ATC201202: Budgetary Review and Recommendation Report of the Portfolio Committee on Communications, dated 1 December 2020

Communications and Digital Technologies

Budgetary Review and Recommendation Report of the Portfolio Committee on Communications, dated 1 December 2020

 

The Portfolio Committee on Communications (the Committee), having considered the performance and submission to National Treasury for the medium term period of the(i) Department of Communications (the Department); (ii)Film and Publications Board (FPB);and (iii) the Independent Communications Authority of South Africa (ICASA) on 4, 6 and 17 November 2020; reports as follows:

 

1.         Introduction

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

 

1.1.       Purpose of the Report

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

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

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

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


 

2.         Role and Mandate of the Committee:

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

 

3.         Organisational Environment

In November 2018 President Cyril Ramaphosa pronounced a merger between the ministries of Communications and of Telecommunications and Postal Services into a single Ministry of Communications and Digital Technologies (DCDT) under new Minister Stella Ndabeni-Abrahams.Following the May 2019 general elections, the President pronounced the establishment of the National Department of Communications and Digital Technologies. The President further pronounced the transfer of the MDDA and Brand SA to the Presidency and the oversight function of these two SOEs were moved to GCIS during 2019/2020.

For this reason, during the reporting period, both Departments worked closely together on identified projects as well as undertook resource sharing from both a financial and human resource perspective in the spirit of the pending merger of the Departments in line with the National Macro Organisation of Government (NMOG) objectives. Jointly developed, the DCDT strategy as well as the start-up structure for the DCDT was approved by the DPSA. The transfer of employees from the DCDT and the DOC to the newly established DCDT was also concluded.

As of 01 April 2020, the Department of Telecommunications and Postal Services and the Department of Communications merged to form the Department of Communications and Digital Technologies.

Both the DTPS and the DoC jointly developed the DCDT strategy which will further inform the development of a revised organisational structure for the DCDT that will be supported by the development of a new budget programme structure. As part of its digitisation journey, the new Department will prioritise the implementation of its Digital Transformation Strategy while taking into consideration the merger of the DTPS and DOC which will require a consolidation of processes and systems that will also include the review of existing operational policies and procedures.

The Department of Communications has been in a state of transformation for the majority of the reporting period which in essence required the Department to collaborate with the DTPS in terms of jointly undertaking specific projects.

The sharing of such resources was formalised through the development of a Cooperation Agreement which was signed by the relevant principals of both Departments. Furthermore, during the reporting period, all staff members from the DOC physically relocated to the premises of the DTPS where they were accommodated.

Subsequent to the May 2019 national elections, the President pronounced the establishment of the national Department of Communications and Digital Technologies. As a result, the Presidential Proclamations in Government Gazette dated 14 August 2019 (President Minute: 372) confirmed the transfer of administration, powers and functions entrusted by legislation to the Minister of Communications in terms of Section 97 of the Constitution.

Based on the Presidential Proclamation, the Department of Communications no longer exists in the 2020/21 financial year. The revised legislative mandate is applicable to the newly established Department of Communications and Digital Technologies (DCDT), which will become operational from 01 April 2020, and will inform the operations of the DCDT going forward.

Furthermore, the MDDA and GCIS have been referred back to the Committee for consideration and reporting even though they were transferred to the Presidency during the above-mentioned cabinet reshuffle in 2018.

 

4.         Methodology

For the period under review, the Committee, in exercising its oversight role, considered the 2019/20 Annual Reports and Financial Statements of the Department,ICASAand FPB, on 4, 6 and 17 November2020.

The Annual Reports presentations to the Committee were all preceded by the Auditor-General of South Africa (AGSA) whichpresented the audit outcomes of the Department, ICASA, SABC, and FPB for 2019/20 financial years.

The Committee also considered the 2019State-of-the-Nation Address (SoNA), National Development Plan (NDP), Committee meetings, oversight reports and the 2018/19 Estimates of National Expenditure (ENE). There was no report from the Standing Committee on Appropriations (SCOA) nor was there a report from the Standing Committee on Public Accounts (SCOPA).

 

4.1        Outcomes of the Report

This report is aligned to broader government policy framework, New Growth Path (NGP), NDP and the governing party’s priorities (job creation, poverty alleviation, combating crime and corruption, rural development, education and health). It reviews the initiatives taken by the Department to ensure that the priorities of the plan are realised. Furthermore, this report will review and seek to address challenges emanating from 5th Parliament Legacy Report and ensure that those recommendations are responded to in a systematic manner.

The report alsoassesses the financial performanceagainst service delivery performance to ascertain whether the budget allocated to the Department was spent as envisaged andannotated in the Annual Performance Plan (APP). Finally, it summarises the observations made by the Committee after considering quarterly reports, all other necessary documents, and presentations generated usingoversight instrumentsbefore making service delivery recommendations.

 

5.         Department of the Department of Communications

5.1        Mandate and Legislative Framework

The Constitutional mandate of the Department is to: “Create an enabling environment for the provision of inclusive communication services to all South Africans in a manner that promotes socio-economic development and investment through broadcasting, new media, print media and other new technologies, and brand the country locally, regionally and internationally. “

The DoC’s mandates are derived from the President’s Proclamation when establishing the Department, to:

• Develop an overarching communications and broadcasting policy and strategy;
• Provide information dissemination and publicity to promote an informed citizenry; and
• Brand South Africa abroad to assist the country promote investments, economic growth and job creation.

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

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

 

The Department is also guided, amongst others, by:

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

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

• World Intellectual Property Organisation (WIPO).

 

 

5.2        Description and Core Functions

The Department is executing its mandate of developing appropriate policies that will help to improve government communication and drive the communications sector to ensure universal access to all citizens. The Department’s mandate is derived from Section 192 of the Constitution of the Republic of South Africa of 1996, which provides for the independence of broadcasting regulation in the public interest, the International Telecommunication Union (ITU) and the World Intellectual Property Organisation (WIPO). Nation-building and social cohesion remain key priorities as stipulated in the National Development Plan (NDP).

The Department is entrusted with a huge responsibility of creating an enabling communications environment and dignity of South Africans as encapsulated in the theme “Universal Access”. The constitutional mandate for the Department is to create an enabling environment for the provision of inclusive communication services to all South Africans in a manner that promotes socio-economic development and investment through broadcasting, new media, print media and other new technologies; and brand the country locally, regionally and internationally.

The Department continued to work with state-owned entities (SOEs) reporting to the Ministry of Communications to deliver on its mandate. These institutions play a vital role in giving true meaning to our mission of ensuring that ours is participatory democracy in which the people truly govern. In this regard, this means that we are vested with the responsibility to ensure that our people have access to as diverse information and knowledge as exist in the world.

Following the May 2019 elections, the President pronounced the transfer of the MDDA and Brand SA to the Presidency and the oversight function of these two SOEs were moved to GCIS during 2019/2020.

For the year under review, the activities of the Departmentwerestructured into four programmes, which are:

1. Programme 1: Administration
2. Programme 2: Communication Policy, Research and Development
3. Programme 3: Industry and Capacity Development
4. Programme 4: Entity Oversight.

 

5.3        PerformanceHighlights

During the period under review(2019/20)the Departmentcontinued to allocate spending to the four programmes.The Department had 19 targets planned; ten (53%) were achieved and nine(47%)were not achieved (see graph). The unachieved targetswere largely experienced in core functions of the Department’s work on policy development and theroll-out and successful completion of the BDM Programme.

 

The nine unachieved targets are reflected as follows:

1. 98.8 per cent of compliant invoices were paid within 30 days;
2. 2019/20 Strategic Risk reports approved, 2020/21Strategic Risk Assessment conducted, and strategic risk register updated;
3. Audio-Visual and Digital Content Strategy developed for the 4IR;
4. Broadcasting Amendment Bill submitted to Cabinet for approval;
5. PMO established and operationalised to support the Presidential Commission on Fourth Industrial Revolution;
6. Training of Audio-Visual SMME in three Provinces focusing on 4IR Skills and Enterprise Development;
7. Country-wide Implementation Plan on Analogue Transmission Services Switch-Off approved by Minister;
8. Report on BDM awareness and educational campaigns conducted in nine provinces; and
9. 12 performance review and compliance monitoring reports of SOEs developed.

Intergovernmental Relations and Stakeholder Management worked closely with the DTPS to develop and advance the Country PositionPaper for the International Telecommunications Union World RadioConference 2019 (ITU WRC 19). It also worked with the DTPS to develop and advance the Country Position Paperat the 5thBrazil, Russia, India, China and South Africa (BRICS) Ministers ofCommunications meetings in Brazil.

The Department implemented the Enterprise Development Programme with the intention to empower SMMEs in the creative and audio visual content industries (training capacity building) and to coordinate and facilitate digital entrepreneurship environment in the creative and audio visual content industries.

A revised Broadcasting Digital Migration Programme delivery model was completed and approved by Cabinet on 13 December 2019, paving the way for the finalisation of the migration process pending the available required financial resources. The recommendations include reprioritisation and sequencing of the BDM Programme in lieu of high demand spectrum release as well as making use of voucher system for qualifying indigent households.

 

5.4        Performance Per Programme

As illustrated in graph below, Programme 1 achieved six targets, Programme 2 achieved zero, Programme 3 achieved three of its targets and Programme 4 achieved one of its planned targets.

 

The Department planned to spend 100 per cent of its budget during the 2019/20 financial year; however, a total of 99.3 per cent of the total budget was spent. Contributing factors were the moratorium on filling of vacant posts, which meant savings on compensation of employees, while another recurring factor was the slow spending on the DTT project.

 

 

5.4.1     Programme 1: Administration

The purpose of the programme is to provide coordinated strategic and administrative support services to enable the Ministry and the DoC to deliver on mandates. The strategic objective for the year under review remained unchanged‘to ensure compliance with statutory requirements and good governance practices by 2019.’

 

5.4.1.1  Programme Performance

As at 31 March 2020, the Department achieved three of the five targets for the financial year owing to a number of reasons, namely

1. Consultations with Programme Managers could not be finalised due to the lockdown. The consultations were finalised in Q 1 of 2020/21 financial year; and
2. Since the DoC officials moved to DTPS premises, the transversal systems and the internet have been overloaded which resulted in poor functionality transversal systems
3. All invoices were paid although some were paid after 30 days.

Highlights for the year include 50 officialstrained for the 2019/20 financial year and the quarterly monitoring reports submitted to the PSETA. Awareness on compliance with the Employee Performance Management and Development System was implemented during the period under review. The Risk Management Directorate has planned for and conducted the risk identification in conjunction with the strategic planning process. As a result, four progress reports on risk mitigation were compiled. A number of internal audit projects were conducted, and the quarterly progress reports provided to management committee and to the Audit and Risk Committee.

The four quarterly reports on financial, compliance and performance audits were compiled against the Annual Operational Plan. Legal Services also dealt with labour matters and provided legal opinions in all the matters that has legal implications. Legal Services further managed the litigation processes for the Department and continued to provide services to the GCIS as well.

 

5.4.2     Programme 2: Communications Policy, Research and Development

The purpose of the programme is to conduct research, develop communications and broadcasting policies. The Department set two strategic objectives for the year under review, namely (i) improving universal access to broadcasting services by 2019; and (ii) broadening access to information all citizens by 2019.

 

5.4.2.1  Programme Performance

None of the targets under this programme were achieved owing to a number of reasons, namely

A Draft White Paper on Audio and Audio Visual Content Services Policy Framework for the 4IR was instead compiled to speed up the strategy development process. A Draft White Paper on Audio and Audio Visual Content Services Policy Framework was approved by EXCO, in February 2020 for processing and submission to Cabinet for approval for public consultation. The Audio Visual and Digital Content Strategy and final White Paper will be expedited in 2020/21 financial years.

The Broadcasting Amendment Bill was approved by EXCO in February 2020 for processing and submission to Cabinet for approval.The Amendment Bill is planned for submission to Cabinet during 2020/21 financial year as part of DCDT priority legislation.

The recruitment process to capacitate the PMO to support the Presidential Commission on Fourth Industrial Revolution took longer than expected. Appointments of a Senior Research Expert and five Research Experts were concluded in the fourth quarter. Only one Research Expert started in March 2019 while the other four officials started on 1 April 2020. The recruitment of the remaining positions is in the process of being concluded.

 

5.4.3     Programme 3: Industry and Capacity Development

The purpose of the programme is to manage enterprise development, Broadcast Digital Migration (BDM) and industry research and analysis.The Department set fourstrategic objectives for the year under review, namely:

1. Support the growth and development of the creative industries by 2019;
2. Manage BDM by 2019;
3. Strengthen support and interrelations with stakeholders by 2019; and
4. Market the country locally and internationally to provide an enabling environment for investment by 2019.

 

5.4.3.1  Programme Performance

Under the year in review, the Department managed to achieve three of its planned six targets, namely:

1. A total of two multilateral structures engaged jointly with the DTPS - the International Telecommunications Union (ITU) and World Intellectual Property Organisation (WIPO);
2. Draft World Radio Conference (WRC) 19 Outcomes report developed to inform the revision of the 2020 National Radio FrequencyPlan jointly with the DTPS; and Twelve SOE QPR sessions coordinated; and
3. Six engagements conducted on access to digital platforms for SMMEs.

The Department did not achieve three annual targets owing to (i) the awareness and educational campaign plan not adequately implemented in some of the provinces during a Quarter 1 reporting period. Awareness Campaigns were also not conducted in the Western Cape, KwaZulu Natal and Gauteng due to the CSIR recommendations that places the WC, GP and KZN as the last provinces for analogue switch off.

5.4.4     Programme 4: Entity Oversight

The purpose of the programme is to monitor the implementation of policies by state-owned and regulatory institutions and to provide guidance and oversight on their governance matters.

The strategic objectives for the year under review were:

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

 

5.4.4.1  Programme Performance

The DoC continued to work with state-owned entities (SOEs) reporting to the Ministry of Communicationsto deliver on its mandate and twelve SOE QPR sessions were coordinated. The performance reviews and compliance and monitoring reports were not developed owing to HR capacity constraints. Analysis reports were only submitted for the FPB and SABC.

The forums were substituted with coordinating twelve State Owned Entities Quarterly Performance Review (QPR) sessions for the year under review as entailed in the 2019-20 APP. The aim was to assess entities’ performance against the targets in the APP and corporate plans, to identify areas of noncompliance in measuring the priorities of government, budget allocations and the monitoring of service delivery and value for money.

 

5.5        Service Delivery Environment

The Department has during the year developed “South African Broadcasting Corporation SOC Ltd Bill, 2020” for Cabinet to consider and approve for public comments. The Bill amends the Broadcasting Act, 1999 (Act 4 of 1999) to develop and implement a stable corporate governance model that ensures long term stability and sustainability of the South African Broadcasting Corporation (SABC). This was in line with government commitment to a strong, independent and relevant public broadcaster, which is accountable to the shareholder, the public and Parliament.

With regard to Broadcasting Digital Migration, a revised delivery model was completed and approved by Cabinet on 13 December 2019 paving a way for the finalisation of the migration process pending the available required financial resources. The recommendations include reprioritisation and sequencing of the BDM Programme in lieu of high demand spectrum release. Other elements include making use of voucher system for qualifying indigent households, value of voucher and the potential process to implement the voucher system.Bythe end of the financial year, atotal of 1 151 194 registrationswere recorded nationally ofwhich 138 676 were registeredbetween 01 April 2019 to 31March 2020.

The 2019/20 Workplace Skills Plan (WSP) and 2018/19 Annual Training Report were submitted to Public Service Sector Education and Training Authority (PSETA). The 2019/20 three-year rolling Audit Strategic Plan and risk-based Internal Audit Annual Operational Plan was approved by both the Acting Director-General (ADG) and Chairperson of the Audit Committee. The Department spent 99.3% of the allocated budget.

During the 2019/20 reporting period, the Department developed a “Draft White Paper on Audio and Audio-Visual Content Services Policy Framework: A New Vision for South Africa” for Cabinet to consider and approve. The Draft White Paper on Audio and Audio-visual Content Services Policy Framework: A New Vision for South Africa 2020 is a forward-looking contribution to support regulatory policy and decision-making in the 6th Administration (2019-2024).

Awareness and Registration Campaigns: For the reporting period, awareness and registration campaigns were carried out as follows:

Parliament (Western Cape): Awareness activities were carried out in Cape Town during the Department’s budget vote.

Northern Cape: As the target province, awareness and registration campaigns were carried out in all districts and local municipalities of the province. As a result, registrations were closed in the province.

Free State. At least ten (10) awareness and registration campaigns were carried out towards closing of the registration process in the province at Springfontein, Trompsburg, Philippolis, Reddersburg, Bethulie, Edenburg, Faurismith and Jaggersfontein, Letsemeng, Dihlabeng and Kopanong.

North West Province Only one campaign was done in the in the town of Vryburg.

Limpopo. At least three focused campaigns were carried out during the President’s visit to Lephalale Municipality in the Waterberg District of Limpopo province. Two others were carried out in Bela Bela and Vhembe District during the hand-over of Computer Labs by the Deputy Minister

Eastern Cape. At least 31 focused campaigns were carried in the Eastern Cape Province: Mbizana Local Municipality; Bizana Town; KwaNdengana; Mthatha; King Williams Town and others.

Distributions and Installations / Activations of Migration Devices

By the end of the financial year, a total of 1 151 194 registrations were recorded nationally of which 138 676 were registered between 01 April 2019 to 31 March 2020. A total of 511 368 installations have been completed across the countryof which only 2 295 were carried out in the period between 01 April 2019 to 31 March 2020.

In terms of a Service Delivery Improvement Plan (SDIP), the Department highlights its achievement to date in the Annual Report; for more information, refer to Section 2.3 (Service Delivery Improvement Plan) of the Annual Report.

 

5.6        Overview of Financial Performance  

The Department was allocated R1. 576 billion for the 2019/20 financial year. The Departmental budget was increased by R3.197 billion during the Adjusted Estimates of National Expenditure (AENE) after adeclared savings of R 5 million.

A total R3.2 billion was allocated to South African Broadcasting Corporation(SABC) as the financial bailout to cater for the public broadcaster’s long outstanding debts, investmentin new and compelling content; and upgrading of dilapidated infrastructure.

Another R2 million was for theGovernment Communication and Information System (GCIS) as a cost recovery for selling anddistribution of the Vuk’uzenzele newspaper.

Out of the final budget allocation of R4.773 billion, as indicated above, R3.2 billion (67%) was allocated topayment for financial assets and transferred to SABC for financial bailout. R1.4 billion was allocatedand transferred to the departmental agencies and the GCIS, leaving the organisation with a totaloperational budget of R143 million (3%). From the operational budget, an amount of R86.791 million(60.7%) was allocated towards the compensation of employees, R55.409 million (39.7%) was allocatedto goods and services, while R574 thousand (0.40%) was for the payment of capital assets.

An amountof R891 thousand (0.62%) was budgeted for transfers and subsidies in respect of leave gratuity thatwas paid to employees who had left the employ of the Department during the 2019/20 financial year.

The Department recorded a total under-expenditure of R41.455 million during the 2019/20 financial year,which represent a saving of 0.87 per cent of the total budget allocation of R4.773 billion. The underspendingon compensation of employees was R25.091 million; this is as a result of the current vacancies and themoratorium that was placed on the filling of posts mainly because of the reconfiguration process of thedepartments.

A further saving of R14.690 million was on goods and services which is mainly recordedin Programme 3: Industry and Capacity Development (DTT Project) as a result of reviewing the deliverymodel that led to delays in the procurement processes for marketing and branding material that couldnot be concluded by 31 March 2020. R1.7 million on payment for capital assets was resulted fromnon-receipt of the equipment that was ordered due to the COVID-19 outbreak in China.

The Department has applied for a roll-over due to commitments that were made, and it is expectedthat the roll-over will fund the Capital Assets that were ordered and could not be delivered.

The Departmental revenue mainly consists of interest received on the commercial bank account as well as interest on Loan that is being received from the SABC in terms of Section 30(1) of the Exchequer Act, 1975 (Act 66 of 1975). In terms of Section 30(2) of the same Act, interest is payable six monthly in arrears on 31 January and 31 July every year at a rate of 6.5 per cent per year. The Department collected a total of R1.9 million against the projected target of R5.4 million.

The Department has received approximately R1.5 billion from ICASA in respect of administrative fees. The Department is deemed to be a “conduit,” as it mainly transfers the administrative fees to the National Revenue Fund and South African Revenue Service, respectively. Therefore, the Department does not realize this revenue in the Statement of Financial Performance.

 

5.6.1     Programme Expenditure

The Department spent 99.1 per cent of its allocated budget and realised a net underspending of R41.455 million (0.87%). The Department spending was mainly on Payment for Financial Assets amounting to R3.200 billion which was then transferred to SABC; R1.430 million was transferred to Departmental public entities. Expenditure also mainly took place under Programme 1 and Programme 3. The saving in Programme 3 is attributed to the slow spending on DTT awareness, see chart below:

 

 

5.6.2     Department Roll-Overs/Additional Funding

The Department applied for a roll over from 2019/20 financial year to 2020/21 financial to fund the capital assets that could not be delivered before 31 March 2020 and still awaiting outcomes.

The departmental budget was increased by R3.197 billion during the Adjusted Estimates of National Expenditure (AENE) after a declared savings of R 5 million. R3.200 billion was allocated to South African Broadcasting Corporation (SABC) as the financial bailout to cater for the public broadcaster’s long outstanding debts;investment in new and compelling content; and upgrading of dilapidated infrastructure. A total R2 million was for the Government Communication and Information System (GCIS) as a cost recovery for selling and distribution of the Vuk’uzenzele newspaper.

 

5.6.3     Department Virements

The Department did not require to effect major virements between programmes after the AENE. A total of R1.945 million was shifted to Programme 1: Administration and only R55 thousand was shifted to Programme 3: Industry, Research and Capacity Development. The amount of R2 million was shifted from Programme 4.

The virements effected for the year are reflected in the below on next page:

 

Lastly, the National Treasury has condoned the amount of R393 000 stemmed from irregular appointments and the Department has an irregular expenditure to the tune of R5.274 million.

 

5.6.4     Reasons for Under/Over Expenditure

Underspending under Programme 2, Communications Policy, Research and Development, mainlyduetodelaysintheimplementationofactivitiesrelatingtotheaudio-visual anddigitalcontentstrategydevelopedforthe4IRandBroadcastingAmendmentAct.Thisresultedinsavingsintravelling,consultations,venuesandfacilitiescost.

Underspending in the Industry and Capacity Development-programme mainlyduetofewoutreachprogrammesimplementedfortheDTTprojectbecauseofchangesinthedeliverymodel.Thisresultedinsavingsintravelling,rentalandhiring,advertisingandpromotionalitemscost.

COE – Underspending due to posts that were not filled during the financial year.

Goods & Services–Underspending mainly due to projects not implemented and overall reduction in international and local travel and other items related to the projects.

Capital Assets –Delays in the delivery of orders placed for laptops by suppliers which was affected by the COVID-19 lockdown.

 

5.7        AGSA Report

TheDepartmentachievedanunqualifiedauditopinionfor2019/20financial year and as at theendofthefinancialyeartheDepartmentaddressed94 per cent ofauditfindingsraisedbytheAGSA.

In terms of the audited Programme 3: Industry and Capacity Development, the Auditor-General (AG) did not identify any material findings on the usefulness and reliability of the reported performance information for this programme. The AG did not raise any material findings on the usefulness and reliability of the reported performance information in relation to Adjustment of material misstatements.

However, on procurement and contract management, the AG reported that some of the goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by Treasury regulation 16A6.1. Furthermore, procurement of assets was not included in the procurement plan.

Some of the goods of a transaction value above R500 000 were procured without inviting competitive bids and deviations were approved by the accounting officer even though it was practical to invite competitive bids, as required by Treasury regulations 16A6.1 and 16A6.4

There were significant internal control deficiencies that resulted in the findings on compliance with legislationand management did not adequately implement review and monitoring controls to prevent noncompliance with applicable laws and regulations relating to supply chain management, which resulted in irregular expenditure.

The report also notes that previous cases of irregular expenditure amounting to R393 000 were investigated and condoned by National Treasury during the financial year.

On the Adjustment of Material Misstatements, the Auditor-Generaldid not raise any material findings on the usefulness and reliability of the reported performance information.

Lastly,on the Internal control deficiencies, the Auditor-General found that management did not adequately implement review and monitoring controls to prevent non-compliance with applicable laws and regulations relating to supply chain management, which resulted in irregular expenditure.

 

 

 

1. Future Plans of the Department

The Department of Communications has been merged into the newly formed Department of Communications and Digital Technologies from the beginning of the 2020/21 financial year. The DoC’s future plans have been captured in the DCDT Strategic Plan 2020-2025 and the APP 2020/21 and aligned to the priorities of the Government’s MTSF 2019 – 2024.

 

6.         Public Entities Reporting to the Department of Communications

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

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

During the reporting period, the DoC’s oversight function over MDDA and Brand SA was transferred to the Presidency, but the budget of the two entities remained with the Department

 

 

 

Transfers are made to Entities according to the agreed schedule with National Treasury at the beginning of the financial year as illustrated below:

 

 

6.1        Film and Publication Board (FPB)

The FPB mandate is derived from the Films and Publications Act 65 of 1996 asamended in 2004 and 2009, the Film and Publication Board(FPB) is mandated to regulate: (1) the creation, production,possession and distribution of certain publications andcertain films by means of classification; (2) the imposition ofage restrictions and giving consumer advice; and (3) makeexploitative use of children in pornographic publications orfilms, or on the internet punishable. Therefore, the mandateof the FPB can be summarised as follows:

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

The FPB does not have a direct constitutional mandate, as itis a classification body, a regulator and a quasi-judicial body,because it licences, regulates, adjudicates and issues sanctions.

However, the FPB carries out its work with regard for therights contained in the Constitution of the Republic of SouthAfrica, which recognises and protects the rights of everycitizen, thereby ensuring an open and democratic society.Of particular importance are the following provisions:

Sections 16, 28, 32 and 36 of the Constitution of the Republicof South Africa and Act No 108 of 1996, which stipulatethat everyone has the right to freedom of expression. Thisincludes freedom of the press and other media, artisticcreativity and the freedom to receive or impart informationor ideas, the right to have access to information, the right tohuman dignity and the right to freedom of choice.For more on the legislative mandate of the FPB, please refer to the annual report.

 

6.1.1     Performance Highlights

The FPBachieved 75 per cent of assigned targets for 2019/2020. In conjunction with theirExecutive Authority and the DCDT, the FPB brought legislation that directs the regulatorymandate into alignment with changes in our environment. FPB celebrated a major coup in the year under review whenthe Films and Publications Amendment Bill was passed byboth houses of Parliament and assented to by the Presidentof South Africa on 9 October 2019.

More online distributors engaged with the FPB during the year, attributable to the traction of online streaming platforms in South Africa. Five licenses were issued in the year under review and non-compliance notices were issued to offending online distributors. The FPB continues to engage with online distributors on legislative compliance, assisted by the FPB Act enacted in 2019.

On registrations, 3 856 applications were received for registration and annual renewals, 2197 were processed manually and 618 though the online portal. Some 1 050 applications were rejected due to insufficient documentation.

On renewals, 2 412 were renewals and 403 were new registrations. During the period, 491 distributors closed, mostly in Gauteng.

Applications were processed in KwaZulu-Natal with 548 processed applications, Western Cape with 489, Limpopo with 67, Mpumalanga with 101, North West with 67 and Eastern Cape with 159. Free State registered 61and Northern Cape 35.

The number of classification submissions received declinedin 2019/2020, contributing to the 37 per cent decline of thepast five years. In 2015/2016, the FPB received 1 988submissions compared to the 1 243 titles received in thereview year.

Film festivals constituted the only submission category that increased during the year, which shows an improvement in compliance from the first quarter compared to the third quarter.

The popularity of DVDs dropped, from 119 in the first quarter to only 70 in the fourth, a result of the high demand for video on demand (VoD) content easily accessible to those with data to stream from over-the-top platforms.

The drop in the cinema category was not as pronounced, as cinemas offer popular family entertainment with unique offerings such as 3D and 4DX, which cannot be enjoyed at home.

 

Some 123 227 images were referred for analysis, 93 447(75.8%) of which were analysed.

Of those 93 447, 4 435 were found to constitute CSAM.The images were retrieved from six of 15 cases analysed.Four cases were carried over to 2020/2021.

During the year, 11 143 inspections were conducted on physical and online platforms such as online stores,social networks and VoD platforms. Some 737 notices of non-compliance were issued to noncompliant distributors for the following contraventions:

• Unclassified material on display
• Unregistered distributors
• Failure to renew registration

Five destructions in the central,northern and western regions were attended by membersof SAPS, Metro Police, distributors, members of the media, the KwaZulu-Natal Film Commission and GovernmentCommunication and Information System.

In the centralregion, 30 000 discs were destroyed with 68 500 in thenorthern and 39 000 in the western regions.The estimatedstreet value of the destroyed material is R13.75 million.

 

 

6.1.2     Financial Performance

Overall Revenue increased by 3 per cent from the previous year with the grant being the main contributor and this continues to put FPB under pressure as the operational costs increase by CPI plus.Operating grant increased by less than the inflation margin of 5 per cent from R94.6million in the previous year to R99.4million. 100 per cent of the billed grant was received

Interest income increased from R909 thousand to R1.2million due to proper cash flow management and investing the surplus cash at the right time.Regulation fee decreased from R7.9million to R6.4million. The decrease was due to a delay in the negotiation of agreements that were supposed to be finalised by year end such as Amazon, MTN etc.

Receivables from exchange transactions decreased from R4.5million in 2018/19 to R3.2million in 2019/20 mainly because of successful collection of debt owed to the FPB by various debtors.

Statutory receivables increased from R2.6 thousand in 2018/19 to R2.4million in 2019/20 and this is due to the number of online distributors that had an outstanding amount owing to the FPB at year end.

The statutory receivable is disclosed separately in the current year as a result of the new standard that requires that the receivables that arise as a result of legislation must be disclosed separately.

Cash and cash equivalents as at 31 March 2020 is R23.6million (2019: R21.4m). The cash balance at the end of the financial year remained high but 60% was committed and accrued for.

Noncurrent assets amounted to R19.3million (2019: R18.1m) as a result of the acquisition of property, plant and equipment and intangible assets. It should be noted that the FPB is currently developing an online content regulation (OCR) system and this is disclosed under computer software under development.

To date the institution has capitalized R9million and the project is estimated to be commissioned in the current financial year.Finance lease obligation amounted to R869 thousand (2019: Nil) due to the new finance lease for office copiers. Payables from exchange transaction decreased from R8.8 million to R8.3 million, with the main contributor a result of payment of large number of invoices received at year end.

Personnel expenditure amounting to R59.7million(2019: R57.9m) indicating an overall increase of 3.5 per cent. Depreciation and amortisation of R1.5million (2019: R2.4m). The decrease is attributable to the leased motor vehicle that came to an end in the 2018/19 financial year. Administration expenditure amounting to R34.5million (R29.0m) increase due to normal CPI increase on admin expenses and other expenditure items that have a higher increase such as domestic travel, consulting and professional fees and workshops.

The net result implies FPB has sufficient working capital to cover operational costs. The organisation has managed to invest R1.8million generated from grants and its own revenue by purchasing new assets (legal compliance and risk software, furniture, office equipment, computer software and computer equipment). Lastly, the organisation closed with a positive cash flow of R23.6 million.

 

6.1.3     Audit Opinion

The FPB received an unqualified audit with findings for the financial year under review. This is a regression when compared with 2018/19 financial years. The FPB had three material findings that resulted in a regression on the audit outcome to unqualified audit opinion with findings

The disclosure on intangible assets did not distinguish between intangible assets under development and intangible assets which resulted in a material misstatement of R9 million.

Statutory receivable portion that relates to service to be rendered was disclosed as income received in advance instead of Deferred Revenue.

Irregular Expenditure

An amount of R1 098 789 relates to the following:

1. Website maintenance costs beyond contractual terms – R135 240. Payments were also made against the SLA after its termination date until August 2019;
2. FPB had commenced a tender process for purposes of appointing a supplier for three years; and
3.  It was noted that responses to the tender were few compared to the norm, probably as a result of a clause which had been inserted that FPB could terminate the contract prior to the end of the three years. Consequently, no suitable bidder was identified from the tender advertisement.

The amount of R1 098 789 relates to the following:

1. Payments made exceeding contract/PO amount – R1 294 for advanced network support;
2. Additional costs for catering incurred without prior approval - R13 300 for catering costs;
3. Payments made exceeding contract/PO amount – R514 for vehicle tracking devices;
4. Deviation not approved – R166 578 for placement of advertisements;
5. No SLA in place for services of an employee benefits administrator – R228 856; and
6. All matters were referred to the Theft and Loss Committee for investigation.

Consequence management has been implemented for matters which were concluded by the Committee.

Fruitless and Wasteful Expenditure

There were no new cases of fruitless and wasteful expenditure reported in the 2019/20 financial year. All cases of fruitless and wasteful expenditure cases from prior years are currently being investigated by the Theft and Loss committee. Fruitless and wasteful expenditure of R9 000was written off due to non-recoverability.The organisation recovered R6 800 for previously incurred missed flights.

 

6.2        Independent Communications Authority of South Africa (ICASA)

ICASA is the regulator for the South Africancommunications, broadcasting and postal services sector.ICASA was established by an Act, the IndependentCommunications Authority of South Africa Act of 2000,as amended.ICASA is mandated to –

• Regulate electronic communications, broadcasting and postal sectors in the public interest; and
• Ensure affordable services of high quality for all South Africans.

ICASA’s mandate is derived from:

• The Constitution, 1996
• ICASA Act, 2000
• EC Act, 2005
• Broadcasting Act, 1999
• Postal Services Act, 1998
• ECT Act, 2002

ICASA has five Strategic Outcome Orientated Goals for 2015-2020, and these are (i) Investment in and access to broadband infrastructure; (ii) Promote competition; (iii) Common national identity and social cohesion; (iv) Independent and credible regulator; and (v) Improve stakeholder and consumer experience.

 

6.2.1     Performance Highlights

The Authority set thirty-eight (38) targets for the 2019/20 financial year. Thirty-three (33) of the targets were achieved and five (5) were not achieved. However overall performance has been on an upward trajectory year on year, with a slight dip in the year under reviewfrom a baselineof 29 per cent performance in 2014/15 financial year (see illustration below).

 

This was achieved notwithstanding significant reductionsin the organisation’s budgetary allocations over thesame period, the imposition of a moratorium of fillingof vacancies, as well as other resource constraints.

A critical achievement in the year under review wasthe commencement of the process for the licensing ofhigh demand spectrum and the wireless open accessnetwork (WOAN) following the publication of the Policyon High Demand Spectrum and Policy Direction on theLicensing of a Wireless Open Access Network (the PolicyDirection) by the Minister of Communications and DigitalTechnologies on 26 July 2019.

The licensing process commenced with the Authority’spublication of the Information Memorandum for the RFSin the bands: IMT700, IMT800, IMT2300, IMT2600 andIMT3500 on 1 November 2019 (“the IM”). The purposeof the IM was to provide an outline of the Authority’sapproach on the licensing of the spectrum for boththe industry and the WOAN. In excess of fifty (50)representations were received on the IM by the closingdate of 31 January 2020. The process is ongoing and willbe completed in the 2020/21 financial year.

Furthermore, as part of its mandate to foster socialcohesion and advance pluralism in the broadcastingsector, the Authority issued an invitation to pre-registerfor the licensing of community sound broadcastingservices on 12 November 2019.

The Authority produced South Africa’s State of ICTSector Report for the period ending 30 September 2019.The Report was released on 31 March 2020.

As part of our enforcement mandate, the regional officeshad to enforce the closure of over 20 community radiostations across the country for non-compliance as theydid not possess the required broadcasting licences tooperate as community radio stations. In terms of Section7 of the Electronic Communications Act No. 36 of 2005(the ECA), it is unlawful for any person to provide (oroperate) a broadcasting service without a licence.

Lastly, with regards to the execution of its compliance monitoringmandate and of primary significance in the year underreview, the Authority released the final report on thebroadcasters’ coverage of the 2019 National Electionsin terms of the National and Provincial Party ElectionBroadcasts and Political Advertisements AmendmentRegulations, 2019.

In terms of performance per strategic objective, on access to broadband spectrum, ICASA had the following highlights for the period under review:

• Commenced the licensing process for IMT Spectrum and the WOAN through the publication of the Information Memorandum;
• Completed the process to revise the Frequency Migration Plan as well as the IMT Roadmap;
• Revision of the Radio Frequency Spectrum Assignment Plans; and
• Regulatory frameworks on the use of TV Whitespace spectrum developed and implemented.

On promotion of competitionICASA had the following highlights for the period under review:

• Review of unreserved postal services Regulations;
• Review of the SAPO Price Cap Regulations; and
• Findings document on the use of digital sound broadcasting.

ICASA developed the Compliance Report on Broadcasters' Coverage of 2019 National Elections under the social cohesion and national identity programme for the period under review:

Oninstitutional credibilityICASA had the following highlights for the period under review:

• Attained level three organisational risk maturity level; and
• Increased stakeholder satisfaction rating from 40 per cent in 2018-19 to 72 per cent in 2019-20.

Onstakeholder and consumer experience ICASA had the following highlights for the period under review:

• Impact assessment study on the End-user Subscriber Service Charter Regulations; and
• A total 98.1 per centreported Radio frequency interference cases resolved or mitigated.

 

6.2.2     Financial Performance

The annual financial statements for the financial year ended 31 March 2020 have been prepared on the basis that the Authority would continue to operate in the foreseeable future based on the following indicators:

• The Authority is wholly dependent on the grant allocation received from National Treasury through the Executive Authority (Department of Communications and Digital Technologies) to continue to operate as a going concern.
• There are currently no indications that the approved grant allocation of R477 721 000 for the financial year 2020/21 will be discontinued. This basis presumes that funds will be available to finance future operations and realisation of the assets and settlement of liabilities, contingent liabilities and commitment will occur in the ordinary course of the business.

The Authority receives funding from the Department of Telecommunications and Postal Services (DTPS) to enableit to carry its mandate as prescribed in the Independent Communications Authority of South Africa Act. The grantreceived from the Department of Telecommunications and Postal Services above consists of an original allocation R452 645 000 (2019 ‑ R443 961 000).

Total revenue amounted to R468 590 177 as at 31 March 2020 up from R459 688 456 in 2019. Total expenditure as at 31 March 2020 was R456 085 307 (2019 – R487 551 179). The surplus (deficit) for the years was R3 504 870 (2019 – R27 862 723).

As at 31 March 2020, the current assets were R1 292 410 564 (2019 – R1 357 967 954). Total assets amounted to R1 438 756 952 (2019 – R1 517 993 869) inclusive of non-current assets. The total liabilities totaled R1 309 032 737 (2019 – R1 292 816 620). There was an accumulated surplus of R129 724 846 (2019 – R126 127 405) by the end of the financial year.

The bank balance of R69 463 458 recorded on 31 March 2020 will not be sufficient to fund the total amount required for all expenses accrued at the end of the financial year. This will mean, the Authority will finance a budget deficit from the 2020-21 budget allocation.

 

Litigations

Over the financial years under review, ICASA presented the following evidence relating to litigations:

On 14 March 2019, ICASA received summons from Two Steps CC (“Two Steps”), seeking a court order to compel theAuthority to pay Two Steps an amount of R321519.30, interest and legal costs in respect of customer satisfactionsurvey devices supplied and delivered to the Authority in terms of a request for quotations. The Authority is defendingthe matter as the purchase order signed was for R96, 238.60. The matter is still pending in court for hearing.

On 27 September 2012, ICASA entered into a contract with Duma Travel (Pty) Ltd (“Duma Travel”) for the provision ofcorporate travel management services. A contractual dispute ensued regarding the interpretation of certain provisionsof the contract. Duma Travel terminated the contract and claimed fees for services rendered. On 1 September 2015,Duma Travel issued summons against ICASA claiming payment of R401 531.36 plus interest thereon for servicesand disbursements allegedly rendered by Duma Travel in terms of the contract. The Parties are currently negotiatingsettlement of the matter.

A former employee of ICASA was dismissed. The employee referred the dispute to the CCMA which ruled in favor ofthe employee. ICASA approached the Labour Court for a review of the decision of the CCMA. To this end, ICASA paidsecurity for an amount of R1 778 195. The Labour Court ruled in favor of ICASA. The security amount has subsequentlybeen paid back to ICASA.

A former employee of ICASA was dismissed. The employee referred the dispute to the CCMA. The CCMA issued anaward in favor of the employee for reinstatement and back pay. ICASA approached the Labour Court for a review of thedecision of the CCMA. To this end, ICASA paid security for an amount of R1 421 436.

A former employee was dismissed. The employee referred the dispute to the CCMA. The CCMA issued an arbitrationaward in favor of the employee for reinstatement and for ICASA to pay an amount of R588 207.87 for back pay, studyloan and leave due to the employee. ICASA is reviewing the decision of the CCMA.

A former employee was dismissed. The Employee referred the matter to the CCMA. The CCMA issued an arbitrationaward of compensation for one month’s salary totaling R64 226.55 in favor of the employee. The employee isreviewing the decision of the CCMA. The Authority is opposing the review application.

On 15 June 2020, ICASA received a letter of demand for an amount of R71 378.20 from Exhibitionist due to services fora stand installation at the ITU Conference that took place in Durban in 2018. Exhibitionist has not yet issued summonson this matter.

A dispute ensued between ICASA and Waiters International regarding a process in terms of which Waiters was addedto the ICASA database and used to provide service to ICASA. Waiters issued summons against ICASA, inter alia, forpayment of an amount of R627 039.99. ICASA opposed the matter. Subsequently, parties reached settlement in termsof which ICASA agreed to pay Waiters an amount of R150 000 in full and final settlement of Waiter’s claim.

 

6.2.3     AuditOpinion

A total of 43 findings were raised by the Auditor-General(AG) on the Management Report issued to the Authority on the 17th of October 2020.

ICASA has consistently received an unqualified audit opinion with findings over the past five financial years as illustrated in graph below.

The AG did not raise any material findings on the usefulness and reliability of the reported performance information relating to the audited Programme 2: Licensing.

Most of the findings highlighted in progress relate to Financial Statement disclosure and IT related finding. However, there were new controls implemented to improve compliance and these are monitored on monthly basis.

The material findings on compliance with specific matters in key legislation are as follows:

 

Expenditure management

Effective and appropriate steps were not taken to prevent irregular expenditure of R3 369 931, disclosed in note 38 to the financial statements, as required by section 38(1)(c)(ii) of the PFMA. Majority of the irregular expenditure resulted from where it was impractical to obtain three quotations, approval of the delegated official was not obtained.

Consequence management

Disciplinary steps were not taken against some of the officials who incurred or permitted irregular expenditure and fruitless and wasteful expenditure, as required by section 38(1)(h)(iii) of the PFMA.

 

Procurement and contract management

Some goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by treasury regulation 16A6.1. Similar noncompliance was also reported in the prior year.

The AG further raised matters relating to internal control deficiencies as follows:

1. Controls were not always effective to ensure oversight monitoring and review of compliance with laws and regulations;
2. Consequence management was not adequately implemented by leadership against some employees who incurred or permitted irregular expenditure and fruitless and wasteful expenditure, as required by the PFMA.; and
3. Management did not implement adequate controls to prevent and detect non-compliance with laws and regulations, which resulted in irregular expenditure incurred by the institution.

 

6.3        South African Broadcasting Corporation (SABC)

The entity had not tabled its Annual Report by the time the Committee finalised the BRRR Report.

 

7.         A Department Reporting to a Department: Government Communication and Information Systems (GCIS)

Section 195 (g) of the Constitution (1996) - Public should be provided with timely, accurate and accessibleinformation.Deepen democracy and sustain nation-building and patriotism by ensuring that the citizenry is informed about government programmes and that they are able to influence and participate in such programmes.

In 1998, the South African Communication Service was dissolved and the GCIS established by Cabinet, largely on the basis of recommendations contained in the report of the Task Group on Government Communications (Comtask: 1996: 58).

The Government Communication and Information System (GCIS):

• Provides professional services;
• Sets and influences adherence to standards for an effective government communication system;
• Drives coherent government messaging; and
• Proactively communicates with the public about government policies, plans programmes and achievements.

 

7.1        Mandate and Legislative Framework

In the execution of its functions and in line with its founding legislation, the GCIS complies with the Constitution of the Republic of South Africa of 1996. Furthermore, the legislative mandate of the Department is realised through the following Acts:

1. The Public Finance Management Act, 1999 (Act 1 of 1999), as amended.
2. Section 41: Cooperative governance values.
3. Section 195: Basic values and principles governing public administration.
4. Sections 231: International agreements.

Relevant Policies include the Medium Term Strategic Framework 2014-2019 as well as the Framework for Strategic & Annual Performance Plans.

 

7.2        Description and Core Functions

The GCIS is committed to its key responsibility of providing strategic leadership and coordinating the government communication system to ensure that citizens are informed and have access to government policies, plans and programmes. Thus, GCIS plays a pivotal role in creating a well-informed citizenry that is engaged in the work of government and is able to fully exercise the rights afforded by our democratic society.

While traditional media channels such as radio, community and other print publications, and terrestrial TV, remain the primary means of disseminating information, rapid advancements in technology such as mobile and smartphones, decreasing costs of broadband technology, coupled with the growth of the broadband network, and the spread of satellite television (TV) have had an effect on the way South Africans access information.

This presents an opportunity for the GCIS to use these new channels to extend the reach of government communication beyond traditional media channels and to deepen dialogue between citizens and government. Government also uses more of social media platforms to reach the citizens.

Keeping public servants informed of government’s plans, programmes and actions is as important as communicating with the public.

 

7.3        Performance Highlights

During the 2019/20 financial year, the GCIS continued to achieve most of the targets set in the Annual Performance Plan (APP) as a result of innovative ways in approaching the work of government communications.

The Department had 43 targets for the 2019/20 financial year. 41 (95%) targets were achieved and 2 (5%) targets (41 out of 43 targets) were not achieved. Some of the key highlights include:

• Distributed more than 19 million copies of Vuk’uzenzele newspaper;
• Conducted 1900 out of 1710 community and stakeholder liaison visits;
• A total of 1737 out of 1140 development communication projects conducted on government priorities;
• A total of 271 out of 240 radio products and services provided. including radio broadcasts, radio news bulletins, live link-ups, community radio phone-in programmes and recordings of government’s events;
• Supported political principals in 84 Izimbizo events;
• GCIS Media Buying Advertising Campaigns in support of Department of Justice and Constitutional Development against GBVF;
• GBVF Opinion pieces and Key Messages to guide communication and setting the agenda around GBVF;
• Public Opinion Research that assessed awareness and impact of GBVF communication campaigns;
• SANews articles on GBVF stories that fed into the wider media space;
• Paid for social media campaign and pushing content on all GCIS digital/social platforms;
• Quarterly Media Content Analysis Reports on GBVF and daily media monitoring on GBVF related stories to inform Rapid Response; and
• The following articles on GBVF were translated into isiZulu and isiXhosa respectively in 2019/20 Financial Year:
  • Radio Script on GBVF Summit 12 April 2019;
  • GBV Video Content 12 September 2019;
  • GBVF article for placement on Isolezwe: 27 January 2020.

Media engagement:

• Inaugural Africa Media Tour – building our continental media footprint
• GCIS Studio at the 2nd SA Investment Conference – high profile interviews

• Communication Strategy and Plan for each of the three Pilot Launches of the District Development Model by the President;
• Rollout of the comprehensive CARA Funded anti-corruption campaign;
• Outreach campaign to support the 2019 Rugby World Cup which saw SA win an event graced by the President, galvanizing the nation;
• Led the communications work stream for the Presidential Inauguration;
• Communications Support for the June 2019, 1st of the 6th Democratic Administration;
• Communications work stream to support the public awareness, information and education about the 6th democratic general election;
• Supported programme of Land handovers – Mkhwanazi Handover in KZN; and
• Profiling of economic interventions – Presidential launch of the new Nissan Bakkie and localisation facility in Rosslyn.

Economic opportunities booklet by GCIS:

• Youth Environmental Services (YES) programme by the Department of Environmental Affairs and the Wildlife and Environment Society of South Africa (WESSA).Learning opportunities on environmental skills training and community service.Job Placement Programme by NYDA links skilled and unskilled young people; and
• Corporative Incentive Scheme by the Departments of Small Business and Department of Agriculture and Land reform. Bela-Bela CPA benefited R12 million to start a chicken farm specializing in egg layers. 

 

7.4        Performance Per Programme

 

In terms of targets, Programme 3 did not achieve 14 percent or two of its fourteenplanned targets in contrast to Programmes 1 and 2 who managed to achieve all planned targets, see table above and graph below:

 

A detailed explanation of performance per programme is outlined herewith below.

Programme 1

The purpose of this Programme is to provide overall management and support for the Department. Thee Strategic Objective is to provide adequate and effective Corporate Services functions in pursuit of good governance.

Key Achievements include: The Department complied with the Department of Planning, Monitoring and Evaluation’s (DPME) frameworks by reviewing and tabling the 2020/21- 2022/23 APP in Parliament according to prescribed time frames. It also complied and submitted the four quarterly performance reports (QPRs) to the Executive Authority, the DPME and National Treasury within the legislated time frames. The portfolio of evidence was audited quarterly against the reported achievements and contributed to a clean audit on performance information maintained during the 2018/19 financial year. Furthermore, the 2018/19 Annual Report was tabled in Parliament in September 2019.

During the period under review, the GCIS had an approved risk management framework with implementation plans, and a risk register comprising the strategic, operational, fraud and corruption risks. It reviewed the registers, monitored and reported quarterly to the Management Committee (MANCO), Audit Committee and Risk Committee. Other highlights include:

• EE targets:
  • Target for Woman at SMS level was exceeded at 53 per cent vs 50per cent; and
  • People with disability target was over achieved at 3,35per cent vs 2per cent.
• 100per cent of disclosure of financial interest was achieved at SMS level and designated groups.

In terms of linking performance with budgets, Programme 1 Final Appropriation versus Actual Expenditure is illustrated in chart below:

 

 

Programme 2

The purpose of this Programme is to provide strategic leadership in government communication to ensure coherence, coordination, consistency, quality, impact and responsiveness of government communication. The Strategic Objectives are (i) to produce government communication products and provide services to grow the share of voice of government messages in the public arena; (ii) to provide strategic leadership and support in government communication through public opinion research and analysis of media coverage to understand the communication environment and inform government messages; and (iii) to provide efficient and effective communication services.

Key Achievements include: During the period under review, 19.35 million copies of Vuk’uzenzele newspapers were published and distributed across the country. Vuk’uzenzele is published fortnightly, with a print run of 850 000 copies per edition – 1.7 million copies per edition. The newspaper is distributed directly to people’s homes, to selected GCIS offices and through activations – especially to those in rural and semi urban areas.

The newspaper is a free government newspaper that communicates directly and regularly with the public. It focuses on communicating government programmes and policies, including socio-economic opportunities created by government and comprehensive details on how to access these opportunities.

The directorate also published 11 copies of Public Sector Manager (PSM) magazine during the period under review.The Directorate: Content Development provided writing, editing, proofreading and translation services to the GCIS and The Presidency.

The GCIS provided support to The Presidency by editing and proofreading the biographies of the recipients of National Orders and other high-profile projects. Apart from the Highlights of the SoNA publication, the directorate also produced an informative booklet on GBV and a 25 Years of Freedom and Democracy publication.

In addition to various multilingual projects, the GCIS Language Unit also translated the fortnightly Vuk’uzenzele newspaper and Cabinet Statement, as well as the weekly President’s Message. When necessary, it also facilitated the translation of the two languages of the Southern African Development Community (SADC) region – Portuguese and French.

The 2018/19 edition of the annual SAYB and Official Guide to South Africa were published online, and 40 000 copies of the Official Guide to South Africa were printed and distributed nationally, including to schools and libraries.

SAnews.gov.za published a total of 2 668 stories on the website www.SAnews.gov.za and via its email newsletter. In the same period, the SAnews Twitter account @SAgovnews increased by 62 000 new followers, bringing the Twitter account to 241 000 followers.

The South African Government Twitter account increased its followers from 205 495 to 338 483 gaining 91 million impressions. The South African Government Facebook account likewise increased its likes from 293 471 to 442 022, with reach of 49 291 945. The South African Government website was updated with 7 270 new items and had 30 283 173 page views during this period.

Other highlights include:

• 19.35 million copies Vuk’uzenzele newspapers were produced;
• The South African Government News Agency (SAnews.gov.za) published over 2668 stories for the year 2019/20;
• A total of 2380 media productsfrom the target 1713 were developed;
• 88 per cent (257 out of 293 media buying campaigns were implemented) against the target of 40 per cent; and
• Ten cluster reports on perception of government were produced during the 2019/20 financial year.

In terms of linking performance with budgets, Programme 1 Final Appropriation versus Actual Expenditure is illustrated in chart below:

 

 

 

 

Programme 3

The purpose of this Programme is the implementation of development communication, through mediated and unmediated and sound stakeholder relations and partnerships.The Strategic Objectives are (i) to pro-actively provide strategic communication leadership on government programmes and content across the three spheres of government; (ii) ensure an informed and empowered citizenry on government’s policies, plans, programmes and achievements to increase public participation in government; and (iii) toimplement a proactive and reactive media engagement system by building, maintaining and improving relations with the media and drive the government communication agenda.

Key Achievements include:The era of heightened fiscal constraints in government has meant that efforts to coordinate, strategise in clusters and where feasible, share resources, has become even more compelling. In the year under review, the GCIS has made significant strides driven by the imperative of trying to improve coordination and sharing between departments. Between April 2019 and March 2020, the GCIS provided strategic leadership and communication support in the planning and implementation of major government campaigns per cluster.

Annual communication programmes for clusters were developed and implemented in collaboration with the departments. The support included conceptualising campaigns, developing communication strategies/ plans, content development, information dissemination, stakeholder engagement, internal communication, provide communication training and development and coordinating government communications.

Among some of the highlights of the cluster work within GCIS was the instrumental role played in the fight against GBVF, 2019 Democratic Elections, 25 Year Review, Presidential Inauguration, Public Service March which started at the City Centre and endedat the Union Buildings South Lawns, NMOG, North West Intervention, National Orders and National Days, and Official State Funerals, to mention a few.

2019 National and Provincial Elections

In 2019, clusters played a critical role in preparations leading to the National and Provincial Elections, working closely with the Independent Electoral Commission in putting in place processes for successful general elections. Clusters played a central role in ensuring that voter education campaign took place, and especially in mobilising the youth to participate in their first democratic elections. Communication messages were crafted to appeal to the youth vote.

The GCIS flagship projects also included providing communication support to the two (February 2020 and June 2019) SoNAs by President Ramaphosa.

The cluster also ensured that all government communicators were workshopped around NHI issues, through a special NHI ICF workshop coordinated and implemented by the ICF team. Over 60 internal communicators attended the workshop, highest number recorded for the 2019 year. A highlight of the NHI campaign was when President Ramaphosa visited an NHI Clinic in Lusikisiki in the Eastern Cape as part of his programme during the launch of the Khawuleza DDM.

GCIS Communication flagship projects included providing support to:

The fight against GBV and Femicide (GBVF), 2019 Democratic Elections, 25 Year Review, Presidential Inauguration and the two February 2020 and June 2019 SoNAs.

Other highlights include:

Provided strategic communication advice to Inter-Ministerial Task Team (IMTT) on the North West Intervention;and

COVID-19 Communication Strategy and Implementation: headed the task team to coordinate the communication for the COVID-19 communication efforts.

 

In terms of linking performance with budgets, Programme 1 Final Appropriation versus Actual Expenditure is illustrated in chart below:

 

 

 

7.5        Overview of Financial Performance Information

The GCIS was initially allocated R441.7 million for the 2019/20 financial year. The original appropriation was reduced with R3 million to R438.7 million during the 2019 Adjusted Estimates of National Expenditure (AENE), see table below.

The reduction was the net effect of an increase of R2 million due to the projected recovery of self-financing expenditure in respectthe advertising of vacant posts in the monthly Vuk’uzenzele newspaper as well as a decrease of R5 million in the appropriation of Compensation of Employees (CoE) due to vacant posts that could not be filled during the first half of the 2019/20 financial year.

Of the allocated budget, the GCIS spent R425.6 million (97%), resulting in an underspending of around R13.1 million (3%), comprising of R11.6 million in respect of CoE, R175 000 in respect of Transfers and Subsidies as well as approximately R1.4 million in respect of operational funds.

 

The savings within CoE (which is an earmarked budget as per the Appropriation Act) at year-end are attributed to attrition of staff and vacant posts in the three programmes as well as secondment of staff to other departments who refunded the GCIS for salaries and related cost. The underspending in Transfers and Subsidies is due to lesser payments to former employees in respect of leave discounting and leave gratification as well as lesser payments in respect of SABC TV licences.

As indicated in table above, the Department spent 97 per cent of its final appropriation. The underspending of R13.116 million comprise of R11.640 million in CoE due to the attrition of staff and vacant posts, R1.383 million in Goods and Services due to lesser recovery of self-financing expenditure in respect of the advertising of vacant posts in the Vuk’uzenzele newspaper, security expenditure that was lesser than anticipated and the funding of the write-off of theft and losses; R175 000 in Transfers and Subsidies due to lesser payments in respect of leave discounting and leave gratification as a result of resignations and retirement of former employees as well as lesser payments than projected in respect of SABC TV licences.

Further underspending in the operational budget relate mainly to lesser recovery of self-financing expenditure in respect of the advertising of vacant posts in the Vuk’uzenzele newspaper, communication, subsistence and travel and property payments.

The projected revenue of R2.712 million was under recovered with R985 000, resulting in total revenue collected of R1.727 million. The under recovery is mainly attributed to lesser self-financing expenditure in respect of the Vuk’uzenzele newspaper of R1.1 million due to lesser sale of advertising space than projected (included in “Sale of goods and services other than capital assets”). Higher revenue was recovered in respect of the sale of GCIS products such as photos and videos (R55 000), interest and parking fees (R21 000) and interest-bearing debt (R134 000).

The GCIS continues to adhere to sound financial management principles as stipulated in the PFMA of 1999 and National Treasury Regulations.

2019/20 Adjusted Appropriation

The additional appropriation of R2 million was appropriated as self-financing expenditure in respect of projected revenue that the department would recover in respect of the sale of advertising space of vacant posts of other departments in the Vuk’uzenzele newspaper, see table below.

 

Unspent funds of R5 million was declared during the first half of the 2019/20 financial year in CoE due to vacant posts.No roll-over of funds was effected from the 2018/19 to the 2019/20 and from the 2019/20 to the 2020/21 financial years.

Virement were applied between Programmes during the first half of the 2019/20 financial year which resulted in a nett increase of R800 000 in Programme 1 and a nett decrease of R800 000 in Programme 2. The virement relate mainly to a shift of R600 000 from CoE to Transfers and Subsidies (Households) to fund the payment of leave gratuities and leave discounting of former officials who resigned or retired. A total of R5.059 million was shifted from Goods and Services to Capital Assets to fund the procurement of equipment and the maintenance or improvements to office buildings.The following virement was applied after the 2019 AENE:

 

The virement reflected above relate mainly to the shifting of funds in respect of office leases, maintenance of the building, procurement of Microsoft licences, procurement of capital assets as well as the funding of leave gratification and leave discounting in respect of former employees who resigned and retired.

 

7.6        Service Delivery Environment

The GCIS is charged with the responsibility of providing strategic leadership and coordinating the government communication system to ensure that citizens are informed and have access to government policies, plans and programmes. The Department plays a pivotal role in creating a citizenry that is well informed and engaged in the work of government, and is able to fully exercise the rights afforded by our democratic society. This has made it necessary to hold how governmentcommunicates at the same level of importance as what government does to improve the quality of lives of citizens.

Later in the 2019/20 financial year government messages on the COVID-19 pandemic were increased to ensure citizens are informed and stay safe from the deadly virus.

A total of 33 strategic engagements with the media were held to improve relations with the media and also share government information. Engagements included 14 post-Cabinet media briefings that were conducted to engage the media and journalists on Cabinet matters. These commenced with consistency and frequency following the General Election in 2019. The Media Liaison Officers’ Forum (MLO) was re-established to enhance coordination of media engagements across government.

The Department implemented 1 737 development communication projects reaching more than 26 million people through community radio, door-to-door, print media, outreach campaigns, dialogues, seminars,mall, and taxi activations, as well as road intersection blitzes. GCIS district and provincial offices conducted 1 900 community and stakeholder visits.

The Izimbizo Programme of Government continued to be the preferred platform for face-to-face engagement. In this regard, the GCIS supported political principals to interact with communities through 84 public-participation events that were held throughout the country. Furthermore, 334 marketing events were held to increase the visibility of the Thusong Service Centres and intensify the use of integrated mobile units.

The government communication system continues to improve in terms of coordination, and ensures integrated planning and implementation around the government communication priorities. The GCIS proactively provided strategic communication leadership on government programmes and content across the three spheres of government. A total of 13 strategic engagements with government communicators were held.

Nine ICFs were held guided by the principle that the army of public servants must be well informed and up to date on the programmes and policies of government. This was especially relevant given the revision of medium-term priorities following the 2019 General Election. A total of 270 government communicators from all spheres of government were trained to build their capacity within government and empower them with the latest communication techniques.

The GCIS continued to play a pivotal role of disseminating information that empowers the general public to participate in government programmes. A total of 12 editions of communication products were published to meet the information needs of different target audiences.

During the period under review, 19.35 million copies of Vuk’uzenzele newspaper were published and distributed. All the 22 editions produced were also published on the GCIS website, the Vuk’uzenzele website and via the Gov mobile app.

SAnews.gov.za published a total of 2 668 stories on www.SAnews.gov.za and via its email newsletter. In the same period, the SAnews Twitter account @SAgovnews increased by 62 000 new followers, bringing the Twitter account to 241 000 followers.

The South African Government Twitter account increased its followers from 205 495 to 338 483 gaining 91 million impressions. The South African Government Facebook account likewise increased its likes from 293 471 to 442 022, with reach of 49 291 945. The South African Government website was updated with 7 270 new items and had 30 283 173 page views during this period.

 

7.7        AGSA Report

According to the AGthe financial statements presentfairly, in all material respects, the financialposition of the Government Communication andInformation System as at 31 March 2020, andits financial performance and cash flows for theyear then ended in accordance with MCS and therequirements of the Public Finance ManagementAct of South Africa, 1999 (Act No. 1 of 1999)(PFMA).The GCIS received a Clean-audit outcome for the 2019/20 financial year

The audit opinion did not raise any material findings on the usefulness and reliability of the reported performance information for Programme 2 – ContentProcessing andDissemination.

The AG did not identify any material findings on compliance with the specific matters in key legislation set out in the general notice issued in terms of the PAA. And did not raise any material findings on the usefulness and reliability of the reported performance information. Lastly, the AG did not identify any significant deficiencies in internal control.

 

7.8        Media Diversity and Development Agency (MDDA)

The Media Development and Diversity Agency (MDDA) is a statutory development agency for promoting and ensuring media development and diversity in South Africa, set up as a partnership between the South African Government and major print and broadcasting companies to assist in (amongst others) developing community and small commercial media in South Africa. It was established in 2003, in terms of the MDDA Act No. 14 of 2002 and started providing grant funding to projects on 29 January 2004.

The call for social cohesion and the need to address unemployment, poverty and inequality guides the MDDA’s commitment to the transformation of South Africa’s media landscape. A diverse media in society reflects diverse views and opinions in a language of the citizen’s choice and, we believe, will promote an informed and knowledgeable society, which in turn sustains and deepens a people-driven democracy.

The MDDA’s mandate, as set out through the Media Development and Diversity Act No. 14 of 2002, speaks to such principles of active citizenship, which are critical to the achievement of the National Development Plan objectives of social cohesion and nation building.

The purpose of the MDDA Act of 2002 is “to establish the Media Development and Diversity Agency; to provide for its objective and functions; to provide for the constitution of the Board and the management of the Agency by the Board; to provide for the chief executive officer and other staff of the Agency; to provide for the finances of the Agency; and to provide for the support of projects aimed at promoting media development and diversity.”

The mandate is encapsulated in Section 3 of the MDDA Act of 2002 and Section 16 and 32 of the Constitution Act No. 108 of 1996, thereby providing for freedom of expression and access to information. The mandate requires that the MDDA encourages the ownership and control of, and access to media by historically disadvantaged communities as well as by the historically diminished indigenous language and cultural groups.

 

7.8.1     Performance Highlights

The MDDA achieved 84 percent (16) of the annual targets for its 19 key performance indicators for 2019/2020. This is an increase of four percent over the previous year and the best performance of the Agency over the past six financial years.

The entity has three strategic outcome orientated goals, and functions through five programmes: Governance and Administration; Grant and Seed Funding; Partnerships, Public Awareness and Advocacy; Capacity Building and Sector Development; and Innovation, Research and Development.

Two of the KPIs that were not achieved fell under Programme 2: Grant and Seed Funding, under Sub Programme 2.1 Community Broadcast Media – “Study into ownership and control in the media in South Africa completed”; and Sub Programme 2.2 Print and Digital Media – “Study into ownership and control in the media in South Africa completed”. Commissioning of the study, which would have had separate sections addressing the broadcast, digital and print media sectors, was delayed to the 2020/2021 financial year as suitable proposals received from service providers exceeded the threshold of R500k. A full tender procurement process is therefore required in 2020/21 when suitable budget will be available.

The third KPI for which the annual target was not achieved fell under Programme 5: Innovation, Research and Development – “Number of Research projects funded on key trends/developments impacting on community media sector” (3). Only one research project was funded as the other two research projects intended to be commissioned were impacted by the fact that suitable proposals received from service providers exceeded the tender threshold and a call for tenders therefore needed to be issued.

Three KPIs exceeded their quarterly and hence annual targets. These KPIs also fell under Programme 2: Grant and Seed Funding - Sub Programme 2.1 Community Broadcast Media and Sub Programme 2.2 Print and Digital Media. They concerned the number of funding proposals submitted to the Board for community broadcast (18) and community and small commercial media (SCM) print and digital publications (4). The community broadcast funding target was exceeded (22 approved) as a result of the additional funding made available in the course of the year from commercial broadcasters, in particular Multichoice, while roll over funds made it possible to fund more print and digital publications (10 approved).

Programme 2 is the core activity of the Agency in the delivery of its mandate.   The purpose of the programme is to promote media development and diversity through providing financial and non-financial support for community and small commercial media projects – across broadcast, print and digital media. 

 

Service Delivery Environment

In a major milestone for the MDDA and its transparent and efficient delivery of its mandate, the Agency’s first funding policy was approved by the MDDA Board in 2019, with immediate implementation in the second quarter of the financial year.  With the objective of strengthening the selection and funding criteria for projects, the policy has also overcome a major challenge in the process, the enormous backlog of projects caused by the open-ended period for submission of applications that the MDDA had followed. The backlog (some R800 million in value) and the principle of ‘first come first serve’ had meant that in some cases the MDDA was required to select projects for approval that had applied in 2012, which may no longer be compliant or have relevance to the current landscape.

In terms of the new funding policy, the MDDA instituted an annual call for proposals, with the call for the 2019/2020 funding cycle opening on in August 2019 and closing in October 2019.  The launch of the MDDA’s new funding policy was supported by the Deputy Minister through interviews on community radio, via a 65-radio link up, and commercial radio, and through social media.

The MDDA had received a final figure of 176 submissions by the closing date. Of concern was the exceptionally low number of applications with all the required documentation and the MDDA will, for the next call for applications, implement an outreach programme to assist projects with compliance.

Community and small commercial media projects on the application backlog were advised prior to the opening of the call for proposals that, if they still were seeking MDDA funding, they should reapply when the call for proposals was opened.

Following rigorous internal review and site verification, 22 community broadcast projects and 10 community and small commercial media print and digital projects were approved by the MDDA Board for funding for 2019/2020.

The community broadcast sector’s spiralling debt with Sentech has been an ongoing challenge, with community broadcast stations having either been shut down or about to be shut down. While the MDDA, with its stakeholders, is urgently seeking a long-term resolution to unaffordable transmission costs, the MDDA is assisting in settling some of the debt as a short term solution. In early March 2020, the MDDA issued an invitation to beneficiaries for applications for assistance with settling signal distribution fees/debt. Twenty respondents qualified for this assistance to an amount of R11,7 million. In addition to this, the 22 broadcast projects approved for the MDDA’s normal grant funding will have their Sentech debt cleared and a further 12 months’ subscription paid. This amountsto R6,6 million for the 22 broadcast projects.  As a result, over 18 million will be paid over to Sentech.

Containing costs of signal distribution and identifying more costs effective methods are one of the planned areas of the sustainability research to be carried out by the MDDA, as such debt is an ongoing problem if the status quo remains.

Covid-19 Emergency Response

Immediate actions taken by the MDDA prior to the national lockdown to protect its staff included hygiene adherence procedures, as well as a month’s transport relief for public transport commuters to prevent and/or limit their contact with crowds. In addition, non-essential travelling was cancelled immediately, and essential meetings were conducted remotely wherever possible.

With the rising COVID-19 infections in South Africa, a further decision was taken to direct staff to work from home from 24 March 2020, to protect both the staff and the organisation from the pandemic. The MDDA activated its business continuity plans, with all staff switching to remote mode, working online from home, and ICT supporting staff from a virtual environment. To date, the MDDA has had no notable outages during this transition, a testament to the strength of the plan in ensuring continuity at times of crisis.

Recognising the critical role played by community media in dissemination of information to communities across South Africa, the MDDA Board approved a COVID-19 emergency response fund to assist the projects continue to operate during the National Lockdown, and at the same time minimise the risk of their staff from potential exposure to the virus. A first phase R10 million emergency fund approved by the Board to cater for content generation, fuel, distribution costs for print, telecommunications and hygiene essentials, was launched at the end of March 2020. The MDDA Board also agreed to approve another R10 million for phase 2, should the lockdown be extended and to monitor further developments through the 2020/2021 financial year.

In other initiatives, the MDDA facilitated interviews around COVID-19 with the Minister in the Presidency on community radio stations across South Africa and has distributed government messages and radio adverts to MDDA beneficiaries, for publishing and broadcast.

 

 

 

7.8.2     Financial Performance

The table below describes the revenue versus expenditure patterns of the Agency during the financial year under review.

 

Major contributors to MDDA broadcast contributions are:

• Multichoice R40 million;
• SABC R8.9 million; and
• E-TV R2.9 million.

Conditional grant income variance relates to the broadcast equipment that is still being installed by the service providers. It is anticipated that the equipment installation will be completed in 2020/21 financial year.

During 2018/19 financial year, MDDA received R20 000 donations from private donors. There were no conditions attached to the donations.R19 million income was projected to be earned from conditional grants. Delays on the completion of studios installation resulted in only R12 million conditional grant revenue being earned.

Interest is earned on invested surplus funds (committed to approved projects). The additional R10 million contribution from MultiChoice necessitated MDDA to increase projects budget. National Treasury has approved R17 million rollover budget which was also allocated to the projects. The Research sub-programme has spent R2 million out of budgeted R3.9 million.

MDDA had only one project approval cycle in 2019/20 financial year. Disbursements to 2019/20 approved projects occurred in the first quarter of 2020/21 financial year.

Variance in employee cost was as a result of vacant positions that were subsequently filled in 2020/21 financial year.

Four new board members were appointed in 2020/21 financial year which will increase spending on board costs.Cost containment measures were implemented in 2019/20 financial year resulting in administrative cost savings.

The cash and cash equivalent balance includes R102 094 768 (2019-R66 650 345) funds committed for the approved grant beneficiaries, refer to note No.24 for the commitments disclosure.

The bank overdraft under current liabilities relate to the balance on the corporate credit card (R20 662). The balance is paid through a debit order on the 6th of each month.

Broadcast equipment roll-out

During the 2016/17 financial year, MDDA entered into MoU with the Department of Communications for Broadcast Equipment support for broadcast projects for an amount of R21 million. The remainder of R7.5 million (2019: R19.8 million) will be realised as revenue as the installations occur.

Programme Production

During the 2008/09 financial year, MDDA entered into MoUwith the Department of Communications for Programme Production support for broadcast projects for an amount of R20 million. The remainder of R5.8 million (2019: R5.8 million) will be realised as revenue as spending occurs.

Competition Commission

The Competition Commission fines different role players within the media industry and requests MDDA to implement remedial projects on its behalf. The remainder of the R16.2 (2019: R5.6 million) will be realised as revenue as spending occurs.

MDDA earns Universal Service and Access Fund (USAF) levy in terms of paragraph 3 of the Electronic Communications Act (Act 36 of 2005) USAF Regulations.

The levy is 0.2 per cent of the license holder’s license activities revenue.

License holders have an option of paying USAF levy to either MDDA or ICASA.

The amount included in Investment revenue arising from exchange transactions amounted to R6 659 515 (2019: R5 638 611).

 

1. Auditor-General

The Auditor-General performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents. AG performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

As mentioned above, the MDDA achieved 84 per cent (16) of the annual targets for its 19 key performance indicators for 2019/2020. This is an increase of four percent over the previous year and the best performance of the Agency over the past six financial years. The Agency achieved a clean audit for the first time over the three years, see chart below,

 

The AG did not identify any material findings on the usefulness and reliability of the reported performance information for Programme 2 - Grant and Seed Funding. AG did not identify any significant deficiencies in internal control.

Fruitless and wasteful expenditure has been incurred on the Workmans Compensation account. This was as result of interest and penalties levied on incorrect return of earnings filed in prior financial years.

R9 929 000 relates to irregular expenditure discovered by the Auditor-General during the audit process in the 2017/18 and prior financial year. The transactions were declared irregular expenditure as a result of procurement which did not follow the Supply Chain Management legislation. Forensic investigations have been conducted, disciplinary hearings were conducted on officials that caused the expenditure. Processes are underway to attain condonation from the National Treasury.

R39 126 159 relates to the irregular expenditure discovered internally on the broadcast centralisation tender where the tender processes were conducted in contravention of the Supply Chain Management legislation. An internal investigation was conducted through the Internal Audit office. value for money has been achieved since the equipment has been delivered and installed. Processes are underway to attain condonation from the National Treasury.

As at 31 March 2020, the entity had an accumulated surplus of R105 956 788 and that the entity’s total assets exceed its liabilities by R105 956 788.It is worth noting that R102 094 768 has been committed to projects for grant funding. The statement of financial performance shows a surplus of R21 218 139

The ability of the entity to continue as a going concern is dependent on a number of factors including the fact that the Government Communications Information Systems has no intentions to discontinue MDDA operations and will continue funding in the foreseeable future.

 

8.         Standing Committee on Appropriations (SCOA)

The Department did not appear before SCOA.

 

9.         Standing Committee on Public Accounts (SCOPA)

The Department did not appear before SCOPA.

 

 

10.        Committee Observations

10.1      The Department

It should be noted that for the purposes of reporting, the observations and recommendations of the Department of Communications and the Department of Telecommunications and Postal Services are conjoinedeven though that during the reporting period 2019/2020 financial year, the Department consisted of two separate departments. The Committee therefore noted:

1. that during the period under review, DOC performed poorly with only 53 percent of planed targets achieved against a 99 per cent expenditure;
2. that the DOC received and unqualified audit opinion for 2019/2020 financial year;
   1. and managed to address 94 per cent of audit findings by the end of the financial year;
3. that the DOC did not achieve 9 of its 19 planned 2019/2020 annual targets;
4. that previous cases of irregular expenditure for the DOC amounting to R393000 were investigated and condoned by National Treasury;
5. that the DTPS achieved 77 percent of planned targets achieved with 96 percent expenditure;
6. that the DTPS achieved an unqualified audit opinion for 2019/2020 financial year;
7. that previous cases of irregular expenditure amounting to R115 million were investigated and referred to National Treasury during the financial year;
8. that DTPS addressed 86 percent of audit findings raised by the Auditor-General;
9. its appreciation and complimented the DTPS for achieving an unqualifiedaudit with only 5 targets not achieved;
10. and congratulated the Minister, Acting Director-General and staff for all the hard work in attaining an unqualified audit;   
11. that zero based budgeting has not been implemented yet and will only be piloted within NT in the coming financial year;
12. that there are general budget cutsacross the State and operations need to happen with the limited budget available.
13. commended the Department on finalising the reconfiguration process within the relevant timeframes;
14. that major challenges for the Department included the processing of Broadcasting Digital Migration, its readiness for 4IR, the Draft White Paper on Audio and Audiovisual Content Services Policy Framework and the SABC Amendment Bill which still needs to be approved by Cabinet;
15. that the PMO is an additional to the structure of the Department and is understaffed.All PMO staff are contractual and terminal posts;
16. that a task team was set up to investigate signal distribution costs, and involves Sentech, ICASA and SABC;
17. that the merger between BBI and Sentech was subject to the finalisation of a business case, in concurrence with the Minister of Finance and the Minister of Public Service, the creation of legislation that gives effect to the merger and the adoption of said legislation by Parliament; and
18. that the Minister has approved the conversion of a BBI loan to equity which is subject to approval by the Minster of Trade and Industry.

 

10.2      GCIS

The Committee noted:

1. and commended GCIS for the good work done in maintaining its clean audit status;
2. and complimented the Ministers in the Presidency for good leadership and the efforts towards good governance;
3. the support of the Ministers to the MDDA and commended GCIS for the appointment of a Chief Executive Officer and the fact that such an appointment is a female;
   1. that under their leadership, MDDA achieved 41 out of 43 targets;
4. with concern that not all vacancies were filled;
5. that more than 19 million copies of Vuk’uzenzele newspaperwere distributed;
6. that 1900 out of 1710 community and stakeholder liaison visitswere conducted;
7. that 1737 out of 1140 development communication projects were conducted on government priorities; and
8. that 271 out of 240 radio products and services were provided. including radio broadcasts, radio news bulletins, live link-ups, community radio phone-in programmes and recordings of government’s events.

 

10.2.1   MDDA

The Committee noted:

1. and commended MDDA for achieving a clean audit;
   1. and commended the entity for not incurring irregular expenditure;
2. that MDDA achieved sixteen (16) out of 19 targets;
3. that variance in employee costs was as a result of vacant positions;
4. that 4 (four) new board members were appointed in 2020/21 financial year through the processes of the Committee;
5. that cost containment measures were implemented resulting in administrative costs savings;
6. with concern that the number of research projects funded on key developments impacting on the community media sector was not achieved; and
7. congratulated MDDA for the appointment of the Chief Financial Officer.

 

10.3      Observations on the FPB

The Committee noted:

1. withdisappointment that the FPB has regressed in performance since the last financial year;
2. with concern about an old ongoing item of allegationsaboutcompromised tender processes;
   1. that this has since been addressed through the adoption of a tender process during the year under review;
3. and commended the FPB achievements made in terms of the BBBEE, particularly with regard to placing focus on businesses owned by women, youth, and persons living with disabilities.;
   1. commends FPB for improving the participation of women and PLWD; and
4. and welcomed the report that there were no new cases of fruitless and wasteful expenditure reported in the 2019/20 financial year.

 

10.4      Observations on ICASA

The Committee noted:

1. and commended ICASA for its good performance;
2. congratulated the newly appointed councillors at ICASA;
   1. that the Committee fought hard to get them appointed;
3. its expectations of ICASA in respect of the management and licensing of the high demand spectrum;
   1. with emphasis that the licensing of high demand spectrum is a priority forthe Committee;
4. thatICASA could not proceed with some of the scheduled public hearings due to the COVID-19 lockdown and restrictions around the number of people allowed to congregate;
5. its concern that the target in respect of the sports broadcasting regulations review was not met, because, amongst other reasons, the Act obliges it to consult the Minister of Sports and the Minister of Communications when making regulations to amendments in this regard;
   1. that it is in the spirit of the Act rather than chasing deadlines and shortcutting processes that ICASA engages in issuing regulations;
6. and congratulated ICASA for the surplus achieved;
7. that the completion of the broadband market review is expected to be finalised by the end of the financial year;
8. that the relationship between ICASA and the Competition Commission was more complementary, particularly because the Competition Commission also participates in ICASA’s processes; and
9. that even though ICASA had regressed from 91 to 86.8 per centof its targets, the achievements recorded were commendable considering the circumstances surrounding the organisation’s operations.

10.5      Observations on the SABC

The entity tabled its Annual Report late and by the time the Committee had commenced to finalise the BRRR Report. There was not sufficient time for the Committee to conduct oversight and consider the annual report of the entity.

 

10.6      Observations Emanating from the Committee Meeting with the Auditor-General

The committee noted:

1. its sincere condolences to the family and staff of the Auditor-General, Mr Kimi Makwetu due to his untimely passing;
2. its appreciation for the personation made by the staff of the Office of the Auditor-General;
3. that overall the DOC portfolio remained stagnant, over the 5 years under review, with an unqualified audit finding;
4. that the FPBregressed from their prior year of a clean audit outcome to unqualified with findings on compliance with legislation;
5. that ICASAaudit outcomes also remained stagnant asunqualified with findings;
6. that the SABCaudit outcomes remained stagnant with qualified with findings; and
7. great concern in respect of procurement issues at the SABC;
8. that the AG informed it that it raised concerns around weaknesses in the internal control environment of SABC which created an atmosphere susceptible to fraud;
9. that there were conditions attached to the bailout of SABC which were satisfied prior to the pay-out although SABC was still required to report regularly to National Treasury in terms of the use of the funds;
10. that DTPS has improved overall to a clean audit inthe 5 years under review;
11. that SAPO and USAF did not signed off theiraudit reports as there was complexities and delays in overall conclusion of the audit;
12. that USAASA has not tabled its annual report;
13. with concern that SITA regressed to qualified audit findings; and
14. with great concern that SITA was in crisis in that proper record keeping and audit trails werelacking and poor internal controls were not met;
15. its appreciation that Sentech maintained its clean audit opinion;
16. that BBI tabled its annual report as per the ATC of 5 November 2020 and that the findings of BBI was omitted in the report of the AG as it was under the impression that BBI did not table;
17. that the AG informed it that it did not encounter any issues of hostility during its audit process and that it received adequate cooperation; and
18. that it was in agreement and accept the recommendations of the Auditor –General;
19. that effective and appropriate steps were not taken to prevent irregular expenditure of R3 369 931;
20. that disciplinary steps were not taken against some of the officials who incurred or permitted irregular expenditure and fruitless and wasteful expenditure, as required by section 38(1)(h)(iii) of the PFMA;
21. that some goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by treasury regulation 16A6.1. Similar noncompliance was also reported in the prior year;
22. that management did not implement adequate controls to prevent and detect non-compliance with laws and regulations, which resulted in irregular expenditure incurred by the institution;
23. that of the allocated budget GCIS spent R425.6 million (97%) resulting in an underspending of around R13.1 million;
24. that the AG reported that some of the goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by treasury regulation;
25. that some of the goods of a transaction value above R500 000 were procured without inviting competitive bids and deviations were approved by the accounting officer even though it was practical to invite competitive bids, as required by treasury regulations 16A6.1 and 16A6.4; and
26. that there were significant internal control deficiencies that resulted in the findings on compliance with legislation and Management did not adequately implement review and monitoring controls to prevent noncompliance with applicable laws and regulations relating to supply chain management, which resulted in irregular expenditure.

 

 

11.        Recommendations

11.1      The Department

The Committee recommends that the Minister:

1. should ensure that the Department considers the impact on the Public Service Wage Billin the transfer of employees from the DTPS and the DOC to the newly established DCDT;
   1. makes commitment that no employees would lose jobs and that the merger would suffice for the Department not to employ new people;
   2. ensures that no further employment of new staff occurs during the transfer of employees; and
   3. ensures that the Department and entities implement transparent change management practices during the mergers;
2. should ensure the Department puts in placemeasures to meet all targets not achieved;
   1. must further ensure that all set targets are achieved by the its entities;
3. should ensure that the Department puts systems in place in anticipation of the intended merger of Sentech and BBI that will enable a smooth transition;
   1. that the Department provides clear timelines to the Committee in respect of the intended merger between Sentech and BBI;
   2. has created an expectation to the Committee that the draft legislation will be tabled by the end of the next financial year;
4. should ensure the Department provides a separate reporting sheet in future presentations, on targets “not achieved” with a clear description of reasons and the work done to mitigate non-performance;
5. should ensure thatthe Department and its entities strive towards attaining or maintaining clean audits;
   1. should further ensure that all audit statuses are matched by high levels of service delivery;
6. should ensure a conducive platform for collaboration between the Department and entities exists in order to facilitate for performance improvement across the board;
7. takes note of the budget cuts and ensures that the Department and entities operate within the limited budgets;
8. continues to facilitate improvements in the structure of the Department’s work discussions with the SABC, ICASA and Sentech relating to transmission costs and to continue to promote sustainability of all entities;
9. should ensure that the Department continues to work with ICASA in order to ensure adequate funding for its programmes and does not impact negatively on its operations;
10. should ensure that the Department reports back to the Committee about the issues relating to achieving of milestones;
11. should ensure that the Department provides feedback before Parliament rises on the finality of BBI recapitalisation;
    1. ensure that the MoU continues to be implemented for continuation of corporation between BBI and Sentech;
12. should address issues in respect of contract management with all entities that need to be improved on;
13. should ensure that the Department fast-track appointment of Council at FPB so that it does not compromise governance;
    1. this in order to minimise impact of uncertainty brought about by the transition and mergers; and
14. should ensure that the Department implements consequence management and should lead by example;
15. should ensure that the Department conducts an investigation by an independent body of violations of Treasury regulations regarding procurement;
16. should ensure that the Department provide the Committee with timelines including requirements to meet for the merger of entities; and
17. should ensure that the Department obtain legal advice on whether a MoU cannot be entered into between entities to be merged for ease of oversight by the Committee.

The Committee commits to undertake its oversight role seriously and ensure that allthe Department’s entities reporting to Committee function efficiently. The Committee reiterates its appreciationof unqualified reports but that they should be sustained and continue to serve as an example to the entire portfolio. That (i) unqualified audits in general, must be justified by the level of delivery and improvements in achieving set targets throughout the portfolio; and (ii) contract management consistent with audit findings across all entities must be improved.

The Minister must prioritise the use of other State entities in order to maximise economies of scale and for further sustainability of all entities. The Department and entities should continue to collaborate further such that they all learn from each other.

Lastly, the Committee will continue to ensure proper functioning and use of State funds by the Department and all its entities.

 

11.2      GCIS

The Committee recommends that the Minister should:

1. ensure that the GCIS fills all outstanding vacancies;
2. ensure that GCIS achieves all outstanding targets;
3. ensure that digitisation of services at GCIS becomes a priority;
4. ensure that GCIS focusesdigital transformation policies that will integrate faster adoption into the work of government and to create new job opportunities;
5. ensure no underspending in future, even though 97% of budget spent, R 13.1 million could have been put to good use for public education initiatives; and
6. ensure that the GCIS provide a full audit of the printing versus electronic costs for GCIS.

 

11.2.1   MDDA

The Committee recommends that the Minister should

1. ensure that all vacancies at the Agency are filled including for junior positions;
2. ensure that the MDDA target on the number of research projects funded be achieved;
3. ensure that the MDDA maintains the clean audit it has achieved after consecutive qualifications; and
4. ensure that there must be further engagement with the SABC to assist community media.

 

11.3      ICASA

On ICASA, the Committee recommends that the Minister should:

1. ensure ICASA’s release of high demand spectrum on the pre-determined date;
2. ensure that ICASA meets the target of conducting public hearingsit could not proceed with due to the COVID-19 lockdown and restrictions around the number of people that could congregate;
3. ensure that ICASA commits to the pronounced dates on the release of high demand spectrum;
4. ensure that ICASA meets its target of 15 December 2020 in respect of the review of sports broadcasting rights regulations;
5. ensure that ICASA improvesperformance of unachievedtargets;
6. ensure that ICASA submit a comprehensive breakdown of labour relations costs and associated litigation costs;
   1. provide the total amount that has been spent on the case against the CFO
7. ensure that ICASA fills all vacant posts;
8. ensure that ICASA works towards improving audit findings;
9. ensure that ICASA takessteps to address consequence management, Supply Chain Management and procurement;
10. ensure that the commitment by ICASA on draft Must-Carry regulations be concluded by end of the financial year; and
11. ensure that ICASA commence disciplinary action taken against staff who permitted wasteful and fruitless expenditure; and
12. ensure that management must put in place controls to prevent and detect non-compliant with laws and regulations regard irregular; and fruitless and wasteful expenditure.

 

11.4      FPB

The Committee recommendsthat the Minister should:

1. ensure that the FPB must reversethe regress on its performance, which is contradictory to its previous financial years’ performance;
   1. to discourage the FPB from using the excuse of lack of capacity for non-performance;
2. urgethe FPB to correct the issues raised by the auditors;
3. ensure that the FPB addresses the issue of compromised tender processes;
4. ensure that the FPB was urged to continue dealing with cases internally, and only resort to courts for matters beyond its jurisdiction;
5. ensure that the FPB improves on its intangible assets; and

(vi) ensure that the FPB puts in place strategies to promote regulation of streaming services especially in the rise of prohibited material.

 

11.5      SABC

The entity had not tabled its Annual Report by the time the Committee finalised the BRRR Report.

 

11.6      Recommendations Emanating from the Committee Meeting with the Auditor-General

The Committee recommended that the Minister should:

1. ensure that the Department and its entities must develop an effective action plan to cover the financial statements, compliance with legislation and performance reporting;
2. ensure that the Department and entities implement consequence management;
   1. consequence management is prioritised and implemented as and when transgressions and/or poor performance is identified;
   2. that ICASA addresses its issues on consequence management;
   3. ensure that the Committeereceives reports from entities to monitorwhetheradequate consequence management policies areimplemented;
3. ensure that the Department and its entities’ action plans form part of the performance contracts of seniorofficials;
4. ensure that a task team within the Department is established and capacitated toadequately monitor the implementation of each entity’s action plan;
5. ensure that key vacancies are prioritised and filled with competent officials;
   1. the Committee will monitor the appointments for key vacancies;
6. ensure that the Department and its entities review and improve systems and controls to ensure quality of the financial statements, compliance with legislation and quality performance reporting;
   1. the Committee will request regular feedback on action plans and implementation thereof to ensure accountability;
7. ensure that ICASA improves on its unqualified audit opinion with findings;
8. ensure that the Department takes responsibility for the underperformance by SITA as well as other entities;
   1. ensure that SITA action plans are implemented in totality;
9. ensure that SITA implements proper record keeping of audit trails and poor internal controls are addressed;
10. ensure that SABC and SITA address audit issues on irregular expenditure;
11. ensure that SABC management tightens its internal control environment;
12. ensure that FPB implements necessary interventions to get back to a clean audit;
13. ensure that the Department has regular training on compliance issues for entities;
14. ensure that the Department replicates performing entities strategies such as Sentech and assist in guiding non-performing entities; and
15. ensure that USAF and SAPO must ensure that their submissions to the audit process are submitted on time, in order to ensure finalisation of audit reports.

 

11.7 Recommendations by the Committee:

The Committee resolved that it:

(i) through oversight,will ensure that all unauthorised, fruitless, wasteful and irregular expenditure are investigated and acted upon by the entities;

(ii) will monitor the review and implementation of systems and controls to ensure quality financial statements;

 (iii)will monitor compliance with legislation and quality performance reporting of the Department and its entities;

(iv) will monitor SITA in particular respect of irregular expenditure and PPE tender issues;

(v) will investigate the procurement and irregular expenditure issues relating to SABC;

(vi) will monitor SITA, NEMISA, SABC and will focus on the key challenges faced by these entities;

(vii) intends to conduct oversight visits to entities to ensure comprehensive oversight; and

(viii) would ensure that its oversight functions cover all the AG’s recommendations.

 

Report to be considered.