Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698925343104.pdf (South Africa)
Monday, 22 May 2023] No 69—2023] FIFTH SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ MONDAY, 22 MAY 2023 _____________________ TABLE OF CONTENTS ANNOUNCEMENTS National Assembly and National Council of Provinces 1.
Withdrawal of Annual Performance Plan 2023/2024: Department of Justice and Constitutional Development ............................................................................................. 2 National Assembly 1.

Discharge of Whip ........................................................................................................... 2 COMMITTEE REPORTS National Assembly 1.

2.
2.

Higher Education, Science and Innovation ...................................................................... 3 Public Enterprises ........................................................................................................... 52 1 ANNOUNCEMENTS National Assembly and National Council of Provinces The Speaker and the Chairperson 1.
Withdrawal of Annual Performance Plan 2023/2024: Department of Justice and Constitutional Development (1) A letter dated 10 May 2023 has been received from the Minister of Justice and Correctional Services, to the Speaker of the National Assembly and the Chairperson of the National Council of Provinces, requesting Parliament for the withdrawal of the Annual Performance Plan of the Department of Justice and Constitutional Development for 2023/2024.

National Assembly The Speaker 1.


Discharge of whip (a) The following member has been discharged as a whip of the African National Congress in the National Assembly with effect from 22 May 2023: (i) McDonald, L E COMMITTEE REPORTS National Assembly 2 1.

REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION, SCIENCE AND INNOVATION ON THE ASSESSMENT OF THE 2023/24 ANNUAL PERFORMANCE PLANS AND BUDGET OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING AND ENTITIES, VOTE 17, DATED 19 MAY 2023 1.
INTRODUCTION AND MANDATE OF THE COMMITTEE The Portfolio Committee on Higher Education, Science and Innovation (hereinafter referred to as the Portfolio Committee”), having assessed the 2023/24 Annual Performance Plans (APPs) and budget and the Medium-Term Expenditure Framework (MTEF) budget projections of the Department of Higher Education and Training (hereinafter the Department), Council on Higher Education (CHE), Quality Council for Trades and Occupations (QCTO), South African Qualifications Authority (SAQA) and National Student Financial Aid Scheme (NSFAS), reports as follows: 1.1.
Mandate of the Committee and Department The Committee derives its mandate from Section 55(2) of the Constitution of the Republic of South Africa, which states that “the National Assembly (NA) must provide for mechanisms (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of (i) national executive authority, including the implementation of the legislation; and (ii) any organ of state.” Rule 227 of the Rules of the National Assembly (9th edition) provides for mechanisms contemplated in section 55(2) of the Constitution.
The Department derives its mandate from section 29 of the Constitution of the Republic of South Africa and the following legislation: Higher Education Act, 1997 (Act No.101 of 1997), National Student Financial Scheme Act, 1999 (Act No.

56 of 1999), Continuing Education and Training Act, 2006 (Act No.

16 of 2006), National Qualifications Framework Act, 2008 (Act No.

67 of 2008), Skills Development Act, 1998 (Act No.

97 of 1998), Skills Development Levies Act, 1999 (Act No.
9 of 1999) and the General and Further Education and Training Quality Assurance Act, 2001 (Act No.

58 of 2001).

The Committee oversees the implementation of the abovementioned legislation.

1 3 1.2.
Purpose of the Budget Vote 17 Report The Report accounts for the work done by the Portfolio Committee on Higher Education, Science and Innovation in assessing the 2023/24 Annual Performance Plans (APPs) and the 2023/24 budget, including the MTEF budget projections of the Department, Council on Higher Education (CHE), Quality Council for Trades and Occupations (QCTO), South African Qualifications Authority (SAQA) and National Financial Aid Scheme (NSFAS) in accordance with Section 27(1) of the Public Finance Management Act, 1999 (Act No.
29 of 1999).

On 31 March 2023, the Minister of Higher Education, Science and Innovation, tabled the Strategic Plans and the 2023/24 APPS of the Entities, including the Department.

The Speaker of the National Assembly refereed the planning documents to the Portfolio Committee in terms of Rule 338 for consideration and reporting.

1.3.
1.3.

Method On 3rd and 10th May 2023, the Portfolio Committee convened briefing sessions with the Auditor- General South Africa (AGSA), Department, CHE, QCTO, SAQA and NSFAS where the tabled planning documents (the revised Strategic Plans, the 2023/24 APPs, and budgets, including the MTEF budget projections) were presented and scrutinized.
The planning documents were assessed against the background of key government policy documents, including, amongst others, the National Development Plan (NDP), the revised 2019 – 2024 Medium Term Strategic Framework (MTSF), and the 2023 State of the Nation Address (SONA).

2.

OVERVIEW OF THE KEY POLICY FOCUS AREAS RELEVANT FOR THE DEPARTMENT AND THE ENTITIES 2.1.

Key government policies 2.1.1.


National Development Plan (NDP) Vision 2030 The NDP identifies the decent work, education and capacity of the state as particularly important priorities.

For the post-school education and training sector, the NDP envisages that by 2030, South Africans should have access to education and training of the highest quality.
The education, training and innovation system should cater for different needs and produce highly skilled 2 4 individuals; and graduates of the post-school system should have adequate skills and knowledge to meet the current and future needs of the economy and society.

2.1.2.
2.1.2.

White Paper for Post-School Education and Training (WPPSET) The White Paper articulates a vision for an integrated system of post-school education and training, with all institutions playing their role as part of a coherent but differentiated system.

The White Paper sets out strategies to expand the current provision of education and training in South Africa, improve its quality, and integrate the various strands of the post-school system.
The White Paper sets interventions for implementation by different sectors within Post-School Education and Training.

The Department has developed a Draft National Plan for Post Education and Training (PSET) from the White Paper, which will be an implementation plan with measurable targets for each sub-system of the sector.
The main policy objectives are: • A post-school system that can assist in building a fair, equitable, non-racial, non-sexist and democratic South Africa; • A single, coordinated post-school education and training system, expanded access, improved quality and increased diversity of provision; and • A post-school education and training that is responsive to the needs of individual citizens, employers in both public sectors, as well as broader societal and development objectives.

2.1.3.
2.1.3.

Revised Medium-Term Strategic Framework (MTSF) 2019 – 2024 The 2019 – 2024 MTSF is a five-year strategic plan of Government and forms the second five- year implementation phase of the NDP.

The Department of Higher Education and Training is responsible for contributing to the realisation of the policy priorities as outlined in the MTSF Priority 3: Education, Skills and Health.
For the 2020 – 2025 planning period, the Department will focus on these outcomes as follows: • Expanded access to PSET opportunities; • • Improved success and efficiency in the PSET system; Improved quality of PSET provisioning; • A responsive PSET system; and • Excellent business operations within the DHET 3 5 In implementing Priority 3, the Department of Science and Innovation, the Department of Employment and Labour and the Department of Agriculture, Land Reform and Rural Development support the work of the Department.
2.1.4.

2023 State of the Nation Address (SONA) The work of the Department for the 2023/24 financial is further informed by the priorities as pronounced by the President, Mr C Ramaphosa in his 2023 State of the Nation Address.
The Department’s 2023 has aligned its output indicators and targets with the SONA priorities as follows: • Skills Development in the digital and technology sector, the NSF will provide R800 million for this initiative in 2023/24 - the NSF targeted to fund 1 000 learners for skills development in response to innovation and technology.
• Presidential Youth Employment Initiative – in 2023/24, the university graduate assistants programme aims to provide employment to 2 559 unemployed graduates at 26 universities in fields related to their areas of study.

The graduate assistants programme is allocated an amount of R99,2 million.

Additionally, another 4 500 young people will receive demand-responsive training in priority growth sectors.

This project, which is allocated R110 million in 2023/24, is co-funded by the National Skills Fund.
Training providers will be paid based on the number of graduates from the programme who find permanent employment.

• Increased number of students entering artisan in TVET colleges – for the 2023/24 financial year, the Department targeted to train 30 000 artisans in TVET colleges from an estimated performance of 800 in 2022/23.
• The finalisation of the Comprehensive Student Funding Model for Higher Education, particularly for students who fall outside the current NSFAS criteria; reaching those who are known as the “missing middle” – for the 2023/24 financial year, The DHET targeted to have a Student Funding Implementation Framework approved by the Minister for submission to Cabinet by 31 October 2023.
• Gender-Based Violence – for 2023/24, the DHET plans to convene a minimum of eight (8) national /provincial workshops on Social Inclusion, including Equality and GBV in the Post- School Education and Training system.

The DHET will further develop a report on the implementation of the Sexual Offences Amendment Act (Act 32 of 2007 and Related Matters) in the PSET system.

The DHET will implement a new programme called the “Transforming 4 6 MENtalities” Programme.
The Programme seeks to address toxic masculinity in the PSET system.

This will be a multi-stakeholder partnership within the PSET system, with a particular focus on mobilising men in the PSET sector to be part of championing a world free of gender biases, stereotypes, violence and discrimination.

Working with Higher Health, curricular to ensure social support for survivors of toxic masculinity in the PSET system will be strengthened.
• Economic Empowerment of Women and determination to direct 40 per cent of public procurement to women-owned businesses – the DHET targets to have 40 per cent of public procurement set aside for women-owned businesses in 2023/24 and over the medium term.

3.
2023/24 MEDIUM-TERM EXPENDITURE FRAMEWORK (MTEF) BUDGET 3.1.Overview and assessment of the 2023/24 MTEF Budget Table 1: Summary of the 2023/24 overall budget allocation and expenditure estimates Programme Budget Nominal Increase / Decrease Real Increase / Decrease Nominal Percent change in Real Percent change in R million 2022/23 2023/24 2022/23 – 2023/24 2022/23 - 2023/24 Programme 1: Administration Programme 2: Planning, Policy and Strategy Programme 3: University Education Programme 4: Technical and Vocational Education and Training Programme 5: Skills Development 492,0 517,5 25,5 1,3 5.18% 0.27% 4 695,9 1 764,9 -2 931,0 -3 013,4 -62.42% -64.17% 88 839,9 92 644,5 3 804,6 -522,9 4.28% -0.59% 12 725,2 12 755,0 29,8 -566,0 0.23% -4.45% 407,0 432,0 25,0 4,8 6.14% 1.18% 5 7 2 577,7 2 667,7 90,0 -34,6 3.49% -1.34% Programme 6: Community Education and Training Sub-total 109 737,6 110 781,6 1 044,0 -4 130,7 0.95% -3.76% Direct Charges against National Revenue Fund 21 238,1 23 027,0 1 788,9 713,3 8.42% 3.36% Total 130 975,7 133 808,6 2 832,9 -3 417,5 2.2% -2.61% 3.2.
Overview and assessment of the 2023/24 MTEF budget allocation per programme and the 2023/24 performance targets Over the MTEF period, the Department has been appropriated R432,4 billion, including direct charges against the National Revenue Fund.

For the 2023/24 financial year, the Department received a budget of R133,8 billion, which comprises R110,7 billion of voted funds and R23 billion of direct charges.

The total budget experienced a nominal increase of R2,8 billion or 2.2 per cent in nominal terms.
When considering inflation-adjusted, the allocation decreased by R3,4 billion or 2.6 per cent.

The budget is projected to grow at an average growth rate of 5.1 per cent between 2022/23 and 2025/26.

The voted funds, excluding direct charges, increased nominally by R1,7 billion or 8.4 per cent.
In terms of economic classification, transfers and subsidies continue to dominate the Department’s budget, which accounts for 90.9 per cent of the total budget of R133,8 billion, including direct charges against the National Revenue Fund.
For the 2023/24 financial year, the allocation for transfers and subsidies amounts to R121,6 billion, of which R71,431 billion is towards Departmental agencies as follows: R47,9 billion to the NSFAS (for student bursaries and administration), R89,7 million to SAQA, R21,4 million to Education, Training and Development Practices Sector Education and Training Authority (ETDP SETA), R83,887 million to CHE; R29,7 million to QCTO; R121,961 million to Public Service Sector Education and Training Authority (PSETA); R4,7 billion to the National Skills Fund (NSF) and R18,4 billion to the SETAs.
An 6 8 amount of R48,7 billion is toward Higher Education institutions, universities, TVET and CET colleges.

The allocation for spending on the Compensation of Employees amounts to R11,1 billion.

The bulk of the budget for the Compensation of Employees is allocated to TVET colleges, followed by CET colleges.

The Goods and Services allocation amounts to R672,1 million.

Goods and Services budget is projected to decrease slightly to R706 million and R736,8 million in 2022/25 and 2025/26.

3.2.1.
3.2.1.

Programme 1: Administration The programme provides strategic leadership, management and support services for the Department.

The Programme structure has not been reviewed or changed.

It has five budget sub- programmes, namely, Department Management, Corporate Management Services, Office of the Chief Financial Officer, Internal Audit and Office Accommodation.

Over the MTEF period, the programme is allocated R1,6 billion.
For the 2023/24 financial year, the Programme received an allocation of R517,5 million, which is the second smallest allocation (0,47 per cent) of the Department’s total budget, excluding direct charges against the National Revenue Fund.

The Programme budget increased by R25,5 million or 5.2 per cent from R492 million in 2022/23.

When factoring in inflation, the budget has increased by R1,3 million or 0.27 per cent.
The bulk of the budget of this Programme at 50.8 per cent is appropriated to Sub- programme 2: Corporate Services, followed by Sub-programme 3: Office of the Chief Financial Officer at 22.2 per cent and Sub-programme 4: Internal Audit at 16.8 per cent.
Approximately 55.6 per cent of the Programme’s total budget will be for compensation of employee costs and 42.8 per cent is allocated for Goods and Services The budget allocation for Sub-Programme 5: Office Accommodation has increased nominally by R3,8 million.

However, when factoring in inflation, the budget decreased in real terms by R0,3 million or 0.32 per cent.
During the 2023/24 financial year, the Department will be relocating its offices to the Council for Scientific and Industrial Research (CSIR) where a better and conducive and conducive will be provided and staff will be supported with additional travel and relocation 7 9 costs.

The Portfolio Committee raised concerns regarding the sufficiency of the Sub-programme budget, given the envisaged office relocation.
This Programme is responsible for the MTSF outcome focusing on excellent business operations within the DHET.
The Programme has new output indicators and targets the 2023/24 APP, as follows: Table 2: New Output Indicators and targets in the 2023/24 APP Outputs Output Indicators 2023/24 Targets Policy directives on preferential to procurement achieve specific transformation goals implemented Safety and Security at public universities and colleges TVET implemented Percentage of public procurement set aside for youth-owned businesses Percentage of public procurement set aside for Black-owned businesses Percentage of public procurement set aside to businesses owned by people living with disabilities Percentage of public procurement set aside to Small, Medium and Macro Enterprises (SMMEs) Implementation Plan for rollout of Minimum Norms and Standards at TVET colleges approved the phased the Safety and Security Number of reports on the Implementation of the Safety and Security Minimum Norms and Standards in selected TVET colleges approved Minimum Norms and Standards for safety and security focusing on universities approved Source: Department of Higher Education and Training, 2023 30% 60% 7% 30% for Implementation Plan the phased rollout of the Safety and Security Minimum Norms and Standards at TVET colleges approved by the Minister by 30 June 2023 and Safety selected TVET 2 Reports on the Implementation of the Security Minimum Norms and Standards in colleges approved by the Director General by 31 March 2024 Minimum Norms and Standards for safety and security focusing on universities approved by the Minister by 31 March 2024 8 10 The Programme will continue to implement activities to achieve the targets relating to the payment of valid invoices received from creditors within 30 days, filling vacancies, resolving disciplinary cases, obtaining a clean audit outcome, and reducing the vacancy rate to below 10 per cent.
3.2.2.

Programme 2: Planning, Policy and Strategy This programme provides a strategic direction in the development, implementation and monitoring of Departmental policies and the Human Resource Development Strategy for South Africa.

The programme has six budget sub-programmes, namely, namely, Programme Management; Human Resource Development Council of South Africa; Policy, Planning, Monitoring and Evaluation; International Relations; Legal and Legislative Services and Social Inclusion and Quality.
Over the MTEF period, the programme is allocated R12,399 billion.

For the 2023/24 financial year, the Programme received an allocation of R1,764 million, which is R2,931 billion less than the 2022/23 financial year’s allocation.

Programme 2 budget accounts for 1,6 per cent of the Department’s total budget, excluding direct charges against the National Revenue Fund.

The bulk of the budget decrease of 65.7 per cent is in Sub-programme 3: Policy, Planning, Monitoring and Evaluation.
This Sub-programme is responsible for monitoring and evaluating the policy outputs of the Department, coordinating research in the fields of higher education and training, and ensuring that education policies, plans and legislation are developed into systems through monitoring their implementation.
It is noted in the Estimates of National Expenditure (ENE) 2023, that Cabinet has approved a decrease of R1,8 billion to the baseline in 2023/24 and an increase of R2,7 billion in 2024/25 and R104,9 billion in 2025/26.

These changes result in a reduction of R900 million over the period ahead of infrastructure grants to the University of Mpumalanga and Sol Plaatje University to fund Early Childhood Development (ECD) in the basic education sector.
Additionally, an amount of R2,2 billion is shifted from the university infrastructure and efficiency grants in 2023/24, of which R1,2 billion is moved to 2024/25 when universities will be better equipped to use these funds; R1,1 billion is reprioritised to Community Education and Training (CET) infrastructure.
9 11 Sub-programme 1: Programme Management: Planning, Policy and Strategy’s budget decreased marginally by R2 million or 32.8 per cent from the previous financial’s adjusted appropriation of R6,1 million.

In terms of economic classification, R146,0 million is allocated for current payments of which R115,2 million is for compensation of employees costs and R30,8 million for Goods and Services.
Notably, the allocation for Goods and Services decreased marginally by R3,1 million from the previous year's adjusted appropriation of R33,9 million.

Approximately R1,336 billion is allocated for transfer and subsidies to the Departmental agencies and accounts.

Allocation for transfers and subsidies decreased significantly from R4,457 billion in 2022/23.
The Programme supports the Department’s work toward achieving the DHET’s five MTSF Outcomes, namely, an integrated and coordinated PSET System, expanded access to PSET opportunities, Improved success and efficiency of the PSET System, Improved Quality of PSET provisioning and a responsive PSET System.
The Programme has new output indicators and targets in the 2023/24 APP as follows: Table 3: New Output Indicators and targets in the 2023/24 APP Outputs Output Indicators 2023/24 Targets NQF Amendment Act, 2019 (Act No 12 of 2019) promulgated Higher Revised Education Act approved Integrated Infrastructure Development Support Programme (IIDSP) for PSET implementation Interventions implemented to support the “Transforming MENtalities” Programme in the PSET system NQF Amendment Act, 2019 published NQF Amendment Act, 2019 Revised draft Higher Education Act approved for public comments published by 31 March 2024.
Revised draft Higher Education Act approved by the Minister by 31 March 2024 for public comments.
Number of Community Learning Centres built Number of TVET campuses built “Transforming Programme launched MENtalities” 3 2 “Transforming MENtalities” Programme launched by 31 August 2023 10 12 ICT funding allocated PSET institutions infrastructure to infrastructure budget Percentage of allocated for ICT infrastructure at PSET institutions Integrated Students participating in work integrated learning construction PSET Planning Framework developed and implemented PSET Management revolutionised Information System Number of students participating in work-integrated learning construction PSET Integrated Planning Framework approved A Plan for the integration of Information Management Systems used in PSET sector approved 10% 1 500 Planning Integrated PSET Framework approved by the Director-General by 31 March 2024 A Plan for the integration of Information Management Systems used in PSET sector approved by the Director- General by 31 March 2024 Source: Department of Higher Education and Training, 2023 The following are key selected annual targets for the 2023/24 financial year: • Revised Recognition of Prior Learning (RPL) Coordination Policy or Implementation Framework signed by the Director-General for submission to the Minister for publication; • Publishing of the National Qualifications Framework Act, 2019; • Revised draft Higher Education Act approved by the Minister for public comments; • Detailed design of a Multi-Purpose Centre in Giyani, Limpopo approved by the Director- General; • 3 000 student beds completed; • Concept design for the construction of the two new universities approved by the Director- General for implementation; • A minimum of eight (8) national/provincial workshops on Social Inclusion (including Gender Equality and GBV) in the PSET system held; • 15 Modules of the Advanced Diploma in TVET developed for TVET lecturers available on NOLS and two TVET Subjects’ learner-teacher support materials (LTSM) available on NOLS; and • A Country-Wide Master Skills Plan approved by the Minister; 11 13 3.2.3.
Programme 3: University Education The programme develops and coordinates policy and regulatory frameworks for an effective and efficient university education system and provides financial and other support to universities, the National Student Financial Aid Scheme, the Council on Higher Education, and national institutes for higher education.
The programme has six budget sub-programmes, namely; Programme Management, University Planning and Institutional Funding, University Governance and Management Support, Higher Education Policy Development and Research, Teaching, Learning and Research Development and Universities Subsidies.

Over the MTEF period, the programme is allocated R294,1 billion.
For the 2023/24 financial year, the Programme received an allocation of R92,6 million, which is R3,8 billion higher than the 2022/23 financial year’s allocation.

The University Education Programme budget accounts for 83.6 per cent of the Department’s total voted funds.

The significant increase is due to an increase in the National Student Financial Aid Scheme allocation meant to expand access of students from poor and working-class backgrounds to universities and TVET colleges.
Sub-programme 3: Institutional Governance and Management Support, which is responsible for monitoring and supporting institutional governance management and provides sector liaison services and Sub-programme 6: University Subsidies received the bulk of the increase at R2,1 billion and R1,6 billion, respectively.

NSFAS allocation for 2023/24 amounts to R47,9 billion, of which R47,628 billion is for students’ bursaries and R318,5 million for Administration.
Notably, NSFAS allocation accounts for 51.7 per cent of the University Education Programme budget for 2023/24.

Notably, the allocation to NSFAS Administration decreased from R366.6 million adjusted appropriation in 2022/23 to R318,5 million in 2023/24.

The allocation for spending on NSFAS Administration is projected to increase in the outer two years of the MTEF period, to R332,7 million in 2024/25 and R347,5 million in 2024/25 and 2025/26, respectively.
The allocation to higher education institutions amounts to R44,476 billion or 48 per cent of the Programme’s total budget allocation for 2023/24.
The R44,476 billion is allocated to higher 12 14 education institutions as follows: University of Mpumalanga: R464,6 million, Sol Plaatje University: R372,4 million, University subsidies: R42,816 billion, Universities subsidies: Academic Clinical training grants: R723,6 million and Universities subsidies: Presidential Employment Initiative: R99,2 million The University Education Programme supports the Department in its intentions toward achieving expanded access to PSET opportunities; improved success and efficiency of the PSET system; improved quality of PSET provisioning; and a responsive PSET system.
University Education Programme has new output indicators and targets in the 2023/24 APP as follows: Table 4: New Output Indicators and targets in the 2023/24 APP Outputs Output Indicators 2023/24 Targets Percentage of private higher education institutions complying with regulations 100% public education Well-managed higher institutions Quality of research and creative and innovation outputs monitored Progress report on the development of the Research Quality Framework (RQF) approved Language Policy Higher developed implemented in Education and Establishment of the Advisory Panel on the implementation of Language Policy approved Source: Department of Higher Education and Training, 2023 on Progress the report development of the Research Quality (RQF) Framework approved by the Director- General by 31 March 2024 Establishment of the Advisory panel on the implementation of the Language Policy approved by the Director-General 30 November 2023 by The following are key selected annual targets for the 2023/24 financial year: Outcome: Expanded access to PSET opportunities • Revised Draft Fee Increase Regulatory Framework submitted to the Minister for approval; • Updated Guidelines for the DHET Bursary Scheme at public universities submitted to the Minister for concurrency; 13 15 • Student Funding Implementation Framework approved by the Minister for submission to Cabinet; • Number (1 110 360) students enrolled at universities; and • Number (439 659) university students receiving funding through NSFAS bursaries.
Outcome: Improved success and efficiency of the PSET System • Number (232 000) of students completing a university qualification; • Number of graduates: Engineering: 14 477, Natural and Physical Sciences: 11 516, Human Health Sciences: 10 200, Initial Teacher Education: 29 500, Veterinary Sciences: 185, Master’s: 15 079, Doctoral: 3 477.
Outcome: Improved quality of provisioning • Number (85) of new Generations of Academics Programme (nGAP) posts filled at universities; • Number (40) of doctoral scholarships allocated to universities through the University Staff Doctoral Programme (USDP) for award to permanent instructional or research staff members; • Proportion (51%) of university lecturers (permanent instruction or research staff) who hold doctoral degrees; • Percentage (85%) of universities that meet the standard of good governance; and • Two reports on the evaluation of creative and innovation outputs by public universities approved by the Director-General and two reports on the evaluation of the 2022 research outputs of public universities approved by the Director-General; 3.2.4.
Programme 4: Technical and Vocational Education and Training The programme aims to plan, develop, implement, monitor, maintain, and evaluate national policy, programme assessment practices and systems for TVET colleges.

It also provides financial and other support to TVET colleges and regional offices.
The programme has six budget sub- programmes, namely, Programme Management: TVET, TVET System Planning and Institutional Support, Programmes and Qualifications, National Examinations and Assessment, Technical and Vocational Education and Training Financial Planning and Regional Offices.

14 16 Over the MTEF period, the programme is allocated R39,997 billion.
For the 2023/24 financial year, Programme 4 received an allocation of R12,755 million, which accounts for 11,51 per cent of the Department’s total voted funds, excluding direct charges.

The allocation increased marginally by R29.8 million from the adjusted appropriation in the 2022/23 allocation.
Approximately 92.29 per cent of the Programme’s budget is appropriated to Sub-programme 2: Technical and Vocational Education and Training System Planning and Institutional Support, which provides support to management and councils, ensures that colleges have fully constituted and functioning councils, provides guidance and support for the planning processes at TVET colleges, monitors and evaluates the performance of the TVET system against set indicators, develops regulatory frameworks for the system, manages and monitors the procurement and distribution of learning and teaching support materials, provides leadership for TVET colleges to enter into partnerships for the use of infrastructure and funding resources, and maps out the institutional landscape for the rollout of the TVET college system.
Notably, Sub-programme 4: National Examination and Assessment’s allocation decreased by R12,3 million from the previous financial year adjusted appropriation of R686,5 million.

In terms of economic classification, the Compensation of Employees received R8,093 billion, which increased by R361,7 million or 4,67 per cent from the previous year’s adjusted appropriation.

Allocation for Compensation of Employees accounts for 63.45 per cent of the Programme’s total budget.
Goods and Services received R387,7 million, which declined by R8,6 million from the adjusted appropriation of R396,3 million in 2022/23.

Transfers and subsidies to TVET colleges for 2023/24 amount to R4,2 million, which is less by R315,4 million from the 2022/23 adjusted appropriation.
Programme 4 supports the Department in its intentions toward achieving expanded access to PSET opportunities; improved success and efficiency of the PSET system; improved quality of PSET provisioning; and a responsive PSET system.
The Programme has a new output indicator and target in the 2023/24 APP as follows: 15 17 Table 5: New Output Indicators and targets in the 2023/24 APP Outputs Output Indicators 2023/24 Targets to reward Incentives completion of TVET Occupational qualifications Operating Model to incentivise TVET to complete Occupational students qualifications to Centres of Specialisation approved linked Operating Model to incentivise to complete TVET students qualifications Occupational linked of Centres to Specialisation approved by the Director-General by 31 March 2024.
Source: Department of Higher Education and Training, 2023 The following are key selected annual targets for the 2023/24 financial year: Outcome: Expanded access to PSET opportunities • Establish an additional Disability Support Unit to support students with disabilities in TVET colleges; • Enrol 520 000 students in TVET colleges; • Fund 346 258 through NSFAS bursaries; • Train 30 000 artisans in TVET colleges; and • Place 20 000 unemployed TVET students in workplaces.
Outcome: Improved success and efficiency of the PSET System • Release examination results to qualifying students within 40 days from the last exam timetable (per exam cycle); • Number (73 743) of TVET college students completing N6 qualification; • Number (13 823) TVET college students complete NC(V) Level 4; and • Enrol 4 500 in PLP to improve success.
Outcome: Improved quality of PSET provisioning • Percentage (75%) of TVET college lecturers with professional qualifications; • Number (300) of TVET college lecturers holding appropriate qualifications supported to acquire professional qualifications; and 16 18 • Number (200) of lecturers participating in project-based lecturer capacity-building programmes in engineering (electrical, plumbing and mechanical).
Outcome: A responsive PSET System • Number (35) of TVET colleges offering 4IR-aligned training; • All 50 TVET colleges implementing student-focussed entrepreneurship development programmes; • 10 new or revised curricula for TVET colleges approved by the Director-General; and • Three additional new/reviewed TVET programmes with integrated digital skills training approved by the Director-General.

3.2.5.
3.2.5.

Programme 5: Skills Development This programme promotes and monitors the National Skills Development Strategy (NSDS).

It develops skills development policies and regulatory frameworks for an effective skills development system.

The programme has five budget sub-programme, namely, Programme Management: Skills Development, National Artisan Development, Sector Education and Training Authority Coordination, National Skills Authority Secretariat and Quality Development and Promotion.
Over the MTEF period, Programme 5 is allocated R1,1 billion.

For the 2023/24 financial year, the Programme received an allocation of R432 million, which accounts for 0.39 per cent of the Department’s total voted funds, excluding direct charges.

The allocation increased marginally by R25,1 million in nominal terms (R4,9 million in real terms increase) from the adjusted appropriation in 2022/23.
Approximately 62,01 per cent of the Programme’s budget is appropriated to Sub-programme 2: Sector Education and Training Authority Coordination, followed by Sub-programme 5: National Artisan Development at 26.2 per cent.

In terms of economic classification, R149,8 million is allocated to the Compensation of Employees, which accounts for 34,67 per cent of the Department’s total voted funds, excluding direct charges.

Goods and Services received R17,8 million, which decreased marginally by 0.5 per cent.
Allocation for transfers and subsidies amounts to R261,7 million.

17 19 The Programme does not have new indicators and targets for 2023/24.

The following are key selected annual targets for the 2023/24 financial year: Outcome: Expanded access to PSET opportunities • 110 500 learners or students will be placed in work-based learning programmes; • 149 000 learners will be registered in skills development programmes; and • 23 00 learners will enter artisanal programmes.
Outcome: Improved success and efficiency of the PSET System • Number (21 000) of artisans found competent; • Number (32 550) of learners who completed learnerships; and • Number (105 000) of learners who complete skills programmes.

Outcome: Improved quality of PSET provisioning • Percentage (95%) of SETAs that meet the standard of good governance.
• Percentage (95%) of allocated SETA Mandatory Grants paid on time to employers Outcome: A responsive PSET System • Average lead time (40 days) from qualifying trade test applications received until the test is conducted.

• Number (21) of SETAs assessed to have developed credible Sector Skills Plans.

3.2.6.
3.2.6.

Programme 6: Community Education and Training (CET) The programme aims to plan, develop, implement, monitor, maintain and evaluate national policy, programme assessment practices and systems for community education and training.

Provide financial and other support to community education and training colleges.
The programme has four budget sub-programmes, namely, Programme Management: Community Education and Training; Community Education and Training Systems, Planning, Institutional Development and Support; Community Educating and Training College Financial Planning and Management; and Education, Training and Development Assessment.

18 20 Over the MTEF period, the CET Programme is allocated R8,366 billion.
For the 2023/24 financial year, the Programme received an allocation of R2,667 which accounts for 2.41 per cent of the Department’s total voted funds, excluding direct charges.

The allocation increased by R90 million in nominal terms (decreased by R34,6 million in real terms) from the adjusted appropriation in the 2022/23 allocation.
Approximately 90.84 per cent or R2,423 billion of the Programme’s budget is appropriated to Sub-programme 2: Community Education and Training System Planning, Institutional Development and Support.

In terms of economic classification, R2,447 billion is allocated to the Compensation of Employees, which accounts for 91.73 per cent of the Department’s total voted funds, excluding direct charges.
Goods and Services received R5,3 million, which decreased marginally by R2,4 million, from the adjusted appropriation of R7,7 million in 2022/23.

Transfers and subsidies received an allocation of R214,8 million, which is less by R6,1 million from the previous financial year adjusted appropriation amounting to R220,9 million.
The Programme has a new output indicator and target in the 2023/24 APP as follows: Table 6: New Output Indicators and targets in the 2023/24 APP Outputs Output Indicators 2023/24 Targets Policy on National Norms and Standards CET Funding for Colleges implemented Criteria to measure compliance with the implementation of the Policy on National Norms and Standards for Funding CET colleges approved Criteria to measure compliance with the implementation of the Policy on National Norms and for Funding CET Standards the colleges approved Director- General 31 December 2023 by by Source: Department of Higher Education and Training, 2023 The following are key selected annual targets for the 2023/24 financial year: Outcome: Expanded access to PSET opportunities • Criteria to measure compliance with the implementation of the sustainable funding model for CET colleges approved by the Director-General; 19 21 • Criteria to measure compliance with the implementation of the Policy on National Norms and Standards for CET colleges approved by the Director-General; and • Enrol 321 841 students at CET colleges.
Outcome: Improved success and efficiency of the PSET System • Number (41 200) of CET college students completing the General Education and Training Certificate (GETC).

• Programmes and qualifications offered in TVET colleges will increase to five.

Outcome: Improved quality of PSET provisioning • Percentage (95%) of CETCs that meet standards of good governance.

• Percentage (100%) of the CTECs compliant with the policy on the Conduct and Management of Examination and Assessment.

4.
4.

ENTITIES OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING 4.1.

Council on Higher Education (CHE) The mandate of the CHE is premised on the Higher Education Act, 1997 (Act No.

101 as amended) and the National Qualifications Framework Act, 2008 (Act No.

67 of 2008 as amended).
In terms of its mandate as per the two primary legislation, the CHE is responsible for the following: • Advising the Minister of Higher Education and Training on all higher education matters upon request and at its own initiative; • Promoting quality and quality assurance in higher education through its permanent sub- committee, the Higher Education Quality Committee (HEQC), including auditing the quality assurance mechanisms and accrediting programmes offered by higher education institutions; • Monitoring the state of higher education and publishing information regarding developments in higher education regularly, including arranging and co-ordinating conferences on higher education issues; 20 22 • Developing and managing the qualification sub-framework for higher education, namely, the Higher Education Qualifications Sub-Framework (HEQSF), including the development of qualifications that are necessary for the higher education sector; and • Advising the Minister of Higher Education and Training on matters relating to the HEQSF.
The mandate is further premised on key policies; namely the National Development Plan: Vision 2030, the White Paper for Post-School Education and Training, the National Plan for Higher Education, and the Medium-Term Strategic Framework 2019 – 2024: Priority 3: Education, Skills and Health, among others.

4.1.1.

Overview and assessment of the CHE’s 2023/24 MTEF budget allocation and the 2023/24 performance targets Over the MTEF, the CHE is allocated R290,735 million.
For the 2023/24 financial year, the CHE’s total revenue amounts to R96,399 million, which is less by R9,699 million from the 2022/23 adjusted appropriation of R106,093 million.

The CHE reported that the 2022/23 financial year adjusted appropriation was higher due to approved roll-overs, which saw a decrease in budget allocation to all Programmes.

The budget is shared among the four budget programmes, namely, Management of the HEQSF, Quality Assurance, Research, Monitoring and Advice and Corporate.
Approximately, R41 million is apportioned to Programme 2; Quality Assurance, which accounts for 42.5 per cent of the Entity’s total 2023/24 budget, followed by Corporate at R36,9 million, which represents 38.3 per cent of the total budget.

The Entity’s budget is projected to decrease marginally by R1,36 million in 2024/25 to R95 million.

The Compensation of Employees received R38,6 million and Goods and Services received R57,7 million.
Programme 1: Management of Higher Education Qualifications Sub-Framework (HEQSF) The Programme manages the development and implementation of the HEQSF policies, qualification standards and data in order to meet the goals of the NQF, NPPSET and the National Development Plan (NDP) 21 23 The following are key selected annual targets for the 2023/24 financial year: • Three qualifications standards fully developed or reviewed or develop; • Five events or projects for promoting the use of qualification standards undertaken • 90% of data sets that are verified and validated to be accurate and reliable, from all data sets submitted by private higher education institutions, in a particular year; • One report on the development of the CHE Management Information Systems (MIS); • One reviewed and approved HEQSF; • Eight higher education institutions were provided support with respect to the development and implementation of relevant institutional policies; • Five national events and/or fora on qualification frameworks involved in; • Two regional and/or international events on qualification frameworks involved in; • Twenty-five quality promotion and capacity-building forums and/or workshops organised.
The Programme received R8,355 million for the 2023/24 financial year.

Programme 2: Quality Assurance The programme contributes toward the fulfilment of the mandate of the CHE as the national authority for quality assurance in higher education.

The programme develops and implements processes to inform, assure, promote and monitor quality in higher education institutions (HEIs).
The following are key selected annual targets for the 2023/24 financial year: • 85% of programme accreditation applications received that go through the accreditation process and are presented to the HEQC within 8 months from the date of final submission of an application (and after receiving payment in case of applications from private institutions); • 95% of site visits undertaken whose reports are presented to the HEQC within 8 months from the date of the receipt of reports from the site visit panels; • Ten institutional site visits by CHE audit panels, within a particular financial year depending on individual institution’s agreed planning with the CHE • Initiate two National Reviews; • 100% completed National Reviews that have their reports finalised and approved; and 22 24 • Develop five Higher Education Practice Standards.
The Programme received R41,018 million for the 2023/24 financial year.

Programme 3: Research, Monitoring and Advice The programme aims to revitalise and strengthen the research, monitoring, evaluation and advice capabilities of the CHE in order to advance the realisation of Outcome 3 in the Strategic Plan 2020 – 2025, namely, to make the CHE a reputable centre of intellectual discourse, knowledge generation and advancement on higher education.
The following are key selected annual targets for the 2023/24 financial year: • Produce three research reports; • Publish two journals/journal articles or book/book chapters; • Produce four policy briefs or Briefly Speaking articles; • Produce one Higher Education Monitor/Review; • Produce one VitalStats; and • Five requests for advice were responded to with the submission of advice and proactive advice produced and submitted.

The Programme received R10 million in 2023/24.


Programme 4: Corporate The programme provides leadership, oversight, systems, activities and structures that enable the organisation to operate effectively and efficiently in fulfilment of its mandates and in pursuit of its outcomes.
The following are key selected annual targets for the 2023/24 financial year: • Develop or review seven ICT policies, frameworks, guidelines and procedures; • Develop or review eight financial management policies, frameworks, guidelines and procedures; 23 25 • Organise and hold 28 scheduled governance meetings to conclude 80 per cent of activities as per an approved annual ICT Operational Plan; • Offer 15 staff training interventions; • 85 per cent of approved posts on the organisational structure have incumbents; • Pay 100 per cent of eligible suppliers within 30 days from the date of receipt of their invoices; and • Conclude 80 per cent of activities as per the Communication and Advocacy Plan The Programme is allocated R36,999 million for the 2023/24 financial year.
4.1.2.

Key issues affecting the CHE The CHE reported to the Committee that its budget allocation is not sufficient to enable it to undertake all the work it is responsible for, and to enable a sufficient number of staff to be in place to do the work in an expanding sector, including expansion resulting from the incorporation of public colleges into higher education.

Resourcing of the additional transformation oversight function is needed for it to be taken forward effectively.
The stipulated Compensation of Employees to Goods and Services budget ratio is a factor that further limits the ability of the organisation to employ staff in permanent positions.

This leads to too much reliance on the use of service-level contracts, of contracted staff, and on the use of peer academics for core work, and in critical support areas like IT.

4.2.
4.2.

Quality Council for Trades and Occupations (QCTO) The Quality Council for Trades and Occupations derives its mandate from the Constitution of the Republic of South Africa, section 22 and section 29.

It further derives its legislative mandate from the National Qualifications Framework Act, 2008 (Act No.

67 of 2008 as amended) and the Skills Development Act, 1998 (Act No 97 of 1998 as amended), Higher Education Laws Amendment Act, 2010 (Act No.
26 of 2010), Public Finance Management Act, 1999 (Act No.

1 of 1999).
1 of 1999).

The mandate is further premised on key policies; namely the National Development Plan: Vision 2030, the White Paper for Post-School Education and Training, the National Skills Development Plan, the Medium-Term Strategic Framework 2019 – 2024: Priority 3: Education, Skills and Health; 24 26 Ministerial Guidelines on Implementation of the NQF; Revised Strategic Plan 2020/21 to 2024/25 of the DHET; Industrial Action Plan; and the NQF Evaluation Plan.
The overall mandate of the QCTO is to develop and manage the OQSF of the NQF.

This includes the development and quality assurance of occupational qualifications (including trades) and part qualifications registered on the OQSF, with a specific focus on occupational qualifications that address the national demand.

4.2.1.

Overview and assessment of the QCTO’s 2023/24 MTEF budget allocation and the 2023/24 performance targets Over the MTEF, QCTO is allocated R460,7 million.
For the 2023/24 financial year, the QCTO’s total revenue amounts to R146,1 million, which increased by R16,9 million from R129,2 million in 2022/23.

The budget is shared among the four budget programmes, namely, Administration, Occupational Qualifications Management and Certification, Occupational Qualifications Quality Assurance and Research Analysis and Quality Assurance.

Programme 1: Administration received approximately R75,6 million, which accounts for 51.7 per cent of the Entity’s total budget.
The second largest allocation amounting to R40,7 million or 27.8 per cent is apportioned to Programme 3: Occupational Qualifications Quality Assurance, followed by Occupational Qualifications Management and Certification with an allocation of R25,4 million or 17.4 per cent.
Research Analysis and Quality Assurance received the smallest allocation, R4,3 million, which represents 2.9 per cent of the Entity’s total budget for the 2023/24 financial year The QCTO’s budget is projected to increase to R153,4 million and R161,1 million in the outer two years of the MTEF period, 2024/25 and 2025/26, respectively.
In terms of economic classification, Compensation of Employees received R77,8 million and Goods and Services received R63,3 million and capital expenditure allocation amounts to R5 million.

25 27 Programme 1: Administration This Programme enables the QCTO performance through strategic leadership and reliable delivery of management support services that will ensure a responsive and learning organisation.
The following are key selected annual targets for the 2023/24 financial year: • • • Implement 20 per cent of the capacity-building strategy; Implement 20 per cent of the Marketing and Communications strategy; Implement 40 per cent Change Management strategy; The Programme’s 2023/24 budget allocation is R75,6 million.
Programme 2: Occupational Qualifications Management and Certification This Programme ensures that occupational qualifications, part-qualifications and skills programmes on the OQSF are available; assessed and certificates are issued to qualifying learners; verify the authenticity of certificates issued; and maintain stakeholder relationships.
The following are key selected annual targets for the 2023/24 financial year: • Process 75 per cent of prioritized occupational qualifications (full/part) (Approved and/or declined for recommendation to SAQA for registration on the OQSF) within 90 working days; • Recommend 200 of remaining Historically Registered Qualifications to SAQA for deactivation on the OQSF; • Process 100 per cent of prioritised skills programmes (Approval and/or declined by the QCTO CEO) within 90 working days; • Quality assures 90 per cent of assessments for occupational qualifications and part qualifications against the QCTO standards within 27 working turnaround time; • Quality assures 90 per cent of Quality Partners (or Assessment Bodies) against the QCTO compliance standards; • Verify within the turnaround time (5 working days) 95 per cent of verification authenticity of certificate requests received.
The Programme is allocated R25,4 million in 2023/24.

26 28 Programme 3: Occupational Qualifications Quality Assurance This Programme establishes and maintains quality standards for Accreditation and Quality Assurance within the OQSF.
The following are key selected annual targets for the 2023/24 financial year: • Process, within the turnaround time (90 working days) 90 per cent of Skills Development Providers (SDPs) accreditation applications for occupational qualifications and part- qualifications; • Process, within the turnaround time (90 working days) 80 per cent of Skills Development Providers accreditation for historically registered qualifications (Trades, non-Trades, NATED Report 190/191, Skills Programmes); • Quality assure 80 per cent of accredited SDPs with implemented occupational qualifications according to QCTO standards; • Quality assure 75 per cent of SDPs implementing historically registered qualifications (excluding NATED Report 190/19 programmes) against QCTO compliance standards; • Produce two reports on Quality Assurance of NATED Report 190/191 (N4 – N6) instructional offering exam sessions and marketing sessions against the QCTO standards; and • Produce two reports on the compliance of accredited assessment centres conducting External Integrated Summative Assessments (EISAs) against QCTO Quality Assurance Standards.
Programme 3 received R40,7 million in 2023/24.

Programme 4: Research Analysis and Quality Assurance The Programme establishes and maintains the QCTO Standards for quality assurance through research, monitoring, evaluation and analysis.

The following are key selected annual targets for the 2023/24 financial year: • Approval of three research reports by the Chief Financial Officer.

• Publish one research bulletin online The Programme received R4,3 million in 2023/24.

27 29 4.3.
27 29 4.3.

South African Qualifications Authority (SAQA) SAQA derives its legislative mandate from the National Qualifications Framework Act, 2008 (Act No.

67 of 2008 as amended).
In terms of the Act, SAQA is mandated to, among others: • Provide advice, oversee NQF implementation and collaborate with the Quality Councils; • Develop NQF policies and criteria; • Maintain a National Learners’ Records Database (NLRD), and provide evaluation and advisory services with respect to foreign qualifications; • Undertake research, collaborate with international counterparts, and drive the communication and advocacy strategy to promote the understanding of the NQF architecture; and • Perform any function consistent with the NQF Act that the Minister of Higher Education and Training may determine.
SAQA further derives its policy mandate from the NDP Vision 2030, the White Paper on PSET, including the National Plan for the Post-School Education and Training and the Department’s five-year Strategic Plan.

Additionally, SAQA’s mandate is further informed by the White Paper for Post-School Education and Training, the National Plan for PSET and the recent Economic reconstruction and Recovery Plan (ERRP).

4.3.1.
4.3.1.

Overview and assessment of SAQA’s 2023/24 MTEF budget allocation and the 2023/24 performance targets Over the MTEF, SAQA is allocated R440,1 million.

For the 2023/24 financial year, the SAQA’s total revenue amounts to R141,7 million, which increased by R26,1 million from R115,6 million in 2022/23.
SAQA’s budget is shared among the five budget programmes, namely, Administration, Registration and Recognition, ICT and NQF Management Information Systems (NQF MIS), Authentication and Ratification Services and Research.

Programme 1: Administration received approximately R70,7 million, which accounts for 49.8 per cent of the Entity’s total budget.
Programme 4: Authentication and Ratification Services and Programme 3: ICT and NQF MIS received the second and third largest allocations at R26,6 million or 18.7 per cent and R23,1 million or 16.3 per cent, respectively.

Research receives the smallest 28 30 allocation, R9,7 million, which represents 6.8 per cent of the Entity’s total budget for the 2023/24 financial year.
Transfers from the department account for an estimated 71.1 per cent (R282.3 million) of total revenue over the MTEF period, while revenue generated from operations accounts for 27.6 per cent (R107.8 million).

In terms of economic classification, Compensation of Employees received R81 million and Goods and Services received R48 million and capital expenditure allocation amounts to R12,7 million.
Programme 1: Administration The programme covers the activities under the Office of the CEO; Finance and Administration; and Governance, People, and Strategy divisions.
Its purpose is to support the operations of SAQA The following are key selected annual targets for the 2023/24 financial year: • • Implement two initiatives to promote the South African NQF; Identify and implement one initiative to promote best practices; • Roll out the second-phase of the Refugee Pilot Plan; • Advise the Executive Authority on NQF matters as required; • Ensure that every staff member has at least two learning interventions; • Obtain an unqualified audit opinion; and • Ensure that the NQF MIS incorporating the National Learner Record Database contains 23 million learners with achievements The Programme’s budget for 2023/24 amounts to R70,7 million, of which R29,6 million is allocated for compensation of employees, R28,3 million for Goods and Services and R12,7 million for capital expenditure.
SAQA will continue to refurbish, repair and maintain its headquarters while its efforts to sell the building are underway.

Programme 2: Registration and Recognition The programme is responsible for registering qualifications and part-qualifications, recognising professional bodies, and registering professional designations.
29 31 The following are key selected annual targets for the 2023/24 financial year: • Register qualifications recommended by the Quality Councils (QCs) that meet all SAQA’s criteria within three months of submission; • Test and implement an end-to-end electronic system for the evaluation of foreign qualifications; • Make the public information on the NQF MIS easily accessible and usable by all stakeholders; and • Seek funding for the digitisation of legacy achievement records.
The Programme received R11,5 million for 2023/24.

Of this, R10,7 million is allocated for the Compensation of Employees and R800 000 for Goods and Services.

Programme 3: ICT and NQF Management Information Systems (NQF MIS) The programme oversees all the ICT infrastructure of the organisation and is responsible for spearheading SAQA into the fourth industrial revolution (4IR).

The major costs are software licence fees, IT security, connectivity as well as application development.
This Programme is strategic to the organisation and is central to the successful completion of the SAQA automation project.

The programme is also responsible for the maintenance and enhancement of all SAQA databases the major one being the NLRD, and the costs of maintenance of these databases are also significant.
The following are key selected annual targets for the 2023/24 financial year: • Ensure that Quality Councils load learner achievements records on the NQF MIS; • All recognised professional bodies load professional designation achievements that meet the requirements, on the NQF MIS; and • Update the Register of Misrepresented Qualifications.

The Programme’s budget for 2023/24 amounts to R23,1 million, of which R12,2 is for Compensation of Employees and R10,8 million is for Goods and Services.
30 32 Programme 4: Authentication and Ratification Services The Authentication Services unit is responsible for verifying South African qualifications and evaluating foreign qualifications.

It also locates foreign qualifications on the SA NQF by comparing them to the relevant national qualifications.

This Unit must ensure that it streamlines its processes where possible so that it can reduce the time that it takes to process applications and verification requests.
The success of this unit in meeting turnaround times and servicing clients relies heavily on its processes being automated.

The longer SAQA takes to introduce automation into this unit, the more public dissatisfaction with SAQA grows.

The following are key selected annual targets for the 2023/24 financial year: • Request verification confirmation from foreign partners for all compliant applications received for the evaluation of foreign qualifications within 60 working days.
• Complete all compliant verification requests received for the verification of South African qualifications within 25 working days.

The 2023/24 budget allocation for the Programme amounts to R26,6 million, of which R22,8 million is for the Compensation of Employees, and R3,7 million is for Goods and Services.
Programme 5: Research The unit is responsible for conducting evidence-based research to track the development and implementation of the NQF and to evaluate the impact of the NQF on the people in South Africa.

The following are key selected annual targets for the 2023/24 financial year: • Review one NQF policy.

• Host one SAQA-QC engagement towards reporting on the implementation of one revised policy.

The 2023/24 allocation for the Programme amounts to R9,7 million.
Of which, R5,5 million is for the Compensation of Employees, and R4,2 million is for Goods and Services.

31 33 4.4.

NATIONAL STUDENT FINANCIAL AID SCHEME (NSFAS) The National Student Financial Aid Scheme was established in terms of the National Student Financial Aid Scheme Act (1999).
The scheme is responsible for providing bursaries and loans to students; developing criteria and conditions for the granting of loans and bursaries to eligible students in consultation with the minister; raising funds; recovering loans from debtors; maintaining and analysing a database of funded students; undertaking research for the better use of financial resources; advising the minister on matters relating to student financial aid; and undertaking other functions assigned to it by the act or by the minister.
The NSFAS’s main responsibility is to administer loans and bursaries and allocate these to eligible students, developing criteria and conditions for the granting of loans and bursaries to eligible students in consultation with the Minister of Higher Education (“the Minister”), raising funds, recovering loans, maintaining and analysing a database, undertaking research aimed at better utilisation of financial resources and for advising the Minister on matters relating to student financial aid.
The NDP commits the NSFAS to provide all students who qualify for the NSFAS with access to full funding through loans and bursaries to cover the costs of tuition, books, accommodation and other living expenses.

In terms of loan recoveries, the NDP enjoins the NSFAS to recover through an arrangement with the South African Revenue Service.

Furthermore, MSTF has identified Seven Apex Priorities, including Priority 3: Education, Skills and Health.
There are four outcomes; namely, expanded access to PSET opportunities, improved success and efficiency of the PSET system, improved quality of the PSET provisioning and a responsive PSET system.

The NSFAS directly contributes to Outcome 1: Expanded access to PSET opportunities.

The MTSF commits the NSFAS to fund 420 000 and 400 000 university students and TVET college students by 2024, respectively.

4.4.1.
4.4.1.

Overview of the Revised 2020/21 – 2024/25 Strategic Plan, updated for 2022/23 NSFAS has revised its Strategic Plan and 2023/24 Annual Performance Plan (updated for 2022/23).

NSFAS indicated that the reasons for reviewing the Strategy and APP were because the audit of performance information was disclaimed in the past two financial years.
This resulted in 32 34 the revised vision mission, and values, revised Strategic Outcome Oriented Goal, reduction in the number of Strategic Objectives from seven to four, Strategic Outcomes from seven to four and Increased Output indicators from 17 to 22.

4.4.2.

Overview and assessment of SAQA’s 2023/24 MTEF budget allocation and the 2023/24 performance targets The NSFAS total revenue for the 2023/24 financial year amounts to R51,0 billion.
The budget comprises the Entity’s revenue of R977,7 million or 1.9 per cent, R47,9 billion or 94.0 per cent from DHET Grant (DHET bursaries: Universities and TVET colleges and NSFAS Administration) and R2,0 billion or 4.0 per cent from other grants.

The overall revenue increased by R1,6 billion or 3.3 per cent from R49,3 billion in 2022/23.

The DHET Grant allocation to the NSFAS increased from R45,7 billion in 2022/23 to R47,9 billion in 2023/24.
The DHET grant allocation to the NSFAS is projected to grow in the two outer years of the MTEF period to R51,9 billion and R54,2 billion in 2024/25 and 2025/26, respectively.

Notably, the allocation from other grants increased from R1,8 billion in 2022/23 to R2,0 billion in 2023/24.

In terms of projected expenditure for the 2023/24 financial year, the bulk of the projected expenditure of the NSFAS, R49,7 billion is apportioned to programme 1: Core Business.
Programme 2: Administration’s projected expenditure amounts to R391,4 million.

The administration budget will increase to R663,5 million in 2023/24 if the Department approves NSFAS’s request to utilise rollover funds amounting to R272 million.

The NSFAS’ projected expenditure is dominated by transfers to institutions (universities and TVET colleges) for student bursaries.

For university and TVET college students, at R49,7 billion.
Projected expenditure on the Compensation of employees is R224,1 million and for Goods and Services is R166,3 million.

The work of NSFAS is divided into two programmes, namely, Core Business, which contribute towards students’ success by being a leading resources provider within the higher education ecosystem; and Administration, which aims to provide fair and equitable access to financial and other resources for eligible students in an efficient, transparent, professional and student-centric manner.
The two Programmes combined 22 output indicators.
33 35 The following are key selected annual targets for the 2023/24 financial year: • R300 million to be collected from loan book debtors; • Unqualified audit opinion obtained from AGSA; • Percentage (80%) of funded students disbursed within a specified period of the receipt of valid registration data; • 44 per cent of the Matric Registered SASSA Beneficiaries; • 346 258 TVET students, 439 659 university students and 15 000 others receiving NSFAS bursaries; • Operating at level 3 Security Posture (Maturity); • Adoption of digital culture while delivering these transformational projects at level 3; • To appoint candidates within 90 days; • Implement the 4 programmes to change the culture at NSFAS; • To reach the 50 per cent target of women appointed in Band D and E management positions; • Approve Eligibility Criteria issued before the earliest Registration Date of any institution of higher learning; • Produce four research reports to enhance operational efficiencies at NSFAS; • Ten Marketing and Communication awareness campaigns transcending both internal and external campaigns; 5.
COMMITTEE OBSERVATIONS The Committee, having assessed the 2023/24 Annual Performance Plans (APPs), budgets and MTEF budget projections of the Departments and Entities, made the following observations and key findings.

5.1.

Department of Higher Education and Training 5.1.1.

Programme 1: Administration 5.1.1.1.


The Committee noted that the head office currently occupied by the Department is not conducive to its optimal operations, and the plan to relocate to new offices at the Council for Scientific and Industrial Research (CSIR) was welcomed.

The Committee was interested in the financial feasibility of the relocation given the budget constraints of 34 36 the Department.
The Department indicated that in terms of its comparison analysis, the rental at the CSIR would be lower than what it pays in its existing office space.

5.1.1.2.

The Committee commended the Department for putting measures in place to address the safety and security challenges in TVET colleges and universities.
However, the Committee raised concerns regarding deferring the implementation of the Minimum Norms and Standards focusing on universities to the next financial year, 2024/25, given the safety and security challenges at universities.

The Committee noted that not all TVET colleges will implement the Minimum Norms and Standards in 2023/24.

The Committee further observed that the Community Education and Training colleges were excluded from the Safety and Security Minimum Norms and Standards.

5.1.1.3.
5.1.1.3.

The utilisation of consultants to fulfil some of the key work of the Department was noted as a concern.

The Committee was concerned that the money incurred in using consultants could have been better utilised to strengthen internal capacity.

The Department indicated that it adheres to the cost containment measures on the usage of consultants, and all appointments of consultants are approved by the DG.

5.1.2.

Programme 2: Planning, Policy and Strategy 5.1.2.1.
The Committee welcomed the allocation of an Infrastructure Efficiency Grant (IEG) to the CET colleges sector.

Before 2023/24, the CET sector had not had Infrastructure Efficiency Grant allocations and this impacted the effective and efficient implementation of its mandate, in particular enrolment numbers, and throughput rates.
It is hoped that the allocation of the IEG will assist in addressing the many challenges that the sector faces in working towards becoming institutions of choice, especially for youth not in education, employment, or training.

5.1.2.2.

The Committee has in the previous budget vote reports and Budgetary, Review and Recommendations Reports recommended that Infrastructure Efficiency Grant be allocated to the CET sector to address the lack of infrastructure and to give the sector its own identity.
The Committee welcomed the plans of the Department to build three new CET learning centres and two TVET college campuses in 2023/24, as this will expand access to education and training and contribute towards a skilled and capable workforce for the country.

35 37 5.1.2.3.
35 37 5.1.2.3.

The Committee further welcomed the plans of the Department to expand access to education and training through the targeted infrastructure projects that will result in 3 000 beds in 2023/24, including the plans to develop a design concept for the construction of two new universities in Ekurhuleni and Hammanskraal, including Multi-purpose Centre in Giyani and a satellite Campus in Ulundi.
The Committee also resolved to call the Department to brief it on the reports of the feasibility studies for the establishment of the two new universities.

5.1.2.4.

It was noted that the reprioritisation of R900 million meant for Sol Plaatje University and University of Mpumalanga (UMP) in support of the Department of Basic Education (DBE) Early Childhood Development (ECD) could have been better utilised to advance programmes aimed at supporting maths and science education in basic education.
The Department noted that the reprioritisation of R900 million to the DBE-ECD programme was not its decision and Treasury mentioned that one of the rationales for the proposal was that DBE assisted DHET with funding to build the University of Mpumalanga and Sol Plaatje University in the past years.

5.1.2.5.

The investment made by the Department towards refurbishing and expanding infrastructure in higher education was acknowledged by the Committee.
However, the poor management of infrastructure projects coupled with shoddy workmanship remains a serious concern.

The Committee has observed in its oversight visits that some residences recently completed in some universities require major refurbishments and others were incomplete.

Furthermore, there was little accountability by contractors responsible for the shoddy workmanship.

5.1.2.6.
5.1.2.6.

The planned “Transforming MENtalities” Programme is welcomed as it will assist in addressing gender-based violence and femicide (GBVF) in the PSET sector as it seeks to address toxic masculinity in the PSET system, by focusing on mobilising men in the PSET sector to be part of championing a world free of gender biases, stereotypes, violence, and discrimination.

5.1.2.7.
5.1.2.7.

The Committee has in previous engagements with the Department and its entities, highlighted the need to have an integrated management information system for the PSET sector to address challenges relating to learners in multiple Sector Education and Training Authorities (SETAs) skills interventions, learners funded by both SETAs and NSFAS, 36 38 etc.
The Committee welcomed the inclusion of a new output indicator and target in the 2023/24 APP by the Department to have a plan for the integration of Information Management Systems used in the PSET sector, which will be approved by the Director-General by 31 March 2024.

5.1.2.8.

The Committee acknowledged that the PSET sector is huge in size and shape with many public institutions under the Department.
However, the inadequate oversight played by the Department as an immediate oversight body over the PSET institutions remains a serious concern.

Many institutions are still plagued by poor governance and corruption in the PSET sector.

Compounding the situation is the increase in interest from external stakeholders or forums to access the PSET institutions' resources and this escalates corruption and safety and security risks.

5.1.2.9.
5.1.2.9.

The delays in the proclamation of the NQF Amendment Act, 2019 were noted as a serious concern.

Notwithstanding, the delayed proclamation of the Act, the Department is planning to publish it by the end of the financial year.

This is concerning, given that the proclamation had been delayed.

5.1.2.9.

Concerns were raised with respect to the number of litigations against the Department and the costs involved in settling them.

5.1.3.

Programme 3: University Education 5.1.3.1.


The decline in the number of students enrolled in the natural, human and health sciences over the MTEF period was noted as a concern.

Notably, the graduate numbers in Veterinary Science are projected to remain stagnant at 185 from 2022/23 to 2024/25 and to decrease to 181 in 2025/26, which is gravely concerning given the need for veterinarians in the country.
The Committee was concerned that this decline is in scarce skills programmes which are critical for the country’s development, and scarcity will impact the economic growth.

Furthermore, the decline poses a threat towards achieving the NDP 2030 targets.

5.1.3.2.

The Committee noted with concern the report by the Department that some of the universities that had projected high numbers reduced them.
Cape Peninsula University of Technology (CPUT), University of Limpopo, Nelson Mandela University, Stellenbosch University, TUT, Walter Sisulu University, University of Witwatersrand, and Sol Plaatje 37 39 University projected a downward trajectory.

Some of them ascribed the reason for the downward trajectory is that they have not completed the process of replacing the BTech with Advanced Diploma and were restricted by limited pool of Matriculants that can enter into these programmes.

5.1.3.3.
5.1.3.3.

The Committee reiterated its concern about the high drop-out rate of students in higher education considering the amount of investment that is made by Government in the sector.

5.1.3.4.

The projected budget growth in (R51 billion in 2023/24 – R57 billion in 2025/26) in the NSFAS funding over the MTEF period is commendable.
Notwithstanding, the Committee was concerned about the funding support for the missing middle students who do not qualify for the NSFAS funding, while at the same time do not afford to pay for higher education.

Furthermore, the delays in the finalisation of the comprehensive student funding model for the PSET system compounded the situation.

5.1.3.5.

The shortage of student accommodation in higher education, particularly on-campus accommodation remains a serious concern.
Consequently, students have no choice but to choose off-campus accommodation which is not always academically conducive or well- regulated, and this results in the violation of their right to basic health and safety.

The Committee welcomed the involvement of NSFAS in the accreditation of private and off- campus accommodation as this will contribute to improving the student living conditions in these privately owned accommodation facilities.

5.1.4.
5.1.4.

Programme 4: Technical and Vocational Education and Training 5.1.4.1.

The Committee expressed concerns about the ability of TVET colleges to manage infrastructure projects due to a lack of capacity and skills.

Consequently, a number of colleges have recorded underspending of the infrastructure efficiency grant.

5.1.4.2.

A notable improvement was noted with respect to good governance and management at some colleges, which have produced good outcomes.
The Committee also observed during its oversight visits the pockets of excellence within the sector, which could serve as the best model for sharing good practices.

5.1.4.3.

Concerns were raised with regard to the outdated curriculum offered in the TVET sector which is not aligned with industry.

The Committee was also concerned that the process of restructuring the TVET curriculum has been slow.

Consequently, some colleges are 38 40 developing innovative ways to catch up with industry needs.
However, the curriculum/syllabus lacks behind the technological developments within the industry.

5.1.4.4.

Concerns were raised with respect to inadequate data integration between the Department, NSFAS and colleges.

Consequently, this contributes to delays in the disbursement of funding and allowances to students.

The Department noted that the MyNSFAS information system is still in the process of being upgraded for improved performance.

5.1.4.5.
5.1.4.5.

The Committee was concerned that there are students in the TVET sector who still have not received their certificates despite meeting all the requirements.

The Department noted that certificates are released to students within 90 days after the approval and release of results to colleges.

The Department also undertakes quality assurance of the results, and when irregularities are reported, the certificates are not printed until investigations are concluded.

5.1.4.6.
5.1.4.6.

The TVET Programme is allocated R12 billion for 2023/24, of which 63.45per cent of the Programme’s total budget is allocated to the Compensation of Employees.

Subsidies to TVET colleges allocation for the current financial year have also decreased, which is concerning as it limits the sector to increase enrolment as per the NDP targets.
Without significant funding commitment, there will be little progress in expanding colleges and turning them into attractive institutions of choice for youth and adults.

5.1.5.

Programme 5: Skills Development 5.1.5.1.

The work done by the Department in increasing the number of artisans produced per annum through the TVET colleges and SETAs was highly commended.

The Department has already met the National Development Plan (NDP) 2030 target of producing 30 000 artisans per annum.
Furthermore, the Department used to have only one public trade test centre, INDLELA.

The increase in public trade test facilities through the accreditation of TVET colleges as Centres of Specialisation with Trade Test Centres serves as a meaningful contribution to expanding artisan training and development.

5.1.5.2.

The Committee acknowledged the role played by SETAs in providing skills development in the PSET system.
However, the poor governance and financial management that continue to plague some of the SETAs remain a concern.

Furthermore, there is poor 39 41 coordination and monitoring of the impact of the skills development programmes offered by SETAs.

5.1.5.3.

The Committee was concerned about the observations made by the AGSA that there was misalignment between the Department service level agreements (SLA) and the SETAs 2023/24 APPs.
The Committee was concerned about the misalignment, which pointed to poor planning and oversight by the Skills Branch over SETAs.

5.1.6.

Programme 6: Community Education and Training 5.1.6.1.

The Committee was concerned that the budget for Goods and Services in the CET sector had been reduced, including subsidies to TVET colleges.

A budget of R7.2 million was allocated during 2022/23, while R5.3 million was allocated for 2023/24.

5.2.
5.2.

Council on Higher Education 5.2.1 The Entity continues to play a critical role in promoting quality assurance in higher education and advising the Minister on higher education matters.

However, its budget allocation is not sufficient to fulfil its expanded mandate and to operate optimally.

The budget limitations also limit the ability of the Entity to employ staff in permanent positions.

Consequently, the Entity relies on contracted staff and peer academics to deliver key functions.

5.2.2.
5.2.2.

The new Council of the Entity, which was appointed on 14 December 2022, was noted by the Committee.

It further welcomed the appointment of a female Chairperson, which is in line with its call for gender equality in senior management of PSET institutions.

5.2.3.

The proliferation of bogus private higher education institutions has been highlighted as a serious concern facing the PSET system.
Despite the Department’s efforts to crack down on these unlicensed private institutions, they still largely operate in urban areas.

The Committee noted that these institutions tend to attract the most disadvantaged populations who are not familiar with their accreditation status.

These institutions also offer qualifications that do not advance the learning or prospects of students, and also leave them indebted.

40 42 5.2.4.
40 42 5.2.4.

The plans of the Entity to implement the new Quality Assurance Framework (QAF) were supported by the Committee.

This process would also lead to the development of a Management Information System in support of the QAF.

5.2.5 It is noted that the traditional higher education model of contact learning is seriously challenged due to the limited capacity of universities to enrol and accommodate more students.
Thus, online and blended learning offers alternative modes of teaching and learning through the use of technology, and enables increased access to higher education institutions.

The Committee was of the view that the CHE has not invested sufficient resources to adapt to the speed of digital transformation of higher education which is essential going forward.

5.2.6.
5.2.6.

Notwithstanding that the CHE’s role is primarily focused on university education, the Committee was of the view that the TVET sector can acquire best practices from the expertise of the CHE for its advancement, and also improve articulation between TVETs and universities.

5.2.7.
5.2.7.

The CHE would be celebrating 25 years of its existence in September 2023 and the Committee noted the important role played by the Entity over the years, and its plans to expand its mandate for the advancement of higher education.

The Entity was encouraged to compile its notable achievements over the years so that the public can be more informed about its mandate.

5.3.

Quality Council for Trades and Occupations 5.3.1.


The gazetting of the Revised OQSF by the Minister in 2021 was welcomed by the Committee since it will uniquely position the QCTO as an Entity mandated to manage and develop occupational qualifications that are credible and meet the demands of the economy.

Furthermore, the revised OQSF will enable TVET colleges to offer NQF Level 6 - 8 qualifications that are at the same level as university qualifications.

5.3.2.
5.3.2.

Concerns were raised with respect to the time frame for the issuing of certificates to candidates who had met all the minimum requirements for occupational qualifications.

The Committee was of the view that certificates could be offered timeously to candidates who had completed their programmes.

41 43 5.3.3.

The Committee expressed concerns with regard to the low uptake of occupational qualifications, part-qualifications and skills programmes by TVET colleges.
It was noted that the importance of occupational qualifications and their relevance are not well appreciated in the PSET system and society at large, as a result, the majority of school leavers still prefer to study at universities as they appear as prestigious institutions.

However, occupational qualifications and skills programmes are the critical drivers of economic development.

5.3.4.
5.3.4.

Concerns were raised with respect to the articulation of candidates with occupational and skills programmes to higher education institutions in the PSET system.

5.3.5.

The Committee was concerned about the narrative that the PSET system was not responsive to the demands of the economy and industry.

The Entity indicated that the implementation and mainstreaming of the OQSF are expected to change the narrative associated with TVET and CET colleges.

5.4.
5.4.

South African Qualifications Authority 5.4.1.

The Committee welcomed the automation project that has been implemented by SAQA to streamline its internal processes and enhance its digital solutions to improve service delivery.

5.4.2.

The Committee expressed concern with regard to public awareness pertaining to the NQF and its importance in society.

It was noted that the Entity could do more in terms of rolling out public outreach programmes aimed at educating members of the public about the NQF.
5.4.3.

Concerns were raised with regard to the ability of the Entity to implement additional priorities considering its budget constraints.

Furthermore, the funding model of the Entity was not ideal given that it receives 60 per cent of its budget from the Department.

5.4.4.

Concerns were raised with the turn-around time for verification of qualifications by the Entity, especially from South African citizens.
As a result, most companies are utilising the services of private verification providers who have a swift turn-around time, and this has an impact on the ability of the Entity to generate income from its verification and evaluation services.

42 44 5.4.5.

The Committee was of the view that the Entity has the potential of generating more income by being innovative and investing in a block chain system for verification purposes.

5.4.6.
5.4.6.

Concerns were raised with regard to staff reduction and impact on the ability of the Entity to delivery on its additional priorities.

5.4.7.

The Entity was commended for its commitment to gender equality and this was reflected in the representation of women at the leadership level.

5.5.

National Student Financial Aid Scheme 5.51.


The Committee has been supporting the Entity in its implementation of the close-out project which is aimed at formally reconciling data with institutions from the 2017 academic year till 2020.

However, the Committee was of the view that the finalisation of the project has been very slow.

5.5.2.

The progress made by the Entity in recovering up to R669 million owed by institutions was welcomed by the Committee.
The Committee further noted that the Entity could still recover more monies if it could speed up the finalisation of the close-out project.

5.5.3.

The Committee was concerned about considering the 2023/24 APP of the Entity while the Annual Report 2021/22 has not been submitted due to delays with the close-out projects and related matters.

5.5.4.

The delays in the payment of funding and allowances to institutions and students for the 2023 academic year were noted as a concern.
The Entity indicated that it had allocated R9.2 billion to universities and R2.2 billion to TVET colleges.

However, there were student protests in some universities, which were related to the delays by NSFAS in confirming funding decisions.

5.5.5.

Concerns were raised with respect to some key performance indicators (KPIs) that are not aligned with the core business of the Entity.

Furthermore, the Committee noted that some of the KPIs were not properly articulated.

5.5.6.
5.5.6.

The Committee was of the view that the instabilities in the PSET institutions have the potential of further disrupting the 2023 academic year if NSFAS is not able to speedily resolve student grievances pertaining to their NSFAS funding and appeals.

43 45 5.5.7.

The Committee noted that the poor integration of the NSFAS data with universities and TVET colleges remains a concern.

The lack of synergy in the systems is not ideal for the smooth disbursement of funding and allowances to students.
5.5.8.

The not fit-for-purpose ICT systems at NSFAS despite the additional allocations by the Entity in 2021/22 and 2022/23 were noted with concern.

The Committee was concerned that the Entity was not able to utilise the funds allocated to improve ICT systems and it applied to the Department for a rollover amounting to R119 million in 2023/24.

5.5.9.

The revised APP 2023/24 and strategy was welcomed given that the previous APP did not meet the AGSA SMART principles.

5.5.10.
5.5.10.

The Committee welcomed the work that has been done by the Special Investigative Unit (SIU) at the Entity that uncovered irregularities in the administration of the NSFAS bursary and also led to recoveries of monies owed by institutions.

6.

SUMMARY The Committee noted and welcomed the Departments’ APP 2023/24 and Budget which considered the need for the expansion and growth of the PSET system in line with government priorities.
The Department’s budget for the 2023/24 financial year inclusive of the skills levy amounts to R133 billion.

Of significance to note is that government is making massive investments of R92.6 billion in higher education, which supports 1.1 million students at universities.

Similarly, the budget for the TVET sector amounted to R12.7 billion to support approximately 640 000 students in the sector and CET colleges received R2.6 billion.
The budget for TVET and CET colleges is inadequate to enable the sectors to increase enrolment.

The Committee reiterated its concern about the disparities in the allocation of resources in the PSET system that is biased towards universities.

The Committee has also been advocating for the expansion and improvement of TVET and CET colleges as they have a responsibility of offering basic and mid-level skills to young people and adults to drive economic development.
The lack of new funding for TVET colleges has hindered the ability of the Department to rapidly increase enrolments in the TVET sector.

However, the construction of eight (8) TVET college campuses over the MTEF period is expected to contribute positively towards changing the size and shape of the PSET system.
In relation to other programmes of the Department, the Committee welcomed 44 46 the milestone achieved by the Department of training 30 000 artisans per annum in TVET colleges in 2023/24 and this number is expected to increase to 36 000 artisans produced per annum by 2025/26.

It is significant to note that the NDP Vision 2030 has a target of 30 000 artisans produced per annum by 2030, and this has already been achieved by the Department in 2023/24.
In relation to the entities (QCTO, SAQA and NSFAS), the Committee had a good impression with respect to their 2023/24 APPs and Budgets, which had performance indicators that were largely aligned to their core business and the objectives of the PSET system.

Funding constraints were highlighted as having the potential to hinder the abilities of the entities (SAQA and QCTO) to implement additional priorities over the MTEF period.
However, these entities undertook to utilise their budgets meaningfully so that they could achieve their strategic priorities.

7.

RECOMMENDATIONS The Committee having assessed the APPs 2023/24 of the Department and entities makes the following recommendations: 7.1.

Department of Higher Education and Training 7.1.1.

Programme 1: Administration 7.1.1.1.


The Department should put measures in place to strengthen its human resource capacity so that it can eradicate the use of external service providers or consultants in delivering some of its critical functions.

7.1.1.2.

The process of moving the Department’s Head Office to the CSIR site should be expedited and the Department should ensure that the Office Accommodation sub-programme in Administration is adequately resourced to ensure the smooth relocation.

7.1.1.3.
7.1.1.3.

The Department should ensure that CET colleges also benefit from the development of the norms and standards for safety and security in the PSET system.

7.1.2.

Programme 2: Planning, Policy & Strategy 7.1.2.2.

A programme of action should be developed to respond to the AGSA’s remarks concerning the misalignment between the Department’s service level agreements (SLAs) and SETA APPs 2023/24.

45 47 7.1.2.3.
45 47 7.1.2.3.

The Department should strengthen its oversight function over PSET institutions so that it is able to identify potential problems/challenges early on and put measures to immediately resolve them before they become a potential threat to the sector.

7.1.2.4.

The Department should engage with the Presidency pertaining to the delays with the proclamation of the NQF Amendment Act, 2019 (Act No.

12 of 2019), and find solutions in resolving this matter.

7.1.2.4.
7.1.2.4.

The Department should expedite the implementation of measures put in place to support universities that are struggling to spend their infrastructure grants.

Furthermore, universities must hold into account service providers / contractors that abandon infrastructure projects or implement shoddy workmanship.

7.1.2.5 The finalisation of the work of the Ministerial Task Team on the Comprehensive Student Funding Model for the PSET sector and the release of the report should be expedited.

7.1.3.
7.1.3.

Programme 3: University Education 7.1.3.1.

The Department should assist universities in increasing enrolments in the sciences, programmes so that it is able to meet the targets of enrolments in scarce and critical skills programmes.

7.1.4.

Programme 4: Technical and Vocational Education and Training 7.1.4.1.

A concerted effort is required to improve the financial management skills and capacity of the TVET officials.
This will enable colleges to improve their audit outcomes and spending on infrastructure grants.

7.1.4.2.

The process of phasing out of the outdated and unresponsive TVET curricula should be expedited so that colleges can be better positioned to respond to the world of work and improve linkages with industry.

7.1.4.3.

The Department should ensure that the remaining certification backlog is cleared so that students or graduates with outstanding certificates receive them.
The Department should endeavour to achieve a day-zero certification backlog.

7.1.4.4.

Additional funding is required for the sector to assist with the demand for increased enrolment over the MTEF period.

46 48 7.1.4.5.

The Department should ensure that colleges are assisted with the modernisation of their training workshops and facilities and be responsive to the reality of rapid technological expansion.

7.1.4.6.
7.1.4.6.

The Department should expedite the process of improving articulation between TVET colleges and universities in terms of qualifications and pathways.

7.1.4.7.

The Department should assist with the process of ensuring that TVET college students, especially those registered in civil and construction programmes are utilised in the colleges’ infrastructure programmes to gain experiential learning.

7.1.5.

Programme 5: Skills Development 7.1.5.1.


The Department should assist with the process of improving partnerships and collaborations between SETAs and TVET colleges so that they can facilitate pathways to the labour market.

7.1.5.2.

The Department working with its entities should forge strategic partnerships and social compacting within the PSET sector for better coordination.

7.1.6.

Programme 6: Community Education and Training 7.1.6.1.
Additional funding is required to increase the access and success of CET colleges so that they can cater for the needs of unemployed youth and adults in their surroundings.

7.1.6.2.

The Department should assist with the process of improving access for students with disabilities in the CET sector.

7.1.6.3.
7.1.6.3.

The Department should strengthen its collaborations with the Department of Public Works (DPW) and other key stakeholders with regard to the repurposing of under-utilised infrastructure for the CET sector.

7.2.

Council on Higher Education 7.2.1.

Consideration should be made to allocate additional funding to the CHE to implement the additional mandates given to it, such as the transformation oversight function and to appoint additional staff needed to fulfil the objectives of the organisation.
7.2.1.

The Ministry of Higher Education and Training should ensure that the vacant council position at the CHE is filled urgently.

47 49 7.2.3.

The CHE should consider expanding its public outreach programmes to include awareness about illegal private higher education institutions.

7.2.4.

The Entity should prioritise investing in Information and Communication Technology (ICT) / 4IR to keep up with the transition into online and blended learning in higher education.

7.3.
7.3.

Quality Council for Trades and Occupations 7.3.1.

The timeframe for issuing certificates to candidates that have met the minimum requirements for certification should be reduced.

7.3.2.

The process of purchasing the QCTO head office should speedily be finalised given that the Entity could realise the potential savings.

7.3.3.

The process of rolling-out the Specialised Occupational Diploma in TVET colleges should be expedited in line with the revised OQSF.
This will also assist in making TVET colleges institutions of choice for many school leavers.

7.3.4.

The QCTO should play an active role in assisting the Department with the review of the TVET sector curricula so that it can respond to industry and economic needs.

7.3.5.

The Entity working with the Department should put mechanisms in place to improve the uptake of Occupational Qualifications and Skills Programmes in TVET colleges as they are critical for economic development.

7.3.6.
7.3.6.

The Entity should allocate more resources to marketing and branding in support of making TVET colleges institutions of choice.

7.4.

South African Qualifications Authority 7.4.1.

The Entity should strive to improve its turnaround time for verification of qualifications to improve competitiveness and generate more revenue.

7.4.2.

The Entity should develop a programme of action to ensure its strategic imperatives are achieved during the MTEF period.

7.4.3.
7.4.3.

The Entity should articulate its funding requirements so that the Committee is able to motivate additional budget allocation.

7.4.4.

The Entity should consider developing a database that will contain employees' personal, educational and employment history for recruitment purposes.

This database could be 48 50 made available to potential employers at a specific fee and SAQA would generate extra income.

7.4.5.
7.4.5.

The Entity should consider reviewing its staff culture and encourage a shift from the public servant go slow mentality to one that is more client-centric to improve its revenue generation.

7.4.6.

The Entity should improve its public outreach programmes concerning its mandate and the significance of the NQF.

7.4.7.

The Entity should consider the utilisation of already existing platforms that might already be employer marketplaces, such as the projects in the Presidential Youth Network.

7.5.
7.5.

NSFAS 7.5.1.

The Entity should provide the Committee with an update on the payment of funding and allowances to institutions and students including the number of outstanding appeals.

7.5.2.

The finalisation of the close-out project should be expedited so that the Entity is able to recoup of monies it is owed by institutions.

This process will also enable the Entity to reconcile its records and be able to determine the funds that it is also owing to institutions and students.

7.5.3.
7.5.3.

The procurement of an ICT system that is fit for purpose should be prioritised so that the Entity can improve its disbursement processes and payment of funds to eligible students.

A fit-for-purpose ICT system will also enable the Entity to minimise fraudulent activities related to its disbursement processes.

7.5.4.

The Entity should consider decentralising some of its services to improve the turn-around time to student queries.

7.5.5.
7.5.5.

The Entity should urgently improve its disbursement of funding and allowances to students and institutions to avert a potential disruption of the 2023 academic year.

7.5.6.

The Entity should put measures in place to improve data integration with PSET institutions.

Report to be considered.

49 51 2.


REPORT OF THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES ON BUDGET VOTE 10: PUBLIC ENTERPRISES, AND ON THE STRATEGIC PLAN AND ANNUAL PERFORMANCE PLAN FOR 2023/24 OF THE DEPARTMENT OF PUBLIC ENTERPRISES, DATED 22 MAY 2023 The Portfolio Committee on Public Enterprises, having received a briefing from the Department of Public Enterprises on the Strategic Plan, Annual Performance Plan and on the Budget Vote on 10 May 2023, reports as follows: 1.
Introduction Guided by the Rules of Parliament, promulgated in terms of the Constitution, the Portfolio Committee on Public Enterprises plays an oversight role on the Ministry, Department of Public Enterprises and State-Owned Companies.

The Committee has to scrutinise the Strategic Plan and Annual Performance Plan of the Department and its entities in order to see if the funds requested are aligned to the objectives as stated in the respective Strategic Plan and Annual Performance Plan documents.
1.1 Background The State has a developmental role to play and uses State-Owned Companies (SOCs) as the implementation tools for fulfilling this role.

The developmental role should support a number of economic and development goals, including delivery of strategic infrastructure that will unlock growth potential in the country; support of the wider economy and marginal business sectors and support of economic recovery and reconstruction where needed.
The State requires strategic, organizational and operational capacity to play its developmental role.

State-Owned Companies act as the extension of the state’s capabilities in this regard, and act as the implementing agents for execution of projects assigned in line with national priorities.

52 2.

Annual Performance Plan of the Department of Public Enterprises The Department of Public Enterprises presented an Annual Performance Plan for 2023/24 financial year to the Committee.
The Department described the overarching policy and strategic direction and priorities of Government, as articulated by the 2023 State of the Nation Address by the President, the National Development Plan, and other pronouncements of Government on the repositioning and repurposing of the SOCs.
The Department’s allocation is a product of a budget process of the National Treasury, which starts in July of a prior year and culminates in the Medium Term Budget Policy Statement (MTBPS) in November of the prior year, and the confirmation of allocations in the February Minister of Finance’ Budget Statement (Estimates of National Expenditure), with a three-years view, that are then outlined in the Department’s Annual Performance Plans.
The Department in the Annual Performance Plan includes the priorities set in the Medium- Term Strategic Framework, which are to be implemented by either the Department directly or indirectly through its SOCs.

2.1 Mandate of the Department of Public Enterprises The Department of Public Enterprises (DPE or the Department) undertakes shareholder oversight for Government and is currently instructed by the Executive Authority to oversee SOCs.
Currently, the DPE does not have a legislated constitutional mandate.

The DPE is recognised as a Government Department through Proclamation No.

82 of 1999.

It has an agreed and assigned dual responsibility to: The DPE aims to drive investment, productivity and transformation in the Department’s portfolio of SOCs, their customers and suppliers to unlock growth, drive industrialisation, create jobs and develop skills.
The Department’s portfolio has six state-owned companies namely; Alexkor, Denel, Eskom, South African Forestry Company (SAFCOL), South African Airways (SAA), and Transnet.

2.1.1 Vision The vision of the Department is to create an enabling environment in which SOCs add real economic value by focussing on operational excellence, commercial viability and fiscal 53 prudence.

This will drive developmental objectives, industrialisation, job creation and skills development.
2.1.2 Mission The mission of the Department of Public Enterprises is to provide clear strategic direction and oversight to the Department’s SOCs, seeking to ensure that: § § § they are financially sustainable, adequately funded and operationally robust; their operating models keep pace with global development and innovation; they provide reliable, high-quality and cost-effective services and infrastructure to industry and our citizens; § they secure investment and funding for strategic industrial development; and § They align with national developmental objectives.
2.2 A Synopsis of the Economic Outlook The International Monetary Fund (IMF) suggests that, the aftershocks of the COVID-19 pandemic continue to reverberate through the world economy, evidenced by the world’s stagflationary conditions.

The pandemic and the policy responses it engendered, together with disruptions to global oil and food supply chains due to Russia’s war in Ukraine, gave rise to the worst inflation surge witnessed in more than a generation.
The imbalances between demand and supply were first seen in goods markets and then spilled over into services before embedding in global and national labour markets, and are yet to fully resolve.

Central banks across the world have responded with tighter policy in an effort to stem the spread of inflation.

Global inflation peaked around the middle of 2022.


The gradual deceleration since then reflects moderating oil and food prices, supply constraints and commodity prices normalising, as well as the demand cooling effects of fiscal and monetary restraint.

Inflation, however, remains well above central bank targets and shows signs of persistence in several sectors.
The baseline scenario is for global inflation to continue its gradual moderation, from 8.7% in 2022 to 7.0% in 2023 and 4.9% in 2024.3 Core inflation, which strips out volatile energy and food prices, also remains well above countries’ inflation targets and labour markets remain buoyant, particularly in advanced economies.
The South African Reserve Bank (SARB) points out that, parallel to the global economic trend, gross domestic product (GDP) growth slowed sharply in the domestic economy in 2022, 54 registering 2.0%, down from 4.9% in 2021.

While the slowdown in part reflects the return to trend growth following the 2021 rebound from the pandemic-induced recession of 2020, various headwinds and shocks have caused output to swing wildly from quarter to quarter.
Much slower growth of about 0.2% is projected for the first and second quarters of this year.

South Africa’s recovery from the COVID-19 pandemic saw production bounce back strongly as the pandemic restrictions were eased, supported by robust export performance amid subdued imports.

Economic growth has, however, slowed since the beginning of 2022 as load-shedding intensified.
Meanwhile, investment and household spending have remained relatively robust, resulting in domestic expenditure exceeding domestic output, and pulling in more imports.

Alongside the weakening terms of trade, rising imports have dragged the current account into deficit.

The labour market has continued to show signs of recovery over the past year.

The economy has realised employment gains on a quarter-on-quarter basis since the third quarter of 2021.
This resulted in unemployment declining to 32.7% in the fourth quarter of 2022 after peaking at 35.3% a year earlier.

The ongoing failure of certain parts of public infrastructure, especially electricity, will continue to constrain growth over the medium term.

Although investment should support growth, it is not expected to increase by much year on year given the difficult operating environment.
Household spending is also expected to grow modestly as consumers face pressures from higher inflation and rising interest rates.

Some reprieve is, however, expected as inflation moderates over the forecast horizon, amid rising nominal wages.

Meanwhile, slower global growth, alongside elevated domestic logistical constraints, suggests that exports will remain weak, while government consumption is expected to remain subdued in line with the announced fiscal consolidation framework.
55 2.3 Policy Priorities for 2023/24 The President made the following pronouncements in his State of the Nation Address in February 2023.

Government priorities for 2023 are the following: § Load-shedding.

§ Unemployment.

§ Poverty and the rising cost of living.

§ Crime and Corruption.

In July last year, President Ramaphosa announced a clear action plan to address the energy crisis.

This was to address the electricity shortfall of 4000 to 6000 megawatts (MW).
The plan outlined five key interventions to: § fix Eskom’s coal-fired power station and improve the availability of existing supply; § enable and accelerate private investment in generation capacity; § accelerate procurement of new capacity from renewables, gas and battery storage; § unleash businesses and households to invest in rooftop solar; and § fundamentally transform the electricity sector to achieve long-term energy security.

Government made important progress in implementing the plan.
The Minister of Public Enterprises, Mr. Pravin Gordhan, outlines the following policy priorities in the annual performance plan for the 2023/24 financial year: • Implementation of the recommendations of the Presidential State-Owned Enterprises Council (PSEC), and the development of the SOE Bill, including the establishment of the holding company for strategic SOCs.

• The completion of the establishment of the National Transmission Company in line with the Eskom Roadmap.
• The conclusion of the Strategic Equity Partnership for SAA.

• The finalisation and implementation of the Transnet Roadmap.

3.

Programmes of the Department 3.1 Programme 1: Administration and Corporate Management The purpose of this programme is to provide strategic management and support services to the Department.

56 The programme includes the Office of the Director-General/Management.
The programme is currently made up of the following sub-programmes: Management; Security and Facilities Management; Information Management and Technology; Office of the Chief Financial Officer; Human Resources; Communications; Strategic Management; and Internal Audit.
The Department’s core functions require significant administrative support, and a substantial portion of the budget is in the Administration programme, an amount of R165.4 million for 2023/24 financial year, a decrease of 1.6 per cent from the R166.3 million in the previous financial year, which has cross-cutting sub-programmes providing for intergovernmental and international relations, strategic planning, monitoring and evaluation, and communications.
The majority of the budget, R93.9 million, is for compensation of employees, while R67.4 million is for goods and services.

The balance of R4.0 million is for machinery and equipment.1 The spending focus over the medium term will be on supporting the Department to play its oversight role on SOCs by providing administrative support services to the Department.
Over the medium term, the majority of the allocation is within compensation of employees, which will provide technical and administrative support to the Department.

The programme has only one performance indicator, down from six indicators in the previous year.

The indicator is: • Number of reports on the interventions to reduce loss of SOEs’ infrastructure through theft and vandalism (one report per quarter).
In the previous financial year, the output indicators for the previous year were as follows:2 • Percentage of vacancy rate reduced; • Percentage of performance management achieved as per individual performance agreements linked to Annual Performance Plan (APP) and Annual Operating Plan (AOP); • Percentage on improvement of ICT Infrastructure services and 90 per cent of systems availability maintained.
1 National Treasury (2023) 2 Department of Public Enterprises (2022) 57 • Percentage on population of ICT structure with new capabilities.

• Percentage on implementation of signed co-operation agreement to reduce SOCs infrastructure vandalism through signing co-operation with stakeholders.

• Percentage on media public perception survey achieved.
3.2 Programme 2: SOCs Governance Assurance and Performance The purpose of this programme is to provide and enforce SOCs’ governance, legal assurance, financial and non-financial performance monitoring, evaluation and reporting systems, in support of the Shareholder, and to ensure alignment with Government’s priorities.
Over the medium term, the programme will ensure the effective shareholder oversight of state owned companies by: • Providing governance and legal systems; • Developing and maintaining shareholder risk profiles and mitigating strategies; and • Monitoring, evaluating and reporting on the financial and non-financial performance, and proposing intervention measures when required.
The programme has the smallest budget of the three programmes of the Department, amounting to R65.6 million for the 2023/24 financial year, or 21.7 per cent of the total Department’s budget.

The programme increases by 8.25 per cent nominally in 2023/24 and increased in real terms by 3.19 per cent.
The majority of the budget goes to compensation of employees of R37.0 million, with the balance going to goods and services amounting to R28.6 million.3 The Department states that the programme’s focus will be the National State Enterprises Bill (NSEB) (Overarching law to be enacted by Government which will govern all SOEs’ to reduce the current burden of compliance with multiple laws and regulations), as well as the implementation of the Minority Shareholding Oversight Framework and establishment of a Holding Company.
The Sub-programmes include: 3 National Treasury (2022) 58 3.2.1 Sub-programme: Management The Management sub-programme comprises the office of the Deputy Director General, which provides strategic leadership and management of the programme personnel.

The sub-programme Legal provides external legal services and oversight support to sector teams.
This entails providing legal services, including transaction and contract management support to the Department, as well as work specifically related to sector teams’ oversight of commercial activities of state-owned companies within their portfolios.

The sub-programme Governance develops, monitors and advises on legislative, corporate governance and shareholder management systems for the Department and its portfolio of state-owned companies.
Risk and compliance management is a component of this unit, which is responsible for developing and implementing risk and compliance with laws and regulations.

The sub-programme Financial Assessment and Investment Support analyses SOEs’ capital plans, operational performance, the execution of capital programmes and proposed restructuring proposals, and advises on appropriate action.
3.2.2 Sub-programme: Governance, legal assurance, risk profiling and mitigation This sub-programme has 2 performance targets, down from 4 performance targets in the previous financial year.

The sub-programme has the following indicators: • Business case for the National State Enterprises Holding Company (NSEHC) in pursuit of a centralised Shareholder model.

• Presidential State-Owned Enterprises Council (PSEC) Strategic and Secretariat support provided.
(quarterly reports) The previous year’s output included the following output indicators.

• Government Shareholder Management Bill adopted into law by 2023; • Report on activities and recommendations of PSEC; • Number of Governance Tools (Memorandum of Incorporation (MOI)) revised and approved; • Centre of Excellence on Governance established.

59 3.2.3 Sub-programme: Financial Assessment and Investment Support This sub-programme has 2 indicators, down from 6 performance targets in the previous year.
The sub-programme indicators are: • Percentage on compliance with conditions of the Eskom debt relief package (100 per cent) • SOEs’ engagements on implementation plans in addressing audit recommendations (2 reports) The outcome indicators for the previous financial year were as follows: • Report on preferred option to resolve Eskom debt; • Guidelines in SOCs seeking SEP and evaluating shareholding i.e.
majority and minority shareholding approved; • Number of SOCs’ business plan developed and restructuring unit established; • Number of progress reports on SOCs’ audit findings; • Percentage on SOCs Compliance reporting (I.e.

corporate plans, quarterly reports, PFMA section 66 applications); • Number of DPE and SOC CFO’s forum held quarterly.
3.3 Programme 3: Business Enhancement, Transformation and Industrialisation The purpose of the programme is to provide sector oversight to ensure that state-owned companies contribute to the advancement of industrialisation, transformation, intergovernmental relations and international collaboration services.
The programme will also support the shareholder in strategically positioning and enhancing the operations of state-owned companies.4 Through this programme, the Department will contribute to the performance SOCs on an ongoing basis by:5 • Conducting reviews, research and modelling of pipeline and new business enhancement opportunities within SOCs; • Assessing operations of SOCs and developing mitigation instruments in conjunction with policy departments, regulatory bodies and industry; and 4 Department of Public Enterprises (2023) 5 Ibid 60 • Conducting research, modelling job creation and transforming instruments for SOCs to inform compact alignment imperatives.
The budget for the programme amounts to R71.9 billion for the 2023/24 financial year or 23.

7 per cent of the total Departmental Budget.

Programme 3’s allocation has decreased by 99.8 per cent nominally from the R34.4 billion allocated in the previous financial year due to no further transfers to the SOCs in the 2023/24 financial year.6 The programme’s main cost driver is the compensation of employees at R54.4 million, and goods and services making up the balance at R17.6 million.
3.3.1 Sub-programme: Business Enhancement Services This sub-programme Business Enhancement Services provides SOCs business enhancement services.

This includes developing and coordinating the implementation of SOCs’ strategies to leverage localisation programmes; provide intergovernmental coordination and support to programmes and SOCs in relation to economic development programmes, as agreed with provincial and local governments.
It will also maintain a register of commitments made by SOCs and lobbies for the implementation of special programmes focusing on skills development, transformation and the youth.

The sub-programme has one indicator, down from the three performance indicators in the previous year.

The sub-programme has the following output indicator: • Percentage increase in participation of DPE/SOC in District Development Model (DDM) technical structures and Metros with Special Economic Zones (SEZs).
(target of 20 per cent) The output indicators in the previous APP were as follows.

• Number of Gender Responsive Plans approved and implemented; • Percentage on SOC public procurement spent on Women-Owned Business; • SOCs Local content verification framework developed and tested.

3.3.2 Sub-programme: Energy Resources This sub-programme Energy Resources is responsible for the oversight of three SOCs, namely Eskom, Alexkor and the South African Forestry Company (SAFCOL).
The sub- 6 National Treasury (2023) 61 programme has five indicators, down from the nine performance targets in the previous year.

The sub-programme has the following indicators: • Percentage on Energy Availability Factor (EAF) increased (increased above 65 per cent).

• Three Eskom companies separated and operationalised.

• Koeberg Nuclear Power Plant Extension Programme units completed.

• Alexkor Repositioning Study conducted.

• Revitalisation of State forestry assets.
The previous years’ output indicators were the following: • Signed shareholder compact per year (Eskom; Alexkor; SAFCOL); • Increased energy availability factor; • Eskom planned capacity adherence (Infrastructure/Build Programme) • Increased electricity reserve margin by 15 per cent by 2024; • Eskom’s roadmap for reformed electricity supply industry implemented (unbundling process; Transmission, Generation and Distribution); • Number of reports on the maintenance of energy levels; • Number of progress reports on Additional 1 000MW commissioned by 2024 produced.
3.3.3 Sub-programme: Transport and Defence This sub-programme Transport and Defence is responsible for the oversight of three SOCs, namely Transnet, South African Airways (SAA), and Denel.

The sub-programme has eight output indicators, the same number of indicators as in the previous financial year.
The sub-programme has the following indicators: • Implementation of the agreed decision of Government on the Structure and functions of Transnet National Ports Authority (TNPA); • Percentage growth in year-on-year rail volumes; • Rail Infrastructure Manager established as a ring-fenced organisational function; • Rail Access Pricing Formulae Rail Access Procedures 3rd Part Access Contract; • Number of Private Sector Participation (PSP) projects concluded; • DPE Transnet Roadmap finalised; • Number of progress reports on the implementation of Denel’s Restructuring Plan; 62 • Strategic Equity Partner (SEP) on SAA finalised.
The output indicators for the previous financial year, were as follows: • Signed shareholder compacts per year (Transnet).

• Implementation of the agreed decision of government on the structure and functions of TNPA.

• Percentage increase of rail friendly commodities moved from road to rail by Transnet Freight Rail (6.2 million tons by 2023/24).

• Number of private sector participation (PSP) transactions in ports and rail identified.
• Framework for the Shareholder Oversight Model for SOCs with a minority Government Shareholding developed.

(SAA) • Number of reports on mapping of industrial defence capabilities and options for Denel divisions.

• Number of diagnostic reports on the root causes to the challenges of the Denel Badger/Hoefyster contract and lessons learnt; • Number of quarterly reports update on the implementation of the Defence and Aerospace Masterplan.
3.3.4 Sub-programme: Research and Economic Modelling This sub-programme Research and Economic Modelling conducts cost-benefit analysis reviews on proposed business enhancement and transformation initiatives, and develops economic sustainability models for proposed work packages and projects.

The sub- programme has one output indicator for the financial year, down from the two output indicators in the previous year.
The sub-programme has the following output indicator: • Komati Agrivoltaic commissioned and training centre operationalised; 150MW PV EIA completed.

In the previous financial year, the sub-programme had the following two output indicators.

• Number of reports on the implementation of “Just” energy Transition Framework; • Number of Industry-specific research working papers conducted.

63 4.
63 4.

Budget Over the medium term, the Department will continue to focus on enhancing reforms to stabilise these companies and strengthen its oversight capacity to ensure that they are sustainable and contribute to economic development and transformation.

Overall, the Department’s budget decreases by 99.12 per cent in nominal terms from R34.4 billion in 2022/23 to R302.9 million in 2023/24.
Table 1 below gives the department’s medium term allocations with the real and nominal increase over the current financial year.

Table 1.
Estimate of Expenditure over the 2023 medium term Programme Budget Nominal Rand change Real Rand Nominal % change change Real % change R million 2022/23 2023/24 2024/25 2025/26 2022/23-2023/24 2022/23-2023/24 168,0 165,4 179,6 174,7 -2,6 -10,3 -1,55 per cent 60,6 65,6 62,6 70,0 5,0 1,9 8,25 per cent 34 121,5 71,9 74,1 85,7 - 34 049,6 - 34 053,0 -99,79 per cent Programme 1: Administration Programme 2: State-Owned Companies Governance Assurance and Performance Programme 3: Business Enhancement, Transformation and Industrialisation TOTAL 34 350,1 302,9 316,4 330,4 - 34 047,2 - 34 61,3 -99,12 per cent Source: National Treasury (2023a) -6,15 per cent 3,19 per cent -99,80 per cent -99,16 per cent As shown in table 1 above, there are notable changes in the allocations for each of the Department’s programmes including the following: • Programme 1: Administration, accounts for the largest allocation of the Department’s overall budget in 2023/24 with a total allocation of R165.4 million or 54.6 per cent of the total budget.
Programme 1: Administration, has a nominal decrease of 1.6 per cent in 2023/24, with a real decrease of 6.2 per cent.

• Programme 2: State-Owned Companies Governance Assurance and Performance receive the smallest allocation in 2023/24 will a total allocation of R65.6 million or 21.7 per cent of the total 64 budget.

The programme increases by 8.25 per cent nominally in 2023/24 and increased in real terms by 3.19 per cent.
• Programme 3: Business Enhancement, Transformation and Industrialisation accounts for the second largest allocation of the budget, R71.9 million or 23.7 per cent of the total budget.

Programme 3 allocations has decreased by 99.8 per cent nominally due to the no further transfers to the SOCs in the 2023/24 financial year.
Compensation of employees amounts to R185.3 million for 2023/24, a decrease of 3.7 per cent on R178.7 million in 2022/23, which constitutes the Department’s largest administrative cost driver.

Goods and services amounts to R113.5 million, an increase of 0.4 per cent on R113.1 million in 2022/23.
Of the goods and services budget, the use of consultants constitutes 33.7 per cent while operating leases accounts for 12.3 per cent and travel and subsistence accounts for 12.1 per cent of the goods and services budget for 2023/24.
Travel and subsistence increases from R12.1 million in 2022/23 to R13.7 million in 2023/24; while consultants decreases from R42.2 million in 2022/23 to R38.3 million in 2023/24.7 4.1 Programme 1: Administration The purpose of this programme is to provide strategic leadership, management, and support services to the Department.
The Department’s core functions require significant administrative support, and a substantial portion of the budget is in the Administration programme, which has cross-cutting sub-programmes providing for intergovernmental and international relations, strategic planning, monitoring and evaluation, and communications.

Over the medium term, the majority of the allocation is within programme 1 is the compensation of employees, which will provide technical and administrative support to the Department.
The overall budget for the programme decreases by 1.6 per cent from R168.0 million in 2022/23 to R165.4 million in 2023/24.

Sub-programmes Communications (22.7 per cent), Human Resources (21.6 per cent) and Ministry (21.1 per cent) constitutes the majority of expenditure in the programme.

Expenditure on compensation of employees constitutes 56.8 per cent of the programme budget for the 2023/24 financial year.
Over the medium term, expenditure on compensation of employees remains steady at approximately R98,7 million.

The number of personnel is expected to increase from 115 employees to 129 employees over the medium term.

7 National Treasury (2023a) 65 Goods and services constitute 40,8 per cent of the budget for the 2023/24 financial year.

Goods and services increases from R65.3 million in 2022/23 to R67.4 million in 2023/24, an increase of 3.2 per cent.
Operating leases and consultants make up the largest portion of goods and services for the 2023/24 financial year, constituting 20.8 per cent and 16.2 per cent respectively.
4.2 Programme 2: State-Owned Companies Governance Assurance and Performance The purpose of this programme is to provide and enforce state-owned companies’ governance, legal assurance, financial and non-financial performance monitoring, evaluation and reporting systems, in support of the shareholder to ensure alignment with government priorities.
The objectives of the programme are to ensure effective shareholder oversight of state- owned companies on an ongoing basis by: • • • Providing governance systems and legal support; Developing and maintaining shareholder risk profiles and mitigating strategies for government’s state-owned companies; and Monitoring, evaluating, and reporting on financial and non-financial performance of state-owned companies, and proposing intervention measures when required.
The programme has four sub-programmes namely: • • Management comprises the office of the deputy director general, which provides strategic leadership and management for the programme’s personnel.

Legal provides external legal services and support, including transaction and contract management support, to sector teams and the commercial activities of the state-owned companies within their portfolio.
• Governance develops, monitors, and advises on legislative, corporate governance, and shareholder management systems for the department and its portfolio of state- owned companies.

The sub-programme develops and implements risk and compliance management guidelines and systems for shareholder risk.
• Financial Assessment and Investment Support analyses state-owned companies’ capital planning, operational performance, execution of capital programmes and proposed restructuring proposals, and advises on appropriate action.

66 The sub-programme Management constitutes the smallest unit of the programme at 4.4 per cent of the budget for the 2023/24 financial year.
The largest sub-programme is Governance at 38.4 per cent of the budget followed by the Legal sub-programme at 35.4 per cent and Financial Assessment and Investment Support at 21.8 per cent of the budget.

The overall budget for the programme increases by 8.2 per cent from R60.6 million in 2022/23 to R65.6 million in 2023/24.
For the 2023/24 financial year, 56.4 per cent of the programme 2 budget is allocated for spending on compensation of employees, with the number of personnel expected to increase from 25 employees in 2022/23 to 33 employees in the 2023/24 financial year.

Compensation of employees increases by 17.1 per cent, from R31.6 million in 2022/23 to R37.0 million in 2023/24.
Goods and services constitutes 43.6 per cent and decreases from R29.0 million in 2022/23 to R28.6 million in 2023/24, a decrease of 1.4 per cent.

Consultants constitute 55.6 per cent while Legal services constitute 42.0 per cent of the Goods and services budget.

Expenditure on consultants is expected to decrease by 12.2 per cent from R18.1 million in 2022/23 to R15.9 million in 2023/24.

Legal services increase by 17.6 per cent, and increases from R10.2 million in 2022/23 to R12.0 million in 2023/24.
4.3 Programme 3: Business Enhancement, Transformation and Industrialisation The purpose of the programme is to provide sector oversight to ensure that state-owned companies contribute to the advancement of industrialisation, transformation, intergovernmental relations and international collaboration services.

The programme will also support the shareholder in strategically positioning and enhancing the operations of state-owned companies.
Through this programme, the department will contribute to the enhancement of the performance of SOCs on an ongoing basis by: • • • Conducting reviews, research and modelling of pipeline and new business enhancement opportunities within SOCs; Assessing operations of SOCs and developing mitigation instruments in conjunction with policy departments, regulatory bodies and industry; and Conducting research, modelling job creation and transforming instruments for SOCs to inform compact alignment imperatives.
67 The programme’s budget decreases by 99.8 per cent from R33.9 billion in 2022/23 to R71.9 million in 2023/24.

The decrease is due to the Department no longer making transfers to SOCs during the financial year.

This is discussed further under Section 5.

This programme has four sub-programmes, namely; The sub-programme Energy Resources exercises shareholder oversight over Eskom, Alexkor and the South African Forestry Company (SAFCOL).
The budget for Energy Resources is expected to decrease by 99.9 per cent from R21.9 billion in 2022/23 to R19.3 billion in 2023/24.

The sub-programme constitutes 26.8 per cent of the programme’s budget.

The Department will no longer make any further transfers to Eskom over the medium term.
The sub-programme Research and Economic Modelling conducts cost benefit analysis reviews on business enhancement and transformation initiatives, and develops economic sustainability models for proposed work packages and projects.

The budget increases from R5.1 million in 2022/23 to R6.8 million in 2023/24, an increase of 33.3 per cent in nominal terms.

The sub-programme Transport and Defence exercises shareholder oversight over Transnet, South African Airways, and Denel.
The budget for the sub-programme constitutes 25.9 per cent of the programme budget for the 2023/24 financial year.

The sub-programme budget decreased in nominal terms by 99.8 per cent from R12.0 billion in 2022/23 to R18.6 million in 2023/24.

This is mainly due to no further transfers to Transnet, SAA and Denel.
The sub-programme Business Enhancement Services develops and coordinates the implementation of SOCs’ strategies to leverage localisation programmes; provide intergovernmental coordination and support to programmes and SOCs in relation to economic development programmes, as agreed with provincial and local governments; and maintains a register of commitments made by SOCs and lobbies for the implementation of special programmes focusing on skills development, transformation and the youth.
The sub- programme’s budget decreases in nominal terms by 10.2 per cent from R30.3 million in 2022/23 to R27.2 million in 2023/24.

Compensation of employees constitutes 75.7 per cent of the programme’s budget under economic classification.

Compensation of employees increases by 12.2 per cent from R48.5 million in 2022/23 to R54.4 million in 2023/24.

Personnel in the programme is projected to increase from 42 employees in 2022/23 to 51 employees in the 2023/24 financial year.
Goods 68 and services constitutes 24.5 per cent of the programmes’ budget and is projected to decrease by 6.4 per cent from R18.8 million in 2022/23 to R17.6 million in 2023/24.

Consultants decrease by 2.7 per cent from R14.3 million in 2022/23 to R11.6 million in 2023/24.

Consultants accounts for 65.9 per cent of the goods and services budget for the 2023/24 financial year.
4.4 Report of Auditor-General on the Annual Performance Plan of the Department of Public Enterprises for 2023/24 financial year The Auditor General of South Africa presented the findings on the APP on the 3rd of May 2023.

By the time of the consideration of the annual performance plan and budget, the Department of Public Enterprises had already considered inputs by the Auditor-General of South Africa.

5.
5.

State-Owned Companies’ Performance State-owned companies are experiencing financial and operational challenges that have affected their performance.

The following section deals with their performance and future plans.

The Department has oversight of six entities, namely, Alexkor, Denel, Eskom, South African Forestry Company (SAFCOL), South African Airways (SAA), and Transnet.

As these are independent companies, they do not receive funding from the fiscus and should be fully self-sufficient.
Therefore, the entities budget does not need to be approved through the national budget appropriation.

However, in the situation of Eskom, Denel, SAA and Transnet that are struggling financially, the government as shareholder can make the decision to recapitalise these companies as and when required.

When this decision is taken, a special appropriation bill will be required to allocate monies to the entity.

The SOCs were not allocated any funds for the 2023/24 medium term.
However, in his budget speech dated 22 February 2023, the Minister of Finance, Mr. Enoch Godongwana stated that, “We are proposing a total debt-relief arrangement for Eskom of R254 billion.

This consists of two components.

One is R184 billion.

This represents Eskom’s full debt settlement requirement in three tranches over the medium term.

Second is a direct take- over of up to R70 billion of Eskom’s loan portfolio in 2025/26.
Because of the structure of the debt relief, Eskom will not need further borrowing during the relief period.” 69 It states in the Eskom Debt Relief Bill, tabled with the Appropriation Bill, that the amounts for the requirements of Eskom are direct charges against the National Revenue Fund and attributed to the vote of the National Treasury: (a) R78 billion for the 2023/24 financial year; (b) R66 billion for the 2024/25 financial year; and (c) R40 billion for the 2025/26 financial year.
The above amounts will be advanced as a loan to Eskom, with the Minister determining conditions for the conversion of a portion or portions of the amount of the loan into ordinary shares issued by Eskom to the State.

With regards to the debt takeover, the Bill states for the 2025/26 financial year, R70 billion of the debt of Eskom is a direct charge against the National Revenue Fund through a debt takeover arrangement as determined by the Minister.
In his speech, the Finance Minister stated that the debt arrangement was accompanied by strict conditions to safeguard public funds.

These conditions included: • Requiring Eskom to prioritise capital expenditure in transmission and distribution during the debt-relief period.

• For the company to focus on maintenance of the existing generation fleet to improve availability of electricity.

• That the debt relief be used to settle debt and interest payments only.
• Eskom implement the recommendations emanating from an independent assessment of its operations, which has been commissioned by the National Treasury.

With regards to municipal debt, the Minister had the following to say, “At the end of December 2022 municipalities owed Eskom R56.3 billion and the debt is rising.

Undertaking a debt-relief of this magnitude without addressing this risk would be counterproductive.
We are working with Eskom to provide a solution to this problem, wherein Eskom will provide incentivised relief to municipalities whose debt is unaffordable.

However, the relief will come with conditions.


And to avoid a repeat of debt build-up over time, the relief will attach measures including the installation of prepaid meters, to correct the underlying behaviour of non-payment and operational practices in these municipalities.” The Minister stated that the National Treasury will publish details 70 for accessing the debt relief in a circular in March 2023, with implementation starting the 01 April 2023.
The Finance Minister also stated that the National Treasury will work with the Presidency on concrete proposals to achieve savings by rationalising or closing public entities.

Recommendations will be made to the President and Cabinet and should form part of the next budget.

5.1 Alexkor Alexkor was established in terms of the Alexkor Limited Act (1992) to mine marine and land diamonds in Alexander Bay, Northern Cape.
The outcome of the land and restitution award to the Richtersveld Community resulted in the formation of the Alexkor Richtersveld Mining Company Pooling and Sharing Joint Venture, wherein Alexkor holds a 51 per cent share interest on behalf of government, and the Richtersveld Community holds 49 per cent.

Alexkor does not have any other mining operations outside the joint venture.
Over the medium term, the company will focus on implementing the turnaround strategy for its diamond mining operations, which have significantly declined in the past 3 years.

Symptomatic of this was production averaging below 30 000 carats over the period and the company not being able to reach the benchmark of more than 45 000 carats that had been achieved previously.

Some challenges to underproduction include a lack of funds to undertake exploration activities and maintenance of old infrastructure.
An immediate intervention is to seek mining contractors with the financial and technical capabilities to undertake large‐scale mining operations.

In the long term, Alexkor’s role should be determined in accordance with the challenges it faces.

To achieve this, the Department of Public Enterprises is conducting a study, which is expected to be completed in 2023/24, to determine the optimal shareholding structure for Alexkor.
This study will take into account the current market characteristics of the diamond mining industry in relation to government’s developmental agenda.

The company was not able to submit detailed performance, expenditure, revenue and personnel data.

71 5.2 Denel Denel was incorporated as a private company in 1992 in terms of the Companies Act (1973), with the South African government as its sole shareholder.
It operates in the military aerospace and landward defence environment and provides strategic defence equipment.

The company’s broad focus over the medium term will be on implementing its turnaround plan, which entails rolling out its new operating model, restructuring and optimising its cost structure.

The new operating model reduces Denel’s structure from 6 core business units to 3 – engineering, manufacturing, and maintenance and overhaul.
This change will not only result in decreased expenditure, but in the improved allocation of critical resources.

It will also require that the company accelerate its disposal of non‐core assets and businesses, improve supply chain policies and align its IT infrastructure with its new organisational structure.

The company’s revenue decreased from R2.8 billion in 2020/21 to R1.5 billion in 2021/22 due to persistent liquidity challenges.
This was exacerbated by fixed costs and under‐ recoveries across the group, resulting in the company having lost experienced personnel with critical skills over the years, which threatens its sustainability.

There has been lack of productivity at Denel due to constraints provided by its operational context.

To fund the turnaround plan’s response to these challenges, the company expects to access funds through proceeds from the sale of non‐core disposals and shareholder recapitalisation.
To improve the company’s 2021/22 and 2022/23 balance sheets, government allocated R3.2 billion over that period to settle guaranteed debt.

To augment this, government allocated an additional R3.4 billion in 2022/23 through the Special Appropriation Act (2022).

The cash injection will be used to implement the turnaround plan, settle legacy obligations and address the company’s liquidity requirements to support operations and execute its order pipeline.
The company was not able to submit detailed performance, expenditure, revenue and personnel data.

5.3 Eskom Eskom is mandated to generate, transmit and distribute electricity to industrial, mining, commercial, agricultural and residential customers and redistributors.

Significant progress 72 has been made on the company’s legal separation into 3 subsidiaries: transmission, generation and distribution.
In this regard, the National Transmission Company of South Africa was corporatised in December 2021, and will be operationalised once the National Energy Regulator of South Africa issues its licence.

The National Electricity Distribution Company of South Africa is expected to be corporatised during 2023/24.

The company’s new board was appointed in October 2022 and has been tasked with ensuring a performance turnaround for operations.
This is expected to result in improving energy availability from 58 per cent as at 30 September 2022 to 66.5 per cent by 2025/26.

The current low availability of energy is due to high unplanned breakdowns and unit trips, which account for 30.8 per cent of the company’s non‐availability of generation capacity.

To improve operational performance, the board is working with the national energy crisis committee, which was established by the president in July 2022.
The committee’s purpose is to oversee the implementation of an action plan to end load shedding and achieve energy security in the country.

As part of the company’s build programme, the Kusile power station is expected to be completed in May 2024.

Interventions and modifications to repair construction defects at the Medupi and Kusile power stations are expected to be completed by the end of 2023.
This includes the recent failure of the flue‐gas ducting that has impacted units 1 to 3 of the Kusile power station.

To support the transition from coal to renewable energy, in line with government’s energy policy, Komati power station was shut down on 31 October 2022 and is being repurposed with renewable energy technologies that will supply clean electricity to the economy and the public.
Based on the company’s 2022/2023 to 2026/27 financial plan, expenditure is projected to increase at an average annual rate of 5.4 per cent, from R299.6 billion in 2022/23 to R351.1 billion in 2025/26.

Generation is Eskom’s main cost driver, constituting 59.7 per cent (R570.6 billion) of its total budget over the medium term.

Spending on goods and services across divisions constitutes 61.5 per cent (R604.1 billion) of the company’s budget.
Revenue is expected to increase at an annual average rate of 8.9 per cent, from R279.5 billion in 2022/23 to R361.3 billion in 2025/26.

Revenue is mainly derived from the sale of electricity, which increased by 2.1 per cent, from R204.5 billion in 2020/21 to R247 billion in 2021/22, due to a regulatory tariff increase of 15.1 per cent imposed on customers supplied directly by Eskom.

Revenue in 2022/23 is projected to increase to R279.5 billion, driven by a 9.61 per cent tariff increase.
The company’s net loss is projected to increase to R20billion in 2022/23, worsening from the R12.3 billion reported in 2021/22.

Net debt decreased by R11.7 billion to R389.1 billion in 2021/22, while 73 municipal arrears amounted to R44.89 billion in 2021/22 and are expected to increase to R57.7 billion in 2022/23.

As such, Eskom’s financial position remains weak and the company is not able to generate enough cash from operations to cover debt obligations.
Given this weak financial position, government has committed an additional R21.9 billion in 2022/23 to assist with the company’s debt‐service obligations.

5.4 South African Airways South African Airways operates a full‐service network in the international, regional and domestic markets.

The airline is responsible for promoting air links with South Africa’s key business, trading and tourism markets across the world, and contributing to key domestic air linkages.
The company was placed under business rescue in December 2019 and exited the process in April 2021.

It resumed operations in September 2021, operating domestically and regionally, and has since been operating 6 aircraft.

Over the MTEF period, the airline plans to increase its operations and improve its service offering, for example, by expanding its route network.

Government is in the process of concluding the sale of its majority shareholding in the company to a strategic equity partner.
This is expected to attract the funding and skills required to strengthen the airline’s balance sheet and improve its operations.

The partnership was expected to be finalised by the end of 2022/23, but due to outstanding matters such as regulatory approvals from the Competition Commission and the Air Services Licensing Councils, it is expected to be concluded in 2023/24.
Expenditure is expected to increase at an average annual rate of 50.8 per cent, from R4.6 billion in 2022/23 to R15.9 billion in 2025/26.

This significant increase is attributed to an increase in operations with the lifting of COVID‐19 restrictions.

Spending on goods and services constitutes 87.2 per cent (R32 billion) of total expenditure, mainly driven by fuel, leases and maintenance costs.
Revenue is expected to increase at an annual average rate of 62.8 per cent, from R3.9 billion in 2022/23 to R16.6 billion in 2025/26.

It is mainly derived from the sale of air tickets, which constitutes 99.7 per cent of total revenue.

This significant increase is attributed to the airline’s anticipated increase in operations.

74 5.5 South African Forestry Company The South African Forestry Company was established in 1992 in terms of the Management of State Forests Act (1992).
It is mandated to ensure the sustainable management of plantation forests, increase downstream timber processing, and play a catalytic role in rural economic development and transformation.

The company contributes to approximately 1 772 direct jobs and more than 1 000 employment positions in small to medium companies through community projects and other services.
Over the medium term, the company plans to improve its performance by implementing its 50:50 revenue strategy, which entails plantation, processing and other businesses contributing equally.

The company will also focus on increasing its processing capacity through upgrading the Timbadola processing plant in Limpopo.

This will reduce operating costs at the plant, particularly for repairs and maintenance.
Expenditure is expected to increase at an average annual rate of 8.4 per cent, from R1.4 billion in 2022/23 to R1.8 billion in 2025/26.

The operations of Komatiland Forests, the company’s main revenue‐generating division, constitutes 80.7 per cent of total expenditure over the MTEF period.

Overall, spending on goods and services constitutes 72.6 per cent (R3.7 billion) of the company’s budget, while compensation of employees accounts for 22.8 per cent (R1.3 billion) over the next 3 years.
The company derives most of its revenue from the sale of saw logs and lumber.

Revenue is expected to increase at an average annual rate of 10.1 per cent, from R1.5 billion in 2022/23 to R2 billion in 2025/26, due to an anticipated higher demand for the company’s products over the medium term.

In 2021/22, the company reported R1.2 billion in revenue, a 33 per cent increase from the R920.8 million realised in 2020/21.

The increase was due to a favourable log and lumber market.
Following years of losses, the company reported a profit of R83.6 million and declared a R1 million dividend at its 2022 annual general meeting.

The company’s fixed costs remain high, something it plans to monitor over the period ahead to remain profitable.

Liquidity and solvency positions remain strong and the company is not highly indebted.

As such, it is in a position to raise funds on the strength of its balance sheet without government support.
5.6 Transnet Transnet provides and operates freight transportation services and infrastructure.

The company’s key strategic objectives include improving logistics competitiveness, promoting a modal shift from road to rail, increasing logistics connectivity, attracting 75 private investment, developing skills and promoting reindustrialisation.
To sustain and expand its capacity, over the 5‐year period ending in 2026/27, Transnet planned to invest R99 billion, 44.5 per cent (R44 billion) of which was earmarked to be invested in the rail sector, another 44.5 per cent (R44 billion) at ports and 6 per cent (R6 billion) on pipeline infrastructure.
However, these investments were hindered due to the company having to reduce capital expenditure in 2022/23 by 9.2 per cent, from R18 billion to R16.4 billion, because of liquidity constraints associated with limited profitability.

Significant turnaround in operations, and as such the company’s financial position, in the short term have been impacted by events such as severe damages at the port of Durban and along the KwaZulu‐Natal rail corridor due to flooding in the province in April 2022.
To assist the company with repairs, government allocated R2.9 billion in 2022/23 through the Special Appropriation Act (2022).

To assist with clearing the backlog in its infrastructure build, maintenance and modernisation programme, Transnet is actively seeking private sector participation in its operations.

Investment from the private sector is also expected to contribute to the migration from road to rail, with the aim of reducing the total national cost of logistics.
The Department of Public Enterprises is working with Transnet to develop a turnaround plan that will address various operational and infrastructure funding challenges.

Expenditure is expected to increase at an average annual rate of 2.5 per cent, from R81.3 billion in 2022/23 to R87.6 billion in 2025/26.

Over the period ahead, Transnet Freight Rail operations constitute 59 per cent (R152.7 billion) of total expenditure.
Overall, spending on compensation of employees constitutes 34.4 per cent (R86.5 billion), while goods and services constitutes 29.3 per cent (R75.9 billion) and provision for depreciation accounts for 18.5 per cent (R46.7 billion).

Transnet derives most of its revenue from freight, port and pipeline operations, amounting to 97.6 per cent (R261.7 billion) of total revenue.

Revenue is expected to increase at an annual average rate of 4.2 per cent, from R83.9 billion in 2022/23 to R95.1 billion in 2025/26.
The relatively low revenue growth was offset by cost savings and significant fair value adjustments.

The latter was linked to the reversal of previous downward valuations during the COVID‐19 pandemic.

As a result, the entity reported a net profit of R5 billion in 2021/22 compared to a loss of R8.4 billion in 2020/21 76 6.
Committee Observations 6.1 The Committee made the following observations: 6.1.1 The Committee welcomed the strategic plan and annual performance plan of the department, but noted with concern the constrained budget of the department to effectively exercise oversight over state-owned companies.

6.1.2 The Committee noted with concern that the Shareholder Management Bill featured as a deliverable in 2022/23 financial year, and never materialized.
The Committee raised concern that the shareholder management bill has not been included as a target for the 2023/24 financial year, and the absence of such an overarching legislation continues to weaken the ability of the state to direct SOCs in advancing the developmental objectives of government.

6.1.3 The Committee expressed concern that during 2022/23 financial year, the department surrendered R3.8 million to the National Treasury due to vacant posts.
6.1.4 The Committee noted that programme 1 on administration was allocated the largest operational budget whilst most of the oversight of the SOCs are conducted in Programmes 2 and 3 which are allocated a lesser budget.

The operational budget for programme 3 amounts to R71.9 million, programme 2 amounts to R65.6 million while programme 1 amounts to R165.4 million.
6.1.5 The Committee expressed concern regarding the ageing infrastructure and the lack of investment in capital equipment and machinery in most state-owned companies, and the over-reliance on private sector investment which has affected the productivity of the companies.

6.1.6 The Committee expressed concern over lack of transformation and lack of effort in ensuring that there is improved percentage of local content in goods and services purchased by SOCs.
6.1.7 The Committee expressed concern regarding the establishment of the National State Enterprises Holding Company (NSEHC) without having developed and passed the Government Shareholder Management Bill.

The Committee felt that the legislation is critical to guide the policy and governance of such a holding company.

6.1.8 The Committee welcomed the recapitalization of Denel and will continue to closely monitor the implementation of the turnaround strategy.
6.1.9 The Committee has welcomed the call to restructure SOCs by the Department which will focus on Eskom, Transnet, Denel and SAA.

However, the Committee believes 77 these state-owned companies should continue being under state-ownership and the state should continue playing a leading role in investment for inclusive growth.
6.1.10 The Committee noted that energy security remains critical for socio-economic growth and will further monitor the restructuring of Eskom into three subsidiaries, namely Generation, Transmission and Distribution, as planned.

6.1.11 The Committee noted the sale of 51% of SAA shares to Takatso Consortium, and will closely monitor the conclusion of the transaction, including ensuring that due diligence is performed by the Department including adherence with all legislative prescripts.
6.1.12 The Committee noted with concern that the recoveries of monies, assets and intellectual properties from SOCs during the state capture process has been slow, particularly the properties of Denel.

6.1.13 The Committee welcomed efforts of the Department of Public Enterprises to start the SOE Integrity Risk Unit which will review forensic reports and follow up on with the Special Investigating Unit (SIU) in pursuing those implicated in corruption and looting the SOCs.
6.1.14 The Committee noted with concern the findings of the Auditor-General regarding the annual performance plan of the Department of Public Enterprises.

These included amongst others; some targets are ambiguous and not measurable, some activities are not mentioned in the annual performance plan but only appear in the annual operational plan, some targets set do not achieve the intended outcomes and have no relevance to the oversight role of the department.

7.
7.

Recommendations The Committee recommended that the Minister of Public Enterprises should, within the 2023/24 financial year, ensure that the Department of Public Enterprises: 7.1 report to the Committee on the establishment and operationalisation of the Presidential SOE Coordinating Council, including the work the council will be doing in the implementation of the recommendations of the 2012 report by the Presidential Review Commission on SOEs.
Some of the recommendations were that Government should develop: shareholder management bill, the shareholder model, SOE remuneration standards, etc, to empower the Government in its oversight of SOCs.

The Department should report on the progress of the Shareholder Management Bill per quarter.

78 7.2 consider introducing a comprehensive plan to expand the corporate social investment of SOCs to rural parts of the country.
7.3 consider working with the Department of Trade and Industry and National Treasury in addressing localization strategies.

These should include resetting of trade and investment cooperation to stimulate and support small businesses and employment initiatives, reduce barriers to trade in services (which are often labor-intensive) and investments in industrial value chains.
7.4 prioritise the development of programmes with SOC aimed at equipping young people with appropriate skills for the economy to address youth unemployment.

7.5 provide the Committee with shareholder compacts on an annual basis and quarterly reports on how the companies are performing in achieving targets.

7.6 ensure that SOCs accelerate investment and procurement programmes, promote industrialization and support small and medium enterprises that are owned by women, youth and people with disabilities.
7.7 ensure that SOCs find a balance between advancing their commercial and public mandates.

They should not over-concentrate on the commercial mandate while neglecting the developmental mandate of transforming the economy and improving the quality of lives of South Africans.

The SOCs should have credible empowerment and demographic targets.

7.8 ensure that the allegations made by the Former Group Chief Executive Officer of Eskom are reported to law enforcement agencies and investigated.
Furthermore, ensure that a qualified, competent and patriotic individual is appointed as the Group Chief Executive Officer of Eskom.

7.9 collaborate with the Department of Rural Development and Land Reform, in addressing long outstanding issues relating to Safcol land claims and that regular progress reports (twice a year) to the Committee.
7.10 ensure that there is a comprehensive plan on improving Energy Available Factor (EAF) from 56% to 65% by the end of the financial year 2023/24 and 70% by 31 March 2025.

7.11 provide an update on Roadmap for Eskom in a reformed electricity supply, in particular, the development and operationalization of the National Transmission Company of South Africa (NTCSA).
7.12 provide a comprehensive plan on Eskom’s Just Energy Transition (JET), which focuses on transitioning the business to a zero carbon emissions efforts over a 30- year time horizon period, between 2020 to 2050, with an increase in sustainable 79 jobs.

A stakeholder management plan to be presented with regards to re-powering and repurposing of older power stations in Mpumalanga.
7.13 present to the Committee within this financial year a Roadmap for Transnet to provide clarity on the steps to be taken to address current freight challenges and outline a path for reform.

7.14 present to the Committee progress made on dealing with sabotage, theft and vandalism on infrastructure.
7.15 work with the Departments of Cooperative Governance and Traditional Affairs, and of Rural Development and Land Reform to ensure that the Richtersveld Mining Company and Communal Property Association are properly constituted to facilitate the successful implementation of the deed of settlement, and delivery of socio-economic development programmes to the beneficiaries.
7.16 address the financial and governance issues facing the state-owned companies within the Department’s portfolio and provide regular feedback to the Committee.

7.17 work with the Department of Cooperative Governance and Traditional Affairs and other relevant parties to resolve the municipal debt owed to Eskom and provide feedback to the Committee on this process quarterly.
7.18 ensure that all vacant positions are permanently filled within the Department of Public Enterprises by the end of the financial year, and ensure that no money will be surrendered to National Treasury due to vacancies, especially in the wake of high unemployment rate in the country.

7.19 work closely with National Treasury to ensure that the procurement processes within SOCs are fluid enough to enable the SOCs to respond swiftly to market demand.
7.20 address the findings of the Auditor-General of South Africa in relation to the defects in the annual performance plan of the Department of Public Enterprises.

7.21 report every quarter to the Committee on progress being made in regard to the above recommendations.

8.

Conclusion Having considered the Budget Vote and the Strategic Plan and the Annual Performance Plan of the Department of Public Enterprises, the Committee recommends that the House passes the budget.

Report to be considered.

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