Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698924776855.pdf (South Africa)
Wednesday, 25 October 2023] No 145—2023] FIFTH SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ WEDNESDAY, 25 OCTOBER 2023 _____________________ TABLE OF CONTENTS ANNOUNCEMENTS National Assembly 1.

Referral to Committees of papers tabled ......................................................................... 2 TABLINGS National Assembly 1.
Speaker ............................................................................................................................ 2 National Council of Provinces 1.

Chairperson ..................................................................................................................... 3 COMMITTEE REPORTS National Assembly 1 1.

Communications and Digital Technologies ..................................................................... 6 2.
Communications and Digital Technologies ................................................................... 28 3.

Communications and Digital Technologies ................................................................. 210 4.

Communications and Digital Technologies ................................................................. 222 5.

Communications and Digital Technologies ................................................................. 229 6.
Water and Sanitation .................................................................................................... 262 ANNOUNCEMENTS National Assembly The Speaker 1.

Referral to Committees of papers tabled (1) The following paper is referred to the Portfolio Committee on Home Affairs for consideration and report: (a) Amendments to the Department of Home Affairs 2023/24 Annual Performance Plan.
(2) The following papers are referred to the Portfolio Committee on Sport, Arts and Culture for consideration and report.

Report of the Auditor-General on the Financial Statements and Performance information is referred to the Standing Committee on Public Accounts for consideration: (a) Report and Financial Statements of the Mandela Bay Theatre Complex for 2022-23, including the Report of the Auditor-General on the Financial Statements and Performance Information for 2022-23.
(3) The following paper is referred to the Joint Standing Committee on Defence and Portfolio Committee on Defence and Military Veterans for consideration: (a) Letter from the President of the Republic, dated 23 October 2023, to the Speaker of the National Assembly, informing members of the Assembly of the employment of members of the South African National Defence Force for service in cooperation with the South African Police Service for the prevention and combating of crime and maintenance and preservation of law and order in the Republic of South Africa under Operation Prosper.
TABLINGS National Assembly 1.

The Speaker 2 (a) Reply by the Minister of Water and Sanitation to Report of Portfolio Committee on Water and Sanitation on Budget Vote 41, annual performance plans of Department of Water and Sanitation and entities for 2023/24 financial year, as adopted by the House on 30 May 2023.

Referred to the Portfolio Committee on Water and Sanitation.

National Council of Provinces 1.
The Chairperson (a) Letter from the President of the Republic, dated 23 October 2023, to the Chairperson of the National Council of Provinces, informing members of the Council of the employment of eight hundred and eighty members of the South African National Defence Force (SANDF) for service in cooperation with the South African Police Service for the prevention and combating of crime and maintenance and preservation of law and order in the Republic of South Africa under Operation Prosper.
Referred to the Joint Standing Committee on Defence for consideration.

3 4 COMMITTEE REPORTS National Assembly 5 1.
Budgetary Review and Recommendations Report (BRRR) of the Portfolio Committee on Communications and Digital Technologies, dated 24 October 2023 The Portfolio Committee on Communications and Digital Technologies (the Committee), having considered the financial and non-financial performance of the Government Communication and Information System (herein referred to as the Department), and the Media Development and Diversity Agency (herein referred to as the Agency); for the 2022/23 financial year, reports as follows: 1.
Introduction Chapter 4 of the Constitution of the Republic of South Africa, (1996) (the Constitution) mandates portfolio Committees to legislate, conduct oversight over the Executive Authority and facilitate public participation.
In particular, Section 55 of the Constitution outlines the powers of the National Assembly in that it must provide for mechanisms to ensure that all executive organs of state in the national sphere of government are accountable to it; and to maintain oversight of the exercise of national executive authority, including the implementation of legislation; and any organ of state.

1.1.

Purpose of the Report The Money Bills Amendment Procedure and Related Matters Act (No.
9 of 2009) sets out the process that allows Parliament to make recommendations to the Minister of Finance as well as the Cabinet Minister responsible for the vote to ensure the effectiveness and efficiency of the use of resources to ensure optimal service delivery.

According to Section 5 of the Money Bills Amendment Procedure and Related Matters Act, the National Assembly, through its Committees, must annually assess the performance of each national Department.
The Committee must submit an annual Budgetary Review and Recommendations Report (BRRR) for the Department as it falls under its oversight responsibilities for tabling in the National Assembly.

This process happens every October of each year when the Committee assesses service delivery performance given available resources, evaluates the effective and efficient use and forward allocation of resources, and may make recommendations on the forward use of resources.
1 6 The BRRR also sources documents from the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS).

The comprehensive review and analysis of the previous financial year’s performance and performance to date form part of this process.

The Standing Committee on Appropriations (SCOA) should consider these when considering and reporting on the MTBPS to the National Assembly.
Lastly, this performance report also aligns with Section 195 of the Constitution and other legislative prescripts that guide performance management in the public sector to display and promote transparency and accountability to stakeholders and the public concerning matters under their control.

2.
2.

Role and Mandate of the Committee The Role and mandate of the Committee is to: (i) (ii) (iii) (iv) (v) (vi) Consider legislation referred to it; Exercise oversight over the Department and its entities; Consider International Agreements referred to it; Consider the Budget Vote of the two Departments; Facilitate public participation process; and Consider all matters referred to it in terms of legislation, the Rules of Parliament and resolutions of the House.

3.
3.

Strategic Overview of the Department The Department is committed to communicating government programmes through all products and platforms to mobilise the nation towards collective implementation of economic renewal and efforts to stimulate inclusive growth.

However, it has not been plain sailing as this period had experienced challenges such as electricity shortages or load-shedding, crime and corruption, grey-listing and unemployment.
This has resulted in a rising trust deficit, which makes communication more challenging.

The 2 7 programme to restore and rebuild confidence required a coordinated approach by various government departments.

The Department plays a key role in ensuring the cohesion and coherence of government messages.
The updated National Communication Strategy Framework (NCSF), which Cabinet approved in October 2022, took its cue from the 2023 State of the Nation Address (SoNA), where President Cyril Ramaphosa rallied citizens under the theme of “Leave no one behind”.

This is a foundation for government communicators to adapt their communication strategies for the remainder of the Medium-Term Strategic Framework (MTSF) period.
The Department remains committed to its key responsibility of providing strategic leadership and coordinating the government communication system to ensure that citizens are informed and have access to government policies, plans and programmes.

It plays a pivotal role in creating a well-informed citizenry that is engaged in government work and can fully exercise its democratic rights, which aligns with our goals of promoting participatory governance.
The Department continues to manage the bulk buying of media space and airtime on behalf of government departments to ensure that campaigns are implemented coherently and cost- effectively through negotiated costings.

Through this initiative, 35 clients approved 297 media- buying campaigns for various programmes and services in the 2022/23 financial year.
The cost of advertising was R226 411 145,05, of which clients paid R186 550 161,37 and benefitted from the R39 860 983,68 savings, achieving an average saving of 18 per cent.

Out of the 297 approved campaigns, 256 were implemented (86 per cent), 19 were ongoing (6 per cent), eight (8) were approved (3 per cent), and 14 were cancelled (5 per cent).

During the period under review, 23 editions of Vuk’uzenzele newspaper were published online.
Moreover, 13 editions were printed and distributed, totalling 11.2 million copies, including 1,000,000 extra copies and 150,000 copies in February 2023 to cover the SoNA, while 850,000 copies for April 2023 Edition 1 were printed earlier than planned.

A total of 23 Braille editions were also printed and distributed.
The Department continued to provide the information needs of managers in government, state- owned entities (SOEs) and Chapter 9 institutions through the Public Sector Manager (PSM) publication.

In the 2022/23 financial year, 11 online editions of the PSM magazine were published, featuring articles on pressing public sector topics and interviews with political principals and executives.
3 8 In June 2022, the Pan South African Language Board (PanSALB) awarded the Multilingualism Award in the Government/Public Sector category to the GCIS “for an effective service delivery campaign, project or programme in the public sector that seeks to promote multilingualism or any of the 11 official languages, including Khoi, Nama, San as well as South African Sign Language (SASL).
The Department also achieved a 100 per cent response rate to all language service requests received, demonstrating the accessibility of messaging by ensuring translation into all 11 official South African languages.

The annual South Africa Yearbook (SAYB) and Official Guide to South Africa were produced and published on www.

gcis.gov.za.

The content of these publications provides information about the country and an account of government achievements for the past year.
The Department provided strategic leadership by coordinating cluster meetings to ensure the government communication system was functioning well.

Through these meetings, cluster communication strategies and programmes were developed.

Furthermore, two engagements with Heads of Communication (HoCs) were held during the reporting period through the Government Communicators’ Forum (GCF).
The first GCF was convened soon after the SoNA –its purpose was to assess the communication environment and unpack the implications for government communications from the SoNA.

The second GCF focused on the implementation of the revised NCSF and the review of government communication during the past few months of the 2022/23 financial year.

It also provided a platform to address communicators on key issues of concern.
Moreover, 48 communication training opportunities were availed to service principals and communicators across the communication system.

The government has reintroduced the Presidential Imbizo Programme, and the Department has been playing a key support and coordination role in all spheres of government to ensure the programme’s success in unlocking service-delivery bottlenecks faced by various communities in the country.
The Presidential Imbizo Programme is an outreach programme championed by the President, the hosting Premier, and the Executive Mayor to directly measure all the government spheres’ level of response to expectations and challenges of the communities in provincial and district spaces.

It allows the government to listen to people's concerns and needs, account for government programmes and jointly derive solutions with communities.
4 9 During the reporting period, the Presidential Imbizo Programme was rolled out in various provinces such as Mpumalanga, Gauteng, Northern Cape and Free State.

The resuscitation of Izimbizo is part of the government’s strategy to widen communication directly with the people within the District Development Model (DDM) sphere.
During the 2022/23 financial year, the Department continued to achieve most of the targets set in the Annual Performance Plan (APP) due to innovative ways of approaching the work of government communications.

4.

Methodology For the period under review, the Committee, in exercising its oversight role, considered the 2022/23 Annual Reports and Financial Statements of the Department and MDDA on Tuesday, 10 October 2023.
The Annual Reports presentations were preceded by the Auditor-General of South Africa (AGSA), which presented the audit outcomes of the Department and MDDA.

The Committee also considered the 2022 SoNA, National Development Plan (NDP), Committee meetings, oversight reports and the 2020/21 Estimates of National Expenditure (ENE).

There was no report from the Standing Committee on Appropriations (SCOA), nor was there a report from the Standing Committee on Public Accounts (SCOPA).
4.1 Outcomes of the Report This report is aligned with the broader government policy framework, New Growth Path (NGP), NDP and the governing party’s priorities (job creation, poverty alleviation, combating crime and corruption, rural development, education and health).

It reviews the initiatives taken by the Department to ensure that the plan's priorities are realised.
Furthermore, this report will review and seek to address challenges emanating from the 5th Parliament Legacy Report and ensure that those recommendations are responded to systematically.

The report also assesses the financial performance against service delivery performance to ascertain whether the budget allocated to the Department was spent as envisaged in the annotated in the APP.
Finally, it summarises the observations made by the Committee after considering quarterly reports, all other necessary documents, and presentations generated using oversight instruments before making service delivery recommendations.

5.

The Department 5 10 In terms of Section 195 (g) of the Constitution (1996) - The public should be provided with timely, accurate and accessible information.
Deepening democracy and sustaining nation- building and patriotism by ensuring that the citizenry is informed about government programmes and that they can influence and participate in such programmes.

In 1998, the South African Communication Service was dissolved, and the Cabinet established the Department, largely based on recommendations in the report of the Task Group on Government Communications (ComTask).
The priority of the Department and its entities is to ensure that the public is provided with timely, accurate and accessible information.

The focus has been on information dissemination on COVID-19 and access to economic opportunities and social relief packages.

The Department enjoys a footprint in all nine provinces in terms of its mandate.
5.1 Mandate and Legislative Framework The Department was formally established in terms of Section 239 of the Constitution of the Republic of South Africa of 1996 and as a strategic unit in The Presidency in terms of Section 7 of the Public Service Act, 1994 (No.

103 of 1994).

The Department is mandated to coordinate, guide and advise on government communications, including media liaison, development communication and marketing.
Its goal is to achieve integrated, coordinated, and clear communications between government and South African citizens to enable the public’s involvement in the country’s transformation.
The work of the Department is further informed by: • The Constitution of the Republic of South Africa of 1996; • The Public Finance Management Act (PFMA) of 1999, as amended; • International bilateral and multilateral agreements; • National Treasury’s Framework for Strategic Plans and Annual Performance Plans; and • The Medium-Term Strategic Framework (MTSF) 2014-2019.
5.2 Organisational Environment The Department revised its Strategic Plan that set out a new vision to empower South Africans through communication excellence.

The revision of the vision of the Department necessitated a full review of the Strategic Plan, which also resulted in changes in the outcomes and outcome statements thereof.

The revision of the Strategic Plan is in line with the Revised Framework 6 11 for Strategic and APPs.
Through the implementation of the Recruitment Plan, the department continued to recruit and retain a suitably qualified and skilled workforce and maintained the vacancy rate below 10 per cent.

The Employment Equity (EE) target representation of females at the Senior Management Service (SMS) level was met at 56 per cent, which is an increase of 1 per cent compared to the previous financial year.
The percentage of persons with disabilities has been maintained at 3 per cent, exceeding the national target by 1 per cent.

The training and development of employees were prioritised and aligned to core functions and the Fourth Industrial Revolution (4IR) to address Hard-to-Fill Skills (HFS) related to the Department, such as communication, extensive data analysis, innovation and creativity, media monitoring, graphic design, and cybersecurity.
Employees were also capacitated in critical skills such as change management, risk management, ethics, people management, and project and programme management.

In addressing employees' career development, the department recorded 37 active bursaries, with nine (9) awarded for the 2023 academic year.
The department continued to provide opportunities for young graduates to gain work experience by recruiting 65 graduate interns and ten workplace-integrated Learning (WIL) learners during the 2022/23 financial year.

Representation of youth in the department was achieved at 24.77 per cent.

The Department conducted the Business Impact Analysis and compiled the Business Continuity Management (BCM) plan for the first time.
Through the COVID-19 and Occupational Health and Safety (OHS) subcommittee of the BCM Steering Committee (BCMSC), the department exercised oversight of the employees' and workplace's health and safety.

The Business and Disaster Recovery Subcommittee of the BCMSC was on hand to manage and respond to IT-related business interruptions and ensure compliance with the Disaster Recovery Plan.
BCM progress reports and incidents were presented quarterly to the BCMSC and the Enterprise Risk Management Committee (ERMC).
The Department has a vibrant Internal Communication function, which continued to serve as an information desk for employees and disseminated information that empowered employees to participate in government programmes through communication platforms such as the Let’s Talk newsletter, weekly Hot News bulletin, YouTube inserts and the creative use of 7 12 infographics through computer screen slides and posters.
Intensive efforts were directed towards the communication of government priorities and supported communication campaigns on Gender-Based Violence and Femicide (GBVF), fighting corruption, ERRP, professionalisation of the Public Service and job creation.

In the 2022/23 financial year, the department finalised and implemented the Ethics Risk Mitigation Plan, as informed by the outcomes of the Ethics Survey baseline assessment that was concluded in 2021/22.
In the future, the department will continuously monitor the ethics mitigation plans to ensure a good and strong ethical culture in the organisation.

The Department submitted all Quarterly Performance and Expenditure Reports (QP&Rs) and the midterm progress report within the prescribed set timelines by the Department of Planning, Monitoring and Evaluation (DPME).

Performance against predetermined objectives was at 97 per cent overall.
The Department had 35 performance indicators, of which 34 were achieved.

5.3 Performance Highlights The mandate of the Department is enshrined in Section 195(g) of the Constitution of the Republic of South Africa of 1996.

The department exists to ensure that citizens are informed about the government’s policies, programmes and projects in a manner that enables informed decision-making to improve the quality of their lives.
This mandate is given effect through the Department’s outcome of an informed and empowered citizenry.

Adhering to this mandate, the department is pivotal in securing a democratic society, building social cohesion and enabling economic transformation through information on access to opportunities.
Despite the unprecedented experience of COVID-19 and its resultant impact on our economy and society, the Department remained resilient and ensured that it led and coordinated government communication through the media, using its platforms.

Stakeholder Management, Cluster Coordination and Project Management remained key in ensuring government programmes' intergovernmental, integrated, and coordinated implementation.
The address by the President on key matters has become a prominent feature of the South African communication landscape.

The management of urgent and often inaccurate or misleading issues in the communication environment has been strengthened internally in the Department and through the ability to mobilise all communicators in the government communication system daily.

This has allowed 8 13 better responses with one message event if delivered through many voices.
This has not only set the record straight in misleading stories but enriched how the Department responded to the needs of journalists and the media audiences in general.

A confluence of factors – including the COVID-19 pandemic, economic downturn, devastation of state capture, load-shedding and rising fuel prices – have compounded the structural challenges inherited from our past.

This has made life especially hard for the poor and marginalised.
The 2022/23 financial year saw the lifting of the National State of Disaster, which was accompanied by the outbreak of conflict between Ukraine and Russia and which, due to geopolitical factors, resulted in global insecurity and economic uncertainty.

The distant conflict severely impacted fuel prices in South Africa, with attendant aggravation of the cost of living in South Africa.

This was compounded by ongoing load-shedding, which further compromised our recovery.
The 2022/23 financial year also saw all parts of the State Capture Inquiry report being made public, paving the way for prosecutions.

Notably, President Cyril Ramaphosa established the National Anti-Corruption Advisory Council to advise the government on critical preventative measures, institutional capabilities and resources required to proactively curb a recurrence of state capture and prevent fraud and corruption in South Africa.
These issues have had a depressive impact on the national mood and public trust in leadership and institutions.

During the period under review, the government’s communication efforts aptly focused on developing and disseminating content that would keep South Africans safe, keep international stakeholders informed of developments in the country, and direct South Africans to the social relief and economic support the government had devised.
In refreshing government communication to the new reality that the country faces from the impact of the COVID-19 pandemic and in shifting communication to address issues that are of concern to citizens in the current environment, the Cabinet approved the updated NCSF, which incorporates the update of the MTSF necessitated by the COVID-19 pandemic.

The updated NCSF is more prescriptive in providing factors to gauge the successful implementation of government communications across all spheres of government.
In heeding the persistent call by President Ramaphosa to see beyond the challenges and adversity and to find opportunity, the Department continued to build on the National 9 14 Communication Partnership.

Partnerships remain the key to unlocking opportunity.

The 2022/23 financial year was marked by further collaboration between the government and its social partners, which developed a social and behavioural change communication approach.
This established an understanding of our South African realities on the ground.

In search of bespoke communication approaches, the Department continued to commission and use research to measure the impact of government communication.
Communications research continues to provide guidance and insight to navigate our key campaigns, with the Government Segmentation Mode (GSM) categorising the entire population according to their information needs and preferred communication platforms to guide a more targeted communications approach.
The 2022/23 financial year also saw the culmination of the successful piloting of the G-CET from focussing on the COVID-19 communication interventions to broadly tracking the implementation of the Government Communication Policy and the NCSF through key communication functions.

This serves as a mirror to government communicators as the Department consistently aim to professionalise the system.

Vuk’uzenzele is the Department’s flagship publication.
According to the GSM, it primarily targets Rooted Realists, with information focusing on communicating the government’s policies and programmes and how to access their socio-economic opportunities.

The newspaper is published twice a month except in December/January when a combined edition is produced.

Two editions are published online, while there is one printed version of 850,000 copies per month.
It remains the country’s largest newspaper by circulation, which is audited by the Audit Bureau of Circulation (ABC).

During the period under review, 11.2 million print copies were produced and distributed nationally, and 23 editions were published online and in Braille for visually impaired readers.

In pursuance of their strategy to increase Vuk’uzenzele’s reach and readership, a particular focus is improving digital platform access.
To this end, the current number of followers on Twitter is 5,824 and on Facebook, it is 14,000 for those readers with access to the internet.

On 10 March 2016, the Marketing, Advertising and Communications Sector Code (MAC) Sector Code (MAC Code) (as amended) was issued in terms of Section 9 (1) of the B-BBEE 10 15 Act of 2003.

The provisions of the MAC Code apply to MAC and Public Relations companies that derive more than 50 per cent of their turnover from this sector.
The Sector Code needs to be reviewed on a four-year internal and or when there are changes in the Codes of Good Practice issued by the dtic.

In May 2019, the dtic issued a Government Gazette which amended the Codes of Good of Practices, which needed to be considered for adherence by all charter councils, and the 2016 MAC Sector Code was due for revision.

These important activities could not be performed since the Department had not appointed the Sector Council yet.
To this end, on 25 March 2022, the former Minister in The Presidency, Mondli Gungubele, launched the MAC SA Charter Sector Council.

5.4 Performance per programme The Department had 35 annual targets due for the 2022/23 financial year.

A total of 34 targets were achieved, and one (1) target was not achieved.

Programme 1 and Programme 3 achieved 100 per cent of their annual targets, whereas Programme 2 achieved 95 per cent of their annual targets.
Collectively, the outcome of predetermined objectives is 97 per cent achievement (before the audit).

In comparison, the Department’s achievements improved by 8 per cent from the 2021/22 financial year reported performance.

The graphical depiction of the departmental performance over the past two years is illustrated below.

11 16 A detailed explanation of performance per programme is outlined herewith below.
Programme 1: Administration The purpose of this Programme was to provide overall management and support for the Department.

The Strategic Objective is to provide adequate and effective Corporate Services functions in pursuit of good governance.

The revised Strategic Plan resulted in the enhancement of outcome statements that expanded on what the Department intended to do in executing the outcomes versus the previous one that had more activities than anticipated impact.
Internal controls were enhanced to recruit and retain a suitably qualified, capable, and skilled workforce and to maintain the vacancy rate below 10 per cent, as prescribed by the Department of Public Service and Administration (DPSA).

The national target of 2 per cent for employment of persons with disabilities was achieved at 3 per cent, exceeding the national target by 1 per cent.

Women's representation at the SMS level was achieved at 56 per cent.
ICT governance was maintained, and the Information Management and Technology Steering Committee reported quarterly to the Management Committee (MANCO) and the Audit Committee.

By the end of the financial year, 6,618 invoices amounting to R308,678 million had been processed.

Of these processed invoices, 6 561 of them, with a value of R300,585 million, were paid within 30 days, resulting in a payment rate of 99.1 per cent against the target of 100 per cent.
Programme 2: Content Processing and Dissemination This Programme aims to provide strategic leadership in government communication to ensure coherence, coordination, consistency, quality, impact and responsiveness of government communication.

Through research that includes public perception analysis and media monitoring, the department was able to assess how the government fulfils the information needs of the public.

The Radio Services unit remained a vital link between government and communities.
It produced 892 radio products and hosted 351 local community radio activations, reaching over 37 million listeners.

The Language Services unit translated government messages into all 11 official South African languages to ensure that all South Africans have access to pertinent information, a key thrust to effective communication.

SAnews advanced efforts to keep 12 17 citizens informed daily by publishing 3,052 stories online on key programmes and activities.
In addition, managers in the public sector were kept abreast of pressing public sector topics through the Public Sector Manager (PSM) magazine, which published 11 online editions.

During the period under review, there were over 50,9 million page views on www.gov.za, and 111.8 million screens were reached through social media platforms.

The flagship government newspaper, Vuk’uzenzele, continued to reach communities in far- flung areas of our country.
The department distributed 11.2 million copies of the newspaper and published 23 online editions and 23 Braille editions.

Over the past financial year, there was R39 860 983,68 in savings, which was realised for the 35 clients from the 297 media-buying campaigns.

The department has been providing support to the executive authority in exercising oversight of Brand South Africa (Brand SA) and MDDA.
The Department continued its media monitoring role, which included an early morning media headlines session to allow principals and communicators to view the media environment.

The institutionalisation of an empirical approach to government communication through the Government Communication Excellence Tool (G-CET) and scientific communication methods ensured that government messages resonate with South Africans.
Programme 3: Intergovernmental Coordination and Stakeholder Management This programme aims to provide strategic leadership in government communication to ensure coherence, coordination, consistency, quality, impact and responsiveness of government communication.

The Department was at the forefront of preparations for izimbizo in Mpumalanga, Gauteng, Northern Cape and Free State.

The efforts reinvigorated communities towards cooperation, collaboration and building of partnerships to improve people's lives.
The department spearheaded drafting the updated NCSF 2022-2023 to drive departmental and cluster communications to influence service delivery and the implementation of government priorities.

The provincial offices undertook 1,938 development communication projects aligned with the NCSF.

Services of the Thusong Service Centres were promoted during various community outreach campaigns, which focused on national, provincial and local priorities.
5.5 Overview of Financial Performance Information 13 18 The Department was initially allocated R719,911 million for the 2022/23 financial year.

During the 2022 Adjusted Estimates of National Expenditure (AENE), the appropriation increased with R9 753 million to R729,664 million.
The additional allocation comprises the following: Programme Original Virement Additional appropriation AENE Budget Compensation of Employees (CoE) Cost of Living Adjustment (COLA) Goods and Services Self-financing Expenditure R’000 R’000 R’000 R’000 R’000 Administration 177 251 9 597 Content 411 706 (5 937) Processing Intergovernmental 130 954 (3 660) Coordination and Stakeholder Management 2 467 2 978 3 308 - 189 315 1 000 409 747 - 130 602 TOTAL 719 911 - 8 753 1000 729 664 R1 million was appropriated as self-financing expenditure in respect of projected revenue that the Department estimated to recover in respect of the sale of advertising space of vacant posts of other departments in the Vuk’uzenzele newspaper.
CoE increased with R8,753 million in respect of COLA.

Of the adjusted allocated budget, the Department spent R723,905 million (99.2 per cent) on 31 March 2023.
An underspending of around R5,759 million (0.8 per cent) was realised, as reflected in the table below: Programme 2022/23 2021/22 Final Appropriation Actual Expenditure (Over)/Under Expenditure Final Appropriation Actual Expenditure (Over)/Under Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Administration 190 769 188 485 2 284 190 122 189 482 640 Content Processing and Dissemination Intergovernmental Coordination and Stakeholder Management 408 471 405 525 2 946 441 387 440 069 1 318 130 424 129 895 529 125 921 125 453 468 14 19 TOTAL 729 664 723 905 5 759 757 430 755 004 2 426 There was a net decrease in the annual appropriation from 2021/22 to 2022/23, mainly due to the net effect of a once-off allocation of R50 million in 2021/22 for the COVID-19 communication campaign.
The department spent 99.2 per cent of its final appropriation in 2022/23.

The variance of R5,759 million was due to several reasons.

R4,655 million in CoE, which was due to savings of R2,509 million reserved for wage increases as the salary negotiations were not finalised and organised labour was still making demands for further salary increments; and R2,146 million from the attrition of staff, especially senior managers and vacant posts.
R967,000 in Goods and Services due to the lesser recovery of self-financing expenditure in advertising in the Vuk’uzenzele newspaper.

R138,000 in Transfers and Subsidies due to lesser payments than projected in respect of leave gratification and leave discounting to former employees who resigned, retired or deceased; and lesser invoices received for SABC TV licences.

R82,000 in Capital Assets, which was due to the non-delivery of equipment by suppliers.
Finally, the Theft and losses of R83 000 were funded from Goods and Services.

The Department continues to adhere to sound financial management principles stipulated in the PFMA of 1999 and National Treasury Regulations.
To ensure that the Department maintains sound financial governance that is client-focused and responsive to the overall operating environment, the financial policies are reviewed at least every second year to ensure they comply with the PFMA of 1999 and National Treasury instructions and prescripts.

When required, updates are made from time to time within the two years.

Financial policies and related amendments are made available to all Department’s staff.
In between, financial circulars are issued to staff occasionally as guided by the National Treasury and DPSA.

5.6 AGSA Report on the Department The Department obtained a clean audit (unqualified without findings) outcome, an improvement from the prior year.

The internal controls should be consistently reviewed and monitored to ensure the clean admin is sustained.

The Department achieved/overachieved 97 per cent of its targets.
The programme's scope was Programme 2: Content Processing and Dissemination, of which 95 per cent and Programme 3: Intergovernmental Coordination, of which 100 per cent of the planned targets were achieved or over-achieved.

No material findings were identified.

15 20 5.7 MDDA The Agency was set up in terms of the MDDA Act of 2002 to enable historically disadvantaged communities and individuals to gain access to the media.
The mandate of the agency is to create an enabling environment for media development and diversity which reflects the needs and aspirations of all South Africans, redress the exclusion and marginalisation of disadvantaged communities and people from access to the media and the media industry, and promote media development and diversity by providing support primarily to community and small commercial media projects.
The enabling legislative environment and the positioning of the Agency in the Ministry in the Presidency have strengthened the relevance of its value proposition.

The new democratic South Africa recognises the urgent and critical need to transform the media environment based on the key principle of freedom of expression, a right enshrined in our new Constitution.
In addition, media diversity and the invaluable role of the media in ensuring access to information were, from the start, cornerstones of our democracy.

The importance of community media cannot be underestimated.

Though they usually reach a smaller audience/readership, their capacity to offer a targeted platform for under-represented groups is useful for social participation.
Despite all the challenges the community media sector faces, civil society, government, and stakeholder groups still see the need to build a thriving community and small commercial media sector.

5.7.1 Performance Highlights From May to July 2022, the MDDA opened the annual Call for Grant Funding Applications window for the 2022/23 grant funding cycle.
The agency received two hundred and sixty-six (266) applications in total – with eighty-four (84) coming from community broadcast projects and one hundred and eighty-two (182) coming from community print and online/ digital media projects.

The Agency participated in reviewing its founding legislation, including the MDDA Amendment Bill discussions in August 2022, led by the Shareholder (“the Department”).
The MDDA Board approved the final report of the Community and Small-Commercial Media Sustainability Model research, aiming to develop a South African model for the CSCM sector.

It is important also to note that women in managerial positions increased by 10 per cent compared to the previous fiscal year.

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The enabling legislative environment and the positioning of the MDDA in the Presidency entrenches the relevance of its value proposition.

The core of the MDDA is Programme 2: Grant and Seed Funding.

Considering the changing media landscape, including the migration to digital, the structure is being reviewed to provide internal capacity that strengthens its ability to deliver on its mandate and the evolving requirements of the media landscape.
Such changes will potentially elevate the accountability of various programmes and include expertise to guide and direct the MDDA’s strategic and policy-making role.

There was a total permanent staff complement of thirty-seven (37) employees at the end of the period under review out of forty-four (44) approved positions.

This equates to a vacancy rate of 16 per cent.

There were five (5) terminations of permanent employees; one (1) was a dismissal, while the other four (4) were resignations.
The Agency appointed two (2) female managers during the FY 2022/23.

The Agency appointed nine (9) interns and four (4) employees on short-term contracts during the year under review.

5.7.3 Service Delivery Environment MDDA was established to facilitate ownership, control, and access to information and content production of the community media by historically disadvantaged communities.
Despite being in existence for over 20 years, Community and Small Commercial Media (“CSCM”) organisations have struggled to position the CSCM sector as an authority on local content or as a platform to reach often-inaccessible audiences.

This means that community media platforms have not yet been able to convince advertisers of their value for advertising – which is the lifeline for the community media’s sustainability in the long term.
The media landscape has been undergoing rapid, significant global and local challenges.

With the fourth year of the worst global pandemic in a century and misinformation on the rise, the role of a professional, trusted CSCM sector has become more important than ever.

Through the financial support from the commercial broadcasting sector, the Board’s able guidance and the leadership team’s astuteness, the CSCM has navigated these difficult times.
The following briefly outlines the context within which the MDDA had to operate during the year under review: Whilst some of the CSCM sectors continued to demonstrate strong financial sustainability, supported by a diverse range of funding sources, including local businesses and 18 23 donor organisations, the sector continues to face financial challenges due to over-reliance on advertising revenue which leads to defaulting on Sentech fees.
During the period under review, the community broadcasting sector owed Sentech close to R100 million in outstanding signal distribution fees.

This has resulted in several community radio stations being switched off by Sentech.

The rising debt by the community broadcasters threatened Sentech and sector sustainability.
Furthermore, it risked compromising the MDDA’s mandate, facilitating ownership, control, and access to information and content production of the community media by historically disadvantaged communities.

This year under review saw an unprecedented increase in load-shedding stages for many South Africans; the CSCM sector is not immune to this.

This profoundly impacts the MDDA’s Universal Service Obligations (USO) and Quality of Service (QoS).
Universal Service Obligations are defined as principles that ensure everyone has access to communication services at affordable prices and as basic telecommunication services.

They are exclusively a prerogative of public authorities and service providers, as they are obligations, meaning that the network operators and public authorities alone bear the costs of developments and infrastructure.
5.7.4 Financial Performance The table below describes the revenue versus expenditure patterns of the Agency during the financial year under review.
Programme 2022/2023 2021/2022 Budget Actual (Over)/Under Budget Actual (Over)/Under Expenditure Expenditure Expenditure Expenditure 39 284 935 39 859 568 (574 633) 34 130 499 33 018 403 1 112 096 94 024 261 104 758 256 (10 733 995) 97 722 490 79 283 533 (18 483 957) Governance and Administration Grant and Seed Funding Partnership, public 1 349 906 1 386 974 (37 068) - 2 215 455 2 215 455 awareness and advocacy Capacity building 2 815 000 2 512 415 302 585 2 500 000 3 155 178 655 178 and sector development Innovation TOTAL 2 103 288 3 329 970 (1 226 682) 4 386 318 1 176 175 3 210 143 139 577 390 151 847 183 (12 269 793) 138 788307 118 848 734 (19 939 573) 19 24 The Agency's total expenditure amounted to R151 million rand against a budget of R139 million, resulting in an overspending of R12 million.
Grant and seed funding programmes significantly contributed to the overspending of R10 million.

This programme had four targets, with one of those not achieved.

Regretfully, during the period under review, the organisation has regressed in its performance against predetermined objectives (79%) and audit outcomes (Qualified Audit Opinion).
5.7.5 AGSA Report on MDDA The AGSA indicated that there had been a significant regression in the audit outcome relating to the financial statements and compliance with laws and regulations.

This is mainly attributed to the loss of key senior personnel during the 2022-23 financial year and the lack of implementation of controls around the daily and monthly processing of transactions in the general ledger and suppliers’ ledger.
Procurement processes are not followed as required by the National Treasury and Supply Chain Management (SCM) policy.

Management should implement strict measures to improve controls and monitor that controls operate effectively.

6.

Standing Committee on Appropriations (SCOA) The Department did not appear before SCOA.

7.

Standing Committee on Public Accounts (SCOPA) The Department did not appear before SCOPA.

8.
Committee observations 8.1 The Department The following Observations were noted by the Committee: (i) With concern the continued absence of a Director General of the Department; (ii) With concern the decrease by R8 million of the budget for the new financial year; (iii) That the discussion with the National Treasury for an additional allocation of R16 million had been halted due to the competing priorities within government; (iv) That the MAC Charter was before the Minister for approval and is an important transformation tool and should not be postponed as it can assist to level the playing field; 20 25 (v) That the excellent performance by the department to achieve 34 of its 35 targets for the year under review, was commendable; (vi) That Department received a clean audit for the year under review, and that it was encouraged to maintain such an audit outcome; (vii) That clarity was required on the role of community media in the promotion of the various political parties to ensure that multi-party democracy was protected; (viii) The need for clarity as to the support for community media and the role of Vuk’uzenzele.
The Department indicated overachievement in printing Vuk”uzenzele and a move towards an online version.

To date, 850 copies were still printed a month and distributed to areas that have challenges with connectivity; and (ix) That the Department indicated a lack of enough funding to support community media but will continue to provide community media with content.
8.2 MDDA The Committee noted: (i) With concern the delay in the appointment of a CEO despite having conducted interviews; (ii) With concern the exodus of staff at the MDDA, especially in the Finance division; (iii) That the current process to appoint a new CFO will help resolve AGSA recommendations before the next reporting cycle; (iv) With concern that the instability at MDDA will have a direct impact on community media; (v) That the new Audit Committee was due to be appointed; (vi) With concern that MDDA will not be able to sustain community media on the current budget, which ultimately disadvantages the poor communities who need to access services; (vii) With relief that MDDA had addressed most of AGSA findings for the year under review; (viii) With concern that MDDA does not have enough funds to resolve signal distribution costs for community radio; (ix) With greater concern that while MDDA opens new stations, old ones are closed, which undermines the mandate of the entity; (x) That MDDA must conclude the sustainability model as a matter of urgency; and 21 26 (xi) That the two ministries must report to the Committee on resolving the signal distribution matter between Sentech and community radio stations before the coming elections.
9.

Committee Recommendations 9.1 The Department The Committee recommends that the Minister: (i) Ensure that the Department fills all funded vacant positions; (ii) Ensure that MDDA fill all funded vacant positions, including that of the Chief Executive Officer; and (iii) Ensure that there is a collaboration between the Minister of Communications and Digital Technologies and the Minister in the Presidency regarding the Sentech course, which includes funding proposals for new radio stations.
9.2 MDDA The Committee recommends that the Minister: (i) Ensure that the MDDA meet the requirements as laid out by the AGSA to address the audit findings; (ii) Ensure that MDDA fill all vacancies, including the vacancy of Chief Executive Officer; (iii) Ensure that the Audit Committee appointments was finalised; (iv) Ensure a continuous engagement with the National Treasury for additional budget allocation for the entity to meet its mandate; (v) Ensure that there was an ongoing engagement between the Minister of Communications and Digital Technologies and the Minister in the Presidency relating to the matter of the Sentech debt from the community radio stations; and (vi) Ensure that the sustainability model for MDDA was concluded as a matter of urgency.
Report to be considered.

22 27 2.
Budgetary Review and Recommendations Report (BRRR) of the Portfolio Committee on Communications and Digital Technologies, dated 24 October 2023 The Portfolio Committee on Communications and Digital Technologies (the Committee), having considered the financial and non-financial performance for the year 2022/23 of the Department of Communications and Digital Technologies (the Department), Sentech, Film and Publications Board (FPB), Independent Communications Authority of South Africa (ICASA), National Electronic Media Institute of South Africa (NEMISA), the Universal Service and Access Agency of South Africa (USAASA)/Universal Service Fund (USAF), South African Broadcasting Corporation SOC Limited (SABC), South African Post Office SOC Ltd (SAPO),Broadband Infraco (BBI), .ZADNA, and the State Information Technology Agency (SITA) on 10 and11 October 2023, reports as follows: 1.
Introduction Chapter 4 of the Constitution of the Republic of South Africa, Act 108 of 1996 (the Constitution), gives mandate to Portfolio Committees to legislate, conduct oversight over the Executive Authority and facilitate public participation.
In particular, Section 55 of the Constitution outlines the powers of the National Assembly in that it must provide for mechanisms to ensure that all executive organs of state in the national sphere of government are accountable to it; and to maintain oversight of the exercise of national executive authority, including the implementation of legislation; and any organ of state 1.1 Purpose of the Report The Money Bills Amendment Procedure and Related Matters Act 9 of 2009 sets out the process that allows Parliament to make recommendations to the Minister of Finance as well as the Cabinet Minister responsible for the vote to ensure the effectiveness and efficiency of the use of resources to ensure optimal service delivery.
According to Section 5 of the Money Bills Amendment Procedure and Related Matters Act, the National Assembly, through its Committees, must annually assess the performance of the Department.

28 The Committee must submit an annual Budgetary Review and Recommendation Report (BRRR) for the Department, as it falls under its oversight responsibilities, for tabling in the National Assembly.
This process happens every October of each year, where the Committee assesses service delivery performance given available resources, evaluates the effective and efficient use and forward allocation of resources, and may make recommendations on the forward use of resources.

The BRRR also sources documents from the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS).
The comprehensive review and analysis of the previous financial year’s performance and service delivery performance to date form part of this process.

The Standing Committee on Appropriations (SCOA) should consider these when considering and reporting on the MTBPS to the National Assembly.
Lastly, this performance report is also in line with Section 195 of the Constitution and other legislative prescripts that guide performance management in the public sector to display and promote transparency and accountability to stakeholders and the public concerning matters under their control.

2.

Role and Mandate of the Committee For fiscal accountability, the Department must table its annual report before Parliament to account for fiscal expenditure and service delivery performance.
The accountability of public officials, the transparency of public decision-making, access to information, and the implementation of enforceable ethical standards and codes all significantly impact democratic institutions and poverty reduction strategies.

Accountability is the pillar of democracy and good governance that compels the state, the private sector, and civil society to focus on results, seek clear objectives, develop effective strategies, and monitor and report on performance.
It implies that Parliament must hold individuals and organisations responsible for the performance, measured as objectively as possible.
Therefore, the general role of the Committee is to: (i) Consider legislation referred to it; (ii) Exercise oversight over the Department and its entities; (iii) Consider international agreements referred to it; (iv) Consider the Budget Votes of the two Departments; (v) Facilitate public participation process; and Page 2 of 182 29 (vi) Consider all matters referred to it in terms of legislation, the Rules of Parliament and resolutions of the House.

3.
3.

Methodology For the financial period under review, the Committee, in exercising its oversight role, considered the 2022/23 Annual Reports and Financial Statements of the Department; Sentech, .ZADNA, SABC, FPB, ICASA, SITA, USAASA/USAF, BBI, SAPO, Postbank and NEMISA.

The Auditor-General of South Africa (AGSA) also presented the audit outcomes of the Department and its entities for the 2022/23 Financial Year.
The Committee also considered the 2022 State-of-the-Nation Address (SoNA), the National Development Plan (NDP) guided by the Medium-Term Strategic Framework (MTSF) of government which outlines specific outcomes and priorities focused at addressing the challenges of poverty, inequality and unemployment., Committee meetings recommendations, oversight reports (from other committees of Parliament), and the 2022 Estimates of National Expenditure (ENE).
There was no report from the Standing Committee on Appropriations (SCOA), nor was there a report from the Standing Committee on Public Accounts (SCOPA).

4.

Outcomes of the Report This report is aligned with broader government policy framework, New Growth Path (NGP), NDP and the governing party’s priorities (job creation, poverty alleviation, combating crime and corruption, rural development, education and health).
It reviews the initiatives taken by the Department to ensure that the priorities of the plan are realised.

The report also assesses the financial performance against service delivery performance to ascertain whether the budget allocated to the Department was spent as envisaged and annotated in the APP for the period under review.
Finally, it summarises the observations made by the Committee after considering quarterly and annual reports, all other necessary documents, as well as presentations generated using oversight instruments before making service delivery recommendations.

Page 3 of 182 30 4.1 The Department Impacts and Outcomes The Department’s impact statement is: Digitally Enable, Inclusive and Competitive Economy and Society.
Through this Impact Statement, the Department recognises that the importance of universal access to digital technologies cannot be underestimated, as it enables the citizens to do their work, to socialise, to access government services, become economically active and to hold those in power accountable.

However, what is equally important is that such access is secure and affordable to all citizens irrespective of race, class, or geographic location.
The Department will therefore work towards digitally enable, inclusive and competitive economy and society with secure and affordable universal access to digital technologies and services as a key means towards socio-economic growth.

The diagram below illustrates the Impact Statement of the Department and Outcomes as per the Strategic Plan.
In line with the mandate of the Department, the priorities for the medium-term focused on (i) Enabling Digital Transformation Policies, Strategies and Regulation (ii) Increased Access to Secure Digital Infrastructure and Services (iii) Digitally Transformed Economy and Society and Page 4 of 182 31 (iv) High Performing and Sustainable Portfolio to enable achievement of their respective mandates and policy objectives.
This contributes to achieving the desired impact of Digitally enabled citizens with secure and affordable universal access.

The following paragraphs speak to the outcomes of the Department in response to service delivery objectives, the progress made towards the achievement of the strategic plan five-year targets.
The outcome indicators highlight significant achievements regarding the contribution of the Department and its Entities towards the 2019-2024 MTSF: To implement its 2022/23 legislative programme, the Department focused on the development of several legislation and strategies as part of contributing to: (i) Outcome 1 – Enabling Digital Transformation Policies, Strategies and Regulation: the Department focused largely on creating a conducive policy environment through the development and review of relevant enabling policies, legislation and strategies including the development of the Audio-Visual White Paper which was submitted to Minister for consideration; a draft policy direction on the discontinuation of analogue TV sets from domestic production and imports was developed for Minister approval for submission to ICASA that includes proposal of local manufacturing of digital reception devices; Postbank Amendment Bill monitoring reports were developed and Banking licensing application was facilitated; draft Digital Regulatory Reform Policy document was developed; SABC SOC Ltd Bill was submitted to Cabinet for approval to introduce in Parliament, as well as the Electronic Communications Act Amendment Bill.
The Department further focused on the disestablishment of USAASA.

Country Positions were developed to support the National Information Communication Technologies priorities focused on forums such as Brazil, Russia, India, China and South Africa (BRICS) and the Inter-Telecommunications Union (ITU) Plenipotentiary Conference.

At the same time, the Department was conscious that the global digital environment often poses and requires faster responses by governments to new policy and regulatory challenges.
(ii) Outcome 2 – Increased Access to Secure Digital Infrastructure and Services: the Department focused on coordinating implementation of the revised SA Connect Model to ensure 80 per cent broadband access to citizens by 2024.

The Department also coordinated and monitored interventions related to rapid deployment of digital infrastructure, for ease of access to relevant critical infrastructure and servitudes.
The Department further implemented National Cybersecurity programmes, to enable the safe Page 5 of 182 32 participation of citizens online, as well as safeguarding critical ICT infrastructure.

Furthermore, the Department coordinated household migration to digital broadcasting and switch-off analogue broadcasting signal, to enhance TV viewing for information and entertainment.
The Department also prioritised the development of Policy Direction for 5G deployment, to support digital transformation and re-industrialisation of the economy.
Another key focus was on the preparations for the World Radio Communication Conference (WRC) which took place during the reporting period, through conducting preliminary technical and regulatory studies to inform South Africa’s position on the coordination of radio-spectrum in line with changes in technology and demand, and particularly with respect to our national and regional priorities.
(iii) Outcome 3 – Digitally Transformed Economy and Society: The Department focused on coordinating the implementation of identified international programmes to support the digital economy.

The study on the ‘Cost to Communicate’ was conducted to inform the revision on the data costs and implemented some of the recommendations stemming from the study.
The Department also implemented the National e-Government Strategy and Roadmap towards the digitalisation of government services with a focus on Single Portal.

The Department also coordinated the Digital and Future Skills Programmes through local and international Public and Private partnerships.
The Department also focused on establishing the Artificial Intelligence Institute and implemented priority programmes, in line with the recommendations stemming the Report of the Presidential Commission on the Fourth Industrial Revolution (4IR).
(iv) Outcome 4 – High Performing and Sustainable Portfolio to enable achievement of their respective mandates and policy objectives: the Department and the entities focused on the strategic coordination and implementation for the efficient delivery of our respective mandates.
The Department monitored the departmental and SOCs GDYC Responsiveness Programmes in line with National targets focusing on the Pillars in the Framework on GRBPME and developed the Department’s integrated Plan of action in support of the implementation of National Strategic Plan (NSP) on gender-based violence.

The Department also ensured stringent and proactive oversight of the State- Owned Entities (SOEs) in terms of their service delivery performance and compliance against plans and relevant prescripts.
The Department facilitated the tabling of the Annual Performance Plans (APPs) of SOEs in line with the MTSF.

With respect to ICASA, the Department facilitated the monitoring and evaluation of the performance of Page 6 of 182 33 ICASA Councillors, in line with the Performance Management System (PMS), however, there was a delay in the approval of PMS for ICASA Councillors by Parliament.
During the reporting period, the Department functioned on a start-up structure whilst the process of developing the organisational structure was still in progress.

The Department will, in the 2023/24 financial year, approve the Service Delivery Improvement Plan with main service and standards after the organisational structure is approved.

5.
5.

Mandate of the Department The Department’s 2022/23 APP was guided by the MTSF of government, which outlines specific outcomes and priorities focused on addressing the challenges of poverty, inequality and unemployment.

The Department’s mandate is to: lead South Africa’s digital transformation to achieve digital inclusion that must result in economic growth through creating an enabling policy and regulatory environment.
The legislative mandate of the Department is embedded in the legislation as reflected below: The Sentech Act No.

63 of 1996, Former States Posts and Telecommunications Act No.

5 of 1996, Former States Broadcasting Reorganisation Act No.

91 of 1996, Postal Service Act No.

124 of 1998, Department of Communications Rationalisation Act No.

10 of 1998, Electronic Communications and Transactions Act No.

25 of 2002, Electronic Communications Act No.

36 of 2005, ICASA Act No.


13 of 2000, South African Postbank Limited Act No.

9 of 2010, South African Post Office SOC Ltd Act No.

22 of 2011, State Information Technology Agency Act No.

88 of 1998, Broadband Infraco Act, Act No.

33 of 2007.

In executing its role, the Department is also guided, amongst others, by: • The Constitution of the Republic of South Africa Act 108 of 1996; • The Public Service Act 103 of 1994 as amended; and • The Public Finance Management Act 1 of 1999 as amended.
Following the May 2019 National Elections, the President pronounced the establishment of the Department of Communications and Digital Technologies.

Accordingly, the Presidential Proclamations in Government Gazette dated 14 August 2019 (President Minute: 372) confirmed the transfer of administration, powers and functions entrusted by legislation to the Minister of Communication and Digital Technologies in terms of Section 97 of the Constitution.

Page 7 of 182 34 6.
Page 7 of 182 34 6.

Organisational & Service Delivery Environments During the reporting period, the Department implemented the 2022/23 APP aligned to the MTSF of government which outlines specific outcomes and priorities to ensure that the mandate of the Department is fully achieved owing to the budget reductions and fiscal constraints.

During the reporting period of the 2022/23 financial year, the government continued to re- prioritise its budget.
Furthermore, during the fourth quarter of the period under review there was a Cabinet reshuffle which led to the Department having a newly appointed Minister.

The Department continued to implement the Broadcasting Digital Migration (BDM) programme during the 2022/23 financial year.
Following the President announcement of the 2022 Speech of Nation Address (SONA), the Department and entities continued with the installations of outstanding registered households and the switch-off of analogue transmissions in the remaining four provinces of Eastern Cape, KwaZulu Natal, Western Cape and Gauteng.

To achieve this objective quicker, Sentech has enhanced the capacity of installers across the country.
This process was supported by the provincial governments, district and local municipalities as well as the Department of Cooperative Government and Traditional Affairs (COGTA) to raise awareness campaigns about the progress and what was expected of communities.

Post installation of infrastructure, a Consumer Contact Centre was established at Sentech as a support centre for beneficiaries.
The SA-Connect programme was implemented in support of the National Broadband Policy that was approved by the Cabinet in 2013.

SA-Connect seeks to meet the technology goals of the NDP of creating an inclusive information society and position the government to play an enabling role in the provision of broadband to the number of underserved district municipalities thereby bridge connectivity gaps.
The programme was initially aimed at connecting government facilities, which included all schools, health facilities, post offices, police stations and government offices, in the eight rural district municipalities, to broadband services.

Under Phase one (1), 970 government facilities were connected and sustained.

The Department has a revised model and implementation plan for the SA Connect Phase 2 which was approved by Cabinet in January 2022.
The Department has since received funding from National Treasury wherein funding to the tune of R1.1 billion (2023/24) and R1.9 billion (2024/25) has already been allocated for 2023/24 financial year.

Page 8 of 182 35 The Department also received R200 million from the National Treasury as part of the Presidential Employment Stimulus (PES) access fund, the project is underway.

SITA connected government facilities in the Eastern Cape.
SITA continues working with the other provinces to solicit tasking from the Provincial Governments for the connectivity to government facilities.

Challenges were encountered by the Department when implementing the BDM programme as there were litigations on the analogue switch-off which led to the delays in the SA digital migration, and as a result the switch-off date was extended.
There were external factors that were also impacting on the service delivery of the Department such as the Covid-19 and the impact of the load shedding which have affected the productivity of employees working on the Department’s projects.

The 2022/23 financial year was the third year that the Department continued with the implementation of its 2020-2025 Strategic Plan and the 2022/23 APP.
During this reporting period, the Department continued functioning in accordance with an interim organisational structure while it focused on developing an organisational structure aligned to the new mandate of the Department.

The organisational structure will be finalised during the 2023/24 financial year and be implemented going forward.
The Department was able to finalise the Service Delivery Model (SDM) and consultations with the Department of Public Service and Administration (DPSA) to advise on the draft organisational structure were conducted.

The Department continued to function on the start-up structure and a task team was established to complete the process of the Macro Structure.
In terms of acquiring relevant skills to deliver on its mandate, the Department has in place a Workplace Skills Plan (WSP) aimed at capacitating employees with requisite skills aligned to the mandate and strategy.

The Department is currently prioritising the implementation of the Digital Transformation Strategy with the focus on developing the e-Submission System as they move towards a paperless organisation.
This programme will continue within the Department through the digitisation of additional business processes and systems as part of implementing the Digital Transformation Strategy.

The Department has already consolidated some of the processes and systems, which include the review of existing operational policies and procedures.
Moreover, the Department continues to ensure the mainstreaming of critical issues related to designated groups through the Chief Directorate: Gender, Disability, Youth and Children (GDYC).

Page 9 of 182 36 This Unit also ensures that all departmental programme, policies, and processes are inclusive of issues related to such designated groups and will monitor the departmental and SOCs Gender, Disability, Youth and Children Responsiveness programmes in line with National targets.
During the reporting period the Department had a moratorium on the filling of vacancies in the Department for most of the financial year and this resulted in an under expenditure of the CoE Budget.

The Chief Financial Officer (CFO) resigned with effect from 30 June 2022, however an acting appointment was made, and business continued as usual without any interruption.
The Chief Director: Human Resource Management was transferred to another Department with effect from 01 September 2022, however an acting appointment was made, and business continued as usual.

Officials were also appointed as the Acting Director-General/Accounting Officer, Chief Director Communications and Marketing and Chief Director Integrated Strategic Planning and Monitoring.

Business in all areas continued without any interruption.
The following five critical positions were advertised in December 2022 and have been filled except for the Chief Financial Officer (CFO)??

and the Chief Director Human Resource Management (HRM_: • Director-General (DG) • CFO??

• Chief Director Communications and Marketing • Chief Director Integrated Strategic Planning and Monitoring.

• Chief Director: Human Resource Management?


About human resources related matters, as at end of March 2023, the Department had a total of 337 funded positions on its establishment.

A total of 280 of these posts were filled, and 57 posts were vacant and funded which equates to a 16.9 per cent vacancy rate.

During the reporting period there were 20 staff appointed additional to the establishment.
The Department was allocated a total adjusted and exclusively earmarked amount of R313 536 million for COE in the 2022/23 financial year.

As at the end of March 2023, the Department had spent R264 964 million of its COE budget.

The main reason for the underspending was the non-filling of vacancies because of a moratorium on the filling of vacant positions due to the revision of the organisational structure.
Page 10 of 182 37 6.1 Key Policy Developments and Legislative Changes During the reporting period the Department processed the SABC SOC Ltd Bill.

The Bill amongst other things proposes reducing the size of non-executive Board members from 12 to 11 and the executive members from three to two.

It revised the governance structure and funding model of the SABC.

The SAPO Amendment Bill was also submitted to Cabinet for approval to introduce in Parliament.
The proposed amendments seek to enable the SAPO to adapt to the technological developments in the courier-service space and expand its mandate.

The changes are in line with the National Integrated Information and Communications Technology Policy White Paper of 2016.

These two pieces of legislation will have an impact on the operations of the above-mentioned entities of the Department.
Furthermore, the Electronic Communications Amendment Bill was also submitted to Cluster and Cabinet for public consultation approval.

The Bill seeks to provide an opportunity for the Government to make strategic interventions on infrastructure investments whenever it deems necessary.

The purpose of the proposed amendments was to increase the level of competition in the telecommunications sector and drive down prices.
The amendments to the Electronic Communications Act will allow ICASA flexibility to regulate competition issues in the sector.

7.

Highlight of Achievement of Institutional Impacts and Outcomes The Department impact statement is: Digitally Enable, Inclusive and Competitive Economy and Society.
Through this Impact Statement, the Department recognises that the importance of universal access to digital technologies cannot be underestimated, as it enables the citizens to do their work, to socialise, to access government services, become economically active and to hold those in power accountable.

However, what is equally important is that such access is secure and affordable to all citizens irrespective of race, class, or geographic location.
The Department will therefore work towards digitally enabling an inclusive and competitive economy and society with secure and affordable universal access to digital technologies and services as a key means towards socio-economic growth.
Enabling Digital Transformation Policies and Strategies and Regulation The Department concentrated primarily on creating a conducive policy environment through the development and review of policies, legislation and strategies in order to achieve the Output: Page 11 of 182 38 Enabling Digital Transformation Policies, Strategies, and Regulation.
The following result indicators show the progress made regarding the strategic plan’s five-year targets: The Department submitted SAPO SOC Ltd Amendment Bill to Cabinet for approval to introduce in Parliament and the Postbank Amendment Bill was monitored in Parliamentary process and the banking licensing application was facilitated during the 2022/23 financial year.

Furthermore, the White Paper on the Audio and Audio-Visual Content Services Policy was revised in the 2021/22 financial year.
During the 2022/23 reporting period the Audio-Visual White Paper was submitted to Minister for consideration, however, the Department was unable to submit the Audio-Visual White Paper to Cabinet for approval as planned.

The SABC Bill was submitted to Cabinet for approval to introduce in Parliament, focusing on revision of the governance structure and funding model of the SABC, proposing the reduction of size of non-executive Board members from 12 to 11 and the executive members from three to two.
The Data & Cloud Policy was approved by Cabinet for public comments, and subsequently published for public comments through a gazette on 1 April 2021.

During the 2022/23 financial year the Department submitted the Draft National Cloud Computing Policy to the Minister for approval.

The Electronic Communications Amendment Bill was also submitted to Cluster and Cabinet for public consultation approval.
The proposed amendments focused on increasing the level of competition in the telecommunications sector and driving down prices will allow the ICASA flexibility to regulate competition issues in the sector.

The Department developed and approved the Digital Economy Masterplan during the 2020/21 reporting period.

Furthermore, a report on the coordination of the implementation of identified priority areas of the Digital Economy Masterplan was generated and approved.
During the 2021/22 financial year, a report was developed on the Integrated report on Digital Economy Programmes.

Digital Economy Strategy was developed by the Department during the 2022/23 reporting period.

During the 2022/23 reporting period, the Department submitted a Cabinet Memo on the disestablishment of USAASA.

Disestablishment plan was finalised and submitted for the Minister’s approval and the Report on the implementation of the disestablishment plan was developed.
Page 12 of 182 39 With regards to advancing country positions, to support the Digital Economy, the Department has advanced the RSA Position Paper for ITU-WRC-19 focused on Spectrum management and allocations for future technologies to support the digital development agenda.

Furthermore, the Department participated in the Regional Consultation Meetings that took place through the SADC 6th WRC Preparatory meeting and the ATU 3rd WRC preparatory meeting.
South Africa also hosted the 4th ATU APM for the WRC in 2019/20 financial year.

With regards to the UPU, Position papers for UPU and PAPU were developed and approved.

During the 2020/21 reporting period the Department has developed 2 Country Positions to support the National ICT priorities focused on BRICS and WTDC-21.

During the 2022/23 reporting period the Department developed and approved 3 Country positions to support the National ICT priorities focused BRICS, ITU-PP 22 and WTDC.
The focus for 2023/24 financial year will be on developing and approving 3 Country Positions to support the National ICT priorities focused on BRICS, UPU and WRC-23.

In terms of the PC4IR Report, the Department coordinated the development of the Country Report for 4IR, through the Presidential Commission on Fourth Industrial Revolution.
A 4IR Project Management Office was established and operationalised, within the Department, to develop a Strategic Implementation Plan (SIP) focused on the implementation of the recommendations stemming from the PC4IR Report.

The SIP was developed, and consultation was conducted in Provinces and national departments.

During the 2022/23 reporting period the PC4IR Strategic Implementation Plan was submitted to the Minister.
The development of relevant policies and strategies as well as the implementation of the 4IR Strategic Implementation Plan supported by strategic partnerships were focused at contributing to the outcomes of creating an enabling Digital Transformation Policies, Strategies and Services.
Increasing Access to Secure Digital Infrastructure and Services The Department has made progress towards the achievements to the outcome indicators focusing on Increasing Access to Secure Digital Infrastructure and Services in relation to the strategic plan five-year targets.
The Department, in its focus on coordinating implementation of the revised SA-Connect Model to ensure achievement of the target of 80 per cent broadband access to citizens by 2024, concluded the SA-Connect Feasibility Study to facilitate broadband connectivity to government facilities in the 2020/22 reporting period.

Page 13 of 182 40 The Feasibility Study Report for Phase 2 funding was concluded.
During the 2021/22 reporting period the Cabinet approved a revised SA-Connect implementation plan, set to connect South Africa in 3 years.

The Feasibility Study for SA-Connect Phase 2 required R57 billion which the state was unable to fund.

The revised model required state capital funding of R2.5 billion and was to ensure that the Government achieves its target of 80 per cent broadband access.
Furthermore, the Department has established the Project Management Office for SA-Connect Phase 2, the project team has been appointed which consist of representation from the entities within the portfolio and the Department to implement revised SA-Connect Phase 2 Model.

The Department has also continued in monitoring and sustaining the provision of broadband services to all 970 connected sites.
During the 2022/23 reporting period the Department coordinated the implementation of the revised SA-Connect Model on the funded sites.

Going forward the Department will focus on coordinating the implementation of the revised SA-Connect Model towards internet access for communities and government facilities.

During the 2021/22 reporting period the preliminary technical and regulatory studies were conducted to inform draft SA’s position for WRC-23.
The Department during 2022/23 reporting period developed Second Draft SA Preliminary Positions for WRC-23.

Furthermore, the Department developed the Policy Direction for 5G deployment and monitored the implementation of social obligations for new spectrum licence holders.

Going forward, the Department will develop the final approved position for South Africa in preparation for WRC- 23.
With regards to the roll-out of the subsidised digital television installations, the Department continued with the coordination of the Switch-off of SABC analogue television transmitters across provinces.

However, BDM projects target which deals with subsidised digital television was reviewed, following Cabinet approval of the revised implementation plan.
The new target consolidated the work towards Analogue Switch-Off (ASO) by 31 March 2022, the deadline was subsequently extended to end of June 2022 due to litigation.

During the 2022/23 reporting period the Department coordinated the Household Migration and ASO for the Broadcasting Digital Migration for households registered after 31 October 2021.
Going forward, the Department will continue with the coordination of distribution and Page 14 of 182 41 installation of decoders and the coordination of ASO in the four provinces of Eastern Cape, Western Cape, KwaZulu-Natal and Gauteng.

The Department will also continue monitoring the implementation of strategic national cybersecurity programmes to ensure the safety of our citizens online, as well as safeguarding the critical ICT infrastructure.
Progress with regards to broadband connectivity, broadcasting digital migration and allocation of the national radio frequency spectrum will directly contribute to the outcome related to increasing access to secure digital infrastructure and services.

Digitally Transformed Economy and Society To have a Digitally Transformed Economy and Society, the Department has facilitated the implementation of the National e-Government Strategy and Roadmap, towards digitalisation of government services.
The Department focused on establishing the National e-Government Programme Governance Structure and monitored the prioritised key public facing services automation (integrating AI and Big Data interventions).

During the reporting period of 2022/23, the Department has coordinated the implementation of National e-Government Strategy and Roadmap, with a focus on a Single Portal for prioritised government services.
Going forward the focus will be to monitor the automation of e- Government services on e-Portal which is aimed at enabling our citizens to transact with government in real time and in the safety of their homes.

With regards to the Digital and Future Skills Strategy, the Department submitted the Digital and Future Skills Strategy to Cabinet for approval and a draft Digital and Future Skills Implementation Programme was developed.

Furthermore, the establishment of the Digital Skills Forum was approved.
Through NEMISA, the Department facilitated the implementation of training on Coursera online digital skills in the 2020/21 reporting period.

Furthermore, the Department has through NEMISA facilitated and monitored training of young people in pre-entry level digital skills, data science, analytics, and machine learning.
During 2022/23 reporting period the Department continued in its focus to coordinate the Digital and Future Skills training programmes through local and international Public and Private partnerships.

Going froward the Department will still focus on coordinating the Digital and Future Skills programmes through multi-stakeholder partnerships.

Page 15 of 182 42 The Department coordinated and reported on Partnership Programmes initiatives to support the Digital Economy.
Internal engagements to identify priority programmes of the Department were held with both ICT Policy Development and Research as well as with ICT Information Society and Capacity Development Branches.

Stakeholders for partnerships for the implementation of programmes, were identified.

Engagements with concerned Foreign Embassies were conducted to agree on the identified partnership programmes.

Implementation of identified partnership programmes status report was developed.
The Department continued in 2022/23 reporting period with the coordinating the implementation of identified international programmes to support the digital economy initiatives and developed the Status report on the implementation of identified international programmes.

The Department supported and contributed to the SA Investment Conference through advancing the ICT investment initiatives and the Outcomes report was developed and approved during the reporting period of 2021/22.
To further contribute to transforming digital society, the Department, University of Johannesburg (UJ), and the Tshwane University of Technology (TUT) on the 30 November 2022 launched the Artificial Intelligence Institute of South Africa (AIISA).

AIISA was founded upon the vision of the PC4IR articulated in the Commission’s report on the 4IR.

AIISA positioned itself as a supporting innovation engine for the public and private sectors.
It also seeks to generate knowledge and digital applications to position South Africa as a competitive player in the global AI economy.

The Department will during the 2023/24, focus on including four (4) Artificial Intelligence (AI) Centres of Excellent in the AIISA network and implement priority programmes, in line with the recommendations stemming from the Report of the PC4IR.

The Department will in the 2023/34 financial year facilitate the DigiTech Products and services for adoption by the Government.
The purpose of DigiTech is to collect data about digital products developed in South Africa with the aim of supporting the products’ technology enablement and promoting to expand their adoption and use.

Through DigiTech, the Department seeks to promote SA-developed digital products in other markets whilst facilitating partnerships with other countries on co-promotion of local technologies.
The implementation of the National e-Government Strategy and Roadmap towards the digitalisation of government services and increasing the uptake and usage of digital Page 16 of 182 43 technologies contribute to the outcome of having a digitally transformed economy and society in place.

High-performing and sustainable portfolio to enable achievement of their respective mandates and policy objectives.
To ensure a high-performing and Sustainable Portfolio to achieve their respective mandates and policy objectives, the Department has digitised its processes and systems, developed the Integrated Digital Transformation Strategy and monitored the implementation of priority interventions.

The Business needs analysis focusing on prioritised interventions was also conducted.
Furthermore, the Department’s Digital Transformation Strategy and the cloud strategy were approved as an annexure to the Digital Transformation Strategy in the 2020/21 reporting period.

During the 2021/22 financial year, the Department has implemented and monitored the Collaboration platform rollout plan as part of the Digital Transformation priority intervention.
The implementation of the Digital Transformation Strategy activities will continue in the 2023/24 financial year to ensure that the Department is digitised and there is a paperless environment, and the Department will focus on developing the e-Submission System.

With regards to the Approved Strategic Plans and APPs of SOEs, the Department continues to analyse Quarterly SOE Performance Reports and submit the Reports to Minister.
The Department also analysed the entities' quarterly performance reports and the APPs/Strategic/Corporate Plans that the Entities submitted.

The Department reviewed 2021/22 Shareholder Compacts of Schedule 2 and 3B Entities.

The ICASA Act stipulates that the performance management system must, inter alia, set key performance indicators as a yardstick for measuring performance, set measurable performance targets, and set a procedure to measure and review performance at least once a year.
The Department tabled and facilitated the PMS for ICASA Councillors in Parliament.

Parliament subsequently approved the PMS for ICASA Councillors in the current 2022/23 financial year.

As per the requirements of the government during the reporting period, the Department developed and coordinated the Implementation Plan for District Development Model (DDM) in the prioritised Districts / Metros.
This results from a process by which joint and collaborative planning is undertaken at local, district and metropolitan levels by all three spheres of governance, resulting in a single Page 17 of 182 44 strategically focused One Plan for each of the 44 districts and 8 metropolitan geographic spaces in the country.
The DDM was introduced and approved by the Cabinet to address the consequence of a lack of coherence in service delivery planning and implementation to deal with the challenges of poverty, inequality and employment.

The Department monitored the Departmental and SOCs Gender, Disability, Youth and Children (GDYC) Responsiveness programmes in line with National targets.
Furthermore, The DCDT integrated plan of action in support of the National Strategic Plan (NSP) on gender-based Violence, focusing on Prevention, Reporting and Economic Power Pillars, was implemented in Provinces and Districts Municipalities working with SOCs focusing on women, youth, Persons with Disabilities Children, Survivors and Victims of Gender Based Violence and a National Stakeholder Engagement and Evolution Workshop was hosted.
The finalisation of the Department’s organisational structure aligned to mandate and strategy and digitised processes and systems will ensure a high-performing organisation as all business units will focus on digitally delivering services.

Indicators related to providing oversight on our SOEs will contribute towards the outcomes of a high-performing portfolio with a focus on performance against planned indicators and accountability in this regard.
Going forward, the Department will further continue with a stringent and proactive oversight role on its SOEs to ensure performance and compliance reports and facilitate the tabling of submitted APPs of SOEs in line with the MTSF.

The Department will be monitoring the implementation of the performance of ICASA Councillors in line with the PMS.

Facilitation of the development of the shareholder compacts of Schedule 2 and 3B will still be the focus.
Monitoring the implementation of the SAPO Reposition Strategy, Postbank strategy towards State Bank, SABC Turnaround Plan and developing the monitoring report for both SITA Repurposing and USAASA disestablishment will remain a focus during the 2023/24 financial year.

8.

Performance Information and Performance by Programme In terms of performance against the 2022/23 APP, the Department committed to achieving 35 annual targets during the reporting period.
The Department achieved 77 per cent of its annual targets while spending 98 per cent of its adjusted budget allocation, as illustrated in the diagram below.

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This further impacts on the strategic priorities of government to ensure coherence in service delivery planning and implementation to provide optimal quality services to citizens and diminish the potential impact of government services on the triple challenges of poverty, inequality and employment.
Such achievements contributed to the outcome of a high-performing organisation as all business units have well-capacitated staff and are focused on digitally delivering services aligned with the mandate of the organisation.

Programme 1 has ensured the mainstreaming of critical issues related to designated groups through the Chief Directorate: GDYC.
This Unit also ensured that all Departmental programmes, policies, and processes were inclusive of issues related to such designated groups and monitored the Departmental and SOCs GDYC Responsiveness programmes in line with National targets.

8.1.1 Areas of Underperformance (i) Delay in getting the proposal to appoint a service provider to implement the workflow management system.

(ii) The delay was also caused by the high-pricing proposal received.
8.1.2 Programme Performance Against Budgets Spending was R225.8 million in the 2022/23 financial year and R228.4 million in the 2021/22 financial year.

Spending on goods and services increased from R94.1 million in 2021/22 to R97.1 million in 2022/23 financial year.

Spending in travel and subsistence was up from R7.6 million to R17.4 million in the year under review.

The spending rate under this programme was at 82.2 per cent.
Page 20 of 182 47 Strategy to Overcome Areas of Under Performance The Department acknowledges its areas of under-performance related to the target of the Digital transformation strategy initiative implemented (Workflow management system), which could not be achieved due to delays in getting the proposal so that a service provider can be appointed to implement the workflow management system and high pricing proposal that was received.
The Department, in 2023/24 financial year, will develop the e-Submission System as part of implementing the digital transformation strategy initiatives.

8.2 Programme 2: ICT International Relations and Affairs The purpose of Programme 2 is to position South Africa as a digital technological infrastructure and innovation hub leading on digital transformation to contribute to the digital economy.
Institutional Outcomes for Programme 2: Enabling Digital Transformation Policies and Regulation and a Digitally Transformed Economy and Society.

Outcomes, Outputs, Output Indicators, Targets and Actual Achievements In its effort to implement the outcome Enabling Digital Transformation Policies, Strategies and Regulation, the Department has developed 3 Country Positions to support the National ICT priorities focused on BRICS, ITU-PP 22 and WTDC.
Furthermore, in implementing the output of a digitally transformed economy and society, the Department coordinated the implementation of identified international programmes to support the digital economy initiatives.

Page 21 of 182 48 This programme, in its response to prioritising women, youth, and persons with disabilities, has ensured the participation of youth in international fora, working with Progressive Black ICT Forum, which is an association of ICT SMMEs.
8.2.1 Areas of Underperformance Not applicable as all planned targets were achieved within Programme 2.

8.2.2 Programme Performance Against Budgets Spending was R64.6 million in the 2022/23 financial year and R54.6 million in 2021/22 financial year.

The spending in goods and services has increased from R3 million in 2021/22 to R6.4 million mainly due to travel and subsistence increasing from R816 000 thousand in 2021/22 to R4.8 million in 2022/23.
Transfer payment also increased from R32.1 million in the 2021/22 financial year to R35.4 million in the year under review.

The spending rate under this programme was at 94.1 per cent.

8.3 Programme 3: ICT Policy Development and Research The purpose of Programme 3 is to develop ICT policies and legislation that support the development of an ICT sector that creates favourable conditions for the accelerated and shared growth of the economy.
Develop strategies that create the uptake and usage of ICT by most of the South African population, thus bridging the digital divide.

Institutional outcome for Programme 3: Enabling Digital Transformation Policies, Strategies and Regulation.
Outcomes, Outputs, Output Indicators, Targets and Actual Achievements With regards to the “Enabling Digital Transformation Policies, Strategies and Regulation”, the programme was able to develop strategies, policies and legislations such as the SAPO SOC Ltd Page 22 of 182 49 50 F-$.3-$.(!

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Strategy to overcome areas of underperformance.

The Department acknowledges its areas of under-performance related to the targets of submitting the Audio-Visual White Paper to Cabinet for approval.
There was a delay in the approval of the draft white paper for the final gazetting as a result it was not submitted to Cabinet.

However, the Audio-Visual White Paper was submitted to the Minister for consideration.

The target of developing the policy direction on the discontinuation of analogue TV sets from domestic production and imports was not achieved due to the external dependencies to conclude the publishing of the final policy directive.
Furthermore, a draft Digital Regulatory Reform Policy document was developed, however, there was a change in the approach or direction due to a merger of BBI and Sentech to the acquisition of BBI by Sentech.

The Department will ensure finalisation of the abovementioned target by 2023/24 financial year.
8.4 Programme 4: ICT Enterprise Development and Public Entity Oversight The purpose of Programme 4 is to oversee and manage government’s shareholding interest in the ICT public Entities and state-owned companies.

Institutional outcomes for Programme 4: High Performing and financially sustainable portfolio to enable achievement of their respective mandates and policy objectives.
Outcomes, Outputs, Output Indicators, Targets and Actual Achievements Achievement has been made with regards to the Outcome of “High Performing and Sustainable Portfolio” to enable achievement of their respective mandates and policy objectives.

Programme 4 is responsible for overseeing and managing the government’s shareholding interest in the ICT public entities and state-owned companies.
In this regard, the Department as part of its oversight function, was able to develop consolidated performance monitoring and reporting for the Portfolio during the reporting period and coordinated the implementation of recommendations from analysis of Departmental and SOEs Performance Reports.

Furthermore, Programme 4 facilitated the tabling of submitted APPs of Department & SOEs, in line with the MTSF.
In response to prioritising women, youth and persons with disabilities, the programme ensured that the entities are aligned in terms of gender representation and compliance with framework on gender, responsiveness, budgeting, planning monitoring, evaluation and auditing.

Page 24 of 182 51 8.4.1 Areas of Underperformance The Department acknowledges its areas of under-performance related to the target of Monitoring and evaluation of the PMS for ICASA Councillors facilitated.
8.4.2 Programme Performance Against Budgets Spending was R4.3 billion in the 2022/23 financial year and R1.7 billion in the 2021/22 financial year.

The major increase in 2022/23 financial year was mainly in the Payment for Financial Assets due to additional funds received during the second adjustment budget process of R2.4 billion as a recapitalisation for SAPO.

The spending rate under this programme is at 99.9 per cent.
8.5 Programme 5: ICT Infrastructure Development & Support The purpose of Programme 5 is to facilitate the provision of robust, reliable, secure and affordable ICT Infrastructure that supports universal access to applications and services.

Institutional outcomes for Programme 5: Increased Access to Secure Digital Infrastructure and Services.
Outcomes, Outputs, Output Indicators, Targets and Actual Achievements The Department’s Programme 5 contributed to the Outcome of “Increased access to secure Digital Infrastructure and Services.

“in this regard, the Second Draft SA Preliminary Positions for WRC- 23 was developed.
With regards to broadband, the Department during the reporting period, coordinated the implementation of the revised SA-Connect Model on the funded sites to ensure achievement of the target of 80 per cent broadband access to citizens by 2024.

The programme further coordinated the implementation of the rapid deployment of digital infrastructure.
Page 25 of 182 52 The Department further monitored the implementation of strategic national cybersecurity programmes and services to ensure the safety of our citizens online, as well as safeguarding of the critical ICT infrastructure.

The Programme coordinated the Household Migration and Analogue Switch off for the BMD for households registered after 31 October 2021.

Furthermore, the Policy Direction for 5G deployment was developed and approved during the reporting period.
The implementation of social obligations for new spectrum licence holders was also monitored.

In response to prioritising women, youth and persons with disabilities, the programme ensured that during the implementation of the BDM Programme 825 Installers participated and 40 per cent of the appointed companies of set-top-box installers are women led.

This programme also had participation by youth.

8.5.1 Areas of Underperformance Not applicable as all planned targets were achieved within Programme 2.
8.5.2 Programme Performance Against Budgets Spending was R533.3 million in the 2022/23 financial year and R1.513 billion in 2021/22 financial year.

The net reduction was due to transfers and subsidies amounting to R1 billion made to USAF for BDM during 2021/22 financial year.

However, Consultants Business Advisory has increased from R1.8 million in 2021/22 to R207 million due to expenditure for the Provision of Presidential Youth Employment Intervention (PYEI) phase 2 Broadband Access Fund.
The spending rate under this programme is at 98 per cent.

Strategy to overcome areas of underperformance.

Not applicable as all planned targets were achieved within Programme 5.

8.6 Programme 6: ICT Information Society and Capacity Development Page 26 of 182 53 The purpose of Programme 6 is to facilitate the development and implementation of interventions that increase the adoption and use of digital technologies to promote digital transformation.
Institutional outcomes for Programme 6: Digitally transformed Economy and Society and Enabling Digital Transformation Policies, Strategies and Regulation.

Outcomes, Outputs, Output Indicators, Targets and Actual Achievements The Departments’ Programme 6 contributed to the Outcome of “Transformed Digital Society.

“In this regard, the Department conducted the study on cost to communicate to inform the revision on the data costs.
The programme further developed the strategy to leverage delivery of services through 5G and Wi-Fi 6 to stimulate the digital economy and developed the Policy to discontinue GSM phones.

Furthermore, the programme also contributed and focused on coordinating the implementation of National e-Government Strategy and Roadmap, with a focus on a Single Portal for prioritised government services.
The programme also coordinated the Digital and Future Skills training programmes through local and international Public and Private partnerships and coordinated the establishment of the Artificial Intelligence (AI) Institute and developed the AI Strategy.
In response to prioritising Women, Youth and Persons Living with Disabilities, the programme ensured that during training provided by the Entities was aligned in terms of gender representation and compliance with the framework on gender, responsiveness, budgeting, planning, monitoring, evaluation and auditing.
8.6.1 Areas of Underperformance The Department acknowledges its areas of under-performance related to the target of Implementing a study on cost to communicate conducted to inform the revision on the data costs and Recommendations stemming from the study because of delays in finalising cost to communicate study which affected the implementation of the recommendations.
The other area of underperformance is related to the target of Development of a Green Paper on the Digital Government Act, owing to the change of approach in driving the Digital Government agenda within government.

Page 27 of 182 54 Lastly, underachievement in the target relating to the Implementation of the Digital Economy Masterplan was as a result of the need to firstly finalise he Digital Economy Strategy Framework before developing and implementing the Masterplan.
8.6.2 Programme Performance Against Budgets Spending was R63.1 million in the 2022/23 financial year and R65.1 million in 2021/22 financial year.

The spending in goods and services has decreased from R23 million in 2021/22 to R 20 million in 2022/23 mainly in Consultants Business and Advisory from R16.6 million in 2021/22 to R5.8 million in 2022/23 due to delays in the procurement processes which led to the digital skills programme and the district digital enablement project not being executed.
The spending rate under this programme is 71.9 per cent.

Strategy to overcome areas of underperformance.

The Department acknowledges its areas of under-performance related to the target of developing the Green Paper on the Digital Government Act which could not be achieved due to a change of approach in driving the Digital Government Agenda within government.
Furthermore, the Department did not achieve the target of approving and implementing the Digital Economy Masterplan due to the reason that the Department needed to first finalise Digital Economy Strategy Framework before developing and implementing the Masterplan.

The Department will ensure that both targets are finalised in the 2023/2024 financial year.

9.
9.

Overview and Assessment of Financial Performance of the Department The table below depicts the Department’s budget allocation per programme over two financial years.

It also annotates the Appropriation Per Economic Classification over the financial years.

Expenditure for the Department as of 31 March 2023 was R5.2 billion.

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"54 Statement of Financial Position § Unauthorised Expenditure – Follow ups were made with National Treasury (NT) regarding progress on the case as the matter awaits Cabinet approval.
The Department appeared before SCOPA on 19 September 2023; § Cash & Cash Equivalents – Cash in the bank at end of the year; § Voted funds to be Surrendered – Voted funds to be surrendered amounts to R106 million; § Other receivable and other payables – The R2.4 billion disclosed are under other receivable and other payable represent the R2.4 billion second adjustment allocation in respect of SAPO.
As at 31 March 2023 actual funds were not received from National Revenue Fund (receivable) and a payment was not made to SAPO; § Payables – The increase is due to funds were received from ICASA in the week before the 31 March 2023 and was paid over to NRF and SARS in April 2023; and § Loans – The SABC loan is interest bearing of R27.4 million.

A letter was sent to National Treasury to repeal section 28 to 30 of the Exchequer Act and feedback is awaited.
The overall saving of R106.4 million was mainly recorded on Programme 1: Administration, Programme 3: ICT Policy Development and Research and Programme 6: ICT Information Society and Capacity Development.

Of the mentioned amount, a total saving of R48.5 million was recorded on Compensation of Employees and was because of the moratorium on the filling of positions.

A total amount of R51.2 million was recorded on Goods and Services while a saving of R3.5 million was recorded on Payments for Capital Assets.
Programme 1: Administration recorded a total saving of R22.9 million under Goods and Services because of the non-appointment of consultants to conduct IT Audit, non-appointment of consultants for job evaluation on the organisational structure review process and the reduced spending on advertising of positions.

A further saving of R2.3 million was recorded under Payments for Capital Assets which relates to the delays experienced with SITA for the Local Area Network upgrade project invoicing.
Programme 3: recorded a total saving of R5.1 million on Goods and Services due to cancellation of legislative development project which led to a reduction in consultation costs Page 30 of 182 57 and travelling costs.

Online meetings and webinars contributed to a further reduction in travel costs.

Programme 6: recorded a total saving of R17.7 million on Goods and Services due to delays in the roll out of the Digital Skills Programme and the District Digital Enablement Project.
The Department received an additional allocation of R2.4 billion during the 2nd Adjustments Appropriation Act in respect of the recapitalisation of South African Post Office.

As at 31 March 2023, the funds were not yet received from the National Treasury and not disbursed to SAPO.

There was a significant increase in Interest received due to accrued interest received from SABC in respect of SABC Loan 14.
The Department has received funds from ICASA on the sale of Spectrum and this has resulted in an increase of bank interest.

The increase in transactions in financial assets and liabilities is as a result of debts recovered from previous years.

A total of R10.3 billion was received from ICASA during the 2022/23 financial year of which, the R10.2 billion was earmarked for surrender to the National Revenue Fund (NRF).
R10.2 billion was surrendered to the NRF as of 31 March 2023 and R44 million will be paid to the NRF in April 2023.

The Department is deemed to be a “conduit” as it only passes administrative fees from ICASA to the NRF and SARS and, therefore, the Department does not record the mentioned amounts as departmental revenue in the Statement of Financial Performance (PER) at year end as this will overstate the Department’s revenue.
Finally, increase in Receivables is because of debts recovered from previous years.

Virements/roll overs Virements as reflected on the Appropriation Statement were applied in terms of section 43(1) of the Public Finance Management Act (PFMA), 1999 (Act 1 of 1999) which stipulates that virements may not exceed 8 per cent of amount appropriated under that main division.
Funds amounting to R4.6 million and R2.5 million from programmes 1 and 6 were transferred respectively to Programmes 2 and 4 to defray excess expenditure.

Programme 2 was overspending under compensation of employees and programme 4 was overspending under payment for financial assets for SABC loan.

An amount of R200 million was approved by the National Treasury to be rolled over to the year under review for the Provision of PYEI phase 2 Broadband Access Fund.
Page 31 of 182 58 Unauthorised, Irregular, Fruitless and Wasteful Expenditure A description of the reasons for unauthorised, fruitless and wasteful expenditure and the amounts involved as well as steps taken to address and prevent a recurrence.

The Department has incurred irregular expenditure amounting to R153 494.00 during the period under review, however cases amounting to R156 million were resubmitted and referred to the National Treasury awaiting condonation.
The Department did not incur any unauthorised expenditure during the period under review.

Fruitless and Wasteful Expenditure for the 2022/23 financial year amounted to R61 351.95.

During this financial year Fruitless and Wasteful Expenditure to the amount of R56 792.5 was written off and an amount of R1 530. was transferred to receivables for recovery and was ultimately recovered from the official.
The total amount outstanding on the Fruitless and Wasteful Expenditure register as at 31 March 2023 amounted to R3 029.7 which is still under determination.

The Department does implement consequence management as and when necessary.

The policy also strengthens punitive measures against those officials who negligently commit acts that result in Fruitless and Wasteful expenditure.

The following Section 10 of this report covers in detail the audit findings of the Department.

10.
10.

AGSA Report The overall audit outcome of the Department remained stagnant with an Unqualified audit opinion with material findings on predetermined objectives and non-compliance.

It is the third consecutive reporting year that the Department has received an unqualified opinion with findings.
10.1 Report on the Audit of the Key Targets of the Annual Performance Report For the year ended 31 March 2023 for auditing, the AGSA selected programmes that measure the Department’s performance on its primary mandated functions and that are of significant national, community or public interest.

The material findings on the performance information of the two selected programmes as follows: (i) Programme 5 - ICT Infrastructure Development and Support Migrated households.
The indicator was included in the approved annual performance plan but then not clearly defined during planning processes.

It was also not determined how the related target would be Page 32 of 182 59 measured and what evidence would be needed to support the achievements.

Consequently, the information might be less useful for measuring performance.
Implemented revised SA-Connect Model on the funded sites The planned target for this indicator was implementation of the revised SA-Connect Model coordinated on the funded sites.

However, the target was not specific in that it was not indicated how it would be measured or when it should be delivered.

Consequently, the information might be less useful for measuring performance.
(ii) Programme 6 - ICT Information Society and Capacity Development Implemented recommendations stemming from the Cost-to-Communicate Study The planned target for this indicator was study on cost to communicate conducted to inform the revision on the data costs and recommendations stemming from the study implemented, however, the target was not specific in that it was not indicated how it would be measured or when it should be delivered.
Consequently, the information might be less useful for measuring performance.

10.2 Report on Compliance with Legislation The material findings on compliance with the selected legislative requirements, presented per compliance theme, are as follows: Consequence Management The AGSA was further unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure as required by section 38(1)(h)(iii) of the PFMA.
This was because investigations into some of the irregular expenditures were not performed.

The root cause is lack of proper record keeping relating to the reported irregular expenditure which resulted in some cases not being investigated.

It was noted that management did start to address this matter after year-end.
Annual financial statements and performance and annual report The financial statements submitted for auditing were not fully prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 40(1)(b) of the PFMA.
There were material misstatements of non-current assets, current assets, liabilities, disclosure items identified by the auditors in the submitted financial statement were corrected and the Page 33 of 182 60 supporting records were provided subsequently, resulting in the financial statements receiving an unqualified opinion.
The root cause was that material corrections were made as there was an instruction received from National Treasury relating to SAPO recapitalisation funds, which was not aligned to the financial standards and had to be adjusted and there were inadequate reviews.
Internal Control Deficiencies The matters reported by the AGSA are limited to the significant internal control deficiencies that resulted in the material findings on the annual performance report and the material findings on compliance with legislation mentioned above.

An adequate review of the Department’s annual performance indicators and targets was not effectively performed to ensure alignment to the mandate and oversight responsibilities.
The Accounting Officer did not adequately implement consequence management processes in relation to contravention of applicable policies, laws and regulations, as a result material findings were identified relating to consequence management compliance audit.
The significant deficiencies in Internal Control that led to the AGSA’s overall assessment of the status of the drivers of key controls are described below: Financial and Performance Management Management did not prepare performance reports that are supported and evidenced by reliable information.
Management did not review and monitor compliance with applicable laws and regulations to ensure: • Consequence management is implemented; • Indicators and targets are well defined and measurable; and • That the financial statements are prepared in line with the reporting framework.

Management does not have adequate internal controls in collecting, collating and verifying the data related to the BDM project, which resulted in material findings on the reliability of the reported performance information.
10.3 Other Matters The following matters are material non-compliance matters that were identified and reported by the AGSA: Achievement of planned targets Page 34 of 182 61 The annual performance report includes information on reported achievements against planned targets and provides explanations for over- and under achievements.

This information should be considered in the context of the material findings on the reported performance information.
Material misstatements The AGSA identified material misstatements in the annual performance report submitted for auditing.

These material misstatements were in the reported performance information of Programme 5: ICT Infrastructure Development and Support and Programme 6: ICT Information Society and Capacity Development.

Management did not correct all of the misstatements and the reported material findings in this regard.

11.
11.

AGSA Consolidated Portfolio Report The AGSA noted an overall improvement in the Portfolio.

This was mainly due to the improvement in audit outcome of four auditees as highlighted below: FPB: – The FPB received a clean audit – Best practices included proper reviews of financial statements and performance report for audit and adherence to laws and regulations.

The clean audit achieved for the second consecutive financial year reflects the soundness of adherence to compliance frameworks and controls.
Emphasis of matter Statutory receivables – exchange transactions The public Entity has a material balance of statutory receivables older than 180 days on the age analysis.

Management analysed this balance and concluded that it should not be impaired as the probability of non-payment is negligible.

Other Matter The AGSA did not express an opinion on the disclosure of irregular expenditure and fruitless and wasteful expenditure in the annual report.
Report on Compliance with Legislation and Internal Control Deficiencies The AGSA did not identify any significant deficiencies in internal control and did not identify any material non-compliance with the selected legislative requirements.
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"54 The AGSA drew attention to the consolidated and separate financial statements, which indicate that most of the public Entity’s revenue is earned from one customer who experienced cash flow challenges in the past few years.
This indicates the presence of material uncertainty relating to financial sustainability risk due to lack of revenue diversification.

Irregular Expenditure Analysis During the year under review, the public Entity incurred irregular expenditure amounting to R10 million, which was disclosed in the financial statements.

This irregular expenditure relates to fraudulent procurement activities which are currently still in progress with the police involved.
Other Important Matters Sentech & BBI merger The AGSA drew attention to the consolidated and separate financial statements that indicate that Sentech is in the process of acquiring 74 per cent of BBI.

Due diligence was completed, and it is anticipated the transaction will be concluded by the end of September 2023.

There were no significant deficiencies in internal controls.
ICASA: –successfully finalised the process to assign broadband spectrum in prior year with however R6 billion of the revenue related to the project was collected in current year on behalf of the national revenue fund.

ICASA received an Unqualified audit with findings opinion from the AGSA.
Management has not succeeded to address deficiencies in controls around preparation of accurate and complete annual financial statement that are free from material misstatement, identified material misstatement identified were subsequently corrected by management.

Non-compliance with laws and regulations which resulted in the occurrence of irregular expenditure, payments to supplier not made within the required 30 days.
Appropriate evidence was not kept confirming that necessary investigations are carried out and that recommended consequence management actions are taken.

Achieving Key Performance Targets – Summarised Information from performance Report A total of 42 targets out of 48 planned targets were achieved for 2022/2023, which represents an 87.5 per cent achievement based on the annual performance report.
Observation of Possible Impact of Targets Not Achieved – Key Message • The main observation of possible impact of the non-achievement of the targets: Page 37 of 182 64 • The indicators that are not achieved are below the outcome: Competition in the ICT sector promoted.

• Not achieving indicators that aim to stabilize the sector through ensuring fair competition has a negative impact to the users.
Financial Health Risk There is no significant uncertainty that may cast doubt that the Authority may continue as a going concern in the foreseeable future, however the following should be noted.

On the average it takes ICASA to pay its creditors, it has decrease from 92 days in prior to 55 days in current year.

Although there is improvement, the Entity is still not meeting the 30 days payment terms as required by legislation.
This indicates that internal control deficiency in terms of ensuring that creditors are paid promptly.

Irregular Expenditure Analysis During the year under review, the constitutional Entity incurred irregular expenditure amounting to R33 million, which was disclosed in the financial statements.

The analysis of irregular expenditure shows that irregular expenditure increased by 10 per cent compared to the prior year.
The expenditure can be broken down as follows: Findings on Compliance with Legislation The following material non-compliance issues were identified and reported: Page 38 of 182 65 Internal Controls The significant deficiencies in internal control that led to the AGSA’s overall assessment of the status of the drivers of key controls are described below.
Leadership Controls were not always effective to ensure oversight, monitoring and review of compliance with laws and regulations as management did not adhere to their audit action plan to implement controls over financial reporting.

Financial and Performance Management Management did not implement adequate controls to ensure that contracted amount is not exceeded without approved variation.
Management did not implement adequate controls to ensure that payments to suppliers are made within 30 days after receipt of an invoice.

Management did not take action against employees who incurred or permitted irregular and fruitless and wasteful expenditure as required by PFMA.

BBI: – The AGSA opinion remained Unqualified audit with material non-compliance matters.

These matters should be addressed to move the Entity to clean audit outcomes by implementing preventative controls.
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"54 Management addresses compliance on consequence management and adjustments to financial statements.
The Department’s detailed audit report is reflected in the preceding Section 10 of this report.

USAASA – improvement of audit outcomes was due to the effectiveness of the action plans developed and implemented to address previous qualification areas.

However, enhancement of internal controls over review of financials should be implemented as material misstatements were still identified as well as non-compliance on incurring of F&W expenditure and consequence management.
No material misstatements were reported in the audit report on Strategic objective – Business support.

Achieving Key Performance Targets – Summarised Information from Performance Report A total of 5 targets out of 5 planned targets were achieved for 2022/23, which represents a 100 per cent achievement based on the annual performance report.

Findings on the Audit of Financial Statements Unqualified opinion The public Entity improved its audit opinion from a qualified opinion to an Unqualified audit.
This is mainly due to management providing supporting documentation that was not available for audit in the prior year related to receivables from exchange transactions.
Going Concern Risk The annual financial statements have been prepared based on accounting policies applicable to a going concern, describes the events or conditions, along with other matters as set forth in note 23 of Annual Report, that may cast significant doubt on the public’s ability to continue as a going concern and how the public Entity is responding to them.

The Department and USAASA have planned to and are currently implementing activities to disestablish USAASA.
Irregular expenditure analysis: During the year under review, the public Entity incurred irregular expenditure amounting to R7.9 million, which was disclosed in the financial statements.

The analysis of irregular expenditure shows that irregular expenditure decreased by 88 per cent compared to the prior year.
Findings on Compliance with Legislation The following material non-compliance issues were identified and reported: Page 41 of 182 68 Consequence Management Internal controls The significant deficiencies in internal control that led to the AGSA’s overall assessment of the status of the drivers of key controls are described below.

Leadership The public Entity did not implement adequate consequence management processes for transgressions against applicable policies, laws and regulations.
Investigations were not undertaken for all instances of irregular, fruitless and wasteful expenditure incurred in the prior year.
Financial and Performance Management • Management did not implement adequate internal controls to prevent fruitless and wasteful expenditure; • Management did not develop and implement a compliance checklist to monitor compliance with legislation, including procurement legislation; and • Management did not adequately review the financial statements to ensure that material errors were identified and corrected prior to submission for audit.
USAF – Improved from disclaimer opinion, however limitations were noted on inventory resulting in a Qualified audit outcome for the reporting year.

This was due to management providing information for audit that was not available in the prior year relating to BDM expenditure, provisions, payables and administrative expenditure.

Qualifications related to inventory and inventory redemptions remain in the current year.
Page 42 of 182 69 No material misstatements were reported on in the audit report on Programme 1 – Business Operations Achieving Key Performance Targets – Summarised Information from Performance Report One target out of four planned targets was achieved for 2022/23, which represents a 25 per cent achievement based on the annual performance report.
Key Targets Not Achieved The Percentage (%) of valid invoices paid within 30 days from date of receipts (above) performance indicator target further indicates delays experienced in the signing of the respective SLA from the Department as another reason for non-achievement of target.

Impact of targets not achieved.


The main impact of the non-achievement of the targets is as the lack of adequate internal controls over the recording of the movement of the inventory of Set Top Boxes (STBs) and the actual installation of the STBs contributed to the slow progress in approving payments for installations to the service provider.

This also contributes to the non-achievement of government priority to roll-out STBs.
Findings on the Audit of Financial Statements Qualified Opinion The public Entity is qualified on inventory and inventory redemptions as follows: Inventories and Inventory Redemption Page 43 of 182 70 The AGSA was unable to obtain sufficient appropriate audit evidence that management had properly accounted for inventories in the current and previous year as the public Entity did not maintain a register of inventories held by a third party that could be reconciled to the financial statements.
The AGSA was unable to confirm the inventories by alternative means.

Consequently, the AGSA was unable to determine whether any adjustments were necessary to inventories stated at R836 164 000 (2022: R807 209 000) to the financial statements and to inventory redemptions stated at R63 980 000 (2022: 0) to the financial statements.
Going Concern The AGSA drew attention to note 20 of the Annual Report to the financial statements, which indicates that the annual financial statements have been prepared on the basis of accounting policies applicable to a going concern, describes the events or conditions, along with other matters as set forth in note 20 that may cast significant doubt on the public’s ability to continue as a going concern and how the public Entity is responding to them.
Irregular Expenditure Analysis During the year under review, the public entity did not incur any irregular expenditure.

Fruitless and Wasteful Expenditure Analysis During the year under review, the entity incurred fruitless and wasteful expenditure amounting to R107 000, which was disclosed in the financial statements.

The analysis of fruitless and wasteful expenditure shows a decrease when compared to the prior year.
Findings on Compliance With Legislation Internal Controls The significant deficiencies in internal control that led to the AGSA’s overall assessment of the status of the drivers of key controls are described below.
Page 44 of 182 71 • Management did not implement an appropriate internal control process to properly account for inventory balances and the movement of inventory during the year; • Management did not adequately review the financial statements to ensure that errors are identified and corrected prior to the submission of the financial statements for audit resulting in material corrections to the financial statements; and • The public Entity did not implement adequate consequence management processes for transgressions against applicable policies, laws and regulations.
Investigations were not undertaken for all instances of irregular, fruitless and wasteful expenditure incurred in the prior year.

SITA: – The opinion relating to the audit of the annual financial statements remained unchanged – Qualified audit.
In the current year there is also a material compliance finding relating to the audit of pre-determined objectives for Programme 2 - Digital Infrastructure (% provision of broadband services to connected sites sustained) as well as material non- compliance findings.

Significant findings arising from submitted financial statements indicated that the accounting standards were not applied properly when preparing the financial statements.
Refresher GRAP training is encouraged for key officials involved in financial reporting to improve the quality of financial reporting.

Even though the overall outcome remains stagnant, there was an increase in the matters contributing to the overall outcome.

Material findings on AOPO as well as material non-compliance findings were reported in the current year.
Findings on the Audit of the Annual Performance Report Material misstatements under Programme 2 – An achievement of 100 per cent provision of broadband services to connected sites sustained was reported against a target of 100 per cent provision of broadband services to connected sites sustained.

However, some supporting evidence was not provided for auditing; and, where it was, the AGSA identified material differences between the actual and reported achievements.
Consequently, the achievement might be more or less than reported and was not reliable for determining if the target had been achieved.

Achieving key performance targets – summarised information from performance report A total of 8 targets out of 18 planned targets were achieved for 2022/23, which represents a 44 per cent achievement based on the annual performance report.

Key targets not achieved are annotated in detail in the AGSA report to the Committee and available upon request.
Page 45 of 182 72 Impact of targets not achieved The main impact of the non-achievement of the targets is as follows: • There will be no seamless integrated and trusted public services as indicated by the customer satisfaction survey results.

Thus, loss of confidence in utilising SITA’s services could result in potential customers bypassing regulations and incurring non – compliance by not procuring through SITA as well as incurring Irregular expenditure.
Further entities could end up paying more for IT services or goods than they would have paid if they utilised SITA for procurement; • Lack of increased citizen value through availability and accessibility of core Government public facing services on digital platforms which result in longer service delivery times at the expense of the citizens; and • Lack of optimised digital infrastructure which results in the networks not being modernised to be more agile and flexible while enabling the network to be intelligently and centrally controlled as well as slow modernisation of strategic data centres in line with industry standards.
Material Irregularities The Accounting Authority launched a preliminary investigation into the material irregularity on 1 March 2023 to establish who the implicated officials were.

After the investigation, the implicated employees were served formal representation letters for disciplinary action.
Based on the outcomes of the responses to letters, a final report will be submitted and approved by the Managing Director whereafter consequence management processes and possible recovery of losses will take place.

The AGSA has committed to follow-up on the implementation of the planned actions during the 2023/24 audit once the final report has been received.
On Payments for services not delivered, the Accounting Authority instituted legal action on 12 November 2021 to recover the amount from the supplier.

A settlement agreement was concluded with the supplier on 10 March 2023.The supplier paid an initial amount of R50 000 but defaulted on the remainder of the payments stipulated in the agreement.

SITA via their attorneys approached the court to get a default judgement against the supplier.
As at the date of this auditor’s report, no date has been set by the registrar of the court.

The AGSA will follow-up on the implementation of the planned action during the 2023/24 audit to verify if the court date has been obtained to hand down default judgement as well as whether remaining financial loss has been recovered.
Page 46 of 182 73 Findings on the Audit of Financial Statements Qualified opinion The public Entity is qualified on the fair presentation of the financial statements due to the following: Revenue The AGSA was unable to obtain sufficient appropriate audit evidence for revenue from exchange due to the status of record keeping by the public entity.

The AGSA was unable to confirm revenue from exchange transactions by alternative means.
Consequently, The AGSA was unable to determine whether any adjustments were necessary to revenue from exchange transactions stated at R6, 686 million in note 16 of the Annual Report to the financial statements.

In addition, in the prior year the public Entity did not recognize revenue from exchange in accordance with GRAP 1, Presentation of Financial Statements.
Revenue from exchange were recorded in the incorrect financial year, consequently the corresponding figures of revenue from exchange disclosed in note 16 to the financial statements was overstated by R99 million while the prior year surplus, accumulated surpluses and income received in advance were overstated by the same amount.
The AGSA’s opinion on the current financial year annual financial statement is modified because of the effects on the comparability of revenue from exchange for the corresponding figures.

Cost of Sales The AGSA was unable to obtain sufficient and appropriate audit evidence for cost of sales due to their status of record keeping and the underlying accounting records not agreeing to the recorded transactions by the public Entity.

The AGSA was unable to confirm the cost of sales by any alternative means.
Consequently, the AGSA was unable to determine whether any adjustments were necessary to cost of sales stated at R4 732 million (2022: R3 935 million) in note 17 to the financial statements.

The AGSA was unable to determine the consequential impact on the carrying amount of the property, plant, and equipment; intangible assets; trade and other payables; prior period error note as well as operating expense.
In addition, the public Entity did not recognise cost of sales in accordance with GRAP 1, Presentation of Financial Statements.

Cost of sales transactions relating to the previous year and future periods were recorded in the current financial year resulting in the overstatement of cost of sales by R56 million (2022: understatement R298 million).

There was a resultant Page 47 of 182 74 impact on the prior year surplus for the period; accumulated surpluses; and trade and other payables.
Operating Expenses The AGSA was unable to obtain sufficient appropriate audit evidence for operating expenses due to status of record keeping.

The AGSA was unable to confirm operating expenses by alternative means.

Consequently, the AGSA was unable to determine whether any adjustments were necessary to operating expenses stated at R1 474 million in note 18 to the financial statements.
The AGSA was unable to determine the consequential impact on the carrying amount of the property, plant, and equipment; intangible assets; trade and other payables; prepayments; prior period error note as well as cost of sales.

In addition, the current financial year annual financial statement is modified because of the effects on the comparability of operating expenses with the corresponding figures.
Property, Plant and Equipment The public Entity did not recognise property, plant, and equipment in accordance with GRAP 17, Property, plant, and equipment.

Not all items of property, plant and equipment were recorded in the asset register resulting in the property, plant and equipment disclosed in note 04 to the financial statements being understated by R63 million.
In addition, the public Entity did not adequately review the useful lives of the property plant and equipment in accordance with GRAP 17, Property, plant and equipment.

Furthermore, the public Entity did not adequately perform an impairment assessment at the reporting date for property, plant and equipment in accordance with GRAP 26, Impairment of assets.
As a result, the AGSA was unable to determine the correct carrying amount of property plant and equipment, stated at R840 million (2022: R954 million) in note 4 to the financial statements as it was impractical to do so.

The correcting journal for reversal of impairment relating to the prior year was incorrectly processed in the current year, which resulted in R100 million overstatement of carrying amount of the property plant and equipment.
There is a consequential impact on operating expenses; cost of sales; deferred tax liability; correction of prior period error note; surplus for the period and on the accumulated surpluses.

Intangible Assets Page 48 of 182 75 The public Entity did not review the useful lives of intangible assets in accordance with GRAP 31, Intangible assets.
Furthermore, the public Entity did not adequately assess intangible assets for impairment at the reporting date as required by GRAP 26, Impairment of Cash generating assets as well as GRAP 21, Impairment of non-cash generating assets.

As a result, the AGSA was unable to determine the carrying value of the intangible assets, stated at R265 million (2022: R279 million) in note 5 to the financial statements as it was impracticable to do so.
This had a consequential impact on operating expenses; cost of sales; deferred tax liability; correction of prior period error note; surplus for the period and on the accumulated surpluses.

Trade and Other Receivables In the prior year, the public Entity did not recognise trade and other receivables in accordance with GRAP 1, Presentation of Financial Statements.
Trade and other receivables transactions were recorded at incorrect amounts resulting in the overstatement of trade and other receivables by R165 million.

The AGSA audit opinion on the financial statements for the period ended 31 March 2022 was modified accordingly.

The AGSA opinion on the current year’s financial statements is also modified as there is a possible effect of this matter on the comparability of the trade and other receivables balance.
Additionally, there was an impact on related parties’ disclosure, revenue and surplus for the year.

Prior period error The prior period error note as disclosed in note 30 to the financial statements is incomplete and not in accordance with the requirements of GRAP 3, accounting policies, estimates and errors.

The nature and the amount of the corrections for some financial statement items affected, and the amount of the corrections at the beginning of the earliest previous period were not disclosed.
In addition, some of the amounts included in the disclosure were incorrectly calculated as they did not agree to the related financial statement items.

Consequently, the AGSA was unable to determine the correct balances for those prior period errors as it was impracticable to do so.

Irregular expenditure analysis During the year under review, the public Entity incurred irregular expenditure amounting to R452 million, which was disclosed in the financial statements.
The analysis of irregular Page 49 of 182 76 expenditure shows that irregular expenditure increased by 46 per cent compared to the prior year.

The expenditure can be broken down as follows: A total R2.8 million expenditure incurred in the prior years was condoned in the current year.

Fruitless and wasteful expenditure analysis During the year under review, the public Entity incurred fruitless and wasteful expenditure amounting to R10.8 million, which was disclosed in the financial statements.
The analysis of fruitless and wasteful expenditure shows an increase of 192 per cent when compared to the prior year mainly because of the outstanding payment for SAM licences that were subject to arbitration.
Findings on compliance with legislation The material non-compliance issues were identified and reported as reflected on below: Page 50 of 182 77 Internal controls The significant deficiencies in internal control that led to the AGSA’s overall assessment of the status of the drivers of key controls are described below.

Management developed an action plan to address prior years material audit findings.

However, implementation of the action plan was not effectively monitored.
This resulted in non-adherence to the timelines outlined in the plan and the material misstatements not being appropriately corrected and ultimately repeat modification of the audit opinion.

Critical judgements, assumptions and processes applied by management were inadequately documented and supported by evidence.
Significant findings identified in the submitted annual financial statements indicated that the Standards of GRAP were not interpreted and applied properly and consistently when preparing the annual financial statement.

Effective systems of internal control were not implemented to ensure accurate financial statements.
The preparation of financial statements was not adequately executed to ensure a comprehensive review of year-end adjustments and reconciliations; resulting in material misstatements identified through the audit process, some of which were subsequently corrected.

There is a lack of credible financial reporting throughout the year to enable leadership to review and take appropriate and timeous corrective action where required.
The inaccuracies in financial statements could have been largely prevented if the information was prepared regularly and diligently reviewed by appropriate members of senior management.
Page 51 of 182 78 Several instances of limitation of scope were identified during the audit where management failed to submit information required for audit purposes in a timely manner, due to lack of efficient record keeping system and this resulted in late finalisation of the audit and limitation misstatements being identified.
Management did not prepare regular, accurate and complete performance reports that are supported and evidenced by reliable information when reporting actual achievement made against the planned achievement.

The Accounting Authority needs to strengthen its oversight responsibility over the internal controls relating to compliance with laws and regulations.

SAPO: – remained stagnant with a disclaimer of opinion with findings on financial statements, predetermined objectives and compliance with legislation.
Financial sustainability remains an issue at SAPO.

Furthermore, the continued capacity constraints continued to have an impact on the effectiveness of the accounting authority.

As a result, there has been an increase in the basis for disclaimer during the 2022/2023 financial year.
SAPO is disclaimed on the fair presentation of the financial statements due to the following among others: Trade and other receivables: SASSA-related receivable balance not supported by reconciliation and relevant documentation; Going concern: Significant indicators of material uncertainty on going concern present, including net loss of R2.2 billion and net current liability position of R9.7 billion.

SAPO is struggling to implement the strategies due to lack of funding.
Further, the AGSA was not able to assess if the plans will be effectively implemented and if implemented will yield the desired results.

This is mainly due to information supporting the assumptions not provided; Trade and other payables: The findings pointed to the inadequate system of reconciliation being maintained to name a few.
The AGSA could not obtain sufficient and appropriate information to enable them to confirm or dispel whether it is appropriate to prepare the consolidated and separate financial statements using the going concern assumption.

The financial statements submitted for audit contained several significant misstatements that led to audit findings.
The AGSA also raised significant findings in areas such as Supply Chain Management (SCM), performance information and compliance with legislation due to: Page 52 of 182 79 • Significant internal control weaknesses; • Inadequate policies and procedures; • Lack of proper record-keeping, as evidenced by limitation of scope findings that management were not able to resolve in the process; • Capacity constraints resulted in the entity placing reliance on consultants in preparation of financial statements and for audit process; • Instability and vacancies in key positions within SAPO; and • Lack of consequence management for poor performance and transgressions in some instances.
SAPO and Postbank continue to incur losses resulting from fraudulent activities in the grant payment system because of weaknesses in internal controls within the system.

Therefore, the actions the management has taken have proven not to be effective as the same incidents of fraud continue to negatively affect the Entities.
In addition, financial health and lack of funding is the key driver of the disclaimer of opinion, see chart on next page: The sequence of key events to SAPO being placed under business rescue have been summarised on next page: Page 53 of 182 80 SAPO is unable to implement the planned strategies, therefore, it cannot be confirmed whether the strategic initiatives will be able to turn the Entity around.
The material uncertainties have a pervasive impact on misstatements like going concern, trade payables, lease liabilities, finance costs, property, plant and equipment and investment property etc.
SAPO has run into severe financial distress and has a history of losses with no sustainable income as a result was placed on business rescue effective from 10 July 2023, the business rescue practitioners are still in the process of compiling business rescue plans that will put SAPO in a future sustainable position.

SAPO recorded a net loss after tax for the year ended 31 March 2023 of R2.2 billion (2022: R2.2 billion) and a negative net asset value of R4.4 billion (2022: R6.4 billion).
SAPO revenue decreased by 23 per cent from R3.0 billion in the prior year to R2.3 billion for the year ended 31 March 2023.

The mail revenue continued to be low, driven mainly by the decline in mail volumes, logistics volumes and loss of customers.

The mail revenue business represents 61 per cent of total company revenue.

SAPO did not implement its turnaround plan, which resulted in a deteriorating financial position, and consequently material uncertainty on financial viability.
SAPO’s financial situation has worsened in the current financial year.

SAPO has not been able to successfully turnaround their financial situation.

The vacancies on the Executive Committee (EXCO) contributed to the weak internal control environment at SAPO.

In the year under review, several key positions in Exco were filled in an acting capacity.
Permanent appointments in these roles will go a long way in addressing the Page 54 of 182 81 instability caused by the roles being filled in acting capacity and to accelerating the implementation of the strategy to turn around SAPO.

The status of IT controls requires urgent intervention from management.

The IT control environment of the SAPO was very weak, with minimal to no controls implemented on the IT environment as well as the revenue applications.
The weaknesses on the SAPO systems utilised for financial reporting resulted in no reliance being placed on the systems.

Furthermore, the ageing infrastructure and systems negatively impacted on the processing of transactions.

SAPO also relied on transactions from the Postbank’s Integrated Grant Payment System (IGPS) for the intercompany revenue.

The deficiencies noted on the IGPS system continued to negatively impact the reliability of data on the system.
The AGSA identified significant control deficiencies in the security controls.

The IT security controls at the SAPO also require urgent intervention from management and those charged with governance.

The internal network is exceptionally vulnerable to cyber security attacks.

The combination of weak and/or non-existent controls as well as a lack of best practice fundamentals increase the risk of unauthorised access to the entire network.
In terms of targets, the main impact of the non-achievement of the targets is the negative public perception which will result in further decrease in market share and loosing relevancy; and implementation of the Post Office of the Future to ensure that SAPO has efficient processes and system to attract customers and enhance value chain within the Department.
Irregular Expenditure During the year under review, the Entity incurred irregular expenditure amounting to R155 million, which was disclosed in the annual financial statements.

The analysis of irregular expenditure shows that irregular expenditure decreased by 72.6 per cent compared to the prior year due to SAPO having financial difficulties that worsened in the current year.
Incidents that resulted irregular expenditure are as per the table on next page: Page 55 of 182 82 Fruitless and Wasteful Expenditure Analysis During the year under review, SAPO incurred fruitless and wasteful expenditure amounting to R153 million, which was disclosed in the annual financial statements.
The analysis of irregular expenditure shows that fruitless and wasteful expenditure decreased by 29.7 per cent compared to the prior year due to SAPO having financial difficulties that worsened in the current year.
Incidents that resulted to fruitless and wasteful expenditure are as per the table below: Financial and Performance Management • SAPO did not have a proper record management system to maintain information and support the reported performance in the financial statements and annual performance report.

This includes information that is related to the collection, collation, verification, storing and reporting of actual performance information.
Adding to the weak internal controls is the decentralised approach and different departments within the Entity working in silos, not recognising the impact they have on the preparation of the financial statements.

• Controls over daily and monthly processing and reconciling of transactions were not adequately implemented by management due to the findings raised on Trade and other receivables and trade and other payables.
Page 56 of 182 83 • Sufficient attention was not paid to compliance management as instances of material non-compliance were identified by external auditors.

• Regular, accurate and complete financial and performance reports that are supported and evidenced by reliable information were not adequately prepared by management as material misstatements on financial statements and performance information were identified relating to disagreements and limitations.
• There were material differences due to lack of reconciliations which were indicative of fraud, these were not properly investigated which resulted in disclaimer of opinion.

However, for the legislated requirement to perform the audit of the entity, I would have withdrawn from the engagement in terms of the ISAs.
• IT controls pertaining to security management, program change management, IT service continuity, user access management and physical and environmental controls were not effectively designed and implemented.

The use of outdated infrastructure and systems continues to hamper the implementation of controls in the IT environment as well as business operations.
Lastly, other findings include Findings on compliance with legislation; Material irregularities such as highest scoring supplier did not award the contract & Grant payment internal controls weaknesses (Lack of implementation of effective controls on the SASSA beneficiary payment system (IGPS)); Consequence management; Internal controls; and Leadership.

Postbank: – The overall audit outcome of Postbank has remained stagnant with a Disclaimer audit.
Achieving Key Performance Targets – Summarised Information from Performance Report Postbank did not achieve its planned target of becoming a retail and a business bank.

The Entity reported a R2 billion loss in 2022/23 financial year and its financial position was weakened.

Postbank continues to be vulnerable to cyber breaches, it also recently took over the cash pay points from SAPO which increased fraud at Postbank.

The AGSA could not determine the full extent of losses.
Management must implement key reconciliatory controls, complete investigations.

The bank has recently filled key positions at exco level.

Postbank plays a crucial role in the social grant distribution value chain, heavily relying on technology to ensure service delivery.

It has faced severe media backlash due to failures in paying beneficiaries on time and numerous technical glitches.
The main impact of the non- achievement will result slow improvement in diversification of the bank’s revenue streams such Page 57 of 182 84 as the credit and insurance markets thereby failing to achieve its overall mandate for financial inclusion to the rural and low-income market.

Effective from October 1, 2022, the SASSA contract for the distribution of social grants was transferred from SAPO to Postbank.
This required Postbank to be not only the last-mile distributor in terms of ATMs and POSs but also the hub/owner of the contract.

However, there was poor planning when the contract was handed over, as Postbank did not have proper controls to administer and execute the contract.

Social grant beneficiaries often do not receive their grants on time, leading to financial hardships for those reliant on these funds for necessities such as food, shelter, and healthcare.
These issues encompass a range of problems, including paying beneficiaries in undignified environments, dealing with dysfunctional infrastructure, and experiencing challenges with card replacements.

Postbank has been unable to supply SASSA with clear reconciliations, resulting in penalties being charged by SASSA and delays in the payment of Postbank invoices.
It is important to note the vital importance of the grants in our country, as they are designed to help improve the living standards in society of people who are vulnerable to poverty and need state support and the tail-end creating social cohesion.

Any disruption in the payment is likely to affect over 18 million people and can result in: • Financial hardships and vulnerable individuals becoming more susceptible to poverty, hunger, and health issues when they don't receive their grants on time.
• Stress and anxiety for recipients, as they worry about how to meet their immediate needs and are unable to provide for their families.

• Repeated delays in grant payments can erode trust to Postbank for disbursing the funds, leading to dissatisfaction and frustration among the affected population.

This may also have a negative impact in the entity’s ambition to become a state-owned bank.
Delays in grants can have a ripple effect, affecting not only the individuals directly impacted but also their communities, as local businesses and service providers may also suffer due to reduced consumer spending.

Executives at Postbank did not ensure that the AGSA were provided with access to all the information needed to perform the planned audit.

Moreover, instances of fraud were not always brought to the attention of the auditors, despite being known.
The Postbank failed to achieve its plans to become a retail and business bank, resulting in an overall achievement rate of only 20 per cent.

Additionally, Postbank reported a deficit of R2 Page 58 of 182 85 billion for the year.

This further demonstrates the dependency of Postbank to SAPO, as the loss is mostly attributable to the financial situation of SAPO currently.
Its net current asset position and available cash have significantly decreased, necessitating close monitoring to prevent severe consequences.

Responses addressing all key prior-year audit findings and internal control deficiencies identified have been slow.

Management has not adequately designed and implemented action plans to resolve all key prior qualification areas.

As a result, there were repeat material findings in the financial statements submitted for audit.
The following is a summary of key root causes and recommendations that should be addressed or implemented to improve the audit outcomes which will lead to better service delivery.

It is important to note that most of the key root causes and recommendations were raised in the previous audits thus we are concerned that recommendations are not being implemented.

We have also noted that significant control deficiencies have fueled fraud at Postbank which is resulting in material losses.
The absence of reconciliations with SASSA has resulted to the bank not being paid for its services as a result this may further place a strain on the bank.

There were material differences due to lack of reconciliations which were indicative of fraud risk factors, and these were not investigated which contributed to the limitations that informed the disclaimer of opinion.
The main impact of the non-achievement will result slow improvement in diversification of the bank’s revenue streams such as the credit and insurance markets thereby failing to achieve its overall mandate for financial inclusion to the rural and low-income market.

Information and communication technology environment/projects Cyber Security Incidents The AGSA reported in the 2021-22 audit report paragraph 11 regarding misstatements in the financial statements which were indicative of significant fraud.
Some of these matters, although known to the Accounting Authority and management for some time since they occurred, were not always brought to the attention of the auditors and therefore cast doubt on the representations made by management and the Accounting Authority.

The cyber security incidents have expanded to the universal banking system (UBS) in the 2022/23 financial year.

The AGSA issued management with a Final Special Management Report on the cyber security audit dated 31 August 2022.
Page 59 of 182 86 In this report, AGSA alerted management to the assessment of risks in respect of the October 2021 incidents, resulting in an approximate loss of R89 million in the 2021/22 financial year, a subsequent R3.9 million in 2021/22 financial year and with further losses of R26 586 597 from IGPS and R30 716 108 from UBS in the 2022/23 financial year.
The following is a summary of the key findings: • User management in IGPS is poor; for example, there are 1 524 active users with branch manager privilege; • The transaction logs and related tables are vulnerable as a result of non-sequential transactions numbers and transactions on negative balances; • There are missing transactions in the transaction log tables; • SMS functionality to warn customers of amounts exiting or entering their account is not active; and • There are account and card number correlations and irregularities in IGPS, suggesting that the database is compromised beyond the disappearance of transaction logs.
Findings on the Audit of Financial Statements The Postbank is disclaimed on the fair presentation of the financial statements due to the following among others: the AGSA could not obtain sufficient and appropriate audit evidence for other deposits (grants) due to the limitations imposed by the information system to manage the related transactions.

The required supporting documents such as Bankserv to IGPS recon for IGPS transactions were not provided.
Material losses is as a result of insufficient appropriate audit evidence that material losses are complete due to the significance of internal control deficiencies identified on key systems and cyber security incidents.

Irregular Expenditure Analysis During the year under review, the public incurred irregular expenditure amounting to R165 million, which was disclosed in the financial statements.
The expenditure can be broken down as follows: Page 60 of 182 87 There was a number of material non-compliance issues relating to legislation that the AGSA identified and reported on including annual financial statements and annual report; expenditure management; procurement and contract management; consequence management; revenue management and strategic planning.
The significant deficiencies in Internal Control that led to the AGSA’s overall assessment of the status of the drivers of key controls including Leadership instability and Vacancies in key leadership and management positions resulting in inadequate implementation of the approved action plan because it was not effectively monitored, and recommendations not properly followed through.
“Management did not provide the AGSA with access to the data required for the cyber security audit.” In terms of Financial and Performance Management, management did not timeously implement proper record keeping over information they were responsible for, to ensure that complete, relevant and accurate information was accessible and readily available to support credible financial reporting and compliance.
Material non-compliance issues were identified and reported including AFS and Annual Report, Expenditure management, Procurement and contract management, Consequence management, Revenue management, and strategic planning.
Other Important Matters Investigations • Final report on Investigation into contract management at Postbank that covered the period 22 December 2017 to December 2022 issued on 23 June 2023; • Draft report on Investigation into alleged theft from Postbank that covered the period September 2021 to December 2022, the report has not been finalised at the date the auditor’s report was signed; and • Draft report on fraud risk management review at Postbank, the report has not been finalised on the date the auditor’s report was signed.
Internal Controls The significant deficiencies in internal control that led to the AGSA’s overall assessment of the status of the drivers of key controls including: Leadership, Page 61 of 182 88 Instability and vacancies in key leadership and management positions during the year contributed to the inadequate implementation of the approved action plan as it was not effectively monitored, and recommendations were not properly followed through.
Leadership and management did not implement oversight responsibilities to ensure that the internal control deficiencies on the IGPS, such as reconciliations of data to the systems are addressed to ensure that the system generates reliable data.
• Management did not implement adequate internal controls to ensure the preparation of accurate financial statements as numerous material misstatements were identified that resulted in the modification of the auditor’s opinion; • Leadership did not ensure that key positions are timeously filled to ensure stability, adequate development, and implementation of the audit action plan.
The continuous changes in the Chief Information Officer (CIO) position and inadequate capacitation of the IT function have resulted in the over-reliance on service providers and created an environment that focused more on resolving operational challenges than on the implementation of controls; • Leadership and management did not exercise oversight responsibility to ensure that the internal control over the IGPS, such as reconciliations of data with other key systems are implemented.
The entity did not implement key application controls on the IGPS that can prevent and detect deficiencies whether due to fraud or error.

The entity did not implement adequate user access management, particularly those with special access privileges, to protect against misuse and unauthorised access; • Leadership did not implement effective monitoring controls over services rendered by a shareholding entity on its behalf.
Postbank remained over-reliant on the processes and controls of on and compliance requirements of supply chain management processes.
This caused significant limitations and delays in the submission of information, material errors and material non-compliance, which resulted in irregular expenditure and an unfavorable audit outcome; • Management did not timeously implement proper record keeping of information for which they were responsible, to ensure that complete, relevant and accurate information was accessible and readily available to support credible financial reporting and compliance, resulting in limitations and exposure in the key business processes, transactions and balances; • The leadership did not ensure that adequate structures, processes and practices were implemented for the governance of IT.
The principles and guidance of good corporate Page 62 of 182 89 governance (King IV) and IT governance (COBIT) practices were not adequately implemented; and • Management did not provide me with access to the data required for the cyber security audit.
Financial Performance Management Management did not timeously implement proper record keeping over information they were responsible for, to ensure that complete, relevant and accurate information was accessible and readily available to support credible financial reporting and compliance.

SABC – The public broadcaster performance regressed to a Disclaimer audit opinion due to the uncertainty on the going concern matters that remains a challenge.
The SABC regressed due to a material limitation on Going Concern.

Although some improvements were evident, the state of internal control environments still require attention to drive the portfolio to favorable audit outcomes and service delivery.

The financial bailout of R3.2 billion underpinned by the Turnaround Strategy received in October 2019, improved the cash position of the SABC at that stage.
However, the major portion of the funds have been spent with a remaining balance of R234.3 million as of 31 March 2023.

The qualification on the completeness of the opening balance of Irregular Expenditure (IE) in the prior year was cleared based on the reporting framework (National Treasury Instruction No.

4 of 2022/2023).

Thus, the disclosure of Irregular Expenditure is now disclosed in the Annual Report.
Management should direct efforts on initiatives driving outcome and impact of the Turnaround Strategy.

There were no material findings reported in the audit of the annual performance report.

Achieving key performance targets – summarised information from performance report A total of 8 targets out of 25 planned targets were achieved for 2022/23, which represents a 32 per cent achievement based on the annual performance report.
Key Targets Not Achieved The Entity achieved 66 per cent of the target for the performance indicator: Percentage of analogue TV transmitters switched off (in collaboration with Sentech), owing to additional 51 Low Power Low-Cost transmitters being switched off by Sentech.

This is after the switch-off of 155 analogues TV transmitters in five Provinces.
Page 63 of 182 90 Prime time share of television screen rating percentage targets were not met for SABC 1, 2 and 3 and reasons given were that the SABC is awaiting the confirmation of the proposed new final ASO date, lack of strong content, drop in weekend and daytime performance and ASO and power outages playing a significant role.

The Number of SABC TV programmes in the terrestrial top 20 performance indicator target was not met owing to aggressive competition and drop in content performance.
The performance indicator on Average number of adult listeners of SABC radio stations per 7- day period targets were not met for both Public and Commercial Broadcasting Services because (i) target setting was adversely affected by the limited data available at the time, which necessitated the inclusion of this indicator as a temporary measurement; and (ii) the target was narrowly missed due a general industrywide decline in radio listenership.
The declining audience problem is further exacerbated by lengthy periods of severe load-shedding.

Impact of targets not achieved The main impact of the non-achievement of the targets is as follows: SABC’s continued ability to effectively pursue its mandate is largely dependent by being financial sustainable to ensure its urban relevance, which could be affected by the digitization of content and content acquisition tailored for a wider demographic audience.
No new Material Irregularities were identified during the current year’s audit.

Findings on the Audit of Financial Statements Going Concern As indicated in the statement of profit or loss to the financial statements, the public broadcaster incurred a net loss of R1 127 million as of 31 March 2023 and at that date, its current liabilities exceeded the current assets by R612 million.
The public broadcaster was therefore commercially insolvent because it was not able to pay its debts as and when they were due, even though its assets exceeded its liabilities.

Additionally, the AGSA was unable to obtain sufficient appropriate audit evidence to confirm the reasonableness of the cash flow forecasts for the public broadcaster’s viability in the foreseeable future.
Consequently, the AGSA was unable to confirm or dispel whether it is appropriate to prepare the financial statements using the going concern assumption.

Page 64 of 182 91 Irregular Expenditure During the year under review, the public broadcaster incurred Irregular Expenditure amounting to R34.7 million, which was disclosed in the Financial Statements.
Although the audit qualification on completeness of the opening balance of Irregular Expenditure is resolved, based on the reporting framework, the SABC still needs to ensure the investigations are taking place and to follow proper consequence management process to address the Irregular Expenditure under assessment and identified as R3.9 billion of Irregular Expenditure balance for 2022/23 is still under assessment and under determination.
Page 65 of 182 92 Fruitless and wasteful expenditure analysis During the year under review, the public broadcaster incurred fruitless and wasteful expenditure amounting to R16 million (2021/22 - R10 million), which was disclosed in the financial statements.

The main contributor to fruitless and wasteful expenditure is mainly interest and penalties due to late payments.
Findings on compliance with legislation Consequence management The following material non-compliance issues relating to consequence management were identified and reported: Out of the 570 cases, 291 (51%) related to completed investigations, 116 cases (40%) represented completed consequence management.

The slow progress in investigating and Page 66 of 182 93 quantifying prior year Irregular Expenditure is mainly due to the enormity of the transactions emanating from historical transactions.
The resource challenges experienced by the investigation team continue to impact the performance of investigations and determination tests which has a knock-on effect on consequence management and condonation of IE.

Internal controls The significant deficiencies in internal control that led to the AGSA’s overall assessment of the status of the drivers of key controls are described below.
Leadership • Leadership did not exercise oversight responsibility regarding compliance and related internal controls to ensure that compliance requirements are met to prevent irregular and fruitless and wasteful expenditure and consequence management.

The public entity continued to incur irregular and fruitless and wasteful expenditure; • The action plans to address the internal control deficiencies were not adequately implemented and monitored.
The absence of the accounting authority had an impact on the effectiveness of governance and oversight.

The accounting authority did not exercise oversight on the annual performance report before submitted for audit; and • We identified material misstatements to the annual performance report submitted for audit that were subsequently corrected.
Financial and Performance Management • Management did not implement adequate review controls and an effective system of collating information to ensure that information disclosed in the financial statements agrees with supporting schedules; and • Non-compliance with legislation could have been prevented if management had properly reviewed and monitored compliance.

11.1 Three Year Performance Audit of the Portfolio 2019/2020 - 2022/23 The overall improvement in the Portfolio.
This was mainly due to the improvement in audit outcome of four auditees as was indicated.

USAF and USAASA improved in their audit outcomes.

The Infor graphs charts below are a summary of the performance of the Portfolio headed by the Department: Page 67 of 182 94 Page 68 of 182 95 ""#4 -0'1(':7%+0!.67%%,%<!7%)!'0.('&,%<!27/!,:.7+&!(%!/0'H,+0!

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"54 11.4 Financial Health: Management and compliance SAPO: The group recorded a net loss after tax for the year ended 31 March 2023 of R2.

2 billion (2022: R2.2 billion) and a negative net asset value of R 4.4 billion (2022: R6.4 billion).
Group revenue decreased by 23 per cent from R3.0 billion in the prior year to R2.3 billion for the year ended 31 March 2023.

The mail revenue continued to be low, driven mainly by the decline in mail volumes, logistics volumes and loss of customers.

The mail revenue business represents 61 per cent of total company revenue.

SABC: The corporation reported a deficit of R1.1 billion for the year.

The creditors’ payment period is 115 days.


This means that the SABC is not settling its debts when they become due.

BBI: Company loss for the year increased from R119 million in 2022 to R121 million to 2023.

BBI disclosed significant doubt in financial statements about ability to continue operating as a going concern in foreseeable future.

Sentech: Included an emphasis of matter to draw attention to the fact that there is over reliance on one customer.
This indicates presence of sustainability risk due to lack of diversification as well as the fact that Sentech is in the process of acquiring 74 per cent of BBI.

Due diligence was completed, and it is anticipated that the transaction will be concluded by the end of September 2023.
Page 70 of 182 97 According to the AGSA report, there is material doubt whether the SABC (Disclaimer), SAPO (Disclaimer), BBI (Emphasis), Sentech (Emphasis) and Postbank (Emphasis) can continue as going concern in future which might impact service delivery for what they are mandated for: With an annual budget of R2 trillion, the country's prospects continue to worsen by the high and volatile global economic climate which has resulted in ongoing supply chain bottlenecks, higher global inflation rates, higher food and energy costs, a cycle of repo rate hikes, and a general increase in living expenses.
Continuous loadshedding challenges are further exacerbating our economic and fiscal pressures and limited economic growth has narrowed government's budget which is already constrained by high debt levels and high unemployment requiring socio support for the vulnerable and initiatives to enable employment.

Weak governmental institutions, particularly SOEs have also contributed to low growth rates and a drain on public funds, exacerbating the country’s deteriorating fiscal health.
“If financial health in these Entities does not improve, more pressure might be on the fiscal health of South Africa!” 11.5 Key Message on SOE’s not Driving Financial Sustainability SAPO has not been able to fulfil this mandate.

This is largely due to its ongoing financial difficulties, as well as a lack of implementation of the turnaround strategy.

This is further impacted by the instability in leadership, resulting in a deteriorating financial position.
The delivery of postal and other similar services is a key service to the public, especially when it comes to people living in rural areas.

SAPO was also party to the SASSA grant distribution.

Whilst this had provided SAPO with an opportunity to increase its revenue, SAPO continued to incur penalties, as they were unable to service their contract fully, due to the malfunctioning of IT infrastructure and other branch challenges.
The overall impact of the SAPO’s lack of sustainability, inability to maximize revenue, ineffective cost management and lack of sound governance structures has a ripple effect on the lived experiences of the citizens as they are not getting the postal services timeously.

Page 71 of 182 98 The Postbank’s mandate is to promote universal and affordable access to banking services to rural and lower income markets.
Postbank provides banking services to the neediest (unbanked –rural and low-income market) and offers book-based accounts which are mostly used by the elderly citizens.

Postbank is also involved in the SASSA grant distribution which is of critical importance to the public.

A series of control weaknesses resulting in cyber breaches as well as glitches relating to the payment of the SASSA grants continue to be reported to management.
These were the main contributors to the basis for the disclaimer of audit opinions for the Postbank over the past three audit cycles.

The weaknesses also formed the basis for the variation order issued by the South African Reserve Bank (SARB) in Dec 2021.

The variation order noted a failure to implement its recommendation might result in the bank’s privileges being revoked, thereby posing a threat to its ability to render these services.
A new trend has emerged where the Entity is suffering financial losses through the SASSA cash pay-points that have recently been taken over by SAPO.

The overall impact of the challenges relating to the payment of grants results in citizens receiving the grant money late or having to spend money to collect money from another pay point.

Post bank has also not been able to achieve the target of becoming a retail and business bank, further impacting on the Entity’s ability to introduce new revenue streams.
The SABC’s mission is to be a high-performing, financially sustainable and digitised national public broadcaster that provides compelling informative, educational and entertaining content via all platforms.

The SABC completed its three-year turnaround plan, however its financial position not improved, and the bailout funds will be fully utilised by the end of financial year 2024.
Revenue generation has been poor for the SABC as the revenue improvement plans for the current year were not effective in generating revenue.

While the SABC is not yet technically insolvent as its assets exceed its liabilities, it is however commercially insolvent, as it is struggling to settle its debts as they become due.

Should the SABC not be financially sustainable in the near future, they will not be able to deliver on their mandate.
Page 72 of 182 99 11.6 Quality of Financial Reporting The info graph on next page is a summary of financial management controls and impact on quality statement submitted for audit purposes of the Department and its Entities: Main qualification areas • Disclaimer expressed on numerous Financial Statement line items in SAPO and Postbank; • Material limitation relating to going concern of the SABC; • Lack of supporting information to support the inventory balance at USAF; and • SITA qualification areas: Revenue; cost of sales; Operating expenditure; property, plant and equipment; Intangibles; Trade receivables and Prior period error.
Impact on quality of financial statements submitted for auditing • In-year and year-end financial reporting and monitoring may not be credible, which exposes management to possibly making inappropriate business decisions as decisions would be based on information with limitations (SAPO &Postbank).

• Impacts on planning and budgeting for the next cycles as budget votes are approved in May annually and may possibly be informed by deficient information.
• If these insufficient internal controls are not addressed, they will result in future unfavorable audit opinions.

Page 73 of 182 100 11.7 Irregular Expenditure Although in most instances services were rendered, the key pillars of Fairness and Equitability of section 217 of the Constitution were not adhered to.
Annual Irregular Expenditure Impact of irregular expenditure incurred Breach of five pillars of procurement –equitable, fair, cost effective, transparent and competitive: • SITA: R452 million, the main contributor was due to expenditure incurred on ongoing multi-year contracts incurred in prior years; • Postbank: R165 m mainly contributed to approving agreements without following proper SCM processes and software license purchased and not used; and • SAPO: R155 million mainly contributed to transgressions where contracts amounting to R62 million were amended without appropriate approvals, R76 million related to a CIT and R17 million related to expenditure around deviations.
Although the audit qualification on completeness of IE at the SABC was resolved based on the changed in the reporting framework, the SABC still needs to ensure the investigations as taking place and to follow proper consequence management process to address the irregular expenditure identified.
Top 5 contributors for 2021-22 to irregular expenditure not dealt with constitute 99 per cent of R8.2 billion, see graphic below: Page 74 of 182 101 Reasons for IE not dealt with include: Investigated and Awaiting Condonation and Investigation in Progress: SITA – R0.5 billion and R1.22 billion respectively.
Investigation in progress: SITA –R1.22 billion Not yet Dealt With: SABC – R3.2 billion under determination; SAPO – R2.4 billion; Postbank – R0.2 billion; and ICASA – R0.2 billion MI process implemented and MIs identified Observations from the Material Irregularities (MI) process concluded that (i) appropriate consequence management action should be initiated timeously in addressing the MIs and at the least; (ii) court proceedings prolong the process to recover the losses and to initiate consequence management timeously specifically at the SABC; (iii) Internal Controls should be strengthened and sustained to avoid future or similar MIs at the SABC; (iv) actions taken in addressing MIs were not appropriate or supported by evidence at SAPO; (v) the financial losses continued to exist at Postbank; and (vi) Postbank did not respond to MIs on time.
Below is the detailed description of the MIs of affected Entities of the Portfolio: • SAPO: Grant payment internal controls weaknesses • Postbank: SASSA cards stolen to be used for fraudulent transactions • Postbank: SASSA cards written off due to exposed issuer master key • SABC: Security contract did not follow procurement process • SABC: Rent paid on unoccupied space • SITA: Payment made for excess licenses not utilised • SITA: Payment made for event that did not take place Page 75 of 182 102 Page 76 of 182 103 11.8 Root Causes, Recommendations and Commitments 11.9 The AGSA Recommendation to the Committee The Committee should follow up on all action plans per Entity to ensure AGSA’s recommendations are tracked, and internal controls are strengthened, which will include: • Implementation for proper record keeping and reconciliations for all quarterly reports which will effectively feed into the financial statements; • Compliance with regulations relating to procurement, contract management and performance information; and • Implement controls at Postbank.
The Committee should further: • request progress feedback so that it can monitor whether entities are on track in achieving desired outcomes / recover potential/ actual financial losses to address the identified material irregularities; • request the entities to provide timeous, specific and regular progress reports on the implementation of effective consequence management processes; Page 77 of 182 104 • ensure that the entities are also reporting on the rectification/ improvement of internal controls that resulted in the weaknesses which informed the material irregularities; • follow up on new and updated initiatives (turnaround strategies) to drive financial sustainability within the sector; • follow up on actions pertaining to consequence management processes to ensure perpetrators are held accountable; and • monitor the current vacancies to ensure stability of leadership.
12.
Entities reporting to the Department The table below indicates the entities that report to the Minister: Page 78 of 182 105 The following table is a statement of transfers to Departmental Accounts, noting that SITA, .ZADNA and BBI are self-funded and therefore are not reflected in the table below: Statement of Investments in and Amounts Owing by/to National/Provincial Public Entities Page 79 of 182 106 SITA’s audit is still being finalised and as such the figures provided here are preliminary (unaudited) figures based on the documents that were submitted at at 31 May 2023.
The Annexure will be updated with the final audited figures in the 2023/24 financial year Annual Report.

Transfer payments to All Organisations Other Than Public Entities The Department does not have transfer payments made to provinces, municipalities, departmental agencies, higher education institutions, public corporations, private enterprises, foreign governments, non-profit institutions, and households.
The only payment which is made by the Department is the membership fees which are paid to the International Organisations.

Transfer payments made to the international Organisations which the Department is affiliated with for the period 1 April 2022 to 31 March 2023 amounted to R35 406 million.

Inter-Entity Advances Paid 12.1 .ZADNA (.ZADNA) is a not-for-profit organisation that manages and regulates the .ZA namespace.

The .ZADNA is statutory regulator and manager of .ZA Namespace.
The Authority must enhance Page 80 of 182 107 public awareness on the economic and commercial benefits of domain name registration and it complies with international best practice in the administration of the .ZA domain name space; license and regulate registries and registrars and publish guidelines on .ZA domain namespace.

.ZADNA is therefore the custodian of the Internet Governance in South Africa.
.ZADNA is accountable to the Department but does not receive government funding which means it is exempted from complying with the PFMA.

Section 65(1) of the ECT Act 25 of 2002 forms the core mandate of .ZADNA, but in addition to it, Section 68 gives .ZADNA an ability to make wide-ranging regulations.

In addition, Section 69 of the same Act mandated the Minister to promulgate Alternative Dispute Resolution (ADR) Regulations for the resolution of .ZA domain name disputes.
.ZADNA is mandated to: • Management and administration of the .ZA namespace; • .ZA policy, licensing and regulation; • Monitoring and compliance; • Domain name awareness and education; • Research and development; • Making relevant policy recommendations to the Minister; and • Alternate Dispute Resolution Regulations.
Additional non-ECT Act Responsibilities (i) Dotcities (ii) Internet Governance 12.1.1 Key Operational Highlights 2022/23 Highlights • .ZADNA reported an increase in the accredited registrars in the 2022/23 financial year.

This growth could be attributed to the Registrar Reseller training that ZADNA conducted during the year.

• The .ZA domain namespace retained the growth it achieved in the prior year for the commercial and non-commercial second level domains.
Other Highlights • • .ZADNA managed to achieve an 88 per cent achievement rate of its annual targets; .ZADNA obtained an unqualified audit outcome for the 2022/23 financial year; • The 2022/2023 budget was based on the R15.00 per domain name fee and revenue; Page 81 of 182 108 109 j E. =>==?=>=@M!

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"54 Internet Governance (IG): • .ZADNA conducted 27 Internet Governance engagements during the 2022/23 financial year; and • The engagements covered Alternate Dispute Resolutions (ADR), Intellectual property, domain name abuse etc.
Registry-Registrar Licensing Framework: • .ZADNA conducted 24 Registry Reseller training, the training is conducted to promote the transformation of the Internet Service Provider (ISP) and to create access to the .ZA domain name space market.
.ZA Namespace Development Registrar Market Expansion: • There was an increase in the accredited registrars from 684 60 762 between the 2021/22 and 2022/23 financial year; and • This growth could be attributed to the Registrar Reseller training that .ZADNA conducted during the year.

Commercial and Non-commercial SLDs Performance: • .ZADNA retained the growth it achieved in the prior year; and • This stagnation of the name space was due to the low retention of registered domain names, see graph on next page.
Page 83 of 182 110 Name Server Infrastructure: • The .ZA Root Zone is now served with three secondary nameservers –two are Anycast, and one is Unicast.
.ZA Zone Infrastructure: • .ZADNA owns three physical servers running the .za primary master zone file; • They are set up into one primary master with two failover servers, whereby one is in the data centre at Xneeloin Midrand, and the other is located at the Terracodata centre in Isando; and • The above setup is optimized for business continuity, and disaster recovery mitigation controls, to ensure the continuity and resilience of the zone.
.ZADNA .ZA Security Issues: • The .ZA domain is secured with Domain Name Security Extensions (DNSSEC); • This security feature creates trust within the DNS space, which provides security between the parent and child communication in the DNS space; • The signing of the .za root for the SLDs will thus create trust between the parent and a child zone within the .za namespace; and • The Denic Data Escrow service continues to serve as an Escrow provider for the commercial SLDs.
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"54 A receivable from SARS because of an overpayment due to Input VAT over declaration identified during the year under review.
The amount of R 286 352 is based on actual supplier invoices not included in the declaration.

Audit Opinion .ZADNA achieved an Unqualified audit.

This reflects the commitment of the regulator’s commitment to fiscal responsibility, transparency, and adherence to the highest governance standards without any irregular and fruitless expenditure.

The financial statements of .ZADNA as of 31 March 2023 reveal two notable concerns.
Firstly, there is a significant R31 million disparities between reported Value-Added Tax (VAT) in the VAT Statement of Account and the corresponding ledger balance, attributed to VAT input under-declaration.

Secondly, .ZADNA's management recognizes a R268 .3 million receivable, stemming from VAT overpayment to SARS due to alleged input under declaration.
It's important to note that no provision has been made for potential liability if SARS rejects the assessment, which could impact .ZADNA's financial position and operations.

These matters, though not impacting on the unqualified opinion, require attention and understanding by stakeholders for a complete view of .ZADNA's financial situation and potential future developments.
12.2 Sentech Sentech is a South African-based digital infrastructure and content delivery company providing services in South Africa and on the African continent.

Sentech has an extensive, strategically positioned infrastructure giving coverage to more than 80 per cent of the South African population.
This infrastructure gives Sentech the ability to offer facility leasing and co-location on masts, and the site location enables us to provide connectivity and infrastructure services to the retail, Telcos, and public sectors.

The Entity provides broadcast transmission services to all commercial and public broadcasters, including daily service to over 150 community radio stations countrywide.
As holder of both an Individual Electronic Communications Network Services (I-ECNS) licence and an Individual Electronic Communications Services (I-ECS) licence, the Company is able to provide both voice-based telecommunications and multimedia services.

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"54 • The SABC is unable to pay Sentech in full due to the Corporation’s financial crisis.

This is negatively impacting Sentech’s financial sustainability as well as the ability to deliver services at the agreed level of service; and • The continuous power cuts have a possible impact in the delivery of service to customers by Sentech.
There has been an increased failure in back-up generators, leading to the reduction in productivity, non-achievement of set targets and the increase in the cost of operations.

Strategies to Overcome Areas of Non-Performance • Sentech have made submissions for stakeholder intervention on the issues pertaining to BDM costs, BBI acquisition and SABC debt; and • Remedial plans for the non-achieved targets have been put in place to achieve by the Entity.
Product Performance Content and Multimedia Services • Performance was above expectation, showing growth of 39 per cent against targets; • The BDM project attributed to revenue growth, noting delays experienced in analogue television switch-off within the television portfolio; and • After-market support service and the supply of dish kits in support of the BDM project also contributed to revenue growth.
Managed Infrastructure Services Performance during the 2022/2023 financial year was below expectation, showing an under performance of 2 per cent against planned targets.

Broadband Connectivity Services The number of connected sites stood at 85 and included some of the most rural parts of the country where terrestrial network does not exist.
Data Centre Services • NASREC data centre has the capability to provide co-location services; • Upgrading this data centre from Tier 2 to Tier 3 will enable the centre to provide hosting services.

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"54 As part of the national government’s imperative to move the public to a digital platform, Sentech commenced with the ASO in the past year.

The costs for the ASO are recouped from the dual illumination grant funding that the Company received from the Executive Authority.

However, during the year under review there was a dual illumination shortfall with a funding deficit of R40 million for dual illumination incremental costs, which contributed to the loss and burdened the fiscus.
Sentech deploys its available cash resources and healthy balance sheet to leverage new and existing business opportunities.

During the period under review, a prospective target for acquisition was identified, assessed, and proposed but the deal could not go through.

Preservation and growth of financial capital is key to sustainability, with a focused effort on possible mergers and acquisitions and strategic alliances.
Sentech is negatively affected as the gross debtors’ balance increased significantly, resulting in an additional R59 million recognized for expected credit losses in terms of IFRS 9: Financial Instruments.

The non-payment by customers is also apparent in the significant decline in the cash reserve as per our statement of financial position.
12.2.3 Audit Opinion Sentech received a clean audit, which means having no material misstatements in the financial statements; compliance with legislation and policies; and reliable performance information.

Over the past eight years the Company realised six consecutive clean audits, followed by two years (FY 2020/21 and 2021/22) of unqualified audits with findings.

Furthermore, during the year, ICASA did not find Sentech to be in violation of any regulations.
The external auditors indicated that most of the the public entity’s revenue is earned from one customer who experienced cash flow challenges in the current financial year.

This indicates the presence of material uncertainty relating to sustainability risk due to lack of diversification.

Page 91 of 182 118 Management has indicated plans to mitigate the risk.

Material impairment of R145.6million (2022: R86.5 million) was incurred because of provision for credit losses on trade receivables.
12.3 USAASA/USAF USAASA was established in terms of section 80(1) of ECA, as a public body mainly responsible to facilitate the bridging of the digital access gaps which represent a new form of social inequality derived from the unequal access to the new ICTs, by gender, territory, social class, and so forth.

USAASA is under the oversight of the Board created in terms of section 80(3) of ECA and is directly accountable to Parliament, through the Ministry for Communications and Digital Technologies.
The Agency must contribute toward the revised MTSF 2019 - 2024 on the following two impact outcomes: Unemployment reduced to 20-24 per cent with 2 million new jobs, especially for youth; and economic growth of 2-3 per cent and growth in levels of investment to 23 per cent of GDP1.

High-Level Overview of the Strategy and the Performance The rationalisation of the ICT SOEs is defined by the National Integrated ICT Policy White Paper approved by the Cabinet on 28 September 2016.
The main objective of the rationalisation process is to move away from the fragmented mode of service delivery into a more consolidated approach.

USAASA is one of the Entities identified in the National Integrated ICT Policy White Paper that needed to be disestablished.

This process is intended to harmonise and streamline the public entity’s capabilities to ensure efficiency in service delivery.
The President announced in 2021 that the completion of digital migration is vital to the country’s ability to effectively harness the enormous opportunities presented by rapid technological changes.

After several delays, the country has started and is continuing with a phased switch off analogue TV transmitters, which is being implemented Province by Province.
Following the President’s pronouncement regarding BDM, a holistic review of the BDM service delivery model was undertaken to fast-track the completion.

This resulted in USAASA’s role being limited to managing the Fund in an administrative capacity while USAF’s role was limited to subsidising projects and programmes geared towards providing universal access to Page 92 of 182 119 broadcasting and communication services.
These roles are currently being reviewed within the review of the ECA by the Department to align to the new era of social and digital economy.

Another project referred to by the President in the SONA 2021 was SA Connect, a programme intended to roll out broadband to schools, hospitals, police stations, and other government facilities.

All these facilities and institutions must be connected, and individual citizens should have affordable access to information services and a platform for their own voices.
The following interventions affected the Agency’s execution of the annual performance plans: Disestablishment of USAASA USAASA is being disestablished in accordance with the policy recommendations of the National Integrated ICT Policy White Paper.

The uncertainties inherent in the process of disestablishment of the Entity affected the implementation of the key performance targets contained in APP for the year under review.
The Entity was not able to enter medium- to long-term contracts as a result of the pending disestablishment and the moratorium that was placed on the Entity committing to long-term contracts.

This was critical to managing exposure to the risks of onerous contracts.

As such, USAASA continued to incur irregular expenditure relating to the rental of the offices and the provision of mobile and data connectivity services.
Strategic Relations After the adoption of the MIM on BDM by Cabinet on 30 September 2021, the Agency needed to enter strategic relations with various entities to support the Revised ASO Plan.

With the approval of the deviation procurement strategy by National Treasury, the Agency forged multiple formal strategic relations with the Department, Sentech, SAPO, and the broadcast media players, such as SABC and others.
Strategic relations are essential for ensuring the seamless digital migration of indigent households onto digital broadcasting platforms, and for ensuring that the policy objectives of the universal and geographic reach of digital broadcasting services to all citizens are met.

Facilitating the development of the digital economy is aimed at ensuring inclusivity and sustainable universal access.
The President’s pronouncements on SA-Connect emphasized an expeditious response to the growing need for South Africans to participate in the digital economy, and the need to review the delivery model of SA-Connect Phase 2.

Page 93 of 182 120 To enable universal access to broadband, the approach taken needed to include the release of the spectrum and other digital technologies.

The revised SA-Connect Phase 2 Model was adopted by the Cabinet on 28 January 2022.
As a result, USAASA engaged in strategic relations with BBI to subsidies broadband infrastructure and services, which will contribute to South Africans being able to equally participate in the digital economy.

in the next three years, 44 600 government sites, including schools, health facilities, libraries, Thusong centres and traditional authority offices will be connected through the licensed telecommunications service operators.
More than 33 000 community Wi-Fi locations and broadband to households will be provisioned in the same period, see infographic below.

The Cabinet approved the revised SA-Connect Phase 2 Model which will be rolled out using SOEs such as BBI, SITA and Sentech, and the industry at large.

Government will utilise existing capacity and source additional physical networks from the private sector.
Challenges Faced by Board USAASA is experiencing a high vacancy rate of 80 per cent at executive management level arising from uncertainties associated with the disestablishment of the entity.

In addition, USAASA is unable to attract the desired skills in the labour market as a moratorium was placed hiring key additional employees on a long-term contractual basis because of the impending disestablishment.
Further uncertainties were experienced about the term of the current Board, pending the entity’s disestablishment.

The trajectory suffered a loss from one of its members and Chairperson of the Human Resource and Remuneration Committee (REMCO), Mr Talelani Ramaru.

The Board member’s passing left the board with a vacuum specifically in his area of expertise, knowledge, and skills in the organization.
His absence had an impact on the discussions and decisions related to HR matters as he was passionate about labour issues.

The impact was also felt when dealing with issues of an even number of members where there was potential for tie votes on critical decision-making process.

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"54 Furthermore, USAASA has incurred additional expenditure relating to employee benefits that were not paid in the previous financial years, i.e.

before the 2021/22 financial year.

USAASA had adopted the DPSA salary structure and policy which meant that certain benefits accrued to USAASA employees including pay progressions, and COVID-19 leave cash payout dispensation for 2019 and 2020 leave cycles.
These policy dispensations were not implemented in USAASA in previous financial years, i.e.

before 2021/22.

Payments of these benefits in the current financial year led to additional financial resources being required to meet these costs.

USAASA obtained an approval for the retention of funds specifically for the compensation of employees cost line item emanating from these unpaid benefits.
Payment of these and the normal cost of living adjustment of 3 per cent led to a significant increase in the compensation of employees of R7.9 million.

Lastly, USAASA continued to have a high vacancy rate in leadership roles of executive and senior management.
USAASA bled capacity in the year under review in almost all units, including vacancies in some critical areas in its core activities that could not be filled due to the pending disestablishment and the moratorium on permanent or medium-to-long-term appointments.

12.3.3 Audit Opinion The AGSA has, after conducting an audit of USAASA financial statements, issued an Unqualified audit opinion.
The AGSA did not identify any material findings on the usefulness and reliability of the reported performance information for the audited programme of USAASA.
The material findings on compliance with the selected legislative requirements, presented per compliance theme, are as follows: Annual Financial Statements, Performance and Annual Report The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework, as required by section 55(1)(b) of the PFMA.
Material misstatements of expenditure, current liabilities and the statement of comparison between budget and actual amounts identified by the auditors in the submitted financial statement were corrected resulting in the financial statements receiving an unqualified audit opinion.

Expenditure Management Page 98 of 182 125 Effective steps were not taken to prevent fruitless and wasteful expenditure as disclosed in note 25 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA.
Most of the fruitless and wasteful expenditure was caused by interest charged on outstanding invoices and penalties for late payment of PAYE.

Consequence Management AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular and fruitless and wasteful expenditure as required by section 51(1)(e)(iii) of the PFMA.

This was because investigations into irregular, fruitless and wasteful expenditure were not performed.
Internal control deficiencies Management did not adequately review the financial statements to ensure that material errors were identified and corrected prior to submission for audit.

Management did not implement adequate internal controls to prevent fruitless and wasteful expenditure.

The accounting authority did not initiate investigations into instances of irregular and fruitless and wasteful expenditure incurred.
Other Reports This report did not form part of the AGSA opinion on the financial statements or my findings on the reported performance information or compliance with legislation.

The previous board instituted a forensic investigation in January 2020 on the SAP support and maintenance services to ascertain facts on the matters around the SAP support and maintenance provision or the lack thereof.
The forensic investigation was concluded in October 2022 and the Board is evaluating the recommendations for further implementation.

12.3.4 USAF The mandate of the Fund is based on funding projects / programmes that are exclusively contributing towards two strategic pillars: universal access to (i) Broadcasting; and (ii) Broadband infrastructure and services throughout the country.

The Fund is created in terms of Section 87(1) of the ECA to ensure USAASA attains its statutory objectives.
Licensees are required to contribute to USAF, which is intended to incentivise and subsidise the rollout of electronic communications networks in underserviced areas.

It is also established to finance Page 99 of 182 126 community ICT projects that seek to bring both basic and advanced communications services closer to the poor communities in dire need of those services.
To reach this mandate, the Funds is currently funding / subsidising two (2) apex government priorities, namely, BDM and Broadband Connectivity under Economic Transformation and Job Creation in terms of the Revised MTSF 2019-2024.

USAF continues to play a pivotal role by contributing towards the achievement of Sustainable Development Goals-2030 Agenda and NDP universality policy goals that affect universal service and access.
This is contributed through a coordinated approach to subsidising the connectivity of underserved / underserviced communities in the townships and deep rural areas with ICTs thereby contributing to universal access to broadcasting and communication infrastructure and services.
By subsidising connectivity to educational institutions and primary healthcare facilities, and the provisioning of Free Wi-Fi hot spots, USAF is contributing to the connectivity of communities and bringing SA one step closer to achieving its vision as captured in the NDP of “a connected SA and deployment of a full range of government, educational, and information services by 2030.” USAF activities directly contribute to the implementation of the Apex Priority 2: the Economic Transformation and Job Creation, of the Revised MTSF 2019-2024.
Priority Projects The Priority Projects are as follows: • BDM Programme: Funding / Subsidising the migration of qualifying households from analogue to digital television – this will contribute to freeing the high demand spectrum that was allocated for analogue broadcasting for auction to industry interested players to support/contribute to the country’s digital economy; and • Broadband connectivity programme: at least 80 per cent of the population must have access to the internet by 2024.
USAF will play the role of funding / subsidizing connectivity projects in identified districts to ensure access to broadband / communication infrastructure and services by the marginalized and underserved communities in townships and deep rural areas throughout the country.
USAASA contributes towards the achievement of the SA-Connect Programme by providing funding / subsidizing broadband connectivity infrastructure and services in the above- mentioned identified two (2) districts (OR Tambo District Municipality, Eastern Cape and Page 100 of 182 127 Pixley Ka Seme District Municipalities (Kareeberg and Renosterberg Local Municipality, Northern Cape).
By the 31st of March 2023, the required infrastructure was procured and delivered, and the respective work commenced to connect the identified sites in the districts mentioned above.
With the delays that were experienced as detailed in the Annual Report, USAASA was not able to execute the subsidisation of the broadband services in the current financial year but is regularly engaging the relevant implementing entity to implement interventions that will assist with fast tracking the implementation of the project in the coming year.
USAF further contributes to the following two impact outcomes on Revised MTSF 2019 – 2024: • Unemployment reduced to 20 – 24 per cent with two million new jobs, especially for the youth; and • Economic growth of 2 – 3 per cent and growth in levels of investment to 23 per cent of GDP.

High-level Overview of USAF’s Strategy and Contribution in the Digital Economy BDM BDM is a large and multi-faceted government programme managed and coordinated by the Department through key SOEs and other stakeholders.
These include Sentech (national broadcast signal distributor), USAASA, SAPO, SABC, ICASA, and other commercial broadcasters.

In 2006, SA agreed to ITU Regional Agreement in Geneva determining the countries that must migrate from Analogue to Digital TV by 17 June 2015.

As such South Africa has started with the process of migrating broadcasting signals from analogue to digital television.
A holistic review of the current BDM service delivery model was undertaken by USAASA to fast track the completion of the digital migration project in collaboration with the abovementioned key strategic role players.

Broadband Project: The NDP requires all schools, health facilities and social institutions to be connected, and individual citizens to have affordable access to information services and a voice of their own.

Another project pronounced by the State President was the SA-Connect Programme.
The programme is intended to roll out broadband to schools, hospitals, police stations and other Page 101 of 182 128 government facilities.

Phase One (1) rollout was aimed to connect 970 government facilities however, it never reached the timeliness set by NDP on extended broadband penetration of 100 per cent by 2020, between the medium term: 2015-2020.
The State President’s pronouncement on SA-Connect placed emphasis on an expedited response to the growing need for South Africans to participate in the digital economy including the need to review the delivery model of SA-Connect Phase 2.

Challenges Faced by the Board The complexities experienced with the present contractual relationships with the appointed SOEs that are carrying out USAF’s key priority projects led to undesirable operational performance.
Furthermore, the legal disputes / litigations that were brought by some institutions with regards to the BDM project led to significant delays in the delivery of the project.

The uncertainties around the disestablishment of USAASA and the future of USAF had also contributed to the number of challenges that were experienced by the Board.
The Board was not able to appoint employees in leadership / executive positions due to the moratorium that was placed on USAASA pending the finalisation of the disestablishment of USAASA and determination of the future of USAF.

The Strategic Focus Over the Medium-to-Long-Term Period Due to the rapid changes in digital technologies and digital economy, the mandate of the entity will be refined through the amendment of the ECA that is currently underway from the Department.
Currently USAASA is mandated to subsidise projects and programmes that are exclusively for the payment of subsidies.

As per the revised model, USAF’s role is now the provision of funding / subsidy towards the implementation of the mandate provided for in the ECA as articulated in the above paragraph.

As such USAF will be utilised to fund key strategic projects and/or interventions initiated for the execution of the abovementioned mandate of the entity in the medium- to long-term period.
12.3.5 USAF Operational Highlights The graphs on below depicts USAF’s achieved annual targets against the planned annual targets in the USAF 2022/2023 approved Annual Performance Plan.

One (1) out of Four (4) planned annual targets was achieved translating into 25 per cent of the total planned targets, and three (3) planned annual targets were not achieved translating into 75 per cent of the total annual planned targets.
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"54 Broadened access to broadcast digital services by qualifying households: At the end of the reporting period, the ASO was extended twice, first by the High Court ruling to the 30 June 2022.
The 30 June 2022 date coincided with the date ICASA had determined and announced as the end of the transition period for the broadcasting services and signal distributors to vacate the 700MHz to 800MHz band.

To meet the announced ASO deadline of 30 June 2022, the Agency embarked on conducting door to door registrations as well as mass distribution of STBs to intensify registrations and installations.
The Analogue switch off in the five (5) provinces of the Free State, Northern Cape, North West, Mpumalanga and Limpopo took place and this, which enabled the conclusion of the process of re-arranging spectrum in these five Provinces, thereby giving way for spectrum to be assigned for future digital services.
Increased access to broadband in underserviced areas: With President Cyril Ramaphosa emphasising the need for SA-Connect to be expedited in response to the growing demand for South Africans to participate in the digital economy, SA-Connect Phase 2 was revised on 28 January 2022.

In the next three years, 44 600 government sites, including schools, health facilities, libraries, Thusong centres and traditional authority offices will be connected through licensed telecommunications service operators.
More than 33 000 community Wi-Fi locations and broadband to households will be provisioned in the same period.

Cabinet approved the revised SA-Connect Phase 2 Model which will be rolled out using SOEs such as BBI, SITA, Sentech, and industry at large.

The government will use existing capacity and source additional physical networks from the private sector.

The Entity has appointed BBI to provide broadband internet connectivity to 112 sites in Northern Cape and 300 sites in Eastern Cape.
A well-governed and high-performance organisation delivering on its mandate: USAF obtained a Qualified audit opinion in the 2022/23 financial year.

This is an improvement compared to the disclaimer audit opinion obtained in the 2021/22 financial year.

This demonstrates an improvement in the control environment.
Challenges Implementation of the BDM programme is hindered by delays in the installation of subsidised Set Top Boxes at qualifying households and the low registration rate for qualifying households which are eligible for subsidisation through USAF.

Page 104 of 182 131 Other challenges that plagued USAF in fulfilling its role in the Service Delivery Environment of the Fund include: 1.
Disestablishment • Low Staff Morale; and • Low investment in relevant systems for the environment we operate in (Has an impact on disclosures as per AGSA.

2.

Delivery Model of Roll out of the projects • Inability to operate effectively and efficiently through means on implementation of the projects USAF; • SAPO’s inefficiencies and it effects of the audit opinion; and • Sentech and BBIs lack of timeous delivering within timelines.

3.
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Myopic delivery strategy of USAF • The organisation is forced to disburse funds through the use of Government Entities; • Inability to drive innovation; and • participation in research as per mandate with the Centre for Scientific and Industrial Research (CSIR) and private sector.

Irregular Expenditure There was no irregular expenditure incurred.

The fruitless and wasteful expenditure amounted to R107 000.
The Agency closed with a balance of R50.3 million on irregular expenditure and R78.2 million on fruitless and wasteful expenditure as a due to balances carried over from the previous financial year.

Strategies to Overcome Areas of Non-Performance Take effective measures to prevent irregular expenditure, fruitless and wasteful expenditure, losses resulting from criminal conduct and expenditure not complying with the operational policies of the Agency.
12.3.6 Financial Performance The Agency received an approved appropriation allocation of R126 million.

Interest amounting to R159 million was earned throughout the year.

Thus, USAASA’s total revenue for the year under review amounted to R285 million, representing a decrease of R918 million from the previous financial year’s total revenue of R1.204 billion.
Page 105 of 182 132 Total expenditure for the current year was R210 million, an increase of R173 million compared to the total expenditure in the previous financial year of R37 million, see table on next page.

As such, USAASA made a surplus for the year of R76 million, representing a decrease of R1.1 billion from the surplus of R1.2 billion in the previous financial year.
The main reason for the increased spending was due to the improvements in the level of implementation of the two (2) projects in the current year under review.

To provide for the improved level of implementation, USAF has obtained an approval from the National Treasury to retain funds that were appropriated in the previous financial years amounting to R2.9 billion specifically for the two key USAF priority projects.
2022/2023 2021/2022 PROGRAMME 1: BUSINESS SUPPORT Budget Actual expenditure (Over)/Under expenditure Budget Actual expenditure (Over)/Under expenditure R’000 R’000 R’000 R’000 R’000 R’000 Administration 16,005 9,173 6,832 3,000 3,171 (171) Broadband infrastructure and connectivity 294,028 49,875 244,153 61,165 - 61,165 Broadcasting Digital Migration 2,565,721 150,651 2,415,070 1,073,366 34,044 1,039,322 Total 2,875,754 209,699 2,666,055 1,137,531 37,215 1,100,316 Another key cost driver in USAF was project travel expenditure by district coordinators for projects monitoring and evaluation in the various districts in which the Entity operates throughout the country.
Total costs incurred for travel during the year under review amounted to R6.8 million.

The cost is considered reasonable and justifiable considering the magnitude of the projects and the relevant risk exposures managed through this process.

As at 31 March 2023, the Entity had an accumulated surplus of R3.7 billion and the Entity’s total assets exceed its liabilities by R3.7 billion.

The ability of the Entity to continue as a going concern is dependent on several factors.
The most significant of these is that the members continue to oversee budget and financial management processes to ensure an adequate budget is made available for the Entity’s operations.

Requests for Retention of Funds USAF has submitted and obtained approval for retention of funds to cover the costs highlighted in the financial performance section above and other cost pressures.

From the requested retention of funds of R2.9 billion, the National Treasury approved the total amount requested.
As such nothing was paid back to the NRF in of the PFMA.

12.3.7 USAF Audit Opinion Page 106 of 182 133 The AGSA has, after conducting an audit of USAASA financial statements, issued an Unqualified audit opinion opinion.

Although there is a positive movement in the audit outcomes in USAF, the issue of the inventory opening and closing balances is still unacceptably affecting the audit outcomes.
This is one of the various risk exposures surrounding the BDM project that is outside the control of the entity; USAF is dependent on the control environment and the systems of internal controls implemented in SAPO to effectively manage the project risks to an acceptable level.

However, there are plans to address the key BDM inventory project risks in the next financial year.
Basis for Qualified Opinion The was unable to obtain sufficient appropriate audit evidence that management had properly accounted for inventories in the current and previous year as the public Entity did not maintain a register of inventories held by a third party that could be reconciled to the financial statements.

AGSA was unable to confirm the inventories by alternative means.
Consequently, the AGSA was unable to determine whether any adjustments were necessary to inventories stated at R836 million (2022: R807.2 million) and to inventory redemptions stated at R63.9 million (2022: 0).
Material Uncertainty Relating to Going Concern The annual financial statements were prepared based on accounting policies applicable to a going concern, describes the events or conditions, along with other matters as set forth that may cast significant doubt on the public Entity’s ability to continue as a going concern and how the public Entity is responding to them.

Emphasis on Matters: Uncertainty relating to the future outcome of litigation: – USAF is a defendant in several lawsuits.
The ultimate outcome of the matters cannot presently be determined and no provision for any liability that may result has been made in the financial statements.

Annual Financial Statements, Performance and Annual Report The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by Section 55(1) (a) and (b) of the PFMA.
Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected or the supporting records could not be provided, which resulted in the financial statements receiving a qualified opinion.

Expenditure Management Page 107 of 182 134 Effective steps were not taken to prevent fruitless and wasteful expenditure as disclosed in note 14 to the annual financial statements, as required by Section 51(1)(b)(ii) of the PFMA.
Most of the fruitless and wasteful expenditure was caused by the payment of interest on a court order.

Plans to Address USAASA will continue engaging the National Treasury to be allowed to reconsider USAASA’s cost structure and thereby move all project related costs to USAF.

These costs include warehousing and distribution costs, as these costs are going to be incurred in the future until the inventory stored at SAPO is depleted.
Consequence Management The AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure and fruitless and wasteful expenditure as required by Section 51(1)(e)(iii) of the PFMA.

This was because investigations into irregular expenditure and fruitless and wasteful expenditure were not performed.
Internal Control Deficiencies Management did not implement an appropriate internal control process to properly account for inventory balances and the movement of inventory during the year.

Management did not adequately review the financial statements to ensure that errors are identified and corrected prior to the submission of the financial statements for audit resulting in material corrections to the financial statements.
USAASA did not implement adequate consequence management processes for transgressions against applicable policies, laws and regulations.

Investigations were not undertaken for all instances of irregular, fruitless and wasteful expenditure incurred in the prior year.

12.4 NEMISA NEMISA was established as a non-profit institute for education in terms of the Companies Act (1973) and is listed as a schedule 3A public Entity in terms of the PFMA.
The Institute’s programmes are structured to enhance the market readiness of students in a wide range of broadcasting disciplines.

Its mandate was expanded to include the development of South Africans’ digital skills capacity, and it is responsible for implementing digital skills programmes, including broadcasting, in collaboration with its partners.

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"54 Data costs remain high in South Africa thus excluding many of them who cannot afford it and making activities such as online learning challenging to be adopted.
During the 2022/23 financial period, NEMISA has been successful in implementing a zero-rating of its Learning Management System to mitigate this challenge.

A Digital Skills Colloquium and hybrid Datathon were successfully held with participation from various Provinces; and NEMISA continued with its organisation culture change journey, ending the year with the production of an organisational efficiency report.
During the 2022/2023 financial year, there were in total 240 beneficiaries trained through NEMISA’s accredited training qualifications by the Media, Information and Communication Technologies Sector Education and Training Authority (MICTSETA).

The 2022/23 financial year has been particularly good for NEMISA’s digital learning.
Over the past year, NEMISA has successfully developed and implemented innovative digital learning solutions, empowering learners of all skill levels and backgrounds to acquire knowledge and skills in a flexible and accessible manner.

Upgrades were made to both the NEMISA Learning Management System (LMS) and the NEMISA on Microsoft Community Training (MCT) Platform.
NEMISA team collaborated with external service providers, subject matter specialists, designers, and technologists to create engaging online courses, with interactive learning elements.

This year also saw NEMISA’s first accredited online course called New Venture Creation go live.

NEMISA expanded its reach by forging strategic partnerships, reaching new markets, and delivering online learning nationally.
Furthermore, comprehensive training and support was provided to facilitators, enabling them to effectively leverage digital tools for impactful instruction.

For the 2022/23 financial year the project appointed 124 trainers/ambassadors, some of whom left the programme due to better opportunities.

Lastly, the only challenges identified during the reporting year is the inadequate organisational structure.
Stakeholder Engagements and Activities Table below shows some of the highlights for the year in stakeholder engagement, advocacy and awareness activities: Page 110 of 182 137 12.4.1 Linking Performance with Budgets The table below depicts expenditure against the budget for the reporting period under review and the previous financial year for the programme and sub-programmes: 12.4.2 Financial Performance Analysis The graph on next page is a detail statement of comparison of the Institute followed by the description: Page 111 of 182 138 139 "!
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"54 • Unspent conditional grants – Decreased by R1.9 million (96 per cent).

Training activities for Community Radio completed in the current year.
Deficit for the year • NEMISA made a deficit of R1.3 million for the year.

The deficit is mainly due to the following revenue of R9.9 million – low invoicing versus expense for training by NEMISA partners.

Liquidity and solvent • NEMISA has a strong cash flow balance (cash balance of R38.3m), thus the entity remains liquid and solvent; • The current ratio is 1:1, same as the industry norm of 1:1; and • The debt ratio is 0.7:1.
The above statement indicates that NEMISA has sufficient funds and the ability to meet both its short and long-term obligations.

Analysis – Operating Expenses Operating expenses increased by R32.6 million (58%).

The increase relates to eSkill’s roll out expenses: • Digital entrepreneurship – new indicator in 2022/23 financial year; and • Specialist Technology 2021/22 target of 2750 has increased to 3000 during the 2022/23 financial year.
Budget Versus Actual Reasons for variance explained for the graph below: Page 113 of 182 140 141 • `(%Q0Y+27%<0!

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"54 Fully implement the audit action plan to ensure that all the external and internal audit findings for the year 2022/23 are addressed and do not recur in the next audit.
12.5 ICASA The Constitution mandates Parliament to establish an independent regulatory institution which is required to provide for the regulation of broadcasting in the public interest and to ensure fairness and a diversity of views broadly representing South African society (s 192).

ICASA or ‘the Authority’ falls under schedule 1 of the PFMA.
ICASA’s mandate is set out in the ICASA Act, ECA, Act No 35 of 2005, the Postal Services Act No 24 of 1998 (the Postal Services Act) and he Broadcasting Act, Act No 4 of 1999, (the Broadcasting Act) for the regulation of electronic communications, broadcasting and the postal services in the public interest.

The legislation empowers ICASA to grant licenses, monitor compliance with licence terms and conditions, develop regulations, plan and manage the radio frequency spectrum and protect consumers.
ICASA has concurrent regulatory oversight / jurisdiction with the Competition Commission on competition matters in terms of Chapter 10 of the ECA read with 4B(8)(b) of the ICASA Act, as well as other legislations with an impact on the sector.

The ICASA Amendment Act 2005 also provided for the incorporation of the Postal Regulator into ICASA.

The Amendment Act of 2005 also increased ICASA's council complement from seven to nine councillors.
The ICASA Act 13 of 2000, as amended establishes ICASA to: • perform its functions through Council as contemplated in Section 5, and to be independent and subject only to the Constitution and the law, to be impartial.

• and to perform its functions without fear or favour.

• exercise the powers and perform the duties conferred upon it.

• act in a manner that is consistent with the obligations of the Republic under any applicable international agreement, according to section 231 of the Constitution.
• conclude concurrent jurisdiction agreements with any regulator in respect of areas of regulatory overlaps.

The Authority is responsible for regulating the telecommunications, broadcasting and postal industries in the public interest and ensure affordable services of a high quality for all South Africans.

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"54 The year under review commenced with the prolonged impacts of the COVID-19 pandemic, which necessitated an adjustment to a new working environment.
Fortunately, the National State of Disaster on COVID-19, as declared by the National Government, was lifted as of 05 April 2022; this brought with it some normality to the daily operations at ICASA.

During the year under review, the Authority experienced several changes within its’ leadership, ICASA bid farewell to the former Chairperson Dr. Keabetswe Modimoeng, who successfully served the Authority since 2016, both as a Councillor and Chairperson.
In addition, Mr Willington Ngwepe’s term as CEO came to an end.

Both esteemed colleagues’ leadership spanned significant milestones, including the historic high-demand spectrum auction that took place in March 2022.

During the year under review, ICASA welcomed four new Councillors.

Cllr Faye, Cllr Nontombana, Cllr Sithole and Cllr Mushi were sworn in for a four-year term, pledging to serve the South African people, the ICT sector, and the public interest with integrity.
This expanded the total number of Councillors to eight.

As the year ended, ICASA welcomed Ms. Tshiamo Maluleka-Disemelo as the Chief Executive Officer for a 5-year term, effective February 1, 2023.

Ms Maluleka-Disemelo previously served as the Chief Audit Executive (CAE) at ICASA from 2020.

Other Highlights Under the year in review, ICASA successfully reached an agreement with Telkom SOC Ltd to settle the litigation over the high-demand radio frequency spectrum licensing.
Telkom discontinued the lawsuit, and ICASA committed to issuing an Information Memorandum (IM) for licensing certain spectrum by June 30, 2022.

During the year under review, the Authority published the 8th State of the ICT sector in South Africa report.

The report tracks indicators that are used to benchmark values, inform sector policy analysis and ensure compatibility with global benchmarking and data compiled by other regulators.
Among the notable highlights during the year under review includes the Authority’s activities which encompassed a range of important actions, such as conducting public hearings to amend the service charter regulations, evaluating applications for Community Sound Broadcasting Service licenses, and publishing Radio Frequency Spectrum Assignment Plans for public consultation.
Page 119 of 182 146 Some of the Key regulations we reviewed and published include End-User and Subscriber Service Charter (Eussc); Conveyance of Mail; and the Discussion Document on Dynamic Spectrum Access and Opportunistic Spectrum Management.
Other highlights including conducting public hearings to amend the Service Charter Regulations, evaluating applications for Community Sound Broadcasting Service licenses, and publishing Radio Frequency Spectrum Assignment Plans (RFSAPs) for public consultation; and reviewing and publishing key regulations such as End User Subscriber Service Charter.
The Authority also undertook a process to amend the Numbering Plan Regulations, 2016 to address a possible exhaustion of numbering resources and this was concluded and gazetted by 23 March 2023.
Achievement of Institutional Impacts and Outcomes In terms of the Department of Planning Monitoring and Evaluation Revised Framework for Strategic Plans and APPs, December 2019, the outputs a government institution delivers on an annual basis must contribute towards the realisation of its medium-term outcomes and long- term impact outlined in its strategic plan.
Therefore, the Authority’s outputs delivered under the year in review were geared at contributing towards the Authority’s medium-term outcomes and long-term impact annotated in table on next page.
The Impact Statement of the Authority is Access for all South Africans to a variety of safe, affordable & reliable communication services for inclusive economic growth: Overall Performance Page 120 of 182 147 The 2022/23 financial year began on a positive note following the successful auctioning of the IMT radio frequency spectrum in March 2022.

The Authority also produced a Monitoring Report detailing the impact of 5G deployment in the ICT sector in South Africa.
The Authority gazetted the Position Paper on Optimisation of the Frequency Modulation Sound Broadcasting.

The aim is to optimise the sound broadcasting frequency assignment plan with the view of replanning the Terrestrial Broadcasting Frequency Plan 2013.
In the year under review, the Authority continued to ensure that the resolution of reported cases of interference as part of Consumer Protection, is done in an efficient and effective manner, thus resolving 98 per cent of the Radio Frequency Interference cases within 30 working days.

Furthermore, the Authority resolved 96 per cent of complaints received during the financial year.

All the delivered outputs have contributed significantly to the protection of consumers.
In the year under review, the Authority planned on delivering three outputs: (i) a review of the 2018 Call Termination Regulations as a measure to promote effective competition between operators; (ii) to develop a findings document on Signal Distribution Services which aimed to analyse the competitive landscape in the signal distribution market considering the importance the signal distribution services as an input for the provision of broadcasting services; and (iii) to develop Findings Document on Subscription Television Broadcasting Market which aims to assess the state of competition and determine whether or not there are markets or market segments within the subscription broadcasting services value chain which may warrant regulation in terms of section 67(4) of the ECA.
The Authority was not able to successfully deliver the above-mentioned outputs due to challenges in attracting the requisite service providers that led to delays in procuring the service providers to assist ICASA.

Delivery of the outputs will be carried out during the 2023/24 financial year.

The Authority managed to maintain a low vacancy rate of 5.9 per cent, which is below the targeted 7 per cent.
Lastly, the Authority conducted a mid-term review to determine the degree of achievement in terms of realisation of the Authority’s medium-term outcomes based on the year-on-year outputs the Authority would have delivered by the end of the 2022/23 financial year in total.

The report indicates that the Authority is making positive progress towards achieving its outcomes.
Challenges Page 121 of 182 148 • At the beginning of the 2022/23 financial year, Council functioned with a complement of only three (3) Councillors and an Acting Chairperson, instead of the statutory complement of eight (8) Councillors and a Chairperson.

• Underfunded mandate remains a challenge for the Regulator.

Irregular Expenditure • Irregular expenditure amounted to R34.2 million, increasing the opening balance to R234.3 million at the end of the 2022/23 financial year.
Strategies to Overcome Areas of Non-Performance • Develop and implement an audit action plan to address findings particularly in relation to payment of invoices within 30 days.

• Implement consequence management in instance of non-compliance.

• Filling of the financial specialist vacancy.

• Earlier completion of the Annual Financial Statement to allow enough time for detailed reviews.
Organisational Environment The Authority’s performance on predetermined objectives was attained amid organisational environment factors which either supported or challenged achievement of targets: Structure Few changes happened in the financial year under review, four (4) Councillors were appointed and as the financial year closed, the Council comprised of seven (7) Councillors and the Acting Chairperson.

Another change involved the end of the contract of the CEO and the resignation of the CFO.
The CEO position was filled within the year under review and the process so filling the position of the CFO is underway.

Skills / Staff The moratorium on recruitment continued to be in force, and the Authority resorted to filling critical positions only.

Strategy The Authority’s organizational environment was reviewed for update during planning for the 2022/23 financial year in line with government legislative prescripts on planning.
Their view found the environment relatively stable and needing little update.

Style of Leadership Page 122 of 182 149 The organizational leadership formation was found fit for purpose to support the Authority’s core business and enable it to deliver on its 2022/23 annual outputs.

Systems The Authority continued to utilize some of the business systems that came into effect during the pandemic such as the Microsoft Teams, as its virtual platform for teleworking.
This continues to be an alternative way of conducting business.

Shared Values Organisational shared values allowed staff to remain resilient amid the challenging environment exacerbated by COVID-19 and other factors.

Policy and Policy Direction on Rapid Deployment On 31 March 2023, the Minister of Communications and Digital Technologies published the Final Policy and Policy Direction on Rapid Deployment.
Policy and Policy Directions should precede the development of the Regulations on Rapid Deployment under Chapter 4 of ECA.

The Authority, however, could not produce the Regulations in the year under review as the Regulations must follow only after promulgation of the Policy and Policy Direction in terms of the ECA.

The project will commence during 2023/24 financial year.
12.5.2 Financial Performance The Authority received the normal grant of R469 million and ring-fenced funding of R300 million in 2022/23 financial year, this was 100 per cent in line with the ENE allocation letter from the Department, see table below.

Whilst the normal grant was utilised towards ensuring main commitments inter alia staff costs, office rental costs, IT infrastructure, maintenance of equipment & vehicles, travel costs etc.
The ring-fenced funding successfully allowed the first round of High Demand spectrum to happen.

The remaining funds on ring-fenced will still be utilised in 2023/24 financial year towards the second round of auctioning Lot 9 spectrum and infrastructural multifaceted projects.

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"54 and audited Programmes (being Programme 2: Licensing & Compliance, Programme 3: Policy Research & Analysis, Programme 4: Engineering & Technology).

ICASA received an Unqualified audit with a modification on material findings as annotated below.
Expenditure Management: Effective and appropriate steps were not taken to prevent irregular expenditure of R485 667 incurred in 2022/23 financial year, and requirement of Treasury regulation 8.2.3 was not met of paying invoices within 30 days upon their receipt.

Effective and appropriate steps were not taken to prevent irregular expenditure, disclosed as part of note 36 to the financial statements, as required by section 38(1)(c) of the PFMA and treasury regulation 9.1.1.
Most of the irregular expenditure was caused by contracts variations not approved.

Revenue Management: Material misstatement due to understatement of accounts receivable – licensees did not provide revenue projections to be billed.

While irregular expenditure has decreased when compared to 2021/22 financial year, the findings are all repeat findings from the previous reporting year including on revenue management.
The AGSA raised concerns on the Material Amendments to the Financial Statements, prevention of irregular, fruitless and wasteful expenditure.

Delays in the implementation of consequence management on instances where irregular, fruitless and wasteful expenditure were incurred and non-compliance with the SCM prescripts, laws and regulations and internal controls which were not always effective in detecting and recording irregular expenditure.
The AGSA had emphasis on the matter of Material Impairments and that the Entity has impaired receivables from non-exchange transactions amounting to R119 641 110 (2021: R87 770 681) because of potential irrecoverable receivables from non-exchange transactions.

The AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against some officials who had incurred irregular expenditure as required by section 38(1)(h)(iii) of the PFMA.
This was due to proper and complete records that were not maintained as evidence to support the investigations into irregular expenditure.

The Financial Statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 40(1)(a) and (b) of the PFMA.
Page 125 of 182 152 The AGSA was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against some officials who had incurred irregular expenditure as required by section 38(1)(h)(iii) of the PFMA.

This was due to proper and complete records that were not maintained as evidence to support the investigations into irregular expenditure.
Disciplinary steps were not taken against some of the officials who had incurred and or permitted irregular expenditure, as required by section 38(1)(h)(iii) of the PFMA.

The matters reported by the AGSA are limited to the significant internal control deficiencies that resulted in the material findings on compliance with legislation included in this report.
Controls were not always effective to ensure oversight, monitoring and review of compliance with laws and regulations as management did not adhere to their audit action plan to implement controls over financial reporting.

Management did not implement adequate controls to ensure that contracted amount is not exceeded without approved variation.

Management did not implement adequate controls to ensure that payments to suppliers are made within 30 days after receipt of an invoice.
Management did not take action against employees who incurred or permitted irregular and fruitless and wasteful expenditure as required by PFMA.

12.6 The FPB The Films and Publications Act, 1996 (Act No.

65 of 1996), as amended (FP Act), has been promulgated.

The FP Act repealed the Indecent or Obscene Photographic Matter Act, 1967 (Act No.

37 of 1967), and the Publications Act, 1974 (Act No.

42 of 1974), and created a new comprehensive regulatory framework for films, games, and certain publications.
The FP Act provides for the establishment of the FPB that is responsible for the classification of films, games and certain publications, and no film or game may be distributed or exhibited in public unless it has been classified by the FPB.
In the main, the FPB is established to regulate the creation, production, possession and distribution of films, games, certain publications to: a. protect consumers against harmful and disturbing material while allowing adults to make informed choices for themselves and the children in their care by providing consumer advice; Page 126 of 182 153 b. protect children from exposure to disturbing and harmful material and from premature exposure to adult material; c. make the use of children in pornography and exposure to pornography punishable; d. criminalise the possession, production and distribution of child pornography; and e. create offences for non-compliance with this Act.
The FPB Council endorsed the following five priorities during the 2020 – 2025 review of the Strategic Documents: a.

Technology driven content regulation; b.


Public education (empower adults and protect children); c. Legislative review (technologically neutral legislation regime); d. International and local partnerships (to ensure better regulation of the web) – with renewed focus on local partnerships; e. Research, Compliance Monitoring and Monitoring and Evaluation to inform future priorities; f. Resource mobilisation and develop appropriate funding models; and g. Strategic institutional alignment.
Overall, the mandate of the FPB is to protect consumers against harmful and prohibited content as defined in the Act by regulating the creation, production, possession and distribution of films, games, certain publications, and the internet.

12.6.1 Performance Highlights 2022/23 was an extremely challenging year for the organization in that with the Films and Publication Amendment Act being operationalized earlier on 1 March 2023.

As a result, the organization had to gear itself for the expanded mandate.
The overall organizational APP targets are 13 and 10 APP targets were achieved for the year which translates to 92 per cent of achievement of targets.

Only one target was not achieved in the reporting year.

Unachieved targets equated to 8 per cent and only two indicators had no activities for the year under review, namely: Enforcement Committee indicator had no performance; and percentage of online distributor applications concluded (self-classification), no applications were received in this regard.
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"54 performing its functions in terms of the provisions introduced by the Films and Publications Amendment Act, 2019 (Act No.
11 of 2019) (Amendment Act) by critically assessing the institution’s current capacity, challenges and risks concomitant to the actions, functions and responsibilities introduced by the Amendment Act.

It further assisted the FPB to identify critical areas of the institution that require attention and the resources needed: human and financial and technological to implement the Amendment Act.

The Board managed to maintain a low vacancy rate of 2.04 per cent, which is below the targeted 10 per cent.
All the vacant executive positions were filled which helped to sustain the desirable productivity-levels across the various programmes and ensure that the strategic priorities of the Board are met.

There were proposed regulatory instruments which were prioritised in the 2022/2023 financial period, after considering the targets which have been set for in the Annual Performance Plan for the FPB.

The instruments were arranged in accordance with the FPB’s streamlined regulatory schemes.
Challenges • Inadequate financial resources • Declining materials submitted for classification • Digital Transformation • Declining materials submitted for classification • Public education and awareness of the new mandate • Digital Transformation (Inability to procure an online systems for classification and monitoring • Resource capacity (Funding) • Reskilling programme, owing to resources and preoccupation with organizational transformation issues Strategies to Overcome Areas of Non-Performance • Non-achievement of the one target was attributed to the existential manual classification process; and • As a plan of action, the FPB has committed to develop and implement games matrix to reduce classification turnaround times on games.
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"54 v Interest revenue generated surpassed the target as a result of good cash flow management and the effect of high interest rate; v The personnel budget was adjusted downwards because of the underspend due to vacancies.
When positions are filled on an acting basis, the acting allowance is lower than the full time cost; v The under expenditure was as a result of the lease agreement for Gauteng that was negotiated and the commitments on the revised rate were made which resulted in lower rentals; v The overspending was mainly due to the additional costs incurred in implementing the expanded mandate and introducing additional outreach activities in all the provinces to disseminate the information about the FPB's new mandate; v The overspending on staff development was mainly because of the bursaries that FPB offer to its employees which is paid directly to the universities and as a result of late invoicing there is a timing difference, the expenditure was incurred towards the end of the financial year when the universities open; v The underspending in admin costs is due to the fact that management implemented cost containment measures online items like stationery, workshops and delay in finalisation of projects; v The underspending was due to delay in the finalisation of the communication strategy and new branding; v The underspending on consulting was because of some of the project being done internal; and v The overspending on legal services was largely due to the year-end adjustment on labour costs provision based on the Commission for Conciliation, Mediation and Arbitration (CCMA) award.
12.6.3 Audit Opinion The FPB received a clean audit opinion from the AGSA in the 2021/22 Audit Report.

This implies that there were no material misstatements in the financial statements as well as non- compliance with all relevant legislation and performance objectives.
The clean audit achieved during the reporting period is not only a reflection of our commitment to clean governance, but also our governance framework based on the principles contained in Page 131 of 182 158 the Films and Publications Act, (no.11 of 2019), the Public Finance Management Act (1998) and King IV Report on Corporate Governance for South Africa (2016).
Going Concern The AGSA drew attention to the fact that at March 31, 2023, FPB had an accumulated surplus of R 46.1 million (R47 064 709 - 31 March 2022) and that its total assets exceed its liabilities by R 46.1 million (R47 064 709 - 31 March 2022).

The financial statements have been prepared based on accounting policies applicable to a going concern.
This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

There is no indication from the Department that the FPB will not continue to receive funding going forward.

12.7 The SABC The SABC (SOC) Limited is a Schedule 2 (“Major Public Entity”) entity in terms of the PFMA as amended.
The Corporation is subject to a list of legislation during its operations.

The Broadcasting Act (The Act) is the SABC’s founding statute.

In terms of the Act, the SABC’s obligations are captured in the ICASA Regulations and license conditions of the Corporation’s five television channels and 18 radio stations.
The business of the SABC is further defined by the Act into two distinct services – Public Broadcasting Services (PBS); and Public Commercial Services (PCS) – which are to be administered separately.

Each SABC radio service and television channel is licensed independently by ICASA, and each is required to adhere to its respective license conditions and the provisions of the Broadcasting Act, including the SABC Charter.
12.7.1 Performance Highlights Despite the fulfilment of many of the objectives of the turnaround plan, the SABC unfortunately continues to trade under very stringent conditions due to the bleak domestic and global economic outlook, prompting aggressive marketing and trading models by competitors, aimed at attracting investor support and enticing clients.
Page 132 of 182 159 The Corporation has also pursued audience acquisition and retention strategies that continue to secure audience equity in a competitive and fragmented market.

It is encouraging that SABC video entertainment programmes form part of most of the programmes in the top 20 most watched, and SABC radio stations command a 63 per cent listenership share.
On the high-level achievement of Strategic Outcome Oriented Goals the public broadcaster reported as follows: Financial Sustainability • The completion of the Turnaround Strategy has stabilised the SABC and laid a strong foundation for its operations and requirements for competition in the market.

• During the past year, no borrowings took place, and the SABC has a working capital facility.
• Achieving our growth goals depends on finalising the key actions in the Turnaround Plan relating to legislative and regulatory reforms.

A Competitive and Innovative Multi-Channel Portfolio • The review and reprogramming of radio shows and talent placement activity is critical for stations to offer fresh content and innovations.
• SABC Radio continued to adhere to its public broadcasting mandate as well as other organisational goals such as broadcasting programmes that support social cohesion, nation building, promotion of democracy and empowerment of citizens.

• SABC managed to have an average of 30 per cent of Fresh content on the channels, excluding renewals.

Content Everywhere for Everyone • The SABC continued to expand on its third-party digital streaming platform strategy by launching the Over-The-Top (OTT) platform.
• The SABC+ platform performed well operationally, with no significant downtimes recorded.

• SABC content and channels on this platform will provide audiences with more choice and Free-To Air (FTA) services.

A Competent, Dynamic Workforce Page 133 of 182 160 • The Performance Management process is now fully implemented with the inclusion of Value Based assessments (360 and 180) as per policy.
The automation of this process provides for an end-to-end, user-friendly performance management process and ease of reporting regarding the performance of individuals.

• The SABC achieved 79 per cent against the Corporate Plan WSP implementation target of 60 per cent.

Bursaries also increased from 67 to 77 during the reporting period.

Compliant Governance Practices, Risk Management and Sound Internal Controls • The SABC conforms with the IIA Code of Ethics and Standards.
• The Corporation continued to work to strengthen internal controls across the organisation.

• Implemented a revised Enterprise Risk Management Policy, Framework and Strategy during the year to increase risk integrated thinking and promote risk awareness.

Strategic and Sustainable Partnerships The Corporation continued to service its existing content distribution partnerships.

Efforts are ongoing to secure more such partnerships that enable the further exploitation of SABC’s content.
The global and local economic situation has continued to hamper efforts to secure content generation partnerships.

SABC will create added opportunities for talented local producers to showcase more of their work on a platform, which will enable content to live longer.

Other Highlights • Launched OTT (SABC+) digital streaming platform.

• SABC+ platform performed well operationally, with no significant downtimes recorded.
• SABC achieved 79 per cent against the Corporate Plan WSP implementation target of 60 per cent.

• The Corporation continued to work to strengthen internal controls across the organisation.

Challenges • Declining television audiences hampered efforts to generate planned advertising revenue.

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"54 Investment in content was consistent with 2022 financial year, though there was the broadcast of unbudgeted sports events (FIFA Soccer World Cup).
Net loss increased by R949 million (368 per cent) year-on-year, and this is attributable to the following- Revenue • Revenue was 7.9 per cent lower than 2022 financial year.

The absence of growth in audience ratings made it difficult to grow classical trading revenue deals.

• VE and Radio performance has been on a constant decline year-on-year, with 2023 financial year the worst performing financial year in the past ten years.
(FY2023:14 per cent decline, FY2022: 8 per cent decline, FY2021:18 per cent); • TV License fees has struggled to outperform 2022 financial year, this is largely due to the DCAs lost during the financial year due to underperformance and the resultant poor performance on this revenue stream; • Year-on-year Advertising revenue has declined by R460 million (15 per cent); • All revenue streams missed the budget, with an overall revenue shortfall of R1.7billion.
R1 billion of the budget shortfall relates to advertising revenue.

• The delays in ASO is a double-edged sword.

Whilst this has delayed the anticipated savings in signal distribution costs, it has also resulted in audience losses from transmitter switch-off.

Expenditure analysis is detailed below:- Expenses • Employee-related costs increased against prior year by R373 million (19 per cent).
Whilst there was an average of 532 vacancies throughout the year, resulting in a saving of R124 million, an adjustment for credit actuarial valuation movements on employee costs of R302 million to R176 million (FY2022: -R46m actuarial valuation movements), resulted in the increase.

• Broadcast costs increased by R92 million due to trade exchange contracts, Royalties paid on Revenues and project services (i.e., costs related to the OTT platform).
• Signal distribution and linking costs decreased by R43 million to R683 million due to a discount received of R43 million.

• Investment in content is like a prior period.

Sports amortization was above budget by R87 million (FY22:R72m) due to the FIFA Men’s World Cup.

Page 136 of 182 163 • The cost of the public mandate continues to weigh on the Entity’s performance.
Included is for example R617 million (FY22:R605m) spent on the News service which carries regulatory restrictions on commercial exploitation.

The cost of carrying public mandate content for 2023 final year approximates R1.78 billon (FY22R1.88billion).

The unfunded mandate is estimated to be R817 million in 2023 financial year.

Variable costs include the following: - • Marketing • Direct revenue collection costs • Professional and consulting fees • Operational costs • All other costs are fixed.
At 87 per cent fixed costs, the SABC is heavily operationally geared and hence profitability becomes very sensitive to movements in Revenue.
Summary of Financial Position As illustrated in bar graph below, TV license cash collection year-on-year reduced by R115 million (13%) due to the following collection initiative: - • License holders are not willing to engage with the DCAs i.e., they drop calls from the DCAs and do not respond to the electronic communication; • Noting that it only costs 72 cents a day for a license and that there is a segment of the license holders that can afford to pay but choose not to, the current economic situation and affordability remain further contributing factors.
Page 137 of 182 164 12.7.3 Audit Opinion The Corporation performance regressed to a Disclaimer audit opinion due to the uncertainty on the going concern matters that remains a challenge.

Audit information is adequately addressed extensively in the preceding AGSA’s Report of the Portfolio under Section 11 of this report.

Analysis of irregular expenditure is briefly annotated below: • IE incurred is largely attributable to the top 10 suppliers.
This illustrates that the number of instances of IE are significantly limited to these suppliers and that irregular awards are not widespread.

• Awards to the Top 10 suppliers are multi-year contracts, and this illustrates improvement in the SCM control environment over the 4 years.

• Although Irregular expenditure incurred is significantly limited to awards to top suppliers, the reported IE decreased by 69 per cent over the 3-year period.
The decline is attributable to improvement in the control environment.

The Corporation has improved the audit outcomes over the period including resolving the long outstanding IFWE matter.

National Treasury Instruction 4 of 2022/23 on PFMA Compliance and Reporting Framework, which was effective from 3 January 2023, addresses the IE opening balance.
The In-Year IE has, for the past four financial periods, consistently reduced, indicating sufficient controls are in place for it to be managed effectively and in line with PFMA prescripts.

Enhancements continue though.

Investigations and Consequence management completed are at 69 per cent as of 30 June 2023.

In general audit findings have reduced from 214 in 2018 financial year to 64 in 2023 financial year.
Finally, and excluding Going Concern the Corporation would have achieved an Unqualified Audit Opinion.

Predetermined Objectives are illustrated in the infographic below: Page 138 of 182 165 12.8 SITA Following the PRC recommendations, SITA was established in April 1999 through the SITA Act 88 of 1998 and is registered as a Schedule 3A Public Entity which is self-sustaining and self-funding and government is the sole shareholder.
The Minister of Communications and Digital Technologies exercises the custodian rights attached to the shareholder on behalf of the State.

SITA was established with a core mandate to provide IT Services to the Government.
The establishment was from the amalgamation of a number of entities listed below which had different operating methods, procedures, skills set, infrastructure and technologies which had to work seamlessly in order to deliver on its mandate: a) Info plan (Pty) Ltd, the ICT Service Provider to Department of Defence; b) Central Computer Services of the Department of State Expenditure; and c) Sub-component Information Systems within the Department of Safety and Security.
The mandate of SITA as stated in the Act is as follows: a) to improve service delivery to the public through the provision of information technology, information systems and related services in a maintained information systems security environment to departments and public bodies; and b) to promote the efficiency of departments and public bodies using information technology.
Page 139 of 182 166 The Minister of Communications and Digital Technologies, Ms. Khumbudzo Ntshavheni, appointed the Board of Directors (hereinafter referred to as “the Board”) with a balanced set of skills that is built in line with SITA’s needs.

The Board has progressively striven to have subcommittees that optimally reflect the strategic priorities of SITA and the diversity of all the stakeholders.
This new Board which took over the baton from its predecessor (hereinafter referred to as “interim Board”) in February 2022, is technically a successor in title, and had the responsibility to oversee the delivery of commitments SITA had undertaken to its customers, the shareholder and stakeholders up to the end of the financial year.

The 2022/23 financial year was the third year of the newly planned and authorized five-year SITA Strategic Plan.

SITA strategic programmes are tabulated below.


12.8.1 Performance Highlights SITA continued to drive the government’s digitalisation agenda through modernising the foundational infrastructure upon which our systems is built, designing citizen-centric frontend systems and strengthening the digitalisation ecosystem comprising of citizens, SMMEs, ICT Industry and suppliers.
Customer service delivery occurred under less-than-ideal conditions such as adverse weather events that caused infrastructure damage and the ever-exacerbating national energy crisis that compromised both SITA and government’s digitalisation ambition and related efforts.

Page 140 of 182 167 The internal organization faced several challenges relating to resource constraints, which exacerbated an already depleted SCM capacity thereby hampering the progress of both SITA and customer procurement transactions.
Inevitably execution of planned APP targets in their logical sequence was hampered which subsequently impacted negatively on corporate performance results.

In line with the customer centric approach to doing business, SITA focused on improving service delivery, held regular executive sessions with various customers and prioritised contracting with customers; 94.14 per cent customers service level agreements (SLA) were signed which assisted to improve billing for the 2022/23 financial year.
The overall measures of customer satisfaction increased slightly from 51 per cent in 2018 to 56 per cent in 2023.

Service delivery complaints are still a challenge, they emanated from various negative customer experiences relating to procurement request delays, capacity constraints, SITA pricing model, impact of load shedding and network availability.
SITA supported the SA government e-Services strategy through the deployment of various e- Services relating to Information Regulator e-Complaints, liquor license management and student management amongst other, thereby enabling digital transformation of citizen facing services for greater effectiveness, impact, public value and overall improved citizen experience.
In fulfilling its role to manage government operational security, SITA fully established its Security Operations Centre Capability (SOCC) thereby ensuring that information systems utilised by SITA and customers were optimally protected from any cyber threats.

Potential threats were identified, detected and isolated in line with cyber security policies and procedures while state of the art technologies was implemented to mitigate against any malicious system attacks.
Various good governance and stringent financial controls were implemented to mitigate against an unqualified audit opinion going forward.

During the year under review the upskilling and training of employees in relevant accounting practices and applicable legislation was prioritized.
SITA managed only 44.4 per cent (eight out of a total of eighteen planned targets) performance target achievement which is a huge decline when compared to the 72.2 per cent and 57.9 per cent achieved in 2020/21 financial year and 2021/22 financial year respectively.

Page 141 of 182 168 This drop in performance was noticed from the beginning of the year, and the Agency has since submitted a Performance Improvement Plan to the Department but has yet to witness improvement in performance.
It is important to note however that the Agency is in a good financial position as will be demonstrated in following subsection.

Strategies to Strategies to Overcome Areas of Non-Performance • To improve performance, the identified corrective interventions will be implemented: Implementation of the accelerated SCM reform programme comprising process, technology, structure, and people.

• Technology enablement support is to be expedited, specifically the e-procurement tool.
• Secure customer commitment and budget within planning cycle.

• • Improvement of demand management and proposal management turnaround times.

Improvement on recruitment turnaround times.

• A revised customer service improvement plan to address specific concerns raised.

12.8.2 Financial Performance The Entity continues to be financially sustainable.
While expenditure grew drastically, financial performance of the Entity has improved when compared to the previous financial year and despite the challenges of achieving less target during the financial period.

SITA’s revenue was recorded at R6.7 billion for the 2022/23 financial year, up by R700 million for the previous reporting year as illustrated below.

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"54 year ended 31 March 2023 and, as of that date, the current liabilities exceeded total assets by R386 447.
That a material uncertainty exists that may cast significant doubt on the public Entity’s ability to continue as a going concern.

The corresponding figures for 31 March 2022 were restated as a result of errors identified in the financial statements of the entity, and for the year ended, 31 March 2023. irregular expenditure of R21 485 (2022: R37 297) was incurred, as proper tender processes were not followed.
Material Allowance for Impairment Material allowance for impairment of R32 382 (2022: R11 534) was recorded against trade debtors because of irrecoverable debt.

Number of USAASA Sites connected to BBI network.

An achievement of 139 was reported against a target of 412.

However, the audit evidence did not support this achievement.

Auditors could not determine the actual achievement; the reported achievement might be more or less.

Percentage of gross revenue paid as network performance rebates.
Auditors were unable to obtain sufficient appropriate audit evidence that clearly defined the predetermined nature and method of calculation to be used when measuring the actual achievement for the indicator.

This was due to insufficient measurement definitions and processes.

We were unable to test whether the target for this indicator was clearly defined by alternative means.
Other Matters Achievement of planned targets The annual performance report includes information on reported achievements against planned targets and provides explanations for over- and under-achievements.

This information should be considered in the context of the material findings on the reported performance information.

Reasons for the underachievement of targets are included in the annual performance.

report on pages 80 to 81.


Material Misstatements The Auditors identified material misstatements in the annual performance report submitted for auditing.

These material misstatements were in the reported performance information of Page 148 of 182 175 Objective 3 - An increased base achieved through customer fulfilment and state-of-the-art infrastructure and services and Objective 4 - The preferred partner of Government in enabling the digital transformation.
Management did not correct the misstatements and we reported material findings in this regard.

In accordance with the PAA and the general notice issued in terms thereof, the Auditors must audit and report on compliance with applicable legislation relating to financial matters, financial management and other related matters.

The accounting authority is responsible for the public entity’s compliance with legislation.
Report on Compliance and Legislation Material findings on compliance with the selected legislative requirements, presented per compliance theme, include Annual Financial Statements, Expenditure management, Revenue management, Procurement and contract management, Consequence management, and SOE oversight and governance.

12.10 SAPO SAPO SOC Ltd was established on 1 October 1991 as a company in terms of the Companies Act, No.

61 of 1973.
61 of 1973.

The State (Republic of South Africa), represented by the Minister of Communications and Digital Technologies, is the sole Shareholder.

Following the repealing amendment of the Companies Act No.

61 of 1973 and the enactment of the Companies Act No.

71 of 2008 (as amended).

SAPO was designated as a state-owned company (SOC) as per SAPO SOC Ltd Act No.

22 of 2011, as amended.

SAPO is also a major state entity in terms of Schedule 2 of the PFMA No.

1 of 1999 (as amended).


During 2022/23FY there has been a continued mismatch between monthly revenues generated and corresponding operating expenditure, resulting in a deficit to meet financial obligations.

SAPO has been severely impacted by a loss of customers and planned revenues due to the cash flow effects and consequent non-payment of critical suppliers.
Main Challenges: • Distressed financial position • Net loss of R2.2 billion • Provisional liquidation • Disclaimer of opinion issued by the Auditor General • Leadership instability Page 149 of 182 176 177 87,%!8,&,<7&,(%/S • %&2(!K))+0$!&)!

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"54 On 22 February 2023, the Minister of Finance, Mr Enoch Godongwana presented his National Budget Speech to the Members of the National Assembly.
An amount of R2.4 billion was allocated to SAPO for the implementation of the Post Office of Tomorrow, however as the organization had been placed in provisional liquidation, the funding could not be accessed.

The SAPO Retail Outlet footprint as of 31 March 2023 comprises of 1 451 points of presence, of which 1 069 are conventional type Post Offices and 382 Retail Post Office Agencies.
Although the network optimisation programme is confronted with forced closure of offices due to non-payment of rental, the program continuously aims to optimise the network through amalgamations and rationalisation of offices.

During 2022/23 financial year, 122 branches have been closed, 64 forcibly by landlords due to non-payment of rental and a further 58 branches as part of the network optimization programme.
The SAPO Group headcount for permanent and non-permanent employees reduced from 14 460 as at 31 March 2022 to 12 640 at 31 March 2023, a reduction of 1 820 employees.

The reduction in headcount was due to resignation, demise, dismissals, end of contract, retirement, and the implementation of a Voluntary Severance Package (VSP) programme.

From introduction of the VSP in December 2022 to March 2023, 1 891 employees were approved for the VSP.
An owner driver scheme was also announced, and 234 applications received.

The position of CFO was filled on 1 March 2023.

Several vacancies on the Board of Directors and Executive level have persisted during the 2022/23 financial year.

Government Service Delivery The agreement between SASSA and SAPO for the payment of the Covid-19 Social Relief of Distress grant (SRD) expired on 31 March 2022.
In the absence of an extension to the agreement, on mutually agreed conditions, specifically related to reimbursement rate per beneficiary payment and prefunding of SRD payments, SAPO was left with no other alternative but to terminate SRD payments.

Notwithstanding the termination, the final payments of SRD grants continued until May 2022 during which 94 856 SRD grants were paid.

During October 2022, the contract for the payment of Social Grants was ceded to the Postbank.
During the 2022/23 financial year, SAPO registered a total of 403 092 indigent households to receive subsidised STBs and distributed 422 245 STBs to qualifying households.
Page 151 of 182 178 Notwithstanding approval granted by the Board of Directors for the write-off of fruitless and wasteful expenditure during April 2022 of an amount R648 million, the amount was reversed following audit by the Auditor General due to noncompliance with National Treasury requirements relating to the implementation of consequence management.

Irregular Expenditure: • The majority of the irregular expenditure was caused by the group and company not following supply chain management processes.
• Most of the fruitless and wasteful expenditure was caused by interest and penalties for late payments.

• No sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred fruitless and wasteful expenditure as required by section 51(1)(e)(iii) of the PFMA.

The organisation has been placed in business rescue, the adopted medium-term strategy may be amended.
12.10.2 Financial Performance The Group recorded a net loss after tax for the year ended 31 March 2023 of R2.1million (2022: R2.3 million) and a negative net asset value of R7.5 million (2022: R5.3 million).

Group revenue decreased by 23.1 per cent from R3 million in the prior year to R2.3 million for the year ended 31 March 2023.

The mail revenue continued to be depressed driven mainly by the decline in mail volumes, logistics volumes and loss of customers.
The mail revenue business represents 61 per cent of total company revenues.

The Financial Misconduct Framework (FMF) has been established and mandated through the group's financial misconduct policy to regulate, monitor and report on all fruitless, wasteful and irregular expenditure and institute management consequences that need to be implemented.
The low revenues have further contributed to the nonpayment of critical creditors, outstanding liabilities on 31 March 2023 amounted to R9.5 billion with statutory payments of R2.4 billion.

Statutory liabilities include R1.1 billion for the Post Office Retirement Fund, R539 million for SARS, R596 million for Medipos medical aid and R108 million for Unemployment Insurance Fund (UIF).

Amounts owed to creditors, rentals, and accruals total R2.7 billion.
Unpaid trade Page 152 of 182 179 vendor and Property rentals continue to negatively impact on SAPO’s ability to recover lost revenue.

The amount of R212 million is owed to former employees for VSP payments that are paid monthly.

12.10.3 Performance Audit All identified fruitless and wasteful expenditure for the group under investigation as at 31 March 2023 amount to an accumulated balance of R153 million of fruitless and wasteful expenditure (2022: R218 million).
All identified irregular expenditure for the group under investigation as at 31 March 2023 amount to an accumulated balance of R156 million of irregular expenditure (2022: R567 million).

Going concern Based on government support we, the directors, believe that the company will have adequate financial resources to continue in operation for the foreseeable future accordingly, the annual financial statements have been prepared on a going concern basis.
SAPO is a State-Owned Company with the mandate to achieve the priorities of Government in providing universal access and affordable postal and financial services to all areas, including rural areas and small towns within the Republic of South Africa.

The Post Office infrastructure and Post Office branch network exists to render these Universal Postal Services that all citizens are entitled to.
Material Uncertainty – Going Concern The conditions noted below resulted in a material uncertainty that might cast significant doubt on SAPO’s ability to continue as a going concern: • On 09 February 2023, a judgement was issued to place SAPO under provisional liquidation which led to a Provisional Liquidator being appointed on 30 March 2023.

• The Company was subsequently placed under business rescue on 10 July 2023 by the North Gauteng Division of the High Court of South Africa.
Mr Anooshkumar Rooplal and Mr Juanito Martin Damons were appointed as joint interim business rescue practitioners in respect of the business rescue proceedings subject to approval by the Registrar of Financial Services and ratification by the majority of SAPO's creditors.
Approval was obtained from the Financial Sector Conduct Authority (FSCA) on 14 July 2023, and the joint BRP's appointment was ratified at a meeting of creditors in terms of Page 153 of 182 180 section 147 of the Companies Act 71 of 2008 on 24 July 2023.

This is a matter that the Committee is preoccupied with for the current financial year.
Mitigation: Management current understanding of SAPO’s status is that there is no intention from the Department/Ministry (as shareholder representative) and the Board to liquidate SAPO or to cease its operations.
The support of the shareholder for SAPO to continue operating is demonstrated by the fact that National Treasury has granted, in the 2022 financial year, MTEF Funding of R1.6 billion allocated to fund the public service mandate for the 2022/24 to 2025/26 financial years, and a further R2.4 billion second adjustment appropriation.

Extensive audit information is covered in Section 11 of this report.
12.10 Postbank Mandate Postbank’s mandate is prescribed by the Postbank Limited Act and extends beyond the scope of traditional banking incumbents.
Postbank’s role in South Africa includes Social Welfare / Social Profitability & Commercial Sustainability: • Financial Inclusivity & Accessibility • Financial security • Building our communities • Educating our society • Affordable products and services • Digitally driven approach • Ability to respond to market changes with agility • Strong partnerships Highlights Page 154 of 182 181 182 "!

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"54 As at 31 March 2023, Postbank had 20 million active accounts (savings, transactional, and investment) for individuals and groups.

Postbank accepted the cession of the SASSA Master Service Agreement from SAPO, effective 1 October 2022, and the bank continues to deliver the mandated social grant disbursement activities including all other related and supporting activities – the parties continue with the process of reviewing the contract to ensure it is mutually beneficial.
More than 7.1 million SASSA social grant beneficiaries receive monthly social grants through Postbank.

A total of R101 billion was disbursed annually in the period under review (R102.8 billion in FY2021/22).

More than 2.4 million SRD grant recipients were paid via Postbank accounts and to whom an annual total of R8.09 billion (R8.96 billion in FY2021/22) was disbursed in the period under review.
Postbank continued implementing its programme of educating customers on financial matters and conducted more than 76 financial literacy campaigns during the 2022/23 financial year.

Postbank further diversified its channel footprint by partnering with spaza groups in rural and township areas.

This was to ensure the convenient accessibility of its services for customers and beneficiaries residing in these areas.
Postbank continued to address the conditions of the variation notice and with the implementation of the IT modernisation in terms of making available the critical requisite IT assets.

Postbank is in the process of replacing SASSA cards as directed by the SARB.

Key Performance Challenges Key challenges for SAPO during the reporting year include: Ministerial directive referred to as the moratorium prevented Postbank from entering long-term contracts and the appointment of executives.
As a result, the implementation of several strategic initiatives during the 2022/23 financial year was delayed.

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"54 The SARB-issued variation notice restricted the bank from onboarding new customers or offering new products to existing ones, exacerbating the situation.

The Bank’s attempts to grow its deposit base and revenue were impeded by these circumstances.

The Bank’s deposit book remained flat increasing by 1.6 per cent to R9.7 billion (31 March 2022: R9.5 billion) because of the bank’s inability to onboard new customers or offer new products to existing ones.
exacerbating the situation.

The Bank’s attempts to grow its deposit base and revenue were impeded by these circumstances.

Postbank’s Return on Equity (RoE) also worsened from 8.7 per cent of the prior year to -136 per cent in the current year because of a significant decline in retained earnings for the current financial year.

The equity decreased from R3.5 billion in 2021/22 to R1.5 billion in 2022/23 due to reported loss.
This resulted in the Bank’s capital adequacy ratio decreasing to 27 per cent (31 March 2022: 55%) below the minimum required by the Prudential Authority.

Postbank must undergo a recapitalization process to minimize the impact of the SAPO loss and execute its 2030 strategy, as well as finalize its Section 16 application to become a state-owned retail bank.

This recapitalization should address SAPO’s current exposure and strengthen the bank’s balance sheet.
The Bank has a stable liquidity position with a significant investment of R2.3 billion in HQLA.

LCR and NSFR ratios exceed the minimum set by the Prudential Authority, indicating the Bank’s strong liquidity position.

12.10.3 Audit Opinion As at 31 March 2023, Postbank remained with a Disclaimer and only 28 per cent of all audit findings were resolved and 17 per cent were overdue.

• 83 per cent of all findings were rated significant, 16 per cent were rated material, and 2 per cent rated minor.
• 51 per cent of total audit findings relate to Information Technology, 21 per cent Finance, and 18 per cent Supply Chain Management • 20 per cent of audit findings were classified as repeat from prior years.

• 86 per cent of repeat findings were identified in both the Finance and Supply Chain Management business unit.

Page 158 of 182 185 As at 31 March 2023, there were 78 open audit findings, 12 per cent were rated material, 86 per cent significant, and 3 per cent minor.
Only 46 per cent of these findings must be closed by December 2023 which is a pre-condition for the banking license application.

There were 24 per cent audit findings which have missed the due date (overdue).

An extensive audit report is covered in preceding Section 11 of this report.

Page 159 of 182 186 13.
Observations 13.1 The Department The Committee noted: • and welcomed the appointment of the DG of the Department which will assist in bringing stability to the Department; • with relief that her tenure as Acting Director-General will greatly assist in terms of business continuity; • congratulate the Minister for having ended the instability to the leadership of the Department; • with appreciation the presentation made by the Department; • • that the Department received an unqualified audit opinion; that the Department achieved 77 per cent of its planned targets and did not achieve 8 of the 35 targets set in the financial year under review; • with appreciation that, unlike the past three reporting years, the 2022/23 financial year is the first year that the Portfolio receive three clean audit opinions in the form of FPB, NEMISA and Sentech; • acknowledge the progress made in a number of areas by some Entities such as at FPB and NEMISA; • further acknowledged progress and effort made by Entities to address the AG’s findings and recommendations; • welcome the PMO set up by the DG and agreed to by the Minister, to monitor the implementation of programmes and establish a consistent system to monitor programmes of the Department and its Entities; • however, note with great concern the instability at the SABC, SAPO and Postbank; • that following the engagements with Postbank SAPO and the SABC on 11 October 2023, the Committee is clearer on the way forward of these Entities and is in full agreement with the AGSA’s recommendations; • that the action plans for Postbank, SAPO and the SABC will greatly assist to turnaround the dire situation of the said Entities; • that while the Oversight Branch of the Department has limited resources, it undertook to engage all Entities every Quarter while prioritising those that are in danger; • however, with serious concern that Department and its Entities had repeat findings on the audit by the AGSA; Page 160 of 182 187 • with concern that irregular expenditure, poor governance and lack
 of accountability in Entities is not being addressed properly; • that irregular expenditure in the Portfolio is close to a billion Rands in the current reporting year and some of irregularity is reoccurring (historical) to up to R9 billion; • that there is a lack of credible reporting information on the part of some Entities; • with serious concern that the AGSA’s findings on Entities have yet to be implemented; • with more concern that the refusal of Entities to comply with the AGSA’s recommendations has resulted in irregular expenditure amongst others; • that the reoccurrence of matters raised by the AGSA is not desirable; • with serious concern as reported by the AGSA that management did not correct all of the misstatements relating to the Digital Telestrial Television (DTT) programme; • with greater concern that there is a culture of setting unrealistic and unachievable targets across the Portfolio; • that failure to meet targets means important programmes of government, where the funds and other resources could have been used more effectively and efficiently, are compromised; • and acknowledge all the interventions by the Minister and the Department; • with disappointment that the implementation of BDM Policy has taken over ten years; • with serious concern that SAPO and Postbank continue to incur losses resulting from fraudulent activities in the grant payment system, because of weaknesses in internal controls within the system; • that actions the management took have proven not to be effective as the same incidents of fraud continue to negatively affect the Entities; • with great concern that management does not comply with applicable laws and regulations to ensure (i) consequence management; (ii) indicators and targets are well defined and measurable; and (iii) that the financial statement is prepared in line with the reporting framework.
• with greater concern that the Department’s management may not be adequately capacitated to deliver on the mandate of the Department; • that instability at management is one of the root causes for high staff turnover, the general financial sustainability of Entities, association and reputational risk are also areas motivating the exodus of staff; • that the impact of poor governance has direct impact to service delivery; Page 161 of 182 188 • with serious concern that the AG indicated that (i) statistics from DTT Migration Dashboard of independent sources indicates a sharp drop in audience share after ASO nationally and this reporting is consistent to that presented by the SABC during the meeting of 11 October 2023; (ii) the slow pace of release of spectrum is impacting negatively of the financial health of Sentech as a result of high costs associated with dual illumination; and (iii) that data costs remain high because of the slow release of spectrum, directly depriving citizens the opportunity to benefit from connectivity and improve their lives; • the indication by the AGSA that investment in skills, systems and capabilities within Entities received qualified and disclaimer findings; • with concern the lack of consequence management in the Department and its Entities, especially the Postbank; • with concern that pursuit of aggressive consequence management processes is not in place and no one is held accountable for wastage of State resources; • with more concern that some of the consequence management is
 frustrated by lack of cooperation and or delays on cases that are before the courts; • • that there were no reporting systems in respect of internal audits within Entities; that there is a culture of mismanagement and maladministration across the Portfolio; • with concern that the late influx of legislation to be tabled before the Committee with expectation to adopt before end of 6th Parliament creates uncertainty and anxiety to the sector on the basis that only one term is left to process complex pieces of legislation while the Committee does not have adequate time to thoroughly process it, especially considering the upcoming national elections; • with serious concern that in some Entities, executive management under investigation, suspected of wrongdoing or deliberately embezzling State funds, opt for resignation as means to evade prosecution and cannot be held accountable thereafter; and • that there is a lack of internal controls to collect and verify data to monitor the implementation of the BDM Policy.
13.2 Sentech The Committee noted: • and commended Sentech for the clean audit opinion; Page 162 of 182 189 • and thanked Mr Mlambo Booi, the CEO for the excellent service to the Entity and the people of South Africa and for leading the organisation to consistent clean audits irrespective of the difficulties; • that the loss incurred by the Entity was beyond its control as it pertained to the depreciation of the Rand to the Dollar in respect of the suppliers of satellites abroad; • that on the issues of the BDM project, Sentech has already switched off transmitters in five Provinces; and • that Sentech is in the process of acquiring 74 per cent of Broadband Infraco and that the transaction has been concluded.
13.3 SABC The Committee noted: • and welcomed the newly appointed Board; • and commend the SABC for implementing 92 per cent of the activities committed to in the Turnaround Strategy, namely the Stabilising Phase and Sustaining Phase; • that only the Growth Phase (8 per cent) was not achieved in the Turnaround Strategy and was a precursor to SABC’s financial sustainability; • that the Going Concern was as a result of (i) audit opinion, (ii) delays in legislative reform; (iii) acquiring compelling content; and (iv) of revenue are among the activities that contributed to the non-achievement of the Growth Phase Turnaround Strategy; • despite a 70 per cent reduction in Audit findings over a five-year period and significant improvement in financial controls, great concern exists that material uncertainty of the SABC’s ability to maintain its Going Concern status exists and is so pervasive that a Disclaimer Opinion was issued; • that while there is a new Board, concern remains on the monumental challenges at the public broadcaster; • that the short-term goals are desirable; • with concern that the SABC’s performance has regressed; • • that the Group CEO has left the position that the process to fill the vacancy of the CEO has been concluded; • with concern that given the dire financial constraints, whether the Entity will be able to fulfil its constitutional mandate; • with concern that buildings and facilities are not maintained at the SABC; Page 163 of 182 190 • with concern that irregular expenditure and consequence management issues have not been addressed and yet the public broadcaster continues to highlight challenges of funding; • with concern the poor governance practices evident in the poor financial reporting SABC; • with concern that despite the advice of the AGSA, the SABC regressed to a disclaimer; • that compelling content drives growth in viewership; • with concern that the SABC is in the exact position it was under before the bailout; • that while outcomes were there, expectations were not met; • with
 more concern that the SABC recorded a R1.13 billion regression on net losses for the year under review as a result of regression in revenue; • with greater concern the recurring irregular expenditure of the public broadcaster; • with anticipation that the position of the CEO will be concluded soon; • with concern the increase evasion rate of TV license payments; • with concern that the unfunded mandate of the SABC cost was R817m in 2022/23 financial year • that despite the dire financial situation, commend the public broadcaster for ensuring that citizens have access to the Cricket World Cup; • with concern that the SABC internal control environment is under threat and susceptible to compromise; • that as a result of the Section 189 process, the SABC was able to reduce the permanent compensation bill from R2.5 billion in 2018 to R 1.5 billion in 2001/2022 and to R1.7 billion in 2022/23 Financial Year, which is still far from the initial target of R700 million; • that some of the investments made by the SABC may not yield immediate results but in the near future; • that most property assets were sold or are in the process to be sold are with the exception of three who are still subject to eviction court cases.
All these assets are not core for the SABC; • further that the SABC expects to report proceeds of over R121 million from the sale of the above-mentioned assets; Page 164 of 182 191 • with concern that the Technology Division, which is tasked with critical CAPEX projects such as IT infrastructure was underfunded by almost 70 per cent, which contributed to non-achievement of targets; • with concern that SABC IT systems such as DIRA, a playout system used for radio broadcasting, is outdated whereas it is critical to securing advertising revenue for the public broadcaster; • that investment in tools of trade for the SABC is critical; • with further concern that the SABC cash reserves decreased by R709 million (60 per cent) as compared to the R300 million recorded in the previous year; and • with concern that the legal Department has spent excess amounts; however noted further that costs have been reduced by ensuring that more matters are handled internally.
13.4 NEMISA The Committee noted: • • that NEMISA was doing well and as a result, received a clean audit; the progress made in a number of areas which helped to improve audit outcomes; • with concern that controls relating to management of performance were lacking; and • that NEMISA has improved its programmes to reach remote areas of South Africa with its projects.
13.5 .ZADNA The Committee noted: • and appreciated that .ZADNA obtained a clean audit; • that the .ZADNA awareness programmes have been successful; and • with concern that technical glitches were reported with CIPC systems on numerous occasions, as a result customers could not register domain names through the CIPC terminals.
13.6 ICASA The Committee noted: • that ICASA received an unqualified audit with findings; • with serious concern that irregular expenditure amounted to R34.2 million; • that there is a Loss Control Committee established to oversee irregular expenditure; Page 165 of 182 192 • that the highlights of ICASA’s performance is that the Regulator conducted public hearings to amend (i) the service charter regulations, (ii) evaluate applications for Community Sound Broadcasting Service licenses, and (iii) publish Radio Frequency Spectrum Assignment Plans for public consultation; • with regret that Council was forced to initially function with a staff complement of three Councillors and an Acting Chairperson, instead of the statutory complement of eight Councillors and a Chairperson; • with great concern that the Regulator will have to deliver on the unfunded mandate of National Elections without adequate financial resources; • that the underfunded mandate will continue to remain a challenge for the Regulator; • however, with concern that ICASA accumulated irregular expenditure-whereas it seeks more funding without practicing austerity measures; • with concern that ICASA recently experienced a strike relating to structural issues, affordability of the Regulator and overworked staff; • that ICASA requires more funding to ensure that the structure is fit for purpose to enable a well-functioning and efficient Regulator, especially in the core business unit; • with further concern that the IT systems at the Regulator are archaic and out of warranty while the budget is inadequate to procure new and up-to-date IT systems, • that the irregular expenditure of just over R31 million by the Authority is related to a legacy rental of a building and will be condoned is at an advanced stage because all avenues have been explored without a solution; and • a disciplinary action as a form of consequence management was undertook, however the senior official resigned before conclusion of process.
13.7 FPB The Committee noted: • and commended the FPB for a clean audit outcome; • that improvement in audit areas identified by the AG has helped improve audit status leading to a clean audit; • • that FPB developed a new organizational structure to deliver on its mandate; that the FPB finalised regulatory instruments to be able to function as an online regulator; Page 166 of 182 193 • that the Enforcement Committee has been appointed to establish rules for its operations to effectively address cases of non-compliance; • that the non-achievement of the one target was attributed to the manual classification process; • and commend the FPB for implementation of the amendment act and to dispel misinformation and disinformation especially towards the national elections; • that the successful prosecution of offenders is a testament of the direct translation of law to benefit citizens; and • that the challenges the Board experienced related to inadequate financial resources, the decline in submitted materials for classification and the overall digital transformation of the Entity.
13.8 USAASA/USAF The Committee noted: • and applauded the clean audit attained by USAASA and the 100 per cent achievement of targets.
• that dissolution of USAASA is still the policy position emanating from the ICT White Paper of 2016 as gazetted by the Department; • further that the dissolution of USAASA as an Entity requires a legislative process and for that reason, it is important that the Entity remains functional until that time; • that the transformation of USAF into a Digital Development Fund was undertook following a Study in partnership with National Treasury; • that USAASA’s disestablishment and repurposing of USAAF will be given a longer period in order to accommodate legislative amendments and this includes filling of vacancies and extending the period for the respective Boards; • with concern that at USAASA, six senior officials have been suspended and the Committee is not aware of any consequences management; • that USAASA needs to be transparent as to the suspended individuals involved and provide reasons for the suspensions; • that the Department indicated that the disestablishment of USAASA comes from a study by the National Treasury; Page 167 of 182 194 • as emphasized by the Department that its policy position is still that USAASA will be dissolved and that the concern is what will happen to USAF as they have both are creatures of statute; • as indicated by Deputy Minister, a further extension of the process of disestablishment of USAASA is required; • welcome the improvement of USAF opinion from disclaimer, albeit with limitations noted on inventory and resulting in a qualified audit outcome; • with concern the deficiencies of the internal audit of USAF; and • that there have been some improvements with resolving inventory imbalances.
13.9 SITA The Committee noted: • with concern that SITA achieved a qualified audit opinion with findings; • with disappointment that SITA achieved only 8 of the 38 planned targets; • with concern that a 44 percent performance decline in performance was noted for the financial year in review; • with concern that even though SITA was instructed to submit a Performance Improvement Plan, which they did, this has not yet translated in an improved performance; • • that despite not achieving targets, the Agency is still in a good financial position; and that corrective measures as indicated by the Auditor General have been addressed.
13.10 SAPO The Committee noted: • with serious concern that SAPO received a disclaimer with findings; • with regret that while the bailout was meant to assist SAPO to stay afloat, the Entity still received a disclaimer; • with great concern the discouraging AGSA audit report on SAPO; • with concern that consequence management as indicated by the AG has not been implemented at the Entity; • that SAPO managed to reduce its expenses by R72 million; • with concern that SAPO financial state was still dire; Page 168 of 182 195 • with greater concern the poor reporting of financial statements; • with serious concern that the poor governance at SAPO is evident when interrogating the poor financial reporting particularly; • that poor governance at the Entity has a direct impact on the service delivery to the citizens of South Africa; • That an agreement was reached with government to guarantee the resuscitation of SAPO as a form of compensation for its detachment from Postbank and for its long-term investment in infrastructure of which Postbank continues to utilise; • with relief that additional funding, in addition to the confirmed R2.4 billion, will be made available in support of the business rescue process and in order to effect the turnaround; • welcome the feedback that as a precondition to the rescue, a structure consisting of the Department, SAPO, BRP’s and National Treasury was set up to monitor the turnaround of SAPO; • commend the improvement in the reduction of expenses to R73 million which is an indication
 of some progress; • that based on the interaction with the Committee, there’s indication of where the monies were spent; • however, with greater concern about the poor reporting of financial statements and ongoing irregularities at the Entity; • with serious concern that SAPO continues to incur losses resulting from fraudulent activities in the grant payment system, because of weaknesses in internal controls within the systems; • that SAPO’s performance is a serious concern especially the indication by the AG that the Entity incurred a loss of over R1 billion rand; • that National Treasury has provisionally granted SAPO with a R2.4 billion rescue fund; • with concern that there appears to not be sufficient support from the Department towards SAPO.
• that the concern from the Department was the adequate funding of SAPO, which is detrimental to the implementation the strategy of ‘Post Office of Tomorrow;’ • that contrary to the view of the Committee, the facilitation and fast-tracking of the SAPO Amendment Bill is one of the many ways that the Department supports SAPO, including the facilitation of discussions with National Treasury; Page 169 of 182 196 • that the SAPO Amendment Bill currently before Parliament will greatly alleviate the challenges faced by SAPO as it proposes among other insertions, the expansion of the mandate and creating a relevant SAPO of tomorrow; • that SAPO currently has a moratorium due to its dire financial position; • with concern that the AGSA is gravely concerned about the overall management of SAPO, which includes issues relating to the SASSA transactions not supported, incorrect disclosures, weak control environments, inadequate security systems and processes amongst others; • and however, welcome the interventions by government thus far to rescue the organisation; • that having played an instrumental role, it is in the interest of the Committee to conduct oversight and monitor how the R2.4 billion is spent at SAPO, also taking into consideration that the preconditions were clear that the cash injection was to be used for both servicing critical debts as well as stimulate the turnaround of the Entity in order to be sustainable; • with serious concern that rate at which post office branches are closing down; • with disappointment that often citizens have to travel long distances to access post office services in order to receive grants, but become stranded because SASSA systems are often offline rendering citizens without means to return home; and • that inability of SAPO to meet its targets has a direct impact on the poorest of the poor of our society as demonstrated with in the above noting on SASSA grant disbursement challenges.
13.11 The Postbank The Committee noted: • concern that the Board was expelled but that no monies have been returned; • that the Minister had indicated that an Administrator has been appointed for the entity; • concern that the Postbank have had a failure to launch and that it was still reliant on SAPO.
with greater concern over the instability of Postbank and how it will be able to deliver on its mandate in such a state; • with concern the timing of resignations of executives; • with concern that the assets of the Entity have been reduced; Page 170 of 182 197 • with further concern that the moratorium and the Variation Notice contributed to targets not being achieved by Postbank; • that the Variation Notice means that Postbank cannot acquire new customers because it is unable to service existing clients; that the Variation Notice also related to IT capabilities of the Entity; that the Variation Notice is a prerequisite for the banking licence and discussions are • • ongoing; • that this might be related to the association of the bank to SAPO, which has accumulated a bad reputation with the public and sector at large; • with concern that only five people were dismissed for criminal charges for an amount of R90 million; • with concern that the only investigation was related to the five individuals that have been dismissed, which is minimal considering the level of mismanagement identified by the AGSA; • with more concern that a vendor was identified by KPMG as not having the appropriate capabilities to deliver for Postbank; • with great concern the three consecutive disclaimers for Postbank; • with serious concern that the targets set for the Entity were unrealistic and were not implementable in the year under review resulting in non-achievement of targets; • that even though the Committee had endorsed these targets on the basis that they would foster growth for Postbank, they were not achieved as a result of the Variation Notice instruction imposed by National Treasury; • that the Postbank’s inability to carry out its mandate impacts negatively to the most vulnerable citizens of South Africa who are dependent on the grant facility offered by government; • with serious concern of the state of affairs at Postbank and its ability to exist; • that to date, only six per cent of clients are still dependant on the
 SAPO, a further testament to its struggle to remain relevant; • with serious concern about the lack of fit-for-purpose systems for Postbank; • with serious concern that delivery targets were not met which included the non-payment of SASSA grant beneficiaries; Page 171 of 182 198 • with serious concern that the Postbank continues to incur losses resulting from fraudulent activities in the grant payment system, because of weaknesses in internal controls within the system; • with concern the poor governance at Postbank that is evident in the poor financial reporting; • with concern that Postbank had irregular expenditure amounting to R165 million and wasteful expenditure amounted to R611 000 during the reporting year; • with further concern that since 2021, R89.5 million fraud has occurred, however only 5 employees were dismissed as a form of consequence management; • with concern the lack of consequence management at Postbank; • that an agreement was reached with government to guarantee the resuscitation of SAPO as a form of compensation for its detachment from Postbank and for its long-term investment in infrastructure of which Postbank continues to utilise; and • that the Postbank’s inability to carry out its mandate impacts negatively to the most vulnerable citizens of South Africa who are dependent on the grant facility offered by government.
14.
Recommendations: 14.1 Department The Committee resolved that the Minister should: • ensure that the Department deploys systems to ensure that there are no repeat findings on all of the Audits of the Portfolio for the next years financial reporting; • enhance the oversight function of the Department in order to ensure all priority projects of government remain on track; • Identify areas that need bolstering at the Department and its Entities and report back to the Committee before the end of 2023/24 financial year; • endeavor to equip the Portfolio with necessary resources and expertise to help plan, assist, empower and where applicable, intervene to guarantee service delivery objectives of government are not compromised; Page 172 of 182 199 • ensure that the Department conducts a comprehensive review of the current performance measures, with a specific focus on aligning them with the direct impact the Department has on the BDM project outcomes and the SA-connect project; • ensure that the Department reconciles the progress performance for the BDM and SA- Connect projects’ actual outcomes and report to the Committee when required to by the Committee; • ensure the Committee receives regular status updates on both projects before the end of 2023/24 financial year; • ensure that the Department improves internal controls, determine proper accountability processes and enhance oversight over the BDM project in order to ensure reliable reporting; • ensure that the Department addresses non-compliance to the PFMA in relation to consequence management and misleading reporting on financial statements that contradicts all reporting frameworks; • ensure that the Accounting Officer outlines performance measures explicitly that reflect the Department's true influence on both projects’ progress and success; • ensure that the Department appears before the Committee to present on business tools used by the Department to monitor and evaluate the implementation of the BDM and SA-Connect Policies of government, as well as for the
 Cost-to-Communicate projects no later than the 4th Quarter of the 2023/2024 financial year; • ensure the Department also presents Project Management Tools used to monitor implementation of the programmes above including the implementation of the Spectrum Policy; • ensure that the Department also presents a project plan on the connectivity of the remaining government facilities in the next 36 months as committed; • that the Department and related Entities present to the Committee no later than the 4th Quarter of the 2023/2024 financial year, a comprehensive audit of the above-mentioned projects so as to measure in real-time the impact of Departmental programmes to ordinary citizens; • should ensure that the Accounting Officer enhances the performance measuring processes in order to improve internal control deficiencies and guarantee submission of credible financial statements of the Department as required by section 40(1)(b) of the PFMA; Page 173 of 182 200 • therefore, appear before the Committee together with the Department to present a skills audit of the Department no later than the 4th Quarter of the 2023/2024 financial year; • ensure that the Accounting Officer complies with section 38(1)(h)(iii) of the PFMA by ensuring that investigations into irregular expenditure are performed and disciplinary steps are taken against officials who incurred irregular expenditure; • ensure that the Department reports quarterly to the Committee, beginning the 4th term of the 2023/2024 financial year, on progress made to comply with the above-mentioned sections of the PFMA; • ensure that the Accounting Officer ensures consistency in developing annual targets with conviction for both the Department and its Entities in order to impactfully improve on the outcomes of the Department; • candidly address the concerns of the prolonged timelines and success of the projects under the political leadership, namely the BDM and the SA-connect project; • instruct the Department to monitor ALL
 role player and keep them accountable; • with the assistance of the AGSA and Government Technical Advisory Committee (GTAC), and as originally directed by the High Court in 2022, undertake a forensic audit of the entire value chain of the digital migration project since its inception, and this should include everything from the communications campaign, manufacturing, storage and distribution, installation and installer contracting, number of STBs activated and percentage of active STB’s, post-installation support, and evaluation of the track and trace system.
The audit should measure the impact on SOEs such as the USAF, SABC and Sentech.

In addition to the focus on the subsidised STBs, the audit should include the rollout of STBs through the retail for households that don’t qualify for the subsidised STBs including the availability of STBs for purchase.

Regarding the households that rely on Free-To-Air Television, the audit should also investigate the number of households that remain without STBs including those that remain without signal.
The audit should include an assessment of the extent to which the legislative requirements relating to Universal Service and Access have been achieved: that is the definition of under serviced areas by ICASA, and the determination of needy people by the Minister in terms of s88 the Electronic Communications Act; • with the assistance of the AGSA conduct an audit of the reasons for failure for implementing SA-connect to realize vision of 100 per cent broadband connectivity of the Republic by 2030; Page 174 of 182 201 • ensure the successful implementation of the transition from analogue to digital broadcasting because it is pivotal to realising the NDP’s vision of an inclusive and dynamic information society by 2030; • at all times maintain the posture to uphold the values enshrined in the Constitution and the Bill of Rights by ensuring that all citizens have equal access to the benefits of the digital and knowledge economies; • ensure that the Department implement daily and monthly controls in respect of consequence management processes; • ensure that all areas of under-achievement as indicated by the AGSA are addressed expediently; • ensure that the Department outlines clear action plans and present to the Committee how the Department will adhere to the AGSA’s recommendations; • ensure that Entities prioritise the resolve of repeat findings as indicated by the AGSA; • ensure that where applicable, personal accountability for non-compliance to AGSA recommendations is penalised; • ensure that Entities are in
 religiously held accountable for irregular expenditure and that the 30-day rule payment of service providers is adhered to; • ensure that officials who resign due to maladministration are held accountable and handed to the judicial institutions of the State; • ensure the religious implementation of consequence management across the Portfolio; • ensure that processes are in place to urgently address concerns of irregular expenditure and poor governance by Entities; • ensure that the action plans submitted by all Entities; • ensure that sound consequence management is implemented; • ensure that a balance is considered in respect of the action taken by the Department which must be carried out within the confines of the law; • ensure that management improves internal controls and determines proper accountability in respect of BDM; • ensure that remedial actions are in place to ensure that all challenges facing the Portfolio are addressed; and • ensure that progress reports are provided to the Committee well in advance of the time to address relevant issues.
Page 175 of 182 202 The Committee will: • continue to ensure that it is more aggressive in respect of addressing deficiencies at internal audit units of Entities; and • undertake rigorous and frequent oversight visits to the Department as well as to conduct proper interaction with all Entities, especially those identified by the AGSA as under- performing.
14.2 Sentech The Committee resolved that the Minister should: • ensure that the Entity has processes in place to comply with all AGSA’s findings; • ensure Sentech provides a report of the implications of ASO to the financial health of the Entity; • ensure the Entity finds alternatives to mitigate financial losses incurred even when beyond Sentech’s control; and • guarantee business continuity after the departure of the CEO.
14.3 FPB The Committee resolved that the Minister should: • make provisions to digitise the laborious manual classification processes; • ensure that the Entity has processes in place to maintain clean audit and ensure consistent compliance with the AGSA; and • ensure that processes are in place to address the challenges of inadequate financial resources, ensure the Board mitigates for the declining materials submitted for classification and the overall digital transformation of the Entity.
14.4 .ZADNA The Committee resolved that the Minister should: • ensure that the Entity maintains its systems to ensure that technical glitches reported with CIPC systems are resolved; • ensure the Entity increases its revenue for better service delivery in the domain name space; • ensure that the Entity sustains the clean audit going forward; • appear before the Committee to present the impact of the awareness programmes; and Page 176 of 182 203 • ensure that technical challenges do not compromised customers when registering domain names.
14.5 NEMISA The Committee resolved that the Minister should: • ensure that the Department puts processes in place to address the AGS’'s recommendations of the Entity; • ensure that the Department put improve controls relating to to management of performance information; • ensure that there is adequate and proper record-keeping; • ensure that all key vacancies are filled; • ensure that monthly reporting and verification of audit performance information takes place; • ensure that the audit action plans are implemented; and • that NEMISA continue to improve on reaching remote areas of the country with its projects.
14.6 USAASA/USAF The Committee resolved that the Minister should: • strive to maintain the cleaned audit by the Entity; • ensure that USAASA maintain the 100 per cent of target achievement; • guarantee the Committee that USAASA will remain functional; • ensure that all entities to emulate USAASA’s performance; • Appear before the Committee before end of 6th Parliament, to bring into confidence, Parliament about the feasibility study for the transformation of USAF into a Digital Development Fund; • ensure that the USAF has processes in place to comply with the AGSA’s findings; • ensure processes are in place to improve internal controls; • ensure that fruitless and wasteful expenditure is diminished; and • ensure that issues of consequence management are addressed expediently.
14.7 ICASA The Committee resolved that the Minister should: Page 177 of 182 204 • that the technology refresher plan must be formulated in upgrading the absolute IT infrastructure which has impacted the performance of the Regulator; and • that those implicated in corrupt practices must be held accountable including those who have left the Regulator; 14.8 SABC The Committee resolved that the Minister should: • ensure that processes are in place to address irregular expenditure; • ensure that proper action plans are in place to address all issues raised by the AGSA; • ensure that consequence management is implemented; • ensure that proper action plans are in place to address all issues raised by the AGSA; • ensure that the buildings and facilities at SABC are properly maintained; • ensure that all vacancies are filled; • ensure that irregular expenditure is addressed; • ensure that key vacancies are filled including the position of the Group CEO; • ensure that management addresses compliance and consequence management issues; • ensure that employees who resigned and was responsible for mismanagement are prosecuted; • ensure that the Department puts systems in place to ensure compliance to the advice of AGSA; • ensure that the SABC improves the regressed disclaimer opinion; • ensure that the Board turns around the fortunes of the SABC; • that SABC endeavours to prepare well in advance to participate in bidding for events and sports of national interest; • that because the governing structure is in place, the Board
 should be able to turnaround the SABC for the benefit of the citizens of the Republic; • ensure the Board appear before the Committee to present on compelling content acquisition strategy before the end of the 2023/2024 Financial Year; • report to the Committee on status the Board found at the public broadcaster before being appointed; • must improve on project planning in order to fully achieve set targets for the Department and its Entities; Page 178 of 182 205 • ensure that the Department monitors the Board’s Action Plans in order to minimise challenges at the public broadcaster; that people are held accountable for misuse of State funds; that SABC must provide an investment audit report to the Committee before the end of • • the Financial Year 2023/24; and • ensure that SABC operations continue irrespective if there is a new Board.
14.9 SITA • ensure that consequence management processes are applied for the transgressions and mismanagement; • ensure that the entity has processes in place to comply with the AGSA’s findings.
• The Committee noted that the recommendations by AGSA, which suggested a refresher course for all management across all entities, should be considered; • The Committee will do extensive oversight over entities and ensure consequence management prevails; • The Committee will ensure that reports are provided ahead of time in order for the committee to deal with the issue adequately; and • The Committee will request the AGSA to submit an explanatory document detailing the rights the Committee has over entities and how to hold entities to account.
14.10 SAPO The Committee resolved that the Minister should: • ensure that proper action plans are in place to address all issues raised by the AGSA; • ensure that processes are in place to hold board members liable for the mismanagement of SAPO; • ensure that the business rescue practitioner is called to account to the Committee; and • ensure that the Department provides sufficient support as it relates to funding of SAPO; • ensure that the matters of oversight on SAPO as it relates to its business rescue and the appropriation of R2,4 billion is spent properly; • ensure the sustainability of SAPO; • ensure that there is compensation for SAPO as it relates to how it invested in Postbank and that these figures be made clear and given attention by the National Treasury; • ensure that the Department addresses poor financial reporting by SAPO; Page 179 of 182 206 • that Business Rescue Practitioners (BRP) should appear before the Committee post finalisation of their report, to present an update into the work they undertook at SAPO before the end of the 2022/23 financial year; • thereafter, appear before the Committee during the Third and Fourth Quarters of the 2023/2024 Financial Year and regularly until completion of the rescue process; • that the Department also quantifies the investment and present to the Committee before the end of the 2023/2024 Financial Year.
• ensure that there needs to be compensation for SAPO as it relates to how it invested in Postbank and that these figures be made clear and given attention by the National Treasury; and • that National Treasury should be afforded the platform to make the final decision on the matter.
14.11 Postbank The Committee resolved that the Minister should: • ensure that proper action plans are in place to address all issues raised by the AGSA; • ensure that processes are in place to hold board members liable for the mismanagement of SAPO; • ensure that the business rescue practitioner is called to account to the Committee; and • ensure that the Department provides sufficient support as it relates to funding of SAPO; • ensure that the matters of oversight on SAPO as it relates to its business rescue and the appropriation of R2,4 billion is spent properly; • ensures the sustainability of SAPO; • ensure that there needs to be compensation for SAPO as it relates to how it invested in Postbank and that these figures be made clear and given attention by the National Treasury; • addresses the poor financial reporting at SAPO; • that Business Rescue Practitioners (BRP) should appear before the Committee post finalisation of their report, BRP appear before the Committee to present an update into the work they undertook at SAPO; • thereafter, appear before the Committee during the Third and Fourth Quarters of the 2023/2024 Financial Year and regularly until completion of the rescue process; Page 180 of 182 207 • that the Department also quantifies the investment and present to the Committee before the end of the 2023/2024 Financial Year; • ensure for investment in fit-for-purpose systems at Postbank; • ensure that the Postbank improve on technology to ensure clean audits; • and that National Treasury should be afforded the platform to make the final decision on the matter; • appear before the Committee to present salient aspects of the KPMG report; • • that timelines must be provided to the Committee for the IT modernisation of Postbank; that the results of the KPMG forensic report needs to be made available to the Committee; • ensure that there is compensation for SAPO as it relates to how it invested in Postbank; and • that these figures be made clear and given attention by the National Treasury.
15.

General Recommendations The Committee notes that following the engagements with Postbank, SAPO and the SABC on 11 October 2023, the Committee is clearer and in agreement with AGSA recommendations; and that the action plans for Postbank, SAPO and the SABC will greatly assist to turnaround the dire situation of the said Entities.
That the Minister must: • ensure that the action plans are implemented in full; • ensure that mismanagement is vigorously scrutinised by way of implementation of consequence management, especially at Postbank, where the responses to AGSA’s instructions were not forth coming; • ensure that the Department and its Entities are responsive to the AGSA’s highlight of Material Irregularities; and • Address the instability of SABC, SAPO and Postbank.
Furthermore: Page 181 of 182 208 • The Committee is committed to ensuring the sustainability, efficiency and effectiveness of the three troubled Entities; • The Committee will monitor more closely the Oversight Branch of the Department; • The Department and its Entities must appear before the Committee to present on forensic investigations, budget spending on legal matters and an audit report of all other matters currently in our legal system within the portfolio.
• ICASA should present to the Committee on how it protects the interests of the Constitution by regulating Sports of National Interest; • That the Department and its Entities provide assurance to the Committee that set targets will be met; • With great concern that there is a culture of setting unrealistic targets across the portfolio • That the Department should guard against deliberate misleading of Parliament by setting unrealistic targets; • With concern that failure to meet targets means important programmes of government where the funds and other resources could have been used more effectively and efficiently are compromised; • That the Department its Entities desist from planning for failure as it is unacceptable; • That all set targets should ultimately benefit ordinary citizens; • The Committee noted that the recommendations made by the Auditor General.
• The Committee will endeavour to improve and ensure that there is a close working relationship with the Office of the Auditor General in order to adequately assess entities and strengthen the oversight work of the Committee; • that in order to fully realise potential of the organisational structure; • all vacant executive positions across Entities must be filled urgently; • that mismanagement should be vigorously scrutinised by way of implementation of consequence management, especially at Postbank where the responses to AG’s instructions were not forthcoming; and • The Committee will call some Entities back to make further updates.
Report to be considered.

Page 182 of 182 209 3.
Report of the Portfolio Committee on Communications and Digital Technologies on 2022/23 Third and Fourth Quarter Performance and Expenditure Report of the Department of Communications and Digital Technologies, dated 24 October 2023 The Portfolio Committee on Communications and Digital Technologies (the Committee), having considered the Third and Fourth Quarter Performance and Expenditure Report of the Department of Communications and Digital Technologies (DCDT) and its Entities, here referred to as “the Department,” reports as follows: 1.
Introduction The Committee considered the 2022/23 Third and Fourth Quarter Performance Report (01 April 2022 – 30 June 2022, and 01 July 20222 - 30 September 20222, respectively) of the Department and its Entities in a virtual meeting on 5 September 2023.
This report gives an overview of the presentation made by the Department to the Committee, focusing mainly on its achievements and outputs in respect of the performance indicators, and targets set for the 2022/23 Third and Fourth Quarters, including related financial performance.

The report also provides the Committee’s key deliberations and recommendations in relation to the performance presentations by the Department and its Entities.

2.
2.

Organisational Environment The Department is mandated to create a vibrant ICT sector that ensures that all South Africans have access to robust, reliable, affordable, and secure ICT services to advance socio-economic development goals, support the African agenda, and contribute to building a better world.

This contributes to the development of an inclusive information society in which information and ICT tools are key drivers of accelerated and sustained shared economic growth and societal development.
The Department is comprised of various public entities, namely South African Post Office (SAPO), SENTECH, Universal Service Access Agency of South Africa (USAASA), Universal Service Access Fund (USAF), Broadband Infraco (BBI), National Electronic and Media Institute of South Africa (NEMISA), State Information Technology Agency (SITA),.ZA Domain Name Authority (ZADNA), the South African Broadcasting Corporation (SABC), the 1 210 Film and Publication Board (FPB) and the Independent Communications Authority of South Africa (ICASA).
3.

Third and Fourth Quarter Performance Overview Table 1 below depicts summarised information on the performance of all Departmental Programmes regarding the status of planned targets for the Third and Fourth Quarter reporting period.

This information translates into the overall organisational performance.
Programme Total APP Achieved Not % Achieved Targets Achieved Administration ICT International Relations and Affairs ICT Policy Development and Research ICT Enterprise and Public Entity Oversight ICT Infrastructure Development and Support ICT Information Society and Capacity Development Total 3 5 9 5 7 8 2 5 5 4 5 5 1 0 4 1 2 3 67% 100% 56% 80% 71% 63% 37 26 11 70% Administration ICT International Relations and Affairs ICT Policy Development and Research ICT Enterprise and Public Entity Oversight ICT Infrastructure Development and Support ICT Information Society and Capacity 4 2 9 6 7 8 3 2 6 5 7 5 Development Total 36 28 1 0 3 1 0 3 8 75% 100% 67% 83% 100% 63% 78% The Department committed to achieving 36 (thirty-six) Annual Performance Plan (APP) quarterly targets by the end of Quarter 4 (01 January 2023 - 31 March 2023) of the 2022/23 financial year.
This is the total number of Quarter 4 APP targets of all six (6) Programmes of the DCDT.

Overall, the Department has Achieved 27 (78%) of the APP targets, and 9 (22%) were Not Achieved.

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International Programmes to support the digital economy initiatives The engagements with relevant stakeholders were conducted to agree on identified international programmes.

A report on the implementation of the Identified international programmes status report was developed.

Digital Economy Framework Draft Digital Economy Framework and Strategy was developed and submitted to the Minister for approval.
The Department did not Achieve the following planned Q3 & 4 quarterly targets as reflected below: Digital transformation strategy (Workflow management system) There was a delay in the appointment of a service provider due to proposals thatwere above the budgeted amount.

Audio-Visual White Paper The Draft Audio-Visual White Paper document was not submitted to the cabinet as planned due to delays in internal processing and receiving final inputs.
Policy Direction on the discontinuation of analogue TV sets External dependencies to conclude the publishing of the final policy directives (the DTIC, ICASA) was a challenge.

Draft Regulatory Reform Policy Change of direction, on the proposed digital regulator resulting in the delay.

Monitoring and evaluation of the Performance Management System (PMS) for ICASA Councillors Delays in getting the approved PMS by the National Assembly.
Study on Cost to Communicate Though the study has been finalised, the recommendations were not implemented as planned.

Digital Economy Masterplan The Implementation of the DEM was put on hold until the finalization of the Digital Economy Strategy Framework.

4 213 Green Paper on Digital Government Act Draft Green Paper was developed on the Digital Government Act but it was not revised for finalisation as planned.

4.
4.

Third and Fourth Quarter Budget Overview and Expenditure Analysis The Department spent R2.1 billion or 73.2 per cent of the total budget.

Spending at the end of the Third Quarter is R213.9 million or 9.1 per cent lower than projected.

Programme 1: Administration spent R161.9 million against a projection of R175.5 million.
Spending is R13.5 million or 7.7 per cent lower than the projected as the process of developing the organisational structure is in progress and due to delays in appointing consultants to conduct an IT internal audit for the financial year, and on appointing consultants to conduct job evaluations on the organisational structure review process.

Programme 2: ICT International Relations and Affairs spent R55.7 million against a projection of R55.4 million.
Spending is R400 000 higher than projected due to higher spending on compensation of employees due to costs for an employee who was seconded as a telecommunications attaché to the South African permanent mission to the United Nations in Geneva.

Programme 3: ICT Policy, Development and Research spent R25.1 million against a projection of R29.9 million.

Spending is R4.8 million or 16 per cent lower than projected due to the cancellation of the legislative development project and lower travelling costs.
Programme 4: ICT Enterprise and Public Entity Oversight spent R1.6 billion against a projection of R1.6 billion.

Spending is R1.3 million or 0.1 per cent lower than projected due to lower‐than‐expected spending on advertising, consultants, as well as travel and subsistence.

This is due to public nominations for the Boards of NEMISA and Sentech that had not taken place.

The.

ZADNA and NEMISA adverts will be placed between January and February 2023.
Programme 5: ICT Infrastructure Development and Support spent R288 million against a projected R476.8 million.

Spending is R188.8 million or 39.6 per cent lower than projected due to no spending on the broadband fund project, which is part of the Presidential Employment Stimulus programmes.

The department is completing due diligence and capacitating Broadband Infraco (BBI) to manage the fund.
There is also slow spending on consultants due to a new directive from the Ministry that the cybersecurity hub should be relocated to SITA 5 214 from the Council for Scientific and Industrial Research (CSIR) since the expiry of the Memorandum of Agreement (MoA).

The cybersecurity unit is engaging with the legal division to develop a revised MoA between DCDT and SITA.

A memo is currently being routed to request approvals to formally engage with SITA and the CSIR around the proposed relocation.
The payment for the hub will depend on the finalization of all these processes.

Programme 6: ICT Information Society and Capacity Development spent R46.5 million against a projection of R52.4 million.

Spending is R5.8 million or 11.2 per cent lower than projected due to the suspension of the Digital Economy masterplan as the unit will focus on the establishment of the Artificial Intelligence Institute as per the recommendations of the Presidential Commission on Fourth Industrial Revolution (PC4IR) report.
Virements During the 3rd Quarter, as part of the Adjustment budget process, the National Treasury recommended for Parliamentary approval a shift of R6 million to support the establishment of artificial intelligence hubs A further R3.4 million was approved by the accounting authority of the Department to cover shortfall in goods and services under Programme One.

Covid‐19 spending Spending for Covid‐19 is R341 000 up to the end of the 3rd Quarter.

4.1 Issues for the committee to note.


SA Connect project: The department has completed Phase 1 of the rollout of broadband connectivity and services to 971 government sites.

Maintenance of services is being undertaken, although there have been challenges due to power outages and other technical challenges.
Broadband Access Fund: An amount of R200 million was allocated in the adjustment budget to the Broadband Access Fund, which will enable 13 million households to access broadband internet at an affordable rate and competitive speed as part of the presidential employment initiative.

The department still undertaking due diligence and capacitating BBI to manage the fund.5.

Committee Observations and Recommendations.


Broadcasting Digital Migration (BDM) Project – The National Treasury granted approval of R2.8 billion of surplus funds by USAF in order to ensure the finalisation of this project.

6 215 For the Fourth Quarter, the Department of Communications and Digital Technologies has an adjusted budget appropriation of R5.3 billion for the 2022/23 Financial Year.

The Department spent R5.22 billion or 98 per cent of the total budget.
At the end of the Fourth Quarter, spending is R106.4 million or 2.0 per cent lower than the total allocation.

Programme 1: Administration: This programme spent R225.8 million against an available budget of R279.4 million.

Preliminary underspending of R53.6 million or 19.2 per cent is the moratorium on the filling of positions until the new organisational structure is finalised.
The preliminary underspending on goods and services is mainly on consultants: business and advisory services and can be attributed to the non‐appointment of consultants for conducting the IT internal audit, the job evaluation on the organisational structure review process, and for IT system management for the financial year.
Underspending on legal fees was due to outstanding invoices from the State Attorney for legal advice, while not advertising posts due to the moratorium resulted in underspending on advertising.

The unspent funds will be moved to cover overspending in households for leave gratuity costs made to employees who have left the department.

Preliminary underspending on payment for capital assets is due to the delays experienced with SITA in the invoicing for the Local Area Network upgrade project.
Lastly, overspending on payment for financial assets is due to the damages and losses incurred, which were not budgeted for.

Programme 2: ICT International Relations and Affairs: This programme spent R64.6 million, against an available budget of R64 million.
Preliminary overspending of R553 000 or 0.9 per cent is on the compensation of employees due to costs for an employee who was seconded as the telecommunications attaché to the South African permanent mission at the United Nations in Geneva, and for which costs were not sufficiently provided for.

Funds will be moved from underspending areas within the department to augment the overspending.

Programme 3: ICT Policy, Development and Research spent R34 million against an available budget of R45.3 million.
Preliminary underspending of R11.3 million or 25 per cent is mainly due to the cancellation of the legislative development project, and delays in the creative industries project, while underspending on travel and subsistence was due to meetings 7 216 and webinars being held online, resulting in fewer travelling costs.

There is however an overspending under households due to leave gratuities made to employees who have left the employment of the department.
Programme 4: ICT Enterprise and Public Entity Oversight spent R4.3 billion against an available budget of R4.3 billion.

Preliminary underspending of R4 million or 0.1 per cent is mostly due to public nominations for the Board of NEMISA that did not take place, the appointment of the Boards for relevant public entities and the evaluation of the South African Post Office (SAPO) Board will take place in the new financial year due to recent changes in the Ministry.
Furthermore, preliminary underspending on travel and subsistence was due to meetings with the Portfolio Committee on Communications and Parliament being done virtually.

The savings realized are being redirected to payment for financial assets to make payment for the historic SABC loan.

Programme 5: ICT Infrastructure Development and Support spent R533.3 million against an available budget of R544.5 million.
Preliminary underspending of R11.1 million or 2 per cent is due to the payments for data lines that were not made as an ICT security service was not included.

Payments will be made when the service is successfully delivered.

Furthermore, certain ICT security devices and services, such as a firewall, were returned to the supplier as they did not fulfil the order specifications, which had an impact on the underspending.

A new firewall will be procured in the new financial year.
Programme 6: ICT Information Society and Capacity Development spent R63.1 million against an available budget of R90.1 million.

Preliminary underspending of R27 million or 30 per cent is on the compensation of employees due to unfilled posts within the programme.
Furthermore, there were delays in the procurement processes which led to the digital skills programme and the district digital enablement project not being executed, and the funds budgeted for these projects were redirected to other priorities of the Department.

Covid‐19 spending.

Spending for COVID-19 is R341 thousand up to the end of the 4th Quarter.

The Department has a total budget of R302.9 million for the compensation of employees in the 2022/23 financial year.
At the end of March 2023, the Department had spent R264.6 million.

8 217 Preliminary underspending by R48.9 million is due to the critical vacancies not yet filled, which includes the position of the Director‐General.

The Department is still in the process of finalising its new organisational structure, and there is currently a moratorium on the filling of posts.

At the end of March 2023, the Department reported 58 vacant positions mostly under Programme 1: Administration.

4.2.
4.2.

Issues for the Committee to note: Recapitalisation of SA Post Office: The Second Adjustments Appropriation Act for the 2022/23 financial year was tabled by the Minister of Finance in March 2023, which included an allocation of R2.4 billion for the SAPO.

Due to this additional allocation, the total appropriation of the Department was therefore increased to R5.328 billion.

The Act allows the department until 31 May 2023 to spend this allocation and have it recorded in the 2022/23 financial year.
Broadband Access Fund: Following the undertaking of due diligence and capacitating Broadband Infraco to manage the fund, the department has transferred an amount of R200 million allocated in the adjustment budget to the Broadband Access Fund.

This will enable 13 million households to access broadband internet at an affordable rate and competitive speed as part of the presidential employment initiative.
The South African Post Office: Financial update as of 31 March 2023 Revenue of R2 6 billion for the year is 46 under budget due to failure to implement revenue initiatives, increased customer migration to digital alternatives, and the weak financial position of SAPO impacting its ability to pay suppliers.

Expenses of R5 1 billion are 24 under budget However, due to SAPO’s high fixed cost structure, expenses continue to exceed revenue Staff costs of R3 6 billion for the year contribute 70 of the total cost.
The poor revenue performance has resulted in SAPO forecasting a net loss for the year of R2.1 billion despite SAPO’s USO mandate being funded (USO subsidy of R452 million).

SAPO’s financial position continues to be severely constrained resulting in SAPO being commercially insolvent and illiquid.
SAPO creditors amount to R5 billion as of 31 March 2023 with statutory obligations amounting to R2.4 billion Included in the statutory obligations are 9 218 R1.1 billion due to Post Office Retirement Fund, R539 million to SARS, R596 million to Medipos and R108 million to UIF.

No government guarantees are currently in place for SAPO and SAPO has been recapitalised with R2 4 billion prior to the entity receiving provisional liquidation order.
The DCDT has developed a strategy to deal with the provisional liquidation which has been submitted to Cabinet for consideration.

The plan is intended to form part of the response to the Court Judgement and will be tabled in court on 01 June 2023.

5.
Observations Having considered the 2022/23 Third and Fourth Quarter Performance and Expenditure Reports of the Department and its Entities, the Committee noted: (i) and commended the performance of the Department; (ii) with concern that the Department did not achieve 8 of its programmes, in particular the appointment of service providers; (iii) that DCDT was in the process of analysing the report on the business rescue process for SAPO; (iv) with concern that there have been many delays in the implementation of the Postbank legislation; (v) with concern that there are high private security costs in excess of R70 million at Postbank; (vi) with concern that sundry costs are high at Postbank; (vii) with concern that SAPO has reported a loss of R1.1 billion; (viii) with concern that load shedding has become a problem for the SABC; (ix) with concern that there has been a loss of audience ratings and viewership of SABC programmes; (x) that there has been difficulty in replicating the Metro FM model; (xi) that the SABC needs to utilise the bailout properly and that they seem to be worse off now than when they had a bailout; (xii) with further concern that matters at the SABC do not show signs of improvement other than another bailout; (xiii) that the matter with respect to the Rugby World Cup rights for the SABC has not been resolved; 10 219 (xiv) that the producers of the soap opera Sevende Laan would continue its production at the SABC; (xv) that the SABC has kept its producers informed of the financial matters, especially with respect to the top 5 productions; (xvi) that the radio stations at SABC are in full swing and operating; (xvii) that the OTT was taken over from Telkom by SABC; (xviii) with concern that the ICASA performance management system has been delayed by Parliament and that this is not agreed to; (xix) that there was a need for the Postbank to be responsible to Departments and government departments to bank with it; (xx) and commended Sentech for doing well and that the team is quite capable and should
 maintain the standard; (xxi) with concern that SAPO is closing post offices across the country, which has a severe impact on people; (xxii) with concern that the post office staff have paid in medical aid and yet are not paid out; (xxiii) and questioned the tagging process in respect of the SAPO Amendment Bill; (xxiv) that the IT Structure was important to secure revenue for the Postbank; (xxv) that security costs include that the SASSA contract was ceded over from Postbank and is therefore responsible for the payment of grants; (xxvi) that there is a commitment to get management back on board at SITA; (xxvii) that SAPO was placed under business rescue and a creditors meeting has taken place and the creditors confirmed their status as business rescue practitioners; (xxviii) that medical aid liability of SAPO and all historical debts of SAPO have been ring- fenced, the business rescue practitioners have been in contact with all practitioners; (xxix) that the branches of SAPO have been forced to close by landlords who have locked premises as SAPO has not paid; (xxx) that Creditors will ensure that SAPO debts are settled; (xxxi) that the Committee was informed that the CEO of Sentech has not resigned, he is finishing off his second term; and (xxxii) Resolved to deal with issues of Postbank and to determine if the business rescue plan of SAPO will deal with the issues at hand.
11 220 6.

Recommendations The Committee recommends that the Minister should ensure that: (i) ensure that processes are in place to address the 8 targets not achieved by the Department; and (ii) ensure that the Minister of DCDT deals with his counterparts to ensure that the SABC is sustained.
SAPO (i) SAPO gives the Committee an update on the criminal cases under investigation and investigated; (ii) ensure that SAPO address the closure of post offices; and (iii) ensure that pensions and UIF of post office staff are accounted for.

Postbank (i) ensure that processes are in place for Postbank to ensure banking by government departments.
SABC (i) ensure that the Committee has further engagement with SABC; (ii) ensure that processes are in place to address the issue of load shedding; and (iii) and ensure that the loss of its membership was addressed.

ICASA (i) ensure that its draft regulations are completed.

The Committee endeavours to ensure that the Department and Entities consistently appear before the Committee.

Report to be considered.

12 221 4.


Report of the Portfolio Committee on Communications and Digital Technologies on the 2022/23 Third and Fourth Quarter Performance and Expenditure Reports of Government Communication and Information System (GCIS) and the Media Development and Diversity Agency (MDDA), dated 24 October 2023.
The Portfolio Committee on Communications and Digital Technologies (the Committee), having considered the 2022/23 Third and Fourth Quarter Performance and Expenditure Reports of Government Communication and Information System (GCIS), hereafter referred to as “the Department”, and the Media Development and Diversity Agency (MDDA), hereafter referred to as “the Agency,” reports as follows: 1.
Introduction The Committee considered the 2022/23 Third and Fourth Quarter Actual Performance and Expenditure Reports (September 2023) of the Department and the Agency in a virtual meeting.

This report gives an overview of the presentation made by the Department, which mainly focuses on its achievements, and output in respect of the performance indicators and targets set for the 2022/23 financial year and related financial performance.
The report also provides the Committee’s key deliberations and recommendations in relation to the performance presentation by the Department.

2.

Third Quarter Performance The Department had thirty-five (35) targets due for the Third Quarter of the 2022/23 financial year.

Twenty-seven (27) targets were achieved and eight (8) targets were not achieved.

This constitutes 77 per cent of overall performance.

The Department had thirty (30) targets due for the Fourth Quarter of the 2022/23 financial year.
Twenty-eight (28) targets were achieved and two (2) targets were not achieved.

This constitutes 93 per cent overall performance.

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The rental amount was higher than projected due to inflationary adjustments.
Spending on goods and services was also higher than projected on audit fees.

The programme also incurred higher than projected spending on compensation of employees due to cost-of-living adjustment and payment of notch increments.

Programme 2: Content Processing and Dissemination This programme reported an actual expenditure of R304.9 million or 74.4 per cent of its 2022/23 available budget allocation of R409.7 million as at the end of the third quarter of 2022/23.
The reported expenditure translates to lower than projected spending of R1.2 million or 0.4 per cent of the available budget mainly under goods and services, due to lower than projected spending on printing, publication, courier, and delivery of the Vukuzenzele newspaper.
Whilst noting the overall lower-than-projected spending, the programme also incurred higher-than-projected spending under machinery and equipment due to laptops, tablets, and computer equipment that were procured in the 2021/22 financial year, and delivered during the current financial year.

Programme 3: Intergovernmental Coordination and Stakeholder Management This programme spent R99.5 million or 76.2 per cent of its 2022/23 available budget allocation of R130.6 million as of the end of December 2022.
The expenditure was R1.3 million or 1.3 per cent higher than the programme’s projected expenditure.

The higher-than-projected spending was reported mainly under goods and services due to higher than projected spending on travel and subsistence for the Presidential Imbizos.

The programme also incurred higher than projected spending on compensation of employees due to cost-of-living adjustment and payment of notch increments.
Covid-19 spending The GCIS spent R2.8 million on COVID-19-related expenditures mainly for awareness campaigns, office disinfection and, COVID equipment.

The Government Communication and Information System (GCIS) spent R723.9 million or 99.2 per cent of its 2022/23 available budget allocation of R729.7 million as at the end of March 2023.

The spending was R5.8 million or 0.8 per cent lower than the department’s allocated budget for the period under review.
The underspending was incurred mainly under compensation of employees which reported a preliminary underspending of R4.7 million or 1.6 per cent due to vacant funded posts.

The GCIS also reported an underspending of R946 000 5 226 or 0.5 per cent on goods and services due to lower than anticipated management/handling fees of courier and delivery of Vuk’uzenzele newspaper.
5.2 Quarter 4 Expenditure per Programme Programme 1: Administration This programme reported an actual expenditure of R188.5 million or 98.8 per cent of the programme’s 2022/23 available budget of R190.8 million as at the end of the fourth quarter of 2022/23 resulting in an underspending of R2.3 million or 1.2 per cent mainly to vacant funded posts and delays in the procurement of uniform for general workers.
Programme 2: Content Processing and Dissemination This programme reported an actual expenditure of R405.5 million or 99.3 per cent of its 2022/23 available budget allocation of R408.5 million as at the end of the fourth quarter of 2022/23.

The reported expenditure resulted in an underspending of R2.9 million or 0.7 per cent of the available budget mainly under compensation of employees due to vacant funded posts.
Goods and services also reported an underspending due to lower than anticipated printing, publication, courier, and delivery costs of the Vuk’uzenzele newspaper.

Programme 3: Intergovernmental Coordination and Stakeholder Management This programme spent R129.9 million or 99.6 per cent of its 2022/23 available budget allocation of R130.4 million as of the end of March 2023, resulting in an underspending of R509 000 or 0.4 per cent reported mainly under compensation of employees due to vacant funded posts.
Covid‐19 spending.

The GCIS spent R2.8 million on COVID-19-related expenditure under programme two and three mainly for awareness campaigns, office disinfection and, COVID equipment.

6.
Observations and recommendations 6.1 Observations In relation to the Department the Committee noted; (i) and commended the performance of the Department; (ii) that GCIS has information resource centres in every office and every region; (iii) that GCIS has increased the Twitter following; 6 227 (iv) that the rise in crime has necessitated the GCIS to develop a communication strategy; (v) that load-shedding has affected its outcome; (vi) that MDDA did not report to the Committee as it was currently audited which has resulted in changes to information and will therefore report at a later date; 6.2 Recommendations In relation to the Department, the Committee recommends that the Minister should: (i) (ii) ensure that all vacancies are filled at the Department; and Implore GCIS to continue to supply publications to Parliamentarians.
Report to be Considered 7 228 5.

Report of the Portfolio Committee on Communications and Digital Technologies on its public hearings on the South African Post Office SOC Ltd Amendment Bill [B11-2023] dated 24 October 2023 The Portfolio Committee on Communications and Digital Technologies, having conducted public hearings on the South African Post Office SOC Ltd Amendment Bill [B11 – 2023], reports as follows: 229 1.
Introduction Section 59 (1) (a) of the Constitution of the Republic of South Africa obligates the National Assembly (herein referred to as the Assembly) to facilitate public involvement in legislative and other processes of the Assembly and its Committees, as well as to conduct its business and meetings in public.

In line with this mandate, the Committee must decide how it will deliberate its activities to fulfil the constitutional mandate.
Public hearings are part of Parliament’s public participation process in which members of the public are given an opportunity to give inputs on a Bill, in this case, The South African Post Office SOC Ltd Amendment Bill [B11-2023].

Members of the public may raise issues, comment, critique/challenge and make recommendations.
The Committee thereafter drafts a report per visited province which will be used during the formal stages of the Bill when it deliberates on all the inputs received both from national and provincial public hearings.

The South African Post Office SOC Ltd Amendment Bill will seek to expand the mandate of the South African Post Office (SAPO) and repurpose its infrastructure to provide diversified and expanded services.
One of the most prominent services offered by SAPO, which the Bill aims to assist in fortifying, is the payment of social grants by the entity.
One of the primary reasons for the amendment will provide SAPO with the impetus to continuously adjust its business model in line with the technological and industry developments in the provision of postal services and other services – including the roll-out of service points and the use of third-party infrastructure and other related services subject to the approval of the Minister in charge.

2.
2.

Background The South African Post Office SOC Ltd Amendment Bill (B11-2023) was introduced in Parliament on 11 May 2023 and subsequently referred to the Committee for consideration.

The Department of Communications and Digital Technologies (DCDT) appeared before the Committee on 13 June 2023 to it on the Bill and the areas which will need to be amended.
To give effect to Parliament’s constitutional mandate of facilitating public involvement, the Committee commenced with an advert that was published in the national and regional newspapers from 18 July 2023 to 14 August 2023, calling for written public submissions on 230 the South African Post Office SOC Ltd Amendment Bill [B23 – 2023].

There was one response from the public written submission.

3.

Amending Legislation “Every new law in effect amends an existing law “.
In this case, the South African Post Office SOC LTD Amendment Bill [B11-2023] seeks to amend the South African Post Office SOC Ltd Act, 2011, so as to provide for the revised duties and expand on the mandate of the SAPO as provided for in this Act and the Postal Services Act, 1998.

4.

Purpose of Amending Legislation: The amendments are intended to: - Change the wording of a law.

- Change the scope of the law.

- Repeal provisions.

- Add new provisions.

5.


Background and the Rationale for the Amendment SAPO is a creature of statute and is governed by the South African Post Office SOC LTD Act No.

22 of 2011 and Postal Services Act No.

124 of 1998 in terms of its corporate governance, structural arrangements, duties, powers and functions.
The current legislative framework provides for SAPO’s mandate as the provider of traditional mail services, which has almost become redundant due to technological advancement and developments and how people communicate and do business in the digital age.
In terms of the legislative framework, SAPO has the exclusivity to provide reserved postal services under the Postal Services Act of 1998, which are: delivery of all letters, postcards, printed matter, small parcels and other postal articles weighing up to 1kg; issuing and sale of postage stamps; and the provision of roadside collection and address boxes.
As part of its Universal Service Obligation (USO), legislative framework and licence, SAPO is required to provide such services to every citizen in the country without discrimination and at uniform fees.

The fees are therefore regulated by the Independent Communications Authority of South Africa (ICASA) and are publicly reported.

231 These are considered social services that SAPO is required to provide, regardless of whether they derive financial benefit or not.
SAPO is faced with dire financial and operational challenges, which often undermine the strategic role that it can play in society and the economy and the fulfilment of the USO mandate.

With the current legislated mandate and continued financial and other operational challenges, it is evident that SAPO’s sustainability continues to be under extreme threat, which will, in turn, impact the economy and result in job losses.
The amendments to the legislation are part of the intervention to review the legislative framework governing the entity, to ensure that it is aligned with current developments and to position and empower SAPO to digitally transform and expand on its business offerings, taking advantage of opportunities created by technological developments and create more revenue- generating streams.
The SAPO SOC Ltd Amendment Bill is informed by the following documents including: • The National Integrated ICT Policy White Paper of 2016; • The Presidential Commission (PC) on Fourth Industrial Revolution (4IR) Report; and • SAPO’s Post Office of Tomorrow Strategy The National Integrated ICT Policy White Paper of 2016 provided for the diversification of service offerings by SAPO and position itself to serve as a strategic partner to the Government in the delivery of services.
The Post Office of Tomorrow Strategy further outlines the modernisation of its product portfolio, which will include e-services, technology modernisation, developing a smart Post Office, re-designing the logistics operations and creating a Post Office that can serve as a strategic partner to the Government in the delivery of services and businesses, including Small Medium and Macro Enterprises (SMMEs).
The interventions are also aligned with international developments where many postal operators face similar challenges and are being repurposed to provide diverse and value-added services.

The Universal Postal Union (UPU), which is a multilateral organisation responsible for postal services under the United Nations, has identified opportunities and developed new models for 232 member country operators to diversify and adapt to remain relevant and sustainable.
South Africa is a good-standing member of the UPU.

In this regard, there is an urgent need to amend the SAPO SOC LTD Act to revise the current mandate and repurpose SAPO’s infrastructure to deliver diversified services by leveraging its widespread network infrastructure and creating more revenue-generating streams.

6.
Main Objectives of the Amendment Bill The objectives of the Bill are to mainly amend the South African Post Office SOC Ltd Act, 2011, so as to provide for the following: • Revised duties and expand on the mandate of the South African Post Office as provided for in the SAPO Act and the Postal Services Act, 1998; • Repurposing the Post Office infrastructure to provide diversified and expanded services and exploit the infrastructure capacity to extract value and forge partnerships with other stakeholders; • Leveraging its widespread network infrastructure and serving as a facilitator for the provision of Government services; • Revision of governance structure and address problematic provisions identified during the implementation of the SAPO Act; • SAPO to serve as a logistics and e-commerce provider as well as a logistics partner for other e-commerce and logistics players, including SMMEs and informal traders; • SAPO serves as a digital hub for businesses and communities and serves as a Designated Authentication Authority that also fulfils its role as a National Trust Centre in the age of digital identity and services; and • Establishment, appointment and functions of the Stamp Advisory Committee.
The Bill would also deal with other governance provisions of the Act that were identified as problematic during implementation to ensure accountability by Executives.

233 7.

Committee Members Political Party Committee Member African National Congress Democratic Alliance Economic Freedom Fighters Inkatha Freedom Party United Democratic Movement *indicate that a member is an alternate 8.

Purpose of the Report 1.

Mr. B. Maneli, MP (Chairperson) 2.

Mr. L Molala, MP 3.

Mr H. T Gumbu, MP 4.


Mr. R Mdakane, MP 5.

Ms. N. Kubheka, MP 6.

Ms. A. Mthembu, MP 7.

Ms T Xego, MP* 8.

Ms. N. Mazzone, MP 9.

Ms. T. Bodlani, MP 10.

Mr. S. Tambo, MP 11.

Mr. V. Pambo, MP* 12.

Ms. Z. Majozi, MP 13.

Mr N. Kwankwa, MP* The report provides a consolidation of progress undertaken regarding the processing of the South African Post Office SOC Ltd Amendment Bill.

It precedes by highlighting the main issues raised during the public participation process i.e.
the public hearings, and cites key issues from the oral submissions that were in four the Provinces: Western Cape (Paarl), Eastern Cape (Idutywa), Limpopo (Thohoyandou) and Gauteng (Tembisa).

The report also provides a summary of key issues raised, clause-by-clause analysis and recommendations made regarding the written submissions by the public on Bill.

The report will be made up of three (3) categories that the Committee undertook to seek public comments on the Bill.
These were a) oral submissions during the public hearings; b) written comments during the public hearings; and c) written comments from the advertisement of the Bill.

9.

Provincial Public Hearings The Committee conducted provincial public hearings from 9 September 2023 to 20 September 2023 covering four (4) provinces.
The decision of the Committee to conduct public hearings (both nationally and provincially) was premised on the general principle of the Constitution which asserts South Africa as a constitutional democracy that upholds representative and 234 participatory democracy.
Specifically, sections 59(1)(a) and section 72 (1)(a) of the Constitution provide that the Assembly and the National Council of Provinces (NCOP) must facilitate public involvement in the legislative and other processes of the Assembly and its committees.

The Committee’s public participation process was also guided by the Parliament Public Participation Model, which provides a legislative framework that fortifies public participation in Parliament.
The Committee conducted public hearings in four (4) provinces visiting one (1) District Municipality as indicated in Table 1 below: Table 1: Dates and Venues of the Public Hearings Provinces DATE MUNICIPALITY & VENUE 1.

Western Cape 9 September 2023 • Cape Winelands District Municipality- Drankenstein Local Municipality - Paarl (Simondium Hall) 2.

Eastern Cape 15 September 2023 • Amathole District Municipality- Mbhashe Local Municipality – Idutywa (King Hintsa TVET College) 3.
Limpopo 19 September 2023 • Vhembe District Municipality-Thulamela Local 4.
Gauteng 20 September 2023 • Municipality – Thohoyandou (Thohoyandou Town Hal)l Gauteng - City of Ekurhuleni- Tembisa (Sam Hlalele Community Hall) 9.1 SAPO SOC Ltd Amendment Bill [B11 -2023] Public Hearing – 9 September 2023 Venue for the hearings: Cape Winelands District Municipality- Drankenstein Local Municipality - Paarl (Simondium Hall) Start Time – 10:00 9.1.1 Opening and Welcoming The Chairperson opened the meeting with the National Anthem, followed by a moment of silence for meditation and prayer.
Mr Calvin Croutz, a local Councilor welcomed the Committee to the Drankenstein Local Municipality.

9.1.2 Committee Delegation Members: Mr BM Maneli (Chairperson), Mr E Molala (ANC), Ms N Kubheka (ANC), Mr T Gumbu (ANC) Mr R Mdakane (ANC), Ms. T Bodlani (DA).
235 Committee Secretariat: Mr. Thembinkosi Ngoma (Committee Secretary), Mr. Siyabamkela Mthonjeni (Committee Secretary), Mr. Mbombo Maleka (Content Advisor), Dr Jacob Medupe (Content Advisor), Mr J van der Westhuizen (Committee Assistant), Mr. Thurston Arendse (Committee Assistant), and Mr. Justice Molafo (Principal Communications Officer).
The Committee was assisted by various business units of Parliament, which amongst others included Public Education Office (responsible for public awareness and mobilization) Protection Services (responsible for access/egress control), Public Relations (responsible for branding), Language Services (responsible for interpretation), and Audio-Visual Services (responsible for broadcasting services).
9.1.3 Purpose of the Visit The Chairperson outlined the objectives of the SAPO Soc Ltd Amendment Bill, what the Committee sought to achieve in holding the public hearings, and the process the Committee was going to follow in interacting with the community.

He indicated that those who would like to make written submissions should approach the Secretariat.
He also emphasized that the Committee had come to listen to the community and would not be responding in the hearings but would take into consideration all submissions made when deliberating on the Bill.

9.1.4 Summary of the Oral Submissions There were a total of 121 members of the public who were in attendance with the oldest being 83 years old and the youngest being 17 years.

There was a fair representation of youth in attendance at the hearings.
The majority of speakers were in support of the Bill with the understanding that the process would lead to a Post Office branch being established in the community and services brought closer to the people as they in the rural communities would benefit immensely from services such as the registration of motor vehicles and drivers licences.

A smaller number of speakers understood the intention of the Bill and appreciated the Committee for choosing their community to conduct the public hearings.
The speakers also supported clause 3 of the Bill and indicated that the expansion of services provided by the SAPO would assist rural communities in a great deal, especially money transfer services.

Some of the speakers indicated that the equality and the human dignity of the people needed to be considered during the processing and implementation of the Bill.

A number of speakers raised service delivery issues concerning housing subsidies and delays in grant payments.
Complaints were also raised regarding some of the local Post Office branches which were closed.

The community relied on these branches for a number of services and their closure forced the 236 community to travel long distances to far branches to receive their disability and social grants.
The people living with disabilities in the community raised this as a serious concern as they often suffer a lot due to the transport costs and requested the Committee to ensure that SAPO reopened some of these branches.

Some of the speakers requested that the Bill should be taken to much broader communities to ensure people were aware of its objectives and benefits.
The reopening of the closed Post Office branches in communities would also assist students who completed their higher education as this would present them with an opportunity to partake in internship programmes.

A number of speakers requested the Committee to inform the Executive (Government) to ensure that in every housing subsidy project, 20% was given to people living with disabilities as they could not run when there were fires in the informal settlements.
Members of the community also requested that if there was an incident of fire in informal settlements, where a family lost three (3) or more members, that government should assist with the burials as most of the time people living with disabilities are the most affected.

Some speakers requested that the stamp advisory board be all-inclusive and cater for representation from people in rural areas and previously disadvantaged communities.
9.1.5 Community Members' Inputs – Public Submissions Participants were given an opportunity to comment on the Bill.

There were a number of submissions, hereby attached to this report as Annexure 1 below.

9.1.6 Public Hearings - Written Submissions.

There was a total of nine (9) written submissions with the majority of those supporting the Bill.
However, some of the issues raised during the written submissions were as follows: • Speakers submitted that the lack of housing and Post Offices nearby was a major problem.

• The recent challenges around the payment of the SAASSA grants were also raised and the Government should investigate what caused the problem.

• Lack of housing and some family feuds, when it came to title deeds, were also raised with the Committee.

• Lack of functional SAPO infrastructure was also a major concern.
• Some of the Speakers raised concerns about the lack of reliable electricity and housing as major issues.

237 • One of the major concerns was the elderly who struggle to get access to the postal services due to lack of the Post Office outlets in their communities.

• One other submission indicated that they had been without electricity as a community for almost six (6) years including the lack of functional sanitation facilities.
They indicated that a functional Post Office was very important due to affordable services when comparable to other commercial postal services.

• One of the speakers highlighted that he supported the Bill and would like to see the Post Office functional as it is accessible and convenient for most of the poor communities.

• One of the submissions supported the Bill as it would be unfortunate for the Post Office to close down and for people to lose jobs whilst there were families to feed and take care of.
9.1.7 Closing Remarks The Chairperson thanked the members of the Committee, the support staff and all members of the public who attended the hearings.

He welcomed all submissions made by the community.

The comments indicated that the Committee was well received, and the Public Education Office had done its work as required.

In closing, the Chairperson informed the community that any matters that were raised which do not fall within the ambit of the Committee would be directed to the relevant Committees.
The Chairperson provided a brief background on the Postbank Bill, which would provide a solution to some of the issues that were raised in the hearing.

9.2 SAPO SOC Ltd Amendment Bill [B11 -2023] Public Hearing – 15 September 2023 Venue for the hearings: King Hintsa FET College Start Time – 11:10 9.2.1 Opening and Welcoming The Chairperson opened the meeting with the National Anthem followed by a moment of silence for meditation and prayer.
Mr. Ayabonga Tatyana, a newly elected Councillor welcomed the Committee to the Mbhashe Local Municipality.
9.2.2 Committee Delegation 238 Members: Mr. BM Maneli (Chairperson), Mr. E Molala (ANC), Ms. N Kubheka (ANC), Mr. T Gumbu (ANC) Mr. R Mdakane (ANC), Ms. T Bodlani (DA) Committee Secretariat: Mr. Thembinkosi Ngoma (Committee Secretary), Mr. Siyabamkela Mthonjeni (Committee Secretary), Mr. Mbombo Maleka (Content Advisor), Dr Jacob Medupe (Content Advisor), Mr. J van der Westhuizen (Committee Assistant), Mr. Thurston Arendse (Committee Assistant), and Mr. Justice Molafo (Principal Communications Officer).
The Committee was assisted by various business units of Parliament, which amongst others included Public Education Office (responsible for public awareness and mobilization) Protection Services (responsible for access/egress control), Public Relations (responsible for branding), Language Services (responsible for interpretation), and Audio-Visual Services (responsible for broadcasting services).
9.2.3 Purpose of the Visit The Chairperson outlined the objectives of the SAPO SOC Ltd Amendment Bill, what the Committee sought to achieve in holding the public hearings, and the process the Committee was going to follow in interacting with the community.

He indicated that those who would like to make written submissions should approach the Secretariat.
Lastly, he emphasized that the Committee had come to listen to the community and would not be responding in the hearings but would take into consideration all submissions made when deliberating on the Bill.

9.2.4 Summary of the Oral Submissions There was a total of 152 members of the community in attendance at the public hearings.

There were about 101 young people who attended the hearings.

All oral submissions made supported the amendments to the Bill.
A number of speakers thanked the Committee for involving their community in the law-making process.

The speakers understood the importance of the Bill, however, they also focused on service delivery issues affecting their community such as lack of access to quality water, and road infrastructure.

Some of the Speakers expressed the importance of capacitating the staff complement as well as security personnel around the Post Office outlets.
They proposed that there be queue marshals in each Post Office to assist with the identification of persons living with disabilities, pregnant women and pensioners so that they do not stand in long queues.

Members of the community called for the employment of youth in order to make sure that Post Offices became fully functional once the Bill was passed.

The empowerment of the SMMEs was also raised by numerous speakers.
The challenges 239 around the payment of the South Africa Social Service Agency (SASSA) grants were also raised and the elderly had not been paid after receiving notes which referred them, to the SASSA offices on the status of their grants.

Some of the speakers were also of the view that the Bill would ensure that additional Automated Teller Machines (ATMs) were going to be deployed to assist in the distribution and payment of grants by the Postbank.
The communities wanted to know whether the withdrawal bank charges from Postbank would be the same as the commercial banks.

Speakers raised cybersecurity concerns around the possibility of SAPO deploying the latest technologies across its networks.

Some of the speakers expressed their concerns about the deteriorating Post Office infrastructure which had not been maintained for a long time.
The community also urged the Committee to ensure that all the closed Post Office outlets would be reopened as this would ensure that the elderly people would not travel long distances to the nearest outlets.

9.2.5 Community Members' Inputs – Public Submissions The list of oral submissions made during the public hearings is attached here as Annexure 2 below.

9.2.6 Public Hearings - Written Submissions.

There were no written submissions for the Eastern Cape leg of the public hearings.
9.2.7 Closing Remarks The Chairperson thanked the members of the Committee, the support staff and all members of the public who attended the hearings.

He welcomed all submissions made by the community.

The comments indicated that the Committee was well received, and the Public Education Office had done its work as required.

The Chairperson informed the community that any matters that were raised that did not fall within the ambit of the Committee would be directed to the relevant Committees.
The Chairperson provided a brief background on the Postbank Act, which would provide a solution to some of the issues that were raised in the hearing.

9.3 SAPO SOC Ltd Amendment Bill [B11 -2023] Public Hearing – 19 September 2023 Venue for the hearings: Vhembe District Municipality – Thulamela Local Municipality- Thohoyandou Town Hall Start time: 10:00 240 9.3.1 Opening Remarks The Chairperson opened the meeting with the National Anthem followed by a moment of silence for meditation and prayer.
9.3.2 Opening and Welcoming Ms Tsakani Nkondo, the Speaker of Vhembe District Municipality welcomed the Committee to Limpopo Province.
9.3.3 Committee Delegation Members: Mr. BM Maneli (Chairperson), Mr. E Molala (ANC), Ms. N Kubheka (ANC), Ms. A Mthembu (ANC), Mr. R Mdakane (ANC), Ms. T Bodlani (DA), and Mr. T Gumbu (ANC) Committee Secretariat: Mr. Thembinkosi Ngoma (Committee Secretary), Mr. Siyabamkela Mthonjeni (Committee Secretary), Mr. Mbombo Maleka (Content Advisor), Dr Jacob Medupe (Content Advisor), Mr J van der Westhuizen (Committee Assistant), Mr. Thurston Arendse (Committee Assistant), and Mr. Justice Molafo (Principal Communications Officer).
The Committee was assisted by various business units of Parliament, which amongst others included Public Education Office (responsible for public awareness and mobilization) Protection Services (responsible for access/egress control), Public Relations (responsible for branding), Language Services (responsible for interpretation), and Audio-Visual Services (responsible for broadcasting services).
9.3.4 Purpose of the Visit The Chairperson outlined the objectives of the SAPO Soc Ltd Amendment Bill, what the Committee sought to achieve in holding the public hearings, and the process the Committee was going to follow in interacting with the community.

He indicated that those who would like to make written submissions should approach the Secretariat.
Lastly, the Chairperson emphasised that the Committee had come to listen to the community and would not be responding in the hearings but would take into consideration all submissions made when deliberating on the Bill.

9.3.5 Summary of the Oral Submissions The majority of the speakers were in support of the Bill and thanked the Committee for having chosen Vhembe District Municipality for the hearings.
Many speakers welcomed the 241 digitalisation of SAPO as technology would improve the standard of services provided.

Only one (i) speaker opposed the Bill.

However, his understanding was that the Bill sought to establish a Postbank and the Chairperson provided clarity at the end of the hearing.

Some of the speakers were concerned that SAPO was renting office space even though there were vacant government buildings and proposed that SAPO should make use of such infrastructure.
Furthermore, speakers called for the prioritisation of employment of youth in Post Offices.

Speakers highlighted corruption and nepotism as some of the serious concerns which hinder the development and sustainability of the Post Office.

Lastly, the community expressed concern that some branches of the Post Office were closed without consulting the affected communities and they requested that such branches be reopened.
9.3.6 Community Members' Inputs – Public Submissions Participants were given an opportunity to comment on the Bill.

There were a number of submissions and the detailed inputs are attached as Annexure 3.

9.3.7 Public Hearings - Written Submissions.

There was a total of 36 written submissions with the majority of those supporting the Bill, with one partially supporting and two undeclared submissions.
However, some of the issues raised during the written submissions were the following: • One of the submissions indicated that a new SAPO should be used to create employment in order to reduce the unemployment rate.

• Part of the submission registered complaints of lack of working sanitations and that the lotto machine had not been functional at their closest branches and had to use the Post Office in Polokwane.
It encouraged SAPO to move speedily to the latest and available technology to improve its services.

• One other submission indicated that SAPO should resuscitate courier services to transport some of the government consignments such as medication to hospitals and many other related services which require to be couriered.

SAPO should be used as WIFI hotspots for access to the internet by youth and learners to search for job opportunities and research work for the learners.
• Some of the submissions advocated for skills transfer to the young people from those who have had a number of years of experience working for SAPO.

Most of the Post 242 Office employees lacked customer service expertise.

Lack of shelter and enough chairs for the elderly remained a major challenge for most of the SAPO outlets.

• The issue of security at the SAPO outlets was also a major concern, particularly during the withdrawal of grants by the elderly people.
The submissions called for strengthened security including the building of perimeter fencing at some of the outlets.

Some of the SAPO outlets have experienced a shortage of staff and this resulted in the deterioration of services.

• The Post Office should be fully capacitated to be a one-stop shop where a number of services such as application of ID, driver's license the motor vehicle license renewals were able to be offered as services.
• One of the submissions indicated that the absence of the Post Office at Malamulela had proven to be a problem as the elderly would need to travel to Vuwani and Saselamani for postal services and payments of grants.

Transport to these distant SAPO outlets was quite expensive.

• The technical glitches around the payment of grants were raised as one of the major challenges facing the elderly.
• The migration of the payments of grants from pay points has affected a lot of SMMEs as there used to be food vendors who used to survive by selling food during the payments of grants.

The government should assist with some interventions for the small businesses which have been affected.

• Some of the submissions indicated that they supported the Bill as it was the only means of providing affordable postal services to the poor.
• There were also a number of submissions which supported the Bill indicating that they would like to see the government coming up with decisive measures to support the SMMEs.

• Some of the submissions have indicated that the Post Offices like the one in Thohoyandou had been without electricity for more than 3 months and this had affected services provided by these outlets.
• Most of the submissions indicated the importance of rolling out the latest technologies such as e-commerce for the improvement of services and the relevance of the Post Office.

• Some of the submissions that supported the Bill indicated that there was also a need for roads, job creation, affordable electricity and a library within the communities.
243 • One of the submissions that supported the Bill strongly indicated that one of the biggest challenges within SAPO is corruption and that the Government would need to put measures in place to combat such.

• One of the challenges raised was the urgent need for the rollout of the latest technologies which would also ensure that there was a creation of new jobs for the young people within SAPO.
• One of the submissions which supported the Bill indicated that SAPO would need to employ competent workers as the services have deteriorated.

• Some submissions indicated that SAPO would need to be conducive to providing services to people with disabilities.

• One of the submissions which supported the Bill emphasized the need for the retraining of the staff members to be able to use the latest technologies and this would assist in better services by SAPO.
• Some of the submissions indicated that a number of factories within these districts had been closed and lots of jobs were lost in the process.

Most of the government infrastructure was non-functional and as a result service delivery had been affected greatly in the area.

9.3.8 Closing Remarks The Chairperson thanked the members of the Committee, the support staff and all members of the public who attended the hearings.

He welcomed all submissions made by the community.


The comments indicated that the Committee was well received, and the Public Education Office had done its work as required.

In closing, the Chairperson informed the community that any matters that were raised that do not fall within the ambit of the Committee will be directed to the relevant Committees.

The Chairperson provided a brief background on the Postbank Bill, which would provide a solution to some of the issues that were raised in the hearing.
9.4 SAPO SOC Ltd Amendment Bill [B11 -2023] Public Hearing – 20 September 2023 Venue for the hearings: Sam Hlalele Community Centre in Tembisa, City of Ekurhuleni, Gauteng Province Start time: 10:00 9.4.1 Opening Remarks 244 The Chairperson opened the meeting with the National Anthem followed by a moment of silence for meditation and prayer.
9.4.2 Committee Delegation Members: Mr. BM Maneli (Chairperson), Mr. E Molala (ANC), Ms. N Kubheka (ANC), Ms. A Mthembu (ANC), Mr. R Mdakane (ANC), Ms. T Bodlani (DA), and Mr. T Gumbu (ANC) Committee Secretariat: Mr. Thembinkosi Ngoma (Committee Secretary), Mr. Siyabamkela Mthonjeni (Committee Secretary), Mr. Mbombo Maleka (Content Advisor), Dr Jacob Medupe (Content Advisor), Mr J van der Westhuizen (Committee Assistant), Mr. Thurston Arendse (Committee Assistant), and Mr. Justice Molafo (Principal Communications Officer).
The Committee was assisted by various business units of Parliament, which amongst others included Public Education Office (responsible for public awareness and mobilization) Protection Services (responsible for access/egress control), Public Relations (responsible for branding), Language Services (responsible for interpretation), and Audio-Visual Services (responsible for broadcasting services).
9.4.3 Purpose of the Visit The Chairperson outlined the objectives of the SAPO Soc Ltd Amendment Bill, what the Committee sought to achieve in holding the public hearings, and the process the Committee was going to follow in interacting with the community.

He indicated that those who would like to make written submissions should approach the Secretariat.
Lastly, the Chairperson emphasised that the Committee had come to listen to the community and would not be responding in the hearings but would take into consideration all submissions made when deliberating on the Bill.

9.4.4 Summary of the Oral Submissions The public hearings were attended by about 64 members of the community coming from the broader Ekurhuleni Region.

Those in attendance were predominantly those serving in the various ward committees from the region.
All the speakers supported the Bill and welcomed the opportunity to make submissions to the Parliament.

One of the clarity-seeking questions was how the Bill was going to support small business development.

The majority of the speakers requested that old SAPO branches in their communities that were closed due to lack 245 of business be reopened and buildings be renovated to accommodate the expansion of services and that there be suitable ablution and shelter for the elderly.
A number of Speakers also requested that there be enough employment opportunities for the young people within SAPO.

It was further emphasised that SAPO will need to increase its scope of work so that it becomes part of the digital space as most of the services were reduced due to a lack of deployment of the latest technologies.

The lack of proper monitoring of services was also raised as a serious concern as it resulted in poor service delivery.
Whilst a majority of the speakers were in support of the Bill they however raised concerns on service delivery.

One of those was a regular shortage of medication at the Tembisa Hospital and a lack of electricity due to the prolonged time to replace faulty infrastructure such as transformers.

There were also requests for mobile Post Offices and clinics.

Some of the speakers wanted to know how to report faults on the Digital Terrestrial Television (DTT) services.
9.4.5 Community Members' Inputs – Public Submissions Participants were given an opportunity to comment on the Bill.

There were a number of submissions and the detailed inputs can be found in Annexure 4 below.

9.4.6 Public Hearings - Written Submissions.

There was a total of 23 written submissions with the majority of those supporting the Bill with two supporting the Bill partially.
However, some of the issues raised during the written submissions were the following: • Communities of Wattville supported the Bill and submitted that they never had a Post Office in their area and this has affected the postal service delivery, particularly for the elderly.

It also indicated that there was a general lack of basic infrastructure such as recreation centres, and roads and there was a general decline in services in the area.
• Some of the submissions pleaded with Parliament to assist with interventions for youth who were addicted to drugs and dropped out of school in the process.

There was a generally high rate of employment due to the number of youth without matric in the Community.

The lack of sanitary pads was also raised and teenage girls always had been stigmatised as a result of lack of pads during their periods.
There was a plea that SAPO should be capacitated to enable them to issue birth certificates and Identity Documents.

246 • One of the submissions was difficulty accessing the postal services due to the distance from the closest Post Office.

There was also a general shortage of basic infrastructure such as schools and clinics.

• Communities submitted that the government would need to introduce mobile Post Offices to deal with the shortage of postal services within the poor communities.
• One of the submissions supported the Amendment Bill as it was necessary for the sustainability of SAPO.

• Community members submitted that there was a general problem of the abuse of drugs due to a lack of job opportunities.

There was a plea that SAPO should create job opportunities for young people.

• One of the submissions raised the issue of incorrect addresses used by SAPO in the delivery of mail.
Community members had to go for the expensive private service providers due to the reliability of their services.

The logistics business of SAPO was slow and not very effective.

The collapsed collaboration between SAPO and institutions of higher learning will need to be revisited on the delivery of study materials for the students.

The systems used at SAPO were also outdated and this affected service delivery negatively as customers had to wait in queues for a very long time.
• There was the submission that there was a general lack of infrastructure maintenance such as fixing potholes and cutting of street grass.

One of the primary reasons is that there was no capacity to carry out these services whilst a huge number of youth remained unemployed.
• Some of the submissions emphasised the importance of the Post Office serving as a WIFI hotspot to assist youth with research work for assignments and job-hunting; • Several submissions felt that the Bill had not adequately addressed the problem of the closure of several SAPO outlets across the country.

This problem had left several communities without postal services and universal services as required by law.
• Some of the issues raised during the submissions were that there had been corruption on the allocations of vacant lands and communities who had applied and waiting to be allocated stands had to wait for a number of years.

• One of the members of the Community from Wattville indicated that it had been 20 years without the Post Office and they always had to travel long distances to access the services.
• The issue of cyber security with Postbank was also raised as one of the major concerns; 247 248 • <.#$&)$("#$2/9-+22+&.2$+.3+01(#3$("1($("#$%&2($<))+0#$+.$4/3/_1$F12$71.31*+_#3$1.3$ "12$9##.$3N2)/.0(+&.1*$2+.0#$("#.O$ • !

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9.5.1 Public Hearings: Oral Submissions The Bill was hugely supported by the overwhelming majority of the speakers with a total of 52 across the four provinces visited and only two (2) did not support the Bill.
One of the speakers cited that the reasons for not supporting the Bill were due to the corruption within SAPO.

Public Hearings Summary of Speakers' Views on the SAPO Amendment Bill Number Province Yes No Partial Undeclared Western Cape Eastern Cape Limpopo Gauteng 1 2 3 4 Total 19 7 11 13 50 0 1 1 0 2 0 0 0 0 0 0 0 0 0 0 9.5.2 Public Hearings: Submitted Forms Received at Public Hearings There were a total of 68 written submissions during the public hearings with the majority of those supporting the Bill.
Three (3) supported the Bill partially and two (2) did not make any declarations.
Province Submission Forms 9 Western Cape 0 Eastern Cape 36 Limpopo 23 Gauteng Total Forms 68 Support 9 0 33 21 63 Not Support 0 0 0 0 0 Partial Undeclared 0 0 1 2 3 0 0 2 0 2 9.6 Key Emerging Issues Across the Provinces The following is a summary of the comments received during the public hearing: 9.6.1 Major Issues Raised from the Submissions The Bill was supported by the overwhelming majority of the speakers and raised a number of challenges when it came to the services provided by the Post Office.
249 • Some of the speakers supported clause 3 of the Bill and indicated that the expansion of services provided by the SAPO will assist rural communities in a great deal, especially money transfer services.

• Clause 9; Section 14 of the Principal Act: The proposal indicates that there must be government officials in the composition of the stamp advisory committee.

The Bill does not indicate whether it would be officials or politicians.

A request was made that the clause should be clear in this regard.
In addition, the advisory Committee should have indicated a fixed term of office.

A proposal of three or five years was made in this regard.

• Members of the community raised concerns about the distance which the elderly had to travel to access postal services due to the number of Post Offices which were closed.

• SAPO to reopen the closed branches and ensure that there were internship opportunities for youth within the postal sector.
• Some of the speakers submitted that the proposed Stamp Advisory Board must have a fair presentation across the demographic spread in the country.

• Community members indicated that functional SAPO was important as its services were affordable compared to the private postal services.

• There were a number of submissions who complained about the poor customer service at SAPO branches and pleaded with the Department to ensure enough capacity to improve the quality of service.
• One of the primary concerns raised was the lack of security at SAPO outlets particularly during the payment of social grants.

• Involvement and empowerment of SMMEs by SAPO was also raised and speakers pleaded with the Government to ensure that small businesses were empowered within the sector.

• Number of submissions welcomed the provisions that SAPO would roll out the latest technologies to improve services within the sector.
• Number of submissions highlighted concerns around the ageing of the Post Office's current staff and that employment of youth should be prioritized.

• Some of the submissions implored that SAPO should consider using more government buildings and minimise renting private properties.

• Corruption and nepotism were raised as some of the huge challenges within the sector and the Committee was urged that the new Bill must eradicate the culture.
250 • The closing of branches without consulting communities had posed serious problems and the community members needed these services the most.

• Some of the written submissions stressed that SAPO would need to resuscitate functional courier services to provide many needed to the department such as health.

• Some of the speakers submitted that SAPO should also be used as WIFI hotspots to assist with internet connectivity for the surrounding communities and students for research work.
• The Post Office should be fully capacitated to be a one-stop shop where a number of services such as application of Identity Documents (IDs), driver's licenses and Motor Vehicle License (MVL) renewals could be offered as services.

• There was a plea from the speakers that the government must ensure that the Post Office is back in the townships.
9.6.2 Matters Raised Outside the SAPO Amendment Bill Some of the General Observations are: • Some of the poorest communities emphasised the importance of ensuring that there was equality during the processing and implementation of the amendments of the Bill.

• Number of speakers across the country who raised service delivery issues concerning housing subsidies and grant payments.
• Youth unemployment across the country remained one of the prominently featured submissions that there is a huge number of unemployed young people.

• There was a submission that people living with disabilities should be prioritised when it comes to housing subsidies and that 20% be set aside and this will have to cater for any eventualities such as when there were fires with persons living with disabilities being the most affected.
• The submissions on the lack of infrastructure such as appropriate roads and lack of quality water supplies.

• General challenges when it came to the payment of the SASSA grants by the Postbank which had recently been separated from SAPO as a subsidiary.

• That there was a greater need for additional ATMs by the Postbank.

• That load shedding remained the biggest concern across the country.

• Lack of adequate security during social grant payments was also raised as a concern.
251 • The demographics and composition of the Committee were also raised particularly the representation of youth and people living with disabilities.

• Shortage of medication within public hospitals such as the Tembisa Hospital was raised.

9.7 Public Written comments from the advertisement of the Bill The Committee placed an advert in the National and Regional newspapers which was published from 18 July 2023 to 14 August 2023, calling for written submissions on the SAPO SOC Ltd Amendment Bill.
There was one response from the public written submission.

Mr Sannie Samuel Zwane submitted in his personal capacity as an academic within the information technology sector.

Mr Zwane indicated a willingness to appear before the Committee for oral submission.
His submission was as follows: 9.7.1 “Digital Community Infrastructure Framework for Inclusive Progress” In an era defined by technological advancements and a growing need for social and economic inclusivity, the potential to revolutionize societal progress through innovative solutions has never been greater.
This executive summary outlines a visionary initiative: The Digital Community Infrastructure Framework, designed to harness the existing infrastructure of the South African Post Office (SAPO) to foster both social integration and economic empowerment.

Emboldened by a steadfast commitment to a Public Value Perspective, this framework presents a transformative approach to address the complexities of financial exclusion, digital divide, and community development in the context of South Africa.
As we delve into the core principles and strategic dimensions of this framework, it becomes evident that its implications transcend mere digital transformation.

This initiative carries the promise of reshaping communities, enabling entrepreneurship, and propelling South Africa toward a more equitable future.
By capitalizing on SAPO's extensive reach and trusted presence, this framework not only addresses prevailing challenges but also paves the way for the nation to embrace the digital age with purpose and impact.

Through the convergence of technology, collaboration, and a shared commitment to the public good, the Digital Community Infrastructure Framework seeks to establish a legacy of empowerment that transcends generations.
252 In the subsequent sections, we will explore the strategic imperatives, key components, actionable phases, and potential stakeholders that will collectively shape the implementation and success of this framework.

By weaving together insights from technology, economics, and social development, this framework emerges as a holistic solution capable of fostering a vibrant, participatory, and inclusive society.
Through the navigation of the contours of this visionary undertaking, it is evident that the Digital Community Infrastructure Framework represents a transformative step toward a future where every citizen's potential is unleashed, barriers are dismantled, and the promise of progress is unlocked for all.

9.8 Conclusions on the Public Hearings The South African Post Office SOC Ltd Amendment Bill [B11 -2023] public hearings received an overwhelming response from the communities which were visited.
The Bill was supported by the majority of the participants during the hearings.

The Committee noted a plethora of issues about service delivery on matters which were outside of the mandate of the Committee.

Members indicated that those issues had been noted accordingly and would be raised with the relevant structures.

There was also a written submission in response to the advertisement with the invitation to the public to participate in the Bill.
The submission was anchored on a proposed framework through the use of technologies which would ensure that SAPO infrastructure was fully utilised to bridge the digital divide which should promote financial inclusion and community development in the context of South Africa.

10.
10.

Annexures - Speakers Oral Submissions There were a number of Speakers who made oral submissions and the following issues were highlighted: 10.1 Annexure One Venue for the hearings: Cape Winelands District Municipality- Drankenstein Local Municipality - Paarl (Simondium Hall) Speaker 1 – Supported the proposed amendments but there is no Post Office in Simmondium.
People must travel long distances to get to the Post Office in Paarl, and upon arrival have to stand in long queues and priority is always given to people from around the area.

253 Speaker 2 – Supported the proposed Amendment Bill as it would benefit the marginalized communities especially people from the rural and remote areas of the country.

They are the ones who struggle to access those services.
The Bill would help the people as it also sought to partner with other stakeholders to bring services to the people.

The Post Office should be responsible for providing services to the people as per their needs.

The Speaker supported all the proposed amendments to the Bill.

These amendments would enable people to have access to the Postbank as well.

Speaker 3 – supported the Bill wholeheartedly.

Post Office remained beneficial to the people of the rural areas.
The system to renew drivers’ licenses was already working and if all services could be provided by the Post Office it would make the lives of the poor better.

The amendments will bring these services closer to the people.

Speaker 4 – Indicated that applied for a house but still lived in a shack.

Speaker 5 – Indicated that he has four children but without proper housing.

Speaker 6 – Wanted to know what happened to the house when the cousin passed away.
Speaker 7 – Indicated difficulty in applying his mind when reading what was proposed on the Bill as the Post Office and the services which were supposed to be rendered were very close to my heart.

However, the services are getting worse and worse each day.

I do not expect anyone to share my perspectives.

Currently, it takes about 2 to 3 months to receive mail.

The water Bills are supposed to be received through the Post Office, but they arrived late and at the time people had already received summons.
There is no Post Office in Simondium and people have to spend money to go to Stellenbosch to get Postal Services.

He requested that the Post Office services be reinstated with immediate effect.

Speaker 8 – Indicated that he lived in the squatter area.

People were suffering as there was no Post Office in Simondium.

Indicated that they always travelled to Stellenbosch for Postal Services and people living with disabilities and the elderly were not able to get services.
There were also cases of where we needed to go on behalf of the elderly to the far-flung Post Offices but the staff always refused to serve us as we were not the account holders.

They indicated that they were glad Parliament came to listen to the communities.

The speaker indicated that they needed a Postal Service in Simondium that would be accessible to all the people including those living with disabilities.

The young people from the community also struggled to apply for the SRD grants during Covid-19.
It would assist us greatly if we can have a Post Office.

254 Speaker 9 – Spoke about SASSA and the Post Office.

The speaker indicated that the same morning had to get up at 04:00 to be at the hearings.

She could walk I am disabled.

Long ago we had a Post Office here and I used to receive my money there.

Since there was no Post Office, the community member always had to go to Paarl to get my social grant.

I am almost 60 years old with no place to stay.

I currently live under very difficult conditions.


Please plan for us to get a Post Office in Simmondium.

The people from Paarl were very rude and mostly prioritised people from the area.

Yesterday, after collecting the grant, the speaker was left with a small amount of money as was forced to take two taxis to the Post Office for social grant payments.

Community Members pleaded for help to get a Post Office opened in proximity as they were struggling, in particular people living with disabilities.
Speaker 10 – Supported this Bill as it spoke to the needs of our people.

This would even be welcomed if the Post Office was going to be expanded for SMMEs and young people who would like to be involved in business.

The amendments contained in the Bill should be properly explained to the people so that they could see the importance of the Bill.

The speaker indicated the need for a Post Office that was closer to the people.

The Bill will at least stop the Post Office being privatised.
This bill would assist people in rural communications and townships.

The committee needed the services to be brought to the people, through digital platforms.

All the proposed amendments were supported.

Speaker 11 – Welcomed the opportunity to engage with the Committee.

Service delivery was not what it was supposed to be.

The Post Office has had a shortage of staff.

The speaker pleaded on behalf of the elderly who stood in long queues before being helped.
Difficult for them to receive Postal Services.

The youth had acquired qualifications but still struggled to get internships at the Post Offices.

The presence of the Post Office in Simondium would assist school kids especially when most of their work gets done online.

Speaker 12 – Indicated that was expected to walk long distances to get to the nearest taxi and about R46 to get to a Post Office on a single trip.

This was quite costly to access the services of the Post Office.
The members pleaded that a SAPO branch be built or that the government provide a mobile satellite Post Office.

Speaker 13 – Wanted to know in case a new branch was to be built on where that was going to be built in the area.

How far would the community members expected to walk to get to the nearest Post Office?

255 Speaker 14 – Indicated that previously they used to fetch their post from BPK but now that the branch has been closed they must now go to Paarl to receive Postal Services.
We do not even know what our Postal address is.

We need a Post Office very urgently.

Speaker 15 – Parliament was at Ceres last year and the speaker was in attendance last year.

The speaker presented similar requests.

The speaker indicated that he was a Councillor of Drankenstein.

The Councillor requested Parliament to speak to the Municipality of Drankenstein.

There were disabled people living in informal settlements.
He pleaded that when houses were built for communities, at least 20 per cent should be given to persons living with disabilities.

They were the ones who were unable to get away when confronted by fires.

Since they lived in the shacks, when people die as a result of fire, we request Parliament's intervention.

Speaker 17 – Welcomed and supported the Bill as proposed.
Equally added the following: requested that the Board should include persons who were suitably qualified and with a demographic spread where Postal Services were mostly needed.

The speaker indicated that they knew the importance of the Post Office; therefore, requested that the Postbank should have its own ATMs closer to the people.

The Postbank must be modernised so that like other banks, it could be easily accessible.

Speaker 18 – Indicated that the grannies had received their monthly grants.
They were still waiting up to this day.

Parliament must assist and ensure that the elderly people are not subjected to all these, particularly those coming from rural areas.

Speaker 19 – The Post Office is very important the ordinary people’s lives.

These would enable them to get affordable services from the Post Office when compared to private companies.

This month, the elderly had not been paid grants on time and did not even know where to go or who to ask.
They asked that they have a Post Office close by within their communities.

Speaker 20 – Supported the Amendment Bill as proposed.

Indicated that they were against the closing of the Post Offices in South Africa.

The Post Offices were of great importance to our community.

They need to be revived as a matter of urgency.


10.2Annexure Two Venue for the hearings: King Hintsa FET College 256 Speaker 1 – Indicated that would not raise issues relating to the Bill but issues relating to water shortages in our town and college.

It is very difficult to survive without water and we are expected to buy water for drinking and washing our clothes.

Please help us with water.


Speaker 2 – In Idutywa the Post did not have a security that assists with queueing people during the payments of social grants and general services.

Older people are pushed off and overtaken by the youth.

We also need Chairs for queueing for old people.

Persons living with disabilities and those who are pregnant should be prioritised in terms of receiving services, however, due to a shortage of staff, these people are unable to be prioritised.
Speaker 3 – The Post Office had ageing staff members and was unable to serve the community.

SAPO must create job opportunities for young people.

He also indicated that there were challenges for the elderly and pregnant women who didn’t have a place to rest while waiting to be served.

Young people were not getting business opportunities even though they had registered companies that had the capacity as service providers for SAPO.

Speaker 4 – Did not support the Bill.


I want to know whether since there will be new Postbank ATMs, were there going to be ATM charges when conducting withdrawals from the ATMs.

How long would it take before the ATMs were rolled out the Postbank?

Speaker 5 – I support the Bill.

However, there were challenges with the dilapidated SAPO infrastructure which needs to be upgraded urgently to service the communities.
One of the issues was regarding the lack of road infrastructure and quality water supply within the municipality.

Speaker 6 –The speaker supported the Bill as it seeks to digitise the Post Office and bring advanced service delivery within the sector.

The use of technology will ensure speedy and quality services than the traditional ways of communicating.

These proposed amendments would make life very easy for young people as well particularly when it comes to job opportunities.
She also supported the idea of the new ATMs but worried that they would bring problems, especially for older people on security-related measures.

Speaker 7 – Welcomed the additional services proposed in the amendments.

He was however concerned with the state of the Post Office (it's dirty and filthy), and those who work at the Post Office were not concerned with customer service.

People woke up early in the morning to join long queues to collect their R350 grants from the Post Office.
There were submissions that ageing SAPO staff must leave the Post Office to make way for young people who will be able 257 to improve the services.

There were a lot of young people who had the qualifications to do the job.

If Parliament restores the Idutywa Post Office, there would be a need for qualified people to be appointed.

Speaker 8 – Was overjoyed by the visit of the Committee especially as it sought to elevate the services of the Post Office.
What made the speaker happy was that their children would get job opportunities, and this would reduce the high crime due to unemployment.

Unemployed youth were forever idling and getting into mischief.

Some elderly people lived alone in the villages and were scared because of these unemployed youths.

Concerns were also raised around the delays in the payments of SASSA grants at the beginning of September 2023.
There was a request that the Committee do everything possible to ensure that this did not happen again.

The emergence of ATMs was also welcomed as it will reduce crime.

10.3Annexure Three Venue for the hearings: Vhembe District Municipality – Thulamela Local Municipality- Thohoyandou Town Hall Speaker 1 – Supported the Bill but was concerned that copies of the Bill in indigenous languages were not provided to the attendees.
Speaker 2 – Supported the Bill, however, the Post Office no longer provides services to the people as per its mandate.

Speaker 3 – Thanked Parliament for involving the public in developing laws.

He supported the Bill and appreciated that technology was going to be used to revive and improve the standard of the Post Office.

The Bill should ensure that the people who are already working for the Post Office do not lose their jobs due to expected efficiencies which will be brought by technology.
Speaker 4 – Read out clause 3 and indicated that the composition of the Stamp Advisory Committee was not clearly outlined on how the various demographics would be represented.

The SA Post Offices had collapsed financially and politically and an urgent intervention would need to be implemented.

More than half of the branches had been closed and could not perform postal services (electricity and water shortages are some of the challenges).

Speaker 5 – Supported the proposed amendments to the Bill.
258 Speaker 6 – Supported the proposed amendments to the Bill.

However, disappointed with the absence of the Youth and Persons Living with Disabilities on the Committee as she did not see the youth and people with disabilities.

Speaker 7 – Advised that Parliament must avoid renting buildings charging exorbitant prices.

The Post Office should own its buildings.

SAPO staff must be empowered to provide the services provided on the Bill.

Improved Post office services were desperately needed in rural areas.
Speaker 8 – Supported the proposed amendments, Bill.

In the past, there used to be fast mail but such service was no longer available.

There was a need for such services to be returned, youth must also be employed, and revive the Post Offices.

Speaker 9 – Supported the proposed amendment, Bill.

He indicated the urgent need for the revival of Post Offices in rural areas.

Speaker 10 – The Post Office in Tiyani continued to face challenges even though it services 25 villages.
It was surprising that the Post Office did not have facilities to assist the elderly.

There were no working toilet facilities.

There was no shelter from the sun and the elderly fainted due to heat.

The Post Office network needed to be upgraded.

Nicholas supported the Bill with the hope that there was not going to be corruption otherwise EFF would deal with it.

Speaker 11 – Supported the Bill.

Some years back Post Office used to be functional and people relied on the entity for services.
SAPO was encouraged to employ more young people as they are best suited to access technology.

Speaker 12 – Some of the Post Office outlets have been without a warning to the people they served.

Tembani supported the Bill and believed it was good and would help some of the small towns in the Limpopo Province.

Speaker 13 – Supported the proposed amendment Bill.

In the olden days, communities had Post Offices in the rural areas, but now people are dependent on Post Offices in towns.
The speaker expressed hope that the Bill would bring back some of the closed Post Offices.

10.4Annexure Four Venue for the hearings: Sam Hlalele Community Centre in Tembisa, Gauteng Speaker 1 – Supported the proposed amendments to the SAPO Bill.

The speaker requested that Parliament assist in bringing the Post Office back to the townships.

We further ask that 259 youth should be considered for employment at Post Offices.
They also called yet again for support of small businesses within the postal sector.

Speaker 2 – Supported the proposed Amendment Bill.

He indicated that the Post Office needed to increase the scope of its work to remain relevant.

In the event of digitisation, the Post Office had not been flexible enough to adapt to the digital age.

The amendment would assist in ensuring better services, especially in rural areas.

The separation of the Postbank and SAPO is also supported.
Speaker 3 – Supported the proposed amendments to the Bill.

However, she raised concerns about the Post Office.

She indicated that the number of branches have been closed and most of the communities do not have Post Office services.

Where there were Post Offices, the systems were often offline for longer periods, sometimes up to a month.

The speaker humbly requests government intervention and monitoring of Post Offices.
She also called on the employment of youth in the Post Offices as most of the youth were unemployed.

Speaker 4 – Supported the proposed amendments to the Bill.

The speaker would like to submit the following, Tembisa Hospital was no longer a hospital but a mortuary.

Speaker 5 – Supported the proposed amendments to the Bill.

However, requested that the Post Offices in their communities be refurbished.

She also indicated a need for a Police Station in Kwa-Thema.
Lastly, she indicated they urgently needed assistance with the electric transformer as it affects the electricity connection in our area.

She called on abolishing the age restriction of 18 to 35 years and that government should prioritise those with skills and relevant competencies.

Speaker 6 – The speaker supported the proposed amendment to the SAPO Bill.

Speaker 7 – Supported the amendment to the SAPO Bill.
The speaker also highlighted that she was grateful for the Post Office retirement fund and She was currently on pension after retirement from SAPO.

She had a number of challenges though about DTT.

She said that she was stuck with 13 decoder sets at her house that were left at her place and have not been collected since.

These were left by Sentech subcontractors and installers in her house.

Speaker 8 – Supported the proposed amendments to the SAPO Bill.
260 Speaker 9 – Supported the proposed amendments to the SAPO Bill.

The amendments are going to be helpful to the Committee even though I do not remember having a post office in Springs.

We need Post Offices in our communities.

Speaker 10 –Supported the proposed amendments to the SAPO Bill.

However, we are experiencing challenges with the DTT decoders switching on or off and there are no interventions with these technical glitches.
We have a problem with safety and security, especially in the old residential areas.

Several people are renting out their houses without maintaining them.

Speaker 11 – Supported the proposed amendments to the SAPO Bill.

We are grateful for the opportunity to raise our communities.

There are many churches in Brakpan, some in the open fields, flats, and residential houses.

Speaker 12 – Supported the proposed amendments to the SAPO Bill.
Pleaded that the government must ensure that services were delivered to the people.

People were tired of empty promises.

People were done talking as South Africans but needed action now.

Report to be noted 261 6.
BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON WATER AND SANITATION ON THE ANNUAL REPORTS AND FINANCIAL STATEMENTS OF THE DEPARTMENT OF WATER AND SANITATION AND ITS ENTITIES FOR THE 2022/23 FINANCIAL YEAR, DATED 24 OCTOBER 2023 The Portfolio Committee on Water and Sanitation (hereinafter the Committee), having considered briefings by the Auditor General of South Africa and the Department of Planning, Monitoring and Evaluation on 10 October 2023, the Department of Water and Sanitation (hereinafter the Department) on the 10 October 2023 and its entities, namely: the Trans- Caledon Tunnel Authority (TCTA) and the Water Research Commission (WRC) and the Catchment Management Agencies on 17 October 2023 for the 2022/23 financial year, reports as follows: 1.
INTRODUCTION 1.1 Mandate of the Portfolio Committee on Water and Sanitation The Constitution of the Republic of South Africa, 1996, empowers the National Assembly, through its Portfolio Committees, to ensure that executive organs of the state to the national sphere of government are accountable to it.

It further empowers the National Assembly to maintain oversight of the national executive within a particular sector, which is water and sanitation, for this report.
Parliament's mission governs the work of the Portfolio Committee and vision, the rules of Parliament, and constitutional obligations as they refer to protecting the environment, specifically water resources, through the entire water value chain.
The Portfolio Committee's mandate is premised on the five constitutional mandates of Parliament: processing legislation, conducting oversight, ensuring public participation, processing international agreements, and facilitating cooperative governance within the Intergovernmental Relations Framework.

1.2 Purpose of the Budgetary Review and Recommendation Report 1 262 The Money Bills Amendment Procedure and Related Matters Act (No.
9 of 2009) (the Money Bills Act) sets out the process that allows Parliament, through its committees, to make recommendations to the Minister of Finance to amend the budget of a national Department.
In October of each year, portfolio committees must compile the Budgetary Review and Recommendation Reports (BRRRs) that assess service delivery performance given the available resources, evaluate the effective and efficient use and forward allocation of resources, and make recommendations on forward use of resources.

2.
2.

OVERVIEW OF THE WATER SECTOR IN SOUTH AFRICA WITH SPECIFIC FOCUS ON THE WORK OF THE DEPARTMENT OF WATER AND SANITATION AND ITS ENTITIES FOR THE 2022/23 FINANCIAL YEAR 2.1 Introduction For the 2022/23 financial year, the Department of Water and Sanitation undertook many activities to deliver on its mandate and legislative obligations of ensuring water security for basic needs and economic development and ensuring delivery of water and sanitation services for all South Africans.
Legislative obligations guiding the work of the Department include the National Water Act, Water Services Act, Water Research Commission, and the Constitution enshrined in the Bill of Rights, sections 10, 24 (a), 27(1)(b), and section 27(2)1.
Fundamental to ensuring its obligation in terms of the Constitution and pieces of legislation underpinning its work, constant monitoring of the climatic trends and their implication on water resources, infrastructure development, compliance monitoring and enforcement, human resources management, managing data and information, with balancing of supply and demand of water amongst various stakeholders, is a consistent consideration of the Department.
The Department of Water and Sanitation has made efforts to address water and sanitation challenges.
Still, it acknowledges the warning in the National Infrastructure Plan 2050 that 1 Section 10 – everyone has inherent dignity and the right to have their dignity respected and protected; Section 24(a) – everyone has a right to an environment that is not harmful to their health or well-being; Section 27(1)(b) – everyone has the right to have access to sufficient water and section 27(2) – the state to take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of everyone’s right of access to sufficient water and dignified sanitation.
2 263 tackling South Africa’s water management problems will become more challenging due to increasing water demand from economic growth and urbanisation.

Like many other parts of Africa, South Africa faces water stress that varies over time and space, leading to significant water security issues.
The main factors contributing to this situation are insufficient investment in water and sanitation infrastructure, unequal access to water, poor water quality, and unsustainable water use.2 South Africa has implemented incentive-based regulatory schemes called the Blue Drop and Green Drop certification schemes to monitor the performance of water supply and wastewater treatment works.

These schemes establish minimum standards for water supply and wastewater treatment, respectively.
As a result, poorly performing towns in South Africa are identified through a cumulative risk assessment, and necessary actions are taken to address the issues.

This approach has helped identify regions nationwide at potential risk of water contamination or sewage spillages.

3 According to the 2022 Blue Drop Report, a quarter (23%) were classified as having a "critical risk," followed by 11% for "high risk" and 18% for "medium risk."
The Green Drop study presents a similar picture because most wastewater treatment facilities do not meet the required minimum requirements.

The end effect is ongoing water resource pollution, making it less suited for use in various industries.
Communities' health may suffer if the relevant water sector authorities don't comply with the Blue Drop and Green Drop regulations.4 South Africa uses almost 20 billion m3/year of surface water, with agriculture (55%), industry (18%), municipal (17%), afforestation (5%), mining (5%), and power generation (2%) being the main sectors relying on it.

These industries play a crucial role in the country's economy and development.
When planning for future water needs, a time frame of 20–25 years is often considered, considering factors such as socioeconomic and demographic growth and environmental dynamics.

Almost all available water resources have already been allocated, including provisions for the Ecological Reserve.5 2 Academy of Science of South Africa (ASSAf), Statement on Water Security in South Africa, Issued: 14 March 2023.
3 Academy of Science of South Africa (ASSAf), Statement on Water Security in South Africa, Issued: 14 March 2023.

4 Academy of Science of South Africa (ASSAf), Statement on Water Security in South Africa, Issued: 14 March 2023.

5 Academy of Science of South Africa (ASSAf), Statement on Water Security in South Africa, Issued: 14 March 2023.

3 264 There is a high certainty that climate change impacts the biosphere.
According to the 2022 Intergovernmental Panel on Climate Change, mean annual world surface temperatures have risen by 1.2° Celsius since the pre-industrial era.

Southern Africa is particularly vulnerable to flood, drought, and heatwave events, as highlighted in the World Meteorology Organization's 2021 State of Climate in Africa report.

A water-energy nexus is created when electrical energy is supplied through pumps to power water supply and wastewater treatment.
This connection is essential in South Africa because 15 water-cooled power plants, each using more than 3 l of water to produce 1 kWh and use more than 100 Ml daily, provide most of the nation's electricity.

As fundamental principles for water conservation, South African policy also emphasises recycling, reuse, and regeneration— each of which requires a significant energy input.
The most recent interruptions in water delivery and wastewater treatment demonstrate the considerable impact of the ongoing electricity shortage on the water-energy-food nexus and South Africa's overall development goals.
Both slow investments severely hamper water for growth and development in water infrastructure and insufficient electrical supply.6 Even while the South African government has responded by allocating much-needed funds (R115 billion till 2024) for water and sanitation infrastructure, the implementation of projects at various levels has been recognised by the department and most notably highlighted by the Auditor-General South Africa in its assessment of performance reports.
Notwithstanding the challenges mentioned above confronting the department and its entities in addressing water and sanitation issues, the department’s performance has improved from the previous year with respect to both financial and nonfinancial resources.
2.2 Mandate, plans and policies guiding the work of the department aligned to the National Development Plan and Medium-Term Strategic Framework The Department of Water and Sanitation's work is underpinned by rights enshrined in the Constitution and emboldened by provisions in Chapter 2 of the Bill of Rights.
The Department of Water and Sanitation's service delivery tools are embodied in the National Water Act, Water 6 Academy of Science of South Africa (ASSAf), Statement on Water Security in South Africa, Issued: 14 March 2023.

4 265 Services Act, and Water Research Act, including all policy mandates and strategies.
The legislative mandate of the Department of Water and Sanitation is to ensure that the country’s water resources are protected, managed, used, developed, conserved and controlled by regulating and supporting the delivery of effective water supply and sanitation.

This entails adhering to water-related policies and legislation requirements, including constitutional provisions critical in delivering the right to sufficient food and water, transforming the economy and eradicating poverty.
The country's National Development Plan and the Medium-Term Strategic Framework determine the Department's activities.

The National Water and Sanitation Master Plan, launched in November 2019, forms the bedrock of the water and sanitation developmental agenda in line with the African Union's Vision 2063 and the United Nations Sustainable Development Goals, Goal Number 6, impacting the delivery of water and sanitation.

Table 1.
Alignment between Department Programmes, National Development Plan, and MTSF 2019-2024 Programme Programme 1: Administration MTSF Priority Priority 7: A better Africa and world Indicator Percentage of annual international relations programmes implemented per year NDP Priority (7) South Africa in the region and the world – positioning South Africa in the world Programme 2: Water Resources Management Programme 3: Water Services Management Number of river systems with water resources classes and determined resource quality objectives per year Number of wastewater systems assessed for compliance with Green Drop regulatory standards per year Percentage of water use authorisation applications finalised within 120 working days of application Number of mega-regional bulk infrastructure project phases completed per year Number of large regional bulk infrastructure project phases Priority 5: Spatial integration, human settlements and local government Priority 1: Economic transformation and job creation Priority 1: Economic transformation and job creation; (5) Spatial integration, human (3) Economy and Employment; (4) Economic Infrastructure - The foundation of social and economic development; (5) Environmental sustainability and resilience - An equitable 5 266 settlements and local government; transition to a low- carbon economy; (6) Inclusive rural economy completed per year Number of small regional bulk infrastructure project phases completed per year Number of small projects completed through the water services infrastructure grant per year Number of water supply systems assessed for compliance with Blue Drop regulatory standards per year Number of existing bucket sanitation backlog systems in formal settlements replaced with adequate sanitation services per year The Department set out to achieve six (6) strategic oriented outcomes with their 19 respective outcomes indicators during the year under review.
In this regard, the Department achieved an average of 92% of the overall strategic-oriented outcomes, which is a tremendous achievement compared to the previous year.
The department has satisfactorily attained a majority of its strategic objectives, which relate to, among others, the (1) efficient, effective and development- oriented department, increase of water supply by introducing other sources of water such as desalination and return/ reuse of wastewater, (2) the protection and restoration of ecological infrastructure, and (4) effective management of water and sanitation services; and (6) Water redistributed for transformation.
The successful implementation of the financial recovery and turnaround plan and targeted procurement for Small and Medium Micro Enterprises (SMMEs) is worth noting.

The publication of the green drop reports is a commendable achievement that would ensure enhanced regulation of the water and sanitation sector.

The Department failed to successfully process water use license applications on time, which would negatively affect economic development and sustainable utilisation of water resources.
The achievement of the strategic goal of water redistribution for transformation is commendable as it would enable the country to address unemployment, poverty and the widening inequality gap.

Proper management of appropriated budgets, sustainable implementation of strategic plans and annual performance plans form the basis of good governance in all institutions.
So, too, the Department utilised its budget, worked toward achieving its targets, identified risks and formulated strategies to address underperformance within the water and sanitation sector.

6 267 3.
6 267 3.

Audit outcomes of the work of the Department and Entities by the Auditor- General South Africa 3.1 Overview of audit outcomes of the Department of Water and Sanitation, Water Trading Entity, Trans-Caledon Tunnel Authority and Water Research Commission 3.1.1 Department of Water and Sanitation and Water Trading Entity • Audit Outcomes The department received an unqualified audit outcome with findings.
The auditor-general highlighted the need for strengthened performance reporting controls, effective monitoring of audit actions, and annual review of performance reports.

Delays in investigating irregular expenditure and allegations led to delayed consequence management processes.

The department improved compliance with legislation and had no material findings on financial statements or procurement.
The trading entity's internal control environment remained stagnant, leading to unqualified audit opinions and findings on compliance with legislation.

The entity corrected material misstatements but still had non-compliance findings.

Management did not implement adequate preventative internal controls to avoid non-compliance with legislation in financial statements, expenditure management, consequence management, procurement, and contract management.
Additionally, the entity did not implement effective compliance checklists, leading to irregular expenditure of R26 million and fruitless spending of R70 million in the current year.

• Audit Outcomes of Performance The table below highlights the achievement of key performance targets from the departmental reports.
7 268 Performance indicator Target Actual Reasons for non-achievement 10 798 performance 0 Several challenges were linked to the project, including procurements for Goods and Services, labour and SMME disputes and inclement weather.

systems existing sanitation in settlements Number of bucket backlog formal replaced.

Number of bulk raw water projects under construction.

4 2 of Percentage applications for water authorisation use the finalised within regulated period.
Number of bulk raw in water preparation for implementation.

projects 80% 69% 4 1 Tzaneen – delay in submitting the application for the Construction Permit to the Department of Labour.

Clanwilliam – Delays with procuring goods and services have delayed the recommendation of construction activities.

Officials performing the water use authorisation function are also performing other functions.

The Department is still finalising the recruitment of officials dedicated to the water use authorisation function.
The function is also being performed in calendar days.

Nwamitwa Dam – delays in the receipt of the signed dam boundary line drawings and the resulting delay in completing the land schedules.

Coerney Dam – There is a delay in the appointment of the PSP to carry out the design work.

Foxwood Dam – There is a delay in the appointment of the PSP to undertake the design and construction supervision.

Nkadimeng Dam – delay due to additional scope of work to address dam safety risk.
Marico Bosveld Dam – due to additional scope of work to address dam safety risks.

New-term contractors were appointed midway through the financial year and required some time to acclimatise to departmental procedures.

2 0 50% 45% (473 of 1046) Number of dam safety rehabilitation projects completed.

of Percentage of scheduled projects maintenance completed a as proportion of planned maintenance projects.
Percentage unscheduled projects maintenance completed a as proportion of planned maintenance projects.

of Water Number Services Authorities assessed for compliance the No Drop with Regulatory Programme requirements.

30% 35% (364 of 1046) The extended period without access to maintenance contractors caused a deterioration, exacerbating the backlog.

144 assessed.
144 assessed.

assessed 0 (Draft No Drop Watch Report) There was a low submission rate from the Water Services Authorities, as 42 of the 144 had submitted for assessment.

8 269 67 65 of Number regional infrastructure phases construction.

large bulk project under of large bulk project Number regional infrastructure phases completed.

Number of water supply systems assessed for compliance with Blue Drop.
13 5 1035 979 Driefontein Bulk Water Scheme Phase 2 of 3: The project RBIG commitment ceiling has been reached.

There is no allocation for the current financial year.

The project is about 99% complete, and the contractor moved off-site due to the municipality’s failure to pay its invoices.

Nebo Phase 3 of 3: The contractor vacated the site due to financial challenges.

CHDM Cluster 4 Phase 4 and 5: The poor contractor performance delayed the completion of these projects.
When conducting the assessment, it was found that some water supply systems were decommissioned and thus could not be assessed.

• Detailed briefing notes on the performance of the Department of Water and Sanitation and Water Trading Entity Material misstatements The auditor-general found material misstatements in Programme 2: Water Resources Management, which related to the percentage of scheduled maintenance projects completed as a proportion of planned maintenance projects.
An achievement was reported against a target of 50 per cent.

However, the audit evidence did not support this achievement.

Outcomes of Blue, Green and No Drop Assessments for Remedial Action The Green Drop Watch Report, an interim report, aims to monitor and publish the turnaround status one year after identifying 334 critical wastewater systems in the April 2022 Green Drop report.
The report highlights the status and quality of correction action plans taken by local authorities responsible for these systems, who were under regulatory surveillance.

The report also highlights the progress made by municipalities to remedy failing wastewater infrastructure and compliance.

Nine provinces and 334 municipal Water Treatment Works (WTWs) were identified as critical in 2022, receiving Green Drop scores below 31%.
These municipalities were placed under regulatory surveillance and required to submit a detailed corrective action plan within 60 days.

9 270 The audit revealed slow progress in municipalities implementing wastewater treatment works and CAPs, with only seven criminal cases opened and two finalised during the 2022 Green Drop report.

The department's actions are insufficient, with only seven criminal cases opened from 334 critical wastewater treatment works.
Delayed Regional Bulk Infrastructure Projects Seventy-one per cent (71%) of the total RBIG projects are delayed in terms of completion.

Over the years, as the projects were delayed, the initial budget continued to be revisited.

To date, there is an increase in budget by R9.4 billion.

The spending on these projects is also not always aligned with the initial plan.

Variations in scope can be due to poor planning.


Maintenance of infrastructure at the Water Trading Entity Forty-two per cent of the trading entity’s bulk water infrastructure is in poor condition.

Repairs and maintenance costs amounted to 2.13 per cent of the total infrastructure assets balance, lower than the 8 per cent prescribed by National Treasury.
Financial constraints severely impacted maintenance budgets, and planned targets for maintenance were significantly reduced, contributing to the maintenance backlogs.

Management is not appropriately supervising service providers on the job.

An instance was noted where a contractor was paid for work not fully performed, which resulted in fruitless and wasteful expenditure and a material irregularity was raised.

However, the entity adequately spent its maintenance budget for the year under review.
Annual assessments of assets The annual assessment of assets performed by management was incomplete.

Insufficient conditional assessment of assets may result in unplanned maintenance, which often requires deviations from procurement processes, resulting in increased irregular expenditure and lack of maintenance term contracts.

Findings of the ‘No Drop Report’ – Water Losses 10 271 The National Water Act mandates sustainable and equitable water conservation, management, and control.
The department produced a "No Drop" report highlighting water losses in the country, showing an increasing trend of water losses over the years.

The report highlights the increasing avoidable water losses in the country, which have reached 1.525 million kilolitres, a 4% increase from the previous year.

The main causes of these losses include theft due to illegal connections, billing inaccuracies, and leaks due to ageing infrastructure.
The sector loses R18.9 billion and R29.7 billion in money spent on treating water, and the opportunity cost from water sales annually.

The report also provides key recommendations for DWS and municipalities to reduce water losses.

During the audit, it was found that the department sets no water loss targets to drive compliance by water service authorities.
The department has reconciliation strategies to monitor water demands but no evidence of review and monitoring of action plans prepared by Water Service Authorities to address water losses.

There are also no national action plans designed by the department to address the root causes of material water losses in the system.

Bucket Eradication Programme The bucket eradication programme targeted four (4) provinces with bucket toilets in formal areas: Eastern Cape, Free State, Northern Cape and the North-West.
Targets were achieved in two (2) provinces – the Eastern Cape and North-West, with outstanding work in the Free State and the Northern Cape.

During the audit, it was found that the programme has been significantly delayed mainly due to poor project management by the department and poor performance by appointed contractors with delays in procurement processes by the department.
As stressed by AGSA, these delays significantly impact the communities this project intends to benefit as they continue to be deprived of basic sanitation.

Infrastructure management and delivery The trading entity has been underspending in the augmentation fund, primarily due to delays in major projects.
The main causes of the delays include protracted procurement processes, non-performance of contractors, lack of plant maintenance resulting in plant breakdown, 11 272 challenges with land acquisition and poor project management.

The value of significantly delayed projects disclosed in the financial statements is R3.47 billion in the 2022/23 financial year, while the carrying amount of assets under construction is R5.89 billion.
Fifty-nine per cent (59%) of projects are delayed compared to 33 per cent in the prior year.

The key root causes for delays, as identified by the entity, are related to inadequate supervision of contractors, poor performance, and inefficient supply chain management processes.

• Trans-Caledon Tunnel Authority TCTA's audit outcome was unqualified due to compliance issues.

Strengthening laws and regulations controls, monitoring audit actions, and reviewing financial statements are recommended.
The gradual implementation of consequence management has reduced historical irregular expenditure.

However, the remaining balance requires full implementation in line with National treasury framework requirements and the entity's policies.

The slow implementation of consequence management continues to impact the entity's audit outcomes.

The table below highlights the achievements of key performance targets from the performance report.
Performance indicator project Reaching critical milestones as reflected the project plan.

in Actual performance The construction contract was not awarded.

main Target MCWAP – 2A: Award of main construction award.

BRVAS: Award design build tender.

of and Operate and maintain the plant to meet the minimum operating volumes – Acid Mine Drainage.
Eastern Basin: An average daily volume of treated water between 80% and 90% of the Eastern Basin: An average daily volume of treated water of 21 Ml/d with a capacity of Reasons for non-achievement the timelines estimates Regarding National Treasury Note No.3 Section 8.4, the procurement process could not be initiated until funding had been secured.

The outcomes of the conceptual designs concluded in February in a significant 2022 resulted project in increase and implementation capital to cost completion.
substantial The increase in the project capital cost estimate necessitated reviewing the adopted design and building contractual strategy.

The Eastern Basin Acid Mine Drainage Plant was not in operation from 1 April 2022 to 17 December 2022 due to the failure of the AMD pump motors.

12 273 The tender process for the PSP failed due to a conflict of interest issue response the single in received.

max treatment capacity of 100Ml/d, including planned outages, calculated over the full year.
tender Award for the PSP contract for the tunnel 2024 outage by 30 September 2022.

Delivery LHWP Tunnel North: Ensure infrastructure and operated is maintained to ensure water sustainable from deliveries Lesotho.

Ml/d 100 calculated over the full year.

The tender for the PSP contract for the tunnel 2024 outage had not been awarded 30 by September 2022. bid The specification committee developed and the approved revised and improved tender document on 28 March 2023.
• Water Research Commission The WRC audit outcome remained unqualified, with no findings on pre-determined objectives and compliance with legislation.

A strong internal control environment and disciplined adherence to applicable legislation helped maintain a clean audit for the 2022-23 financial year.

4.
4.

FINANCIAL AND NON-FINANCIAL PERFORMANCE OF THE DEPARTMENT OF WATER AND SANITATION AND ENTITIES7 The Department of Water and Sanitation operates two financial accounts: The Main Account and the Water Trading Entity.

The Main Account is funded from the fiscus (Vote 36), and the 7 The information that follows was sourced from the following sources: Annual Report and Financial Statements of the Department of Water and Sanitation and its Entities, 2022/23.
Presentations by the Department of Water and Sanitation, 10 October 2023.

13 274 Water Trading Entity account mainly receives voted amounts from the Main Account toward implementing Programme 3: Water Infrastructure Development and generating revenue through bulk water sales.

The Department of Water and Sanitation delineates its expenditure into four programmes – Administration, Water Planning and Information Management, Water Infrastructure Development, and Water Sector Regulation.
A synopsis of each programme's actual spending vs. budget is captured below for the period under review.
For the year under review, the 2022/23 annual report highlights achievements and various challenges set for the 2022/23 year in the Annual Performance Plan to those achieved/not achieved or partially achieved, the details of which will be summarised in the sections which deal with respective Programmes, which comprise Administration, Water Resources Management and Water Services Management.8 4.1 Financial Performance (Main Account and Water Trading Account) The expenditure for the period ended 31 March 2023 amounted to R17.693 billion, representing ninety-five per cent (95%) of the total budget of R18.555 billion, leaving total unspent funds of R861.594 million.
The department reported an under-expenditure of R861.594 million.

8 Information from the 2022/23 Annual Report of the Department of Water and Sanitation.

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*;$ :;$ ("#$ '#1=8#1$ '0(#$ &)$ )+**+.7$ 6080.8+#9$ (&$ 8&-@*;$ M+("$ !& mandatory budget cuts over the Medium-Term Expenditure Framework period.

Only critical prioritised posts are being filled.

On Goods and Services under expenditure is R60.847 million.

The under-spending is mainly due to unpaid invoices for the Eastern Cape and KwaZulu-Natal disaster interventions due to systems errors at year-end.

These invoices were paid in the 2023/24 financial year.
Transfers and subsidies underspent by R3.975 million; the under-spending relates mainly to the Households (Employees' social benefits / leave gratuities).

Payments for capital assets underspent by R773.226 million.

The indirect grant allocation to municipalities is a significant contributor, including the regional bulk and water services infrastructure grants.

The Department has been working with Implementing Agents to improve procurement and project management processes.
.4.1.2 Performance of the Main Account Although the Department received an unqualified audit opinion for the financial year under review, Programme 1: Administration achieved 75 per cent against a budget spend of 98 per cent, Programme 2: Water Resources Management achieved 72 per cent against a budget spend of 99 per cent, and Programme 3: Water Services Management achieved 70 per cent against a budget spend of 93 per cent.

Overall, the achievement totalled 72 per cent against a budget of 95 per cent.
4.1.2.1 Performance per Programme Programme 1: Administration The programme provides strategic leadership and support services to the Ministry and the Department through various activities such as financial management, shared corporate support services, and the coordination of water resources between neighbouring countries.

The programme achieved 50% of its targets on departmental management, 90% on corporate services, 71% on financial management and 100% on provincial and international coordination.
The sub-programmes under Administration comprise Ministry, Departmental Management, Corporate Support Services, Financial Management, Provincial and International Coordination, and Office Accommodation.

For the period under review, the following targets were achieved: 16 277 • Compliance with the internal audit action plan was 100% due to additional outsourced support for forensic cases.
• The implementation of the management plan was at 96 per cent, and there are plans to hire an independent person to conduct a risk maturity assessment.

• The implementation of a new organisational structure led to an increase in scientific and engineering posts.

However, there is still a vacancy rate of 25 per cent, which the department hopes to mitigate by advertising new posts.

• An increase in training attendance.


• Appointed ten graduate trainees to meet the demand for high-level skills in water-related disciplines.

• In terms of procurement, the department revised its approach to prioritise companies with 50 per cent or more ownership by designated groups such as women, youth, and people with disabilities.
Areas of underperformance in this programme related to challenges in implementing the risk management plan, expenditure on the annual budget, and the number of debtors’ days.
The department, however, provided strategies to overcome areas of underperformance in Programme 1, which included assessing the risk maturity plan during the first quarter of the 2023/24 financial year and advertisements placed for a total of 122 professional and technical WULA posts in January 2023, of which 71 are scientists and engineering posts (46 posts shortlisted, 34 posts interviewed).

The remaining posts are in the process of scheduling the panel approval.
Furthermore, the department is implementing the financial recovery plan and has appointed service providers from the National Treasury transversal contract to assist with debt collection.

The department is also implementing an incentive scheme that encourages debt repayment agreements and waiver of interest.
Programme 2: Water Resources Management The programme is responsible for the protection, use, development, conservation, management, and control of water resources sustainably for all people and the environment.

It provides for developing a knowledge base for proper planning and informed decision-making.

17 278 It also includes the development of effective policies and procedures as well as oversight of all water resource management institutions.
The sub-programmes under Water Resources Management comprise Water Resource Management Support, Integrated Water Resource Planning, Water Ecosystems Management, Water Resource Information and Management, Water Resources Infrastructure Management, Water Resources Policy and Strategy, Water Resources Regulation, and Water Resources Institutional Oversight.
The water resources management sub-programme focuses on developing comprehensive plans for water resource availability equitably and environmentally sustainable.

They developed status reports on various topics, including implementing the National Water and Sanitation Master Plan, reconciliation strategies for water supply systems, climate change scenarios, and environmental impact assessments.
During the specified period, various projects and initiatives were undertaken to manage and protect water resources in South Africa.

These included the development of operating rules for multiple water supply systems, establishing measures to protect water ecosystems, and maintaining water resource monitoring networks and information systems.
Additionally, efforts were made to construct and refurbish water infrastructure, resulting in the completion of several projects and the creation of job opportunities.

Compliance with water supply agreements/authorisations was also achieved at a high level due to favourable rainfall.

The water resources policy and strategy sub-programme develops water resources management policies and procedures and reviews their implementation.
The National Water Amendment Bill and the third edition of the National Water Resource Strategy (NWRS-3) were endorsed by the Forum for South African Directors-General (FOSAD) cluster system to be submitted to the Cabinet.

The water resources regulation sub-programme develops, implements, monitors, and reviews water resource regulations, including raw water pricing regulation, water use authorisation, compliance monitoring and enforcement, dam safety and resource protection, and waste.
The Vaal, Letaba, Inkomati-Usuthu, and Olifants-Doorn river systems were monitored for the implementation of resource-directed measures.

Mitigation strategies for mine water and wastewater management were developed for the Upper Olifants and Limpopo, and implementation plans were developed for the Orange and Mzimvubu-Tsitsikamma catchments.

18 279 A draft waste discharge charge system strategy was developed.

Raw water tariffs for 2023/24 and water research levy for 2022/23 were approved.
Five hundred sixty-two applications for water use authorisation were finalised within the regulated period.

Four hundred twenty-two water users and 455 wastewater systems were monitored for compliance with water license conditions and regulatory requirements.

Three hundred forty-two pollution incidents were reported and investigated.

A final business case for the water regulator was developed to streamline water resource management institutional arrangements.
The water resources institutional oversight sub-programme is responsible for institutional governance and oversight of all water resource institutions and facilitates their establishment and development.

Performance assessments were conducted for Breede-Gouritz and Inkomati- Usuthu CMAs, the Water Research Commission, and the Trans Caledon Tunnel Authority.
The Mzimvubu-Tsitsikamma CMA was gazetted for establishment, and reports on transforming irrigation boards into water user associations were finalised.

The National Water Resources Infrastructure Agency Bill was finalised and tabled in Parliament on 25 August 2023, which included extensive consultation with Labor, Community, and Business constituents at NEDLAC.
Areas of underperformance in this programme related to challenges concerning delays to the National Water Amendment Bill and the National Water Resources Strategy-3, finalisation of the National Water Resources Infrastructure Agency Bill, bulk raw water projects in preparation for implementation phase and under construction, scheduled and unscheduled maintenance projects, dam safety rehabilitation projects, conveyance systems rehabilitation, water use authorisations and draft regulation for water allocation reform.
The Department, however, provided clear strategies to address underperformance, which comprise the following: The National Water Amendment Bill was endorsed for submission to the Cabinet, and Cabinet approved the National Water Resource Strategy Edition 3 for implementation.
Other strategies within this programme to overcome areas of under-performance: • Bulk raw water projects in preparation for implementation – The internal capacity is augmented with graduates coming through the Learning Academy and appointing a professional engineering draw-down panel.

19 280 • Bulk raw water projects under construction – The department adopted a new infrastructure Procurement Strategy to accelerate water resource infrastructure project implementation.
There is also collaboration with the private sector to jointly implement large projects to enhance fiscal relief.

• Completing scheduled maintenance projects – Underperforming contractors are informed of their non-performance by formal letters.

If transgressions continue, the department invokes clause 1.7 of tender documents, which stipulate that the department reserves the right to appoint performing contractors to assist.
• Unscheduled maintenance plan – To deal with the backlog of aged infrastructure, the department will improve its revenue strategy to increase the maintenance budget.

• Dam safety rehabilitation projects – Development of a Construction Efficiency Enhancement Strategy to improve the performance of the internal construction unit to ensure a higher success rate of implementing projects within timeframes and costs.
• Rehabilitation of conveyance systems – Review the overall plan of the Rehabilitation of Conveyance Systems programme and apply capital rationing to ensure meaningful impact on project implementation at priority projects (thus reducing the number of projects).

• Water use authorisation – The department is still finalising the recruitment of officials dedicated to the water use authorisation function.
During the 2022/23 financial year, the regulations to revise the function’s performance from calendar days to working days have since been published for public participation.

• National Water Resources Infrastructure Agency – The bill was introduced in Parliament during the 2023/24 financial year, and the Portfolio Committee on Water and Sanitation is currently processing it.
Programme 3: Water Services Management The programme addresses the water and sanitation services provision across the water and sanitation value chain to support water services authorities.

The integration of bulk and retail water services to improve the sector's coherence and realise economies of scale and efficient use of water.

It also provides for developing effective policies, strategies, guidelines, procedures, plans, oversight, and regulation of all water service management institutions.
The sub-programmes under Water Services Management comprise Water Resource Management Support, Water Services and Local Management, Regional Bulk Infrastructure Grant, Water 20 281 Services Policy and Strategy, Water Services Infrastructure Grant, Water Services Regulation, and Water Services Institutional Oversight.

The water services and local management sub-programme focuses on developing strategies, guidelines, plans, and information management for water and sanitation services.
It supports and strengthens water and sanitation institutions in their planning and management efforts, promotes water efficiency, and evaluates sector performance for sustainable water and sanitation services.

Draft water conservation and demand management strategies were finalised during the review period for various sectors.

Water balance data was collected to assess water losses, and feasibility and implementation readiness studies were completed for regional bulk infrastructure projects.
Reliability plans were also finalised for specific districts, and reports on municipal self-assessment and priority action plans were completed.

Additionally, action plans were developed to improve sanitation regulation.

In terms of infrastructure development, numerous regional bulk infrastructure projects were under construction, resulting in 872 job opportunities.
The water services infrastructure grant sub-programme is responsible for building new water and sanitation infrastructure and rehabilitating existing infrastructure.

This is done by transferring water services schemes to water service institutions.

During the review period, there were 379 projects under construction, with 102 completed.

In the Eastern Cape, 52 projects were under construction, and 39 were completed.

The Free State had 41 projects under construction, with eight completed.
Gauteng had 11 projects under construction.

KwaZulu- Natal had 56 projects under construction, with eight completed.

Limpopo had 90 projects under construction.

Mpumalanga had 32 projects under construction, with 17 completed.

The Northern Cape had 31 projects under construction, with 13 completed.

The North-West had 43 projects under construction, with seven completed.

The Western Cape had 23 projects under construction, with seven completed.
The sub-programme also implemented the Vaal River and Giyani intervention projects.

The sub-programme water services policy and strategy is responsible for developing and reviewing water services policies, procedures, norms, and standards.

They also monitor the implementation of these policies.

During the review period, they addressed comments from the Office of the State Law Advisor and revised the Water Services Amendment Bill.
21 282 The water services regulation sub-programme develops, implements, monitors, and reviews water resource regulations, particularly the compliance of water service authorities with water supply regulations.

They approved the 2023/24 bulk water tariffs to enhance regulation in the water and sanitation sector.

They also assessed 979 water supply systems for compliance with the Blue Drop requirements and monitored 446 non-compliant systems against regulatory requirements.
The water services institutional oversight sub-programme oversees and governs water services institutions.

They facilitate the establishment and development of these institutions by providing support and advisory services to water boards.

They assessed shareholder compacts, business plans, and quarterly and annual reports for eight water boards during the review period.

The Sedibeng water board was disestablished due to reconfiguration.
Areas of underperformance in this programme related to challenges in the assessment of water services authorities for the No-Drop programme, district municipality’s five-year water and sanitation reliability plans, large regional bulk infrastructure project phases under construction and completed, water services infrastructure projects completed, replacement of existing bucket sanitation in formal settlements, and assessment of water supply systems for Blue Drop.
To overcome areas of under-performance in this programme, the department has developed the following strategies: • Regional bulk infrastructure under construction and completed – The department’s supply chain has provided guidance on how municipalities appoint contractors.

The department will enforce these circulars to improve contractor appointments to ensure timely project implementation and completion.
• No Drop Regulatory Programme – A process is underway to align the No Drop Programme with the Green and Blue Drop Programmes, with an implementing agent appointed for the next three years to support the department.

• District Municipalities 5-year water and sanitation reliability plans – To enhance the department’s capacity, a procurement process is underway to finalise the reliability plans during the next financial year.
22 283 • Water services infrastructure projects – The department will engage underperforming municipalities and provide support and technical expertise needed to complete the projects.

The department’s supply chain has also, through instruction noted, aided in how the department can assist the municipalities when appointing contractors.

• Bucket sanitation backlog – All contractors to develop an acceleration plan for system functioning.
• Water Services Amendment Bill – A decision to scrutinise the proposed legal section about the licensing of Water Services Providers.

The Executive Authority directed the Water Research Commission to investigate the implications of licensing water service providers.

• Blue Drop Regulation – These systems will be put under regulatory focus.
The report will highlight the need to develop corrective action plans, including the commencement of drinking water quality supplied and implementing best practice management by implementing a Water Safety Planning principle at those boreholes.

4.2 Water Trading Entity The Water Trading Entity was established in 1983 under the Exchequer Act as a trading account operating as an integral part of the Department.
The status of government trading accounts was eventually changed through the Public Finance Management Act of 1999, converting trading accounts into trading entities.

The Entity reports directly to the Accounting Officer of the Department of Water and Sanitation.

It is divided into two parts, namely the Water Resource Management Unit and the Infrastructure Branch.
Water Resources Management deals with water resource management functions that primarily address the use, conservation, and allocation of water resources sustainably and equitably to benefit the people residing in the relevant water management areas.

This component is funded through revenue generated from water users in the area and partly augmentation from the fiscus, which covers the shortfall where revenue is inadequate to cover the entire operations.
4.2.1 Financial Performance The entity reflected an operating surplus of R9.2 billion for the year under review, a R1.395 billion increase compared to the 2021/22 financial year.

This increase can mainly be attributed 23 284 to the reduction in operating expenditure driven by the change in accounting estimates relating to the impairment of infrastructure assets.

The revenue for the year under review amounted to R17.6 billion compared to R17.9 billion for the 2021/22 financial year.
This is an R286 million decrease, that is, 6 per cent, mainly driven by the reduction in the sale of water.

The total operating expenditure for the period under review amounted to R8.44 billion compared to R10.127 billion in the 2021/22 financial year.

This is an R1.682 billion reduction due to the change in accounting estimates of infrastructure assets, the reduction in finance costs relating to interest on amortised payables, and the reversal of impairment of financial assets.
Although the cash and cash equivalent reflect a favourable balance of R1.780 billion for the period under review, it is R361 million lower than the 2021/22 financial year as the water trading entity struggled to collect the outstanding debt from the sale of water.

The water trading entity issued a higher number of advances to public entities, amounting to R2.4 billion.
To mitigate its challenges, the entity has put measures to follow up on the recoverable debts and implement cash flow management strategies while complying with the PFMA 30-day payment requirements.

For the period under review, the debtors’ days reflect a regression compared to the 2021/22 financial year.

After impairment, the debtors’ days moved from 308 days in 2021/22 to 389 days in 2022/23, mainly due to non-payment by various municipalities.
The debtors’ collection days indicate that the entity has cash tied on the outstanding accounts.

The current ratio of the entity has increased from 5:08:1 in the 2021/22 financial year to 7:48:1 in the 2022/23 financial year, which indicates that the entity has sufficient liquid assets to meet its short-term financial obligations.
Requests for rollover of funds have been submitted to National Treasury for the Giyani Water Reticulation to Villages project, the water tankering related to the KZN and NMB disaster response, Kouga, Ndame, and Amatola Water Projects, uMkhanyakude section 63 intervention, bucket eradication in Free State and Northern Cape.

The total rollovers of R722 791 million include funds for committed projects already in progress within the Regional Bulk Infrastructure Grant and Water Services Infrastructure Grant.
24 285 5.

OVERVIEW OF THE PERFORMANCE OF ENTITIES SUPPORTING THE WORK OF THE DEPARTMENT FOR THE 2022/23 FINANCIAL YEAR 5.1 Water Research Commission The Water Research Commission (WRC) operates and accounts for its activities under the Public Finance Management Act (PFMA) (Act No.

1 of 1999) as amended and listed as a Schedule 3A Public Entity.

The WRC's goals align with various government outcomes, priority areas, and the country's report on the UN SDGs, particularly SDG 6.
They aim to contribute to national, regional, and continental policy formulation and develop science-based decision- making tools.

The WRC strives to provide sustainable development solutions, develop products and services for the economy, promote human capital development, empower communities, and support the national transformation project.

Additionally, the WRC focuses on translating research outputs into innovative technology products that can positively impact the lives of South Africans.
Their projects address three dimensions of water and sanitation challenges: generating new knowledge, developing human capital, and implementing innovative technologies.

5.1.1 Financial and Non-Financial Performance In the 2022/23 period, the Commission started 121 new research projects and completed 150 ongoing projects out of a total portfolio of 378.

Among these projects, 213 were led by project leaders from designated groups.
The WRC achieved several notable accomplishments, including improving water supply in rural communities and schools, creating a guide for municipal engineers to expand South Africa's water supply, and developing new technologies such as an app for groundwater monitoring and a tool for monitoring eutrophication in lakes and dams.

Additionally, the WRC collaborated with the Government of Flanders to launch a climate change resilience program in the Giyani municipal area.
The WRC also worked closely with the DWS, providing technical expertise and coordination for their projects.

In terms of funding, the WRC had a total income of R409 million, with the water research levy being their primary source of revenue and received a clean audit for the year under review.

5.2 Trans-Caledon Tunnel Authority 25 286 The Trans-Caledon Tunnel Authority (TCTA) was established in 1986 to finance and construct the Delivery Tunnel North of the Lesotho Highlands Water Project (LHWP).
In 1994, TCTA received a directive to fulfil the financial obligations of the South African government regarding the water transfer component in Lesotho.

The Notice of Establishment was amended in 2000 to include this directive and allow the Minister to issue directives to TCTA.

TCTA is responsible for implementing, operating, and maintaining Phase 1 of the LHWP in South Africa and performing additional functions as directed by the Minister.
The National Water Act allows the Minister to direct TCTA to provide various services to water management institutions.

TCTA cannot undertake any function outside its Notice of Establishment without the Minister's permission.

TCTA must manage and account for its Treaty functions separately from its non- Treaty functions.

The majority of TCTA's work now consists of non-Treaty functions.
5.2.1 Financial Management TCTA is responsible for ensuring effective financial management to achieve its strategic goals for the year ending on March 31, 2023.

Compliance with the Public Finance Management Act (PFMA) is a priority, particularly in preventing irregular, fruitless, and wasteful expenditure.

An agreement was reached with the Department for implementing the AMD project, which regulates funding, implementation, and repayment of costs.
TCTA relocated offices during the current financial year, resulting in the recognition of a right-of-use asset and lease liability.

The financial statements reflect TCTA's commitment to reliable and accurate financial reporting.

The financial performance of TCTA can be better understood by analysing the following elements: Tariff Receivable, Cash and Cash Equivalent, Retained Income and Financial Market Liabilities.
The Tariff Receivable represents TCTA's entitlement to recover project costs and debt incurred for national water infrastructure projects.

The amounts received from the Department of Water and Sanitation reduce the outstanding Tariff Receivable balance.
The table below provides an overview of the financial reporting highlights: 26 287 2023 2022 (R’m) (R’m) Tariff receivable 8 9 The balance was reduced predominantly due to 881 545 the cost capitalised due to the level of project activity being lower than the amounts received from the Department of Water and Sanitation.

Cash and cash 9 8 There have been improved payments by the equivalent 359 849 Department, resulting in higher cash on hand for some projects.
Retained income 4 3 Increased due to the increased surplus for the 961 890 year.

Financial market 13 15 The decrease is mainly due to capital repayments.
liabilities 381 199 Source: Presentation by TCTA on 10 October 2023 5.2.2 Successes and Challenges in the 2022/23 Financial Year For the 2022/23 financial year, TCTA experienced the following successes and challenges: 1) Funding proposals for Phase 2A of the Mokolo Crocodile River (West) Water Augmentation Project exceeded the requirements, indicating a willingness to invest in well-structured projects with demonstrated loan repayment ability.
Negotiations with lenders were ongoing at the end of the financial year, and the construction tender was not issued due to the requirement of funding before market tenders.

2) The Trans-Caledon Tunnel Authority (TCTA) secured funding based on future cash flows from the Vaal River System to cover the construction costs of Phase 2 of the Lesotho Highlands Water Project.
This milestone allowed the Lesotho Highlands Development Authority to award significant contracts, contributing to additional water storage in the integrated Vaal River System and ensuring water security for users.

3) Affordability concerns regarding Phase 1 of the uMkhomazi Water Project were addressed through a 50% fiscal contribution approved by the Budget Facility for Infrastructure.
The 27 288 project is currently in the process of negotiating and finalising water user agreements with municipal water users.

Once these agreements are approved, the project can secure a loan, raise commercial funding, and appoint professional service providers to construct the Smithfield Dam and the transfer tunnel to the Umgeni River Valley.

This is a significant step towards ensuring water security for the users in the Umgeni System.
4) Similarly, on the Berg River - Voëlvlei Augmentation Scheme, the necessary institutional arrangements have been completed, and a borrowing limit has been obtained from National Treasury.

This allows the project to raise commercial funding and appoint a professional service provider to design the weir in the Berg River and the transfer pipeline into Voëlvlei Dam.

The project has shifted to a more traditional approach to design and construction, reducing risks and costs.
5) Regarding debt management, revenue has been received on time from the Department of Water and Sanitation, ensuring sufficient liquidity for all projects.

However, the management of the Acid Mine Drainage Plants has faced challenges due to the breakdown of pump motors and heavy rain during the summer season.

The treated water met the required standards for discharge, but water levels continued to rise despite treatment being carried out in the Western and Central Basins.
However, in the Eastern Basin, installing new motors resulted in a decrease in water levels and no reports of groundwater contamination were received.

In the Western Basin, the treatment capacity was overwhelmed by heavy rainfall, leading to overflow.

Fortunately, monitoring in the Krugersdorp Game Reserve showed a minimal impact.
In the Central Basin, the water level has been kept below the overflow point, but concerns have been raised about the plant's resilience due to insufficient redundancy to handle unexpected outages.

6) The Delivery Tunnel North of the Lesotho Highlands Water Project continued functioning as intended, transferring water from Lesotho to South Africa.
5.3 Catchment Management Agencies Catchment Management Agencies are established in Section 80 of the National Water Act and manage water resources within the defined catchment areas.

The CMAs ensure water resources management at a regional or catchment level with the involvement of the local communities.

28 289 5.3.1 Breede-Gouritz Catchment Management Agency The Breede-Gouritz Catchment Management Agency (BGCMA) manages water resources in the Breede-Gouritz Water Management Area in the Western Cape.
They ensure that water resource management services are provided to stakeholders at a local level, with their participation in decision-making.

This annual report will be the last for the BGCMA, as they will report as the Breede-Olifants Catchment Management Agency in the next reporting period.

The BGCMA plays a role in processing license applications and has achieved the target of processing them within the required timeframe.

This demonstrates the effectiveness of local water resource management.
The BGCMA's efficient processing of license applications will help allocate water for further economic development in the local area.

They are also increasing awareness about stakeholders' operational water resource challenges, including pollution prevention.

5.3.1.1 Financial and Non-Financial Performance • Financial Performance Total operating expenditure for the 2022/23 financial year increased from R78 million to R90 million.
This increase is mainly due to higher employee-related costs, operational expenses, and provision for doubtful debts.

Employee-related costs rose by 8.42% due to increased staff and cost of living.

The Provision for Doubtful increased by 64.3% due to poor payment from water users.

Depreciation and amortisation decreased from R1.4 million to R634,686, as some assets reached their useful life but are still in use.
Operational costs decreased by 10.19% due to lower variable costs such as depreciation, cost of operations, and reduced furniture and equipment purchases.

• Revenue Analysis The augmentation allocation for the 2022/23 financial year amounted to R 40 173 million, showing a slight decrease compared to the previous year.

Interests charged on overdue debtors and interest earned on positive bank balance amounted to R15.051 million.
29 290 • Cash from operating activities The Agency experienced a positive cash flow from operating activities, amounting to R15.1 million in the 2022/23 fiscal year and R17.7 million in the 2021/22 fiscal year.

These numbers can be attributed to a decrease in revenue collection from major customers.

By the end of the 2022/23 fiscal year, the cash and cash equivalents showed a positive balance of R125.10 million.

Management is actively maintaining strict budget controls to prevent negative cash flow.
This indicates that the Agency has sufficient financial resources to continue operating in the foreseeable future.
• High-level non-financial performance The key highlights for the financial year under review reflected the following: Unqualified audit opinion with findings, which was previously qualified; Improved revenue collection, which increased from 79% in the previous performance year to 89% in 2022/23; Several community projects were undertaken, such as the vegetable garden project maintained by people living with disabilities and the eco-brick project, which provides skills in making furniture from eco-bricks; Equipping rainwater harvesting tanks for small-scale farmers; River rehabilitation project with alien clearing in the Holsloot River and 100% of water license applications were processed.
• Audit Opinion The audit opinion for the Agency has slightly improved compared to the previous two financial years.

The Agency has received an unqualified audit opinion with findings.

The management and staff are dedicated to further improvement and will implement initiatives to maintain or enhance the audit outcomes.

The management has created an audit finding register that will be monitored quarterly.
They have also implemented follow-up processes, including quarterly reporting on action plans to address the audit findings.

They have developed and monitored the implementation of action plans to address internal control deficiencies.

In the 2022/23 financial year, irregular expenditure of R1.741 423 was identified in relation to the procurement of travel services.

The bid documentation did not include the bid evaluation and adjudication criteria required by the regulations.
However, no loss was incurred, and value 30 291 for money was achieved.

The irregular expenditure resulted from non-compliance with the regulations, and no fraudulent or criminal actions were involved.

The management was able to cancel the contract before its expiry date and has learned from this experience to prevent similar incidents in the future.
5.3.2 Inkomati-Usuthu Catchment Management Agency The Inkomati-Usuthu Catchment Management Agency (IUCMA) is mandated to ensure the protection, conservation, development, use, and management of the water resources at a localised level in Mpumalanga, with four main catchments – Crocodile, Sabie/Sand, Usuthu and Komati.

The agency is transboundary, and forms part of the IncoMaputo Basin shared between the Republic of Mozambique, the Kingdom of Eswatini and the Republic of South Africa.
5.3.2.1 Financial and Non-Financial Performance of the IUCMA • Financial Performance The Agency has faced the challenge of managing its operations amidst a low GDP of 2.9% and a high inflation rate of 6.9%.

The performance of the South African economy has had an impact on the Agency.

Recognising the economic challenges, the Agency has focused on managing its working capital to protect its financial position.

As a result, the Agency has reported a healthy balance sheet at the end of the financial year.
One contributing factor to this success was the Agency's ability to reduce its debt collection period to 148 days.

The Agency also saw positive performance in debtors, with a 2% decrease in the impairment rate for trade debtors.

This improvement was achieved through effective debt management strategies, resulting in a collection figure of R54.2 million for the year.

• Revenue Collection In the reported year, the Agency continued to depend on funds allocated by parliament as its primary source of revenue.
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$# The Agency ensured in the reporting year that a strong Debt Management Strategy was developed under relevant policies and legislation.

This strategy was successfully implemented and emphasised the importance of engaging with stakeholders at both strategic and operational levels.

This engagement is crucial for achieving the set objectives.
The strategy also included measures to improve data integrity, utilise legal processes, and strengthen relations between different levels of government.

• Under-billing due to decrease in registered volumes The Water Resources Management charges experienced an underbilling of R16.58 million by the end of the year.

This underbilling was due to a decrease in registered volumes.

The projected revenue was based on a registered volume of 1.946 billion cubic meters at R0.027c per cubic meter.
However, the actual volume for the year was 1.894 billion cubic meters.

As a result, the volume decrease led to a revenue reduction.

The decline in volumes has had a significant impact on projected revenue.

As a result, the Agency is closely monitoring any changes that could negatively affect financial sustainability.

The ongoing reviews at various levels of management focus on compliance and monitoring to ensure that resources are not being misused.
To address the challenge of declining volumes and revenue, the institution has implemented several measures.

These include improving communication between critical functions, establishing early warning systems to manage activities that could reduce volume, and implementing punitive charges for customers not complying with license renewal processes.
• High-level non-financial performance For the financial year under review, the agency’s strategic outcome in 2022/23 target was 40 per cent of total spending allocated to B-BBEE suppliers and achieved 51%.

The creation of jobs resulted in 75 community workers being employed within the alien vegetation and river rehabilitation programmes over two years.

A total of 115 posts out of 144 were filled, comprising 56 females.

Overall, the annual performance of the agency attained was 100 per cent.
Of the set thirteen (13) targets, seven (7) were achieved, and six (6) were overachieved.

33 294 • Audit Outcomes The agency achieved all its planned financial and non-financial targets in the past year.

This resulted in a clean audit opinion, which is particularly impressive considering the agency has consistently achieved clean audits since its establishment.

6.
6.

OBSERVATIONS, RESPONSES AND RECOMMENDATIONS Members of the Portfolio Committee raised the following issues/questions regarding the Department of Water and Sanitation and Entities briefings.
6.1 Audit Outcomes • Main Account and Water Trading Entity Although the Main Account and Water Trading Entity had received unqualified audit outcomes, concerns were raised by the Auditor-General, such as the need for strengthened performance reporting controls, effective monitoring of audit actions, and annual review of performance reports.

Delays in investigating irregular expenditure and allegations led to delayed consequence management processes.
6.1.1 The Committee recommended that the Department implement the auditor general's findings and provide a written report on strategies to address findings in the first term of 2024/25, 6.2 Challenges related to future costs of operations and maintenance of water and sanitation infrastructure The Committee re-emphasised its major concern that the existing water and sanitation infrastructure requires efficiency in operations and maintenance, as the country is already facing challenges with a lack of focus on sustainable asset management.
Funding constraints prevent the Operations and Maintenance Unit from receiving the required allocation for 34 295 operations and maintenance.

For the period under review, the unit received R2.1 billion, while a total of R2.2 billion was needed for operation and maintenance.

The total cost required for renewals of assets as per the Asset Management Plan is R2.6 billion, and only R553 million has been received.
There is a significant and growing backlog in the maintenance and refurbishment of national water resources infrastructure, with inadequate ring-fencing of budget contributing to a refurbishment, renewal, and maintenance backlog of R36 billion.

This funding gap is a significant obstacle to attaining targets and is unlikely to be addressed by the release of mega-investments in the near future.

This backlog could have a detrimental impact on the national economic and strategic users.
6.2.1 The Committee recommended that the Department of Water and Sanitation and other critical stakeholders in the entire water value cycle ensure that effective operations plans are devised by water services authorities to manage schemes on a sustainable basis.
Short-term measures that can help alleviate this pressure include enforcing water conservation and demand management approaches; improving coordination of planning for water and sanitation through the use of DDM platforms, taking into account the local municipality level as the main focal point for service delivery; encouraging proper integrated asset and operations management and maintenance through innovative PPPs; and ensuring that service level choices are appropriate to avoid unnecessary and irregular expenditure.
The issue must be addressed by reviewing mandates and policies related to water infrastructure management and available capacity.

6.3 Unauthorised, irregular, fruitless, and wasteful expenditure In response to Members' request for further information on unauthorised, irregular, fruitless, and wasteful expenditure, the Department noted that cases are ongoing, and some measure of success has been attained.
6.3.1 The Committee resolved that the Department should fast-track and finalise the investigations, apply consequence management on those officials found transgressing, and provide progress reports to the Portfolio Committee in the first quarter of 2024/25.
6.4 Financial Performance Challenges within the Water Trading Entity (WTE) 35 296 The Committee expressed its concerns about the findings of the Auditor-General, which noted that 42% of bulk infrastructure assets by the Department of Water and Sanitation’s Water Trading Entity are in poor condition.

Yet, the entity spent a fraction of its costs on maintenance and repair.
The impact of non-maintenance on bulk infrastructure assets leads to high water losses, loss of revenue and the inability to deliver water to its clients.

6.4.1 The Committee recommended that the WTE must hasten to remedy this concern to ensure adequate repair and maintenance.

6.5 Repair and maintenance of water infrastructure The Committee was alarmed that the WTE had only spent 2.13% of the total infrastructure assets on repair and maintenance work.
This is particularly concerning in the context of the National Treasury’s prescribed 80% norms and standards for maintenance.

The committee was also concerned that the department has no maintenance policy to guide infrastructure asset maintenance.

The committee called for this anomaly to be remedied urgently to improve infrastructure lifespan, prevent water losses and improve revenue collection.

6.5.1 The Committee recommended that the Department develop a national action plan to address water losses.
6.6 Management of Wastewater and Wastewater Treatment Works In response to issues raised around challenges of wastewater treatment plants in the country, the department noted that the issue of inadequate management of municipal wastewater, as a national priority, cannot be adequately addressed by the Department of Water and Sanitation.
This strategy necessitates a multi-sectoral approach, for example, the use of the District Development Model, which can holistically address and implement strategies on remediation measures, infrastructure maintenance, and human settlement planning to ensure wastewater treatment plants do not operate above capacity due to population growth.
6.6.1 The Committee recommends that the Department of Water and Sanitation enhance wastewater reuse efforts to meet water demand and conservation objectives and reduce pollutant loads.

Implementation and monitoring must be reinforced.


36 297 6.7 Turnaround time in the adjudication of water use licence applications While the Committee welcomed the improvement in the turnaround time for the adjudication of water use licence applications, the target of 90 days, as announced by the President in the 2020 and 2021 State of the Nation Address, has not yet been achieved.

The committee, however, welcomed the progress from the 300-day turnaround to the current 110 days.
6.7.1 The Committee urged the Department to continue implementing interventions to achieve the 90-day target, including improving the capacity of the unit performing water use authorisation functions.

6.8 Bucket Eradication Programme The Committee raised concerns about non-performance on the Bucket Eradication Programme, despite the Department’s promises that this programme would be prioritised.
6.8.1 The Committee recommended that the Department revise and draft new timelines to eradicate these bucket systems and adhere to these timelines.

6.9 The role of the Trans-Caledon Tunnel Authority (TCTA) within the proposed National Water Resources Infrastructure Agency In response, the Department noted that the TCTA would be directly affected when the proposed National Water Resources Infrastructure Agency is established.
However, the proposed Agency would still face the funding challenges that TCTA is facing presently.

The Minister would provide direction on how TCTA works with the proposed Agency.

Improvements have been recorded in meeting deadlines on tariff payment periods of water invoices.

The primary debtor of TCTA is DWS because DWS stands surety for defaulters who do not pay tariffs at the right time.
Funding agencies question payment shortfalls on tariffs, and banks want more guarantees as the economy is presently challenged.

37 298 6.9.1 The Committee recommended that the Department provide progress reports on the modalities it intends to use in terms of the financial modelling of the agency, the transfer of staff, and the institutional set-up of the agency.
6.10 Observations and Recommendations by the Auditor-General South Africa The audit identified significant challenges affecting the implementation of critical projects, maintenance of infrastructure at the Water Treatment Establishment (WTE), water quality risk management at water service authorities, and water loss management.

The department has prepared monitoring reports for these areas, but the key actions required to address the root causes were not determined and documented in an action plan.
The Water Services Improvement Plan (WSIP) is an integral part of the plan, but it does not include a detailed action plan to address the root causes that must be addressed immediately to improve service delivery challenges.
6.10.1 The Portfolio Committee appreciated the recommendations by the AGSA and stressed the importance to the Department of Water and Sanitation of implementing the following: • Key planned initiatives in implementing a water services improvement plan to improve service delivery at municipalities will assist the sector in addressing its challenges.
• The development of a single national regulatory dashboard that tracks various assessments and results for each municipality and identifies focused actions relating to the municipality to improve its performance.

• Review legislation to strengthen the department’s oversight role/enforcement rights and to enable greater involvement of the department as may be necessary to resolve water service delivery concerns as may be necessary.
• Capacity building at the municipal level for water service managers linked to recognised tertiary educational institutions.

This will include an increased focus on minimum competency requirements and practical artisan training.

• TCTA to prepare a detailed action plan to address the root causes identified.

The planned actions must assign responsibilities to responsible staff members within the entity, together with timelines for implementation.
The action plan must be monitored regularly, and 38 299 corrective action must be taken to ensure the achievement of planned project completion dates to improve access to water.

• Stringent project management controls to be implemented to ensure that project delays are kept to a minimum.

• Project control processes and procedures developed should be implemented.
6.11 Rollover of underspent budget The Committee noted that the Department requested to roll over the qualifying 2022/23 unspent funds of R722.7 million to the 2023/24 financial year, which will allow for the completion of various identifiable committed, contracted and accrued projects and activities which started in the previous financial year under the Water Services Management programme.
The rollover will, among others, fund the disaster response in KwaZulu Natal and Eastern Cape provinces; Giyani Water Reticulation to Villages; Kouga, Ndlambe and Amatola Water Projects; uMkhanyakude section 63 Intervention; and Bucket Eradication - Free State and Northern Cape provinces.

6.11.1 The Committee recommends that the Minister of Finance approve the rollover application to enable the Department to complete the abovementioned activities and projects in the 2023/24 financial year.
Report to be considered.

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