. It would also improve the quality of service by improving events A, H & I from 65% to 98%. It would further provide electronic proof of delivery to customers when delivering International Registered Letters.

 

  1. Procurement of Postbus: In 2006, the SAPO received QSF funding to purchase five (5) Mercedes-Benz Panel Van Sprinters for the purpose of conveying mail to SADC. The aim was to transport mail to and from Lesotho, Botswana, Swaziland, Mozambique and Zimbabwe. The five vehicles reached end of lifespan in 2013 with kilometres in excess of 400,000. As such, the vehicles were replaced by leasing similar panel vans from Avis. SAPO was still conveying mail on a day to day basis to Lesotho, Swaziland, Botswana except for Mozambique, Maputo mail which was conveyed once a week due to volumes and distance. Also, due to the high costs of cross-border, permit fees and distance, a decision was taken to cease conveyance of mail to Zimbabwe but to use air transportation.

With high influx of people from these countries out of South Africa to buy commodities to South African Development Community (SADC) region, this justified the need for Post Busses to carry passengers for both inbound and outbound stream at a fare and additional fee for extra commodities.  The busses will be designed to carry passengers and cargo space reserved to carry mail only to increase the safety and integrity of the Mail Items.  The model was used in other countries such as Zimbabwe and Zambia in Africa for domestic transportation. It is important to note that UPU had approved a project and allocated an amount of 1,968,750 USD for purchase of 7 Busses. The project will be self-funding and in addition to current budget to be transferred for OPEX, the remaining budget will be recouped from ticket sales.

 

  1. IPS Upgrade: The aim of the project was to migrate IPS version 5.20 to the latest available version of IPS. To achieve better quality of service through the use of a tracking system  To procure and replace computer equipment for use on IPS  Replace the current customs system, IPMS with IPS  Interface IPS with the Harmonized Electronic System for calculation of import duties and classification of tariff headings  Improve the quality of service of ordinary letters, bar-coded and registered items Reach levels of 90% target performance

 

  1. Conveyor Belt: The conveyor belt project was an old project with implementation started in 2004.  A company by the name of Ramtech Systems won the tender for the installation of the Conveyor Belt. The project’s intention was to:
  • Improve the delivery standards for priority mail (from J+2 to J+1);
  • Improve the delivery standards for non-priority mail by surface (from J+2 to J+1);
  • Improve delivery standards for air parcels (from J+3 to same day as arrival)
  • Overall performance of the international business to increase by 80%.

 

5.1.3 Challenges/Observations

 

  • The committee noted that the process of manual mail scanning takes a bit of time due to a lack of modern systems
  • The committee also noted the use of target system for UPU to allocate funds based on the quality of service and were keen to know how the UPU target system was implemented
  • The committee noted a huge variance on the property expenses and were keen to know if there were any financial expertise challenges within SAPO. Members noted the challenges on the conveyor belt project and wanted to know the steps that will be taken to ensure that people who were supposed to deliver a working system were held accountable. SAPO highlighted that most of the employees who were involved in the implementation have since resigned and it will be difficulty to take disciplinary steps against them.
  • The committee further noted that the quality of service funds allocated by the UPU for the various projects within the International Mail Business and were keen to know if UPU was doing any monitoring on the success of the funded projects.
  • The committee noted the delay on the mail delivery due to the inbound mail which needed to be sorted out before getting to final destination and wanted to know if mails can be sorted by the originating countries to their final destinations based on postal codes.
  • The committee was also briefed on the reliability of the IT infrastructure and were informed that a plan was underway to use the fibre network for connectivity.
  • The committee raised concerns on the positive variance on the security costs and wanted to know if security had enough capacity to ensure crime prevention after the recent height at the OR Tambo International Airport cargo.
  • The committee also noted that the staff expenses were lower than budgeted for and raised concerns if this was not due to lack of capacity and vacant positions within the International Mail Centre.
  • The committee noted the critical success factors during the presentation and wanted to know if there were specific timelines to achieve those.
  • The committee was also made aware that Treasury regulations were also highlighted as one of the challenges for the viability of the JIMC.
  • The committee further noted the vacant positions and wanted to know how many positions were vacant.

 

5.1.4 The Minister should consider the following:

  • Ensure that the IT infrastructure is updated and the fibre rollout is finalised for effective operations of the International Mail Centre.
  • Ensure that the discussion with the Union on the staff redeployment is expedited and finalised to ensure enough and optimisation of human resources to deliver on the mandate for SAPO.
  • Ensure that there is a full audited report for all the projects funded by UPU under the Quality of Service funds
  • Ensure proper budget estimations as there were huge variances on the budget on salaries, security and property expenses.
  • Ensure that the issue of the conveyor belt is resolved as a matter of urgency for the full automation of sorting of parcels. This will ensure that the operations of the mail centre are run more efficiently.
  • Ensure that the timelines on the implementation of the critical success factors are made available to the committee within a month of the adoption of this report by Parliament and referred to the Ministry.

 

5.2 Visit to Greenstone Post Office

5.2.1 Presentation by SAPO

The branch falls under the East Rand with 51 branches - 44 conventional branches, 3 retail postal agencies, and 4 Retail Post Offices that operate within the Spar, Pick and Pay and a chemist. Branches are categorised level A-E which was determined by the number of customers and the revenue generated.

The Greenstone outlet was opened on 7 of June 2010. The area has a population of 4636, while the branch serves 4 954 customers per month. Many of these customers were people coming to do shopping in the shopping centre. The branch trades from Monday to Saturday. It has 5 employees (3 black females and 2 black males) with one branch manager, 3 tellers and a postal assistant. The revenue drivers are motor vehicles licenses, the delivery of foreign parcels, Postbank and Lotto. The operating revenue was R764 499, operating expenses were R380 710, non-operating profit is R445 789, and non-operating income R242 899, which comes from non-postal services from other businesses. The net profit for the branch was R688 606.

5.2.2 Challenges/Observations

  • The committee noted that one of the window glasses in front of the Post Office was broken and raised concerns around security.
  • The committee also noted the presence of Postnet within the shopping centre and wanted to know if this was not creating a risk of losing the core business to Postnet.
  • The committee noted that the IT infrastructure was unstable and there were also indications that the eNatis system was down at least once a week for about 2 hours. It was also highlighted that the Postbank IT infrastructure becomes unstable towards the end of the month.
  • The committee enquired about the non-operating income and wanted to know where this was coming from.

 

 

5.2.2 The Minister should consider the following:

  • Ensure that the IT infrastructure is upgraded and stable. SAPO to further engage with the Department of Transport to ensure a smooth running of the eNatis.
  • Ensure that there is adequate security at SAPO branches and all the necessary repairs which might compromise security must be fixed.

 

  1. REPORT FINDINGS
  1. Key findings for all entities and projects visited

The committee made the following findings in respect of the entities and projects visited:

  • On USAASA, the committee notes with concern that with the exception of Badplaas clinic, the majority of the projects selected by USAASA to be visited by the committee on the oversight visit were not connected. This situation was aggravated by the fact that these sites were chosen by USAASA to form part of the oversight visit of projects.
  • The committee notes that the service provider, Mongalo Technologies,  failed dismally in providing connection to the sites, despite being paid in excess of R20 million for the projects. The committee therefore questions USAASA’s indication that it had connected 21 clinics, a school and a municipality.
  • The Chief Albert Luthuli Municipality was identified for broadband connectivity, but had not derived any benefit as the municipality was not on the broadband network.
  • The turnaround time to fix network outages was too long and there was an SLA to ensure service guarantees on the restorations of network failures.
  • The committee could not establish and existence of any service level agreements between the service provider, MENG, and USAASA. In the absence of this, it notes that it was difficult to make any assessment on the areas of responsibly for the service provider and if those services have been provided for adequately.
  • The committee noted that the challenges in respect of connectivity were hampered by power failure. Solar panels have been used but almost all solar panels were stolen. Thus it was critical for USAASA to ensure an improved security to safeguard the broadband infrastructures.
  • The sustainability of the project was the obligation of the anchor tenant after two years since connection. This posed some serious challenge as the network has no clear Anchor tenant and there will have to be an engagement with the municipality to ensure that the network is sustained after the USAASA subsidy had come to an end. 
  • The solar panels at Carolina site tower were rusted and the panels were installed low, which exposed them to theft.
  • The community staying in the vicinity of the tower did not have access and connectivity to the broadband network even though the network towers were within their reach.
  • Costs in excess of R20 million was paid to the service provider, who failed in his obligation to provide connectivity.
  • At Badplaas clinic, where there was connectivity, the speed of connection was slow, which hampered the work of staff.
  • On SAPO, the committee observed that the security risks were concerning and did not bode well to improve the image of trust by prospective clients in using the post office in future and also its intention to conduct pension pay-outs.
  • The rental at some post offices seemed exorbitant.

 

  1. Overall recommendations by the Committee to the Minister

The committee recommends that Dr. Siyabonga Cwele, Minister of Telecommunications and Postal Services, ensures that: 

  On USAASA:

  • Adopts an integrated approach and coordinate its work with municipalities and provincial governments in order to prevent it from working in silos.
  • Schools should be the hub of communities and engagement with the Department of Basic Education should be paramount during the budget process.
  • Clear service level agreements (SLAs) between the service provider, MENG, and USAASA be established in order to ensure sustainability of rollout of broadband networks to underserviced areas.
  • Security be improved to discourage theft of infrastructure such as solar panels and other critical infrastructures.
  • There was coordination with relevant provincial department in order to make provisions for the budget to ensure sustainability of the project after two years.
  • Methods be implemented to reduce theft of solar systems. 
  • Communities and schools in the vicinity of the tower should be allowed to benefit from connectivity.
  • Strong monitoring measures were implemented by USAASA over the service provider in order to ensure value for money was received on the services rendered.
  • The service provider restore connectivity to all the clinics as a matter of urgency.
  • USAASA provide the committee with an audit report on the connected sites which include the school, 21 clinics and the report must include current usage of each site by the end-users. This report should be made available within a month of its adoption by the National Assembly and referred to the department.

On SAPO: Mpumalanga oversight visits

  • Measures be put in place to ensure that security risks were minimised, taking into consideration the challenges of branches in the rural areas and that the close relationship with the South African Police Service be maintained.
  • Comparative rental costs be investigated as the current rental amount of R15 000 per month seemed exorbitant.
  • Issue of space be investigated to ensure the smooth operations of the Retail Postal Agencies.
  • Security risk to post offices be minimised by the installation of an alarm system.
  • Security risks at the RPA be addressed and minimised to ensure that the image of SAPO get preserved.
  • Ensure a clear career progression for the RPA managers.
  • Security doors, air-conditioning and broken tiles at the Casteel Post Office be fixed.

On SAPO: Gauteng Oversight – Johannesburg International Mail Centre

  • IT infrastructure is updated and the fibre rollout is finalised for effective operations of the International Mail Centre.
  • Discussion with the Union on the staff redeployment is expedited and finalised to ensure enough and optimisation of human to deliver on the mandate for SAPO.
  • Full audit be conducted for all the projects funded by UPU under the Quality of Service funds and a report be compiled for the committee.
  • Proper budget estimations as there were huge variances on the budget on salaries, security and property expenses.
  • Issue of the conveyor belt is resolved as a matter of urgency for the full automation of sorting of parcels. This will ensure that the operations of the mail centre were run more efficiently.
  • Timelines on the implementation of the critical success factors are made available to the committee within a month of the adoption of this report by Parliament and referred to the Ministry.

 

On SAPO: Gauteng Oversight – Greenstone Post Office

 

  • IT infrastructure is upgraded and stable. SAPO to further engage with the Department of Transport to ensure a smooth running of the eNatis.
  • There is adequate security at SAPO branches and all the necessary repairs which might compromise security must be fixed.

 

Members raised a concern around lack of consequence management and requested that the Minister look at the capacity of the SOE oversight programme to ensure an effective monitoring of all the entities.

 

Report to be considered.

 

 

 

 

 

Documents

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