ATC171017: Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee On Telecommunications and Postal Services, dated 17 October 2017
The Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Telecommunications and Postal ServiceS, dated 17 October 2017
The Portfolio Committee on Telecommunications and Postal Services (PCTPS), having considered the financial and non-financial performance for the year 2016/17 of the Department of Telecommunications and Postal Services (DTPS) and entities reporting to it, reports as follows:
One of the policy goals of the Department of Telecommunication and Postal Services is to make telecommunications services accessible and available to the widest number of people at affordable prices. To this end, the Electronic Communications Act of 2005 introduced a converged, unified licensing regime and witnessed the surge of hundreds of alternative service providers. Other technologies have since emerged including the Internet of Things (IoT).
Although broadband is defined differently in different countries given the level of bandwidth provided in these countries, it is, however, commonly defined as “always on access, at work, at home or as provided by a range of fixed-line, wireless or satellite technologies with higher bandwidths capable of supporting genuinely new and innovative interactive content, applications and services and the delivery of enhanced public services".
- Mandate of Committee
Chapter 4 of the Constitution of the Republic of South Africa gives Parliament the right to initiate, pass or amend legislation, to conduct oversight over the Executive and also to facilitate public participation when a Bill is processed by the institution. The Portfolio Committee on Telecommunication and Postal Services serving as the “engine room” of the legislative process may also investigate any matter of public interest that falls within the ICT area of responsibility.
The Committee is also guided by the Rules of Parliament to conduct an oversight role over the Department of Telecommunications and Postal Services and its entities; facilitates the passing of legislation; and approves annual departmental budgets. 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.
- Purpose of the BRR Report
Section 42(3) of the Constitution of the Republic of South Africa, 1996 bestows the oversight function over the national executive to the National Assembly (NA). The National Assembly Committees are required in terms of Section 5 of the Money Bills Amendment and Related Matters Act, 2009 (Act No. 9 of 2009) to annually assess the performance of each national department and to thereafter submit a Budgetary Review and Recommendations Report, which will provide an assessment of: Department’s service delivery performance given available resources; an assessment of the effectiveness and efficiency of the Department’s use and allocation of available resources; and may include recommendations on the forward use of resources.
The purpose of this report is to account in accordance with Rule 166 of the Rules of the National Assembly for work done by the Committee in considering the 2016/17 Annual Report of the Department which was submitted in accordance with Section 40 (1) of the PFMA; and as referred by the Speaker of the National Assembly to the Committee in terms of Rule 338.
The BRR Report 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 in November of each year and should be submitted to the Minister of Finance and the relevant portfolio Minister.
The Act also requires Committees of the National Assembly to annually submit their BRR Reports after the adoption of the Appropriation Bill and before the adoption of their reports on the 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 Annual National Budget, a report to Parliament is submitted setting out how the Division of Revenue Bill and the national budget give effect to, and 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 also to provide an account of the work done by DTPS and entities during the 2015/16 financial year. The focus will be to highlight key achievements as well as challenges encountered as reported in the 2015/16 financial year, to establish whether the Department and its entities have achieved their aims and objectives as set out in their Annual Performance Plans, and will focus on:
- Medium Term Estimates of expenditure, its strategic priorities and measurable objectives;
- Prevailing strategic plans;
- Expenditure reports relating to such departments published by National Treasury in terms of Section 32 of the Public Finance Management Act;
- Financial statements and annual reports of such departments;
- Reports of the Committee on Public Accounts relating to the department; and
- Any other information requested by or presented to a House of Parliament.
Furthermore, the report also includes reference to the recommendations made in the BRRR of the previous financial year 2015/2016 to indicate whether the Department and entities implemented the committee recommendations.
Finally, it summarises the observations made by the Committee after considering all necessary supporting documents, presentations and observations made during oversight visits and / or public hearings before making recommendations aimed at improving service delivery.
The Annual Reports of the Department and all entities except the. Zadna Domain Name Authority were submitted to the Speaker, in terms of section 40(1) of the Public Finance Management Act, Act 1 of 1999, as amended. The Committee held meetings on 3 and 5 October 2017 to deliberate the annual performance report and financial expenditure of the Department and its entities.
Since the tabling of the annual reports, the Committee had a presentation by the Office of the Auditor General and met with the Department and the following entities: SENTECH, National Electronic Media Institute of South Africa (NEMISA), the South African Post Office (SAPO), the State Information Technology Agency (SITA), Broadband Infraco (BBI), and the Universal Access and Services Agency (USAASA).
The Committee consulted various sources to make objective and informed assessments and recommendations on the Department’s performance during the 2016/17 financial year. The source documents consulted are:
- The 2016 State of the Nation Address (SoNA);
- The DTPS Strategic and Annual Plans 2016/17;
- DTPS Annual Report and Financial Statement for 2016/17 and those of its entities were not interrogated by the committee as the annual report and financial statements were only made available to the committee on the day of the presentations;
- The Annual Reports and Financial Statements for 2016/17 for entities reporting to the Department;
- The Strategic Plans and Annual Performance Plans of the entities that fall under the DTPS, as well as their Annual Reports and Financial Statements for 2016/17;
- Quarterly reports of the Department;
- Auditor-General of South Africa reports presented before the Committee on the audit outcomes of the Department and entities reporting to it;
- The National Development Plan;
- National Treasury Section 32 Reports;
- The 2015/16 BRR Report; and
- Minutes and Reports of the Committee.
5.1 Overview of DTPS
The Department of Telecommunications and Postal Services is mandated to develop ICT policies that create conditions for an accelerated and sustained shared growth of the South African economy and to ensure the development of a robust, reliable, secure and affordable ICT infrastructure. The policies must contribute to the development of an inclusive information society in which information and ICT tools are key drivers of economic and societal development.
The Electronic Communications Act (2005) allows the Minister of Telecommunications and Postal Services to draft policies to fulfil South Africa’s obligations under bilateral, multilateral, and international treaties and conventions. The Act sets guidelines for the determination of certain licence fees by the Independent Communications Authority of South Africa; promotes universal service and electronic communications services in underserviced areas; promotes the participation of small business in the ICT sector, and enhances the capacity of and exercises oversight over state-owned enterprises. The department also contributes to building an ICT skills base in the country to ensure equitable prosperity and global competitiveness.
In addition to the Electronic Communications Act (2005), the department’s mandate is derived from the following legislation:
- the Electronic Communications and Transactions Act (2002);
- the Sentech Act (1996);
- the Postal Services Act (1998);
- the South African Post Office SOC Ltd Act (2011);
- the South African Postbank Limited Act (2010);
- the State Information Technology Agency Act (1998); and
- the Broadband Infraco Act (2007).
- During the 2016/17 financial year, the Department focused on the following strategic programmes:
South Africa Connect and the associated strategy and plan, gives expression to South Africa’s vision of 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 Government Outcome 6 which is focused on the development of an efficient, competitive, and responsive economic infrastructure network.
In the 2016/17 financial year, the Department planned to provide connectivity to 1296 identified government institutions through the implementation of Phase 1 of the Digital Development Plan.
5.2.3 The Integrated ICT Policy White Paper
In 2016 the Department committed itself to table a new Integrated ICT White paper. The policy is informed by developments, innovations and convergence of technologies in the ICT sector. The aim of the White Paper is to provide universal access for all South Africans to affordable ICTs and to bridge the digital divide in order to build a knowledge economy in which all citizens could participate on an equal basis.
- Overview of the relevant policy focus areas
- 2016 State of the Nation Address
The reflection on the 2017 State of the Nation Address had been considered and its relevance outlined on how to propel the agenda of universal access and services. The State reform focused on the boosting of State Owned Companies (SOCs) in the ICT infrastructure.
The President referred to the Inter-Ministerial Committee chaired by the Deputy President whose task is to look at the rationalisation of State owned companies in line with the recommendations of the Presidential Review Committee report. In response to this call, the Department of Telecommunications and Postal Services is planning to merge NEMISA, the eSkills Institute and the Institute of Satellite Software Applications into a single entity called Ikamva National e-Skills Institute.
The President urged government to realign the mandates of State entities to ensure that there are no overlaps. State owned companies that were no longer relevant, should be phased out.
The President also mentioned government’s plan in rolling out broadband to district municipalities, a continuation of the previous commitment by government in the prior year. In this regard the SONA must not be viewed in isolation, as the DTPS was developing the implementation plan for SA Connect and the objective was to provide ubiquitous and affordable broadband for all the citizens by focusing on both supply side and demand side interventions.
The government also emphasised the need to include universal access and service obligations, broadband connectivity to communities, schools, public institutions and under-serviced areas. There was a need to expand the reach of services, especially network services like infrastructure. The SONA 2017 highlighted the need to deal decisively with the issue of escalating data costs as this had created barriers for the poor. This went back to the issues of accessibility and affordability. The ICT sector was impacting on the current business model of SAPO as more and more people were moving away from the traditional ways of communicating.
- National Policy Frameworks
The discourse around the digital divide typically refers to socio-economic inequalities in access to, and use of, ICTs. The assumption is that the use of such technologies, particularly the Internet, might result in several beneficial outcomes and that non-use excludes people from full participation in any contemporary society. In the past decade, digital divide discussions have moved from the use or non-use to a nuanced recognition of different types of access, motivation, skills and Internet use in a discourse that centres on digital inclusion and inequality.
Internet access is now considered in terms of quality, ubiquity, and mobility; skills as having technical, social, critical, and creative elements; motivation and awareness of the benefits as determined by both individual and social circumstances; and engagement as driven by the everyday life needs of individuals through content created by and for them so that engagement is effective and sustainable .
At the same time, the National Development Plan and the, 2017 State of the Nation Address by the President pronounced the goal of 100% connectivity in South Africa by 2020. Therefore, as the Internet and Broadband make their 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.
- THE NATIONAL DEVELOPMENT PLAN (NDP)
The NDP is government’s development plan which aims to eliminate poverty and reduce inequality by 2030. Also, it identifies the ICT sector as one of the main contributors to job creation by reducing the cost to communicate, as well as putting policies and regulations in place. Chapter Four of the NDP, entitled Economic infrastructure - the foundation of social and economic development, focuses on three pillars where the ICT sector has a critical role. These are:
- South Africa needs to maintain and expand its telecommunications infrastructure to support economic growth and social development goals;
- Social services and wage goods should be affordable so that the majority can achieve a decent standard of living; and
- There should be channels to influence factors that influence citizen’s well-being.
- The 2014 – 2019 mEDIUM TERM EXPENDITURE FRAMEWORK (MTSF)
The 2014-2019 MTSF, which is a five-year strategic plan of government, forms the first five-year implementation phase of the NDP. The aim of the Framework is to ensure policy coherence, alignment and coordination across government plans as well as alignment with the budgeting process. The MTSF is structured around 14 priority outcomes, which cover the focus areas identified in the NDP and Government’s electoral mandate.
The BRRR process also includes an assessment of the performance of the Department and entities against the Medium Term Expenditure Framework (2014-2019).
- SOUTH AFRICA CONNECT
South Africa Connect, the national broadband policy and the associated strategy and plan, gives expression to South Africa’s vision of the 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.
- EVALUATION OF RESPONSE BY THE DEPARTMENT AND MINISTER OF FINANCE
In tabling the Medium Term Budget Policy Statement (MTBPS) in 2016/17, the Minister of Finance raised the following generic issues and agreed with recommendations made by all Committees’ BRR Reports:
- Plans to intensify efforts to carry out expenditure reviews aimed at increasing efficiency of spending and combating waste should be supported. In particular, in-house reviews should be complemented by independent expenditure reviews;
- Serious concern should be expressed concerning reduced national efforts to facilitate economic growth through infrastructure-led growth. Reflecting this, growth in the percentage of gross fixed capital formation is lower than the last period; and
- In the medium-term, managerial interventions (controls on automatic pay progression and performance bonuses, reduction in the rate of hiring in non-critical areas) may assist government in its commitment to ensuring that the upward trend in the wage bill does not adversely impact its budget deficit targets.
- 2015/16 COMMITTEE BUDGET REPORT
The Committee considered the Strategic Plan of the DTPS and its public entities for the 2016/17 financial year, and it was satisfied with the Annual Performance Plans for 2016 – 2017 of the Department; USAASA; .ZA Domain Name Authority; SAPO; SENTECH; Broadband Infraco; SITA and INeSI. The Committee, however, recommended that the Minister ensures:
- that the DTPS and all its entities fill all critical funded vacant positions especially those at Senior Management Service (SMS) level within three (3) months from the tabling of the APP;
- the finalisation of new policy directives on Transparency Pricing Policy to deal with the cost of communications;
- the finalisation of new policy directives on National Spectrum Policy that will support the digital dividend;
- that sub-programmes on Research, Market and Economic Analysis are allocated sufficient resources;
- that the mandate and funding of BBI, the funding model and the budget of SAPO and the funding of iNeSi are reviewed;
- that all entities include timeframes against their targets and that each target must include a budget attached to it to ensure efficient oversight by Parliament;
- that the Department and its entities have existing Disaster Recovery Plans;
- that SITA develops as a matter of urgency a Cyber-Security vision and strategy that will ensure government-wide data protection;
- that USAASA’s mandate is reviewed to be in line with the modern broadband and data services;
- that the Department and all entities, especially iNeSI and SAPO, review the ratio of the spending on salaries versus operational costs;
- that clear time frames in respect of completion of rationalisation of SOCs is made available;
- That the Department reduces the amount allocated for professional consultancy fees to reflect the approved amount in relations to the discussions led by the Minister of only allowing 5% expenditure on consultants;
- That the Department, National Treasury and BBI urgently intervene to avoid unintended consequences while the entity’s future is being finalised,
- that an audit of legislated policies and regulations that became law, but were not implemented by the Department, should be conducted;
- that INeSI develops a new marketing strategy to ensure that more people are aware of the e-skills initiative;
- that the Minister engage the SITA Board to revise its bloated structure and instead develop a new strategy that will maximise the efficiency of the institution;
- that the Minister engage the SITA Board on the establishment of the proposed subsidiaries and their importance, and submit a report to Parliament within three (3) months after the APP process;
- that the filling all vacant Board positions in affected entities is expedited.
- Overview and assessment of financial AND NON-FINANCIAL performance OF DTPS
The Department achieved 81% of its 21 planned 2016/17 annual targets (17 out of 21) while spending 86% of its budget allocation. Targets achieved include the following:
- Drafting of the ICT legislation (White Paper)
- National e-Strategy & e-Government Strategy
- ICT SMMEs Strategy
- SOC Rationalisation
- National Radio Frequency Plan
- Advancing South Africa’s ICT Agenda
- Automation of Business Processes
- Climate and Culture Survey.
The Department did not achieve 4 of its 21 planned 2016/17 annual targets, as reflected below:
- Revision and implementation of the organisational structure
- Development of the RSA position for BRICS
- Development of the National e-Strategy
- Project Managing the roll-out of the Broadband connectivity.
The Department was only able to develop the Service Delivery Model but all the other elements related to the target were not achieved. A partnership agreement could not be concluded regarding SA’s position for BRICS. The e-Strategy was gazetted after the reporting period and the Department could not connect the identified sites.
- department’s Financial performance 2016/17
- Expenditure Trends of the Department for 2016/17 – 2018/19
2. International Affairs
3. ICT Policy Development
4. ICT Enterprise
5. ICT Infrastructure Support
1 176 277
2 417 412
2 075 692
1 300 097
9. DTPS EXPENDITURE TRENDS 2015/16
The department was allocated R2,4 billion for the 2016/17 financial year. Transfers to entities amounted to R1 billion, and compensation of employees totalled R205 million compared to R181 million the previous year. The department’s use of consultants amounted to R153 million, reduced from R230 million the previous financial year.
The merger of the National Electronic Media Institute of South Africa, the e-Skills Institute, and the Institute of Satellite Software Applications to form the Ikamva National eSkills Institute was initiated to address the overlap, duplication and gaps in e-skills development within and between government departments, the education sector, business and civil society. The process of establishing the institute is supported by increased funding of R126.4 million over the medium term transferred to the National Electronic Media Institute of South Africa in the ICT Enterprise Development and Oversight programme.
To ensure the growth and sustainability of the postal sector, the department will support the implementation of a strategic turnaround plan by the South African Post Office. An additional R650 million is allocated in 2016/17 for the recapitalisation of the entity, which accounts for the large increase in the budget of the ICT Enterprise development and Oversight.
Information and communications technologies are a key driver of socio-economic development and an important tool for improving productivity and efficiency. The National Development Plan aims to accelerate the creation of a connected society and an inclusive knowledge economy and the Department of Telecommunications and Postal Services contributes to realising these goals by ensuring accessibility to affordable ICT. Over the medium term, the department will focus on the ongoing roll-out of the department’s broadband policy, supporting the roll-out of broadcasting digital migration, tabling ICT white paper, and establishing the Ikamva e-Skills Institute.
9.1 First Quarter Expenditure
The DTPS was allocated a budget of R2,4 billion during 2016/17. The department had a budget of R684,7 million for operational expenditure. Of this, the department had spent R95,9 million for Quarter 1 in 2015/16, or 14%, the largest portion of which was used for goods and services and compensation of employees.
Transfers and Subsidies amounted to R728,6 million and of this amount the department had transferred R354,3 million, or 48,6%, mainly to departmental agencies and accounts. An amount of R115 million was transferred to USAASA for its operations (R17 million) and for the distribution and Project Management Costs (R98 million) associated with the Broadcasting Digital Migration (BDM) project; R28 million was transferred to Sentech for Dual Illumination costs; R11,8 million to NEMISA for its operations; R174,5 million to Universal Service Access Funds (USAF) for its operations (R24.5 million) and the payment of subsidies for BDM project (R150 million) and R28,4 million was transferred to SA Post Office as a subsidy to implement a new delivery model to meet its Universal Service Obligations (USOs).
9.2 Second Quarter Expenditure
Transfers and Subsidies accounted for R866,775 million or 82% of the budget, mainly for departmental agencies. An amount of R51,7 million was transferred to USAASA for its operations of which R42 million; of these funds was for the distribution and project management costs associated with the BDM project.
SA Post Office received transfers of R240 million as a subsidy to implement a new delivery model to meet its universal service obligations.
Of the available budget of R686,6 million for operations, the department had spent R186 million, or 27,1%, during the second quarter. The largest portion of this was for compensation of employees and goods and services.
9.3 Third Quarter Expenditure per programme
Transfers and Subsidies accounted for R1 billion of the expenditure. The department had at the end of the third term transferred a total of R866,775 million, or 82%, mainly to departmental agencies.
During the financial year under review (2016/17) the Department’s budget was structured around 5 programmes:
Programme 1: Administration – R207,904 million
The purpose of this programme is to provide strategic support to the Ministry and overall management of the Department. The Programme consists of the following six (6) sub-programmes:
- Departmental Management
- Internal Audit
- Corporate Services
- Financial Management
- Office Accommodation.
In the 2016/17 financial year, programme one (1) has been allocated R207,904 million compared to R180,3 million in the previous financial year. The department spent R160,2 million of this amount with R47,6 million available to 2016/17 year-end. On goods and services (consultants) the department spent R117 million compared to R221,2 million the previous year.
Programme 2: International Affairs – R45,6 million
The purpose of this programme is to ensure alignment between South Africa’s international activities and agreements in the ICT sector and the country’s foreign policy. ICT International Affairs Programme consists of the following sub-programmes:
- International Affairs coordinates the functions and responsibilities of the Department to meet South Africa’s international ICT obligations through bi-laterals, multi-laterals and tri-laterals; and
- ICT Trade/Partnerships develop and advance the country’s interests in international trade forums through participation in World Trade Organisation ICT-related initiatives and other international trade agreements, such as South African-European Union Trade Agreement and bilateral agreements with counterpart countries. South Africa’s national interests are also promoted in these forums.
It has become a norm for this programme as evidenced by the three past financial years when it was allocated the smallest amount, which constitutes an average of 2% of the total budget. Despite this amount the department is planning to cut down travelling costs and delegates travelling abroad will be strictly monitored. Underspending on the compensation of employees is mainly attributable to staff resignations and the dispute with the dismissed DDG of the branch. The department is in the process of filling the positions.
Programme 3: Policy, Research and Capacity Development – R88,7 million
The programme develops policy that supports the development of an ICT sector, which in turn 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 to bridge the digital divide.
The Policy, Research and Capacity Development Programme consist of the following sub-programmes:
- ICT Policy Development drafts legislation, regulations, policy and guidelines that govern the broadcasting, telecommunications, postal and IT sectors, thus ensuring broad-based economic development within the ICT sector;
- Economic and Market Analysis is responsible for economic analysis and growth projections. This sub-programme also undertakes market research to explore areas that require policy intervention;
- Research is responsible for understanding the ICT landscape and delivering a National ICT Strategy;
- Information Society Development renders delivery management services in support of an ICT information society, development and usage; and
- Capacity Development provides direction for the advancement of e-Skills graduates and society in general to function effectively in the emerging information society.
Programme 4: ICT Enterprise Development and SOC Oversight – R886,6 million
The purpose of this programme is to oversee and manage government’s shareholding interests in the ICT public entities. This programme also facilitates growth and development of Small Micro Medium Enterprises (SMMEs). The ICT Enterprise Development and SOC Oversight Programme consist of the following sub-programmes:
- Public Entity Oversight provides oversight relating to State Owned Companies by managing Government’s shareholder interests in public enterprises to support the attainment of key national goals and strategic priorities;
- Small, Medium and Micro Enterprise (SMME) Development facilitates the growth and development of ICT SMMEs; and
- ICT Support oversees and manages transfers to public entities and state owned companies (SOCs) responsible for the management and protection of South Africa’s ICT environment.
Programme 5: ICT Infrastructure Support – R1,1 billion
The purpose of this programme is to promote investment in robust, secure and reliable ICT infrastructure that supports the provision of a multiplicity of applications and services. The ICT Infrastructure Support Programme consists of the following sub-programmes:
- Broadband is responsible for developing and facilitating the implementation of the ICT infrastructure broadband strategy and implementation plan and ensures that broadband goals are achieved; and
- Digital Terrestrial Television is responsible for making transfers to Sentech to roll out ICT infrastructure for the migration of signal distribution from analogue to digital.
10. FINANCIAL ALLOCATION TO Entities of the DEPARTMENT OF TELECOMMUNICATIONS AND POSTAL SERVICES
The following shows the transfer of funds to entities and agencies reporting to the Department of Telecommunications and Postal Services:
10.1 South African Post Office (SAPO) – R240 million
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 Postbank’s universal service obligations and associated financial services.
In addition, for the 2015/16 financial year, the following were the key focus areas for SAPO:
- Finalise and implement the Strategic Turnaround Plan;
- Create a customer centric organisation to restore customer confidence;
- Position SAPO as a key service partner that delivers government services;
- Corporatisation of Postbank and increase access to financial services;
- Ensure good corporate citizenship and corporate governance; and
- Property evaluation, balance sheet structure, funding solutions, capital adequacy, and the implementation of the turnaround plan.
10.2 Sentech – no allocation
Sentech's 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.
SENTECH’s strategic goals and the three main priorities for the 2016/17 were:
- Infrastructure Roll-Out
- DTT Network Expansion: complete 4 Greenfield sites;
- Connect and install 300 terminals;
- FM: Connect 33 Community Radio Broadcasters;
- FM: Install 31 transmitters for the South African Broadcasting Corporation (SABC); and
- Digital Media: Connect 1 new customer on Hybrid Broadcasting Platform.
- Organisational Performance
- Redesign the Organisational Structure.
- Financial Sustainability of the Company
- Generate Net Profit Before Tax of R195,7 million; and
- Receive the 3rd clean audit in a row.
10.3 Universal Service and Access Agency of South Africa (USAASA) – R51 million (Operations) USAF R42 million (Set-Top Boxes, subsidies, antennae and installations cost) USAF (broadcasting digital – R442 million
USAASA’s sole mandate is to promote universal service and access to electronic communication services, electronic communications network services and broadcasting services.
To contribute to the achievement of government priorities and outcomes; USAASA was to pursue the following strategic goals for the 2016/17 financial year:
- Facilitate the rollout of broadband infrastructure in the identified underserviced areas;
- Subsidise 5 million needy households with Set-Top Boxes (Scheme for STB Ownership Support);
- Provide 2 under-serviced areas with the Internet (Albert Luthuli and Vhembe local municipalities);
- Provide 3 schools for Persons with Disabilities with Internet service (Gert Sibande District Municipality, Mutale Local Municipality and Vhembe District Municipality).
10.4 National Electronic Media Institute of South Africa(NEMISA) – R63 million
In contribution to this broader mandate of DTPS, NEMISA provides very necessary 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: Television 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 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 NEMISA’s product offerings with key outcomes; a recognised training institution of choice from all over South Africa.
10.5 Broadband Infraco (BBI) – No allocation from Government
BBI mandate is to offer “open access” wholesale backhaul connectivity services to other service providers although this term is not well defined in the licence or regulatory environment in South Africa.
BBI interventions are focused on two areas; namely long-distance fibre optic cable and participation of BBI in the international connectivity projects. The long-distance fibre optic network to provide a high capacity communications services to the main metropolitan areas that will over time be expanded into the previously under-services areas. While, at the same time, the company participates in the international connectivity project, most particularly the cable project that will connect South Africa to the United Kingdom along the west coast of Africa.
BBI’s strategic goals and the three main priorities for the 2016/17 financial year were to:
- Strengthening Capex Management
- Embark on developing the institutional structure to minimise the current funding challenges through focussing on effective Capex management;
- New Product Development for additional revenue stream focussed on:
- Comprehensive Open-Access, carrier-neutral, connectivity enabler that offers higher industry service level performance and diverse route coverage.
- SA Connect
- BBI has extensive pre-existing infrastructure that can be important in the implementation of SA Connect connectivity projects.
10.6 State Information Technology Agency (SITA) - No allocation from Government
SITA is governed by the founding legislation, State Information Technology Agency (SITA) Act (Act No 88 of 1998), as amended by the SITA Act (Act No 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.
Also, the Act separates SITA’s services into mandatory services (services that SITA must provide) and non-mandatory services (services that SITA may provide). SITA’s strategic goals and the three main priorities for 2016/17 are:
- Drive modernisation of the public sector;
- Improve government business processes; and
- Enhance access to government services by the citizens.
- Data Security
- Safeguard and protect government information.
- Value-added (IT) Procurement
- Generate Net Profit Before Tax of R195,7 million; and
- Receive the 3rd clean audit in a row.
11. Human Resources - (2016/17 Financial Years)
The Department has an approved Service Delivery Model and a structure will be compiled during the 2017/2018 financial year aligned to the SDM. In the meantime, the Department uses an interim structure and as at 31 March 2017, the total establishment for the department was 304 funded positions, which were captured on the Persal System. Of these 304 funded positions 295 positions were filled and 9 positions were vacant. Of the 9 positions, it is envisaged that 4 positions will be filled by 31 March 2017.
11.1 Vacancy rate per program
The final appropriation for compensation of employees for the 2016/17 financial year was R213 -007 million. As at 31 March 2017, the Department’s vacancy rate stood at 2.96 % a significant improvement compared to the 17% vacancy rate reported the previous financial year.
12. THE AUDITOR-GENERAL of SOUTH AFRICA’S FINDINGS 2016/17
The Auditor-General of South Africa has a constitutional mandate and, as the supreme audit institution of South Africa, exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence in government institutions.
The department received an unqualified audit opinion, however the Auditor-General drew attention to the following matters:
- Achievement of planned targets
Some targets are over-achieved whereas others are underachieved.
- Annual financial statements
Financial statements were not prepared in accordance with the prescribed financial reporting framework as required by section 40(1)(b) of the PFMA. Material misstatements of contingent liabilities and assets identified by auditors were corrected resulting to unqualified audit opinion.
- Procurement and contract management
Some goods and services with a transaction value below R500 000 were procured without obtaining the required price quotation as required by Treasury Regulations.
A contract was awarded to a bidder who submitted a false declaration on whether the bidder is employed by the state or connected to any person employed by the state, which is prescribed to comply with treasury regulation
In contravention of treasury’s regulations bidder was awarded a contract based on evaluation criteria that differed from those stipulated in the original invitation for bidding and the preferential procurement regulations.
- Expenditure management
Effective steps were not taken to prevent irregular expenditure amounting to R2 615 000. The majority of irregular expenditure resulted from unjustifiable deviations from competitive bidding processes.
- Consequence management
Disciplinary steps were not taken against some of the officials who had incurred irregular expenditure as required by Section 38(1)(h)(iii) of the PFMA.
- Internal control deficiencies
Repeat findings on non-compliance with laws and regulations and internal control deficiencies that existed in the prior year were again identified, indicating that the action plan to address audit recommendations was not timely implemented and adequately monitored.
The leadership did not exercise its oversight responsibility to ensure that consequence management was actively implemented in the department.
- Financial performance
The financial statements contained material misstatements due to lack of review of supporting schedules submitted to the finance section for the preparation of the financial statements.
- The SIU investigation
An investigation by the Special Investigation Unit was initiated in terms of Presidential Proclamation No. R.10 of 2014 into the broadcasting digital migration process project. The investigation was still in progress at the end of the financial year.
Financial mismanagement has great implications on the Department’s ability to roll out infrastructure, e-Skills and e-Government to respond to the needs of the information society. The cause of this was that management did not implement adequate controls to ensure that the procurement of goods and services comply with the requirements of the Department’s Supply Chain Management Policy. There is a need to ensure that proper review and approval processes are in place to identify payments that do not comply with the requirements of the Department’s Supply Chain Policy.
13. Key recommendations for improvement by the AG
- Auditees that submitted financial statements of poor quality for auditing should strengthen their processes and controls, to create and sustain a controlled environment that supports reliable reporting. The financial reporting has to be an ongoing process for the entire financial year;
- Regular workshops between AG and the Audit Committees to ensure that there are action plans are corrective measures are implemented;
- AG recommended that the following best practices be implemented by all auditees to prevent material misstatements and non-compliance with legislation:
- Leadership should prioritise filling all vacant managerial and key official positions that have remained vacant for extended periods;
- Leadership should develop a training programme to ensure that all staff are up to date with the requirements of their jobs and relevant legislation;
- Leadership should implement an effective performance management system, which ensures that consequence management is implemented;
- Auditees should implement daily and monthly processing and reconciling controls over the areas where material misstatements were identified in the submitted financial statements; and
- The information for the secondary financial information should be prepared not only when compiling the year-end financial statements, but regularly, and reviewed monthly.
- Auditees should identify the cause of the material misstatements identified during the audit and ensure that adequate and immediate action is taken to address them; and
- To do away with the irregular expenditure, the AG recommended that capacity is reinforced with stricter procurement management and that consequence management be enforced following the PFMA guidelines.
14. REPORT OF THE AG ON AUDIT OUTCOMES AND RECOMMENDATIONS FOR
- The Department, BBI, SITA, USAASA and USAF received an unqualified audit outcome with findings.
- Sentech received an unqualified audit with no findings for four consecutive years.
- NEMISA has regressed in its audit performance in the current year financial year and received a qualified audit with findings.
- SAPO received a qualified audit with findings. Although there was some level of improvement in respect of SAPO, the entity needs intervention. The internal controls of SAPO would have to be monitored to work effectively.
- The key findings on SAPO in respect of specific focus to evaluate the adherence and effectiveness of the license requirements in terms of under-serviced areas was as follows:
- Many post office branches were within the proximity of 3km within each other, therefore resulting in some branches not being efficiently and optimally used.
- The average number of transactions per branch does not relate to the size of the branch.
- Underutilization of space in branches (19 branches) had more counters than front office staff allocated.
- Rental costs was a driver for losses at underutilized branches.
- Unavailability of stationery, equipment and connectivity to operate branches.
- Motor vehicle licensing (MVL machines) was not fully operational.
- SAPO had a high vacancy rate with many acting positions prevalent. These acting positions would need to be made permanent and vacant positions would have to be filled.
- USAF had material findings and regressed in the current financial year. The reason for regression was due to the non-achievement of its broadband targets, which could not be audited.
- SAPO and NEMISA had material findings for not submitting its Annual Performance Plan and/or not implementing recommendations of the AGSA.
- The financial health of SAPO was affected and there was a material uncertainty for the entity as a going concern. Liquidity in SAPO has improved due to a capital injection by the Department.
- BBI had material findings which was of concern. The reason for the regression was the lack of compliance with legislation and stagnation in the quality of financial statements.
- The audit report impact noted that none of the entities incurred fruitless and wasteful expenditure. SAPO was the only entity that had received wasteful expenditure over the last few years due to historical reasons for not paying suppliers.
- Irregular expenditure showed an increase from the prior financial year to current financial year. USAF (R536 million), SITA (R449 million) and SAPO (R297 million), all incurred expenditure that has been classified as irregular. In respect of SAPO, the contracts signed in respect of the Eco point lease was one of the biggest contributors to its irregular expenditure.
- The Department and SAPO were the two auditees that had material findings on fraud and non-compliance with legislation on consequence management. In this regard, the Department had not taken disciplinary steps against an official who incurred irregular expenditure. Also, the Department and SAPO had not taken disciplinary steps against an official who incurred fruitless and wasteful expenditure.
- Investigations should be conducted on allegations of financial and/or fraud and SCM misconduct within the Department and SAPO.
- The following root causes must be addressed:
- Lack of accountability of personnel at SITA, NEMISA and SAPO resulted in a slow response to findings by management (accounting officer and senior management) and action not being taken against transgressors.
- Instability or vacancies in key positions at SAPO, NEMISA and SITA had an impact on audit outcomes for the current financial year.
- Lack of consequence for poor performance and transgressions within SAPO and the Department. Inadequate mechanisms (i.e. ineffective investigations) to communicate and hold individuals accountable for non-performance with regard to internal control responsibilities.
- The following key commitments by the Minister which were slow or in progress should be addressed:
- Filling of key vacancies
- Implementing consequence management
- Tracking of irregular and fruitless and wasteful expenditure
- Tracking of SAPO and BBI as going concerns
- Tracking of DTT project
- Clarity as to the role of each entity as there is an overlap of functions and responsibilities.
15. Action required from the Oversight structure
- Senior management, political leadership and oversight structures should continue to pay close attention to supply chain management transgressions. Investigate the incidents of non-compliance, take appropriate corrective steps and implement consequence management;
- Oversee key projects, reporting on the milestones of the projects;
- Monitor Financial viability or health of entities within the portfolio; and
- Continue to have the portfolio account for their performance quarterly.
- SUMMARY OF THE BRRR PROCESS:
- In respect of the Department of Telecommunications and Postal Services (DTPS) the committee made the following observations:
- The committee expressed disappointment in the performance of the department and some of its entities.
- The committee expressed concern in respect of the number of sick leave days taken and absenteeism on the part of senior management staff within the department.
- The committee expressed concern in respect of the irregular expenditure by the department, which indicated that an employee was paid before his employment was approved.
- The committee stated that there was a perception from entities that money would be there to assist them when in financial trouble often due to mismanagement. The committee was of the opinion that it was unacceptable for government to be expected to assist and that accounting bodies should be held accountable.
- The committee was of the opinion that work related travel periods for staff should be minimised and that it should be the responsibility of the Deputy Director-General to ensure that work is done and does not stop when other employees are granted leave.
- The committee noted with concern, that improper processes were followed in respect of a tender for cleaning and security services.
16.2 In respect of State Information Technology Agency (SITA) the committee made the following observations:
- SITA received an unqualified audit opinion on both the financial statements and its predetermined objectives.
- The overall financial health of the organisation has improved. The committee commended the improvement in performance by SITA and complimented the team for turning the entity from a deficit to a surplus.
- The committee commended SITA in collaboration with National Treasury for renegotiating the existing Microsoft contract, which would result in significant savings of over R1.3 billion over the next three years to the national fiscus on the government wide software and services contract.
- The agency incurred irregular, fruitless and wasteful expenditure which was incurred due as a result of non-compliance to legislation.
- SITA achieved 19 of its 25 targets, which is an achievement of 76%. The reason for the non-achievement of some targets was due to its internal key performance indicators and delays in the execution of plans and stricter controls over the spending on capital expenditure amongst others.
- SITA has adopted a new business model in order to improve performance and address service delivery challenges.
- A comprehensive investigation into alleged fraudulent activities within the Human Resource department was concluded and individuals involved were either dismissed or resigned from the employ of the entity.
- The committee noted that SITA in collaboration with the Western Cape Government connected 1037 schools of which 382 are in rural areas.
- The committee noted that SITA made a donation of ICT hardware to 36 schools.
- The National Certificates (vocational) backlog was reduced from 33 297 to 3 046.
- A total of 219 interns were engaged of which 79 interns were absorbed in various fixed term contracts.
- The committee noted with concern that during the forensic investigation into supply chain management transgressions the lives of senior executives and board members were threatened.
- The committee was concerned that SITA was not allowed to increase its tariffs as by law such tariffs was approved by Minister with concurrence of Minister of Finance.
- The committee expressed concern that there was a trend for employees in the public sector, who are investigated for fraud, to sign a mutual separation agreement before the investigation could be concluded.
16.3 In respect of Broadband Infraco (BBI), the committee made the following observations
- BBI received an unqualified audit with findings. The entity achieved 5 out of 18 targets.
- In respect of its annual performance results, the KPIs not achieved includes the following:
- The percentage increase of actual revenue annually was not achieved. The reason for non-achievement was due to its sales strategy that would be reviewed.
- A decrease in the operational loss was not achieved. The reason for the non-achievement was the revenue decrease.
- The percentage spent on black owned entities annually was not achieved. The reason for non-achievement was its limited procurement budget.
- The percentage spent on black youth-owned entities annually was not achieved. The reason for the non-achievement was the limited procurement budget as a result of financial constraints.
- The percentage spent on people with disabilities was not achieved. The reason for the non-achievement is mainly the limited procurement budget as a result of financial constraints.
- BBI currently employs interns, and intends to develop more talent by employing the interns in the future.
- BBI has performed from a network point of view and its customer base has increased from 23 to 30.
- Employee engagement was continuous with the CEO and senior management.
- The committee commended BBI for honouring its social responsibility in implementing its corporate social investment projects in schools with installation of e-curriculum on 60 tablets on the server of Shesigo High School.
- BBI did not achieve its revenue target. However, the entity honours its time-frames to ensure proper creditor and debtor management.
- The use of energy was one of the biggest costs for BBI and this would result in the entity turning to solar energy in future to reduce costs.
- The committee raised its concern in respect of the financial health of BBI and the challenges of the entity especially as a going concern. The cash reserves are consistently diminishing and so are the profits. The committee further notes that the Auditor General has indicated material uncertainty in that the expenditure has been higher than the revenue for the past years raising further liquidity concerns.
- The committee notes, with regret that the chief executive officer, Ms Puleng Kwele has resigned from the employ of BBI.
- The committee notes that possible rationalisation of BBI with Sentech would change the future outlook of the entity. It is envisioned that in terms of the rationalisation of State owned companies the entity would be merged with Sentech and the latter would be responsible for signal distribution while BBI would provide the necessary broadband infrastructure. However, the committee is aware that such rationalisation process would still have to be formalised through the passing of legislation.
- 4 In respect of SENTECH, the committee made the following observations:
- Sentech received an unqualified audit with no findings and the committee commended the entity for its good work despite the challenging economic climate.
- The performance of Sentech has improved with Sentech receiving a clean audit for 5 consecutive years.
- Sentech has achieved all its 9 KPIs, which is a 100% achievement.
- The customer satisfaction index improved to 76% and network availability improved to 99.88%.
- Sentech is in a stable financial position with acceptable levels of liquidity and solvency ratios.
- In respect of training interventions, 93% have been implemented.
- The challenges for Sentech included a sluggish economy and weak exchange rate, shortfall in the funding of dual illumination which impacted profitability, the sustainability of community and commercial broadcasters, the level 4 B-BBEE rating which was due to the introduction of new ICT B-BBEE sector codes. A major challenge is the growing number of customers that experience cash flow problems.
- Sentech has the following key audit findings and planned interventions
- General Information Technology control weaknesses due to vacancy at senior management.
- Financial internal control weaknesses due to lack of documented processes and decisions, poor basic accounting skills and accountability.
- Non-compliance and consequence management due to poor planning and inadequate record keeping.
- The Audit and Risk Committee responsible for audit issues was able to manage risks therefore ensuring that Sentech was able to achieve its KPIs.
- Sentech will focus on sustainability due to market changes and also create partnerships with 3 universities.
- The committee was concerned about the debt management procedure used to ensure that community broadcasters pay their debts. Sentech was advised to ensure strict compliance with debt management procedures.
- The committee noted that there was a decline in gross profit and suggested that hedging should be used to protect the profitability of the entity.
- The committee expressed concern with the delays to secure funding for dual illumination in the outer years of the MTSF period.
- The committee noted that Sentech’s presentation was silent on its satellite project and was informed that it was communicating with various government departments with the aim to ensuring a detailed business plan. International assistance from the BRICS partnerships was also considered.
- The committee notes that the possible rationalisation between Sentech and BBI would impact positively on Sentech’s delivery rate.
16.5 In respect of South African Post Office (SAPO), the committee observed the following:
- SAPO received a qualified audit opinion with findings and achieved 5 out of 18 KPIs which was an audit achievement of 27.8%.
- Funding was sourced from commercial banks and National Treasury to pay outstanding creditors.
- Critical vacancies of senior executive positions such as Chief Financial Officer, Chief Operating Officer and Company Secretary were finalised.
- SAPO implemented interventions in respect of its property plant and equipment, contingencies, irregular expenditure and international revenue, which resulted in the reduction of key audit findings.
- Human capital management was a challenge and the staff compliment was reduced by 2 052 from 20 781 employees to 18 729 employees.
- The committee noted that although SAPO reduced its operating loss by 17%, there was still a concern in respect of its liquidity.
- The committee indicated that it could not condone the almost R1 billion-loss incurred by SAPO.
- The committee referred to its oversight visits conducted and stated that some SAPO retail agencies were in a shocking state and exposed to security risks.
- The committee was of the view that SAPO management lacked innovation and that the continual losses were of concern to the committee.
- The committee was of the opinion that due to SAPO’s weak public image, it lost various customers and that it might not be able to get these customers back.
16.6 In respect of National Electronic and Media Institute of South Africa (NEMISA), the committee made the following observations
- NEMISA received a qualified audit opinion with findings. This was due to the failure of the entity to update its assets and receivables and most of its items were not recorded or the existence of items could not be verified. The existence and valuation of receivables from exchange transactions could not be verified.
- A company has been appointed to assist NEMISA with assets management.
- The committee was informed that the collection of money from debtors has been difficult to achieve and the Board decided to write off outstanding debt in certain instances. NEMISA still ensures that it collects outstanding debts from bigger companies. Outstanding debts have been handed over to an agency to act on behalf of the entity.
- The committee was informed that six (6) senior posts have been filled; the Chief Financial Officer position was still vacant; but NEMISA had minimal vacant posts in the current financial year.
- A new Board was appointed and NEMISA has appointed a new management team in October 2016.
- NEMISA formalized its multi-stakeholder collaboration by signing six (6) agreements with stakeholders. Formalised partnerships increased as a result of the network being established at a provincial level.
- The delays in financial transfers from National Treasury (transferred in September 2017) impacted negatively on the transfer of e-skills.
- The committee was of the opinion that NEMISA does not possess the skills to develop new products for knowledge assimilation.
- The committee noted that action was being taken against an employee deemed to be responsible for audio visual and office equipment that was stolen during a move to new premises.
- The committee cautioned NEMISA that similar issues that were supposed to be remedied as listed in the BRR report of 2016, have been repeated in the current financial year.
- NEMISA had material findings for not submitting its Annual Performance Plan timeously and not implementing recommendations of the AGSA.
16.7 In respect of Universal Services and Access Agency of South Africa(USAASA) and the Universal Services and Access Fund (USAF), the committee made the following observations
- USAASA/USAF received an unqualified audit opinion, with findings.
- The committee noted that six (6) of the nine (9) planned targets were achieved.
- The three (3) planned targets which were not achieved were as follows:
- Human capital training and development programmes aligned to organisational strategy.
- Optimal functional human resources policies and systems aligned to organisational strategy.
- Automated and integrated business processes.
- The reason for the non-compliance was poor planning and lack of capacity that prevented USAASA from achieving these targets.
- Human capital vacancies at the executive level was filled in compliance with the AG report. Other vacancies would still need to be filled.
- The top risks of the entity include organisational performance, abilities to effectively recover should a disaster occur, lack of technical skills, potential litigation against the Agency Fund, amongst others.
- USAF did not achieve its target in terms of facilitating its digital migration project, with 67% of its targets not achieved.
The reason for non-compliance was that there was a problem with some set-top boxes produced and there are legal challenges in respect of the cancellation of a contract with the supplier.
- USAF had material findings and regressed in the current financial year. The reason for regression was due to the non-achievement of its broadband target, which could not be audited.
- Irregular expenditure showed an increase from the prior financial year to the current financial year for USAF in the amount of R536 million.
16.8 In respect of. ZADNA the committee expressed its disappointment at the non- (delete: late) submission of the annual report of. ZADNA. The reasons for not tabling the said report related to the fact that processes to finalise the reports have not been completed. ZADNA is in arbitration with .ZA Central Registry (ZARC) of which the arbitration will be heard in late October 2017. The arbitration outcome is likely to have a material effect on the auditors' report on the annual financial statements.
- BRRR 2016/17: RECOMMENDATIONS BY THE PORTFOLIO COMMITTEE
17.1 Recommendations relating to the Department and its entities
The committee recommends that the Minister of Telecommunications and Postal Services should:
- Ensure that the department improves and strengthens its leadership role and implements changes in its internal controls to ensure better audit outcomes of entities reporting to it;
- Ensure improved supply chain management systems are implemented in line with National Treasury regulations and the Public Finance Management Act (PFMA).
- Ensure that the department implements proper processes in respect of sick leave and annual leave of employees.
- Ensure that the department and its entities provide feedback on the implementation and progress of the action plans to address poor audit outcomes during quarterly reporting.
- Ensure that the department and its entities provide quarterly feedback on the status of internal controls.
- Ensure that the department and its entities provide quarterly feedback on the progress of filling key vacancies.
- Ensure that the department provides the committee with detailed information of initiatives implemented to track/monitor irregular and fruitless expenditure of entities.
- Ensure that the department provides the committee with a list of action steps to be taken against all transgressors especially on irregular expenditure.
- Ensure that SAPO and BBI provide feedback on a quarterly basis on its turnaround/viability plans to facilitate the financial viability of the two entities.
- Ensure that criminal charges be laid against individuals participating in improper tendering processes.
- Ensure that strong disciplinary action would be taken against individuals who failed to submit their performance agreements.
17.2 On SITA
- Ensure that the 36 schools to which SITA donated ICT hardware receive the necessary support to operate such hardware.
- Ensure that SITA provide the committee with a completed breakdown of the 1037 schools it connected including a breakdown of townships and suburbs.
- Ensure that measures be implemented to protect senior executives and board members who were threatened with their lives during the forensic investigation into supply chain management irregularities.
- On BBI
- Ensure that its annual performance results improve, especially in respect of the Key Performance Indicators (KPIs) dealing with the percentage spent on people with disabilities.
- Ensure that the entity improves its financial health and that going concern challenges are addressed until such time as rationalisation takes effect and that the entity make a concerted effort to make a profit.
17.4 On SENTECH
- Ensure that the filing of the vacancy at senior management level is finalised.
- Ensure that internal financial controls are strengthened and that training programs on key accounting principles are reviewed and updated.
- Ensure that non-compliance and consequence management policies are reviewed and strengthened.
- Ensure that the entity look into the possibility of hedging to avoid a decline in gross profit and to protect the strength of the entity in the market.
17.5 On SAPO
- Ensure that SAPO finalise its discussions and implement its proposed strategy to use spaza shops and filling stations as SAPO outlets and to create competition with courier companies.
- Ensure that SAPO upgrades its branches with adequate security to protect its staff and assets.
- Ensure that SAPO implements strategies to allow it to use its monopoly (which should be enforced by ICASA) to be self-sufficient and turn the business around without government support.
- Ensure that SAPO resolves its labour relations issues.
- Ensure that the AG’s recommendations are implemented to strengthen internal controls.
- Ensure that the high vacancy rate be resolved by the filling of vacant posts on a permanent basis.
- Ensure that disciplinary steps are taken against officials who incurred fruitless and wasteful expenditure.
- Ensure that investigations are conducted on allegations of financial misconduct and/or fraud in relation to SCM.
- Ensure SAPO submits its Annual Performance Plan and implement the recommendations of the AG.
- Ensure SAPO complies with the requirements of the AG with respect to wasteful expenditure by ensuring timely payments to suppliers.
- Ensure that lack of consequences for poor performance and transgressions and lack of accountability of personnel within SAPO, is addressed.
17.6 On NEMISA
- Ensure that criminal charges are laid against those responsible for the theft of equipment from NEMISA premises.
- Ensure that NEMISA complies with the deadline for the submission of its Annual Performance Plan and with the recommendations of the AG.
- Ensure that the lack of accountability of personnel at NEMISA, which resulted in a slow response to the AG findings be addressed.
- Ensure that instability or vacancies in key positions at NEMISA that had an impact on audit outcomes is addressed.
17.7 On USAASA/USAF
- Ensure that set-top boxes are installed within the required timeframes and that all challenges (including legal challenges) that hamper the installation process are resolved.
- Ensure that poor planning on the part of the management team and the Board of USAASA is rectified to ensure that targets are achieved.
- Ensure that irregular expenditure in USAF is reduced.
- Ensure that USAF strives to achieve its broadband targets.
Report to be considered.
 Sawyer et al, (2003)
 van Dijk (2005),
 Helsper, (2015).
 SITA Act No 38 of (2002)
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