ATC210218: Report of the Portfolio Committee on Communications on the Revised Annual Performance Plan and Strategic Plans of Department and its entities, dated 16 February 2021:

Communications and Digital Technologies

Report of the Portfolio Committee on Communications on the Revised Annual Performance Plan and Strategic Plans of Department and its entities, dated 16 February 2021:

Introduction

The Minister of Finance delivered the Special Adjusted Budget in June 2020 which focused on the government response strategy to the COVID-19 pandemic. The COVID-19 pandemic forced many countries into lockdowns and slowed down public and private economic activities globally.

The economic impact due to the pandemic is equally devastating in South Africa. The global economy is expected to contract by 5.2 per cent, while South Africa's economic growth has been revised from the initial expected growth of 0.9 per cent, to contract by 7.2 per cent in 2020. In addition, South Africa's official unemployment rate has increased by 1 per cent to 30.1 in the first quarter of the year while the Gross Domestic Product (GDP) continued to contract for the third consecutive quarter, falling by 2 per cent.

On 24 June 2020, the Minister of Finance introduced the 2020/21 Special Adjustment Budget in the National Assembly to provide for comprehensive COVID-19 relief measures in terms of Section 30 of the Public Finance Management Act (Act 1 of 1999) and Section 12 of the Money Bills Act. The Special Adjustment Budget required that national departments and their entities all had to revise their allocation and spending plans for the 2020/21 financial year and this then warranted that the 2020/21 Annual Performance Plans also needed to be revised.

It is evident from these economic indicators and the Special Adjusted Budget, that COVID-19 has had a significant impact on public service delivery by government. Despite the Coronavirus pandemic, Parliament is expected to continue with its oversight function to ensure effective budget spending and safeguarding service delivery.

This Special Adjusted Budget report is based on briefings received by the Department and its entities including ICASA, SENTECH, FPB, USAASA/USAF, NEMISA, SITA, ZADNA and the SABC. The Department and the above-mentioned entitiesmade presentations to the Committee on 18 November 2020 and 24 November 2020 respectively. This is following a circular issued by DPME allowing Departments to review their 2020/21 Annual Performance Plans in light of the COVID-19 pandemic and the related budget adjustments.

Background on Revision of 2020/21 Annual Performance Plan

The Department, as is the case with other departments,accordingly reviewedits 2020/21 Annual Performance Plans.

The revision of its 2020/21 APP is largely based on the following criteria:

R111 million budget cut incurred by the Department; and
the impact of COVID-19 on the delivery modes to achieve certain targets in line with the new way of working.

The Department had to also take into consideration the fact that several key senior staff members had to focus on Covid-19 related priorities in Quarter 1 2020 through participation in the Covid-19 PMO, which in essence meant that such staff members could not fully focus on the planned Quarter 1 targets in the Annual Performance Plan (APP). This resulted in a backlog of certain Quarter 1 targets thereby creating a knock on effect to the subsequent quarters.

Where possible, only quarterly targets were adjusted allowing the Department to catch up on the delays, however, in certain instances, annual targets were affected and had to be revised accordingly.

Summary of revision of 2020/21 Annual Performance Plan

The Department revised its original targets as illustrated in table below:

4. The Department 2020/21 Priorities Per Outcome

The Department’s Revised Annual Performance Plan of the for 2020/21 has 4 outcomes in order to realise its impact statement: to ensure the promotion of digitally enabled citizens with secure and affordable universal access.

Herewith follows the outcomes and its corresponding targets as per the Revised Annual Performance Plan.

Outcome 1. Enabling Digital Transformation Policies and Strategies

The following 13 APP targets for 2020/21 have been identified by the Department as follows:

Development of 3 Country Positions to support the Digital Economy focused on BRICS, UPU and WTSA
International engagement strategy revised and submitted for approval
Submission of the South African Post Office SOC Ltd Amendment Bill to Cabinet
Submission of the South African Broadcasting Corporation SOC Ltd Bill to Cabinet
Development and implementation of the Data & Cloud Policy
Development and implementation of the Digital Economy Masterplan
Implementation of the PC4IR Report
Revision and implementation of the ICT SMME Strategy
Submission of Postbank Bill to Parliament
Submission of the State Digital Infrastructure Company Bill to Parliament
Submission of the State Digital Services Company Bill to Parliament
Issuing of final Policy Direction on 5G Spectrum
Development of Blueprint for Digital Technology diffusion.

Outcome 2: Increased Access to Secure Digital Structure:

The following 8 APP targets for 2020/21 have been identified by the Department as follows:

Development of the Legal Framework for the establishment of the BRICS Institute for Future Networks
Revision of National Radio Frequency Plan in line with WRC-19 Outcomes
Monitoring and sustaining provision of Broadband services to 970 connected sites
Conducting feasibility study for Phase 2 Funding
Establishment of the Digital Transformation Centre
Coordination and monitoring of 860,000 subsidized digital television installations in three (3) provinces
Coordination and monitoring of the distribution of 139 006 vouchers
Establishment of 1 additional Sector Computer Security Incident Response Team (CSIRTs).

Outcome 3: Transformed Digital Society:

The following 3 APP targets for 2020/21 have been identified by the Department as follows:

Signing and monitoring implementation of a Partnership Agreement, focusing on the Digital Economy
Implementation of the National e-Government Strategy and Roadmap towards digitalisation of government services
Implementation of the Digital and Future Skills Programme, in line with National Digital and Future Skills Strategy.

Outcome 4: High Performing Portfolio to enable achievement of their respective mandates:

The following 8 APP targets for 2020/21 have been identified by the Department as follows:

Revision and approval of the Organisational structure, aligned to mandate
Development and implementation of a Workplace Skills Plan (WSP), aligned to DCDT mandate
Development of and implementation of an Integrated DCDT Digitisation Strategy
100% of valid invoices paid within 30 days
Monitoring of service delivery performance and compliance of SOEs against strategic plans and relevant prescripts
Implementation of the Performance Management System for ICASA Councillors
Development of Quarterly analysis reports on SABC’s implementation of the turnaround plan
Development of an Integrated Digital Economy and Society Indicator Model.

5. Adjusted Financial Information 2020/21 Financial Year

Special budget cuts which were COVID-19 related amount to R111 million. Adjustment budget cuts of R48 million and an additional budget of R84.7 million to ICASA for the licensing of the spectrum wereeffected. In addition, adjustments for SAA Business Rescue amounted to R38 million.

Adjusted budget cuts of R27 million effected on the cost of employees of entities and additional budget of R84.7 million to ICASA for the licensing of the spectrum, see table below.

6. Observations made by the Committee

6.1 DCDT

The Committee made the following observations.On the Department, the Committee noted:

that as per the DPME circular, the Departmentand its entities reviewed their 2020/21 Annual Performance Plans in light of the COVID-19 pandemic and the related budget adjustments;
that this revision was based on the criteria of a R111 million budget cut incurred by the Department;
that the impact of COVID-19 was on the delivery modes to achieve certain targets in line with the new way of working;
that the Department had to take into consideration that its key senior staff members werere-assigned to Covid-19 related priorities in Quarter 1, which resulted in a backlog of certain Quarter 1 targets thereby creating a knock on effect on the other quarters;
that theimpacted outcomes for the 2020/21 APP included (i) the increased access to secure digital infrastructure; (ii) enabling digital transformation policies and strategies; (iii) transformed digital society; and (iv) the high performing portfolio to enable achievement of mandates;
that there is a general lack of monitoring tools at the Department;
that the Department has put in place strategies to deal with the resurgence of the COVID-19 pandemic; and
that the Departments’ budget was significantly cut which will have a knock on effect in terms of achieving its targets.

6.2 USAASA/ USAF

The Committee noted:

and appreciated the good work done by USAASA and USAF;
and appreciated that USAF’s finances are being managed adequately;
that the revised USAASA APP comprises of 7 (seven) output indicators implemented across 3 (three) outcomes and 2 (two) budget programmesi.e. Business Support & Business Intelligence;
that the revised USAF APP comprises of 4 (four) output indicators implemented across 2 (two) outcomes and 1 budget programme divided into 3 sub-programmesi.e. Broadband Infrastructure, Connectivity & Broadcasting Digital Migration programme;
with concern that USAASA defaulted in respect of the payment of valid invoices within 30 days;
with appreciation that staff has been suspended and consequence management implemented; and
that USAASA’s contingency plans in preparation for the second COVID-19 resurgence were project based.

6.3 Sentech

The Committee noted:

its appreciation for the good work done by Sentech;
andapplaudedSentech for its business acumen;
that Sentech was planning for the potential resurgence of the second wave of COVID-19 which will affect the revenue of the entity;
that Sentech had planned to meet its training targets and are actively pursuing such targets;
with concern that there was a decrease in annual revenues targets from 90 percent to 85 percent; and
that Sentech continuously monitors the volatility of exchange rates.

6.4 NEMISA

The Committee noted:

with concern the findings of the Auditor-General, in particular proper record keeping;
with concern that in particular,Programme 3 dealing with the provision of digital skills training to existing ICT education to meet the digital skills targets, was not met;
that the mandate of NEMISA has been revised and that the co-labs were the driving forcein order to reach more disadvantaged people in the country;
with concern that the resurgence of the COVID-19 wave would have a negative effect on the entity;
that NEMISA had experienced capacity issues, however, the Chief Executive Officer has been appointed; and
that NEMISA wants its platforms to be zero-rated to allow accessibility to all who cannot afford, that do not have connectivity.

6.5 SITA

The Committee noted:

its appreciation for the good work done by SITA to date;
with appreciation that the target for industry transformation was met;
that SITA’s review resulted in changes that affected 3 of the 5 strategic programmes i.e. financial sustainability, thought leadership and service delivery, and procurement and industry transformation;
that the impact of COVID-19 on SITA’s strategic direction was positive, in that it elevated its role in digital transformation and prioritised the acceleration of the digitisation programme;
with disappointment the regress of the audit opinion
1. with concern that the Auditor-General highlighted concerns in respect of targets dealing with procurement issues and internal capacity issues;
2. however, appreciate that SITA has an audit action plan considering the AG opinion;
that the Chief Financial Officer would be appointed in December 2020;
1. commend the filling of vacancies at middle management; and
that the resurgence of the second wave due to COVID-19 will affect the budget of the entity but that its reserves will sustain it.

6.6 ICASA

The Committee noted:

its appreciation for the good work done by ICASA;
that the spectrum auction process will be concluded in March 2021;
with concern that ICASAexperienced capacity problems as a result of the level of vacancies at a rate of 6.5 percent; and
with concern that the budget model is a challenge and that funding issues may impact theindependence of the Authority.

6.7 . ZADNA

The Committee noted:

its appreciation for the presentation made by. ZADNA;
that. ZADNAhas readjusted its targets and there was no impact on the entity;
that contingency measures would be implemented for a resurgence of the COVID-19 pandemic;
that. ZADNAhas adequate funds available in their reserves in case of a resurgence; and
that. ZADNA will implement more adequate systems for training and will incorporate more virtual training into its programmes.

6.8 FPB

The Committee noted:

its overall appreciation for the performance of the FPB;
that during COVID-19 pandemic, the FPB moved to operating budgets to purchase supplies and PPE equipment;
that less than R300 000 was spent during the COVID period which was a minimal amount;
that during COVID period the FPB continuedits operations with minimal interruptions and was still operating with minimum staff;
that the strategy was to generate income with online market strategies; and
with concern that the FPB was experiencing capacity issues.

6.9 SABC

The Committee noted:

its appreciation for the SABC in that its concerns that were previously raised were being addressed by the entity;
with concern that the SABC forecasted a R1.4 billion net loss, due to the impact of the COVID 19 pandemic;
with concern that what society was exposed to during the news briefing is reminiscent of the HlaudiMotsoeneng era;
with concern that the commercial revenue of SABC has been heavily impacted;
that the unfunded mandate is what impacts negatively on the bottom-line of the SABC;
that due to the operating model changes and revenue enhancements strategies, the commercial revenue was anticipated to aggressively improve in the ensuing financial period; and
that the SABC has implemented strategies in preparation for the resurgence of the COVID-19 period to be able to ensure the safety of employees.

7. Recommendations made by the Committee