Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698930365115.pdf (South Africa)
Tuesday, 25 October 2022] No 167—2022] FOURTH SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ TUESDAY, 25 OCTOBER 2022 _____________________ TABLE OF CONTENTS ANNOUNCEMENTS National Council of Provinces 1.

Transmission of Bills for concurrence ............................................................................. 2 COMMITTEE REPORTS National Assembly 1.
Women, Youth and Persons with Disabilities .................................................................. 3 Small Business Development ......................................................................................... 89 2.

Environment, Forestry and Fisheries ............................................................................ 126 3.

Communications ........................................................................................................... 152 4.
Auditor-General ............................................................................................................ 235 5.

Public Enterprises ......................................................................................................... 246 6.

Home Affairs ................................................................................................................ 289 7.
Tourism ........................................................................................................................ 368 8.

1 ANNOUNCEMENTS National Council of Provinces The Chairperson 1.

Bills passed by Assembly and transmitted to Council for concurrence (1) Bill passed by National Assembly and transmitted for concurrence on 25 October 2022: (a) National Land Transport Amendment Bill [B7F-2016] (National Assembly – sec 76).
The Bill has been referred to the Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure of the National Council of Provinces.

In accordance with Joint Rule 207, the President’s reservations on the National Land Transport Amendment Bill (see ATC of 23 September 2021, ATC of 20 September 2022 and NA Minutes of 25 October 2022) have also been referred to the Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure.
COMMITTEE REPORTS National Assembly 2 1.

BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON WOMEN, YOUTH AND PERSONS WITH DISABILITIES, DATED 21 OCTOBER 2022.
The Portfolio Committee on Women, Youth and Persons with Disabilities, having considered the annual and financial performance of the Department of Women, Youth and Persons with Disabilities on 11 October 2022, and the Commission for Gender Equality on 14 October 2022 and the National Youth Development Agency on 18 October 2022, reports as follows: 1.

Introduction The financial year 2021/22 was a period in which South Africa continued to experience the impact of the COVID-19 pandemic in several forms.
Furthermore, the country was still reeling from the effects of the global financial crisis and the downgrades by rating agencies with devastating effects on the economy.

In turn, the combination of these factors had a direct impact on the livelihoods of women, youth and persons with disabilities which is then further exacerbated by poverty for many.
At present women constitute more than half of the South African population and the youth unemployment rate is the highest it has even been since the advent of democracy.

Gender-based violence and femicide continues to ravage the country and has been deemed the silent pandemic.

It is within this context that the Budget Review and Recommendations Report (BRRR) 2022 is compiled.
The review and assessment of the Annual Reports for the Department of Women, Youth and Persons with Disabilities (hereafter referred to as the Department), the Commission for Gender Equality (CGE) and the National Youth Development Agency (NYDA) has this been considered against that backdrop.

The Department having been more than two years in existence in its current form experienced a major tragedy with the death of the former Deputy Minister Hlengiwe Mkhize in September of 2021.
To date, the position of deputy minister has not been filled in the Department.

Another key significant change for the Department was the change to its mandate as it became what it refers to as a regulator.

Moreover, by the introduction of the Annual Performance Plan 2022/23 the Department had also decreased its programmes from five to four with the merger of disability and youth into one.
However, for the period under review 2021/22 the Department still operated with five programmes and as such it has been assessed in this regard.

3 On the 11th October 2022, the Committee was briefed by the Department on its Annual Report for 2021/22, as well as by the Auditor General of South Africa (AGSA).

The Commission for Gender Equality (CGE) briefed the Committee on the 14th October 2022 and the National Youth Development Agency (NYDA) on the 18th October 2022.

2.

Strategic Overview 2.1.


Mandate and Purpose of the Department The Department of Women, Youth and Persons with Disabilities derives its mandate from section 9 (3) of the Constitution.

Department has shifted its mandate from that of being a facilitation department to that of being a regulator.

As such, the mandate of the Department is to regulate the socio-economic transformation and implementation of the empowerment and participation of women, youth and persons with disabilities.
Furthermore, it will also create and facilitate a socioeconomic internal and institutional environment that will enable it to perform its function as a regulator.

Its ultimate vision is one in which the rights of women, youth and persons with disabilities are realised.
As stated in the Estimates of National Expenditure (ENE) for 2021, the Department received its transfer from National Treasury via Vote 20, which at the time was inclusive of five programmes namely; Programme 1: Administration, Programme 2: Social Transformation and Economic Empowerment (STEE) and Programme 3: Policy, Stakeholder Coordination and Knowledge Management (PSCKM); Programme 4: Rights of Persons with Disabilities and Programme 5: National Youth Development.
The Department notes as its new outcomes as follows: • The socio-economic empowerment of women, youth and persons with disabilities through the development and implementation of regulatory frameworks, • The rights of women, youth and persons with disabilities realised through the development and implementation of legislation, and • The development and implementation of a stakeholder framework.
2.2 Mandate of the Commission for Gender Equality 2 4 The Commission for Gender Equality (CGE) was established in 1996 according to the Commission for Gender Equality Act 39 (1996) to promote gender equality.
In its efforts to monitor, lobby, educate citizens and encourage the equitable development of women and men, the CGE is compelled to undertake the following: • To monitor and evaluate policies and practices of organs of State at any level, statutory bodies or functionaries, public bodies and authorities, and private businesses, enterprises and institutions; • To cultivate an understanding of gender equality and the role and activities of the Commission through developing, conducting and managing information and education programmes; • To evaluate whether Acts of Parliament (existing or proposed), systems of personal and family law or custom, systems of indigenous law, custom or practices or any other law, will affect the status of women, and to make recommendations to Parliament in this regard; • To recommend to the National and Provincial Legislatures, any new legislation that would promote gender equality; • To investigate on its own initiative or due to a complaint, any gender related issue; • To maintain close relations with institutions that undertake similar work, and to facilitate cooperation in handling complaints; • To interact with civil society to further the work of the Commission; • To monitor compliance to international conventions, covenants and charters related to gender issues, and to submit reports to Parliament in this regard; • To conduct research on gender related issues; and • To consider recommendations, suggestions and requests made with regards to gender equality as received from any source.
2.3 Mandate of the National Youth Development Agency The National Youth Development Agency (NYDA) was established through the NYDA Act (No.

54 of 2008).

It was established to be a single, unitary structure to deal with youth development issues at a national, provincial and local government level.

The NYDA Act instructs the NYDA to promote a uniform approach to youth development by all organs of State, the private sector and non-government organisations.
The NYDA derives its mandate from legislative frameworks which is inclusive of the 3 5 NYDA Act (No.

54 of 2008), the National Youth Policy (2009-2014) and the Integrated Youth Development Strategy.

The NYDA Act (No.

54 of 2008) stipulates objectives of the Agency as follows: a) Develop an Integrated Youth Development Plan and Strategy for South Africa.

b) Develop guidelines for the implementation of an integrated national youth policy and make recommendations to the President.
c) Initiate, design, co-ordinate, evaluate and monitor all programmes aimed at integrating the youth into the economy and society in general.

d) Guide efforts and facilitate economic participation and empowerment, and achievement of education and training.

e) Partner and assist organs of state, the private sector and non-governmental organisations and community-based organisations on initiatives directed at the attainment of employment and skills development.
f) Initiate programmes directed at poverty alleviation, urban and rural development and the combating of crime, substance abuse and social decay amongst youth.

g) Establish annual national priority programmes in respect of youth development.

h) Promote a uniform approach by all organs of state, the private sector and non-governmental organisations to matters relating to or involving youth development.
i) Endeavour to promote, generally, the interest of the youth, particularly young people with disabilities.

From an oversight perspective, the Committee is therefore responsible for overseeing the Department which is inclusive of the Commission for Gender Equality (CGE) and the National Youth Development Agency (NYDA).

3.

Purpose of the Budget Review and Recommendations Report (BRRR) The Money Bills Procedures and Related Matters Amendment Act (No.
9 of 2009) sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department.

Section 5 (1) of the Money Bills Amendment Procedure and Related Matters Act, (No.

9 of 2009) requires that the National Assembly, through its Committee, must annually assess the performance of each national department.
Section 5 (2) makes provision for the annual submission of the budgetary review and recommendations report (BRRR) for tabling in the National Assembly for each department.

It is expected of the BRRR to report on the following: 4 6 • Assessment of the department’s service delivery performance given the available resources; • Assessments on the effectiveness and efficiency of the department’s use and forward allocation of available resources; and • May include recommendations on the forward use of resources.
4.

Method In order to enable the Committee to take informed decisions on the performance of the Department for the financial year 2021/22, the Committee consulted the following reports and documents: Section 32 reports of National Treasury, the Department’s Annual Report 2021/22, Reports of the Auditor-General of South Africa (AGSA), Report of the Department’s Audit and Risk Committee (ARC), the 2021 State of the Nation’s Address, the CGE’s and NYDA’s Annual Report for 2020/21.
All of this information assisted the Committee in providing a holistic assessment of the Department, the NYDA and the CGE’s performance for 2021/22 with reflections on the 1st Quarter report of 2022/23.
In complying with Section 5 (2) of the Money Bills Amendment Procedure and Related Matters Act, (Act No 9 of 2009), the Portfolio Committee on Women, Youth and Persons with Disabilities held a meeting on the 11th October 2022 to consider the 2021/22 Annual Report of the Department of Women, Youth and Persons with Disabilities.

The Office of the AGSA was invited to give input during the budget review and recommendation report process on the 11th October 2022 as well.
As noted previously, the Committee was also briefed and deliberated on the quarterly reports for 2021/22 including the first quarter reports for 2022/23 of the Department and the CGE.

As such, this report therefore includes those key issues that were identified by the Committee.

5.

Outline of the Contents of the Report This report provides an analysis of the financial and programmatic performance of the Department, the NYDA and the CGE.
Cognisance is taken of the reductions imposed on the budget allocated as well as revisions made to respective Annual Performance Plans and where relevant, commentary is provided in that regard.

Moreover, the report not only reflects on the Annual Reports but examines the Committee’s engagement with the entities for the year under review as well as the Q1 2022/23 performance and what needs to be taken into consideration going forward.
The report concludes with key observations and recommendations made by the 5 7 Committee having engaged with the Department, the NYDA, the CGE, the AGSA and each of the Audit and Risk Committee’s for each of the entities.

6.

Overview of Key Policy Focus Areas - Strategic Priorities of Government 6.1 National Development Plan “The NDP Vision 2030 prioritises the significant role of women, youth and people with disabilities in our society.

If these three groups are strong, our whole society will be strong.
These are cross-cutting focus areas that need to be mainstreamed into all elements of South Africa’s developmental future and all programmes of government.
They will inform interventions across the three pillars.”1 The Department indicates that its mandate is aligned to the National Development Plan and that it was engaging with the DPME on ensuring that the 7 national priorities informs the policy priorities for gender, youth and disability and includes indicators and targets into the NDP 5- year Implementation plan and MTSF 2019-2024.

In turn, this would therefore inform the focus areas in the Strategic Plan for the next five years.
Furthermore, the Department maintains that its Country Gender Indicator (CGI) Framework which is the backbone of the monitoring mechanism of the Gender responsiveness Budgeting, Planning, Monitoring, Evaluation and Auditing (GRBPMEA) Framework has its foundation in the NDP, State of the Nation Address (SONA), Sustainable Development Goal (SDG) (5), Agenda 2063, Convention on the Elimination of all Forms of Discrimination (CEDAW), Beijing Platform of Action (BPfA), Solemn Declaration on Gender Equity in Africa, Protocol on Gender and Development, National Policy Framework for Women Empowerment and Gender Equality (NPFWEGE) and other regional and international instruments on women Thus in implementing its programmes, the Department maintains that it aligned its indicators to respond and contribute to the principles of the NDP.
This BRRR also examines the extent to which the Department has been able to do this for the year under review but also has a mid- point in the five-year term.

6.2 Medium-Term Strategic Framework (MTSF) 1 Department of Planning, Monitoring and Evaluation, Republic of South Africa (2019) Medium Term Strategic Framework 2019-2024.
6 8 The Medium-Term Strategic Framework (MTSF) (2019-2024) for the 6th Administration identified the following seven priorities: (a) Priority 1: A capable, ethical and developmental state; (b) Priority 2: Economic transformation and job creation; (c) Priority 3: Education, skills and health; (d) Priority 4: Consolidating the social wage through reliable and quality basic services; (e) Priority 5: Spatial integration, human settlements and local government; (f) Priority 6: Social cohesion and safe communities and (g) Priority 7: A better Africa and world All of the MTSF priorities are underpinned by three pillars namely; (a) Achieving a more capable state (b) Driving a strong and inclusive economy (c) Building and strengthening the capabilities of South Africans.
The MTSF 2019-2024 aims to address the challenges of unemployment, inequality and poverty through three pillars outlined above.

Moreover, the MTSF has also identified cross-cutting focus areas for women, youth and persons with disabilities which are implicitly linked to the National Development Plan (NDP).

“Cross-cutting focus areas: The NDP Vision 2030 prioritises the significant role of women, youth and people with disabilities in our society.
If these three groups are strong, our whole society will be strong.

These are cross-cutting focus areas that need to be mainstreamed into all elements of South Africa’s developmental future and all programmes of government.

They will inform interventions across the three pillars.”2 The Department provided specific commitments with respect to each of the MTSF priorities identified and presented these to the Committee in May 2020.
6.3 State of the Nation Address 2021 The 2021 State of the Nation Address (SONA) focussed on four key areas related dealing with the coronavirus pandemic, accelerating the country’s economic recovery; implementing economic reforms to create sustainable jobs and drive inclusive growth and finally, fighting corruption and strengthening the State.
All four of the key focus areas have a bearing on women, youth and persons with disabilities in South Africa The President made reference to women in relation to the fight against gender-based violence (GBV) and economic empowerment.
In terms of GBV, the President reaffirmed his commitments made at the launch of the National Strategic Plan on Gender-Based Violence and Femicide (GBVF) “to the women and children of this country that we were going to strengthen 2 Department of Planning, Monitoring and Evaluation, Republic of South Africa (2019) Medium Term Strategic Framework 2019-2024.
7 9 the Criminal Justice System to prevent them being traumatised again, and to ensure that perpetrators face justice.” As such, three key pieces of legislation were introduced in Parliament in the previous year to make the criminal justice system more effective in combatting GBV thereby bringing perpetrators to book and reducing the backlog of GBV cases.

Furthermore, the President announced that the private sector-led GBVF Response Fund was launched.
To this end, he indicated that “Several South African companies and global philanthropies made pledges to the value of R128 million.” In addition, the President also indicated that, “Over the next three years, government will allocate approximately R12 billion to implement the various components of the National Strategic Plan.” With respect to prioritising the economic empowerment of women as was stated in the 2020 SONA, the President noted that Cabinet approved a policy that 40% of public procurement should go to women-owned businesses and entities.
To this end, the President stated that “Several departments have started implementing this policy and are making progress.” With respect to youth, the President also reflected on the commitments made in SONA 2020, to address youth unemployment by announcing that the National Youth Development Agency and the Department of Small Business Development would provide grant funding and business support to 1 000 young entrepreneurs within 100 days.
To this end, even though the programme had to be put on hold due to the coronavirus restrictions, it still managed to reach its target of 1 000 businesses by International Youth Day on 12 August 2020.

In so doing, providing a firm foundation for Government’s efforts to support 15 000 start-ups by 2024.

The President also encouraged the youth to join that the National Pathway Management Network that was established in 2020 as it provided support and opportunities to young people across the country.
Only one reference was made to persons with disabilities, in which the President committed in “the year ahead, we are also going to forge ahead with efforts to provide greater opportunities for persons with disabilities to participate in the economy and in society in general.” During the year under review, the Committee also requested the Department to report on progress in terms of what the President identified in its 2021 SONA and how the respective programmes were responding to these.
Similarly, the CGE and NYDA were also requested to do the same in its quarterly report briefings to the Committee.

Despite requests made in this regard, not much was reflected during quarterly reporting.

8 10 7.
8 10 7.

Department’s Strategic Priorities 7.1 Strategic Priorities as per Strategic Plan 2020-20253 As per the Strategic Plan (2020-2025), the Department outlines the links between the 7 MTSF priorities, the NDP and SONA priorities by highlighting the alignment through the various outcomes and five-year targets that were identified in its Strategic Plan for 2020-2025 as outlined below.
7.1.1 MTSF Priority 1: A Capable, Ethical and Developmental State Outcomes: • Improved governance processes and systems for DWYPD • Government-wide planning, budgeting, M&E addresses priorities relating to women’s empowerment, youth development and the rights of persons with disabilities • Gender, youth and disability rights machineries institutionalised • Accessible and available evidence based knowledge and information on access to services, empowerment and participation for women, youth and persons with disabilities • Revised legislative framework to respond to and enforce rights of women, youth and persons with disabilities • Strengthened stakeholder relations and community mobilisation towards the realisation of women’s empowerment, youth development and disability rights 7.1.2 MTSF Priority 2- Economic Transformation and Job Creation • Equitable economic empowerment, participation and ownership for women youth and persons with disabilities being at the center of the national economic agenda 7.1.3 MTSF Priority 3- Education, Skills and Health Outcomes • Education: Improved rate of educational attendance and retention of young women and women with disabilities in public sector institutions • Health: Improved health for women, youth and persons with disabilities • Skills: Improved skills for women, youth and persons with disabilities 3 Department of Women, Youth and Persons with Disabilities (2020) Strategic Plan 2020-2025 9 11 7.1.4 MTSF Priority 4 - Consolidating the Social Wage through Reliable Outcomes: • The Department, working with the Department of Social Development and of Health, will co- develop and ensure implementation of a core package of essential psychosocial support and norms and standards for substance abuse, violence against women and children.
Through the core package the department will ensure that 90% of victims of GBVF have access by 2024.

• The Department will develop different interventions to reduce GBVF among women, youth and persons with disabilities.

One of the interventions is the National Strategic Plan to end GBVF which will be accompanied by a monitoring framework to ensure its implementation.

• The actual deliverables are covered under Priority 6 and the details on the specific deliverables will be outlined in the APP each year.
7.1.5 MTSF Priority 5: Spatial Integration, Human Settlements and Local Government: Outcomes: • The department will lobby and support other department’s infrastructure and neighbourhood development grants and tax rebates and new structures to incorporate universal design norms and standards.

This will include retrofitting existing buildings, transport and Information and Communication Technology (ICT) systems and infrastructure to ensure universal design.
It will also monitor compliance with the universal design, norms and standards.

• Furthermore, the department, through Programme 5 on Persons with Disabilities, will develop Frameworks on Disability Rights Awareness Campaigns.

7.1.6 MTSF Priority 6- Social Cohesion and Safe Communities Outcomes: • Levels of marginalisation, stigmatisation and discrimination and violence against women, girls and persons with disabilities reduced • Equal opportunities, inclusion and redress.
The department contributes to Priority 6 through the Stakeholder Coordination and Outreach (SCO) sub-programme, which is responsible for coordinating sustained and visible initiative/ campaigns on gender to contribute to the target of 30 by 2024.
7.1.7 MTSF Priority 7- A Better Africa and World Outcomes: • Strengthened women, youth and disability rights agenda within global, continental and regional platforms, institutions and engagements towards a better Africa and the world • Gender equality, youth and disability agenda strengthened within multilateral institutions 10 12 • The department contributes to Priority 7 through the International Relations (IR) Directorate and the Research Policy and Knowledge Management, on international reporting The Department had also identified the following strategic priorities for each of its programmes namely; Programme 1: Administration (Admin.)
• Strengthened good governance that ensures the Department delivers on its mandate.

• Improved strategic financial management system in Department, enabling delivery on the mandate.

• Effective and appropriate Human and ICT and Physical Resource management, enabling delivery on its mandate.

Programme 2: Social Transformation and Economic Empowerment (STEE) • Development and implementation of interventions to promote gender mainstreaming of socio- economic and governance programmes.
• A Department that advances women empowerment and gender equality.

Programme 3: Policy, Stakeholder Coordination and Knowledge Management (PSCKM) • Promotion of gender-responsive knowledge and research, policy development, international relations, planning, monitoring and evaluation, stakeholder engagement, advocacy and outreach campaigns with respect to women's socio-economic empowerment and gender equality.
Programme 4: Rights of Persons with Disabilities (RPD) • To promote, protect and empower persons with disabilities through the development and implementation of legislation, policies and programmes.

• To strengthen implementation of the White Paper on the Rights of Persons with Disabilities through the National Disability Rights Machinery.

• Strengthening of International Relations to promote the rights of persons with disabilities.
Programme 5: National Youth Development Programme (NYD) • To coordinate, support and facilitate youth development and empowerment.

7.2 Strategic Outcomes over MTSF Period 11 13 The Department has identified the following strategic outcomes as informed by its priorities and other Government-wide outcomes as follows in the Annual Report: a) Improved governance processes and systems for Department of Women, Youth and Persons with Disabilities (DWYPD).
b) Government-wide planning, budgeting, M & E addresses priorities relating to women’s empowerment, youth development and the rights of persons with disabilities.

c) Gender, youth and disability rights machineries institutionalized.

d) Accessible and available evidence based knowledge and information on access to services, empowerment and participation for women, youth and persons with disabilities.
e) Strengthened stakeholder relations and community mobilisation towards the realisation of women’s empowerment, youth development and disability rights.

f) Revised legislative framework to respond to and enforce rights of women, youth and persons with disabilities Socio-Economic Empowerment –WYPD.

g) Rights of Women, Youth and Persons with Disabilities realised.

h) Stakeholder Management.
The Department notes in its 2021/22 Annual Performance Plan that that its outcomes are aligned to the following MTSF priorities: Priority 1: A capable, ethical and developmental state Priority 5: Spatial integration, human settlements and local government Priority 7: A better Africa and world The Department notes its new outcomes as follows: • The socio-economic empowerment of women, youth and persons with disabilities through the development and implementation of regulatory frameworks, • The rights of women, youth and persons with disabilities realised through the development and implementation of legislation, and • The development and implementation of a stakeholder framework.
Moreover, the Department also notes the following as its main services: a) Coordinate the establishment of an accountability architecture (national coordinating structure) undergirded by the necessary resources to drive a multi-sectoral response to Gender-Based Violence and Femicide (GBVF).

b) Develop and implement a National Strategic Plan (NSP) on GBVF.

12 14 c) Reinvigoration, revitalisation and strengthening of the National Gender Machinery.

d) Women’s empowerment and gender equality mainstreaming.
e) National Gender Machinery Coordination and Accountability Forum to support closer collaboration between government, Parliament, independent bodies, private sector and civil society.

f) Employment of Gender Focal Points in government departments as outlined in the NGPF (2000).

g) To develop intervention mechanisms for gender mainstreaming for women’s socio-economic empowerment, transformation and gender equality.
h) Promote gender sensitive research and policy analysis in relation to gender equality and women’s empowerment.

i) Establish a knowledge gateway for women’s socio-economic empowerment transformation and gender equality.

j) Monitor and evaluate the impact of government policies and programmes on improving the socio-economic status of women, which includes facilitating stakeholder coordination (domestic, regional and international).
k) Conducting outreach initiatives, including dialogues to share and gather information to promote women’s socio-economic empowerment and gender equality.
7.3 Strategic Priorities 2021/22 According to the 2021 Estimates of National Expenditure (ENE), the Department intended focussing on the following over the medium term:4 a) reducing the incidence of gender‐based violence and strengthening the national response to it; and b) promoting the inclusion of women, youth and people with disabilities in the economy and society more broadly (This included promoting gender‐responsive planning, budgeting, and monitoring and evaluation across government; promoting the rights of people with disabilities and supporting the empowerment of young people).
In addition, other policy instruments and legislation that the Department aims to develop and implement across the next five years includes the following: 4 National Treasury (2021) Estimates of National Expenditure, Vote 20: Women, Youth and Persons with Disabilities, p. 350 13 15 • Socio economic empowerment index policy • WYPD Responsive planning, budgeting, monitoring and evaluation framework • National gender policy framework • WYPD mainstreaming framework • Reasonable accommodation framework • Universal design and access framework • Self-representation framework • Disability Rights Awareness Campaign framework • Women empowerment and gender equality (WEGE) Bill • National Council on Gender Based Violence Bill • Disability rights Bill • NYDA Amendment Bill • South African Youth Empowerment Act With regards to the CGE, “Over the medium term, the commission will continue to advance legislation, policies and advocacy initiatives that contribute to the eradication of gender inequality.
This is expected to be achieved by influencing laws and government policies through written submissions to Parliament; and monitoring the country’s response to addressing and combating gender‐based violence and inequality.
The commission will also seek to conduct outreach and advocacy interventions to increase education and awareness, and provide legal clinics to resolve disputes in cases of gender‐related complaints.”5 With regards to the NYDA, “Over the medium term, the Agency will focus on providing comprehensive interventions to support decent employment, skills development and entrepreneurship for young people.
This will include partnering with different sectors to provide training in technical and vocational skills through sector education and training authorities, providing grants to young people for enterprise development, and coordinating the national youth service programmes.”6 8.
Policy Priorities for 2021/22 Overall, the Department notes that it is at the centre of Government and has a mandate to co- ordinate and regulate accelerated delivery of a quality, cohesive and integrated national gender, 5 National Treasury (2021) Estimates of National Expenditure, Vote 20: Women, Youth and Persons with Disabilities, p. 360 6 National Treasury (2021) Estimates of National Expenditure, Vote 20: Women, Youth and Persons with Disabilities, p.362 14 16 youth and persons with disabilities (GEYODI) programmes.
As per the 2021 Estimates of National Expenditure, the key priorities that the Department intended spending its budget included addressing gender-based violence and supporting empowerment, promoting gender- responsive planning, budgeting and monitoring and evaluation across Government, promoting the rights of persons with disabilities and supporting the empowerment of young people.
Furthermore, in the 2021/22 financial year 2021/22, the Department also planned to focus on development of the Gender, Youth and Persons with Disabilities (GEYODI) Coordination Framework.
The purpose of the GEYODI Coordination Framework is to serve as the Government’s nerve centre for effective coordination and accountability of the National GEYODI Programme; and broaden sectoral participation in the National GEYODI Programme by engaging on an equal footing all stakeholders and structures of the machineries.

9.
9.

General Overview and Assessment of Financial Performance for Department According to the Estimates of National Expenditure 2021, R763,5 million was allocated for Vote 20 for the Department of Women, Youth and Persons with Disabilities.

Bearing in mind that R 91,376 constituted the transfer payment to the CGE and R470,962 million to the NYDA.

This amounted to R562,338 million.


Hence the Department would have been left with an operating budget of R203.170 million to undertake its programmes and meet its targets for 2021/22.

However, in October 2021 the NYDA received an additional cash injection from National Treasury of R430 million7 taking its total in transfers via the Department to R 900.962 million.

As of 31 March 2022, the Department spent R1 164 423 billion (97.4%) of its total budget R 1 195 508 billion (includes transfers).
The total under-expenditure incurred was R31.085 million.

The Department reports a total of R2,185 million in virements from Programmes 1 and 3 to Programme 1 (Administration), 2, 3 and 4.

As such R1,992 million from Compensation of Employees (CoE) was shifted from Programme 3 to CoE in Programme 1 (R1,662 million), 2 (R64 000), 3 (R64 000) and 4 (R266 000) for CoE.

A total of R193 000 was shifted from Goods and Services in Programme 1 to Payment for financial assets Programme 1.
Hence this was an internal virement between sub-programmes.

In summary, the following virements have been made in terms of financial line items: 7 R400 million as per the adjusted appropriation was for the NYS programme and R30 million for Entrepreneurship support initiatives by the NYDA.

15 17 • CoE: Shifting of funds was to augment the excess expenditure in programmes 1, 2 and 4 utilising unspent funds related to vacant posts in programme 3 that were not filled by the end of the financial year.
R1 992 million from Compensation of Employees (COE) from Programme 3 to Programme 1, 2, 3 and 4.

• R193 000 from Goods and Services (G&S) from Programme 1 to Programme 1 – primarily for payment for financial assets.

In examining the programme expenditure for 2021, the following table has been collated using the information the information provided in the Annual Report.

Table 1: Total vs Operational Expenditure as at 31 March 20228 Programme Total Expenditure Incl.
transfer payments Total budget as per Annual Report Appropriation Statement (incl.

transfer payments) 1.

Administration 2.

Social Transformation & Economic Empowerment 3.

Policy Coordination & Knowledge Management 4.

Rights of Persons with Disabilities 5.
National Youth Development R 111 909m R 103 486m R 118 407m R 113 311m R 35 668m R 26 059m Rm R 16 383m R 10 887m Rm R 913 141m R 910 680m R 900.962m (Rm – NYDA R0m) Budget per programme excluding transfer payments (operational budget) R111,909m R91.376 million (R118,407 - CGE R91,376m) Actual expenditure excluding transfer payments (operational expenses) % of allocated programme budget R103,486m 92.4% R91.376m (Rm-CGE Rm) % R26,059m 73.0% R10,887m 66.4% R900.962m (R910,680m - NYDA R900,962m) 79.7% Programme expenditure as % of total operational expenditure R103,486m 60.1% R21,935 m (R113,311 - R91,375m) 12.7% R26,059m 15.1% R10,887 6.3% R9,718m (R910,680 - R900,962m) 5.6% R172,085m Total R 1 195 508 billion Total under-expenditure = R 31,085m R 1 164 423 billion Total budget expenditure = 97.4% R 203,170m Total expenditure, i.e.
operational budget = 84.7% The table provides an overview of expenditure as at the end of the 2021/22 financial year.
The following can be noted:9 8 Levendale, C (2022), Annual Report Overview 2021/22 Department of Women, Youth and Persons with Disabilities Parliament of the Republic of South Africa, Research Unit, 10 October 2022 9 Ibid 16 18 • When considering the overall expenditure of the Department based on its total appropriation of R1.195 508 billion, it appears that the Department has spent 97.4% or R1.164 423 billion million of its total budget.
• However, when considering the budget less the transfer payments to the CGE and NYDA, i.e.

the operational budget (R203,170 million), the Department has spent 84.7% or R172,085 million of the operational budget.

• The bulk of the Department’s operational budget was still allocated to its Administration Programme (Programme 1).

This programme also consumed the largest expenditure (R103,486 m) of the Department’s operational budget which amounted to 60.1%.
Programme 4, the Rights of Persons with Disabilities accounts for only 6.3% of expenditure, while Programme 5, National Youth Development accounts for only 5.6% of operational expenditure.

• Total under-expenditure for the year amounts to R31,085 million.
The Department reports that it has requested the following roll-over funds from National Treasury: • A roll-over request was made for R1 000 000.00 on the support and maintenance project for Microsoft, R600 000.00 for the payment of the Microsoft License and R1 767 000.00 for the installation of the Information Communications Technology (ICT) infrastructure as part of the relocation of the Department to the new premises.
• A roll-over request was made for the R3 508 000.00 for the installation of ICT infrastructure at the new premises for the department as part of the relocation.

• A roll-over request was made for the R3 585 000.00 for the continuation of the establishment of the NCGBVF.

• A roll-over request was made for an amount of R784 000.00 for the appointment of a service provider to harmonize Disability Rights Instruments and develop a Disability Rights Monitoring Results-Based Framework.
The Department still awaits the outcome of these requests.

The key cost drivers were Compensation of Employees and Goods and Services.

As such, 71.9% (R115 million) of the Department’s operating budget has been spent on Compensation of Employees (CoE).

This was an 8.7% increase from 2020/1.

Furthermore, 24.7 % has been consumed by Goods and Services (R50,993 million).

In terms of spending under goods and services, the line items which have incurred greatest expenditure are listed in the table below.
17 19 Table 2: Comparison of Key Cost Drivers between 2020/21 and 2021/22 Key Cost Driver Compensation of employees Goods and services - Property payments - Travel & Subsistence - Communication - External Audit Costs - Computer services - Advertising 2020/21 R110.311 million R43.243 million R19.147 million R6.078 million R4.323 million R3.235 million R2.870 million 2021/22 R115,7 million R50,993 million R21,649 million R4,450 million R4,008 million R3,802 million R4,224 million R5,112 million There has been a significant increase in property payments year on year from R12.8 million in 2019/20 to R19.1 million in 2020/21 to R21,649 million in 2021/22.
While travel and subsistence remains a primary cost driver it has seen a marked decrease from 2019/20 when expenditure was at R28.3 million to R4,450 million in 2021/22.

The decrease is attributed to the COVID-19 lockdown travel restrictions.
In terms of spending under Goods and Services, the main cost drivers were travel and subsistence (R 4,450 million), property payments (R21,649 million), expenditure for external audit costs (R3,802 million), Communication (R4,008 million) and Computer services (R4,224 million) and Advertising (R5,112 million).

These 5 line items consume 84.8% (R43,245 million) of the Goods and Services budget.
Looking at key cost drivers comparatively across the 2019/20, 2020/21 and 2021/22 financial years they remain fairly similar.

Compensation of employees sees a continuous increase from R89.013 million in 2019/20 to R110.311 million in 2020/21 to R115,7 million in 2021/22.

Goods and Services also increased by R7,75 million between 2020/21 and 2021/22.
The Department indicated that under-spending per programme was due to following reasons as cited in the table below: Table 3: Under-expenditure per programme for 2021/2210 10 Levendale, C (2022), Annual Report Overview 2021/22 Department of Women, Youth and Persons with Disabilities Parliament of the Republic of South Africa, Research Unit, 10 October 2022 18 20 Programme Under- Expenditure Under- expenditure as % of total appropriation Under- expenditure as % of programme operational budget P1: Admin R 8,423 million 7.5% 7.5% P2: STEE R 5,096 million P3: PSCKM R 9,609 million 4.3% 18.8% 26.9% 26.9% P4: RPD R 5,496 million 33.5% 33.5% 19 Reason For Under-Expenditure • Delayed spending on the support and maintenance of the implementation of the Microsoft Licenses amounting to R1 077m.
Reduction on travel and subsistence amounting to R1 371 000.00 linked to COVID-19 restrictions on travel • Daily office operational expenditure included: - administrative fees (R425 000), communication (telecoms) (R488 000), legal services (R296 000), contractors (R270 000), training and development (R345 000) and operating payments (R333 000).
• Non-procurement of the 2 Executive Vehicles for the Cape Town Office amounting to R1 392m due to the passing away of the former Deputy Minister • Cancelation of an order for 22 laptops due to no stock availability from the supplier amounting to R573 000.

• The procurement of the furniture as part of the relocation to the new premises was put on hold as the refurbishment and upgrading of the building is work in progress.
• Delay in the finalisation of the National Council for Gender-Based Violence and Femicide (NCGBVF) due to challenges in legislation, the unspent funds amount to R3 706m.

• Reduction on travel and subsistence due to COVID-19 travel restrictions amounting to R1 055m.

• Due to the challenges experienced by the department for the procurement of research and monitoring and evaluation projects that went out on tender, but no responses were received from the market.
The estimated cost for these projects is to R2 991m.

• COVID -19 restrictions on travel and physical events resulted in an unspent amount of R1 973m budget for travel and subsistence as well as the budget for items such as contractors (R495 000), operating payments (R1 117m), venues and facilities (R958 000) and rental and hiring (R641 000) • Attributable to the reduction on travel and subsistence amounting to R2 410m.
• COVID-19 restrictions on physical events contributed to the underspending on items 21 Programme Under- Expenditure Under- expenditure as % of total appropriation Under- expenditure as % of programme operational budget Reason For Under-Expenditure P5: NYD R 2,461 million 0.3% 20.2% such as catering (R237 000), consultants: business and advisory services (translation and transcription services) (R638 000), venues and facilities (R850 000) and stationery and printing (R302 000).
• Attributable to the tender process that was not finalised by DPME at the end of the financial year in relation to a research study on Youth Employment Programme in the country.

This study was initially to be the 2021/22 financial year.

implemented within • Also due to the declined donation of laptops by National Treasury (NT) amounting to R500 000 that would have been procured as part of an initiative with DIGITITAN to assist young persons in terms of education at TVET colleges.
Based on the table above, the main reasons for under-spending related to Good and Services and payment for capital assets.

When considering, the under-expenditure as a percentage or proportion of the actual operational budget of R203,170 million as opposed to the total budget of R1.1 billion which is inclusive of the transfer payments to the NYDA and the CGE, it is vastly different.
Hence as a proportion of the operational budget, the smallest percentage of under-expenditure occurs in Programme 1 at 7.5% of the operational budget, while the greatest under-expenditure is in Programme 4 at 33.5%.

Hence the core programmes had the highest under-expenditure as compared to the administration programme.

Furthermore, the Department indicated that it utilised 39 consultants on 9 projects throughout the financial year amounting to R1,848 million as outlined in the table below.
The Department is not able to indicate the estimated duration/work days of these consultants for 5 of the projects stated as ongoing in the Annual Report.
Table 4: Use of consultants for 2021/22 Project Title Health risk management (SOMA) Competency Assessment Total number on consultants that worked on the project Estimated Duration (work days) Contract Value in Rands (R’000) 1 1 20 Ongoing Ongoing 19 34 22 Audit Committee Organisational Strategic Planning Translators, Interpreters & Sign Language Facilitation Services Virtual NYP M&E Research project Qualifications Verification (SAQA) Total 5 1 27 1 1 1 1 39 Ongoing Ongoing 1 5 1 Ongoing 1 269 175 293 213 141 696 7 R1,848 million 9.1 Expenditure Management for 2021//22 9.1.1 Irregular Expenditure • The Department has irregular expenditure to the amount of R41,712 million on its financial statements relating to previous financial years.
No irregular expenditure was incurred for the 2021/22 financial year.

New policies on irregular, wasteful and fruitless expenditure were developed and approved during November 2021 to enhance compliance and prevent the occurrence of irregular expenditure.

9.1.2 Fruitless and wasteful expenditure • The Department has not incurred any Fruitless and Wasteful expenditure for 2021/22.
However, previous expenditure relating to a case against a previously used travel agency is still on record and is currently with the State Attorney to consider possible recovery of funds (R1.330 million).

9.1.3 Unauthorised expenditure • The Department did not incur any Unauthorised expenditure for 2021/22.

However, there is unauthorised expenditure from previous years that is awaiting authorisation.

This amounts to R32,774 million.


9.1.4 Deviations • The Department states in its Annual Report that it did not receive exemptions and deviations form National Treasury during the 2021/22 FY.

However, the Q4 2021/23 briefing to the Portfolio Committee the following was reported 21 23 - As at 31 December 2021, the Department has incurred 16 deviations amounting to R1,539 418 million - By 31 March 2022, this had increased to 20 deviations, amounting to R1,929 418 million.
8= single source appointments 8= obtaining less than 3 quotes for amounts of more than R2000 2 = contract extension/continuation of services 2 = variation of orders/contract prices 9.1.5 Contingent Liabilities • The Department notes contingent liabilities to the amount of R15 million.

It notes as follows: “the department is a defendant in a case including 3 other defendants.

As the case has not served in court yet, the liability breakdown of the R15 million linked to the department cannot be determined.
As the progress determination will be sought and provided during the case.” The Department must keep the Portfolio Committee updated on this matter.

9.2 2021/22 MTEF financial allocation The Department still maintains that it is under-resourced.
The Minister states in the Annual Report that, “the ability of the Department to expand its capacity in support of its strategic intentions and to resource potential options for the restructuring of the Department has been severely constrained by reductions that have been made to baseline allocations of the Compensation of Employees Budget over the MTEF period due to macro-economic challenges facing the South African economy.” 9.3 Concluding comments on financial performance The Department spent 84.7 % of its operating budget and managed to achieve 95.1% (39/41) of its targets as per the revised APP reflected in the Annual Report 2021/22.
The underspending increased from R18,575 million in the previous FY to R31,085 million in the year under review.

Programme 1 consumes the greatest proportion of the budget at 55%, while Programme 5 has the smallest allocation, consuming only 5.9% of the budget.

Programme 1 sees a significant increase from R98 million in its original appropriation, to R111,9 million in its final appropriation.
Despite a sizeable portion of the operational budget being allocated to CoE, the Department relied on consultants to deliver on targets and expenditure incurred despite a large 22 24 cohort of staff within programmes.

Most of the expenditure incurred as in the previous financial years was for Compensation of Employees and Goods and Services.

10.

COMMISSION FOR GENDER EQUALITY (CGE) The CGE briefed the Committee during all the quarterly reports on its finances.
A Commissioner’s report was submitted to the Committee at every quarter.

Based on its constitutional mandate, the CGE’s vision is to strive for “a society free from all forms of gender oppression and inequality”, while its mission includes to “advance, promote, protect, monitor and evaluate gender equality through undertaking research, public education, policy development, legislative initiatives, effective monitoring and litigation”.
Its values are independence; professionalism; accountability; ethical behaviour; and teamwork.

The Commission’s Strategic Framework translates its constitutional mandate into four strategic outcomes as outlined hereafter.

In summary, the CGE set out to achieve 26 targets and achieved 25 (96%).

10.1 Strategic Outcome (SO) 1 The purpose of SO 1 is to evaluate legislation, policies, practices and mechanisms and make recommendations to bring about continuous improvements to advance gender equality.
These has been achieved through the following sub-strategies: (i) To monitor and evaluate the promotion of gender equality and any relevant policies and practices of the public and private sector and report to Parliament.

(ii) To initiate and review for the improvement of the legislative framework in all spheres of government that impacts on priority areas of gender equality.
(iii) To conduct periodic performance assessments of priority Ministries, State institutions, Government departments, political parties and the private sector on the implementation of applicable legislation and policies that impact on gender equality.

(iv) To evaluate the implementation and the effectiveness of the national justice facilities for gender discrimination.
(v) To convene direct dialogues with relevant policy makers at national and provincial level on recommendations to promote gender equality contained in research reports and research activities.

23 25 According to the Annual Report 2021/22, this SO planned for 7 targets, all of which 6 were achieved and 3 was exceeded as cited below.
The target not achieved has been cited below • Only 14/16 submissions on new and proposed legislation that substantively promotes and protects gender equality 10.2 Strategic Outcome (SO) 2 The purpose of this SO is to evaluate legislation, policies, practices and mechanisms and make recommendations to bring about continuous improvements to advance gender equality.
This SO has the following sub-strategies: • To timeously investigate complaints of violations of gender rights and identify appropriate re-dress.

• To initiate investigations of systematic violations of gender rights in the public and private sector and identify appropriate redress.

• To develop a coordinated programme to promote equality.
• To initiate intervention for sustainable development and promotion of gender equality by addressing violations in the social cultural, political and economic security and human rights dimension.

• To collaborate with organs of state, civil society and other institutions for the effective development, protection, promotion and attainment of gender equality.
According to the Annual Report 2021/22, this SO planned to achieve 11 targets of which only 6 were achieved and 5 targets were not met as cited below.
• Only 30/36 training workshops on gender and development conducted; • Only 27/108 outreach, advocacy and access to justice interventions conducted guided by a project plan; • Only 11/36 stakeholder engagements with like-minded institutions on topical issues relating to gender equality which will inform CGE planning and programmes held; • 2 High-level meetings & a report with outcomes of meeting with DBE, SACE & Teachers’ Unions on GBV & learner pregnancy not held instead other meetings held; 24 26 • Only 24/40 40 courts monitored.
It is concerning that Outcome 2, which deals with education and information sharing to create public awareness and understanding has performed the poorest out of the 4 outcomes.

10.3 Strategic Outcome 3 The purpose of this SO 3 is to transform behaviour to respect and uphold gender equality and to further ensure effective and efficient social justice for victims of gender violations.
This has been achieved through the following sub-strategies: • To conduct annual reviews and audits of state compliance with obligations under the conventions, covenants and charters and to report a regular basis to Parliament and the Office of the Speaker of Parliament.

• To interact with and report to national, regional and international bodies on state compliance with conventions, covenants and charters acceded to or ratified.
According to the Annual Report 2021/22, this SO planned to achieve 7 targets and 6 were achieved only 1 not met as cited below.

• Only 283 SAPS and 19 TCCs were reached instead of 432.

10.4 Strategic Outcome 4 The purpose of this SO 4 is to build and sustain an efficient organisation, to effectively promote and protect gender equality.

According to the Annual Report 2020/21, this SO planned to achieve 13 targets and 9 were achieved whilst 4 were not met as cited below.
• A report on the assessment of plenary effectiveness Approved ICT and Knowledge Management Plan; • A report on the assessment of Sub-Committees’ effectiveness; • Only 1/4 Strategic partnership agreements concluded; • Consolidated report on the implementation of IKM plan not completed.

25 27 10.5 CGE’S BUDGET FOR 2021/2211 For the 2021/22 financial year, the CGE receives an allocation of R91,376 million through the transfer payment via the Department of Women, Youth and Persons with Disabilities.
When examining the allocation between 2020/21 (R78,651 million) and 2021/22, the Nominal Rand Change is approximately R12,7 million.

However, when taking into account inflation, the Real Rand Change in allocation is R9,076 million.12 Notwithstanding that, the CGE’s total revenue income amounted to R92,088 547 on account of R712 547 accrued from interest and sundry income.

Approximately 69% of the budget is allocated for on Compensation of Employees, while 31% was allocated towards Goods and Services.
The Commission has repeatedly reiterated that it is a “human capital driven” institution, with its employees carrying out the bulk of its services, and as such the bulk of its funding is allocated for compensation of employees.

SO 4, which is the outcome focusing on the operations and systems of the Commission, receives the largest proportion of the budget.
For the year under review, the CGE spent R77,835 659 (85.5%) of its budget and thus incurred an under-expenditure of R14,2 million (15.4% of the annual budget).

Compared to the previous FY in which the CGE spent 95% (R76,085 756) of its budget incurring an under-expenditure/surplus of R3,925 153 million.

The under-expenditure has not only continued but has regressed further.

The reasons noted for under-expenditure were as follows: • Vacant posts resulted in under-expenditure of R9 174 496 million.
Vacant posts include amongst others: - 2 Commissioner positions - Head of Legal Department - Head of Parliamentary Liaison Unit - Head of Public Education and Information - 3 x middle management positions • Under-spending occurred in goods and services amounting to R5 084 812 million.
Primarily as a result of: 11 Levendale, C (2022) Commission for Gender Equality 2021/22 Annual Report Overview and Analysis, Parliamentary Research Unit 12 Ibid 26 28 - Decreased spending on travel and accommodation and events management due to COVID-19 lockdown regulations during the first half of the financial year.
- Under-expenditure on staff development and training (R1 million had been budgeted for training and R1 million for bursaries – it is not clear how much of this collective R2 million was underspent).

This is of particular concern as the training and development funds were lost to COVID-19 reprioritisation funds during 2020/21.

Approximately 69.7 % or R 54,2 million was spent on CoE, while 28.3% (R22,097 088m) was spent on Goods and Services.
The CGE had 101 funded positions for the year under review and a total of 87 employees as at the end of March 2021.
The Key Cost drivers at the end of the FY were as follows: • ICT (Computer servicing, IT and website) (R3,818 229) • External Auditing Fees (AGSA) (R2,681 561m) • Office cleaning, Maintenance, Plants and Security (R2,439 672) • Travel (R2,430 234) • Interest and penalties (R1,982 473) Together the aforementioned cost drivers amounted to R13,352 169 million (60.4%) of the total Goods and Services expenditure.
The CGE also reports that R13,843 996 million (17.7% of total expenditure) was spent on the Commissioner’s Programme; R23,218 160 (29.2% of total expenditure) was spent on Corporate Support Services and R40,773 494 million (52.33% of total expenditure) was spent on Service Delivery.

In terms of irregular expenditure, the Commission records R 3,745 346 million for the 2021/22 financial year, however only R 1 656 338 relates to the current financial year.
The remaining R 2 089 008 relates to expenditure from the previous financial year.

It indicates that investigations are currently underway to determine liability and effect additional measures to strengthen systems of internal control.

In 2020/21, R455 036 irregular expenditure was incurred for salaries for Commissioners’ PAs, which was incurred in contravention of recruitment policies.

In 2021/22 this amount has increased to R 786 954.


Another item of irregular expenditure relates to a bid awarded to 27 29 TGF Consulting without approval from the delegated officials.

This amounted to just under R 500 000.

Furthermore, 3 other service providers were also listed with the same reason cited.

The Commission records R 5, 694 008 in its financial statements with regard to Fruitless and Wasteful expenditure.
However, R 2,753 340 relates to the 2020/21 financial year incurred as a result of payment of Commissioner’s (remuneration) without supporting evidence or time sheets.

For the 2021/22 financial year the Commission indicates that it has incurred fruitless and wasteful expenditure to the amount of R 2,692 369.

The bulk of this (R2 381 665) is attributed to the payment of part-time Commissioners without requisite time sheets.
The CGE reports that this payment was made as a retainer in the absence of time sheets which were not regularly submitted to vouch for the actual time for remuneration.

The remaining R 310 706 in Fruitless and Wasteful expenditure relates to: - R 169 147 as a result of a policy change relating to medical subsidies for staff that was not communicated to payroll office.

- R 52 493 as a result of a policy change relating to housing subsidies for staff that was not communicated to payroll office.
- R 84 064 relaying to penalty and interest charged by SARS as a result of a late submission of a tax return.

- R 5000 as a result of a long service cash gratuity paid without full contractual documents in the file to vouch for the period under consideration.

10.6 Human Resources The Commission indicated that they had 101 funded posts during 2020/21 and a vacancy rate of 16% (16 vacancies) and in 2021/22 the vacancy rate had increased to 19% (22) of the 116 funded posts.
When reflecting back on the 2019/20 financial year, the vacancy rate was 15% (17 vacancies) and 10% (11 vacancies) in the 2017/18 financial year.

This is a cause for concern.

The CGE reports only 1 post that is unfunded and additional to the establishment – in 2020/21 there were 8.

The CGE had a total of 94 employees as at the end of March 2022 of which 4 staff members are employed on a temporary or internship basis.

The CGE notes that 7 appointments were made during the 2021/22 financial year.
However, there is conflicting information in terms of the number of staff that have left the Commission during the same period based on the various tables outlined in the Annual Report.

Under terminations it stipulates, 12 but under employee 28 30 changes in the year the CGE reports 16 (1 death, 10 resignations, 5 expiry of contracts).

However, 17 leave pay-outs were stated and finally under the termination of demographics categories 11 is reflected.
According to the table on Employment Equity per race and gender, the CGE has a total of 54 female employees and 32 male employees.

It is unclear how many persons with disabilities are employed at the CGE as this is not reflected in the Annual Report so an assessment of the Employment Equity target in this regard cannot be done.

Personnel expenditure amounted to R55,471 194 million for the year under review.
The highly skilled category (level 6-8, 9-12) constitute the majority of those employed in Core-service delivery programmes of the CGE, namely 69.1% (65 employees).

A total of 77 employees received performance related rewards during the period under review resulting in expenditure of R2,711 540 million.

During the period under review 18 employees received training 6 of whom were from Senior management and 12 from the Professionally qualified category.
The cost implications for the training was not indicated in the Annual Report.

11.

NATIONAL YOUTH DEVELOPMENT AGENCY (NYDA)13 For the year under review, the NYDA briefed the Committee on all 4 quarterly reports.

The quarterly reports included a focus on programme performance and financial health of the entity.

Moreover, the NYDA tabled its Annual Report on time and briefed the Committee with its Audit Committee on 18 October 2022.
In the period under review the NYDA had 23 targets of which all were achieved 15 were met whilst 8 were met and exceeded.

This amounts to a 100% achievement of the planned targets in its Annual Performance Plan.

The performance of the NYDA has remained fairly consistent over the last eight years.

The next section examines the performance of the NYDA for each Programme in light of the Annual Report 2021/22.
11.1 Performance per Programme 13 Matthews, T (2022) National Youth Development Agency (NYDA) Annual Report 2021/22 Review, Parliament Research Unit 29 31 11.1.1 Programme 1: Administration The purpose of this programme is to enable effective and efficient Agency capabilities for good governance and ethical leadership to support service delivery.

Its key outcome is an efficient and effective Agency characterised by good corporate governance and ethical leadership.
This programme achieved 10 targets of which 2 targets were met and exceeded.

The achievements were as follows: 1.

4 NYDA Quarterly Management Reports 2.

Reviewed and Implemented Annual Workplace Skills Plan 3.

R 70 million in funds sourced from the public or private sectors to support youth development programmes 4.

6 SETA partnerships established 5.


2 partnerships signed with technology companies 6. Review and implement ICT Strategic Plan indicating 50% achievement of ICT targets in the plan by end of the financial year 7.

Reviewed and implemented Integrated Communication and Marketing Strategy 8.

Produce and approve the NYDA Strategic Risk Register by Ops Exco 9.

Reviewed annual SCM Procurement Plan and produced quarterly reports 10.
Annual Report on partnerships established with Disability organisations to promote youth development 11.1.2 Programme 2: Programme Design, Development and Delivery (PDDD) The purpose of the programme is to enhance the participation of young people in the economy through targeted and integrated economic programmes, including skills and education programmes, and national youth services.
Facilitate and co-ordinate the effective and efficient implementation of the Nation Youth Service Programmes across all sectors of society.

This programme achieved 9 targets of which 5 targets were met and exceeded.

The achievements were noted as follows: 1.

1100 youth owned enterprises supported with financial interventions.

(New target: 2000) 2.

20 000 youth supported with non-financial business development interventions 3.

5000 jobs created and sustained through supporting entrepreneurs 4.
Enterprises (New target: 6000) 30 32 5.

Participate on the National Pathway Management Network to facilitate youth job placement opportunities 6.

50 000 young people capacitated with skills to enter the job market 7.

40 organisations and departments lobbied to implement NYS 8.

Produce an annual report on the NYS Programme 9.

10 000 young people participating in NYS Expanded Volunteer Projects (New target: 30 000).
11.1.3 Programme 3: Integrated Youth Development The purpose focuses on fostering a mainstreamed, evidence based, integrated and result oriented youth development.

This programme achieved all 5 targets 4 of which were met and exceeded.

The achievements were noted as follows: 1.

2 impact programme evaluations conducted 2.

Produce annual report on Integrated Youth Development Strategy 3.

3 youth status outlook reports produced 4.


Develop a discussion document on youth development in the country 11.2 NYDA’s Budget for 2021/221 According to the ENE 2021, the original budget allocation was for R471 million which the NYDA would have received via a transfer from the Department under Vote 20.
Due to additional funds received of R430 million for the Presidential Youth Employment Intervention (PYEI) (R400 million NYS programmes + R30 million Entrepreneurship support) together with donor funds of R50,261 million and the Revenue from Exchange transactions increased the budget significantly.

The NYDA’s total revenue for 2021/22 was thus R958,230 million.

The NYDA’s total expenditure for the year was R528,096 million hence an under-expenditure of R430,134 million.
According to the NYDA, because of the amount of work required before the PYEI programme can start, from Fund Management and recruitment of participants for the program, contracting of implementing agents was finalized in March.

In turn, this has resulted in the budget of 31 33 the project funds being unspent as at 31 March 2022.

Notwithstanding that, National Treasury has approved a rollover request for funds committed at the end of 2021/22.
With regards to expenditure per programme, Programme had a revised budget of R66,062 million and spent R66,767 million (101%).

Programme 2 had a revised budget of R677,402 278 and spent R646,997 million (96%) and Programme 3 with its revised budget of R720 000 spent R725 000, In terms of key expenses for the 2021/22, Communication and Public Relations (R11,7m); Workshops, Travel and Accommodation (R24,6 m); Information Technology (R24,6m); Administration and Overhead (R52,8m) and Employee costs (R199.9m).
The largest proportion of the overall expenditure is spent on employee costs, followed by administrations and overheads.

The NYDA noted a surplus (R 5.3 m) for Information technology due to cost savings on internet connectivity and telephone costs.

Savings (R7.6m) for workshops, travel and accommodation were mainly due to cost containment measures in place and reduction in physical gatherings due to Covid- 19 regulations, while other employees worked remotely from home.
With regards to CAPEX, the Annual Report reflects R10,381 million for 2021/22 but at the Q4 2021/22 briefing the NYDA indicated it was R34,767 411m.

It is unclear why this is the case.

The NYDA did not incur nor identify any irregular expenditure during the 2021/22 financial year.

An application to the National Treasury to write off fruitless and wasteful expenditure as well as irregular expenditure balances was made.
As at 31 March 2022 the feedback on the application made to National Treasury was still pending.

11.3 Human Resources The NYDA had a staff compliment of 549 employees, 445 (81%) were permanent and 104 temporary employees.

This amounted to R528,342 million for the year under review.

The majority of staff, 35.5% (195) fell within the skilled technical occupational level with only 6 employees in the Executive and Senior management category.
In terms of gender ratio, the NYDA has a dominant female work force 61% (334) and 215 males (39%).

Of the 549 people employed by the NYDA, 3 employees are receiving an average R1,6 million per annum.

The lowest salaries are received by staff located in operations and temporary work, they account for 79% of the NYDA’s workforce.

At present, just over 10% (R20 million) of the total employee cost is allocated to top and senior management.
32 34 During the year under review a total of 125 employees left the NYDA, 97 employees left due to the expiry of contracts, 3 were dismissed, 22 resigned with 3 deaths.

A total of 39 employees (27 Black females, 11 Black males, 1 Coloured female) were funded by the NYDA bursary programme for undergraduate and post-graduate studies in the 2021 academic year.

12.
12.

FINDINGS OF THE AUDITOR GENERAL OF SOUTH AFRICA (AGSA) The Department has received an unqualified audit opinion from the Auditor-General of South Africa (AGSA), with findings on expenditure management and compliance with legislation, specifically in relation to consequence management and internal control deficiencies.
To this end, the AGSA highlighted the following key concerns with regards to the Department: 12.1 Expenditure Management • The AGSA found that the Department has materially underspent the budget by R31 million.

• The AGSA indicated that even though the Department made progress on consequence management findings for a certain number of transactions relating to the previous years’ irregular expenditure.
However, this was insufficient, hence there is a material finding on consequence management relating to irregular expenditure reported in the audit report.

The DWYPD needs to place more focus on retrieving information in order to perform the required investigations and institute consequence management.

12.2 Internal Control Deficiencies (Compliance) • The AGSA found that Senior management has not adequately or properly monitored compliance with laws and regulations.
This could have led to prevention of non- compliance.

Notwithstanding the audit action plan, not enough attention was given to matters relating to consequence management as at 31 March 2022.

12.3 Consequence management • The AGSA noted a lack of sufficient appropriate audit evidence to indicate that disciplinary steps were taken against officials who had incurred irregular expenditure.
• Furthermore, proper and complete records were not maintained by the Department to conduct investigations into irregular expenditure.

12.4 Irregular Expenditure 33 35 • The AGSA noted an amount of R187 000 on account of SCM processes not followed by the Department which relate to non-compliance from the previous year.

This was attributed to inadequate monitoring of compliance with key legislation and ultimately resulted in the unfair appointment of service providers.
With regards to the CGE, it received an unqualified audit opinion from the AGSA.

The following matters were raised by the AGSA: 12.5 Non-compliance with legislation • The audit opinion of the commission remained unchanged with no improvement over the last three financial years.
The audit outcomes obtained can be attributed to the commission’s material non-compliance with laws and regulations pertaining to expenditure management, procurement and contract management as well as non-compliance with Section 40(1) of the Public Finance Management Act 1 of 1999 (PFMA) which requires that all financial statements submitted for audit, should be free from material errors, omissions and misstatements.
12.6 Internal control deficiencies • In the current financial year, the commission still received an unqualified opinion with material findings on the audit of compliance.

• The unchanged audit outcomes can be attributed to findings on the expenditure management and consequence management as a result of management’s slow response to execute audit action plans, inadequate internal controls surrounding the performance reporting process as well as insufficient oversight with regards to policy adherence.
12.7 Root causes - non-compliance and internal control deficiencies • Inadequate monitoring and oversight with regards to compliance with laws and regulations as well as related internal controls • Inadequate record keeping - the Commission did not have the proper recording system to ensure that documents were kept and were available for audit purposes.
• Lack of consequence management for poor performance and transgressions - No evidence that consequence management was performed on fruitless and wasteful expenditure • Staff vacancies in key positions lead to significant findings.

12.8 Recommendations by AGSA 34 36 • The policies and procedures for consequence management or investigating must be updated to be process dependent and not people or position dependent.

• Adequate controls must be put in place to prevent irregular expenditure.
Furthermore, the entity must improve its controls to identify, report and record irregular expenditure.

• CGE to fill key vacancies.

With regards to the NYDA, it received 8th clean audit opinion from the AGSA.

Notwithstanding that, the following matters were raised by the AGSA: 12.9 AGSA Findings for NYDA • The NYDA received an eighth consecutive clean audit outcome from the Auditor General of South Africa with zero unauthorized, irregular or fruitless and wasteful expenditure reported or detected.
All of which can be attributed to good internal controls regarding reporting on financial information as well as performance information while ensuring that the agency adheres to all relevant frameworks, laws and regulations.

• The AGSA encouraged the NYDA to leverage on its good reporting processes and its ability to achieve the target it set for itself, to ensure that these have visible positive impact to the citizens of South Africa.
In the AGSA presentation to the Committee it stated the following: “There are still concerns over the two complaints by beneficiaries where the intended support does not get to the beneficiaries, while the money is spent, recorded in the AFS and reported as an achievement against planned targets.

A beneficiary, Nokuthula Jele who owns a company named Feza Okuhle Production Trading as King Kota’s applied for financial assistance grant from the NYDA and the application was approved in 2019.
The beneficiary was to receive a kitchen trailer and a freezer after the supplier was paid.

The supplier delivered a freezer on time but the supplier never delivered a kitchen trailer to date despite payment.

The agency investigated the matter through their legal division and it is still open.
While the supplier has agreed to pay back the money, this delay means this part of the support to the beneficiary has delayed, as a result the beneficiary has lost income and therefore the intended impact has not been fully achieved.” To this end, the AGSA recommended that, “The Agency must use the agreement with suppliers and beneficiaries to ensure the grant expenses is used for intended purposes of the mandate.
Controls must 35 37 be put in place to avoid pre-payments, unless it is necessary and there must be processes in place to ensure the goods and services are from prepayment are received.” The AGSA have considered the Annual Reports of the Department, the CGE and the NYDA recommended the following to the Committee: a) Consequence management should be prioritised in order for the employees that cause unauthorised, irregular, fruitless and wasteful expenditure to be held accountable.
b) Performance indicators and targets must be developed to achieve service delivery/impact against the mandate of the department and the portfolio c) Monitoring must be done, especially at CGE to ensure that Medium Term Strategic Framework (MTSF) indicators and target are met.

13.

FINDINGS OF THE AUDIT AND RISK COMMITTEE (ARC) 13.1.
ARC Department The Audit and Risk Committee (ARC) of the Department of Women, Youth and Persons with Disabilities noted the following findings and recommendations as contained in the Annual Report for 2021/22: 13.1.1 Effectiveness of Internal Controls The ARC indicated that controls in the following areas required improvement namely; • Monitoring of compliance with applicable laws and regulations, specifically on investigating the irregular expenditure incurred in the previous financial years, • Budget monitoring, and • Information Technology which requires improvement on service continuity and security controls.
13.1.2 Internal Audit • The ARC was still not satisfied with the existing capacity of the Internal Audit Unit and the capacitation in this regard should be priorities for it to function optimally so as to ensure a wide risk and audit coverage in the Department.

36 38 13.1.3 Risk management • The ARC recommended the improvement on the risk management processes and advised the Department to provide capacity including funding of the risk management activities.
13.1.4 In-Year Management and Quarterly Reports • The ARC reviewed the financial management reports, human resource management reports, information technology reports and progress reports on litigations and labour cases.

To this end it recommended improvements and monitored the implementation of those recommendations.
13.1.5 Compliance with Legal and Regulatory Provisions • The ARC noted the progress made in the investigation of irregular expenditure incurred by the Department during 2020/21, 2019/20, 2018/19, 2017/18 and 2016/17 financial years.

The Accounting Officer implemented the appropriate action in the form of consequence management, based on the results of the irregular expenditure investigations.

(This finding is different to that expressed by the AGSA).
13.1.6 AGSA Report • The ARC concurs with the AGSA conclusion.

13.1.7 Audit Action Plan • The ARC recommends that the Accounting Officer develops an audit action plan to resolve the audit findings identified during the 2021/22 financial year audit.

This plan will be closely monitored by the Committee to ensure that all the issues are being addressed.
13.2 ARC CGE With respect to the CGE, its ARC noted the following: 13.2.1 Irregular Expenditure 37 39 • The ARC notes that as at the date of reporting, management had not determined recoverability or write-off on expenses relating to the disclosure of irregular expenditure related to remuneration claims by commissioners.

• Per the recommendation of the Auditor General, management had reclassified these expenses to fruitless and wasteful expenditure.
13.2.2 Risk management • Urgent attention is required in relation to risk management systems and processes at the CGE - this entails the development of risk mitigation strategies & plans, risk registers and assignment of resources to monitor and report on risk management activities.

• The ARC had raised concern about the vacancy of the chairperson of the risk management committee which was still vacant as at the end of the financial year.
This had in part contributed to the ineffective risk management activities and the deficiencies communicated in the section on effectiveness of internal controls.

• The ARC had recommended to management for the appointment of the risk management committee chairperson, the appropriate composition of the risk management committee, and the appointment or a risk officer or equivalent who shall facilitate risk management activities at the CGE.
13.2.3 Leadership • The ARC highlights that the AGSA has raised concerns on the effectiveness of leadership at the CGE.

13.2.4 Non-compliance • Non-compliance with legislations were identified and communicated in the report by the Auditor General.

• The ARC had advised management to establish a compliance universe, which must list all the key provisions of legislations applicable to the operations of the CGE.
• This tool should be used to monitor compliance and the severity of non-compliance with laws and regulations.

• There is also a need to improve staff capacity within finance to ensure segregation of duties.

13.2.5 Material compliance 38 40 The ARC also highlights Material compliance findings in relation to: • Expenditure Management: Funds dispersed without approval of the AO or appropriate delegate.
• Consequence management: Failure to timeously implement remedial action against those who allow/ committed IE & F&WE.

13.2.6 Internal Audit • The ARC has continued to register its concerns to management regarding the adequacy of human resources in the internal audit unit.

The limitations on the staff capacity of the Internal audit led to a revision of the annual plan to postpone audit tasks which were due in the year under review when the unit experienced a resignation of one auditor.
Management committed to apply alternative sourcing arrangements where necessary to ensure that the work of Internal Audit complies with the requirements of the standards for Professional Practice of Internal Audit.
13.3 ARC NYDA With respect to the NYDA, its ARC noted the following: • For the 2021/22, audit findings that relate to the internal control environment such as leadership, financial and performance management, and governance are reflected as below: - Consistent in financial management at 71% - - Improvement in performance information reporting from 79% to 100% Improvement in compliance from 86% to 93% • The ARC noted that Irregular expenditure has significantly reduced over the years - from R133 million in 2011/12 to R0.00 in 2021/22.
• Based on the various reports by the Internal Auditors, and the Management Report and Audit Report by the Auditor-General of South Africa, it is noted that there has been a stabilisation in the internal controls environment which has culminated in the NYDA sustaining the clean audit again for the 2021/22 financial year (eight years in succession).

• Of significance, is the 100% achievement of planned targets.
The quality on In-Year management and monthly/ quarterly reports submitted in terms of the PFMA and Division of Revenue Act improved.

• The Audit and Risk Committee is satisfied with the content and quality of monthly reports prepared and issued by the NYDA during the year under review, noting that there has been a 39 41 significant improvement on the compilation of the performance information and the reporting thereof.
• The Audit and Risk Committee will continue to monitor the achievement of all planned targets for the forthcoming financial year to achieve clean audit.

14 OVERVIEW AND ASSESSMENT OF SERVICE DELIVERY & FINANCIAL PERFORMANCE PER PROGRAMME This section provides details of annual targets as per the original APP and the revised APP for each programme as well as an indication as to which targets have been reported on in the Annual Report.
An indication is also provided of whether targets have been achieved or not.

14.1 Programme 1: Administration The purpose of this Programme is to provide institutional overarching support to the Department.

In turn, it is supported by five Sub-Programmes: Ministry; Departmental Management; Financial Management; Office accommodation and Corporate Management.
The purpose of each sub-programme is as follows: • Departmental Management: The purpose of this sub-programme is to provide executive support, strategic leadership and management to the Department.

• Financial Management: The purpose of this sub-programme is to provide and ensure effective, efficient financial management and supply chain services.

This includes budget planning and expenditure monitoring; and the management of procurement, acquisition, logistics, asset, and financial transactions.
• Corporate Management: The purpose of this sub-programme is to provide effective human capital management, facilities and auxiliary management and ICT systems enablers for the Department.

This programme planned to achieve 6 targets of which 4 (66.7%) were achieved and 2 targets were not achieved as reflected in the Annual Report.
The 2 targets not achieved related to • • 100% payment of all valid invoices within 30 days Master Information Technology Strategy and Plan 40 42 The total allocation for this programme was R98 million as per the initial Estimates of National Expenditure (ENE) 2021.

The programme saw a significant increase to a final appropriation of R111,909 million.

Thus an increase of nearly R14 million from its initial budget to final appropriation.
A virement of R1,662 million for CoE was recorded in addition to R193 000 for Goods and Services.

This programme still consumed the highest proportion (55%) of the Department’s operational budget in 2021/22.

The actual expenditure was R103,486 million which amounts to 60.1% of the total operational expenditure and 92.4% of the total programme budget.

An under-expenditure of R8.423 million was recorded.
The key cost drivers for Programme 1 were as follows: • Compensation of Employees accounted for 53.7% of the programme budget (R60.1m), an under-expenditure of R152 000 incurred.

• Goods and Services accounted for 34.6% of the programme budget (R38,7m), an under- expenditure of R5,524 million incurred.
Under Goods and Services, the key cost drivers were as follows: • Property Payments = R21.649 m • Machinery & Equipment = R6.072 m • Computer services = R4.224 m • Audit Costs = R3.082 m • Transport Equipment = R3.670 m • Travel & subsistence = R2.662 m With respect to the expenditure per sub-programme, the Ministry with a final appropriation of R20,976 million spent R18,470 million thus incurring an under-expenditure of R2,506 million.
The Departmental Management had a final appropriation of R20,473 million and spent R20,183 million with slight under-expenditure of R290 000.

Corporate management had a final appropriation of R31,338 million and spent R26,945 million incurring an under-expenditure of R4,613 million.

Financial management had a final appropriation of R17,279 million and spent R16,267 million incurring an under-expenditure of R1,012 million.
Office accommodation had a final appropriation of R21,623 million and spent R21,622 million incurring an under- expenditure of R1 000.

14.2 Programme 2: Social Transformation and Economic Empowerment (STEE) The purpose of the programme is to manage policies and programmes that mainstream the social transformation and economic empowerment of women in South Africa.
41 43 The programme consists of the following sub-programmes namely; • Management: Social Transformation and Economic Empowerment • Social Empowerment and Transformation: the purpose of the sub-programme is to provide intervention mechanisms on policies and programme implementation for mainstreaming the social empowerment and participation of women towards social transformation.
• Economic Empowerment and Participation: the purpose of the sub-programme is to develop and implement intervention for mainstreaming the economic empowerment and participation of women towards economic transformation and development.
• Governance Transformation, Justice and Security: the purpose of the sub-programme is to provide guidance for enhancing existing systems and procedures, addressed barriers to the equal participation of women in the public and private sectors, and contributes to the elimination of gender-based violence.

For the year under review, this programme had planned for 10 targets and achieved all of them.

In terms of this programme’s operating budget i.e.


excluding the transfer (R91,376 million) to the CGE, this programme was allocated R32.8 million as per the initial ENE 2021.

The final appropriation was R118,407 million (include CGE transfer).

Excluding the CGE transfer the operating budget for this programme is R27,031 million noting the virement of R64 000 for CoE.

Notwithstanding that, this programme saw a significant decrease in its operational budget from R32.8 million to R27 million.
The actual expenditure incurred was R113,311 but excluding the transfer to the CGE it was R21,935 million, 12.7% of the total operational expenditure and 81,1% of the total programme budget.

Thus an under-expenditure of R5,096 million which amounted to 18.8% of the programme operational budget.
The key cost drivers for this programme was as follows: • Compensation of Employees accounted for 63,8% of the programme budget (R17,2m), • Goods and Services accounted for 17% of the budget (R4,5m) Under Good and Services, the key costs drivers were as follows: • Consultants: Business and Advisory services = R2.762 m • Travel & Subsistence = R511 000 • Communication = R467 000 42 44 • Venues & Facilities = R296 000 With respect to the expenditure per sub-programme, Management with a final appropriation of R3,637 million spent R3,526 million with an under-expenditure of R111 000.
The Social Empowerment and Participation Programme with a final appropriation of R4,412 million spent R3,614 million incurring an under-expenditure of R528 000.

The Governance Transformation, Justice and Security with a final appropriation of R12,096 million spent R7,639 million incurring an under-expenditure of R4,457 million.

The Economic Empowerment & Participation sub-programme with a final appropriation of R7,156 million spent all its funds.
14.3 Programme 3: Policy, Stakeholder Coordination and Knowledge Management (PSCKM) The purpose of programme 3 is to ensure policy and stakeholder coordination and knowledge management for the social transformation of women in South Africa.
The programme consists of the following sub-programmes: • Research, Policy Analysis and Knowledge Management: the purpose of the sub- programme is to promote the development of gender sensitive research, position the department as a hub to content relating to the socio-economic empowerment of women, and conduct policy analysis to intervene in transformation for women’s socio-economic empowerment and gender equality.
• Stakeholder Coordination and Outreach: the purpose of the sub-programme is to conduct stakeholder engagements and outreach initiatives to promote empowerment and inclusion of women, youth and persons with disabilities.

• International Relations: the purpose of the sub-programme is to promote international engagements on women, as well as ensure South Africa’s compliance with international treaties on women.
• Monitoring and evaluation: the purpose of the sub-programme is to monitor and evaluate progress on the socioeconomic empowerment of women in line with national laws, and regional and continental and international treaties and commitments.

This programme planned for 13 targets as per the revised APP and achieved all.

The programme was allocated R40,6 million as per the ENE 2021.

The final appropriation was R35,668 million hence a decrease of R4,4 million.
A virement of R1,992 million for CoE was 43 45 recorded within the management and Stakeholder Coordination and Outreach sub-programmes.

The actual expenditure incurred was R26,059 million which is 73% of the total programme budget spent and 15.1% of the operational expenditure.

Notwithstanding the virement, this programme still incurred an under-expenditure of R9,609 million which amounts to 26.9% of the programme operational budget.
The key cost drivers for this programme was as follows: • Compensation of Employees accounted for 60.3% of the programme budget (R21,539m) • Goods and Services accounted for 12.5% of the budget (R4,4m) Under Goods and Services, the key cost drivers were as follows: • Advertising = R1.042 m • Travel & Subsistence = R835 000 • Consultants: Business and Advisory services = R 727 000 • Venues & Facilities = R 680 000 The sub-programme Stakeholder Coordination and Outreach incurred 43.9% of the total expenditure for this Programme, R11,431 million but still incurring an under-expenditure of R4,178 million out of the final appropriation of R15,509 million.
The Management sub- programme t with a final appropriation of R2,516 million spent R1,485 million with an under- expenditure of R1,031 million.

The Research sub-programme with a final appropriation of R7,931 million spent R6,769 million incurring an under-expenditure of R1,1162 million.

The Monitoring and Evaluation sub-programme with a final appropriation of R9,612 million spent R6,374 million incurring an under-expenditure of R3,238 million.
14.4 Programme 4: Rights of Persons with Disabilities The purpose of this programme is to oversee the implementation of programmes pertaining to persons with disabilities.

This Programme’s sub-programme aim is stated as follows: • Maintains and implements advocacy and mainstreaming guidelines and frameworks for the rights of people with disabilities.

This programme planned for 7 targets and achieved all.

44 46 The programme was allocated R17,3 million as per the ENE 2021.
The final appropriation was R16,383 million hence a decrease.

A virement of R266 000 for CoE was recorded.

The actual expenditure incurred was R10,887 million, 66.4% of its allocated programme budget and 6.3% of the total operational expenditure.

Notwithstanding the virement, this programme still incurred an under- expenditure of R5,496 million which amounts to 33.5% of the programme operational budget.
The key cost drivers for this programme was as follows: • Compensation of Employees accounted for 54.3% of the programme budget (R8,9m) • Goods and Services accounted for 11.9% of the programme budget (R1,9m) Under Goods and Services, the key cost drivers were as follows: • Advertising = R1.0 35 m • Consultants: Business and Advisory services = R 470 000 • Communication = R250 000 14.5 Programme 5: National Youth Development (NYD) The purpose of this programme is to promote the development and empowerment of young people by reviewing the legislative framework and other interventions to advance youth rights over the medium term.
The programme consists of the following sub-programmes: • Management: National Youth Development facilitates the development and implementation of national strategies and policies aimed at young people.

• Youth Development Programme: Oversees the transfer of funds to the NYDA.

The sub-programme Strategic Objectives are as follows: • National Youth Policy and Legislation Development: Develop national youth policy, legislation, frameworks and strategies as well as ensure monitoring and evaluation thereof.
45 47 • Stakeholder Engagement and Support: Engagement and support youth stakeholders nationally and internationally; conduct oversight of the National Youth Development Agency; and facilitate transfer of funds to the agency.

As per the Annual Report for 2021/22, this programme planned for 5 targets and achieved all.
The programme was allocated R483,2 million as per the ENE 2021 with R471,1 million being transferred to the NYDA leaving the programme with an original allocation/operating budget of R12,2 million.

The NYDA had received a cash injection totalling R430 million.

The final appropriation for the programme was thus R913,141 million.

Excluding the transfer to the NYDA the final operational budget for this programme was R12,179 million.

No virement was recorded for this programme.


The actual expenditure incurred was R9,718 million, 5.6% of the operational expenditure and 79.7% of its allocated programme budget.

This programme incurred an under-expenditure of R2,461 million which amounts to 20.2% of the programme operational budget.
The key cost drivers for this programme was as follows: • Compensation of Employees accounted for 7,2% of the programme budget (R7,247m) • Goods and Services accounted for 9.3% of the budget (R1,140m) They key cost drivers under Goods and Services were as follows: • Transfer payment to foreign govt.
and/or international org (Commonwealth annual subscription) = R1.331m • Operating Expenses = R393 000 • Travel & Subsistence = R 382 000 • Communications = R205 000 14.6 Human Resources The Department notes in its Annual Report as at 31 March 2022 that it had a vacancy rate of 5.6%, thus 8 vacancies of 143 approved funded posts.

Furthermore, the Department had a total of 21 employees additional to the establishment.

In terms of gender, 89/135 staff members are female (66%) and 46 are male (34%).
The majority of women (36) are in clerical positions, 46 48 while 27 occupy professional positions and 21 fall within the “legislators, senior officials and managers” category.

The majority of males employed in the Department are in “legislators, senior officials and managers” positions (19), followed by 14 occupying professional positions.

7 employees are persons with disabilities (5.2% of staff complement).
In the year under review 16 out 21 posts additional to the establishment were in the Administration programme as compared to the previous FY 2020/21, 18 out of the 24 In terms of vacancies by critical occupations, the Department has a vacancy rate of 7% for senior management, with 40/43 posts filled.

The Department had a total turnover rate of 9.6%.


In terms of people leaving and joining the Department during the financial year, a total of 17 staff left but the Department only provided the reasons why 12 left namely, 1 dismissal, 5 resignations and 6 termination of contracts.
During the year under review, a total of 21 disciplinary actions were instituted during 2021/22: • 2 hearings • 1 final written warning • 8 written warnings • 21 verbal warnings To this end, 1 hearing was due to poor performance, 1 hearing was due to insubordination/negligence dereliction of duty and 30 financial misconduct warnings.

A total of 15 grievances were lodged during the financial year under review.

Out of 40 staff in senior management, 37 had signed performance agreements.
Among the reasons cited for this are invalid/unsigned agreement being submitted and one non-submission.

submission.

In these instances, 2 SMS members were issued with letters of non-compliance.
One level 13 was appointed in May 2021 and in terms of policy, the incumbent must sign the PA within three months of being appointed; at the time of reporting she were still within the three-month period The majority of personnel in the Department’s employ were in the Administration Programme (69), 22 posts filled Programme 2, 24 in Programme 3, 11 in Programme 4 and 9 in Programme 5.
47 49 The majority of employees (58) are employed in the Highly skilled supervision salary band (levels 9-12), at an average cost of R632600 per employee.

51 employees are employed in the Senior and Top Management level (level 13-16), at an average cost of R1 1160 000per employee.
14.7 Concluding comments on service delivery performance In examining the significant achievements which the Department noted in the 2021/22 Annual Report, the following have been highlighted: • Maintained a vacancy rate of less than 10% - on 31 March 2022 the vacancy rate was 5.6%; • Three reports were developed on the implementation of HR Plan year 1; • Progress Report was produced on the Implementation of the Gender Responsive Planning, Budgeting, Monitoring, Evaluation and Auditing Framework; • A Rapid Evaluation on the implementation of Government's Policy on Procurement towards women-owned businesses and the report was approved by the minister; • Gender Responsive Planning, Budgeting, Monitoring, Evaluation and Auditing Framework (GRPBMEAF) Coordination; • The NYDA Amendment Bill was approved by Cabinet for tabling in Parliament; • Regulatory framework for WYPD mainstreaming developed; • Report produced on the consultation for the research report on the development of a socioeconomic empowerment index for women, youth and persons with disabilities; • Research report produced on the development of a socio-economic empowerment index for women, youth and persons with disabilities; • One status report on National and International obligations on the rights of persons with disabilities produced; • 3 monthly reports coordinated, developed and analysed on the implementation of the NSP on GBVF by national government departments and including contributions of other sectors coming mainly from the End GBVF multisectoral collaborative platform.
The annual total reports are 12 as 3 reports were produced per quarter; and • Comprehensive National GBVF Prevention Strategy was developed and approved by Minister for tabling to Cabinet.

48 50 Thus of the notable achievements, 2 relate to compliance matters in the Administration programme and the rest are in relation to the core programmes 2-5.
14.8 Summary: Finance and Service Delivery Performance Assessment This section provides a synopsis of the service delivery performance against spending patterns for 2020/21-2021/22 as well as the 1st quarter of 2022/23 of the Department.

14.8.1 General commentary The Department has improved in its performance since its inception as reflected in Table 5 below.
Notwithstanding that, some of the unmet targets from 2019/20 were still unmet in 2021/22 like the establishment of the NCGBVF it is only recently that a Bill in this regard has been tabled in Parliament.

Whilst several of the policies have been finalised, the implementation and popularisation in this regard has been lacking.
Of particular concern to note is that despite the achievement of targets the under-expenditure incurred has increased year-on-year and is a cause of concern so too the Department’s reliance on consultants to help achieve its targets.

Furthermore, the achievement of targets has not translated into visible, tangible differences to the lives of women, youth and persons with disabilities in the country.
Table 5: Targets Achieved per programme 2019/20 – 2021/22-2021/23 Programme 2019/20 2020/21 2021/22 2022/23 (Q1) Administration 11/14 (79%) 3/7 (43%) 4/6 (66.7%) 4/4 (100%) STEE PSCKM NYD RPD Total 5/7 (79%) 6/9 (67%) 10/10 (100%) 8/8 (100%) 11/12 (92%) 8/8 (100%) 13/13 (100%) 8/8 (100%) 4/4 (100%) 2/4 (50%) 7/7 (100%) 8/9 (89%) 1/3 (33%) 5/5 (100%) 5/5 (100%) 32/40 (80%) 24/33 (73%) 39/41 (95.1%) 28/29 (97%) 14.8.2 Overview of performance for 2021/22 • When reflecting back on the Department’s performance, in the 2018/19 FY, the Department planned 32 of which 22 targets (69%) were achieved and 10 targets (31%) were not achieved.
In comparison to the 2019/20 FY, in which the Department planned for 40 targets, 32 targets (80%) were achieved and 08 targets (20%) were not achieved.

Subsequently, the Department achieved 95.1% in 2021/22 which is marked improvement compared to the previous FY.

• Programme 1 consistently consumes the greatest proportion of the operational budget.
49 51 • All Programmes have improved by achieving targets the key concern is the under- expenditure incurred across all programmes more so in the core programmes 14.8.3 Overview of budget for 2021/22 • The Department started the financial year with a budget of R763,5 million (including the transfer payments to the Commission for Gender Equality and the National Youth Development Agency).
• During the 2021/22 financial year, the Department would transfer approximately R91.4 million to the CGE and approximately R471 million to the NYDA.

This amounted to R562.2 million.

• In quarter 3 of the financial year, the provisional allocation of R430 million for Presidential Youth Employment Intervention (PYEI) increased transfers to NYDA to R901 million for 2021/22, and increased the total available budget to R1,12 billion.
NYDA was allocated R400 million for the National Youth Service programmes and R30 million for entrepreneurship support.

• Departmental transfers therefore amounted to R992,338 million.

Thus leaving the Department with an operating budget of approximately R203,1 million to undertake its programmes and meet its targets for 2021/22.

• The Department reports a total of R2,185 million in virements from Programmes 3 and 1 to Programme 1-4.
An internal virement had been recorded in Programme 1 between sub-programmes • When considering the overall expenditure of the Department based on its total appropriation of R1,195 508 billion, it appears that the Department has spent 97.3% or R1,164 423 billion of its budget.

However, when considering the budget less the transfer payments to the CGE and NYDA, i.e.

the operational budget (R203.170 million), the Department has spent 74.7% or R172,085 million of the operational budget.
• When looking at the programme expenditure as a percentage of overall expenditure, 60% of the budget has been spent on the Administration programme.

Programme 4, the Rights of Persons with Disabilities accounts for only 6.3% of expenditure, while Programme 5, National Youth Development accounts for only 5.6% of operational expenditure.

• The Total under-expenditure for the year amounts to R31,085 million.

• No irregular expenditure was incurred for the 2021/22 financial year.
Similarly, no Unauthorised Expenditure and Fruitless and wasteful expenditure was incurred for the 50 52 year under review.

There was however, historical debt from previous years still on record.

14.8.4 Overview of budget for Q1 of 2022/23 • According to the National Treasury 2022 Estimates of National Expenditure (ENE) released in February 2022, the Department under Vote 20, receives an annual appropriation of R987.3 million.
The Department also facilitates two transfer payments to the Commission for Gender Equality (CGE) and the National Youth Development Agency (NYDA) respectively.

As such for the 2022/23 FY, the Department would transfer R100.7 million to the CGE and approximately R681,5 million to the NYDA.

Hence the transfers in total amounts to R782, million.

As such the Department is left with an operating budget of approximately R205,1 million to undertake its programmes and meet its targets for 2022/23.
• The Department underspent on all five programmes: Programme 1 (Administration) spent the highest proportion of its programme budget R24 million (24.3 per cent) as well as the overall operational budget (11.7%).
Programme 4 (Mainstreaming Youth & Persons with Disabilities Rights and Advocacy) spent the smallest proportion of its operational budget at 14.6% or R4,4 million, followed by Programme 2 (Mainstreaming Women’s Rights and Advocacy) which spent 16.7% or R5,5 million then Programme 3 (Monitoring, Evaluation, Research and Coordination) at 16.9%.

Across all programmes savings/underspending has been recorded, primarily as a result travel, accommodation and venue/facilities hire.
Notwithstanding that, the Department had not managed to spend on printing and circulation of documents, frameworks etc.

in its core programmes as well as on (unspecified) project milestones which was concerning.

The table below outlines the Overall Financial Performance - Per Programme as at 30 June 2022.
51 53 Table 6: Overall Financial Performance - Per Programme Programmes Final Appropriation Actual Expenditure as at 30 June 2022 Expenditure as % of Budget R’000 R’000 Administration and Mainstreaming Women’s Rights Advocacy Monitoring, Evaluation Research and Coordination Mainstreaming Youth and Persons with Disabilities Rights and Advocacy Sub-total Operational Appropriation Commission for Gender Equality National Youth Development Agency Total Appropriation 98.7 33.5 42.5 30.4 205.1 100.7 681.5 987.3 24 5.6 7.1 4.5 41.2 25.2 381.0 447.4 % 24.3% 16.7% 16.0% 14.6% 20.1% 25% 55.9% 45.3% • Compensation of employees accounts for 55.1% (R113 million) of the budget and Goods and services consumes approximately 42.8% (R87,9 million) and 2% (R4.2 million) for Capital Assets.
• In Q1 of 2022/23, the Department spent 13.8% (R28,372 million) on Compensation of Employees, 5.4% (R11,077 million) was spent on Goods and services and 0.8% (R1,046 million, R709 000) on Machinery & Equipment, Software and intangible assets in relation to its operating budget.
Table 7: Overall Financial Performance - Economic Classification (Q1 2022/23) Programmes Compensation of Employees Goods & Services Transfers & Subsidies Payment for Capital Assets Total Appropriation Final Appropriation R’000 113.1 87.9 782.2 4.1 987.3 Actual Expenditure as at 30 June 2022 R’000 28.4 11.1 406.2 1.8 447.4 Expenditure as % of Budget % 25.1% 12.6% 51.9% 43% 45.3% • The Department did not fruitless and wasteful expenditure during the quarter under review.
• The Department reported deviations amounting to R9,502 414 as at 30 June 2022 owing to: 52 54 i.

Single source appointment of R8,8 million to HSRC to manage and execute research and evaluation ii.

Single source appointment of R200 thousand for relocation-removal and reinstallation of biometric system and key cabinet iii.
Single source appointment of R501 thousand to Karabo Parking –66 additional parking for staff members as part of relocation 14.8.5 Overview of performance for Q1 of 20222/23 • As per the amended 2022/23 Annual Performance Plan, the Department planned for 29 targets in quarter 1 of which 28 targets (97%) were achieved and 1 (3%) was not achieved.

Programme 1 achieved 4 out 4 targets.

Programme 2 achieved 8 out of 8 targets so too did Programme 3.

Programme 4 achieved 8 out of 9 targets.


The target not achieved related to the draft status report on national and international obligations on the inclusion of persons with disabilities which was only approved in Q2 of 2022/23.

• Human Resources: The vacancy rate (5.6 %) is well below the targeted 10 percent for the FY.

The Department indicated that as at 30 June 2022, it had 143 approved posts, of which 8 were vacant which were listed as follows: i.
Deputy Director-General: PSCKM Deferred to September 2022 ii.

Chief Director, Stakeholder Coordination and Outreach Deferred to September 2022 iii.

Head of Office, DM Subject to the appointment of a Deputy Minister iv.

v. Private Secretary, DM Parliamentary and Cabinet Coordination, DM vi.

Registry Clerk, DM vii.

Driver/Messenger, DM viii.

Domestic Worker, DM • In addition, the Department noted that the contracts of 28 staff members had expired by the end of June 2022.
15 COMMITTEE’S OBSERVATIONS Having interacted with the Department, the AGSA, the NYDA and the CGE, the Committee made the following observations: Observations with respect to the Department of Women, Youth and Persons with Disabilities 53 55 15.1 General a) The Committee commends the Department, the NYDA and the CGE for tabling the Annual Reports within the specified time.
b) The Committee observed that 39/41 (95.1%) of the Department’s targets were met and 27% (2/41) were not met as per the revised APP targets reflected in the Annual Report for 2021/22.

This improvement in performance from 73% in the previous FY is commendable.

c) The Department spent 84.7% of the budget (i.e.

its operating budget of R203,170 million) was spent (R172,085 million) with a surplus/under-expenditure of R31,05 million.
This underspending increased from R18,575 million in the previous financial year 2020/21 to R31,085 million in the current FY under review 2021/22 - which is concerning.

d) The Committee observed that of the total appropriation as per Vote 20 (R1,195 508 billion) which included the transfers to entities, 97% (R1,164 423 billion) was spent.

e) The performance of the Rights of Persons with Disabilities programme remains a key area of concern for the Committee.
The majority of the targets met in Programme 1 relates to compliance matters in terms of the development and submission of reports it remains a concern that it continuously consumed the largest proportion of the Department’s operational budget and staff compliment.
f) The Committee noted with concern the Department’s continued reliance on external service providers to complete the targets it sets out within a FY and is then further hamstrung when the market does not respond or tenders have to be re-advertised by partners.

g) The Committee concurred with all of the findings and recommendations of the AGSA and the ARC.
h) The Committee observed that the Department was not effectively implementing the AGSA recommendations and those of the ARC, hence the repeat findings.

The Committee raised this as a major concern.

i) The Committee was concerned that the Minister had not attended Committee meetings and that several issues raised by the Committee at the time required the attention of the Minister e.g.

under-spending of the Department.


Notwithstanding, the Minister’s responsibilities for attendance at Cabinet meetings as an example and the apology she submitted in that regard.

However, the Committee sought clarity and asked the Minister to cite reasons for not attending Committee meetings.

j) The Committee was concerned about the performance of the Minister and the Department for 2021/22 and the leadership of the Department in general.
54 56 k) The Committee was concerned about the lack of visibility by the Minister and by the Department on the whole to key emerging issues in the country that related to women, youth and persons with disabilities.

15.2 Mandate, Mission and Vision a) Mandate: The Committee questioned how the Department’s new mandate as a Regulator was given effect to in 2021/22 and what was the evidence to support this.

The concern was that this was not evident.


b) Policy imperatives: The Committee asked what was the Department’s assessment of how Government has performed insofar as the various goals and targets related to women, youth and persons with disabilities as outlined in the NDP, MTSF, SDG 5 and Agenda 2063.

It was not evident from the Annual Report under review.
c) SDG 5: With 8 years left in order to achieve SDG 5, the Committee asked the Department what it proposes needs to be done in order to achieve the goals.

Whilst reference was made to the SDG the Department did not clearly articulate what was required of Government.

d) Vision and Mission: The Committee questioned how the Department has ensured that the rights of women, youth and persons with disabilities were realised in 2021/22.
In addition, the Committee enquired about what the Department has done to regulate the rights of women, youth and persons with disabilities in 2021/22.

Evidence in this regard was important for the Committee to consider how the Department then gave effect to its vision and mission during the year under review.

e) Key achievements: The Committee questioned what of the Department’s key achievements for 2021/22 demonstrated the fulfilment of the Department’s vision and mission.
f) Visibility of Department: The Committee was concerned about the effectiveness of the Department’s Communication Unit in terms of issuing statements on time and marketing the Department.

15.3 Policy and Law Reform a) The Committee questioned how accessible the Departments policies and frameworks were to the public when these are not listed on the website.
The Committee asked how these policies were being popularised within government and society at large as the concern was these were not reaching the desired target.

b) The Committee enquired about the status of the WEGE Bill and what the timeframes for tabling the Bill in Parliament were, as the proposed time frames referred to in the annual report were not met.
55 57 c) The Committee enquired about the current status of the Disability Rights Bill as progress in this regard did not find expression in the annual report under review.

This was concerning.

15.4 Performance of Programme 1: Administration 15.4.1 Overview of Programme 1 Performance a) The Committee observed that in Programme 1, 66.7% (4/6) of its targets were achieved and 92.4% of its budget was spent.
b) This programme continued to have the largest staff cohort within the Department – 69 posts filled with 16 posts additional to the establishment and 6 vacancies.

15.4.2 Human Resources a) Skilled personnel vs Lack of capacity: The Committee observed that of the 185 employees paid in 2020/21, 51 (32%) officials were in senior management while 107 (46.4%) fell within the highly skilled production (49) and supervision (51) category.

As such 158 (47.4%) employees within the Department, i.e.
just under half of its workforce, is meant to have the requisite skills to function at a high end level given their employment ranking.

As such the expectation would be that the Department should be able to yield the necessary deliverables in order to give effect to its mandate and achieve the goals it has set out.

Yet the Department maintains that it has a lack of capacity and is reliant on outsourcing services.
b) SMS cost: The Committee observes that for the year under review, Senior Management constituted 49.3% (R56,914 million) of the personnel cost and the highly skilled supervision (levels 9-12) 31.8% (R36,690 million).

c) Gender parity: The Committee observed that despite a predominantly large female workforce (66%, 89/135), the majority of women (36) are in clerical positions, while 27 occupy professional positions and 21 fall within the “legislators, senior officials and managers” category.
Furthermore, the majority of males employed in the Department are in “legislators, senior officials and managers” positions (19), followed by 14 occupying professional positions.

d) Use of consultants: The Committee noted that the Department continued to procure the services of consultants (39) during the year under review for 9 projects amounting to R1,848 million.
This was concerning given that the Committee consistently discouraged the Department from using external service providers given its limited budget.

This was up from 33 consultants in the previous financial year for 8 projects.

What this demonstrates is the Department dismissing the recommendation from the Committee in this regard.
The 56 58 reliance on service providers is disconcerting for the Committee given the large number of highly skilled professionals and senior managers (158 in total) in the Department as noted previously.

The Department spent the money on Facilitation Services (R213 000), Virtual NYP M&E (R141 000) and a research project (R696 000).

e) Vacancies: The Department is commended for maintaining a vacancy rate below the targeted 10% with 5.6% in 2021/22 which is lower than the previous - 8.5% for 2020/21.
f) Disciplinary cases: The Committee noted that there were two disciplinary hearings initiated and requested more information in this regard.

Of concern to note were the 30 financial misconduct warnings issued.

15.4.3 Financial performance a) Under-expenditure: The Committee noted with concern the R31 million under-expenditure for a department with a small operational budget claiming it is underfunded.
Whilst noting the reasons for the under-expenditure for each programme, the Committee remained resolute that surplus for the Department was significant given its limited budget, the lack of visibility on the ground and questionable impact on the lives of the most vulnerable in the country.

Furthermore, having assessed the Department’s Q1 performance for 2022/23, the continued under-expenditure has continued which is of particular concern.
b) Roll-over funds: The Committee notes the Department’s request to National Treasury for a total R11,244 million in roll-over of funds related to mainly to ICT in terms of the support and maintenance project for Microsoft (R1million); R600 000.00 for the payment of the Microsoft License and R1 767 000.00 for the installation of the Information Communications Technology (ICT) infrastructure as part of the relocation of the Department to the new premises; R3,508 million for the installation for ICT infrastructure at the new premises for the Department as part of the relocation; R3,585 million for the continuation of the establishment of the NCGBVF and R784 000 for the appointment of a service provider to harmonise Disability Rights Instruments and develop a Disability Rights Monitoring Results-Based Framework.
c) The Committee observed that the Irregular Expenditure incurred to the amount of R41.712 million related to previous financial years and will remain on the Department’s books until resolved.

The Department is to be commended for not incurring any irregular expenditure for the year under review.

Notwithstanding that, the 30 financial misconduct warnings warrants concern.

d) The Committee commends the Department for not incurring any Fruitless and wasteful expenditure during 2021/22.
However, the Committee observed previous expenditure 57 59 relating to a case against a previously used travel agency was still on record and is currently with the State Attorney to consider possible recovery of funds (R1,330 million).

e) The Committee observed that the Department did not incur any Unauthorised expenditure during 2021/22 which is commendable.

However, there is unauthorised expenditure from previous years that is awaiting authorisation.

This amounts to R32.774 million.


f) Virements: The Committee observed virements totalling R2.185 million.

R193 000 was shifted within Programme 1 from Goods and Services to Payments for financial assets.

R1,992 million was from CoE in Programme 3 to CoE in Programme 1 (R1,662 million), Programme 2 (R64 000), Programme 3 (R64 000) and Programme 4 (R266 000).
g) Deviations: The Committee notes the discrepancy in reporting on deviations whereby the Annual Report states that the Department had none for the 2021/22 FY.

However, at the Q4 2021/22 briefing to the Portfolio Committee the Department stated that as at 31 December 2021, the Department has incurred 16 deviations amounting to R1,539 418 million.

And by 31 March 2022, this had increased to 20 deviations, amounting to R1,929 418 million.

This contradiction is concerning.


h) Donor funding: The Committee observed that the Department received R23,214 million from the European Union of which it spent R621 000.

This donation forms part of a total funding amount of R109,349 182 million that has been allocated from 2021/22 to 2023/24.

The Committee sought clarity about how the donor expenditure was audited against the required deliverables.
Furthermore, the nature of the donor funding from the EU was to secure additional resources – equipment and personnel - but it is unclear how this was not a duplication of services and if not, how sustainability will be ensured beyond the funding period stipulated.
15.4.4 Investigations & Consequence Management i) The Committee noted with concern the AGSA findings regarding consequence management which could not be substantiated due to insufficient appropriate evidence that action was taken against officials that incurred irregular expenditure.

This was attributed to a lack of proper and complete records that were not maintained by the Department in order to conduct these investigations into irregular expenditure.
However, this was in contrast to the finding by the ARC to be elaborated on in the section hereafter.

j) The Committee questioned why consequence management has not been implemented against officials who were responsible for the under-expenditure incurred in 2021/22.

To this end, the Committee asked what the CFO was doing about the under-expenditure as the concern was there was no strong action taken by management to rectify the matter.
58 60 k) The Committee noted with concern that the DG indicated she was reluctant to implement consequence management against officials who were not performing their tasks as they would approach the Committee to report the matter.

The Committee noted the seriousness of the aspersions cast on the Committee and requested the DG to provide more details in this regard as it would be interpreted as the Committee interfering.
The Committee made it very clear if there were instances this must be brought to the attention of the Committee as members were unaware of any incidents and if this was not the case the DG should retract what was said and make it abundantly clear.

l) The Committee took issue with the DG’s explanation of not being able to hold her officials to account, manage them appropriately and implement consequence management for non- performance.
The Committee reiterated that was the role of the DG and in the event consequence management was not implemented she would be held to account accordingly for failing to perform her duties.

15.4.5 Supply Chain Management (SCM) a) The Department is to be commended for ensuring that no unsolicited bids were concluded for the year under review and that a new SCM policy was developed and approved.
15.4.6 ICT a) The Committee noted with concern that the only ICT target to develop and approve the Master Information System and Security Technology Plan (MITSSP) was not met.

It is important to note that this target was unmet in 2020/21 as well.

b) The Committee noted with concern the ARC’s finding that the ICT environment remained a high risk for the Department which could hinder the achievement of its objectives.
15.5 AGSA & ARC 15.5.1 AGSA Findings and Recommendations a) The Committee concurred with the findings and recommendations of the AGSA.

b) Repeat findings: The Committee noted with concern the repeat findings by the AGSA and the repeated calls by the Committee itself for the Department to address particular matters which appeared not to be taken seriously as not all of these recommendations were implemented by the end of the financial year.
c) Compliance: The Committee noted with concern the repeat finding of non-compliance with legislation as identified by the AGSA as well as those related to internal control deficiencies.

59 61 d) Lack of consequence management: The Committee noted with concern the AGSA and ARC finding which relates to the lack of consequence management.

This too is a repeat finding.

e) Limited scope of audit: Firstly, the Committee was concerned that the AGSA only audited one Programme of the Department i.e.
Programme 2 and did not focus on other Programmes such Programme 4 & 5 which are not performing optimally.

Secondly, the Committee questioned whether the AGSA was providing a true reflection of the performance of the Department if the audit was limited to a programme that appeared to be performing well by achieving all its targets.
The concern articulated by the Committee was that this limited assessment of the Department, CGE and NYDA’s performance did not adequately assist the Committee to obtain a holistic assessment of the performance as the AGSA would have had access to more data and information to make a determination.

Lastly; the Committee questioned what informs the sample of the AGSA in order for the auditors to conduct an audit and derive at an opinion.
The Committee was concerned that only one programme was earmarked for an audit and this was repeated year-after-year.

As such the Committee questioned, why programmes that are performing poorly are not audited.

f) Relationship with ARC: The Committee enquired about the working relationship of the AGSA and the ARC’s of the Department, NYDA and the CGE.
Whilst the Committee acknowledged the independence of these entities, the Committee was concerned that the findings and matters of concern brought to the attention of the Committee by the various ARC’s did not find adequate expression in the audit for the year under review.
g) Outcomes of Performance Audit: Based on the AGSA’s audit of the entities in the portfolio, the Committee enquired whether there was value for money in terms of what was spent versus what was achieved by the Department, the NYDA and the CGE.

h) The Committee questioned whether AGSA found any proof of the regulatory role of the Department during the auditing process.
i) The Committee was concerned that AGSA did not provide an opinion on the Sanitary Dignity Programme (SDP) of the Department having audited Programme 2.

The Committee noted that during its oversight visit to the Gauteng Province, it was revealed that beneficiaries did not receive sanitary products due to problems with the tender.
This was brought to the attention of the Department at the time and as such the Committee questioned its monitoring and evaluation of the SDP despite the submission of reports every quarter as a target achieved.

j) The Committee was concerned about the report of the CGE which reflected that initially targets were cited as achieved by the CGE but upon the AGSA’s audit it found that the targets were not met and the CGE had to correct the mistake.
This brought into question for the Committee whether internal controls of the CGE were poor.

60 62 k) The Committee enquired about how often the AGSA monitors and evaluates the performance of the Department, CGE and the NYDA besides at the end of a financial year.

The Committee indicated that concerns were often identified during in-year-monitoring and was brought to the attention of the Committee through various ARCs.
As such, the Committee noted these issues could have then been averted but often these were not addressed and instead translates into a finding.

l) The Committee enquired about the R15 million and R5 million allocated to the National Council on Gender-Based Violence and Femicide (NCGBVF) and reallocated to the Secretariat on NCGBVF which was allocated for a set period until the end of 2022/23 and whether this was audited by the AGSA.
The Committee enquired whether the Department was aware of this and if so why they have not reported on the matter to the AGSA.

In particular, the Committee asked whether the AGSA has audited the expenditure in relation to the R15 million allocated for the establishment of the NCGBVF.
m) The Committee was concerned about the lack of information provided by the AGSA in terms of whether the CGE conducts needs analysis before procuring equipment to ensure that there is a need for it and whether the purchase is justifiable.

n) Donor funding: The Committee noted with concern the lack of information from the AGSA regarding donor funding received by Department, NYDA and CGE and expenditure in this regard.
The Committee indicated that an assessment of donor funding was important given that it was linked to almost all of the core programmes o) Whistle-blower allegations regarding the NYDA’s CEO: The Committee was concerned that the AGSA did not mention any allegations against the CEO of the NYDA with regards to nepotism, corruption, irregularities on procurement process, tenders given to family members of the CEO in its audit report.
To this end, the Committee asked whether these allegations were investigated and whether these formed part of the audit to indicate whether the allegations were true or false in order to assist the Committee to conduct its oversight over the NYDA effectively.
p) The Committee was concerned that it could not make a determination based on the audit conducted on the NYDA insofar as the allegations levelled by the whistle blower was concerned as the Committee lacked the requisite details in this regard and as such requested more information.

Based on the AGSA’s explanation on the audit pertaining to the alleged impropriety, the Committee was unclear about what was examined/assessed that fell within the scope of the AGSA’s mandate.
The Committee deemed this important in order for it to make a determination of what should still be done given the serious nature of the allegations.

61 63 15.5.2 Audit and Risk Committee (ARC): a) The Committee acknowledges the findings and recommendations of the ARC.

b) The Committee noted with concern that the areas of improvement proposed by the ARC to ensure the effectiveness of internal controls by the Department were not new but longstanding.
In particular, these related firstly to monitoring of compliance with applicable laws and regulations, specifically on investigating the irregular expenditure incurred in the previous financial years.

Secondly, to Information Technology which requires improvement on service continuity and security controls.
c) The Committee notes the ARC’s finding regarding the progress made in the investigation of irregular expenditure incurred by the Department during 2020/21, 2019/20, 2018/19, 2017/18 and 2016/17 financial years as the Accounting Officer implemented the appropriate action in the form of consequence management, based on the results of the irregular expenditure investigations.
However, this finding was different to that expressed by the AGSA which brings into question how the ARC then engaged with AGSA on this matter.

d) Under-spending: The Committee questioned why the ARC identified the under-spending as crisis in the 3rd quarter for 2021/22 only when the potential under-expenditure was already identified during the 1st and 2nd quarter for 2021/22.
e) The Committee also requested more information on the unbudgeted needs as a measure of reducing under-spending as this was unclear.

f) The Committee observed that the ARC indicated that there was no irregular, unauthorised and fruitless and wasteful expenditure for 2021/22 and yet the Department reported 30 warnings given to support staff for financial misconduct.

This appeared to be a contradiction and was concerning.

As such, the Committee requested more information on the matter.
g) Consequence management: The Committee requested more detailed information on the consequence management implemented by the Department given that this was noted as repeat finding.

This was a major area of concern for the Committee and reflected weak leadership and management to take corrective action.

h) The Committee noted with concern that reports were not submitted to the ARC by the Department nor were recommendations implemented.
As such the Committee questioned whether there was any consequence management and if not, why this was allowed to continue unabated.

i) The Committee asked who had not implemented the recommendations of the ARC in the 1st quarter for 2021/22 which resulted in under-spending of the Department by the end of the financial year.

The significant under-spending was concerning.


62 64 j) Risk management: The Committee concurred with the ARC finding and recommendation on the improvement of the risk management processes and that the Department needed to provide capacity including funding of the risk management activities.

k) Audit Action Plan: The Committee concurs with the ARC recommendation that the Accounting Officer develops an audit action plan to resolve the audit findings identified during the 2021/22 financial year audit.
Furthermore, the Committee noted with concern that the audit action plan and risk mitigating actions for 2020/21 were not fully implemented by the Department.

As such, the Committee is concerned about how effective the ARC’s monitoring is over the Department and what remedial action was implemented if the Department did not comply with reporting requirements and the recommendations proposed by the ARC.
To this end, the Committee sought clarity from the ARC in terms of how it conducts its audit programme, whether the ARC considers only reports provided to them or considers any other information over and above that.

15.5.3 Outstanding Audit Findings and Risk Mitigation Actions • Audit Findings: The Committee observed that 4 findings (3 ICT, 1 Internal Audit) for 2020/21 were still not resolved by the end of the 2021/22 FY which was concerning.
• Risk Mitigation Actions: The Department is to be commended for 100% achievement of the mitigation action for Strategic Risks at the end 2021/22 FY; 97% mitigation actions achieved for the Operational risk performance and 91% mitigation actions achieved for Fraud and Corruption.

The outstanding mitigation actions were reported as partially implemented however the Committee maintains that despite noting progress these were not completed by the end of the FY 2021/22.
The Committee notes this with concern as these were longstanding matters.

15.6 Core Programmes 15.6.1 Overview of performance for core programmes a) Targets and expenditure: The Committee commends the Department for achieving all 35 targets in its core programmes during the year under review.

The key concern noted by the Committee was the under-expenditure incurred by the core programmes.
b) Policy and Law Reform: The Committee commends the Department for finalising the National Gender-Based Violence and Femicide (GBVF) Prevention Strategy and for tabling the NYDA Amendment Bill and most recently the National Council on GBVF Bill.

However, the Committee notes with concern that the Department has yet to introduce Bills it has proposed such as the WEGE Bill, the South African Youth Development Bill and the Disability Bill.
63 65 c) Reports: The Committee acknowledges the reports submitted as evidence of the work achieved for the year under review.

However, several reports are outstanding and have not yet been submitted nor are these available on the Department’s website.

To this end, the Committee has repeatedly indicated that reports should be submitted for consideration at least one month after being finalised and published.
Oversight is weakened when the Committee is not privy to products yielded by the Department as evidence of targets met.

15.6.2 Programme 2: STEE a) The Department was commended for achieving all its targets in this programme.
b) The Committee noted that the contracts of the GBVF Secretariat comes to an end 31 March 2023 and it was unclear what the deliverables were since employees took office or how the expenditure in relation to the R15 million allocated by National Treasury for the MTEF can be accounted for.

Furthermore, the Committee was concerned about the transitional arrangements post March 2023 in the absence of an established National Council on GBVF.
c) The Committee was concerned that there was money set aside for consultants to conduct research in addition to donor funding received for core programmes despite the Department having employed several officials in senior positions who were meant to perform these duties.

To this end, the Committee sought more clarity and asked what the role of the data capturers and technical monitors were that are currently funded by the EU.
d) The Committee also requested clarity on the use of consultants when there were people employed in the Department to perform the tasks that seemed to have been outsourced instead.

Reference was made to the EU funded positions.

The Committee was concerned that it appeared to be a duplication of roles.
15.6.3 Programme 3: Policy Coordination and Knowledge Management a) The Committee asked whether the National Gender Machinery Framework had been established and was operational since the target was cited as achieved.

The implementation of a functional NGM was deemed important.

b) M&E: The Committee questioned how the Department undertakes monitoring and evaluation having separated these functions and having produced for e.g.
Annual Performance Monitoring Report emphasis on monitoring versus an evaluation report on the empowerment of WYPD emphasis on evaluation.

15.6.4 Programme 4: Rights of Persons with Disabilities Programme a) The Committee commends the Department for the improvement of performance in terms of targets achieved.
64 66 b) Under-expenditure: The Committee noted that the Department has continuously been underspending in Programme 4 year-on-year and enquired what the plan was to ensure this trend does not persist.

The Committee was concerned that the Department was not giving enough attention to this programme hence the under-expenditure.

This was an indictment on persons with disabilities in the country.
c) The Committee enquired whether reports produced in Programme 4 would be submitted and presented to the Committee.

15.6.5 Programme 5: National Youth Development Programme a) The Department is to be commended for achieving all 4 (100%) targets in this programme.
Observations with respect to the Commission for Gender Equality (CGE) 15.7 CGE Matters Notwithstanding the fact that the CGE is a Chapter 9 Institution, it only accounts to Parliament vis-a-vis the Portfolio Committee on Women, Youth and Persons with Disabilities Presidency and that the Department merely transfers its funds, the Committee deemed it important to note the following observations: 15.7.1 General a) The Committee welcomed the tabling of the Annual Report 2021/22 by the CGE within the required time frame.
b) The Committee remains concerned with the overall performance of the CGE given the challenges that continue to impact on its ability to give effect to its mandate.

c) The Committee queried what the key drivers of success for each of the CGE’s Strategic Outcomes for 2021/22 were.

To this end, the Committee also enquired about the key challenges or barriers the CGE identified that hinder the CGE in achieving its Strategic Outcomes.
The Committee also asked what would be required to address these challenges or potential barriers.

Furthermore, the Committee enquired whether there were any risk mitigating measures currently in place to address challenges and if yes, what are these measures.

d) The Committee questioned what the CGE intends doing to increase its visibility and impact in order to achieve its Strategic Outcomes as the Committee remained concerned that the CGE was still not well known within communities.
65 67 e) The Committee noted with concern the regression in terms of performance specifically in terms of targets achieved and enquired about the plan to ensure that targets are achieved in future.

15.7.2 Governance a) The Committee observed that policy to regulate the interface between Commissioners and staff or the role of a company secretary was not reported on in the Annual Report which was concerning.
b) The Committee noted with concern that the Commissioners Handbook was still not completed by the end of 2021/22 and despite numerous progress updates by the CGE it is still not finalised.

c) The Committee noted its discontent with the CGE’s lack of enforcement of internal controls and consequence management.

d) The Committee observed that the Commission for Gender Equality’s Audit and Risk Committee agreed with the findings of the AGSA, that some were repeat and or new findings.
15.7.3 Performance of Commissioners a) Overview of Meetings: The Committee observed that the sub-committee, plenary, special plenary, Section 6 and Portfolio Committee meetings as presented by the Chairperson of the CGE amounted to on average one per quarter.

Given the serious challenges experienced within the CGE for the year under review, it is unclear why certain sub- committees did not meet more often for e.g.

HR, finance, governance.


b) Absenteeism: The Committee noted the absenteeism of Commissioners at sub- committee, plenary, special plenary, Section 6 and Portfolio Committee meetings as presented by the Chairperson of the CGE.

To this end, the Committee enquired what the implications were for a Commissioner not attending more than 3 consecutive meetings as the Commissioner’s Handbook clearly outlined what the repercussions ought to be.
c) The Committee was concerned that no consequence management had been implemented against Commissioners who had missed 3 consecutive meetings.

Furthermore, in light of the contestation regarding the 100-hour flat rate for part-time commissioners it was unclear to the Committee how attendance to these meetings constituted a significant proportion to the 100 hours per month given that meetings were held on average one per quarter.
66 68 d) Botha Matter: The Committee noted with concern that Commissioner Botha was invited to speak at an event on behalf of the CGE whilst still on suspension.

The matter was brought to the attention of the CGE by the Committee and the Committee requested feedback in that regard.

As the Committee had not received any formal correspondence from the CGE prior to the Committee meeting in that regard, the Committee sought an explanation about how the Commission dealt with the matter.
The Committee was dissatisfied with the response provided by the CGE that it had yet to look into the matter.

15.7.4 Human Resource a) The Committee noted that the term of office of 4 Commissioners would come to an end on 31 October 2022 which included the Chairperson and the Deputy Chairperson.

As such, the Committee enquired about the continuity plans in place.

The Committee deemed this important to ensure a smooth transition for the incumbent Commissioners.
b) The Committee noted the staff turnover, particularly resignations, and enquired about the challenges related to staff retention.

To this end, the Committee asked about mitigation strategies to ensure institutional memory.

The Committee recalled that it had previously recommended to the CGE to conduct exit interviews and questioned whether this was implemented.
15.7.5 Finance a) Underspending: The Committee noted with concern the under-spending (R14,2 million) and requested an explanation in that regard.

Given the importance of the work rendered by the CGE, the Committee deemed it unacceptable that funds are not utilised optimally particularly for an institution that claims it is under-resourced and requires more funding.
b) Fruitless and Wasteful Expenditure: The Committee noted with concern the Fruitless and Wasteful expenditure (R5, 694 008) incurred by the CGE of which R2, 753 340 related to the 2020/21 FY payment of Part-time Commissioners without time sheets.

c) 17% Provident Matter: The Committee noted with concern that the matter related to the payment of certain officials had still not been resolved.
This despite the Committee having recommended in its 2021 Budget Review and Recommendations Report that, “The CGE should submit to the Committee, in writing, a comprehensive report on the 17% Provident fund issue.” The CGE provided the Committee with an update on the matter at its briefing of the Annual Report of 2021/22 and stated that the matter has still not been resolved.
It would appear that no official(s) have been held to account in this 67 69 regard for having implemented the policy decision from the onset nor why it cannot be rescinded.

This was particularly concerning for the Committee.

d) Payment of leave gratuity to former CEO: The Committee was not completely satisfied with the explanation provided by the CFO regarding the leave pay-out of the former CEO whose contract terminated in 2020.
The Committee was made aware of an erroneous leave gratuity pay out to the former CEO.

The CGE had briefed the Committee in this regard in 2020 and 2021 on this matter.

It would appear that the matter has still not been resolved.

The Committee sought more information in this regard and was not satisfied with the slow pace of progress in resolving the matter.

e) 13th cheque: The Committee noted that 2 Commissioners received a 13th cheque payment in 2021/22 and questioned why this was the case.
The Committee was satisfied with the response by the CFO in this regard which related to the manner in which Commissioner’s had structured their total package.

15.7.6 Payment of Commissioners a) Payment of part-time Commissioners: The Committee noted with serious concern the Fruitless and Wasteful expenditure incurred of R2, 381 665 which was attributed again to the payment of part-time Commissioners without the requisite time sheets.
The Committee noted that the CGE had informed Members via correspondence sent to the Committee on 21 September 2021 dealing with the Q4 of 2020/21 and Q1 2021/22 titled “Audit Committee Response to the Portfolio Committee Questions”, sent to the Committee from the CGE’s ARC, the following was noted under III.

Human Resources Audit, Internal control deficiencies identified pertaining to HR are as follows: “Part- time Commissioners salary paid without supporting documentation.
In that, for the period of April 2020 to October 2020 when the country was in a National State of Disaster due to COVID-19, part-time Commissioners were paid 100 hours without supporting documentation.

Further to this the salary was paid without supporting timesheets approved by the Executive Authority.” b) From the correspondence received and the documents assessed the payment of 100 hours exceeded the time period of April to October 2020.
The payment arrangement had exceeded the timeframe and the Committee was unaware and not informed.

Furthermore, Part-time Commissioners were paid 100 hours’ flat rate for 22 months not having submitted time sheets and or template as per CGE Finance Department which was an indictment on the CGE.

This was noted with as a matter of serious concern.

c) The Committee acknowledged plenary’s decision to implement the 100-hour flat rate on account of force majeure for the time period stipulated as cited above.
However, the 68 70 Committee having received and assessed the Commissioners progress reports per quarter for 2021/22 in addition to the overview of attendance for 2019-2022 at sub-committee meetings, plenaries, special plenaries and Portfolio Committee meetings was not satisfied that the 100-hour flat rate should have been extended beyond the stipulated period.

The Committee was not satisfied with the information hereto as a measure of justification of 100 hours per month for part-time Commissioners.
The activities reported together with meeting attendance would not have sufficed for accumulating 100 hours a month.

This was further compounded by, the Committee’s assessment of Commissioners salaries for 2019/20 and having noted that on average, based on crude calculations of their salaries, part-time Commissioners worked between 11.7 minimum to 40.1 hours maximum.

As such, this brought into question how plenary and senior management had justified the 100-hour flat rate.
The Committee was also not satisfied with the CFO’s response insofar as variation in salaries between Commissioners because of benefits such as travel given that during the Covid-19 lockdown period travel was limited and Commissioners indicated that they worked from home as well.
Moreover, the Committee having assessed all the progress reports of Commissioners for the year under review was unable to see how the continuation of a 100-hour flat rate was justifiable when certain Commissioners were not reporting against all Strategic Outcomes within a given quarter.

d) Current status of 100-hour flat rate: The Committee questioned whether part-time Commissioners were still paid the 100-hour flat rate and what the justification was given the issues of concerned raised.
e) The Committee noted that no money has been recovered or written-off to date according to the CGE as reported to the ARC.

Furthermore, the Committee is aware that 4 Part- time Commissioners had taken up the matter on appeal based on the 2020/21 amount and have maintained that submission of quarterly reports together with a letter of endorsement from the Chairperson of the Commission for Gender Equality and an internal circular should suffice as evidence.
To this end, the Committee questioned whether the ARC was in receipt of such evidence.

The Committee was not satisfied with the response of the CGE and noted with serious concern the lack of leadership and accountability demonstrated, as well as not availing proof of evidence for the respective auditors in this regard.
f) Failure to comply with Commissioner’s Handbook: The Committee noted with concern the CGE’s failure to comply with the Commissioners Handbook as per 5.3.2 Claims, “This matter is regulated by CGE policy on subsistence and claims.

In addition, part- time Commissioners are required to file a salary claim every month, using the template 69 71 provided by the CGE finance department.
Full-time Commissioners need not submit salary claims, as their salaries are automatically generated through the CGE salary system.” The Committee noted that the non-submission of timesheets was thus in direct contravention of the CGE’s policy despite the submission of quarterly reports in narrative form.
g) Application of President’s determination of salaries: The Committee having assessed the salaries of Commissioners as outlined in the Annual Report under review was unclear how the President’s determination of salaries as per the Draft Notice on the Determination of Remuneration of Independent Constitutional Institutions was applied by the CGE as the salaries varied considerably.

This was noted with concern as the Committee was dissatisfied with the response provided by the CGE in this regard.
It was concerning that there appeared to be no consistency in terms of the payment salaries of both full time and part-time Commissioners.

In essence, the Committee was concerned that the President’s determination of salaries of both full time and part time Commissioners was not implemented by the CGE.
h) Variations in Salaries: The Committee having assessed and compared the salaries of Commissioners for 2020/21 and 2021/22 as well as 2019/20 also noted significant differences in the salaries of full-time and part-time Commissioners which was concerning.
Notwithstanding the explanation provided by the CGE’s Chief Financial Officer regarding the manner in which certain Commissioners had structured their salary package, the benefits and travel claims salaries varied between full-time Commissioners and part-time Commissioners.

The Committee was not satisfied with the CGE’s justification for those inconsistencies.

The Committee also questioned the process of approval of payments and required more details in that regard.
i) The Committee noted with concern that during the briefing by the CGE on its Annual Report for 2021/22, a Commissioner who was converted from part-time to full time indicated that during her tenure as a part-time she was paid a lower salary as compared to a fellow Commissioner who took office at the same time she did.
j) Payment to former Commissioners: The Committee having assessed the salaries of Commissioners for the last 3 financial years noted that Mr Mr Wallace A. Mgqogi, who was a full-time Commissioner was paid R177 987 for 2019/20 and also received 13th cheque & or leave pay-out of R20 625.

Dr Nondumiso Maphazi who was also a full-time Commissioner was paid R226 285 for 2019/20.

Ms F. Nzimande, a part-time Commissioner was paid R79 987 for 2019/20.
Ms S. Sobahle, a part-time Commissioner was paid R223 013 for 2019/20 and received an additional R22 471 for 13th cheque and or leave pay-out.

The Committee sought clarity in this regard for the payments given 70 72 when their term of office had expired.

Furthermore, the Committee was alarmed by the Chairperson of the CGE’ response of not having been aware of the payments this despite have signed off on all three of the annual reports in which the salaries were expressly stated.
The Committee acknowledged the Chairperson’s withdrawal of not being aware and shocked at the revelations exposed by the Committee.

15.7.7 Programme specific matters • Boy-child: The Committee enquired whether the Commission was still implementing the boy child programme as this was considered to be an important initiative should be continued.
• Webinars: The Committee questioned how the CGE determines whether webinars are successful or not as the impact of initiatives is considered important for the Committee.

• Policy and Law reform: Similarly, the Committee enquired whether the CGE has tracked any of its recommendations made and incorporated into a Bill/policy via submissions made.

Whilst the submission is one aspect of the CGE’s work, the Committee is interested in whether the recommendations are taken up.
• Legal Practice Council: The Committee noted several litigation cases outlined in the Annual Report but it was unclear what the role of the CGE was in all of the cases its standing as a legal entity was not yet accepted by the Legal Practice Council.

This has previously been reported to the Committee which was noted as a major concern and required attention.
To this end, given the reporting in the Annual Report 2021/22, the Committee then questioned whether the CGE resolved the matter with Legal Practice Council with regards to CGE recognised as legal entity.

The Committee was not satisfied with the response from the CGE on the matter as it has still not been resolved.
The Committee noted that it has taken an inordinate amount of time for this matter to be resolved the impact of which was directly on the beneficiaries the CGE is meant to serve, this was deemed unacceptable.

15.7.8 Case Management a) The Committee noted with concern the overall low number of complaints received for the year under review.

The Committee noted a drop in the number of cases opened from 378 in the previous FY to 170 in the current FY.
b) The Committee noted with concern the large number of pending cases (494) at the end of 2021/22 and asked how far the CGE was in dealing with the backlog.

In addition, the Committee questioned whether the large number of pending cases and the duration it took to close a matter was not a key contributing factor for the overall low case numbers 71 73 as the public may be disillusioned with the process and the slow pace of progress to be assisted.
c) The Committee questioned why the CGE registered so little complaints related to gender-based violence for 2021/22.

To this end, the Committee noted that this trend had continued int0 Q1 for 2022/23.

The Committee requested clarity on whether the 170 cases were closed in 2020/21 or 2021/22 financial year.

d) The Committee was concerned about the manner in which the CGE dealt with cases received and closed.
e) The Committee also noted the variation in the number of cases opened and closed across the various provinces which was presented in the quarterly reports for the year under review but not reflected in the annual report.

15.8 Observations with respect to the National Youth Development Agency 15.8.1 General a) The Committee commends the NYDA on receiving its 8th consecutive clean audit and achieving 100% of its targets.
b) The Committee concurred with the AGSA and Audit Committee’s findings and recommendations.

To this end, the Committee agreed that whilst the majority of targets were reached and often exceeded these should be reassessed to determine whether these are too low and should be set higher.

15.8.2 ARC a) The Committee welcomed the report of the ARC and enquired whether the ARC conducted its audit bi-monthly or on a quarterly basis.
b) The Committee also requested the ARC to indicate whether they managed to identify up any red flags during audit period that should be considered by the Committee.

c) The Committee was concerned that the AGSA’s finding related to a beneficiary who did not receive equipment that was due to her was not identified by the ARC as it was not reflected in the ARC’s report.

This brought into question for the Committee how many other issues were then not picked up by the ARC.
Furthermore, the Committee also questioned how the ARC could indicate that the NYDA achieved all its targets when a beneficiary did not receive their equipment during the year under review.

72 74 d) The Committee commended the NYDA on improvement on compliance and wanted to know whether the ARC identified any improvements required with regards to compliance issues in terms of internal environment controls.
15.8.3 Programme 1 Administration a) Finance: The Committee commends the NYDA for not incurring irregular or wasteful expenditure for the year under review.

a) Vacancies: The Committee queried what the time frame was for the filling of vacancies in the NYDA.

b) Dismissals, Resignations: The Committee enquired about the reasons for dismissals and resignations.

In addition, the Committee asked whether exit interviews are conducted with regards to resignations.
To this end, the Committee reiterated the importance of institutional memory and staff retention.

c) Disability Employment Equity Targets: The Committee queried how many youth with disabilities has been employed in the NYDA.

The Committee was concerned that there was no disaggregated data provided on the employment for persons with disabilities in the recent Annual Report.
In addition, the Committee asked what progress the NYDA has made with regards to achieving the employment equity for persons with disabilities.

d) Communication Strategy: The Committee enquired whether the NYDA has forwarded the communication strategy that was requested by the Committee given that NYDA was not reaching youth in all communities.
In addition, the Committee also requested more information on the cost of the communication given that the NYDA is still not well known across the country and within communities.

e) CEO Salary: The Committee was concerned about the R2,7 million salary paid to the CEO and that work of the NYDA does not reach the youth in many communities.
f) Pension Fund: The Committee sought more information about how the NYDA invests the pension of NYDA’s employees as an anonymous whistle-blower had called the Chairperson of the Portfolio Committee to render concerns in that regard.

g) The Committee further requested clarity on the amount of money paid to the former CFO (Mr Mkhwanazi).
15.8.4 Performance of the Board a) Impact & visibility: The Committee was concerned that the Board Members of the NYDA are not performing and have not been impactful since they resumed office.

This was concerning as the Committee was unsure what the Board was doing at national and at provincial level to 73 75 give effect to the NYDA’s mandate.

To this end, Members questioned Board Members on the work they are currently undertaking to achieve the NYDA’s mandate.
Furthermore, the Committee also requested the NYDA Board to cite their key achievements within the first 100 days in office.

b) Russia trip: The Committee was concerned that the NYDA Board Members undertook a trip to Russia with young people without having considered the international ramifications for attending given the war in the Ukraine and the official position from DIRCO in that regard.

The Committee enquired about the criteria applied to choose young people to participate in the study tour.
The Committee was concerned that the NYDA did not respond to young people who applied to be part of the delegation to Russia.

The Committee questioned what the purpose of the trip to Russia was.

c) The Committee noted with concern the lack of response by the Deputy Chairperson on the performance of the NYDA initially.

The Committee noted that the Deputy Chairperson has been travelling abroad often but it was unclear to the Committee how this in turn benefitted the NYDA.
d) The Committee was also concerned with the initial report of the Chairperson as it lacked the requisite details that would highlight what the Board has achieved to date or how it intends responding to and dealing with the high rate of youth unemployment.

e) The Committee sensed tension between Board members and therefore specifically asked what the working relationship was between the Chairperson and the Deputy Chairperson of the Board.
f) The Committee queried how many Board meetings have taken place and whether Board members have been attending these meetings.

g) The Committee also queried how Board members are held to account and how attendance at Board meetings are monitored.

h) The Committee noted with concern the allegations levelled against the CEO and asked what the Board was doing about it.
15.8.5 Programme 2: Programme Design, Development and Delivery a) In light of the concern raised by the AGSA that a beneficiary had not received her equipment (kitchen trailer) despite the service provider having been paid, the Committee sought an explanation in that regard from the NYDA.
The Committee was concerned that intended beneficiaries maybe disadvantaged on account of service providers failing to render the service after receiving payment and insufficient monitoring and evaluation on the side of the NYDA to avert the situation in a timeous manner.

74 76 b) M&E: The Committee questioned who was the key person responsible to check whether the service providers have delivered equipment to the beneficiaries as a means of ensuring that there is value for money.
c) SDP: The Committee asked whether the NYDA was able to offer non-financial business development interventions for beneficiaries in the Department in the Department of Women, Youth and Persons with Disabilities’ Sanitary Dignity Programme during the 2021/22 FY and if so how many.

This was important for the Committee ascertain as it would provide insight into the nature of the collaboration.
Moreover, the Committee was concerned that young people are not benefitting from the value chain of the Sanitary Dignity Programme.

d) Youth with Disabilities: The Committee enquired about how many young people with disabilities benefitted from the non-financial business development interventions in 2021/22.

The Committee questioned whether youth with disabilities were part of the NYDA delegation to Russia.
e) Effectiveness of training by NYDA: The Committee questioned how the effectiveness of the training was assessed in terms of the life skills and job preparedness programme.

To this end, the Committee enquired about the key challenges and lessons learnt from the training and what has been the experience of young people that were trained in 2021/22.
Furthermore, the Committee asked whether the NYDA has followed up on the Committee’s recommendations to collaborate with universities on its training initiatives as means of expanding its reach.

The Committee sought a progress in this regard.

f) Solomon Mahlangu Scholarship: The Committee also wanted to know how many youth benefitted from the Solomon Mahlangu Scholarship and to who the scholarship will be extended to.

The Committee also wanted to know whether the NYDA has disability champion.
g) Workshops: The Committee requested more information on workshops conducted by NYDA that was costly.

The Committee asked who were the beneficiaries who attended workshops at a provincial level.

h) Outcomes of training: The Committee questioned how many young people were employed after receiving training on life skills and job preparedness.

i) Support for young entrepreneurs: The Committee queried whether assistance with financial planning was provided to the small & medium business.
The Committee queried what progress has been made to enable youth to use virtual platforms to complete NYDA applications forms when applying for a grant.

j) APPs submission & assessment: The Committee queried how many Government Department have submitted their annual plans to the NYDA in 2021/22, which Departments have not submitted and why not.
The Committee enquired about the outcomes of the assessment of 75 77 these annual plans as this would be an importance means of determining what progress has been made by Government departments in advancing the youth development agenda.

k) Status of Youth Report: The Committee asked what are the key findings and recommendations from the Status of Youth Report for 2021/22.
The Committee noted that this was an important report however the Committee was not in receipt of it as the NYDA had not submitted or tabled it.

l) IYDS: The Committee enquired about the Integrated Youth Development Summit and when the NYDA intends hosting it.

m) NSP on GBVF: The Committee queried how the NYDA ensures greater alignment with the National Strategic Plan on Gender Based Violence and youth in conflict with the law.
To this end, the Committee questioned how the NYDA collaborates with the Department of Women, Youth and Persons with Disabilities in this regard.

n) Loans written off: The Committee enquired about the measures in place by the NYDA to prevent youth from forfeiting on loan repayments.

The Committee also questioned at what stage is a loan written off and how long does it take to reach that point.
o) The Committee enquired about the support offered to the 2000 youth owned business in the township and rural economy as this was an important initiative.

16 RECOMMENDATIONS The Minister of Women, Youth and Persons with Disabilities should ensure that the following recommendations are implemented.
16.1 General a) The Committee urged the Department to keep it abreast of developments and share information on initiatives such as the proposed provincial summits on gender-based violence and femicide and the national summit.

The Committee indicated it was unacceptable for it to be unaware of what the Department intends pursuing when member’s constituencies request information from them.
b) The Human Resource section within Department should conduct a skills audit of all officials employed by the Department.

c) The senior management of the Department should ensure that there is proper monitoring and ensure compliance that will assist in dealing with under-expenditure.

d) Department Officials responsible for incurring under-expenditure during 2021/22 should be held to account.

76 78 e) The DG should implement consequence management against officials for non- performance.
f) The Communication Unit of the Department should improve on its communication strategy to ensure that the public is aware of the programmes of the Department.

16.2 Audit Action Plan a) The Department should submit its final Audit Action Plan for the Committee’s consideration.

b) The AGSA and ARC recommendations should be taken seriously by the Department and implemented.

Officials found not having implemented these recommendations must be held to account.
c) The Department should clearly articulate how it intends addressing each of the findings identified and implementing the recommendations within a set time frame within the Audit Action Plan.

16.3 Financial performance a) In-Year Monitoring Reports: The Department must continue to submit quarterly reports to the Committee in line with National Treasury Regulations.
b) Spending Trends: The Committee recommends that the Department monitor spending patterns and ensure that this is in keeping with what has been outlined in the respective Strategic Plans and Annual Performance Plans.

To this end, the Department is to provide the Committee with detailed financial reports for activities on a quarterly basis.

These financial reports should clearly indicate the purpose of the activity as it relates to the objectives outlined in the APP and the expenditure incurred.
The Department should consider including a specific target related to expenditure management in the APP for 2023/24.

c) APP: The Department must ensure that its APP is costed appropriately with a clear indication as to how and when it intends undertaking activities with corresponding costs.
d) Irregular expenditure, Fruitless and Wasteful Expenditure: The Committee urges the Department to take disciplinary action against employees responsible for irregular expenditure and fruitless and wasteful expenditure.

The Department should further develop an action plan on steps to prevent irregular expenditure as well as fruitless and wasteful expenditure.
e) Deviations: The Department should clarify in writing within three weeks of the adoption of the report the discrepancy between what is stated in the Annual Report versus what was reported to the Committee at the Q4 2021/22 briefing.

77 79 16.4 AGSA & Audit and Risk Committee a) The AGSA should submit the list of issues/allegations against the NYDA’s CEO that fall within their scope of investigation and those not in their scope to the Committee.
b) The AGSA should submit a report on the expenditure of R15 million & R5 million allocated to the Secretariat for NCGBV&F.

c) The AGSA should submit a report on the Sedibeng Municipality issue with regards to the NYDA.

d) The AGSA should audit other Programmes of the Department such as Programme 4 in order to provide a true reflection of the performance of the Department.

An audit of one programme was insufficient.


e) The AGSA should improve in the manner in which auditing is conducted in the Department, NYDA and CGE and also improve on its relationship with the ARC’s of the Department, CGE and NYDA.

f) The ARC should monitor whether officials who had not implemented the recommendations of the ARC as per the 1st quarter which resulted in under-spending, are held to account.
16.5 Human Resource a) Vacancies: All key funded vacancies should be filled within the specified time allocation, in instances where this is not complied with, the Department should clearly identify within the quarterly reports to the Committee reasons for failure to comply and remedial action taken.

The Department should submit a list of vacancies that have been prioritised and a time frame for filling the required posts.
b) Performance management: The Committee recommends that the heads of Programmes provide quarterly reports of consequence management for the non-delivery of targets with a clear indication of the remedial action implemented.

Each programme and sub- programme will be required to present progress to the Committee on a quarterly basis.
c) Use of consultants: The Department review its continued reliance on consultants and report back to the Committee on how transfer of skills is enabled to Department officials by the current cohort of consultants.

d) Disciplinary cases and investigations: The Department should submit a comprehensive report on all cases in the Department and brief the Committee accordingly.
16.6 Governance a) The Committee reiterated the importance of compliance with the Public Finance Management Act and National Treasury Regulations by the Department and that failure of 78 80 officials in this regard must be dealt with expeditiously.

To this end, the Committee recommends that the Department reports on how it deals with transgressors and what remedial action is taken.

This should be presented in the quarterly reports.


b) The Committee remains concerned about the non-compliance and adherence to laws and prescripts by officials within the Department.

The Department should consider including a specific key performance indicator and targets that addresses compliance to laws and prescripts.
c) Investigations: The Committee recommends that the Department briefs it (at Quarter 2 briefing for 2022/23) on the outcome of investigations that have been completed and indicate what progress has been made in terms of implementing recommendations and consequence management.

Furthermore, the Department is expected to brief the Committee on progress with regards to investigations currently underway.
16.7 ICT a) The Committee urges the Department to address outstanding risk mitigation actions as a matter of urgency.

16.8 Performance related recommendations 16.8.1 SMART principle a) The Committee recommends that the Department must ensure the alignment between the Strategic Plan and its Annual Performance Plan which includes objectives and targets that are SMART and costed accordingly.
Any changes to the APP must be brought to the attention of the Committee as soon as these are done with a clear indication of the HR impact and financial implications.

The Department must update the Committee on the status of targets on a quarterly basis.

Financial and performance reporting must be in-line with the tabled APP.

b) The Department to avoid as far as possible amendments to its APP once operational particularly in the latter half of the FY.
16.8.2 National Gender Machinery (NGM) a) The NGM is an important mechanism for stakeholder engagement as espoused in CEDAW to which South Africa is a signatory.

The Committee should be kept abreast of NGM meetings and activities.

79 81 16.8.3 Treaty compliance framework and timeframes a) The Committee recommends that the Department should ensure that country reports are submitted within the specified timeframes as required by the relevant reporting bodies.
b) The Committee recommends that the Department should report back to Parliament on feedback received on country reports, action plans developed in this regard as well as progress in terms of implementing recommendations.

c) The Committee recommends that the Department must present all reports at an international level to the Committee at least one month before it undertakes the international trip.
16.8.4 Reports a) The Committee recommends that the Department brief the Committee on reports completed for 2021/22 and submit all outstanding reports.

The briefing should include what progress has been made since the completion of the reports.

b) The Department is requested to submit all finalised reports one month after completion to the Committee for consideration.
16.8.5 Legislative and Policy Reform a) The Committee recommends that the Department should brief it on its legislative programme and outline what progress has been made in developing various Bills to be introduced and the timeframes hereto.

b) The Committee urges the Department to finalise all outstanding policies and frameworks.

c) The Committee recommends that the Department brief the Committee on a quarterly basis progress update on the development of reports/policies/frameworks/guidelines etc.
16.8.6 GBVF a) NSP: The Department to provide quarterly updates on the implementation of the NSP.

The Department submit its M&E reports on the implementation of the NSP and brief the Committee accordingly.

b) The Department to submit the National GBVF Prevention Strategy to the Committee for consideration.

c) NCGBVF: The Department to brief the Committee on the National Council on GBVF Bill that has been tabled.
d) Secretariat: The Secretariat/technical team to brief the Committee on progress made to date in November 2022 at a day to be confirmed with the Committee secretariat.

16.8.7 Sanitary Dignity Programme (SDP) 80 82 a) The Committee recommends that the Department ensure that young women and persons with disabilities benefit from the whole SDP value chain and that it collaborates with the NYDA in this regard.
b) The Committee recommends that the Department reports back on its monitoring and evaluation of the roll out of the sanitary dignity programme in provinces and its budgetary allocations on a quarterly basis.

16.8.8 Rights of Persons with Disabilities (RPD) Programme a) The Department should submit quarterly and annual reports on the National Disability Machinery meetings.
b) The Department should brief the Committee on the reports produced related to the analysis of APPs and the annual monitoring report on inclusion of persons with disabilities.

c) The Department should expedite the development of the Disability Rights Bill and brief the Committee accordingly.

16.8.9 National Youth Development (NYD) a) The Department should strengthen its collaboration with the NYDA as part of a coordinated strategy to address youth unemployment in the country.
The Department should submit a report that outlines how it intends giving effect to this recommendation with clear roles and responsibilities and time frames.

b) The programme must brief the Committee on progress with regards to the South African Youth Development Bill at the next Quarterly report briefing.

c) The Department must brief the Committee on the NYDA Amendment Bill.

16.9 CGE The CGE should ensure that the following recommendations are implemented.
16.9.1 Finance a) Audit Action Plan: The CGE should develop an audit action plan that relates to the recommendations made by the AGSA.

This action plan should address the root cause of the problems and reflect the AGSA and ARC findings/recommendations.

It must be submitted to the Committee with the 2nd Quarterly Report for 2022/23.

b) The CGE should provide quarterly progress reports on the implementation of its Audit Action Plan.
81 83 c) The CGE should ensure that it maintains tight control over its fiscus and avoid over- expenditure in 2022/23 and beyond.

d) Irregular expenditure (IE) and fruitless and wasteful expenditure (FWE): The CGE to continue reporting on investigations related to the IE and FWE, mitigating actions and consequence management implemented at every quarterly report briefing.
e) Financial reporting: The CGE must report on an annual and quarterly basis its expenditure per strategic objective in order for the Committee to conduct more astute oversight.

f) Surplus funds: The CGE to report back to the Committee at the Q2 2022/23 briefing on progress made in requesting National Treasury to retain the estimated R11 million surplus funds that was accrued.

g) Monthly reports: The CGE to submit monthly reports to the Committee on key matters of concern and progress hereto.
16.9.2 Payment of part-time Commissioners a) The CGE should present to the Committee a report on the outcomes of the dispute registered by the part-time Commissioners in lieu of the finding of Fruitless and Wasteful Expenditure related to the 100-hour flat rate payment.

b) The CGE should also submit a report to the Committee on the decision by plenary to pay part-time Commissioners 100 hrs during the peak COVID-19 period.
c) The CGE should submit a report on the application of the 100-hour flat rate in relation to the current FY 2022/23 together with all relevant supporting documentation.

16.9.3 Payment to former Commissioners a) The CGE’s Human Resource (HR) should submit a written report on who instructed the CEO to pay former Commissioners who were no longer in the employ of the institution within three weeks of adoption of this report.
16.9.4 Payment of leave gratuity to former CEO a) The CGE’s HR should submit a comprehensive report on the leave payment related to a former CEO which was wrongly calculated to the Committee within three weeks of adoption of this report.

16.9.5 Implementation of President’s Determination of Salaries 82 84 a) The CFO should revise the salaries of full time and part-time Commissioners to be in accordance with the President’s determination of salaries and deal with issues raised by AGSA in this regard.
16.9.6 Governance a) The CGE should finalise its policy that pertains to interrelations between the administration and the Commissioners and this should be submitted to the Committee before the end of the 2022/23 FY.

b) Handbook: The CGE should finalise the Commissioner’s Handbook and submit to the Committee on completion before the end of the 2022/23 FY as a matter of urgency.

c) Business Model: The CGE should submit the Business Model to the Committee for consideration.
d) Consequence management: The CGE should hold to account Commissioners and employees who transgress policy and laws and ensure appropriate consequence management is implemented.

e) 17% Provident Fund Matter: The CGE should submit to the Committee, in writing, a comprehensive report on the 17% Provident fund issue.

The CGE is urged to finalise the matter.


16.9.7 Legal Practice Council a) The CGE should present to the Committee a plan on how to deal with the matter of Legal Practice Council in ensuring the CGE is recognised as a legal entity again.

The CGE was urged to expedite the matter in order for it to be resolved.

16.9.8 Programme and performance a) The CGE must prioritise the filling of vacancies.

The CGE should submit a report to the Committee that outlines its structure with positions linked to salaries.
To this end, the CGE should also provide the Committee with information that illustrates whether the current positions are market related and what are the proposed salaries for positions advertised and how these compare to the market.

b) The CGE should improve on its complaints handling processes.
c) The CGE should submit to the Committee, in writing, a comprehensive report on the 17% Provident fund issue; AG finding regarding 100 hrs worked by part-time Commissioners without time sheets; the compiling of annual report on the boy-child programme.

d) GBV: The CGE to report back to the Committee and provide a progress report regarding its monitoring of NSP in particular and submit a comprehensive report in this regard.
83 85 16.9.9 Commissioners a) Commissioners to continue to report on a quarterly and annual basis to the Committee on their deliverables in line with each Strategic Outcome as per the APP.

16.10 NYDA The NYDA should ensure that the following recommendations are implemented.

a) ARC: The ARC should report back to the Committee and provide an opinion with regards to the issue of the beneficiary who had not received her equipment within the required timeframe form the supplier.
b) Audit Action Plan: The NYDA should develop an audit action plan that relates to the recommendations made by the AGSA and Audit Committee.

This action plan should address the root cause of the problems raised.

It must be submitted to the Committee with the 2nd Quarterly Report for 2022/23.

c) The NYDA should provide quarterly progress reports on the implementation of its Audit Action Plan.

d) Reporting: The NYDA must ensure that its “Performance Information and financial reporting are integrated”.
Quarterly and Annual Reporting should be in line with the tabled APP.

The performance information reporting must reflect what has been achieved and not achieved as per each SO.

In addition, it should be integrating the budget information by reflecting how much it costed the institution to meet the target in comparison to what was budgeted for.

e) The NYDA should examine its targets and consider setting higher targets.
f) The NYDA should forward the whistle-blower’s letter containing the allegations to the Committee in preparation for dealing with the report on the investigation.
g) The Committee will invite the NYDA to brief them members on the report that covers the investigation into the allegations on corruption made by a whistle-blower against the CEO by end November 2022. h) The NYDA should ensure there are market linkages between the NYDA, Department of Basic Education and the Department of Women, Youth and Persons with Disabilities to ensure that young people benefit from the SDP.
i) The Board Members including the Chairperson and the Deputy Chairperson of the Board should indicate what each member has done with regards to their work in the NYDA at the next Committee meeting.

84 86 j) The NYDA to submit a report reflecting all international trips undertaken by Board Members that outline the purpose, cost, number of Board Members attended and the outcomes.

k) The NYDA should include youth who are non-conforming in their programmes.
l) The NYDA should be mindful of paying more money to the CEO at the expense of the organisation not able to implement their programmes.

The Committee hereby recommends the following for consideration by the Minister of Finance: 16.11 National Treasury a) The Committee requests National Treasury to consider the condonation requests by the Department and the CGE.

b) The Committee requests National Treasury to consider the requests for roll-over of funds for the Department and the CGE.
16.12 AGSA a) The AGSA is requested to investigate the payment of part-time Commissioners without timesheets submitted as evidence having taken into consideration the findings of the ARC, the Internal Audit Unit and the Portfolio Committee on Women, Youth and Persons with Disabilities.

b) The AGSA to assess whether the payment of 100-hour flat rate to part-time Commissioners had continued for the current FY 2022/23 and why.
c) The AGSA is requested to investigate the discrepancy in salary between full time and part-time Commissioners and the application of Presidential determination for the period 2019/20 – 2021/22.

17.

SUMMARY OF REPORTING REQUESTS Table 8: Reporting requests Reporting matter Quarterly reports Action required Written report Briefing Timeframe Every quarter Dept.
þ Audit outcomes - Details of audit action plan Written report of audit action plan Briefing Q2 2022/23 briefing þ CGE NYDA þ þ þ þ Progress report on audit action plan Briefing Q2 2022/23 briefing þ þ þ Forensic investigations Written report Quarterly þ þ Briefing 85 87 Reporting matter Deviations HR: vacancies, dismissals, termination of contracts Country reports reports Impact of initiatives (campaigns, workshops, events, conferences etc.)
Commissioners Handbook and interface Policy on between Commissioners Administration Commissioner’s performance quarter Department, CGE, NYDA – Request for reports, documentation etc.

per Action required Written report Briefing Written report Briefing Written report Briefing Written report Timeframe Quarterly Quarterly Dept.
þ CGE NYDA þ þ þ at update Progress quarterly briefings 30 days after an event has taken place þ þ Written report Briefing Finalised March 2023 before 31 Report Briefing before Finalised March 2023 Briefing at Q2 2022/23 31 Written report Briefing At every quarterly report briefing Written Briefing report Refer to BRRR 2022 for exact time frame þ þ þ þ þ þ þ þ 18.
CONCLUSION The Committee will endeavour to monitor the Department, the NYDA and CGE with respect to the implementation of recommendations made by the AGSA as well as the ARC and has committed to engaging jointly in future.

Furthermore, the Committee hereby notes the reservation by the Democratic Alliance.

In conclusion, the Committee urges the Department, the CGE and the NYDA to take its recommendations seriously and implement these expeditiously.

Report to be considered.

86 88 2.


THE BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT, DATED 19 OCTOBER 2022 The Portfolio Committee on Small Business Development, having considered the 2021/22 performance and expenditure of the Department of Small Business Development and its entities, Small Enterprise Finance Agency and Small Enterprise Development Agency, reports as follows: 1.
INTRODUCTION The Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Small Business Development has been compiled in compliance with the Money Bills Amendment Procedure and Related Matters Act, No.

9 of 2009.
9 of 2009.

The objective of the report is to provide an appraisal of the Department of Small Business Development and its entities’ service delivery performance given available resources, effectiveness and efficiency of the Department’s use and allocation of available resources; and may include recommendations on the forward use of resources.
The Portfolio Committee (the Committee) oversees the budget and performance of the Department of Small Business Development (the Department), alternatively, (DSBD), as well as its entities, Small Enterprise Finance Agency (Sefa) and Small Enterprise Development Agency (Seda).

1.1.
1.1.

Purpose of the Budgetary Review and Recommendation Report The Constitution of the Republic of South Africa, 1996 (the Constitution), specifically Section 77 (3), stipulates that an Act of Parliament must provide for a procedure to amend money bills before Parliament.

It is this constitutional provision that gave birth to the Money Bills Amendment Procedure and Related Matters Act, No.

9 of 2009 (the Act).


The BRRR is therefore an instrument Parliament utilises to assess the effectiveness and efficiency of a Department’s use and forward allocation of available resources and may include recommendations on the use of resources in the medium term.

1.2 Mandate of the Committee In terms of the Constitution of the Republic of South Africa, Portfolio Committees have authority to legislate, conduct oversight over the Executive and facilitate public participation.
1 89 Parliament’s mission and vision statements, the rules of Parliament and its Constitutional obligations govern the Portfolio Committee on Small Business Development mandate.

The mandate of the Portfolio Committee is to contribute to the realisation of a developmental state and to ensure effective service delivery through discharging its responsibility as a Portfolio Committee of Parliament.
1.3 Mandate of the Department The Department of Small Business Development plays a major role in implementing Chapter three (3) and six (6) of the National Development Plan (NDP).

Both chapters deal with the economy and employment as well as rural inclusive growth.
With respect to the seven priorities identified in the Medium Term Strategic Framework (MTSF), the Department has a primary responsibility in relation to Priority 2: Economic Transformation and Job Creation and their related sub-outcomes and interventions.
Other policy and strategy mandates informing the strategic direction of the Department include the Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises (2005), the Integrated Strategy on the Development and Promotion of Co-operatives (2012) and National Informal Business Upliftment Strategy (NIBUS) and Implementation Framework (2014 and 2015).
1.3.1 Small Enterprise Development Agency Small Enterprise Development Agency is an entity of the Department whose mandate include, inter alia, developing, nurturing, supporting and promoting small business ventures throughout the country, whilst ensuring their growth and sustainability in a harmonised fashion with various stakeholders.
The Minister of Small Business Development is the Executive Authority (EA) of the agency and as such exercise oversight role over the entity as prescribed by the Public Finance Management Act.

Seda is a schedule 3A national public entity in terms of the Public Finance Management Act (PFMA), Act 1 of 1999, as amended.

The agency decree is to serve as the implementation arm for DSBD specifically on non-financial products and services.
1.3.2 Small Enterprise Finance Agency The Small Enterprise Finance Agency was established in April 2012 through the amalgamation of South African Micro-Finance Apex Fund (SAMAF), Khula Enterprise Finance and Industrial Development Corporation’s small business activities.

It is a registered entity in terms of the Companies Act of 2008 and incorporated in terms of Section 3(d) of the Industrial Development Corporation (IDC) Act, 1940, and thus a wholly owned subsidiary of the IDC.
2 90 Section 3(d) of the IDC Act seeks “to foster the development of small and medium enterprises and co-operatives”.

The fusion of the two entities, Seda and Sefa, including Co-operatives Bank Development Agency (CBDA) into a single entity in conformity with PFMA and Companies Act(s), has already begun.
1.4 Preparation of BRRR Report In preparation for the BRRR report the Portfolio Committee received briefings from the Auditor-General of South Africa on 11 October 2022, as well as DSBD and entities on 12 October 2022.
Whereas during the course of 2021/22 the Committee undertook the following activities - o Received regular briefings from the Department and entities on quarterly performance and expenditure reports; o Held virtual oversight sessions with the Department beneficiaries and stakeholders; o Scrutinised performance of the Department and entities in relation to set targets as captured in the Strategic Plan, the Annual Performance Plan and Budget of the Department for the 2021/22 financial year, Economic Reconstruction and Recovery Plan (ERRP) and National Development Plan (NDP) etc; o Assessed the impact of support interventions offered by the overall portfolio for the benefit of small enterprises, including updates on the expenditure of the Covid-19 and Flood Relief funds and other support measures to cushion the sector from devastating impacts of the pandemic; o The report also draws from other briefings, reports and inputs that the Portfolio Committee received throughout the 2021/22 financial year, and the 2022/3 financial year to date.
1.5 Outline of the Report This report consists of seven sections.

Section one (1) covers the introduction, briefly outline the mandate of the Portfolio Committee and the Department, the purpose of BRR report and the methodology followed in preparing the report.

Section two (2) sets out the key policy focus areas for the Department.
This includes an overview of the relevant national priorities as outlined in the government policies and plans such as the National Development Plan, the Medium Term Strategic Framework and the State of Nation Address that the Department has to contribute to in achieving them.
Thereafter, an 3 91 overview of the strategic plans of the Department and its entities are highlighted with a view to assess the extent to which they address the broader government priorities and plans originating from the afore-said policies and plans.

Section three (3) revisits 2021/22 recommendations to ascertain if any of these have at all been given attention or implemented.
Section four (4) and five (5) considers the Department’s and entities financial and nonfinancial performance against its allocation for the financial year 2021/22.

Section seven (6) of the report considers Committee observations and perspectives with regard to the annual reports of the Department and entities concerning its mandates, strategic objectives and core issues previously and currently identified by the Committee.
Whereas section eight (7) is a synthesis of recommendations, past and present, based on the deliberations informed by the assessment of the Department in each of the sections discussed above.

2.

OVERVIEW OF THE RELEVANT POLICY FOCUS AREAS The National Development Plan (NDP) is a long-term development plan, crafted by the National Planning Commission (NPC) on behalf of the South African government in collaboration with South Africans from all walks of life.
The NDP aims to achieve the following objectives by 2030 -: o Uniting South Africans of all races and classes around a common programme to eliminate poverty and reduce inequality; o Encourage citizens to be active in their own development, in strengthening democracy and in holding their government accountable; o Raising economic growth, promoting exports and making the economy more labour absorbing whilst focusing on key capabilities of both people and the country; o Capabilities include skills, infrastructure, social security, strong institutions and partnerships both within the country and with key international partners; o Building a capable and developmental state and; o Strong leadership throughout society that work together to solve our problems.
2.1 Relationship with National Development Plan (NDP) The implementation of the National Development Plan (NDP) is one of the key government imperatives under the current administration and is aligned with the Africa Agenda and the 4 92 global Sustainable Development Goals (SDG).

The NDP focuses us on the overall objectives, supported by South Africans, to eradicate poverty and substantially reduce inequality by 2030 through the creation of jobs and accelerating inclusive economic growth.
The Department is directed to implement chapters three (3) and six (6) of the NDP that deal with the economy and employment as well as rural inclusive growth.

The NDP is the country’s vision, with a target of creating 9.9 million new jobs from small businesses by 2030.

2.2 Relationship with the Medium Term Strategic Framework (2019 - 2024) The period in progress marks the beginning of the second Medium Term Strategic Framework following the adoption of the NDP.
In 2013, the Cabinet had then decided that the 2014 - 2019 MTSF would form the first five-year implementation phase of the NDP.
With respect to the seven priorities identified in the MTSF, DSBD obligation is in relation to Priority 2: Economic Transformation and Job Creation and their related sub-outcomes and interventions as follows- o Creating more jobs; o Inclusive economic growth; o Re-industrialisation of the economy emergence of globally competitive sectors; o Increased access to and uptake of ICT; o Competitive and accessible markets through reduced share of dominant firms in priority sectors; o Mainstreaming of Youth, Women, and Persons with Disabilities with minimum 40 percent target for Women, 30 percent for Youth and 7 percent for Persons with Disabilities in the SMMEs and Co-operatives Sector.
2.3 State of the Nation Address In this year’s State of the Nation Address (SONA) the President asserted that “the government will embark on extensive measures to unleash the potential of small businesses, micro businesses and informal businesses”.

A new - redesigned loan guarantee scheme announced during the address is already being implemented to enable small businesses to bounce back from the pandemic, civil unrest and floods that swept through provinces of KwaZulu Natal and parts of the Eastern Cape.
The Bounce-back scheme incorporates the lessons from the previous loan guarantee scheme.

The scheme involves Development Finance Institutions (DFIs) and non-bank SME providers in offering finance, expand the types of financing available and adjust eligibility criteria to encourage greater uptake.
The President also informed the nation that the review of the Business Act – alongside a broader review of legislations that affects SMMEs – 5 93 to reduce the regulatory burden on informal businesses is underway.

There is a general unanimity that the country is beset by too many regulations that are unduly complicated, costly and difficult to comply with.

This prevents companies from growing and creating jobs.
2.4 The Economic Reconstruction and Recovery Plan The global economy is “on a cliff-hanger,” still lurching from the Covid-19 pandemic whose impact will be felt for years to come.

South Africa has not been spared.

It is in this context that South African government has created a strategic blueprint for economic recovery, the Economic Reconstruction and Recovery Plan (ERRP).
Thus, according to the Minister of Small Business Development, “the 2021/22 APP was presented within the context of driving the implementation of the ERRP with a focused view on achieving inclusive growth”.
The plan has the following five policy objectives - o To create jobs, primarily through aggressive infrastructure investment and mass employment programmes; o To re-industrialise our economy, focusing on growing small businesses; o To accelerate economic reforms to unlock investment and growth; o To fight crime and corruption; and o To improve the capability of the State.
2.5 Summary of the Key Priorities informing the 2020-25 Strategic Plan and 2020/21 Annual Performance Plan During May 2020, the Department and entities presented their five-year strategic as well as annual and corporate plans which underlined key priority/focus areas.
The annual performance currently being considered is premised on the commitments contained in these statutory documents and they included -: o Finalisation and implementation of the Township Entrepreneurship Fund; o Establishment of Funds in partnership with the private sector; o Review and implement Credit Guarantee Scheme; o Finalise and implement the SMME Funding Policy; o Finalise amendments to the National Small Enterprise Act to deal mainly with the establishment of the SMME Ombud Office, regulations/licensing of businesses owned by foreign nationals and unfair business to business practices; o Accelerate establishment of incubators and digital hubs in the townships and rural areas.
6 94 3.

SUMMARY OF PREVIOUS KEY COMMITTEE RECOMMENDATIONS During the 2021 Budgetary Review and Recommendation Report, the Portfolio Committee made the following recommendations to the Minister and the Department -: Table 1: 2021 BRRR Recommendations 3.1 The Department act swiftly in dealing Action plans to address AG audit findings and implementing Auditor General have been developed by the Department recommendations.

There should be and its entities and are being implemented.
necessary urgency by management in Progress on implementation is monitored responding to the AG’s requests on a quarterly basis.

relating to addressing risks identified and improving internal controls that will improve the audit outcomes of both the Department and entities.
3.2 There should be regular and timely The Department has an approved reviews of performance information Framework on Strategic Planning and by senior management to ensure that Performance Reporting and the Standard valid, accurate and complete reporting Operating Procedures, aligned to the is done to minimise reporting errors.
Revised Framework for Strategic Plans and Annual Performance Plans and the Framework for Managing Performance Information, that are implemented through the Strategic Planning and Reporting Cycle Implementation Plan in order to ensure that the processes for planning and reporting are integrated within the Department.
Through implementing the Implementation Plan and constant engagements with the Branch Heads and process owners, awareness is created on the importance of reporting validated, accurate and complete performance information.

7 95 In addition to the above, the Department conducts mid-year and end year reviews of its performance information and supporting evidence, against the Annual Performance Plan (APP) and the Technical Indicators.
This process assists in providing clear communication of the necessary actions that need to be taken in ensuring that the implementation of the APP is on track.

This is also covered in the reviews of performance information that Internal Audit conducts as per the audit plan.

Significant effort is being directed towards ensuring that at branch level regular and timely reviews of performance information are discussed with the aim to reduce reporting errors.
The latter is providing some level of assurance and with the intention that this will be a permanent feature at branch meetings.
3.3 The Department should take The Department has already successfully appropriate steps to ensure that addressed the first part of this observation, Identified deficiencies in internal which cautions the DSBD against repeat controls are addressed by management findings with regard to the usefulness and to mitigate against recurrence of the reliability of the reported performance findings with regard to the usefulness information.
The audited 2020/21 and reliability of the reported performance information report was performance information.

declared useful and reliable by AGSA.

The Management should also develop an 2020/21 performance information report action plan to respond to address the did not only manage not to have repeat findings raised by the AGSA; findings, but it had no findings at all (it was without findings), hence it resulted into 8 96 clean audit opinion (unqualified opinion without findings).
The Enterprise Development branch has put in place controls to ensure that deficiencies in internal controls are addressed by management to mitigate against recurrence of the findings regarding the usefulness and reliability of the reported performance information.

This process will improve overtime.

Action plans to address AG audit findings have been developed and are being implemented.

Progress on implementation is monitored on a quarterly basis.
3.4 Non-compliance with key legislation DSBD has largely remained compliant which remains a challenge especially with SCM processes that are guided by the in Supply Chain Management (SCM), existing SCM Policy that is anchored on a which has led to irregular expenditure myriad of instruction notes from National and fruitless and wasteful expenditure Treasury.
being incurred is addressed; At times irregular expenditure results out of differing interpretation between implementing officials, AGSA and Office of the Chief Procurement Officers.

None of the investigations have identified loss of state resources as services were duly rendered and deserving of payment.

To date, all of DSBD’s irregular expenditure has been investigated, officials sanctioned in line with the Public Service Regulations.
9 97 Fruitless and wasteful expenditure: where such cases are identified, investigations are undertaken, and the relevant sanctions implemented – such as full recovery of the loss from responsible officials.

Consequence management to guard against non-compliance is being implemented.

3.5 Effective monitoring and oversight by The Department has an approved the Accounting Officer, Internal Audit Framework on Strategic Planning and and Audit Committee is adhered to.
Performance Reporting and the Standard These are critical in ensuring that the Operating Procedures, aligned to the audit outcomes in the performance Revised Framework for Strategic Plans and information environment of the Annual Performance Plans and the Department is maintained in future Framework for Managing Performance years; Information, that are implemented through the Strategic Planning and Reporting Cycle Implementation Plan to ensure that the processes for planning and reporting are integrated within the Department.
Through implementing the Implementation Plan and constant engagements with the Branch Heads and process owners, awareness is created on the importance of reporting validated, accurate and complete performance information.

In addition to the above, the DSBD conducts mid-year and end year reviews of its performance information and supporting evidence, against the Annual Performance Plan (APP) and the Technical Indicators.
This process assists in providing clear 10 98 communication of the necessary actions that need to be taken in ensuring that the implementation of the APP is on track.

Internal Audit conducts reviews of performance information as provided for in the audit plan.

The Audit and Risk Committee exercises oversight on a quarterly basis.

3.6 The vacant posts are filled.


The The finalisation of the merger of the Committee is mindful that filling of Department’s agencies does not impact the vacant posts is reliant on a successful filling of strategic posts within the finalisation of the merger of DSBD Department as they are independent entities and CBDA.

However, this activities and not mutually or directly process should not be achieved at the dependent but may contribute.

The expense of service delivery.


Strategic Department’s structure is in the stage of posts have remained vacant for too obtaining support form National Treasury long and this is affecting the in terms of budget and affordability and performance of the Department and then concurrence from DPSA for entities.

The process must be fast- implementation.

The project plan is pegged tracked and finalized before the end of at obtaining the go ahead before 31 March 31 March 2022; 2022.
3.7 The Accounting Officer, EXCO, The Department will build internal Management or responsible officials capacity to conduct monitoring and do adhere to their obligation of evaluation functions to ensure that we are ensuring that site visits are conducted able to track the delivery and impact of the to all beneficiaries of the Department SBD Portfolio’s work throughout the and Seda programmes in order verify country.
Seda will continue to perform pre- if goods and services are/were actually and post-investment site visits on its delivered/received through pre-and supported beneficiaries and sporadically post-site visits.

Owing to Seda when so requested by the department.

geographic footprint the agency could be utilised for this purpose.
While 11 99 Parliamentary Constituency Offices (PCOs) should also be explored to grow DSBD countrywide footprint; 3.8 The Department looks at efficient Financial management does monthly spending of its baseline funds and spending reviews and requisite reporting promptly identify idling reserves in highlighting areas of underperformance order to avoid future and undesirable and recommends reprioritisation of funds virements and suspensions.
Poor to SMMEs benefitting programmes with spending on programmes as well as National Treasury’s support.

goods and services which are usually a manifestation of vacant posts, are Underperformance is mainly in COE – due typically the basic triggers and to the structure not being finalised and motivation behind such virements; incentives programmes.
Management has instituted various structures to primarily attend to poor programme spending and address emerging risk which are often encountered during the implementation process.

This structure constitutes of senior managers who periodically sit to review programme performance and audit related issues amongst others.

This is done in full consultation and involvement of all the key programmes of the department.

There are no idling reserves to talk about in the Department.

Virements are rarely done.


Where they are done, they are done on a serious case/basis.

3.9 All outstanding bills e.g.

review of the The National Small Enterprise Bill is National Small Enterprise Act (1996) dependent on the opinion awaited from are accelerated and tabled to Treasury on whether the Department 12 100 Parliament in line with the strategic requires a completely new legislation or to plan and successive annual just amend the existing Act.
This will then performance plans of the Department determine whether the Department tables before 31 March 2022; the Bill or waits to include in the merger.

The Department is currently engaged in stakeholder consultations on the Businesses Act (1991) targeting various critical stakeholders especially Municipalities, hence the amendment Act is not being submitted to Parliament during the current financial year.
The Department intends to table amendments to the Businesses Act during the 2023/24 financial year.
3.10 The Department position with respect The reviews of the Integrated Strategy on to the review of the Co-operatives Act the Promotion of Entrepreneurship and (as amended), Business Act (1991), Small Enterprises (ISPESE) and Co- soon to be transferred Co-operative operatives Development Strategy have Banks Act (2007) is clarified to the been overtaken by the development of the Portfolio Committee as these have National Integrated Small Enterprise implications on the programme and Development Masterplan, which budget of the Committee.
So are incorporates all the pillars of the Strategies.

reviews of the Integrated Strategy on the Promotion of Entrepreneurship and The Department is currently engaged in Small Enterprises and review of the stakeholder consultations on the Businesses Integrated Strategy on the Act (1991) targeting various critical Development and Promotion of Co- stakeholders especially Municipalities, operatives (2012 - 2022).

hence the amendment Act is not being submitted to Parliament during the current financial year.
The Department intends to table amendments to the Businesses Act during the 2023/24 financial year.

Source: 2021 BRRR Report 13 101 4.

OVERVIEW OF FINANCIAL AND NON-FINANCIAL PERFORMANCE 4.1 Non-financial Performance Summary During the period under review the Department had set out to achieve 24 annual targets.
One area of concern flagged by the Committee during its previous BRRR process was the urgency to complete organisational structure and filling of vacant posts particularly at senior management level.

The Department reports that the inability to finalise the structure expressively impacted operations and spending in respect of the Cost of Employment budget due to vacancies in critical positions.
As a consequent, the Department’s overall performance declined to 60 percent of its annual performance targets from a high of 86 percent during the previous year.

However, the 60 percent achievement includes only targets that have been 100 percent achieved.

It excluding those that may be partially achieved.

The Department consists of four programmes namely: Administration, Sector Policy and Research, Integrated Co- operatives Development and Enterprise Development and Entrepreneurship.
Table 2 below provides summarised information regarding the performance of each of the four programmes of the Department.

Table 2: Performance Summary per Programme Branch Annual Targets Achieved Not Achieved No.

of Output Indicators 8 6 6 4 9 6 6 4 24 25 1.

ADMINISTRATION 2.

SECTOR POLICY AND RESEARCH 3.

INTEGRATED CO-OPERATIVES DEVELOPMENT 4.


ENTERPRISE DEVELOPMENT AND ENTREPRENEURSHIP TOTAL Source: DSBD Annual Report (2021/22) 6 (66.7%) 4 (66.7%) 3 (50%) 2 (50%) 15 (60%) 3 (33.3%) 2 (33.3%) 3 ( 50%) 2 (50%) 10 (40%) 4.1.1 Programme One: Administration The programme is responsible for the provision of strategic leadership, management and support services to the Minister, Director-General, the Department and entities.
During the year 14 102 under review, Programme One registered significant achievement on a number of targets.

The Department achieved an unqualified audit opinion on the nonfinancial performance information and Annual Financial Statements for the 2020/21 financial year.

Public engagements, which were implemented in District Municipalities, formed core of the DSBD and its agencies’ programmes as the Department far exceeded this target by 58 engagements.
The Department further developed a base control system to ensure singular applications and incorporate both international and local platforms.

These achievements were registered as part of Phase three database – key trade exchange platform integrated and enhanced reporting implemented.
Despite the challenges experienced by the Department in achieving at least 50% female SMS representation due to resignations of female SMS members and appointments of male SMS members, the Department managed to overachieve on the target of representation of PWDs.

The Department is working towards a recruitment plan that will assist in going back to maintaining at least 50% female SMS representation.
4.1.2 Programme Two: Sector and Market Development The purpose of the programme is to facilitate and increase access to markets for SMMEs through business information, product development support and value chain integration.

The annual target of 250 products has been overachieved, with the Department introducing a total of 288 products to market for this financial year.
Relationships have been established with key private sector partners and the Department continues to monitor the supply and demand side of products and services produced and rendered by SMMEs and Co-operatives.

The target of 200 businesses exposed to international markets in the financial year 2021/22 has been overachieved.

An annual total of 242 businesses were exposed during the 2021/22 financial year.
It should be noted that since the 2020 lockdown, exposing businesses to international market opportunities was an impossible target to meet.

The SBD Portfolio commenced with participating in virtual sessions to facilitate exposure to businesses that may not have necessarily qualified due to not being export ready.

This initiative, together with the few face- to-face exposure engagements, greatly assisted in achieving this significant milestone of 242.
4.1.3 Programme Three: Development Finance The aim of the programme is to expand access to finance for SMMEs and Co-operatives through innovative service offerings.

During the period under consideration the Department supported 953 Crafters through the Craft Customised Sector Programme against the planned target of 800.
Further to this, significant overachievement was recorded on start-up youth 15 103 businesses supported financially and non-financially and competitive SMMEs and Co- operatives supported targets that have been overachieved by more than double the target that was set for each.

There are inherent challenges in supporting the youth, women-owned, and businesses owned by PWDs such as lack of collateral.
The support provided under Programme Three toward the start-up youth businesses is one of the initiatives that seeks to curb some of these challenges.

On areas of underperformance under this programme the Department is accelerating finalisation of the SMMEs and Co-operatives Funding Policy.

Also, the number of Co- operatives supported to the value of R13 million while the target was R89 million points to a policy incongruity on co-operatives development that requires urgent intervention.
The Committee remains of the view that the phasing out of Co-operatives Incentive Scheme (CIS) in favour of concessional loans, blended financing, income-contingent repayments, instalment relief and/or payment holidays to name the few may have been introduced in good faith but premature.

Co-operatives are social enterprises which service their members.

Members reinvest most, if not all of their surplus into the co-operative.

They should not therefore be treated as enterprises for gain.
4.1.4 Programme Four: Enterprise Development The objective of the programme is to oversee the promotion of an ecosystem that enhances entrepreneurship and the establishment, growth and sustainability of small businesses and Co- operatives as well as coordinating business development support interventions across various spheres of government.
One of the key milestone achieved under this programme was the finalisation and submission to the Minister of the National Integrated Small Enterprise Development Masterplan for Cabinet approval.

However, the Department concedes that some of important pieces of legislations i.e.

Business Amendment Bill, National Small Enterprise Amendment Bill which includes the establishment of the Small Enterprise Ombud Service and relooking at the definition of SMME were not taken through Parliamentary processes.
It is also not likely that this target will be achieved during the current financial year due to a merger of Sefa, Seda and CBDA into a single entity under one legislation.

4.2 Financial Performance Summary As illustrated in table 3 below, as of of 31 March 2022 the annual expenditure by the Department amounted to R2.613 billion against the final appropriation of R2.637 billion, 16 104 reflecting a financial performance of 99 percent.
The variance of R24 million was recorded with programme two contributing the largest portion of the overall underspending - compensation of employees underspent by R11.5 million due to vacancies, transfers contributed R4 million due to delays in the commencement of the Product Markets programme, whilst machinery and equipment underspent by R1 million due to supply chain challenges in the delivery of computer equipment.
Other programmes that somewhat underspent were Development Finance at R2.8 million due to vacant posts amounting to R2.2 million and Customised Craft Sector Programme underspending by R380 thousand.

While Enterprise Development fell short of exhausting its entire budget by R2.6 million due to vacant posts.
The Department received its maiden clean audit opinion during the 2021-22 financial period, with no material findings or adjustments on either the audit of performance information or the Annual Financial Statements.
Table 3: Financial Appropriation vs Actual Expenditure Programme Adjusted Appropriation Final Appropriation Actual Expenditure Variance Expendi ture as a % of Final Approp riation R’000 98.2 84.4 R’000 1 808 16 708 R’000 Administration 103 300 138 746 Sector and Market Development Development Finance Enterprise Development 2 637 063 TOTAL Source: 2021/22 DSBD Annual Report 1 520 109 874 908 R’000 101 002 107 139 R’ Annual expenditure for Programme One Key milestone under programme one during the period under consideration is the attainment of the first ‘clean audit’.
The programme expenditure added up to R99 million or 99 percent against the final appropriation of R101 million, resulting in an under-expenditure of R1.8 million.

Goods and Services contributed R1.6 million to the under expenditure due to low expenditure than projected for Operating leases (R471 thousand), Training underspent by R332 17 105 thousand as most trainings were attended virtually and others cancelled due to COVID-19, Consultants and Professional Services also contributed by R242 thousand.
Table 4: Expenditure Estimates - Programme 1 Subprogramme Final Actual Over/Under Appropriation Expenditure Expenditure Ministry Departmental Management Corporate Services Financial Management TOTAL Source: DSBD Annual Report 2021/22 R'000 25 584 28 000 29 117 18 301 101 002 R'000 25 464 27 817 27 799 18 114 99 194 R'000 120 183 1 318 187 1 808 4.2.2 Annual expenditure for Programme Two Sector and Market Development – programme two disbursement amounted to R90.4 million (84.4%) against the final appropriation of R107.1 million, resulting in an under expenditure of R16.7 million (15.6%).
Compensation of Employees underspent by R11.5 million due to vacancies and Transfers contributed R4 million to the underspending due to delays in the commencement of the Product Markets Programme, whilst machinery and other equipment contributed R1 million due to delays in the delivery of ordered computer equipment.
Table 5: Expenditure Estimates - Programme 2 Subprogramme Final Actual Over/Under Appropriation Expenditure Expenditure R'000 1 581 R'000 808 R'000 773 Sector and Market Development Management Business Information and 19 459 14 254 5 205 Knowledge Management Ease of Doing Business Access to Market Support TOTAL Source: DSBD Annual Report 2021/22 7 961 78 138 107 139 7 564 67 805 90 431 397 10 333 16 708 18 106 4.2.3 Annual expenditure for Programme Three The Development Finance – programme three expenditure for the period under review amounted to R1.551 billion against the final appropriation of R1.554 billion, resulting in an under expenditure of R2.8 million.
Compensation of Employees contributed R2.2 million to the under expenditure due to vacancies.

The main cost drivers of expenditure in the Programme are Transfers and Subsidies at R1.528 billion, Compensation of Employees at R21.6 million, and Goods and Services at R1.7 million.

The drivers of expenditure on Goods and Services are Travel and Subsistence (R998 thousand), Communication (R282 thousand) and Legal Costs (R206 thousand).
The Committee has noted with concern the unfortunate performance – support to co-operatives and lack or absence of a strategy thereof to deal with the matter.
Table 6: Expenditure Estimates - Programme 3 Subprogramme Final Actual Over/Under Appropriation Expenditure Expenditure Development Finance Management R'000 1 912 R'000 1 270 Model Funding Collaboration 7 057 6 976 Blended Finance 1 534 086 1 532 434 Business Viability 11 327 10 945 TOTAL 1 554 382 1 551 625 Source: DSBD Annual Report 2021/22 R'000 642 81 1 652 382 2 757 4.2.4 Annual expenditure for Programme Four Expenditure on programme summed up to R872 million against the final appropriation of R875 million, resulting in an under expenditure of R2.6 million.
Compensation of Employees contributed R2.5 million to the under expenditure due to vacancies.

The main cost drivers for expenditure in the Programme are Transfers and Subsidies at R838.6 million, Compensation of Employees at R27.9 million, as well as Goods and Services at R5.3 million.

The drivers of expenditure in Goods and Services are Venues and Facilities (R2.2 million), Travel and Subsistence (R1.9 million), Communication (R355 thousand), Consultants (R288 thousand) and Contractors (R180 thousand).
19 107 Table 7: Expenditure Estimates - Programme 4 Subprogramme Final Actual Over/Under Appropriation Expenditure Expenditure R'000 6 378 R'000 5 783 R'000 595 Enterprise Development Management Enterprise and Supplier 857 223 856 799 424 Development SMME Competitiveness TOTAL Source: DSBD Annual Report 2021/22 4.2 Economic Classification 10 939 874 540 9 386 871 968 1 553 2 572 Table 8 – economic classification depicts an outlay of R138 million on the Compensation of Employees against the final appropriation of R155 million.
There was underspending of R16 million owing to vacancies.

Expenditure on Goods and Services reached R74 million against the final appropriation of R76 million, which constitutes an under spending of R1.8 million.
The items contributing to the underspending are mainly Operating leases (R471 thousand) due to lower expenditure than projected; Training and development (R332 thousand) as most training was either cancelled or attended virtually; Travel and subsistence and travel agency fees underperformed by R272 thousand; Consultancy service (R242 thousand) as some services were carried by donor funds; operating and fleet services fees (R248 thousand) jointly and whilst Consumable supplies and stationery jointly contributed R129 thousand.
Disbursement on Capital assets was R3 million against the final appropriation of R4.5 million while Transfers and Subsidies incurred an expenditure of R2.4 billion.
Table 8: Economic Classification Economic Final Actual (Over)/Under Classification Appropriation Expenditure Expenditure (R’000) (R’000) (%) (R’000) Compensation of 154 762 138 425 16 337 Employee Goods and Services 75 784 73 949 1 835 20 108 Transfers and 2 402 031 2 397 586 4 445 Subsidies Capital Assets 4 476 3 250 1 226 Source: DSBD Annual Report (2021/22) 4.4 Report of the Auditor-General The report of the Auditor General presented to the Committee on 11 October 2022, it noted that there has been no change in the general audit outcomes of the Portfolio.
The Portfolio as whole has performed well.

The Department The audit opinion of the Department has positively changed in the current year after being unqualified with findings for six years prior.

The current year’s improvement in opinion indicates management’s successful attempts at addressing action plans.

The submitted financial and performance information had no material misstatements in them and were considered reliable and accurate.
Also, the quality of compliance with legislation improved, with the Department having addressed matters causing non-compliance in their incentives’ guidelines by amending the guidelines pertaining to post site visits and the required timeframe in which they should be conducted.

A total of 15 targets out of 25 planned targets were achieved for 2021-22, which represents a 60 percent achievement based on the annual performance report.
Public Entities Seda agency maintained its outcome of an unqualified audit with findings on the reporting on predetermined objectives.

The audit outcome in respect of the predetermined objectives has regressed to an adverse opinion with findings due to the extent to which the majority of performance indicators were not measurable and reliable.

The public entity’s financial statements have been prepared on a going concern basis.
No matters or conditions have been identified during the year under review that may cast significant doubt on the entity’s ability to continue as a going concern.

While Sefa audit opinion remains unqualified with no material findings, where the quality of the submitted financial and performance information had no material misstatements identified in them and were considered reliable and accurate.
Further, there were no instances of material non-compliance with the specific requirements of applicable legislation.

The agency continues to maintain its clean audit status since incorporation in 2012.

21 109 5. REVIEW OF THE DEPARTMENTAL ENTITIES 5.1 Small Enterprise Development Agency Small Enterprise Development Agency is one of the two entities reporting to the Department of Small Business Development with its mandate oriented towards providing nonfinancial support to small enterprises.
The agency’s performance information is presented in accordance to the approved Annual Performance Plan 2021/22 wherein it had vowed to accomplish 30 indicators at output level.

Of the 30, the agency succeeded in achieving 24 indicators reflecting a performance achievement of 80 percent.
However, the current year audit outcome in respect of the predetermined objectives continued to regress to an adverse opinion with findings due to the extent to which the majority of performance indicators were not measurable and reliable.

The Auditor General identified limitations in the management of the performance information, which requires management attention; key weaknesses emanate from various levels of data collection aggregation and validation.
This clearly represents a sustained slump in performance which according to the agency’s own analysis is attributable to the moratorium to fill vacant posts pending finalisation of the merger.

Few performance indices points to an organisation besieged by uncertainty with high incidents of labour turnover.
There are three main programmes in the Seda Annual Performance Plan (APP) presented to Parliament in 2021, namely, Enterprise Development Division (EDD), Seda Technology Programme (STP) and Administration.
The sections below provide detailed support offered under each programme and its contribution to the institutional outcome -: 5.1.1 Programme One: Enterprise Development Division The purpose of programme one is to support township, rural-based enterprises and informal businesses to ensure that they are competitive and contribute meaningfully to the economy.
This includes providing compliance support to aid business formalisation to enable business growth by providing necessary support to ensure that they are competitive.

Table 9: Enterprise Development Divison Performance Measure No.

Target Achievement 1.

Number of SMMEs and Cooperatives reached 37 104 67 029 through entrepreneurship awareness sessions 22 110 2.

Number of Spaza shops and general dealers 9 276 7731 supported 3.

4.

5.

6.
4.

5.

6.

Number of Personal Care businesses supported 2 000 Number of Informal and Micro Restaurants and 1 500 Tshisanyama supported Number of Fruit and vegetable vendors supported 4 638 Number of Panel beaters, motor mechanics, auto 4 638 spares and auto-fitment businesses supported 2 993 4 523 4 832 2 806 7.

Number of Small scale bakeries and 2 000 2 843 confectionaries supported 8.

Number of Clothing, leather and textile 2 000 3 840 businesses supported 9.

10.
10.

Number of Butcheries supported Number of jobs created Source: Seda Annual Report (2021/22) 2 000 4 683 1 889 5 176 One of the notable areas of underachievement on programme one was towards support spaza shops and general dealers under Retail Support Programme.

Seda reports that “branches were experiencing several challenges with the conversion of informal Spaza shops to formal, as these are mostly owned by foreigners”.
There are plans to turnaround this target by improving partnerships with associations to improve the uptake.

Also on the scheme to support panel beaters, motor mechanics, auto spares and auto-fitment businesses, the agency plans to increase the capping to R1 million in order to improve uptake.
5.1.2 Programme Two: Business Competitiveness and Viability The purpose of programme two is to support small businesses and Co-operatives by providing them with the necessary support to develop and enhance business production capacity and capabilities.

This also includes improving their competitiveness in order to access local and international markets.

The programe has 13 indicators and 11 of them were achieved.
Key achievements under programme two include 3 087 enterprises supported to be competitive in local markets, 1 933 enterprises exposed to international markets, 3 820 enterprises assisted with quality improvement, 9 839 enterprises supported in the manufacturing sector and 4 692 enterprises supported through sector specific training.

23 111 Table 10: Business Competitiveness and Viability No.

Performance Measure Target Achievement 1.


Number of SMMEs & Cooperatives supported to 2 500 3 807 be competitive in local markets 2.

Number of SMMEs and Cooperatives listed to 1 000 623 supply wholesalers and retailers 3.

Number of SMMEs & Cooperatives exposed to 1 000 1 933 international markets 4.

Number of SMMEs & Cooperatives registered on 1 000 1 170 export platforms 5.

Number of SMMEs and Cooperatives assisted with 3 247 3 269 incubation programme 6.
Number of SMMEs and Cooperatives assisted with 2 783 2 901 productivity improvement 7.

Number of SMMEs and Cooperatives assisted with 2 783 3 820 quality improvement 8.

Number of SMMEs & Cooperatives assisted 70 000 52 830 through the ecosystem 9.

Percentage of Identified Stakeholders Participating 75% 100% in the Ecosystem 10.

Number of SMMEs and Cooperatives whose 2 783 2 990 turnover has increased 11.

Number of SMMEs and Cooperatives supported in 2 783 9 839 the manufacturing Sector 12.
Number of SMMEs and Cooperatives supported 2 783 4 692 through Sector specific training 13.

Number of SMMEs and Cooperatives supported 2 783 2 794 enterprise Coaching Source: Seda Annual Report (2021/22) On access to markets, Seda could not achieve its target of listing 1000 SMMEs and Co- operatives to wholesalers and retailers.
According to the agency some of the intended beneficiaries for product listing required additional business development interventions before they could be listed by wholesalers and retailers.

There are plans to engage more wholesalers 24 112 and retailers to establish partnerships to enable supported clients to access their shelf space.

Clients who are market-ready will be encouraged to register their products with those identified wholesalers and retailers.
5.1.3 Programme Three: Administration The key objective for programme three is to be responsible for strategic leadership and support to core delivery to ensure successful implementation of the organisation’s strategy.

This includes monitoring organisations performance, strategic alignment with the shareholders’ expectations and capacitating the organisation to achieve its set objectives.
Important milestones under the programme includes 33 percent of innovative ideas implemented, 67 percent of staff recognized for excellence, 95 percent level of customer satisfaction, 86 percent level of stakeholder satisfaction and 88 percent of Seda funds allocated to core delivery.

This achievement reflects the organisational efforts to deliver on the mandate through an agile, innovative, excellent and customer centric organisation.

Table 11: Administration No.

Performance Measure 1.

2.

3.

4.

5.


6.

7.
Percentage of innovative ideas implemented Percentage of staff recognised for excellence Percentage of staff satisfaction Percentage of customer satisfaction Percentage of stakeholder satisfaction Percentage of vacancy rate Percentage of funds allocated to core delivery Source: Seda Annual Report (2021/22) Target Achievement 25% 25% 75% 80% 80% 10% 75% 33% 67% 43% 95% 86% 7% 88% In the 2021/22 financial year, a permanent moratorium was placed on filling vacant positions – to ensure that the merger process was not compromised.
During the agency’s appearance before the Committee to present its annual report, Seda did allude to the instability emanating from uncertainty as a result of employees being employed on contractual basis.

The Committee was informed that majority of employees are dissatisfied with a number of areas which included organisational leadership and management, remuneration and benefits, recognition and resources provision.

As a result, Seda is struggling to retain its quality and experienced staff.
25 113 5.1.4 Financial Overview In the financial year under review, the organisation had a total income of R902 million, which represented only a four (4) percent increase from the 2020/21 financial year.

The percentage growth was mainly due to the increase in allocation from the Department of Small Business Development grant and other specific projects.

Seda made an application to Treasury to approve the previous year’s surplus and National Treasury approved R294 million.
This increased the expenditure budget to R1.190 billion.

The actual expenditure for the period under review amounted to R1.185 billion resulting in an underspending of R5.2 million compared to R218 million in 2021.

Based on the total amount spent, Seda does not have surplus funds to roll over for the first time in more than 5 years.
Included in the expenditure of R1.185 billion is an overall spending of R773 million on goods and services during the 2021/22 financial year compared to R400 million in the previous year.
Table 12: Seda Budget Seda Budget 2021/22 Programme Programme 1 Programme 2 Programme 3 Budget R’000 530 758 462 430 197 099 Actual Expenditure Over/Under R’000 Expenditure 540 884 456 076 188 106 R’000 -10 126 6 354 8 993 5 220 TOTAL 1 190 287 1 185 067 Source: Seda Annual Report (2021/22) The 93 percent increase in spending as compared to the previous year was due to the approved surplus by the National Treasury and a decrease in spending on general administrative activities such as travelling and face-to-face stakeholder engagement projects, which were impacted by lockdown restrictions due to the Covid-19 pandemic.
The financial resource constraints due to budget cut over the Medium Term Expenditure Framework (MTEF) period had adverse impact on the implementation of some projects.

This ultimately impacted some projects with a high propensity to deliver impact whilst they require substantial investments from the organisation.

Some of these projects include technology transfer programme which mainly assists manufacturing businesses with the purchase of advanced production equipments.
26 114 5.2 Small Enterprise Finance Agency Small Enterprise Finance Agency is an agency of the Department of Small Business Development entrusted with the responsibility to champion access to finance for small enterprises.

Sefa’s loan financing programmes primarily focus on black entrepreneurs, women, youth, entrepreneurs with disabilities, enterprises in rural communities and townships, and Military Veterans.
Accelerating financial inclusion for SMMEs remains critical in helping the South African economy to develop and grow.

During the 2021/22 financial year, Sefa strove to increase diversity in its intermediary base and sought to increase the capacity of black-owned financial institutions that it works with.

In carrying its mandate, the agency is mindful that access to capital remains one of the primary challenges facing SMMEs and co-operatives.
As a result, during the period under review, Sefa continued to reimagine and modernise its lending processes, so that it can take advantage of new opportunities for financing SMMEs and capture more of the forecast growth.

The agency approved loans to the value of R2,4 billion representing 116 percent of the annual target and disbursed R2,3 billion into the economy representing 86 percent of the annual disbursement target for the year.
The finance supported 76 129 businesses and facilitated 96 589 jobs in the economy.

The number of businesses supported represented 40 percent of the target and 46 percent of jobs target.

5.2.1 Service Delivery Channels The Sefa lending operations comprise of the following channels - Micro Finance Institutions (MFIs), SMME Wholesale and Retail Financial Intermediaries, Joint Ventures and Khula Credit Guarantee via the commercial banks and trade credit suppliers.
Sefa microfinance distribution channel is made up of Direct Lending and Micro Finance Institutions accessing wholesale facilities and then lending to informal and micro enterprises in accordance with the National Credit Act.

Sefa reported that due to Covid-19 pandemic the demand within these MFIs declined significantly.

In the 2021/22 financial year, Sefa supported informal and microenterprises in eight of the nine provinces.

Economy is recuperating from turbulent years of the pandemic.
The agency managed to grow its loan book to R3.4 billion from R2.5 billion in 2021.

This reflects 36 percent growth that is mainly driven by Direct Lending at R2 billion from R1.3 billion in 2020/21 financial year.

Whilst the Wholesale Lending book also grew from R1.2 billin during 2020/21 financial year to R1.4 billion during the period under consideration.

Total approvals grew by 32 percent year on year at R2.5 billion from 1.9 billion during the previous financial year.
Whilst total disbursements grew by 44 percent year on year 27 115 from R1.6 billion to R2.3 billion.

This noteworthy performance was achieved notwithstanding capacity limitations linked to the pending merger.
5.2.1.1 Wholesale Lending As one of Sefa main distribution channels of deploying funding into the economy, the Small and Medium Enterprises (SME) Wholesale Lending Division deploys funding to retail financial intermediaries and specialised funds with the objective of increasing access to finance to SMMEs.
To supplement this objective, Sefa also enters into joint ventures and other strategic partnerships in order to crowd-in financial and business support as well as technical resources of the public and private sector strategic partners.

The SMME Wholesale programme is a significant contributor to Sefa loan book performance, with R361 million approved to 12 new intermediaries during 2021/22 financial year while R570 million was disbursed by intermediaries to SMMEs between April 2021 and March 2022.
5.2.1.2 Micro-Finance Institutions In the financial years preceding 2021/22, Sefa ability to implement an effective microfinance strategy was significantly hampered by a lack of internal staff capacity in Sefa and the absence of developmental microfinance institutions geared to micro entrepreneurs.

Sefa was still primarily depended on two large microfinance institutions (MFIs), namely Small Enterprises Foundation (SEF) and Phakamani Foundation as retail partners.
During this year the relationship with these partners was stabilised and long-term funding agreements were settled and the impact expectations with these partners were set in place.

The role of the Microfinance Unit is to facilitate and increase access to finance and reduce the cost of end-user financing to informal and micro enterprises, with targeted rural, peri urban and township areas as a focal point.
5.2.1.3 Direct Lending Direct Lending compliments the Wholesaling Lending programme and enables Sefa to implement a hybrid lending model in the SMME lending space.

The channel targets entrepreneurs that have viable businesses and are not able to secure funding from the open markets.

Direct Lending mainly provides debt funding and in certain programmes offers blended financing instruments.

The available financing instruments include: asset finance, term loans, revolving credit loans and bridging loans.
Direct Lending approvals have grown significantly over the past five years.

The approvals grew by 18 percent when compared to the 28 116 previous financial year.

This trend is attributed to various programmes that were introduced in the past two years – such as Township and Rural Entrepreneurship Programme, Small Enterprise Manufacturing Support Programme, Youth Challenge Fund, Debt Relief Scheme, Business Viability Programme and Business Recovery Programme.
Direct Lending disbursements have shown a corresponding trend to approvals over the past five years.

Direct Lending disbursements grew by 39 percent when compared to the previous financial year.

Disbursements are real investment in the economy and contribute towards the development impact outcomes.

The high level of disbursements has resulted in a total loan book of R2 billion as of 31 March 2022.

5.2 Financial Performance Sefa obtained unqualified audit opinion - 10 years running.
The agency’s financial position is showing signs of improvement at the back of the increased size of the loan book and the increase in cash and cash equivalents.

The net loans and advances have increased by R640 million to a carrying amount of R1.5 billion at year end.

Also, the improvement in the cost-to- income ratio showed significant signs of improvement with 43 percent growth in revenue.

However, the group reported a loss before tax of R172 million from R283 million in 2021.
The overall impairments write-off and bad debt provisions on loans and advances have increased by a net amount of R339 million from the previous year due to the growth in the loan portfolio.

At year end, the impairment provision had grown from R800 million in 2021 to R1 billion in 2022.

6.
6.

OBSERVATIONS Having reflected on the Department, Sefa and Seda annual reports for 2021/22 financial year, the Portfolio Committee herewith registers the following observations for consideration by the Department - 6.1 The Committee welcomes overall performance of the Portfolio.

Achieving a clean audit opinion was certainly the highlight for the Department.

Whereas Sefa and Seda maintained clean and unqualified audit opinions respectively.

Improved spending is evident across the entire Portfolio.
However, there is scope for improvement from Seda’s audit opinion which has transgressed over the past two financial years, the Departments’ sliding performance to 60 percent achievement of its annual targets from a high of 85 percent during the previous financial year to Sefa’s rising impairments to R1 billion from R800 million in 2021.

These require increased scrutiny.


29 117 6.2 The Committee notes that the Department has been unable to refer the National Small Enterprise Amendment Bill to Parliament as pledged in its consecutive annual performance plans.

The Department reported that this was due to pending incorporation of the Sefa and CBDA into Seda – and for that reason, Cabinet has approved a 20- month extension to give the Department a leeway to include a chapter on the merger.
6.3 The Committee is fully aware that the Department’s attainment of its objectives is dependent on a successful completion of the National Small Enterprise Amendment Bill.

These include but not limited to the merger which must be supported by an act of Parliament, the creation of statutory entities such as the Small Enterprise Ombuds Office and Small Business Advisory Council, and definition of the term ‘small enterprise’.
In terms of the estimation or timeline provided by the Department recently, it is inferred that the bill will be tabled to Parliament on or before December 2023.

6.4 The Committee further notes that the Business Amendment Bill to replace the Business Act (1991) has still not been brought before Parliament notwithstanding numerous assurances by the Department to table the draft bill once all executive processes are exhausted.
The Committee is not optimistic that this bill will soon be finalised because in the annual performance plan (2022/23) presented to Parliament - it was intimated that the bill might only be referred to Parliament in 2025.

6.5 The Committee has noted the increase in the number of complaints of unfair business practice referred to it by the sector including the petition currently before it.
During the fifth Parliament, the Committee conducted intense engagements with the sector in order to understand small business concerns to ascertain possible policy, legal and regulatory mechanisms that Parliament could put in place.

The Committee had then made a recommendation to the Department to establish an Ombuds office within a period of 24 months.

It has now been five years since that recommendation was first made.
6.6 The Committee notes the Minister’s acknowledgement that “SMME credit gap in South Africa is in excess of R350 billion, with start-ups and micro businesses being the most underserved”.

The Committee welcomes the proposed cocktail of interventions such as de-risking of lending space to SMMEs through credit guarantees, rethinking forms of collateral, and improving credit information systems that currently disadvantage underserved communities.
The Committee is hopeful that these proposed measures will be contained in the SMME and Co-operatives Funding policy soon to be finalised by the Department.

30 118 6.7 Pursuant to 6.6 above, the Committee observed with great concern that not even a single co-operative benefited from Sefa funding during 01 April 2021 to 31 March 2022.

The Committee rejects the Department’s assertion that “Sefa’s balance sheet is limited and cannot afford to offer 100 percent grants to SMMEs and Co-operatives”.
If the Department and Sefa are able to diagnose the source of the challenge being that “the blended finance system that is used to fund the Co-operatives makes it difficult for many Co-operatives to qualify and have access to the funds available to them - due to the fact that through blended finance, Co-operatives have to have a positive / healthy credit score”, then the onus is on the Department and Sefa to devise mechanisms or mitigating strategy to deal with imbalance.
During the Department’s tabling of its annual performance plan (2022/3), the Committee expressed its displeasure and cautioned against phasing out of grants and incentives in favour of concessional loans, blended financing, income-contingent repayments, instalment relief and/or payment holidays to name the few.
While these interventions are welcome for going-concern enterprises that are able to produce, among others, management accounts, financial statements, collateral etc, it was premature for the Department to extend this blanket policy to co-operatives.

6.8 The Committee is noting disjointed working relationship between Seda and Sefa in as far as handling of applications for funding are concerned.
Difficulty in achieving seamless and collaborative rapport between the two agencies is showing beyond doubt the urgency and necessity to combine the two entities.

The Committee further took note of Sefa Chief Executive Officer’s remarks that it may not be in the best interest of Sefa to merge with Seda and CBDA.

The Committee will follow up to ascertain how best could this merger be accomplished without compromising service delivery.
6.9 In the previous BRRR (2019) and Legacy report, the Committee noted that the Department lacks appreciation or the role Stokvels, Village banks and Co-operatives Banking Institutions (CBIs) play in bridging funding gap for informal traders, co- operative enterprises and entities operating in far-flung areas in particular.

In its Wholesale Lending facility, Sefa provides funding to financial intermediaries only regulated by the National Credit Regulator (NCR).
However, the agency has not investigated nor attempted to bring to the fold the Co-operative Banking Institutions registered, licensed and regulated by the Co-operatives Banks Development Agency, Companies and Intellectual Property Commission, Prudential Authority and Financial Sector Conduct Authority (agencies of the South African Reserve Bank) and Financial 31 119 Intelligence Centre to mention the few.
Collective oversight by these agencies implies a much more improved governance and risk-based approach to managing public funds.

During the fifth Parliament, the Committee had detected that some of the intermediaries Sefa worked with, either went under, applied for voluntary liquidation or their debts were written off while they still owed Sefa millions e.g.

Marang Financial Services, Retmil Financial Services and Super Grand to mention but the few.
6.10 The Committee has taken note that when the Department and agencies report performance highlights in respect of co-operatives and informal traders tend to club or aggregate beneficiaries under one umbrella of SMMEs.
Such a reporting methodology conceals the narrow and askew distribution of resources amongst SMMEs mostly private businesses registered in terms of the Companies and Close Corporation Act(s), social enterprises registered in terms of the Co-operatives Act and informal traders registered in terms of the Municipal By-laws.

Also, provincial aggregation instead of regions or district municipalities does not provide clear picture of how resources are spread equitably across the regions.
6.11 The Committee has noted that not only are co-operatives prejudiced from benefiting adequately from the Portfolio programmes, informal traders are also casualties.

For instance, Seda struggled to meet its projected target on the support to Spaza shops and general dealers, an area where as a country we are performing dismally.
The agency attributes this shortcoming to numerous challenges such as “failure to convert informal Spaza shops to formal traders as these are mostly owned by foreigners” - a grave indictment and demonstration that our policy as a country is not responsive.

This development is not only common to spaza shops and general dealers, there is a complete takeover and deliberate displacement of informal traders i.e.
clothing and retail, saloons and cellphone shops with persons whom ordinarily and in terms of South African laws are not eligible to conduct those types of businesses.

6.12 Members of the Committee have over time expressed misgivings at the rate at which Committee resolutions and recommendations in general are being executed by the Department.

For instance, the Committee resolutions in the legacy report carried over from the fifth Parliament are far from being completed.
The sixth administration is effectively left with less than 18 months to conclude its term.

During the legacy report deliberations by members of the fifth Parliament, they had been confronted with a delicate question of whether the Department should continue to exist.

The Committee had then concluded that “the Department must continue to exist.

Empirical evidence 32 120 suggests that no economy can exist without the small enterprise sector.
The National Development Plan situates more accountability on the sector to create 11 million jobs which is a further indication that the challenge of tackling unemployment will come from a vibrant small enterprise sector.

Based on the Committee experience, the establishment of the Department was absolutely necessary, and it must therefore remain in order to fulfil what it had intended to accomplish”.
It is therefore not unanticipated that members of the Committee during the sixth Parliament, considering the degree to which the Department is falling short of implementing resolutions contained in various Committee reports, would be faced with a similar conundrum.

6.13 The Committee has long noted and flagged red tape as an area of interest as it believes it is one of the biggest constraints on economic opportunity, business investment and job creation.
At the start of its term, the Committee had sought to dissect and analyse common bottlenecks bedevilling small enterprise sector from realising full potential.

The Committee had then re-examined all previous government initiatives aimed at eliminating red tape e.g.

Regulatory Impact Assessment, Socio Economic Impact Assessment System, Guidelines for Reducing Municipal Red Tape and national Red Tape Reduction (“RTR”) strategy developed by the Department.
None of these interventions seem to have yielded any positive responses considering the rate at which small enterprises are disappearing due to red tape.

6.14 The Committee welcomes the Department’s approach to District Development Model (DDM) and the use of co-locations to expand the Portfolio footprints.
It however, observes that Parliamentary Constituency Offices (PCO) with members of Parliament in excess of 400, plus provincial legislatures, have not been utilised strategically to promote government-wide programmes.

6.15 The Committee has noted Seda’s outcome of an unqualified audit with findings on the reporting on predetermined objectives.
According to the Auditor General the audit outcome has regressed to an adverse opinion with findings due to the extent to which the majority of performance indicators were not measurable and reliable.

According to the Auditor General, there was no good planning, in-year performance management, and monitoring and reporting, the management did not adequately exercise oversight responsibility regarding performance reporting as well as related internal controls.

33 121 7.
33 121 7.

RECOMMENDATIONS Informed by its deliberations, the Portfolio Committee recommends that the Minister of Small Business Development take steps to implement the following resolutions - 7.1 As noted earlier that the National Small Enterprise Amendment bill might only be referred to Parliament in 2023, and considering the period that has elapsed since this bill has been on the drafting phase, the Committee is of the view that a staggered approach to the development of the bill should be considered.
The precedent was set by the Department of Trade and Industry when it successively amended the National Small Business Act (1996) in 2003 and 2004.

The Department must endeavour to review its timelines.

The third quarterly report (2022/23) should consist of implementation framework on how it plans to meet these milestones bit by bit.
7.2 The Committee is of the view that in light of a variety of challenges besetting the sector, and hundreds of complaints from small business owners before the Committee, a segmented approach should indeed be given primacy.

The Committee herewith recommends to the Department to consider the following propositions for implementation on or before 31 March 2023 – § The Small Enterprise Ombudsman Services Bill announced by the Former Minister Khumbudzo Ntshavheni in July 2020 be referred to Parliament.
The Committee understands that the bill had gone through all legal hurdles; § The National Small Enterprise Amendment Bill which incorporated a chapter on the creation of the “Small Enterprise Ombud Service” is referred to Parliament.
The bill had gone through all legal scrutiny including obtaining Socio Economic Impact Assessment System (SEIAS) certification and gazetted for public comments in December 2020; § Alternatively, as per the revised business case shared with the Committee at the beginning of the financial year 2022/23 concerning the establishment of the Office of the Small Enterprise Ombud Service, the Department should go ahead establish the office as a Juristic Person within the Department, and in the medium term as a Public Entity i.e.
Schedule 3A.

The Committee reserves its right to accept or reject the Department strategic plan and annual performance plan (2023/24) should it not comply with any of the directive set forth hereinabove.

7.3 In the meantime and in case of further delays by the Department in executing the Committee resolutions, the Committee will explore a Committee bill (Section 75 bill) 34 122 in order to implement its own resolution for the establishment of the Small Enterprise Ombudsman.
The Committee is in agreement that the Small Enterprise Service Ombuds bill, draft bill amending the National Small Enterprise Act (1996) and draft Public Procurement bill specifically the section that deals with dispute resolution should be considered key constituents of the planned bill.

7.4 During the course of the financial year (2022/23) the Department revised its own timelines in as far as the referral of the Business Amendment bill to Parliament is concerned.
The project plan was shared with the Committee.

It is on this basis that the Committee was prevented from pursuing its resolution to produce a Committee Bill.

In terms of the project plan shared and agreed to by the Committee, the Department shall table the draft bill to Parliament on or before April 2023.
Despite the fact that the project plan is not a statutory document to hold the executive to account, the Committee will scrutinise strategic plan and annual performance plan (2023/24) to ensure that this target is fully incorporated and correctly reflected on the Department’s plans.

7.5 The SMME and Co-operatives Funding Policy must be accelerated and concluded before 31 March 2023.

This target has been on the successive annual performance plans of the Department since the financial year 2020/21.
It will not be in the interest of good governance if the Committee accepts or considers the annual performance plan (2023/24) with this target still incomplete or pending approval by Cabinet.

7.6 Co-operatives enterprises are struggling to access financial assistance from Sefa or the Department.

It is reported in the annual reports that there was no co-operative funded by Sefa in the previous financial year.
Whereas the Department fell short of its expenditure target on co-operatives by more than R70 million.

The Department's catalytic and supportive role in the development of co-operatives is invisible.

The Committee would like to reiterate its previous recommendation to the Department to reinvent the Co-operatives Development Support Programme (CDSP) to include performance linked incentive scheme for co-operatives.

7.7 The Department should develop a turnaround plan on co-operatives.
The plan must be incorporated into the third quarterly report (2022/23) for consideration and discussion with the Committee.

7.8 As stated before the utilisation of financial intermediaries by Sefa was raised sharply by members of the Committee and flagged by the Financial and Fiscal Commission (FFC) in 2019 as increasing the cost of capital for struggling small enterprises.
The Portfolio Committee recommendation is that Sefa should consider insourcing all its 35 123 lending activities, alternatively, consider giving priority to financial institutions registered, licensed and regulated by reputable agencies of the state e.g.

Prudential Authority, Financial Sector Conduct Authority, Financial Intelligence Centre and National Credit Regulator.
As the Co-operatives Banks Development Agency prepares to join the Department, from the policy point of view, it is important for the Department to proactively envisage potential role of Co-operatives Banking Institutions in distribution or channelling of resources to SMMEs and Co-operatives.
7.9 The skewness in the distribution of funds and resources as observed in all annual reports in favour of Gauteng, KwaZulu Natal and Western Cape (provinces with big metros) at the exclusion of other struggling regions and/or provinces like Northern Cape, Eastern Cape, Free State, Mpumalanga and North West requires urgent intervention.

Historical inequities exist between provinces as well as among districts within each province.
Remedial measures should include, amongst others, equitable allocation of resources per provinces and districts.

Such distribution should be reported on the quarterly and annual reports of the Department and agencies.

7.10 The Committee is calling on Seda and Sefa to re-examine the degree to which their services are integrated and interdependent.
The Committee does not concur with the notion that funding applications and business plans developed by Seda maybe declined willy-nilly and without recourse or corrective measures by Sefa.

In future, all Seda and Sefa quarterly reports must incorporate a column – re: status of all applications submitted and received by both agencies respectively.

7.11 There are areas of underspending in the Department occasioned by vacant posts i.e.

compensation of employees, goods and services as well as capital assets.
The Department of Public Service and Administration has approved DSBD organisational structure.

The Committee is calling on the Department to act swiftly in filling vacant posts particularly at senior management level.

The Committee will track progress through monitoring quarterly reports of the Department.

7.12 A high staff turnover at Seda and Sefa is posing a risk to service delivery environment.
The Committee is of the viewpoint that 20-month extension granted by Cabinet was indicative and not cast in stone.

There is a lot that can be achieved within a reasonable period of time to ensure that entities are stabilised.

The Committee wishes to invite the Department and entities to conduct an analysis and develop a mitigating strategy for consideration by the Committee before 31 January 2023.
36 124 7.13 The Committee is on record and wishes to reiterate its initial recommendation when the merger was first introduced that consolidation of the three agencies, should if possible, be assumed separately from regular operations of the entities as all three of them are governed by different legislations that may take longer to process.

The Minister should ensure that proper coordination between the entities and National Treasury is monitored to guarantee that the mandate of the Portfolio is achieved.
7.14 The Portfolio Committee noted Auditor General remarks with respect to absence of good planning, in-year performance management, monitoring and reporting.

Committee is calling on the Seda to act speedily in dealing and implementing AG recommendations.

In line with AG recommendation to the Committee, the Committee will ensure that all Seda quarterly reports provide feedback on the implementation and progress of action plans to ensure improvement in the audit outcomes of the agency.
7.15 In spite of numerous road shows, marketing and awareness campaigns, as well as expansion of co-locations to remote and underprivileged regions, remonstration and grumbling on the ground have not abated.

The Department should monitor the extent to which annual performance plans and quarterly reports incorporate output indicators that involves working with Parliamentary Constituency Offices.

This could be facilitated or achieved through the District Development Municipal Champions.
The Committee will monitor this adaptation during quarterly reports presentations.

Unless otherwise indicated, responses to the above recommendations should be submitted to the National Assembly not later than three months after the adoption of this report by the National Assembly.

Report to be considered.

37 125 3.
BUDGETARY REVIEW AND RECOMMENDATIONS REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON ENVIRONMENT, FORESTRY AND FISHERIES ON THE ANNUAL REPORTS AND FINANCIAL STATEMENTS OF THE DEPARTMENT OF FORESTRY, FISHERIES AND THE ENVIRONMENT AND ITS FIVE ENTITIES, NAMELY: THE SOUTH AFRICAN NATIONAL PARKS, ISIMANGALISO WETLAND PARK AUTHORITY, SOUTH AFRICAN WEATHER SERVICE, THE SOUTH AFRICAN NATIONAL BIODIVERSITY INSTITUTE AS WELL AS THE MARINE LIVING RESOURCES FUND FOR THE 2021/22 FINANCIAL YEAR, DATED 20 OCTOBER 2022.
The Portfolio Committee on Environment, Forestry and Fisheries (hereinafter the Committee), having considered the Annual Report of the Department of Forestry, Fisheries and Environment (hereafter referred to as the Department or DFFE) for the year under review 2021/22, as well as the performance of the entities reporting under the Department, namely: the South African National Parks (SANParks), iSimangaliso Wetland Park Authority (iSimangaliso); South African Weather Service (SAWS); the South African National Biodiversity Institute (SANBI); and the Marine Living Resources Fund (MREF), and having further interacted with the Auditor- General of South Africa (AGSA), reports as follows: 1 INTRODUCTION 1.1 Mandate of the Committee The mandate of the Portfolio Committee is to advance the ideals of a developmental state by enacting legislation and facilitating public participation, monitoring and oversight functions over the legislative processes relating to the environment; confer with relevant governmental and civil society organs on the impact of environmental legislation and related matters; enhance and develop the capacity of committee members in the exercise of effective oversight over the Executive Authority.
Thus, the core mandate of the Committee is to: • Consider legislation referred to it; | 1 126 • Conduct oversight of any organ of state and constitutional institutions falling within its portfolio; • Consider international agreements; and • Consider the budgets, strategic plans, annual performance plans and related performance reports and targets of the Department and entities falling within its portfolio.
2 PURPOSE OF THE BUDGETARY REVIEW AND RECOMMENDATIONS REPORT Section 5 of the Money Bills Procedures and Related Matters Amendment 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 Recommendations Reports (BRRRs) that assess service delivery performance given the available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on forward use of resources.
In preparation for the BRRR and in compliance with its mandate as set out in Section 5(1) of the Money Bills Act, the Committee was briefed and deliberated on all four quarterly reports of the Department of Forestry, Fisheries and the Environment for the 2021/22 financial year.

The performance of the prior financial year has so been thoroughly reviewed and analysed to create the basis of the BRRR.
In addition to the Annual and Quarterly reports, the BRRR also sources documents for 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 Budgetary Review and Recommendations Report of the Portfolio Committee is based on the information that it accessed through various engagements with the Department and its respective entities, namely, the SANParks, iSimangaliso, SAWS, SANBI, and MLRF as well as AGSA on their respective reports on the performance of the environmental portfolio.
To effectively undertake the oversight mandate of its work as required by the Money Bills Act, the Portfolio Committee on Forestry, Fisheries and the Environment having received and considered briefings from the Department of Forestry, Fisheries and Environment and its respective entities, namely: the SANParks; iSimangaliso; SAWS; SANBI; and MLRF, as well as from the Office of the Auditor-General on 11 and 18 October 2022 on the Annual Reports | 2 127 and Financial Statements of the Department and its entities for the 2021/22 financial year, reports as follows: 3 OVERVIEW OF THE AUDITOR-GENERAL’S AUDIT OUTCOME REPORT FOR 2021/22 The Auditor-General of South Africa (AGSA) has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, was established to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing of public governance and annual performance targets, inter alia.
In so doing, the Auditor-General builds public confidence in the manner in which the environmental portfolio is governed and administered on behalf of the South African population.

Per this mandate, the South African Auditor-General gave a summary of the audit findings and other information on the environmental portfolio during the period under consideration - the 2021/22 fiscal year.
The AGSA reported that the overall audit outcomes in the portfolio remained unchanged when compared with the prior year (2020/21).

The Department remained stagnant with a qualified audit opinion with findings on the annual performance report and compliance with legislation.

The only improvement from the Department was the significantly reduced number of qualification areas.
All five departmental entities, SANBI, SANParks, SAWS, iSimangaliso and MLRF remained unchanged with an unqualified audit opinion with findings on compliance with legislation in the current year under review (2021/22).

The DFFE, SANParks, SANBI, iSimangaliso and MLRF submitted deficient performance information, primarily because they did not follow the SMART principle or lacked credible evidence to support their performance claims.
The iSimangaliso and MLRF were able to correct the performance misstatements in their reports, while DFFE, SANParks and SANBI could not correct the findings after audit adjustments.

The DFFE, SANParks, SANBI, and MLRF submitted financial statements that contained material misstatements.

Therefore, for these impacted entities to achieve unqualified audit opinions, these errors had to be fixed.
However, the Department was unable to correct all the identified material misstatements which resulted in a qualified audit opinion.

These material misstatements on the Annual Financial Statements were due to inadequate internal controls and | 3 128 reviews by management before submission for audit.

The majority of the material misstatements identified for the portfolio were on immovable assets, expenditures and disclosure notes.
These could also be attributed to slow progress in addressing internal control deficiencies identified by internal and external auditors.

Some of the findings raised are recurring despite discussions held with the auditees on the implementation of preventive control measures.

Finally, the Department and all its entities incurred irregular expenditures amounting to R975 million for the 2021/22 financial year.
The closing balance of irregular expenditure rose to R5.41 billion because the irregularly awarded contracts in the 2017/18 financial year are still in place.
These audit outcomes and findings are further described in the following sections, for the Department and the respective entities: 3.1 Department of forestry, fisheries and Environment The audit opinion of the Department remained unchanged, having retained the same audit outcome of a qualified audit opinion in the 2021/22 financial year as in the prior years (2019/20 and 2020/21).
The Auditor-General noted that the Department did not improve the quality of its planning for service delivery and performance reporting.

The Department did not define evidence to validate reported achievement, did not report on revised targets, and the reported performance achievements lacked credible, reliable and complete evidence.
The Department incurred R888 million (down from R1.03 billion in 2020/21) of irregular expenditure (IE), which constitutes 91 per cent of the total irregular expenditure in the portfolio.

The majority of irregular expenditures were identified and declared in the 2018/19 financial year from irregularly awarded contracts in the 2017/18 financial year.

These contracts remain in place while an investigation is ongoing, hence the irregular expenditure balance increases annually.
The Department did not incur any unauthorised expenditure during the year under review.

Fruitless and wasteful expenditure amounted to R9.02 million because the Department allocated funds to implementing agents that did not spend per the approved memorandum of understanding.

The Department is implementing the Audit Action Plan to correct the AG’s findings.
3.2 iSimangaliso Wetland Park Authority For the 2021/22 financial year, the iSimangaliso Wetland Park Authority retained an unqualified audit opinion with findings on compliance with key legislation, since the beginning | 4 129 of the term for the current administration.

Notwithstanding the finding, the findings from the 2020/21 financial year were mostly resolved.
The entity incurred an irregular expenditure of R41.2 million in the 2021/22 financial year as it procured services from non-compliant or unqualifying service providers.

3.3 South African National Biodiversity Institute SANBI remained unchanged with an unqualified audit opinion with findings on the annual performance report and compliance with legislation, as in the prior year (2020/21) after improving from a qualified audit opinion in the 2019/20 financial year.
SANBI retained findings on the usefulness of reported performance information due to targets not being specific.

The entity incurred an irregular expenditure of R8.7 million, while fruitless and wasteful expenditures amounted to R620 thousand in the current 2021/22 financial year.

SANBI’s fruitless and wasteful expenditure is the same amount as in 2020/21 and the reasons are still penalties and interest on late payments.
The repeated findings reflect that consequence management from the concluded investigations is ineffective in curbing fruitless and wasteful expenditure.

3.4 South African National Parks The audit result for SANParks for the fiscal year 2021/22 remained unchanged having obtained an unqualified audit opinion with findings on compliance with key legislation since the beginning of the current administration term.
Irregular spending totalling R36.8 million on several contracts was discovered due to non-compliance with supply chain management practices.

There is currently an amount of R393.7 million of alleged irregular expenditure under assessment which relates to budget over expenditure on Operating leases and Operating expenses.

SANParks also incurred a fruitless and wasteful expenditure of R10 thousand.
There is overall regression in supply chain management (SCM) compliance that is partly driven by poor consequence management or ineffective steps taken to prevent irregular expenditure and/or fruitless and wasteful expenditure.

3.5 South African Weather Service | 5 130 The South African Weather Service’s audit outcome remained unchanged in the year under review (2021/22) with unqualified audit opinion with findings on compliance with legislation.
This is a continuation of the string of unqualified audit opinions from the 2019/20 fiscal year.

SAWS is the only entity that submitted performance and financial information without material misstatements for the 2021/22 financial year.

SAWS incurred irregular expenditures amounting to R353 thousand due to payments made on expired contracts.

The total fruitless and wasteful expenditure amounting to R2.29 million relates to a cancelled contract and SAWS is still processing the settlement amount.
3.6 Marine Living Resources Fund The Marine Living Resources Fund (MLRF) maintained its unqualified audit opinion with findings on compliance with legislation in the current year under review (2021/22).

The Entity started the current administration with a disclaimed audit outcome in 2019/20, then improved to an unqualified audit outcome with findings on procurement and contract management in 2020/21.
The non-compliance with legislation identified in 2021/22 is similar to that reported in the prior year, as MLRF did not fully implement effective action plans to address significant internal control deficiencies relating to compliance with legislation.

MLRF is among the four auditees that submitted financial and performance statements with material misstatements, which were subsequently corrected.

MLRF did not incur irregular, fruitless or wasteful expenditures in the 2021/22 financial year.
Nevertheless, MLRF still has a historical fruitless and wasteful expenditure of R149.8 thousand relating to fraudulent payments from donor funds by former employees.
4 OVERVIEW OF PERFORMANCE BY THE DEPARTMENT OF FORESTRY, FISHERIES AND ENVIRONMENT IN THE 2021/22 FINANCIAL YEAR The Department is mandated to ensure the protection of the environment and conservation of natural resources, balanced with sustainable development, resiliency to climate change and the equitable distribution of the benefits derived from natural resources.
the Department is guided by its constitutional mandate, as contained in section 24 of the Constitution of the Republic of South Africa of 1996.

Consequently, the Department fulfils its mandate by formulating, coordinating and monitoring the implementation of national environmental policies, | 6 131 programmes and legislation with additional support from the five entities - the iSimangaliso, SANBI, SANParks, MLRF and the SAWS.
The execution of the Department’s mandate, in the year under review (2021/22), is reflected in the performance of its nine departmental programmes outlined below, which operate within the context of the Department’s Strategic Outcome-oriented Goals, comprising: • Environmental Economic Contribution Optimised; • Environmental/ Ecological Integrity Safeguarded and Enhanced; • Socially Transformed and Transitioned Communities: • Global Agenda Influenced and Obligations Met; and • A Capable and Efficient Department For the 6th administration, the Department directly contributes to all seven government priorities that are monitored.
The Department submits bi-annual performance reports to the Department of Planning, Monitoring and Evaluation (DPME) to gauge progress made towards achieving the seven outcomes.

The preliminary performance based on the information up to the third quarter of the 2021/22 financial year is summarised below: 1.

Economic transformation and job creation: 33 planned targets contribute to this priority of which 22 were achieved, translating to 66.7 per cent achievement.

2.
2.

Education, skills and health: 55 planned targets contribute to this priority of which 24 were achieved, translating to 43.6 per cent achievement.

3.

Consolidating the social wage through reliable and quality basic services: 97 planned targets contributed to this priority of which 37 were achieved, translating to 38.1 per cent achievement.

4.
4.

Spatial integration, human settlements and local government: 61 planned targets contributed to this priority of which 51 were achieved, translating to 83.6 per cent achievement.

5.

Social cohesion and safe communities: 78 planned targets contributed to this priority of which 25 were achieved, translating to 32.1 per cent achievement.

6.

A capable, ethical and developmental state: 88 planned targets contributed to this priority of which 39 were achieved, translating to 44.3 per cent achievement.

7.
7.

A better Africa and world: 18 planned targets contributed to this priority of which 10 were achieved, translating to 55.6 per cent achievement.

| 7 132 The cross-cutting focus areas or transversal priorities to all 7 priorities are women, youth, and persons with disabilities.
For the 2021/22 financial year, the Department’s contribution to alleviating the triple challenges of inequality, poverty, and unemployment took place via the Environmental Programmes Branch, where 18 208 Full-Time Equivalent jobs were created (equivalent to a one-year full-time job) instead of 31 243 FTEs as well as 43 911 work opportunities instead of 66 432 work opportunities.

The Department further created 2 180 jobs in the forestry sector.
The Environmental Programme benefited 22 798 women instead of 39 859 women, as well as a total of 27 695 young people instead of 36 583 youth.

Although the Programme has a high impact, it has been underperforming due to poor contract management and weak supply chain management systems, thus creating much fewer jobs than planned.

The Department achieved 68 per cent (102/149) of planned targets during the year under review, which is the same when compared to the 2020/21 financial year.
The only difference is the number of annual targets which increased from 129 to 149.

When removing the six reportedly achieved targets that lack credible evidence or supporting documents, the performance of the Department drops to 64 per cent for the 2021/22 financial year.

The number of targets that lacked credible evidence increased from four in the 2020/21 financial year to six in the 2021/22 financial year.

Although these are repeat findings, they emanate from different Branches.
During the 2020/21 financial year, the offender was Programme 5 (Biodiversity and Conservation), and during the year under review, it was Programme 7 (Chemical and Waste Management) and 8 (Forestry Management).

This level of performance is far below the undertaking of at least achieving 80 per cent of targets and attaining a clean audit made by the Minister at the beginning of the sixth Parliament.
4.1 PROGRAMME 1: ADMINISTRATION The purpose of the Programme is to provide strategic leadership, centralised administration, executive support, and corporate services and facilitate effective cooperative governance, international relations and environmental education and awareness.

The programme is made up of four sub-programmes, Management, Corporate Management Services, Financial Management Services, and Office Accommodation.
The number of targets for the Administration Programme has remained the same when compared to the 2020/21 financial year, yet achievement has declined from 67 per cent (10/15) to 60 per cent (9/15).

The missed | 8 133 targets include the same as in the previous financial year, largely driven by underperformance in the Office of the Chief Financial Officer.
4.2 PROGRAMME 2: REGULATORY COMPLIANCE AND SECTOR MONITORING The purpose of the Regulatory Compliance and Sector Monitoring (RCSM) Programme is to promote the development and implementation of an enabling legal regime and licensing/authorisation system to ensure enforcement and compliance with environmental law.
The programme comprises six subprogrammes namely: Legal, Authorisations, Compliance and Enforcement Management; Compliance Monitoring; Integrated Environmental Authorisations; Enforcement; Corporate Legal Support and Litigation; and Law Reform and Appeals.

The performance against the targets of the RCSM Programme has declined from 92 per cent (11/12) to 75 per cent (9/12) when compared to the 2020/21 financial year.
The missed targets are the same as in the previous financial year, largely driven by underperformance in the Office of the Chief Financial Officer.

4.3 PROGRAMME 3: OCEANS AND COASTS The purpose of the Oceans and Coasts Programme is to promote, manage and provide strategic leadership on oceans and coastal conservation.
The programme is made up of five sub- programmes, including Oceans and Coasts Management; Integrated Coastal Management; Oceans and Coastal Research; Oceans Conservation; and Specialist Monitoring Services.

The number of targets was increased from 10 in the 2020/21 financial year to 16 for the year under review.

In terms of achievement, the Branch performed better in the year under review by achieving 81 per cent (13/16) - up from 60 per cent (6/10) in the 2020/21 period.
4.4 PROGRAMME 4: CLIMATE CHANGE AND AIR QUALITY The purpose of the Programme is to improve air and atmospheric quality, lead and support, inform, monitor and report efficient and effective international, national and significant provincial and local responses to climate change.
The programme is made up of eight sub- programmes, which comprise Climate Change, Air Quality and Sustainable Development Management; Climate Change Mitigation; Climate Change Adaptation; Air Quality Management; South African Weather Service; International Climate Change Relations and Negotiation; Climate Change Monitoring and Evaluation; and Sustainable Development.

The | 9 134 Branch had 18 targets for both 2020/21 and the year under review.
The Branch improved its achievement of targets from 78 per cent (14/18) in the 2020/21 financial year to 89 per cent (16/18) for the 2021/22 period.

4.5 PROGRAMME 5: BIODIVERSITY AND CONSERVATION The purpose of the Biodiversity and Conservation Programme is to ensure the regulation and management of all biodiversity, heritage and conservation matters in a manner that facilitates sustainable economic growth and development.
The Programme consists of eight sub- programmes, including Biodiversity and Conservation Management; Biodiversity Planning and Management; Protected Areas Systems Management; iSimangaliso Wetland Park Authority; South African National Parks; South African National Biodiversity Institute; Biodiversity Monitoring and Evaluation; and Biodiversity Economy and Sustainable Use.

The number of targets for the Branch increased from 17 in the 2020/21 cycle to 29 in the year under review.
During the year under review, the Biodiversity and Conservation programme achieved 66 per cent (19/29) of targets – up from 53 per cent (9/17) of audited performance in 2020/21.

It is worth noting that the Branch had declared a 76 per cent (13/17) achievement in 2020/21, however, the was no audit evidence for the claimed achievement, hence achievement had to be reduced to 53 per cent.
4.6 PROGRAMME 6: ENVIRONMENTAL PROGRAMMES The purpose of the Environmental Programmes Programme is to implementation of expanded public works and green economy projects in the environmental sector.

The programme is made up of five sub-programmes, consisting of the Environmental Protection and Infrastructure Programme; Natural Resource Management; Green Fund; Environmental Programmes Management; and Information Management and Sector Coordination.
The Environmental Programmes branch only achieved 33 per cent (5/15) of its targets during the year under review.

The targets were reduced from 23 in the 2020/21 financial year, where only 48 per cent (11) were achieved.

The Department missed all the targets relating to the creation of work opportunities and full-time equivalent jobs, largely because of the poor supply chain and contract management.

The subsequent result is less clearing of alien invasive species or restoration of wetlands and estuaries.
| 10 135 4.7 PROGRAMME 7: CHEMICALS AND WASTE MANAGEMENT The purpose of the Chemicals and Waste Management Programme is to manage and ensure that chemicals and waste management policies and legislation are implemented and enforced in compliance with chemicals and waste management authorisations, directives and agreements.
The Programme is made up of six sub-programmes, which include Chemicals and Waste Management; Hazardous Waste Management and Licensing; Integrated Waste Management and Strategic Support; Chemicals and Waste Policy, Evaluation and Monitoring; Chemicals Management and Waste Bureau.

After the audit process, the achievement of the Branch was revised downwards from 82 per cent (14/17) to 71 per cent (12/17) of targets.

In the 2020/21 financial year, the Branch achieved all 9 targets.
4.8 PROGRAMME 8: FORESTRY AND NATURAL RESOURCE MANAGEMENT The purpose of the Forestry Management Branch is to develop and facilitate the implementation of policies and targeted programmes to ensure the proper management of forests, the sustainable use and protection of land and water, and the management of agricultural risks and disasters.

The programme comprises three subprogrammes, namely Forestry Management; Forestry Operations; and Forestry Development and Regulation.
The Forestry Branch reported the achievement of 72 per cent (10/14) of the targets as set out in the 2021/22 Annual Performance Plan.

This was a good improvement from the 50 per cent (6/12) achieved in the 2020/21 financial year.

Following the audit process, four target achievements could not be supported by credible evidence, thus reducing the achievement to 43 per cent (6/14).
4.9 PROGRAMME 9: FISHERIES MANAGEMENT (MARINE LIVING RESOURCES FUND) The purpose of the Fisheries Management Branch is to ensure sustainable utilisation and orderly access to marine living resources through improved management and regulation.

The Branch comprises six subprogrammes, namely Fisheries Management; Aquaculture and Economic Development; Monitoring, Control and Surveillance; Marine Resource Management; Fisheries Research and Development, and the MLRF.
The MLRF is the primary source of funding for the operational activities of the Fisheries Management Branch of the Department.

In terms of section 10(3) of the MLRA, the Director-General of the Department administers the MLRF in | 11 136 consultation with the Minister.

The staff of the Fisheries Branch, in partnership with other stakeholders in the fishing industry, execute the functions of the MLRF.
The Fisheries Branch and the MLRF accounted for all set targets on the 2021/22 Annual Performance Plans in the annual reports and achieved 54 per cent (7/13) of the set targets.

When compared to the performance achievement of 62 per cent (8/13) in the 2020/21 financial year, there is a slight performance decrease.
5 OVERVIEW OF PERFORMANCE BY THE DEPARTMENTAL ENTITIES 5.1 iSimangaliso Wetland Park Authority The iSimangaliso Wetland Park Authority in KwaZulu-Natal was established in terms of the World Heritage Convention Act (Act No.
49 of 1999), with the mandate to ensure that effective and active measures were taken in the Park for the protection and conservation of World Heritage Convention values; promote empowerment of historically disadvantaged communities living adjacent to the Park; promote, manage, oversee, market and facilitate optimal tourism and related development in the Park; and encourage, sustain, invest and contribute to job creation.
Covering a 3 280-square kilometres area, iSimangaliso is the third largest park in South Africa and the first listed World Heritage Site in South Africa in 1999.

In the year under review (2021/22), iSimangaliso met all its 57 annual performance targets across its four programmes of Corporate Support Services, Biodiversity Conservation, Tourism and Business Development, and Socio-Economic Environmental Development.
For the 2020/21 financial year, the iSimangaliso Wetland Park Authority had a total of 61 performance targets, of which the entity met all of them despite being affected by lockdowns.

iSimangaliso started the sixth administration term with 87 per cent (59/68) success against predetermined objectives for the 2019/20 financial year.

5.2 South African National Biodiversity Institute (SANBI) SANBI was established in September 2004, in terms of the National Environmental Management: Biodiversity Act (Act No.
10 of 2004).

The mandate of the Institute is to monitor and report regularly on the status of South Africa’s biodiversity, which includes all listed threatened or protected species, ecosystems and invasive species; and the impact of any genetically modified organisms that have been released into the environment.
The Institute is | 12 137 also mandated to act as an advisory and consultative body on matters relating to organs of State and other biodiversity stakeholders; coordinate and promote the taxonomy of South Africa’s biodiversity; manage, control and maintain all national botanical gardens, herbaria and collections of dead animals that may exist; and advise the Minister of Forestry, Fisheries and the Environment on any matter regulated in terms of the Act, and any international agreements affecting biodiversity that are binding on South Africa.
In the year under review (2021/22), SANBI achieved 41 of its planned 44 targets, translating to 93 per cent of its targets across its four programmes – the National Botanical and Zoological Gardens, Biodiversity Science and Policy Advice, Human Capital Development and Transformation, and Administration.

This is a significant improvement from the achievement attained during the 2020/21 financial year, where SANBI had 44 planned targets and achieved 39.
This 2020/21 achievement translated to an 89 per cent achievement of planned targets.

SANBI started the sixth administration term with 67 per cent where the Institute achieved 29 of its 43 planned targets for the 2019/20 financial year.

5.3 South African National Parks SANParks’ mandate is derived from the National Environmental Management: Protected Areas Act (Act No.

57 of 2003), which is to conserve, protect, control and manage national parks and other defined protected areas and biological diversity.
SANParks is a Schedule 3A Entity, in terms of the Public Finance Management Act (PFMA) No.

1 of 1999.

Thus, the mandate of SANParks is to develop, expand, manage and promote a system of sustainable national parks that represents biodiversity and heritage assets, through innovation and best practices for the just and equitable benefit of current and future generations.

The entity executes its mandate through its four sub-programmes.
The South African National Parks had 57 targets in the year under review (2021/22), of which the Entity fully met 49 targets – translating to 86 per cent achievement.

This is a slight improvement from 84 per cent in the 2020/21 financial year where SANParks achieved 42 of 50 planned targets.

SANParks has consistently been improving their achievement of planned goals since the start of the sixth administration in the 2019/20 financial year where they achieved 68 per cent (41/60) of planned targets.
There is a year-on-year improvement in the achievement of planned targets over the past three financial years.

| 13 138 5.4 South African Weather Service (SAWS) The mandate of the South African Weather Service (SAWS) was established in terms of the South African Weather Service Act (Act No.

8 of 2001), which is to provide two distinct services, i.e., the public good service, which is funded by government and commercial services where the user pays principle applies.
This entails maintaining, extending and improving the quality of meteorological services; providing risk information, which is essential for minimising the impact of disasters; collecting meteorological data over oceans; and fulfilling the government’s international obligations under the World Meteorological Organisation and the International Civil Aviation Organisation.
SAWS has four sub-programmes that fulfil the mandate - Weather and Climate Services; Research and Innovation; Infrastructure and Information Systems; and Administration.

In the period under review (2021/22), the South African Weather Service had 28 annual performance targets and achieved 23 targets – translating to 82 per cent success.

When compared to the prior year (2020/21), SAWS improved where 14 of 20 targets were achieved – translating to 70 per cent achievement of its planned targets.
The SAWS started the sixth administration term with 67 per cent (16/21) success against predetermined targets for the 2019/20 financial year.

Overall, SAWS is steadily improving in the achievement of planned targets since the beginning of the new administration.

5.5 Marine Living Resources Fund The Marine Living Resources Act (Act No.

18 of 1998) establishes the MLRF and in terms of the PFMA, is a Schedule 3A Public Entity.
The MLRF is the primary source of funding for the operational activities of the Fisheries Management Branch (the Branch) of the Department.

In terms of section 10(3) of the MLRA, the Director-General of the Department administers the MLRF in consultation with the Minister.
The execution of the mandate is driven by the six sub- programmes of the Entity – Aquaculture Development, Monitoring Control and Surveillance, Marine Resource Management, Fisheries Research and Development; Fisheries Operations Support; and the Marine Living Resources Fund.

The mandate and primary objective of the fund is to oversee the sustainable development of South Africa's marine and coastal resources while also preserving the ecological integrity and quality of the region.
| 14 139 The MLRF had 17 targets in the year under review (2021/22), of which the Entity fully met 10 targets – translating to 59 per cent achievement.

This is a slight improvement from 57 per cent in the 2020/21 financial year where MLRF achieved 8 of 14 planned targets.

The MLRF started the administration term with 60 per cent (9/15) success against predetermined objectives for the 2019/20 financial year.
The MLRF has never achieved above 60 per cent since the start of the sixth administration in the 2019/20 financial year.
6 COMMITTEE OBSERVATIONS Following the Committee’s interaction with the AGSA, Department of Forestry, Fisheries and the Environment and its five departmental entities on their annual reports, financial statements and the audit outcomes in the period under review (2021/22 financial year) as well as engagements with their respective quarterly reports for the current year, the Committee made the following observations: 6.1 Committee observations on the Auditor-General’s findings The Committee welcomed the audit report and findings by the Auditor-General for the Department of Forestry, Fisheries and Environment (DFFE) and the five departmental entities for the 2021/22 financial year and noted the following: • The Committee noted with concern that none of the environmental portfolio received a clean audit, although there had been some improvement in performance compared to the prior (2020/21 ) financial year; • The planning and reporting on performance has continued to be a problem for the Department and its entities (except for the SAWS) who submitted performance reports with material misstatements; • Preparation of financial statements remained a concern at the Department and its entities (SANParks, SANBI, and MLRF), as material adjustments had to be made to the financial statements submitted for auditing; • The slow pace of implementing audit action plans, consequence management and post-audit action plan outcomes; | 15 140 • The Committee noted the improvements in compliance with legislation by the Department, SAWS, SANBI and iSimangaliso by reducing the number of non-compliance issues, while at SANParks non-compliance issues increased; • The Committee noted that consequence management, procurement and contract management were a general concern in the Department and its entities (except for SAWS, although there is progress in reducing these incidences.
Irregular expenditure arose due to inadequate monitoring of compliance with supply chain management (SCM) laws and regulations; • The Committee was concerned by the potential impact of personal relations that may exist between auditee institutions and AG officials on the independence and objectivity of the Office of the Auditor General; • The Committee was concerned that the improvement of audits and performance by the Department and Entities is not translating to the improvement of livelihoods in coastal communities.
• The Committee is concerned that only one entity of the Department (SAWS) submitted its annual performance and financial statements to AGSA free of material misstatements in the period under review; • The Committee took note of the AGSA's willingness to scrutinise any programme it deemed warranted special attention.
6.2 Committee observations on the Department of Planning, Monitoring and Evaluation (DPME) findings • The Committee appreciated the presentation provided by the DPME, although it was concerned by the assessment of only two out of seven priorities and the low performance on MTSF targets; • The Committee noted the immense challenge DPME faced, being such a small department with few officials mandated to verify, monitor and evaluate the work of all the government departments and to ensure consistency in the process; • The Committee noted the slow progress on the auditing of municipal infrastructure resilience and readiness for climate change disasters; • On the finalisation and implementation of Master Plans, the Committee noted the lack of a Waste Economy Master Plan, while there is limited achievement of outcomes from the implementation of the Forestry and Oceans Economy Master Plans.
| 16 141 • The Committee noted that the greenhouse gas emission reduction approach does not account for social impacts and is not managed at a centralised point resulting in existing plans such as the “Just Transition and Job resilience” remaining uncoordinated and unaccounted for; • On the issue of “Just Transition” and industrialisation, the Committee noted that there are five Climate Sector Adaptation Plans have been developed to reduce vulnerability to risks associated with climate change even though there is no evidence on the extent of implementation and associated impacts on emission reduction, economic contributions, and industrialisation and localisation.
• The Committee noted that the Forestry Master Plan will form part of the pilot study by the DPME and Department of Trade, Industry and Competition to develop a computerised masterplan monitoring dashboard; 6.3 Department of Forestry, Fisheries and Environment • The Committee noted the improvement the in the ‘environmental’ portfolio in the 2021/22 financial, all five public entities received an unqualified audit opinion with matters of emphasis.
However, the Committee is still concerned that the Department received a fourth qualified audit opinion with two matters of emphasis; • The Committee noted the reaffirmation of the Minister that the departmental performance standard remains at 80 per cent; • The Committee noted that there was no unauthorised expenditure in the 2021/22 financial but irregular, wasteful and fruitless expenditure, and non-compliance with the supply chain management legislation persisted, indicating weak internal controls and poor record keeping on financial accountability; • The Committee noted the Audit Action Plan that the Department is implementing to address some of the issues raised by AGSA; • The Committee noted the skills development in terms of workshops for employees and the full capacitation of the SCM Unit by the National Treasury and the Office of the Auditor General; • The Committee noted with dismay the slow progress in fully implementing the remedial actions outlined in the Audit Action Plan wherein only 19 per cent was achieved; • The Committee was concerned that departmental vehicles were transferred to the employees of the Working for Fire company; | 17 142 • The Committee was alarmed that payments were made for work that was not done or payments were made to expired contracts; • The Committee was disappointed that conditional grants that were meant for the implementation of the Expanded Public Works Programme to change people’s lives were returned to National Treasury due to poor contract or project management; • The Committee raised concerns about the delays in finalising disciplinary cases thus allowing offenders to resign and escape consequences and get easily employed in a different government department; • The Committee noted with concern that there might be audit regression now that the section 42 process of the PFMA for the transfer of these biological assets has been completed; • The Committee was concerned that the Department was dumping the State plantations on communities after they failed to manage
 them productively; • The Committee noted that efforts to renew the lapsed 5-year MoU with Laos have yielded no results, thus collapsing cooperation in the fight against rhino poaching; • The Committee noted with concern what appeared to be the Department dumping more climate change mitigation and adaptation responsibilities on under-resourced municipalities without financial and human resource support to aid implementation; • The Committee raised a concern about the slow progress towards the finalisation of Biodiversity Management Plans for species that are on the brink of extinction, as well as Management Plans for newly declared Marine Protected Areas; 6.4 South African Weather Service • The Committee commended SAWS for improvements in its audit outcome, particularly on submitting performance and financial reports that are without material misstatements; • The Committee also noted that SAWS had put a dedicated team and systems to prevent repeat findings and clear all outstanding matters during October 2022, except for those awaiting a decision from the National Treasury; • The Committee noted the upgrades in critical infrastructure and refurbishment of some of the SAWS sites, thereby gradually addressing some of the challenges in achieving the targets; | 18 143 • The Committee was concerned by improper appointments at SAWS, the appointment of a service provider that had no background in weather service infrastructure, irregular expenditure emanating from poor contract management; • The Committee also noted that vandalism, load-shedding and theft of critical equipment are contributing to data gaps; • The Committee was concerned that the investment into infrastructure upgrades could be lost if infrastructure safety cannot be guaranteed; and • The Committee appreciated that SAWS was increasingly applying impact-based weather forecasting and integrating early warning system broadcasts in locally used languages.
6.5 iSimangaliso Wetland Park Authority • The Committee appreciated the iSimangaliso Wetland Park Authority’s achievement of an unqualified audit opinion, though with findings; • The Committee welcomed the implementation of the audit action plan that addressed the audit findings relating to supply chain management and irregular expenditure; • The Committee noted the ecosystem changes that had occurred since the natural breaching of the estuary mouth and the gradual reduction of silt and sludge; • The Committee appreciated the update on the infrastructure upgrades, particularly the administration building and water availability in facilities; • The Committee also noted the cooperation with surrounding communities, the community benefit scheme, and the 14 land claims that are still being processed; and • The Committee raised concerns about the spread of alien invasive species along the coast.
6.6 South African National Biodiversity Institute • The Committee commended SANBI for improving its performance from 89 per cent in the prior fiscal year to 93 per cent, and for significantly reducing irregular expenditure and in its audit outcome; • The Committee noted the impact that COVID-19 had on the Institute’s ability to meet visitor targets and associated income; • The Committee appreciated the potential benefits that could come from the accreditation of SANBI for direct access to the Green Climate Fund such as mobilising the funds for projects in South Africa around biodiversity adaptation and climate change; | 19 144 • The Committee noted the resumption of school trips to the facilities of the Institute and reminded the Institute and other departmental entities about the Committee’s resolution of taking these services and awareness programmes to schools; • The Committee noted the need to clarify or harmonise roles among Government departments in the fight against alien invasive species in different parts of the ecosystem; • The Committee was concerned by how SANBI bypassed the local content requirement for tenders; • The Committee appreciated the contribution of SANBI to jobs and skills through the implementation of Groen Sebenza and the Presidential Employment Stimulus Plan; 6.7 South African National Parks • The Committee congratulated SANParks for the unqualified audit opinion for the 2021/22 financial year; • The Committee raised a concern that the SANParks in Kruger National Park were not complying with the national Veld and Forest Fire Act, and the fires from the reserve were impacting livestock farmers and threatening their livelihoods; • The Committee was concerned about the argument that natural mortality was contributing to the decline in the decline of rhino population, while poaching was the main cause; • The Committee noted the net cash deficit that was mainly due to the decrease in government grant funding and other donations; • The Committee noted with concern the vacant management, fence
 monitors and ranger positions that were impacting the delivery of the mandate of SANParks; • The Committee noted with concern the contradictory information between Kruger National Park visitors and the Entity on waste management and the prevention of bin digging by baboons and the lack of sanctions against people who feed wildlife; • The Committee was concerned that the CEO position was advertised while the disciplinary process was not concluded; • The Committee expressed concern over the possibility that moving rhinos out of Kruger National Park would only be a temporary fix and would likely result in the spread of poaching to new places; • The Committee was concerned about the decline in the rhino population at Kruger National Park, but noted the reported increase in the rhino population in other parks; | 20 145 • The Committee noted that most of the revenue of SANParks came from tourism and the sector is recovering; • The Committee reiterated its position that SANParks, SANBI, the Marine Living Resource Fund and iSimangaliso should create a common outreach programme for children in rural schools to expose them to the opportunities available and provide bursaries, to fight poverty, inequality and unemployment.
6.8 Marine Living Resources Fund • The Committee noted the impact of stakeholder engagements on the re-introduction of the Aquaculture Development Bill; • The Committee noted that the Revenue Model for the MLRF and its strategy to increase fees for levies, permits, applications and harbour access was suspended in light of the prevailing economic climate; • The Committee noted the delayed allocation of fishing rights to small-scale fishers in the Western Cape while DFFE awaited the court's decision but sought confirmation on the Department’s readiness to allocate the rights should the court agree; • The Committee should be provided with an update on the fisheries violation database or register that was planned to be finalised at the end of the 2019/20 financial year.
• The high confiscations of abalone and West Coast rock lobsters seem to indicate that the Department is losing the war on poaching of the fisheries resources, as supported by scientific reports that these stocks are declining instead of recovering.

The Committee should be provided with a comprehensive report on why the applied methods are failing or, why are they not changed.

For example, why are working shifts not created for Fisheries Compliance Officers instead of having all FCO working office hours?
• In November 2017, the Department mentioned that they had commissioned a study to review the state of the marine fishing sector and answer questions such as employment in the industry, economic contribution, transformation, and other vital indicators.

The service provider was to complete the study during the 2019/20 financial year.

A copy of the Report from this commissioned study should be sent to the Committee.
| 21 146 7 CONCLUSION AND RECOMMENDATIONS The Portfolio Committee, in its conclusions, thanked officials from the AGSA, the Department and entities for presenting their reports, and more importantly the undertaking to improve performance and stewardship of the limited State resources.
Overall, the Portfolio Committee considers the performance of the Department unsatisfactory when considering that since the start of the new administration in the 2019/20 financial year, the Department has not met its 80 per cent performance target and is still receiving qualified audit outcomes.
On the contrary, the performance of the entities is satisfactory, although some entities have more work to do than others to achieve or exceed the 80 per cent performance target that is coupled with clean audit outcomes.
It is in this regard that the Committee recommends the following: 7.1 Recommendations (for the Committee) • The Committee welcomed the Auditor-General oversight and verification work on tyre waste management and the lack of measurements of waste diverted from landfill sites such as e-waste, lighting waste, and paper and packaging waste.
The Committee should closely monitor the implementation of the remedial actions to correct the findings on tyre waste management and waste diversion from landfill sites; • The Portfolio Committee should closely monitor the implementation of the recommendations of the AGSA directed at the Department and entities to ensure that all those recommendations are implemented to ensure desired results; • The Department should update the Committee on the current extent of temporary unplanted areas, the planting of trees outside forested areas, and the applicable audit evidence at the municipal level; • The Committee should ensure that the Department and entities present a unified awareness programme where they will reach out to rural communities and townships about career and bursary opportunities in the environmental sectors; • The Department should update the Committee on progress made in ensuring that the planned indicators and targets not only adhere to the SMART criteria but that they contribute to what the portfolio wants to achieve and is responsible for in terms of delivery; • The Committee should be briefed on the impacts of training, inspections, handover of cases to NPA, and enforcement targets that the Department often exceeds; • The Committee should focus on monitoring the performance improvements of the underperforming and underspending departmental Branches; | 22 147 • The Committee should monitor the operations and conditions of proclaimed fishing harbours to ensure their optimal performance and service to users; • The Committee should host a closed session with the Department and SANParks on the implementation of the Rhino Conservation Strategy, which includes the Rhino Management Plan.
7.2 Department of Planning, Monitoring and Evaluation • The DPME should brief the Committee in the next quarter on the Performance Report of DFFE and associated recommendations.
7.3 Department of Forestry, Fisheries and the Environment • The Executive Authority (Minister of Forestry, Fisheries and the Environment) should pay due attention to the Auditor-General’s findings and take such necessary action against staff for irregular expenditure and fruitless and wasteful expenditure in the Department and/or entities to ensure that public funds are used optimally for the greatest public good.
This is necessary in light of the Auditor-General’s determination that irregular expenditures would have been prevented, had effective and appropriate steps been taken to avert them; • The Executive Authority should ensure that repeat findings do not occur and that public funds are prudently and can be accounted for; • The Minister should ensure that her Department fully complies with DPSA’s SMART principles when planning and setting targets and should equally provide credible evidence to support the achievement of targets; • The Minister should comply with Sections 40(3)(a) and 55(2)(a) of the PFMA by ensuring that the Department and entities submit financial statements that are accurate and complete; • The Department should ensure that its Audit Action Plan is implemented to the latter to ensure that there is no room for any unclean audit opinion moving forward from the 2021/22 audit outcome.
The progress that the Department makes in this regard should be presented to the Committee every quarter; and • Weaknesses in internal control systems must be strengthened to prevent, detected and curtail misstatements; • The Department should send a copy of the Status Quo Report of Food Waste and Loss across the value chain; | 23 148 • The Department should provide the Committee with the breakdown of each environmental programme (Working for Programmes), including their status, locations, contact people, and associated costs and statistics; • The Committee noted that the Department will send the report on the cases referred to the NPA, their status and conviction rate since the start of the sixth administration; • The Minister should ensure that the transferred biological assets do not contribute to audit regressions as was the case in the past; • The Department should provide the Committee with the State of Marine Protected Areas report, including whether they are functional, allocated budgets for enforcement, adopted governance model, and assessed indicators (social, economic, ecological, biological, etc.
); and • While the Department is not directly responsible for job creation and sector growth, the policies and programmes should contribute and be assessed.

The Minister should initiate discussions with StatSA and DPME to track the impact of the departmental policies or programmes and report to Parliament.
7.4 iSimangaliso Wetland Park Authority • The Committee should be provided with a funding and implementation plan from the HLP Report; • iSimangaliso to send a report to the Committee on the area (hectares) affected by alien species and plans to reduce it; • The Entity should holistically implement its Audit Action Plan to ensure that the outstanding audit matter identified by the Auditor-General is addressed for the Entity to obtain a clean audit outcome at the end of the running financial year.
7.5 South African National Biodiversity Institute • The Institute should submit a report to the Committee on the race and gender composition of its bursary beneficiaries and localities where they are from; • SANBI should update the Committee on progress made on refurbishing and maintenance of infrastructure in its national botanical gardens, but more so at the National Zoological Gardens in Pretoria; and • SANBI should provide the Committee with a plan or progress report for improving the status of venues that obtained average green star ratings to improve the rating in the future.
| 24 149 7.6 South African National Parks • The Committee should be provided plans on the rollout of lifestyle audits or polygraphs testing; • SANParks should submit a progress report on land claims in Kruger park and other parks; • SANParks must submit to the Committee a submit a list of the animals that had been translocated to Mozambique; • The Committee directed SANParks, MLRF, SANBI, SAWS and iSimangaliso to create a common outreach programme for children in rural schools should be exposed to the opportunities available and provide bursaries, to fight poverty, inequality and unemployment.
• The Committee needed a progress report on the engagements with communities that had blockaded roads leading to the park; and • The Committee should be provided with a report on the Presidential Youth Employment initiative and responses that the programme contributes to youth unemployment.
7.7 South African Weather Service • The Committee should be provided with a comprehensive report on the status of air quality and weather monitoring stations; and • SAWS should upgrade the weather forecasting infrastructure or the processing of collected data to communicate accurate and locally-relevant fire danger ratings, as opposed to the outdated Lowveld Fire Danger Index to aid adequate fires preparedness.
7.8 Marine Living Resources Fund • The Minister should capacitate the Fisheries Branch to facilitate the effective allocation of small-scale fishing rights and curb the slow progress to prevent illegal, unreported and unregulated fishing activities; • There should be proper support programmes for small-scale fishers to ensure that the fishers derive livelihoods and economic benefits from fishing rights, including improved market access; | 25 150 • The finalisation and implementation of the alternative livelihood strategy in fishing communities where job opportunities are already scarce; • The Committee should be provided with a status report of all the fishing harbours, including allocated budgets, removal of sunken vessels, dredging, repairing and replacements of infrastructure on the shores, security, contract management, joint plan by the DPWI and DFFE to manage the harbour and its activities, etc.
; and • The Committee should be provided with a report on the volumes of the confiscated fisheries resources, the amount auctioned, their current market value, the volume in storage and the condition.

The Minister should submit a detailed response to the Committee on all the recommendations made in this report within 90 days after the adoption of this report by the National Assembly.
The Portfolio Committee on Environment, Forestry and Fisheries recommends the adoption of this Budgetary Review and Recommendation Report (BRRR) for the Department of Forestry, Fisheries and Environment and its Public Entities for the 2021/22 financial year.

Report to be considered.

| 26 151 4.
THE BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON COMMUNICATIONS, DATED 18 OCTOBER 2022 The Portfolio Committee on Communications (PCC), having considered the financial and non- financial performance for the year 2021/22 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 of South Africa (NEMISA), the Universal Service and Access Agency of South Africa (USAASA)/Universal Service Fund (USAF), the South African Postal Services (SAPO); South African Broadcasting Corporation SOC Limited (SABC) and .ZADNA, and the State Information Technology Agency (SITA) on 11 October 2022 reports as follows: The PostBank and Broadband Infraco (BBI) had not been tabled by the time this report was adopted.
1.

Introduction In terms of Chapter 4 of the Constitution of the Republic of South Africa, Act 108 of 1996 (the Constitution) gives a mandate to Portfolio Committees to legislate, conduct oversight over the Executive Authority and also facilitate public participation.
1.1 Purpose of the Report The Money Bills Amendment Procedure and Related Matters Act 9 of 2009 sets out the process that allows Parliament to make recommendations to the Minister of Finance as well as the cabinet Minister responsible for the vote to ensure the effectiveness and efficiency of the use of resources to ensure optimal service delivery.
According to Section 5 of the Money Bills Amendment Procedure and Related Matters Act, the National Assembly, through its Committees, must annually assess the performance of each national Department.

The Committee must submit an annual Budgetary Review and Recommendation Report (BRRR) for the Department, as it falls under its oversight responsibilities, for tabling in the National Assembly.
This process happens every October of each year, where the Committee assesses service delivery performance given available 152 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 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 general public concerning matters under their control.

2.
2.

Role and Mandate of the Committee For fiscal accountability, government departments must table their annual reports 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: • Consider legislation referred to it; • Exercise oversight over the Department and its entities; • Consider international agreements referred to it; • Consider the Budget Votes 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.

153 3.
153 3.

Methodology For the period under review, the Committee, in exercising its oversight role, considered the 2021/22 Annual Reports and Financial Statements of the Department; Sentech, SAPO, .ZADNA, SABC, FPB, ICASA, SITA, USAASA/USAF and NEMISA.

The Auditor-General of South Africa (AGSA) also presented the audit outcomes of the Department and its entities for the 202 1/22 Financial Year.
The Committee also considered the 2021 State-of-the-Nation Address (SoNA), the National Development Plan (NDP), Committee meetings recommendations, oversight reports (from other committees of Parliament), 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.
4.

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 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.
4.1 Impacts and Outcomes DCDT impact statement is: Digitally enabled citizens with secure and affordable universal access.

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, socialise, access government services, become economically active and hold those in power accountable.
However, equally important is that such access is secure and affordable to all citizens irrespective of race, class, or geographic location.

The Department 154 will therefore work towards digitally enabled citizens with secure and affordable universal access to digital technologies and services as a key means towards socio-economic growth.

The following diagram illustrates the Impact Statement of DCDT and Outcomes as per the Strategic Plan.
The following is the progress made towards achieving the strategic plan's five- year targets in relation to the outcome indicators that highlight significant achievements regarding the contribution toward the 2019-24 Medium Term Strategic Framework.

The progress in achieving these strategic outcomes will be discussed in Section 7 of this report.

5.
5.

Service Delivery & Organisational Environment During the reporting period, DCDT revised a number of targets on the 2021/22 Annual Performance Plan to align with the new priorities to ensure that the mandate of DCDT is fully achieved, owing to the budget cuts and fiscal constraints.

The 2021/22 Annual Report covers the initial Annual Performance Plan, which was in effect in quarters one, two and three, and the revised APP, which was in effect from quarter four.
During the reporting period of the 2021/22 financial year, the government had to reprioritise its budget and related programmes considering COVID-19.

Furthermore, there was Cabinet reshuffling in which the Department had a newly appointed Minister and the Deputy Minister.
Over and above the budget cut, which impacted planned targets, the revision of the 2021/22 Annual Performance Plan had to also take into consideration the fact that during Quarter three of the 2020/21 financial year, the Executive Authority prioritised several projects such as the 155 SA Connect which needed to take a new direction as the cabinet approved a revised SA Connect implementation plan, set to connect South Africa in three years.
The previous work done by DCDT on Feasibility Study for SA Connect Phase 2 required 57 billion, which State could not fund.

The revised model requires state capital funding of 2.5 billion and will ensure that Government achieves its target of 80 per cent broadband access by 2024.

Furthermore, the delivery of the Broadcasting Digital Migration (BDM) projects target, which deals with subsidised digital television, was reviewed, following Cabinet approval of the revised implementation.
The new target consolidates the work towards Analogue Switch-Off by 31 March 2022, due to the litigation, the switch off date was moved to 30 June 2022, which led to the target not being achieved during the reporting period.

In terms of the performance against its 2021/22 Annual Performance Plan, the Department planned to achieve 35 targets.
Of the 35 planned targets, the Department was able to achieve 32 targets which equates to 91 per cent achievement, as depicted in the graphs on the next page: The 2021/22 financial year was the second year of implementation of the DCDT 2020-2025 Strategic Plan and the 2021/22 Annual Performance Plan.
During this reporting period, the Department continued functioning by an interim organisational structure while it focused on developing an organisational structure aligned to the new mandate of the Department (DCDT).

The organisational structure will be finalised during the 2022/23 financial year and implemented.

In terms of acquiring relevant skills to deliver on its mandate, the DCDT undertook the verification of competencies exercise followed by a structured and comprehensive skills audit.
156 Furthermore, the Department has in place a Workplace Skills Plan (WSP) aimed at capacitating employees with requisite skills aligned to the mandate and strategy.

The DCDT is currently prioritising the implementation of the Digital Transformation Strategy with a focus on workflow management systems as we move towards a paperless organisation.
This programme will continue within the DCDT through the digitisation of additional business processes and systems as part of implementing the Digital Transformation Strategy.

The DCDT has already consolidated some of the processes and systems, including reviewing existing operational policies and procedures.

Moreover, the Department will ensure the mainstreaming of critical issues related to designated groups through the Chief Directorate: Gender, Disability, Youth and Children (GDYC).
This Unit will also ensure that all Departmental programmes, policies, and processes are inclusive of issues related to such designated groups and will monitor the Departmental and SOC's Gender, Disability, Youth and Children Responsiveness programmes in line with National targets.

With regard to human resource-related matters, as at end of March 2022, the Department had a total head count of 333 staff on its establishment.
290 of these posts were filled, and 43 posts were vacant and funded which equates to a 12.9 per cent vacancy rate.

The Department was allocated a total adjusted and exclusively earmarked amount of R295 831 million for the compensation of employees in the 2021/22 financial year.

At the end of March 2022, the Department had spent R271 487 million of its CoE budget.
The main reason for the underspending was the non-filling of vacancies as a result of a moratorium on the filling of vacant positions due to the revision of the organisational structure.

However, some appointments were made additional to the establishment during the 2021/22 financial year so as to ensure ongoing operations and achievements of strategic priorities.
5.1 Key Policy Developments and Legislative Changes No major changes to relevant policies or legislation affected the Department's operations during the period under review.

It must, however, be noted that following the May 2019 National Elections, the President pronounced the establishment of the National 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 in terms of Section 97 of the Constitution.
Based on the Presidential Proclamation, the revised legislative mandate applies to the newly established Department of Communications and 157 Digital Technologies (DCDT), which came into operation on 01 April 2020 and will inform the operations of the DCDT going forward.

6.

Mandate of the Department In line with such values, the National Development Plan indicates that by 2030, ICTs will underpin the development of dynamic information society and knowledge economy that is more inclusive and prosperous.
A seamless information infrastructure will meet the needs of citizens, businesses and the public sector, providing access to the wide range of services required for effective economic and social participation – at a cost and quality at least equal to South Africa’s competitors.

DCDT will therefore play a specific role in fostering broader economic and social participation by all citizens through digital transformation underpinned by the Fourth Industrial Revolution (4IR).
The Department will focus on creating a South Africa where citizens can enjoy more significant economic and social prosperity, comfort, and higher levels of health, well-being and safety through levering the 4IR.

The benefits that come with the adoption of these advanced 4IR technologies bring both economic and social advantages and benefits, transforming how we relate as individuals, groups, and organisations across the globe.
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, Independent Communications Authority of South Africa Act No.

13 of 2000, South African Post Bank 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.
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 National Department of Communications and Digital Technologies.
Accordingly, the Presidential Proclamation in Government Gazette dated 14 August 2019 (President Minute: 158 372) confirmed the transfer of administration, powers and functions entrusted by legislation to the Minister of Communication in terms of Section 97 of the Constitution.

Accordingly, the mandate of the DCDT is as follows: 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.

7.
7.

Achievement of Institutional Impacts and Outcomes Enabling Digital Transformation Policies and Strategies With regards to the progress on the implementation of the outcome indicators related to the Enabling Digital Transformation Policies and Strategies, the Department has revised the draft South African Post Office SOC Ltd Amendment Bill and submitted it to Cabinet for public consultation, approval and the Postbank Amendment Bill was introduced in Parliament.
The Data & Cloud Policy, which was approved by Cabinet for public comments and subsequently published for public comments through a gazette on 1 April 2021, has been submitted for approval to Minister during this reporting period.

The White Paper on the Audio and Audio- Visual Content Services Policy was revised.

Furthermore, a Rapid Deployment Policy was also finalised.

The Department developed and approved the Digital Economy Masterplan during the 2020/21 reporting period.
Furthermore, a report on coordinating the implementation of identified priority areas of the Digital Economy Masterplan was generated and approved during the 2021/22 Financial Year.

The Department has developed the Integrated report on Digital Economy Programmes.
With regards to advancing the country's 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 through the SADC 6th WRC Preparatory meeting and the ATU 3rd WRC preparatory meeting.
Moreover, South Africa also hosted the 4th ATU APM for the WRC in the 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.

The Department has approved the Business Cases for the State Digital Infrastructure Company Bill and the State Digital Services Company Bill.
The focus for the next financial will be on developing and approving three 159 country positions to support the National ICT priorities focusing on BRICS, ITU-PP 22 and WTDC.

In terms of the PC4IR Report, the Department coordinated the Country Report for 4IR development 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 implementing the recommendations stemming from the PC4IR Report.

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

During the reporting period, the PC4IR Strategic Implementation Plan was submitted to 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 on contributing to the outcomes of creating enabling Digital Transformation Policies and Strategies.

Increasing Access to secure Digital Infrastructure As part of increasing access to secure Digital infrastructure, the Department is responsible for increasing broadband connectivity.
Therefore, in the 2020/21 reporting period, the Department concluded the SA Connect Feasibility Study to facilitate broadband connectivity to remaining government facilities.

The feasibility study report for Phase 2 funding was also 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 previous work done by the Department of Feasibility Study for SA Connect Phase 2 required 57 billion, which the state could not fund.

The Revised model required state capital funding of 2.5 billion and was to ensure that Government achieves its target of 80 per cent broadband access by 2024.
Furthermore, the Department has established the Project Management Office for SA Connect Phase 2; the project team has been appointed, which consists of representation from the entities within the portfolio and the Department to implement the revised SA Connect Phase 2 Model.

The Department has also continued monitoring and sustaining the provision of broadband services to all 970 connected sites.
In the future, the Department will coordinate the implementation of the revised SA Connect Model on the funded sites.

During the 2021/22 reporting period the preliminary technical and regulatory studies were conducted to inform draft SA’s position for WRC-23.

The focus for 2022/23 will be on 160 developing Second Draft SA Preliminary Positions for WRC-23.
Furthermore, the Department will develop the Policy Direction for 5G deployment and monitor the implementation of social obligations for new spectrum licence holders.

With regards to the roll out of the subsidized digital television installations, the Department continued with the coordination of the Switch-off of SABC analogue television transmitters across provinces.
However, Broadcasting Digital Migration (BDM) projects target which deals with subsidised digital television was reviewed, following Cabinet approval of the revised implementation.

The new target consolidates the work towards Analogue Switch-Off by 31 March 2022, which the deadline was subsequently extended to end of June 2022 due to litigation.
Going forward the Department will focus on coordinating the Household Migration and Analogue Switch-off for the Broadcasting Digital Migration for households registered after 31 October 2021.

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.
Transformed Digital Society To have a transformed digital Society, the Department has facilitated the implementation of the National e-Government Strategy and Roadmap, towards digitalization of government services.

The Department focused on establishing the National e-Government Programme Governance Structure and monitored the prioritized key public facing services automation (integrating AI and Big Data interventions).
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 Coursera online digital skills training in the 2020/21 reporting period.
For the 2021/22 reporting period with regards to the implementation of the Digital and Future Skills Strategy, the Department has, through NEMISA facilitated and monitored the training of young people in pre-entry level digital skills, Data Science, Analytics, and Machine Learning.

The Department coordinated and reported on Partnership Programmes initiatives to support the Digital Economy.

Internal engagements to identify priority programmes of DCDT were held with both ICT Policy.
161 Development and Research and 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 supported and contributed to the SA Investment Conference by advancing the ICT investment initiatives, and the Outcomes report was developed and approved.

Implementing the National e-Government Strategy and Roadmap towards the digitalisation of government services and increasing the uptake and usage of digital technologies contribute to a transformed digital society in place.

High Performing portfolio to enable achievement of their respective mandates.
With efforts to achieve a high-performing portfolio to achieve their respective mandate, the Department has digitised its processes and systems, developed the Integrated DCDT Digital Transformation Strategy, and monitored the implementation of priority interventions.

The Business needs analysis focusing on prioritised interventions was also conducted.
Furthermore, DCDT 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 implemented and monitored the Collaboration platform rollout plan as part of the Digital Transformation priority intervention.
Regarding the Approved Strategic Plans and APPs of SOE, the Department continues to analyse Quarterly SOE Performance Reports and submit the Reports to Minister.

The Department also undertook an analysis of the quarterly performance reports of the entities and an analysis of the APPs/ Strategic/ Corporate Plans that were submitted by entities.

Furthermore, the Department reviewed 2021/22 Shareholder Compacts of Schedule 2 and 3B entities.
Regarding the Performance Management System for ICASA Councillors, the Department tabled the Performance Management System for ICASA Councillors in Parliament.

Going forward, the Department will facilitate the monitoring and evaluation of the Performance Management System for ICASA Councillors.

As per the government requirements, the Department also developed and coordinated the Implementation Plan for District Development Model.
Furthermore, monitored the Departmental and SOCs Gender, Disability, Youth and Children (GDYC) Responsiveness programmes in line with National targets.

162 The finalisation of the DCDT organisational structure aligned mandate and strategy, as well as digitised process and systems, will ensure a high-performing organisation as all business units will focus on digitally delivering services aligned to the organisation's mandate.
Indicators related to providing oversight on our SOEs will contribute towards to outcomes of a high- performing portfolio with a focus on performance against planned indicators and accountability in this regard.

8.

Performance Information The Department achieved 32 out of the 35 annual targets committed to during the 2021/22 financial year.

This equals 91 per cent of the planned targets achieved.

It is also a 91.9 per cent expenditure against the budget allocation.
100 per cent of transfers paid to the entities in line with the draw-down schedule.
Performance by Programme The activities of the Department are structured into six programmes, which are: Programme 1: Administration Programme 2: ICT International Relations and Affairs Programme 3: ICT Policy Development and Research Programme 4: ICT Enterprise and Public Entity Oversight Programme 5: ICT Infrastructure Development And Support Programme 6: ICT Information Society and Capacity Development 8.1 Programme 1: Administration The purpose of Programme 1 is to provide strategic leadership, management and support services to the Department.
For the period under review, this programme had one strategic 163 objective, which is to create a high-performing organisation to enable the achievement of the Department’s mandate.

Institutional outcome for Programme 1: Administration is a high-performing Portfolio to enable the achievement of their respective mandates.

The Department, in this regard, was able to develop and implement the Workplace Skills Plan (WSP), aligned with the DCDT mandate.
Furthermore, Programme 1: Administration, implemented collaborated platform as part of the Digital Transformation priority intervention and coordinated the implemented Annual 2021/22 Communications Plan.

Such achievements contributed to the outcome of a high-performing organisation as all business units have well- capacitated staff and are focussed on digitally delivering services aligned to the organisation's mandate.
The Department has ensured the mainstreaming of critical issues related to designated groups through the Chief Directorate: Gender, Disability, Youth and Children.

During the reporting period, 50 per cent of the senior management in the Department are women.
Reporting on the Institutional Response to the COVID-19 Pandemic The Department issued multiple Directions on the Risk-Adjusted Strategy for the Communications and Digital Technologies Sector under Regulation 4(10) of the Regulations made under Section 27(2) of the Disaster Management Act, 2002 (Act No.

57 of 2002).
57 of 2002).

In order to facilitate the implementation of the Directions across the entire Sector, a Programme Management Office was still functional as a coordinating mechanism through which the Department, together with the industry service providers, facilitated the provisioning of services so as to ensure smooth operations of the communications industry as essential services during the disaster period.

The composition of the COVID-19 Programme Management Office consisted of Departmental officials.
8.1.1 Areas of Underperformance There were no areas of underperformance in this programme.

8.1.2 Programme Performance Against Budgets Spending was R228.4 million in the 2021/22 Financial Year and R215.9 million in the 2020/21 Financial Year.

Spending under goods and services increased from R72 million in 2020/21 to R94.1 million in 2021/22 financial year.

Spending on computer services increased from R6 million in 2020/21 to R19 million 2021/22.
Travel and subsistence increased from R5.1 million 164 in 2020/21 to R7.6 million in the year under review due to increased activity since the easing of the 2020 nationwide lock regulations as announced by the president of the country.

Spending rate under this program is at 88.7 per cent.

• Underspending in compensation of employees as a result of unfilled posts within the branch.

The process of finalising and developing the organisational structure has commenced.
• Underspending under Payment for Capital Assets, mainly under software is because the Integrated Workflow management system was not procured due to reasons stated by SITA for the requirement to deviate from IFMS project.

The digital migration project commenced during the financial year but was not finalised at year-end.

• Underspending was impacted by less travel in the Branch as most meetings were held virtually.
8.2 Programme 2: ICT International Relations and Affairs The purpose of Programme 2 is to ensure alignment between South Africa’s foreign policy and international activities in the field of ICT.

Institutional outcomes for Programme 2: Enabling Digital Transformation Policies and Strategies; Transformed Digital Society; and Increased Access to Secure Digital Infrastructure.
The Department in its effort to implement the outcome of Enabling Digital Transformation Policies and Strategies has developed 2 Country Positions to support the National ICT priorities focused on BRICS and WTDC-21.

Furthermore, the Department coordinated the implementation of the International Relations and Engagement Strategy and approved the International Engagement Strategy and has also signed a partnership agreement focusing on the Digital Economy.
The development and advancement of Country Positions as well as the related outcomes informed the development of enabling policies and strategies.

Furthermore, partnership programmes to support the Digital Economy initiatives focused on contributing towards the outcome of a transformed digital society.
Furthermore, to contribute to the outcome of Increased Access to Secure Digital Infrastructure, the Department developed the National BIFN-S priority Programme focusing on Broadband Infrastructure Roll-out, Artificial Intelligence and Cyber-security.

165 This programme, in its response to prioritising women, youth and persons with disabilities, has ensured youth participation in International fora, working with Progressive Black ICT Forum, an association of ICT SMMEs.
Reporting on the Institutional Response to the COVID-19 Pandemic The Department issued multiple Directions on the Risk-Adjusted Strategy for the Communications and Digital Technologies Sector under Regulation 4(10) of the Regulations made under Section 27(2) of the Disaster Management Act, 2002 (Act No.

57 of 2002).
57 of 2002).

In order to facilitate the implementation of the Directions across the entire Sector, a Programme Management Office was still functional as a coordinating mechanism through which the Department, together with the industry service providers, facilitated the provisioning of services to ensure smooth operations of the communications industry as essential services during the disaster period.
The composition of the COVID-19 Programme Management Office consisted of Departmental officials from all six Programmes of the Department.

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 R54.6 million in the 2021/22 Financial Year and R61.5 million in the 2020/21 Financial Year.
There was a decrease in transfers and subsidies from R39.5 million in 2020/21 to R32.1 million in the 2021/22 financial year.

The variance was mainly due to low exchange rates as the rand was stronger during the transfer of funds for foreign payment to the International Organisation for membership fees.

Also the decline was due to non-transfer to Commonwealth Telecommunications Organisation (CTO) due to the government resignation to participate in that space.
However, spending under goods and services increased from R1.9 million in 2020/21 to R3 million in 2021/22 financial year.

Spending in consultation fees increased from R-Nil in 2020/21 to R1.2 million in the year under review due to increase in activity since the easing of 2020 nationwide lock down regulations as announced by the President of the country to curb the spread of the corona virus.

Spending rate under this program is at 92.7 per cent.
Underspending under goods and services is mainly under travel and subsistence as it is impacted by virtual webinar instead of workshop.

166 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 accelerated and shared economic growth.
Develop strategies that increase the adoption and use of ICT by the majority of South Africans to bridge the digital divide.

Institutional outcome for Programme 3: ICT Policy Development and Research is enabling Digital transformation policies and strategies.

As its contribution to the Outcome related to “Enabling Digital transformation policies and strategies,” the programme was able to develop draft policies as well as coordinate the implementation of the Digital Economy Masterplan.
Furthermore, a Rapid Deployment Policy was finalised and submitted to Minister for approval.

Such achievements contribute towards creating and enabling digital transformation policies and strategies.

In response to prioritising women, youth and persons with disabilities the programme ensured that during the consultation workshops on the White Paper on the Audio- and Audio-Visual Content Services, more than 50 per cent of participants were women, youth and persons with disabilities.
Reporting on the Institutional Response to the COVID-19 Pandemic The Department issued multiple Directions on the Risk-Adjusted Strategy for the Communications and Digital Technologies Sector under Regulation 4(10) of the Regulations made under Section 27(2) of the Disaster Management Act, 2002 (Act No.

57 of 2002).
57 of 2002).

In order to facilitate the implementation of the Directions across the entire Sector, a Programme Management Office was still functional as a coordinating mechanism, through which the Department, together with the industry service providers, facilitated the provisioning of services so as to ensure smooth operations of the communications industry as essential services during the disaster period.
The composition of the COVID-19 Programme Management Office consisted of Departmental officials from all six Programmes of the Department.

8.3.1 Areas of Underperformance Not applicable as all planned targets were achieved within Programme 3.

8.3.2 Programme Performance Against Budgets Spending was R29.6 million in the 2021/22 Financial Year and R36.1 million in the 2020/21 Financial Year.
Spending under goods and services declined from R2.4 million in 2020/21 to 167 R1.7 million in 2021/22 Financial Year.

Consultants and business advisory decreased from R170 thousand in 2020/21 to R-Nil in 2021/22 and spending in advertising also decreased from R539 thousand in 2020/21 to R154 thousand in the year under review due to continuous slow spending as a result of the nationwide lockdown.

The spending rate under this program is 59.2 per cent.
• Underspending in compensation of employees is as a result of unfilled posts within the branch.

The process of finalising and developing the organisational structure has commenced.

• Underspending on Goods and Services is due to delays in drafting Bills and Policies due to a change in direction of the Department.

• Underspending on Goods and Services as a result of work-from-home strategy which caused slow spending on Travelling and Subsistence and Advertising costs.
8.4 Programme 4: ICT Enterprise Development and Public Entities Oversight The purpose of Programme 4 is to oversee and manage the government’s shareholding interest in the ICT public entities and state-owned companies.

Facilitate the growth and development of small, medium, and micro enterprises in the ICT sector.

Institutional outcomes for Programme 4: High-performing Portfolio to enable achievement of their respective mandates and enabling digital transformation policies and strategies.
Achievement has been made with regard to the Outcome of “High performing Portfolio to enable achievement of their respective mandates.” 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 coordinate the implementation of recommendations from the analysis of SOE Performance Reports and facilitated the tabling of submitted Annual Performance Plans of SOEs in line with the MTSF.

Furthermore, Performance Management System for ICASA Councillors was submitted in Parliament.
With regards to the Outcome of “Enabling Digital transformation policies and strategies,” the Department introduced the Postbank Amendment Bill to Parliament.

Furthermore, developed and approved the Business Cases for both the State Digital Infrastructure Company Bill and State Digital Services Company.
Through its stringent oversight of the State-Owned Entities and the development of relevant legislation, the Programme contributed to the outcomes related 168 to creating a High performing Portfolio to enable the achievement of their respective mandates and Enabling Digital transformation policies and strategies.
In response to prioritising women, youth and persons with disabilities the programme ensured that the Entities were aligned in terms of gender representation and compliance with the Framework on Gender, Responsiveness, Budgeting, Planning, Monitoring, Evaluation and Auditing.
Reporting on the Institutional Response to the COVID-19 Pandemic The Department issued multiple Directions on the Risk-Adjusted Strategy for the Communications and Digital Technologies Sector under Regulation 4(10) of the Regulations made under Section 27(2) of the Disaster Management Act, 2002 (Act No.

57 of 2002).
57 of 2002).

In order to facilitate the implementation of the Directions across the entire Sector, a Programme Management Office was still functional as a coordinating mechanism through which the Department, together with the industry service providers, facilitated the provisioning of services to ensure smooth operations of the communications industry as essential services during the disaster period.
The composition of the COVID-19 Programme Management Office consisted of Departmental officials from all six Programmes of the Department.

8.4.1 Areas of Underperformance Not applicable as all planned targets were achieved within Programme 4.

8.4.2 Programme Performance Against Budgets Spending was R1.7 billion in the 2021/22 Financial Year and R1.8 billion in the 2020/21 Financial Year.
Spending under goods and services increased from R1.6 million in 2020/21 to R2.7 million in the 2021/22 Financial Year.

Advertising costs increased from R Nil in 2020/21 to R1.2 million in the year under review due to continuous slow spending due to the nationwide lockdown.

The spending rate under this program is 99.7 per cent.

Underspending under goods and services is due to delays in drafting of the Bills for the State Digital Infrastructure Company (SDIC) and the State Digital Services Company (SDSC).
The rationalisation project in the Department has taken a different direction, the funds will no longer be spent on the service provider as planned since a legal unit now leads the project.

8.5 Programme 5: ICT Infrastructure Development & Support 169 The purpose of Programme 5 is to promote investment in robust, reliable, secure, and affordable ICT infrastructure that supports the provision of multiple applications and services.
Institutional outcomes for Programme 5: ICT Infrastructure Development and Support include increased access to secure Digital Infrastructure and enabling Digital transformation policies and strategies.

The Department’s Programme 5 contributed to the Outcome of “Increased access to secure Digital Infrastructure” in this regard, preliminary technical and regulatory studies were conducted to inform the draft SA’s position for WRC-23.
With regards to broadband, the Department during the reporting period, the revised SA Connect Phase 2 model was approved by the Cabinet, and the provision of broadband services to 970 connected sites was sustained.

Regarding the Outcome of “Enabling Digital Transformation policies and strategies” although the progress was not achieved as planned during the reporting period, the Department coordinated the Switch-off of SABC analogue television transmitters across provinces by 31 March 2022.
The target could not be achieved due to litigation, and the new deadline has been extended to the end of June 2022.

However, the progress contributed to the outcomes related to Increased access to secure Digital Infrastructure and Enabling Digital Transformation policies and strategies, respectively.
In response to prioritising women, youth and persons with disabilities, the programme ensured that during the implementation of the Broadcasting Digital Migration Programme, 40 per cent of the total number of set-top-box installers were women.

This programme also had participation by youth.


Reporting on the Institutional Response to the COVID-19 Pandemic The Department issued multiple Directions on the Risk-Adjusted Strategy for the Communications and Digital Technologies Sector under Regulation 4(10) of the Regulations made under Section 27(2) of the Disaster Management Act, 2002 (Act No.

57 of 2002).
57 of 2002).

In order to facilitate the implementation of the Directions across the entire Sector, a Programme Management Office was still functional as a coordinating mechanism through which the Department, together with the industry service providers, facilitated the provisioning of services to ensure smooth operations of the communications industry as essential services during the disaster period.
The composition of the COVID-19 Programme Management Office consisted of Departmental officials from all six Programmes of the Department.

170 8.5.1 Areas of Underperformance The Department acknowledges its areas of under-performance related to the target of Switch- off of SABC analogue television transmitters coordinated across all provinces by 31 March 2022, which could not be achieved due to litigation against the Department.

As a result, the deadline was extended to the end of June 2022.
The Department will ensure the finalisation of the coordination of the switch-off of SABC analogue television transmitters across all provinces in the 2022/23 Financial Year.

The completion of the analogue switch-off will have a huge impact on the accessibility of digital content.

8.5.2 Programme Performance Against Budgets Spending was R1.513 billion in the 2021/22 Financial Year and R1.017 billion in the 2020/21 Financial Year.
Spending in goods and services decreased from R217.3 million in 2020/21 to R186.3 million in the 2021/22 Financial Year.

Spending in Travel and subsistence increased from R2.9 million in 2020/21 to R5.6 million in the year under review.

The transfer to public entities increased from R765.2 million in 2020/21 to R1.291 billion in the 2021/22 Financial Year.

These transfers are for the Digital Terrestrial Television Migration project.
The variance is mainly due to funds transferred to Universal Service and Access Fund for Broadcasting digital migration project (BDM).

The spending rate under this program is at 85.9 per cent.
• Underspending under goods and services is mainly due to R200 million appropriated during adjustment estimates for the Presidential Employment Stimulus not spent as the process to appoint BBI as a designated fund manager for the Broadband Access Fund for which the funds have been allocated was not concluded at the end of the current financial year.

The rollover request was submitted to National Treasury in this regard.
The Department has yet to formalise the appointment in line with the due governance process.

• The underspending is also due to a request for deviation submitted to National Treasury to appoint CSIR as a strategic partner for hosting the Cybersecurity hub; the response from National Treasury was received in the new Financial Year.
• The underspending on SA Connect Phase 1 was due to non-payment of services that did not meet the Service Level Agreement (SLA)Performance requirements, in line with the contractual agreement between DCDT and the implementing agencies.

171 8.6 Programme 6: ICT Information Society and Capacity Development The purpose of Programme 6 is to develop and implement strategies to build capabilities to bridge the digital divide.
Institutional outcomes for Programme 6: ICT Information Society and Capacity Development include a transformed digital society, enabling Digital transformation policies and strategies, and a high-performing Portfolio to achieve their respective mandates.

The Department’s Programme 6 contributed to the Outcome of a “Transformed digital society.“ In this regard, the Department monitored the implementation of the National e-Government Strategy and Roadmap towards digitalising government services.
The Department’s Programme 6 contributed to the Outcome of a “Transformed digital society.“ In this regard, the Department coordinated the implementation of the National e-Government Strategy and Roadmap towards digitalising government services.

The implementation of the Digital and Future Skills Implementation Programme was also facilitated and monitored.
Programme 6 also contributed to the Outcome of “Enabling Digital transformation policies and strategies.” During the reporting period, the Department has not achieved the target of submitting the Framework on Digital Transformation and Digital Inclusion for approval and developing the implementation plan as there were delays in the approval process.
This Programme also contributed to the Outcome “High performing Portfolio to enable achievement of their respective mandates“ by monitoring the Departmental and SOCs Gender, Disability, Youth and Children (GDYC) Responsiveness programmes in line with National targets and coordinated the implementation of Stakeholder Relations Strategy.
In response to prioritising women, youth and persons with disabilities, the programme ensured that training the Entities are aligned in terms of gender representation and compliance with the Framework on Gender, Responsiveness, Budgeting, Planning, Monitoring, Evaluation and Auditing.
Reporting on the Institutional Response to the COVID-19 Pandemic The Department issued multiple Directions on the Risk-Adjusted Strategy for the Communications and Digital Technologies Sector under Regulation 4(10) of the Regulations made under Section 27(2) of the Disaster Management Act, 2002 (Act No.

57 of 2002).
57 of 2002).

In order 172 to facilitate the implementation of the Directions across the entire Sector, a Programme Management Office was still functional as a coordinating mechanism through which the Department, together with the industry service providers, facilitated the provisioning of services to ensure smooth operations of the communications industry as essential services during the disaster period.
The composition of the COVID-19 Programme Management Office consisted of Departmental officials from all six Programmes of the Department.

8.6.1 Areas of Underperformance The Department acknowledges its areas of under-performance related to the target of Framework on Digital Transformation and Digital Inclusion.
It’s implementation plan and on the target of the development of the DCDT integrated plan of action in support of the implementation of National Strategic Plan (NSP) on gender-based violence which could not be achieved due to delayed inputs from the stakeholders.

The Department will ensure that both targets are approved and finalised in the 2022/2023 Financial Year.
8.6.2 Programme Performance Against Budgets Spending was R65.1 million in the 2021/22 Financial Year and R49.8 million in the 2020/21 Financial Year.

Spending under goods and services increased from R9.5 million in 2020/21 to R23.1 million in 2021/22 Financial Year.

Consultants and business advisory increased from R912 thousand in 2020/21 to R6.6 million in 2021/22.
The major variance is due to payment made to SITA for National e-Government programme and spending in Travel and subsistence increased from R1 million in 2020/21 to R2.6 million in the year under review due to increased activity since the easing of 2020 nationwide lock down regulations as announced by the President of the country to curb the spread of the corona virus.

Spending rate under this program is at 87.4 per cent.
• Underspending in compensation of employees as a result of unfilled posts within the branch.

The process of finalizing and developing the organizational structure has commenced.

• Underspending on Goods and Services is due to Underspending on Goods and Services is due to delays in outstanding invoices for the National e-Government Portal.

173 9.
173 9.

Overview and Assessment of Financial Performance of the Department The Department of Communications and Digital Technologies had a total adjusted appropriation of R3.844 billion for the 2021/22 financial year.

The adjusted allocation for 2021/22 was increased by R603.5 million (15.5%) compared to the previous financial year's allocation of R3.280 billion.

Of the total allocation, transfers and subsidies amount to R2.978 billion (77%) of the budget.
These transfers were mainly to departmental agencies and accounts and an allocation for digital broadcasting migration.

The total revenue collected as of 31 March 2022 amounts to R1.5 million against the adjusted estimates of R1.2 million.

The overcollection of revenue results from bursaries' recovery due to a breach of contract for an official who resigned during the last quarter of the financial year.
Included in the total revenue is interest received from SABC on loan No.14 in terms of Section 30(1) of the Exchequer Act, (Act No 66 of 1975) interest rate of 6.5 per cent per annum.

Payable six monthly on 31 January and 31 July every year.

For the 2021/22 Financial Year, the Department spent R3.569 billion (91.9%) of the adjusted budget of R3.884 billion.

The total under-spending was 315 million (8.1%).


The underspending on goods and services was mainly due to unspent funds appropriated for Presidential Employment Stimulus payment as the process to appoint BBI as a designated fund manager for the Broadband Access Fund has not been concluded, and consultants' costs due to the expiry of the Memorandum of Agreement (MoA) that governs the relationship between DCDT and the 174 CSIR.
Under capital assets underspending is a result of non-procurement of the Integrated Workflow management system as a result of requirements by SITA to deviate from the IFSM project.

The underspending on the compensation of employees is due to critical vacancies not filled due to merger, the organisational structure of the Department not being finalised and a moratorium on the filling of posts, and DPSA’s circular allowing only the advertisement of extremely critical positions due to Covid 19 pandemic.
Underspending under compensation of employees was due to critical vacancies not filled due to merger, the Department's organisational structure not being finalised and a moratorium on filling posts.

Further underspending under goods and services was due to R200 million appropriated during adjustment estimates for Presidential Employment Stimulus not spent as the process to appoint BBI as a designated Fund Manager for the Broadband Access Fund was not concluded by the end of the financial year.
Underspending under Payment for Capital Assets was because of non-procurement of the Integrated Workflow Management System not procured due to requirement to deviate from IFSM project by SITA.

The transfers were paid to the entities in line with the pre-approved scheduled with National Treasury.

Goods & Services – The increase was due to the Broadcasting Digital Migration project.
A deadline for the completion of the BDM was determined to be 31 March 2022 and the Department had to elevate the marketing and advertising interventions of the programme towards supporting the analogue switch off of analogue transmitters across the country.

This was also necessitated by the implementation of the reviewed model and plan approved by Cabinet in September 2021.

The allocation for good & services amounted to R594.7 million (15%) of the total budget.
The allocation for compensation of employees amounted to R295.8 million (8%), and payment for capital assets was allocated R15.1 million which is less than 1 per cent.

Transfers - The transfers were paid to the entities in line with the pre-approved scheduled with National Treasury.
175 Capital Assets – In the financial year 2020/21 the Department had purchased laptops for all employees and less laptop were purchased in the current Financial Year Emphasis of Matter – Impairment of Investment made in SAPO amounting to R8.1 billion (fully impaired) due to the negative net asset value of the entity as 31 March 2021.

Unauthorised Expenditure – Follow ups made with National Treasurer regarding progress on the case as the matter awaits cabinet approval.
Cash & Cash Equivalents – Cash in the bank at end of the year.

Prepayments and advances – The decrease was a result of invoices received from SITA (the advance of R20 million paid in March 2021), DIRCO & GCIS and expensed in the 2021/22 financial year.

In the current year prepayment and advances made to staff is R86 000.

Receivables - The amount of R 11 Million is a result of loan repaid by SABC in contravention of section 30 of the Exchequer Act.
The money was surrendered to National Revenue Fund and needs to be claimed by the Department and returned to SABC.

Loans – The SABC loan is interest bearing of R27.391 million.

A letter was sent to National Treasury to repeal section 28 to 30 of the Exchequer Act.

The Department has received the approval to convert the BBI loan amounting to R1.351 billion into equity, The shares certificate is issued.
Payables - An amount of R11.457 million was received from SABC as a settlement of the loan and the amount has be payable to them.

Virements/roll overs Virements, as reflected on the Appropriation Statement, were applied in terms of section 43(1) of the Public Finance Management Act, 1999 (Act 1 of 1999) which stipulates that virements may not exceed 8 per cent of the amount appropriated under that main division.
Funds amounting to R22.9 million from programmes 1.3 and 6 were transferred to programme 2, 4 and 5 to defray excess expenditure.

Programme 2 was overspending under compensation of employees, Programmes 4 and 5 were overspending under transfers.

No roll-overs were approved by National Treasury for 2021/22 Financial Year.

Unauthorised, Irregular, Fruitless and Wasteful Expenditure 176 The Department did not incur any unauthorised expenditure during the period under review.
The Fruitless and Wasteful expenditure amounted to R4000 for cell phones and R3000 was recovered from the officials.

Fruitless and Wasteful Expenditure and the amounts involved, as well as steps taken to address and prevent a recurrence.

The Department did not incur any Irregular Expenditure during the period under review.

However cases amounting to R133 million were resubmitted and referred to National Treasury awaiting condonation.
The Department had possible irregular expenditure under assessment amounting to R1.2 million that is being quantified.

10.

AGSA Report The Department received an Unqualified audit opinion with 28 findings received.

Audit action plan for all the findings have been developed and progress was monitored on a monthly basis and presented in the relevant governance structures.
The AG was unable to obtain sufficient appropriate audit evidence for the achievement of 29 230 subsidised digital television installations coordinated and monitored in 4 provinces reported against target of 840 000 subsidized digital television installations coordinated and monitored in 4 provinces in the annual performance report, due to the lack of accurate and complete records.

I was unable to confirm the reported achievement by alternative means.
Consequently, I was unable to determine whether any adjustments were required to the reported achievement.

As reported in the previous year, 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 .
Management must improve internal controls, determine proper accountability and enhance oversight over the BDM project to ensure reliable reporting.

Consequence Management The AG 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 expenditure were not performed.
And disciplinary steps were not taken against some of the officials who had incurred and permitted irregular expenditure, as required by section 38(1)(h)(iii) of the PFMA.

177 On next page is a summary of additional findings and corrective actions: 11.

Auditor General of South Africa Consolidated Portfolio Report The Film and Publication Board and the Domain Name Authority obtained clean audits in the Financial Year under review.
The DCDT, together with the Independent Communication Authority of South Africa, the National Electronic Media Institute of South Africa, and Sentech, obtained Unqualified audit opinions with findings.

The South African Broadcasting Corporation, the State Information Technology Agency and the Universal Service and Access Agency of South Africa obtained Qualified audit opinions with findings.

The South African Post Office and the Universal Service Access Fund obtained Disclaimers with findings.
178 As illustrated above, the overall outcomes remained stagnant for the Portfolio.

This reflects a state of the internal control environment that requires urgent attention with 6/12 unfavourable outcomes: • SENTECH-The inadequate accounting records to support the BDM project remained (material PDO finding).

Management is encouraged to improve the recording and reporting process via internal audit assistance and additional systems and resources to manage the volume of information and record keeping (AFS).
• DCDT -As reported in the previous year, 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.

Management must improve internal controls, determine proper accountability and enhance oversight over the BDM project to ensure reliable reporting.

• USAASA-Regressed as the action plan developed was not effective.
Significant internal control deficiencies identified in the prior year were not addressed during the year under review.

An effective action plan to improve internal controls must be implemented by management.

• USAF-Remaineddisclaimed, mainly as a result of inadequate supporting documentation regarding the BDM project.

(Sentech= IA –arrangement entered into in the prior year to install STBs).
No controls over the number of STBs and no sufficient supporting documentation resulted in numerous qualification areas which 179 were material and pervasive.

Management must ensure proper record-keeping and consequence management.

• SITA -The opinion remains Qualified.

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

• ICASA & BBI-The opinions remained unqualified with material non-compliance matters.

• NEMISA-The opinion remained unqualified with material non-compliance matter.

Total Irregular Expenditure incurred for the Portfolio during the year amounted to R1.2 billion (identified in the current year, relating to current and/or prior).
Regarding SITA, services rendered after the contract expiry date, an invalid extension of contracts, payments made to suppliers who was not tax compliant at the date of award, and shortened advertisement periods.

R250 million incurred at SITA detected in prior years related to ongoing contracts.

The SABC implemented a project to review the population of procurement transactions from 1 April 2018 to 31 March 2022.
In this period, the vendor spending amounted to R14.4 billion, of which R6.9 billion was under investigation.

Further Irregular Expenditure relating to the prior period amounting to R43 million was identified and disclosed accordingly.

The most significant adjustments to the Irregular Expenditure closing balances regarding write-offs and condonations amounting to R89 million (SABC) in the current year.
The highest contributors to irregular expenditure in the portfolio: • Payments made to suppliers without a valid contract.

• Incorrect evaluation criteria applied to bids.

• Payments that did not qualify as deviations which is defined as an emergency, sole source or where prior approval.

• Purchase Orders without obtaining the minimum number of quotations.
• Awarded purchase orders /contracts for services without following a competitive bidding or quotation process in accordance with the Policy and PPPFA.

• Tender above R30 million did not include subcontracting as a condition of a tender.

• Variation order in excess of 15% as prescribed by the National Treasury.

180 R2.9 billion relating to SABC Irregular Expenditure balance is awaiting condonation subject to further investigation.

SABC is currently engaging NT to determine the process going forward.
For DCDT, USAF and USAASA, disciplinary steps were not taken against officials who had incurred Irregular Expenditures as investigations were not performed.

As illustrated above, there was a general increase in Fruitless and Wasteful Expenditure of 9 per cent compared to prior year.

Total Fruitless and Wasteful Expenditure for the Portfolio that was identified during the Financial Year amounted to R265 million.
R10 million of which was incurred by the SABC, which mainly relates to content impairment, interest and penalties on late payments and rental paid of unoccupied office space.

SITA, R3.7 million of software licences paid for that were not deployed.

For USAF and USAASA, disciplinary steps were not taken against officials who had incurred Fruitless and Wasteful Expenditure as investigations were not performed.
11.1 Auditor General Key Message on Digital Migration Affecting the Lives of Our Citizens The AG observations are that the citizens are impacted by STB not being installed as planned as follows: • Statistics from the Digital Terrestrial Television Migration Dashboard (independent source) indicate that audience share have dropped after the switch-off in certain Provinces.

This might impact the mandate of SABC as communities are not reached with compelling information, education and entertainment content.
• With these statistics showing a decline in audience share, this might negatively impact on SABC’s financials (taking also into consideration all other factors impacting audience share as well).

• Slow release of the spectrum, keeps costs high to run both analogue and digital networks.

• Slow release of the spectrum also keeps data costs high, not allowing all citizens to have access to streaming.
The AG Recommendation: 181 STB installations are to be effectively monitored and completed to allow for spectrum release to reduce data costs (ICASA to regulate prices) and allow more streaming platforms.

11.2 Going Concern of the SABC Despite an improvement in the extent of overall loss, the entity continued to suffer losses for a 4th consecutive year.

The net loss amounted to R201million (R530m 2020-21).
The income statement projections continue to indicate operating losses of R123 million, which indicates that the entity will continue to operate at a loss for the foreseeable future.

Forecast cash flow shows a decrease of cash collected from customers of 2 per cent from R4.2 billion to R4.1 billion, and this excludes cash collected relating to TV licences with a 9 per cent increase in account receivables.
Cash collected from TV licences indicates an increase of 1 per cent from R889 million to R897 million.

This is despite the assessment from management indicating that TV licence shortfall of R122 million is anticipated due to Direct Collection Agencies (DCAs) failing to meet set standards in Financial Year 22 and the contracts of two (2) DCAs being terminated as a result.

Payments to employees show an increase of 3 per cent from R2.1 billion to R2.2 billion excluding the 495 vacancies as at 31 March 2022.
Net cash flow from operation activities shows a negative increase of 14 per cent from R403 million to R459 million.

Cash reserves are forecasted to decrease from R1.1 billion to R775 million as at 31 March 2023 graphs below depict the movement of cash on hand (own cash: R421m) and bailout funds (R353m) (April to June –actual figures).

11.2.1 Implementation of Material Irregularity Process: SABC 182 11.2.3 AG Recommendations to be Addressed 12.
Entities of the Department The following shows the transfer of funds to Entities and Agencies reporting to the Department of Communications and Digital Technologies (excluding international organisations), noting that SITA, .ZADNA and BBI are self funded and therefore are not reflected in the table below: 183 Name of Entity Key Outputs Amount Transferred Amount Spent Achievements R100.9m R99m excluding commitments R118.6m inclusive of commitments FPB achieved 80% of planned targets for the 2020/21 financial year.
The achievement included the following: production of the Content Classification index; emoluments of the classifiers who have been appointed as independent contractors to classify the films, games, and other publications; enforcing the FPB Act to the training of educators, parents and learners on cyber safety, training workshops for the classifiers and industry Implementation of outreach programmes Improving stakeholder relations for the FPB.
distributors through issuing noncompliance notices FPB ICASA Effective Content Regulation aligned to the Constitution Public Education and Stakeholder Partnering Research and Development Efficient and high performing organisation Access to quality broadband Services Increased Status of Social Cohesion (inclusive of Diversity of Views) enhanced Rights of Consumers Protected Competition in the ICT Sector Promoted R508.2m R447.4m NEMISA Digital Skills training R98.5m R64.5 m USAASA Progressive realisation of the goal of universal access and universal service in South Africa R177.1 m R64.599 m ICASA achieved 89.6% of its targets for the current financial year (Unaudited).
ICASA has both monthly and quarterly monitoring system that ensure spending kept on close watch.

Forecasting on spending sufficiently done predict overspending future months ahead.

5G spectrum auctioning at close of 2020/21FY was already set to take place with all regulatory requirements in place.

NEMISA has achieved 10 out of 11 planned targets, translating to 90%.
Notable achievement include the training of: - 16 296 citizens in basic digital literacy • 117 learners in creative media practitioners • 1126 citizens on specialist technology • 703 government officials in digital transformation advocacy and awareness campaigns Other key achievements include: • The registering of 10492 LMS users on the system The achievement included the: • Filling of the 2 critical vacancies under the organisational structure • Appointment of Sentech to project manage the BDM rollout of Phase 1 installations of 860 000 set-top-boxes in 3 priority provinces, i.e., Free State, Northern Cape, and North West • The establishment of the Enterprise Risk Maturity Level baseline – a baseline of 43% (level 3) was recorded in quarter 4 and 32% (level 2) in quarter 2 • The mapping capability on establishment of the Geographic Information System was developed and approved by EXCO by year end USAF Enhanced access to ICT and digital broadcasting services in identified underserviced areas.
1 137m 30.035m USAF achieved the installation of 12 871 set-top-box kits, compared to 860 000 that were planned.

The work done in relation to other targets that were set did not yield any significant results.

SAPO Provision of Universal Postal Service R542.6m R492.1m 529 USO Post Offices Provision of universal postal services SENTECH Network availability R169.7m R201.5m SENTECH has managed to achieve the 99.8% network availability for the service provision of television and radio services.
Funds are utilised in the managing of analogue and DTT infrastructure (repairs and maintenance) for service provision of uninterrupted quality radio and television service.

The network management has been challenging in the wake of rolling blackouts and vandalism.

The increasing cost of spares and regular maintenance of the analogue equipment has also been a challenge.

In the wake of rolling blackouts, we have put in place diesel generators to power the transmitters to keep transmission on.
The costs are monitored on a monthly basis on a set template to calculate the costs when maintenance is carried out.

The digital frequency migration project funds are required in advance to allow for advance procurement planning of the frequency migration to free up radio frequency spectrum for mobile broadband.

184 SABC The DCDT funding made it possible for the SABC to deliver the following educational programmes to the citizens of South Africa through Radio and Television: 1.
Curriculum content for learners & Educators within a formal education environment (Early Childhood Development, Primary and Secondary Schools, Further Education and Training and Adult Basic Education) 2.

Non-formal content for learners outside of a formal learning environment.

(Children at home).

3.

Informal content for the general public in terms of Democracy, Health, Agriculture, Social Welfare, Youth Development, Social Action campaigns.
The programmes were also supported by sign language and ubtitling etc.).

The SABC also elivered Nation Building programmes to assist in building and strengthening a young democratic South Africa.

4.

Channel Africa, the only international radio service of South Africa, is a platform that supports the government’s programmes into the continent in spheres of political, social, and economic.
It produces content that nforms the African citizens of issues that affect their lives, thereby empowering them to make informed decisions.

It assists in the enhancement of the national brand - South Africa, which is critical for business confidence and ultimately economic development for the country.

Through its content offering, it creates the Africa that all envisages.
R209.7m SABC – Public Broadcaster TV and Radio Education program: R79m Tv Programme Productions: 3m Channel Africa: R51m Total = R133m • SABC’s educational programmes are the most watched programmes in South Africa compared to other broadcasters, and our radio programmes are very popular with our listeners.

• The SABC’s Youth Development programme called Skeem Sam is the third most watched programme in South Africa compared to other broadcasters.
• SABC’s Children and Educational programmes received 12 SAFTA nominations.

• SABC also developed an Online Virtual Academy for high school learners, called SEVA (SABC Education Virtual Academy) 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 for the period 1 April 2021 to 31 March 2022 amounted to R32 049 million.

185 12.1 .ZADNA The .ZA Domain Name Authority (.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 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 South African Department of Communications and Dgital Technlogies, but does not receive government funding which means it is exempted from complying with the Public Finance Management Act.

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: • Comply with international best practice in administration and management of the .za namespace in compliance with international best practice; • Licensing and regulate registries; • Licensing and regulate registrars for respective registries; • Publish guidelines among others; and • There was a total of 120 targets for the year, and .ZADNA achieved 118 (98%) of the targets.

There were 2 targets (2%) that were not achieved are deferred to 2019/2020.
12.1.1 Operational Highlights The Authority managed an achievement rate of 79 per cent of its targets translating to .ZADNA achieving 11 of the 14 annual targets as illustrated below: This achievement is a testament to .ZADNA’s commitment to furthermore achieve its vision, and ensuring it has the expected impact.
However, the 2021/22 financial year came with its fair share of challenges; this is shown in .ZADNA’s inability to achieve three of its fourteen targets, which include the promulgation of the registry and registrar licensing framework, the 186 namespace growth of 25 000 domains, and increasing the namespace by 0.25 per cent through the CIPC channel.
Key highlights • Ensured access to the internet through the school digitisation programmes • Empowered communities through awareness and training programmes • • .za Regulations Improved stakeholder engagement During the course of the 2021/2022 financial year organisations and businesses experienced an adjustment to the “new normal.” Some of them recovered from the effects of the pandemic while others, unfortunately, had to terminate their business activities and operations.
This in turn, resulted in job losses as businesses could not generate sufficient revenue.

During the 2021/22 financial year, .ZADNA tirelessly worked on the draft .ZA Registry and Registrar Licensing Regulations and Procedure to ensure that a legally sound and constitutionally grounded regulations are produced for public commentary.

The .za domain namespace retained the growth it achieved in the prior year.

This stagnation of the namespace was due to the low retention of registered domain names.
The Authority embarked on industry market studies and an analysis of socio-economic factors that impact and contribute to the namespace's growth.

Benchmark of top-level domain name regulations and global best practice policies to curb the abuse of the Internet country-code top-level domain.
These were supported by the Board and Management’s participation in various global policy formulation platforms and local engagements and interventions Among the organisation’s key focuses for the year, the Board of Directors and Management worked tirelessly to ensure that the .za Registry-Registrar Licensing Regulations were gazetted for public comments in preparation for the promulgation of the Regulations which will enable the Authority to license the accredited .za channel partners.
This moment coincided with the most significant milestone of the organisation as it celebrated 20 years of its establishment.

In July 2021, the organisation started the process of appointing a new Registry Operator.

187 .ZADNA successfully rolled-out forty-three (43) awareness campaigns, and forty (40) articles/news reports about this organisation appeared on and in various media outlets.
A total of 19 disputes reached actual adjudication, with 15 decisions accounting for 78 per cent of the disputes, which resulted in the transfer of the disputed domain names to the complainants.

The transfer of the four disputes accounting for 22 per cent of the disputes, were refused, and two of the refused disputes accounting for 11 per cent of the disputes, were appealed.

No withdrawals were made.


During the same period, we conducted 24 Registrar-Reseller training sessions, empowering 800 South Africans, the majority being female (433 out of the 800).

Due to this effort, we produced 18 Resellers and one (1) Registrar.

For the year under review, .ZADNA continued to keep the various stakeholders engaged through 32 internet engagements across the country, focusing on online child protection, digital skills, women empowerment and access and accessibility to the internet.
12.1.2 Financial Performance and Audit Opinion .ZADNA earned a net surplus for the year ended 31 March 2022 of R2 901 381 (2021 surplus: R 5 472 275).

The 2021/2022 budget was based on the R15.00 per domain name fee.

.ZADNA continued to show a good and stable financial performance during the 2021/22 Financial Year.

.ZADNA managed to keep its expenditure within its budget and collected revenue timeously .ZADNA receives its funding from the co.za, net.za, org.za and web.za per domain name revenue.
This was achieved while retaining the surplus at a manageable level.

.ZADNA’s performance was reaffirmed by the Clean audit opinion (Unqualified with no findings) which was achieved for the 2021/22 Financial Year, and without any Irregular and Fruitless Expenditure.

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.
The Company has an extensive, 188 strategically positioned infrastructure that provides a combined coverage to 100 per cent of the South African population.

This enables us to provide facility leasing and co-location on our masts, offering connectivity and infrastructure services to the retail, telecommunications and public sectors.

We provide broadcast transmission services to commercial and public broadcasters in the country, including over 150 community radio stations.
As a holder of both an Individual Electronic Communications Network Services (I-ECNS) licence and an Individual Electronic Communications Services (I-ECS) licence, Sentech is able to provide both voice-based telecommunications and multimedia services.

Sentech is a Schedule 3b Government Enterprise and we derive our mandate from legislation, particularly the Sentech Act and the Electronic Communications Act (ECA).

It is also a Level 1 B-BBEE contributor.


sentech was incorporated as a wholly-owned subsidiary of the South African Broadcasting Corporation (SABC) in 1992.

In 1996, the SENTECH Act (No.

63 of 1996) was amended, converting SENTECH into a separate public entity that owns the largest infrastructure in the country for terrestrial signal distribution for both television and radio.
12.2.1 Operational Highlights The 2021/22 financial year period was characterised by challenges related to slow economic growth, however, it also presented opportunity in the rising need for information communication services.

This delicate reality demanded organisations to advance creativity and innovation capabilities to efficiently offer services to economically constrained markets to foster integrated sustainability for Sentech and its customers.
As at the end of March 2022, the organisation had successfully transitioned five provinces (the Free-State, Northern- Cape, North-West, Mpumalanga and Limpopo provinces) to digital television.

This was immediately followed by the implementation of Spectrum re-farming (digital to digital migration) to ensure the release of spectrum above 690Mhz in line with the National Frequency plan and paved the way for the implementation of IMT services in these five provinces.
189 Sentech embarked on a few successful 5G pilots with the market and the industry, piloted a digital radio network in Gauteng, and worked with the regulator to advance the digital radio trial to the Western Cape and KZN provinces.

Sentech continued to optimise the use of satellite and energy resources, and as a result, we achieved efficiencies of 18 per cent for satellite and 7 per cent for energy.
This productivity efficiency was realised due to optimised contractual negotiations, implementation of a smart energy solution and termination of analogue technologies.

During the reporting period, the energy reduction programme resulted in a decrease of 9 075 tonnes of carbon dioxide equivalent (tCO2e) in direct (Scope 1) emissions and a reduction of 1 154 tonnes in indirect (Scope 2) emissions.
Sentech rolled out 1 037 training interventions during the reporting period against a target of 1 035, with 22 of these being related to mission-critical skills and also began a process of reviewing our operating model.

Sentech missed the revenue target by 3 per cent and noted that alternative revenue sources have significantly reduced the impact of Covid-19 on the organisation.
Some of the innovation projects undertaken during the reporting period included: • the implementation of cloud computing infrastructure at NASREC to enable public and private computing and storage capacity; • the implementation of a new standalone 5G radio network to provide cost-effective network infrastructure for government departments and industry; and • the establishment of the SENTECH Research and Innovation Collaboration Network as a hub for creativity and thought leadership between ourselves, institutes of higher learning, industry and other stakeholders.
12.2.2 Financial Performance The revenue of R1.373 billion achieved during the period was partly due to the economic recovery and partly due to close collaboration with customers to establish mutually beneficial payment arrangements.

Nevertheless, Sentech experienced a loss of revenue in the managed infrastructure services and broadband connectivity businesses resulting from cancellations caused by the pandemic.
Sentech’s core operations nevertheless generated positive cash flows, and we maintained profitability.

190 Most notably, the balance sheet improved considerably, with cash reserves above R2 billion by year-end.

Accounts receivable also improved due to the settlement of long-outstanding debts following a concerted debt-collection programme.
As of 31 March 2022, satellite capacity Lease Liability was R1.16 billion compared to the prior period's amount of R1.22 billion, mainly attributable to foreign exchange rate fluctuations.

Reporting on this is required by IAS 21 as more than 90 per cent of the value of Qualifying lease contracts for satellite capacity is foreign currency denominated.
Sufficient cash reserves were realised to meet our capital projects requirements for the period and, by year-end, had achieved an EBITDA margin of 18 per cent.

Sentech improved its cash flow position, closing the year with a cash balance of R2 billion, an increase of R151 million from the previous period.

In addition to the above non-achieved targets, the Auditors also indicated that 163 analogue sites switched off were reported as achievements against the planned target of 155.
However, the supporting evidence indicated that only 141 analogue sites were switched off in the period under review.

12.2.3 Audit Opinion The Entity received an Unqualified audit opinion with findings.

Emphasis of matters on: 191 • Expected credit losses of R82 million (R74 million 2021) (Note 9 in the consolidated and separate annual financial statements) was raised on the trade debtors balance.

More than 80per cent of the expected credit loss pertains to community broadcasters.
• The merger between Sentech SOC Limited and BBI has the potential to embody competitiveness within the core competency market through benefits from economies of scale, increased market share, more efficient resource allocations, a more extensive asset base, increased offering, and instantaneously adopted expert knowledge.

Audit of compliance with legislation • The annual financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework.
• Adjustment of Material Misstatements - auditors identified material misstatements in the annual performance report submitted for auditing.

Internal control deficiencies raised by the Auditors Management did not implement adequate period-end controls for the public entity’s business processes to support financial statements, compliance with legislation and audit of performance information reporting.
Inadequate oversight responsibility on preparing accurate financial information performance information was not exercised by management, resulting in material misstatements identified.
12.3 USAASA/USAF The Universal Service and Access Agency of South Africa (USAASA) was established 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 are 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.
In terms of its strategic overview, the mandate/purpose, and vision of USAASA are both aligned to and support the Department of Communications and Digital Technologies’ vision to be “a leader in enabling a connected and digitally transformed South Africa.” In response, USAASA has the following vision: Universal ICT access and service for all.
• In respect of its mandate, the entity seeks to promote and pursue the goal of universal access and service and to contribute to building South Africa’s sustainable 192 knowledge society through a response to the 4IR, innovation, research, monitoring, evaluation and advisory services; and To effectively manage the Universal Service and Access Fund (USAF), whose mission it is to: Facilitate the roll-out of adequate Information and Communication Technology (ICT) infrastructure to enable 4IR readiness and universal access to underserviced areas in South Africa; • Facilitate ICT service to underserviced areas and thereby contributing to the reduction of poverty and unemployment in South Africa; and • To broaden access to digital broadcasting services by qualifying households.
In terms of strategic outcomes: Outcome 1: An optimised delivery system to support the achievement of the mandate.

Outcome 2: A respected thought leader on universal access and universal service.

Outcome 3: A well-governed and high-performance organisation and fund delivering on its mandate.

USAASA is in the process of being dissolution as per the policy recommendations of the National Integrated ICT Policy White Paper.
The fast-tracking of the dissolution of the entity by 31 March 2022 which has been deferred to 31 March 2023, affected the implementation of the key performance targets contained in the tabled USAASA targets on APP 2021-2022.

Since the Entity will be disestablished, it has resulted in delayed implementation of the USAASA Board-approved response to the Gender-Based Violence and Femicide and Stakeholder Engagement Strategy and Plan.
The implementation of the procurement plans in line with the tabled USAASA APP 2021-2022 and budget was put in abeyance and this resulted In some activities being deferred as the entity could not enter into long-term commitments due to the fast-tracking of the winding down process of USAASA.

The Universal Service and Access Fund (Fund) is established in terms of section 87(1) of the ECA, 2005.
It is mainly responsible to facilitate the bridging of the digital access gaps which is a new form of social inequality derived from unequal access to the new ICTs by gender, territory, social class, and so forth.

USAF is under the oversight of the Board created in terms of section 80(3) and USAF is directly accountable to Parliament through the Ministry for Communications and Digital Technologies.
USAF activities directly contribute to the implementation of the Apex Priority 2: the Economic Transformation and Job Creation of the Revised MTSF 2019-2024.

The Priority Projects are as follows: 193 • BDM programme: Licensing of spectrum for Fifth Generations Networks: installations of STBs to qualifying households to enable viewing migration.
• Broadband connectivity programme: 80 per cent of the population will have access to the internet by 2024 to identified local municipalities and will be monitored and sustained.

12.3.1 Operational Highlights In this period under consideration, USAASA planned 24 targets per the approved USAASA Annual Performance Plan 2021-2022 and out of the 24 targets planned, only 15 targets were achieved, translating into 63 per cent performance outcomes.
USAASA’s baseline budget has been substantially reduced, confining the Agency only to perform the administrative function of the Fund.

The budget reduction meant that the Entity could not perform the following statutory requirements: • Conducting the regulatory assessment impact on the provision of universal service and access.

• The setting up of targets to achieve the provision of universal service and access for all.

• The assessment of access gaps in SA and publishing on the state of ICT penetration.
• The dissemination of information on the latest technological developments which affects the provision of universal service access.

• Recommendations of definitions for universal service and access to the Minister for the improvement of ICT penetration in rural areas.

• Determination of needy persons for eligibility for subsidisation.

• The definition of under-service areas to ICASA for determination and the listing of key priority areas for subsidy grants.
The key performance targets of USAASA are not linked to its mandate but more to national priorities such as the following: • Mainstreaming of gender, empowerment of youth and persons with disabilities.

• Public value and trust, active citizenry and partnership in society.

• Programmatic approaches to asset management, elimination of wasteful and fruitless expenditure, and irregular expenditure.
194 The main focus area for USAASA is the administrative function of the Fund which is responsible for the key priority projects such as BDM and broadband connectivity which contribute toward the structural reforms intended for economic recovery.
On the BDM front, the Cabinet on 30 September 2021 adopted a MIM in line with the State President’s pronouncement on the completion of digital migration which is vital to the country’s ability to harness the enormous opportunities presented by technological change effectively.

USAASA, after the adoption of the MIM on BDM by Cabinet on 30 September 2021, needed to enter into strategic relations with various entities to support the Revised ASO Plan.
After the approved deviation procurement procedure by NT, the Agency has forged multiple formal strategic relations with DCDT, Sentech, SAPO and the broadcast media players such as SABC and others.

As at the end of the reporting period, the formal conclusion of strategic relations was concluded with the exception of SITA, Telkom SA Limited SOC, StarSat, eMedia Holdings and MultiChoice, which were still under discussion.
USAASA has not revised its performance targets in the original tabled USAASA APP 2021- 2022 on 14 May 2021.

Although the USAASA budget allocation for 2021-2022 was substantially reduced there were no activities discontinued.
The USAASA targets that have not been achieved are (i) 100 per cent of valid invoices paid within 30 days from the date of receipt, (ii) Reduction of Wasteful and Fruitless expenditure to 20 per cent of R389 00, USAASA AFS 2019-2020 incrementally from baseline of 2019 by 2024, and (iii) Reduction of Irregular Expenditure to 15 per cent of R32 196 000 USAASA AFS 2019-2020 incrementally from baseline of 2019 by 2024 Non-achievement was attributed to (i) delays in the analysis, classification and investigation of irregular expenditure due to capacity constraints (ii) The departure of the ACFO, led to delays in the appointment of an authorised official to release payments on the banking payment platform.
In this period under consideration, USAF planned 30 targets as the approved Revised USAF Annual Performance Plan 2021-2022.

Out of the thirty targets planned, only fifteen targets were achieved, translating into 50 per cent performance outcomes.

For USAF during the reporting period, there were reforms introduced to the BDM programme resulting in significant changes in the delivery model of the BDM programme.
The performance delivery environment was severely affected, which led to delayed implementation of the funded 195 programmes in the approved USAF APP targets.

USAF was therefore offered an opportunity to revise its annual performance plan to align with Cabinet's newly introduced model.

Furthermore, the SA Connect Phase 2 is being revised and adopted by Cabinet on 28 January 2022.
During the reporting period, the changes in the delivery model resulted in delays in the funded programme implementation for broadband targets as the appointment of the service provider for the broadband rollout was subsequently deferred into Quarter four (4) (2021-2022).

USAASA has appointed BBI in line with the Revised SA Connect Phase 2 Model to provide broadband connectivity to 300 sites in Eastern Cape and 112 sites in Northern Cape.
The USAF targets that have not been achieved are (i) 810 000 subsidised Set-Top-Box installations coordinated and monitored in four provinces (FS, NC, NW and Limpopo (ii) 2 266 474 DTT subsidised digital television installations coordinated and monitored (iii) 289 058 DTT subsidised digital television installations coordinated and monitored (iv) Provision of broadband internet connectivity sites to 280 sites to identified two local municipalities (v) Reduction of Wasteful and Fruitless Expenditure by 20 per cent of the identified Fruitless and Wasteful Expenditure Register and (vi) Reduction of irregular expenditure by 15 per cent of the identified Irregular Expenditure Register.
Non-achievement was attributed to (i) delays in the analysis, classification and investigation of irregular expenditure due to capacity constraints and (ii) the suspension of the installation of digital television through a voucher system pending the finalisation of the revised delivery model on BDM.

12.3.2 Financial Performance During the year under review, USAASA spent R81.7 million, representing 46 per cent of the allocated budget of R177 million.
Compared to the previous financial year, the spending was R68 million representing 26 per cent of the allocated budget of R261.4 million.

The underspending in the current year compared to the budget is mainly due to the R95 million for South African Post Office (SAPO) distribution costs which were not spent by the 31st of March 2022; no portfolio of evidence was received regarding any work performed.

The spending pattern has improved as a percentage of the allocated budget in the current financial year.
196 Compared to the previous Financial Year, the spending of R81.7 million represents an increase of R13.7 million from R68 million in 2020/21, representing a 20 per cent increase year-on-year.

The main reason for the increase in spending was due to the increase in payroll costs due to the appointment of 40 District Coordinators to work on accelerating the switch-off in the identified districts.

Another contributing factor was general expenses due to travel costs which have increased significantly.
Revenue was recorded at R185.415 million, as indicated in the table below.

USAF’s overall financial performance for the period under review shows that the Fund has received revenue of R1.2 billion, which largely consists of R1.1 billion, which can be attributed to Government grants and subsidies received.

USAF managed to earn an interest of R66 million.

A recorded total expenditure of R40 million was incurred; from this amount, R36 million was spent on implementing the BDM programme.
R40 million was spent, representing 3.6 per cent of the allocated budget of R1.1 billion.

Compared to the previous financial reporting period, R11.8 million was spent from the allocated budget of R564 million.

Therefore year-on-year spending has shown an upward trend of 239 per cent.

90 per cent of the total expenditure was incurred on Sentech for establishing the call centre support and installation, quality assurance and project management of STB allocations.
12.3.3 Audit Opinion The Auditor General of South Africa (AGSA) has, after conducting an audit of USAASA financial statements, issued a Qualified audit opinion with findings for the Entity with an emphasis on matters.

The basis of the qualification relates to receivables from exchange transactions.

The emphasis of matters related to Restatement of corresponding figures.
Audit of compliance with legislation: • Annual financial statements not submitted on time and in the prescribed financial reporting framework.

197 • Expenditure management - effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R140 000 and irregular expenditure amounting to R17 447 000.

• No consequence management against officials who incurred irregular expenditure and fruitless and wasteful expenditure.
Internal control deficiencies raised by the Auditors: • Management did not effectively implement the audit action plan.

• Management did not implement proper record keeping to ensure that complete, relevant, and accurate information for staff debt/advances is accessible and available to support financial statements.

• Management did not develop and implement a compliance checklist to monitor compliance with legislation, including procurement legislation.
• The 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.

Irregular and Fruitless and Wasteful Expenditure USAASA’s Irregular Expenditure amounted to R17.4 million in comparison to R3.1 million in the previous reporting period.
The increase to R17.4 million is primarily due to payments for contracts that have already lapsed.

However, the services rendered by the contractual parties were still required for operational purposes.

With the above Irregular Expenditure incurred in the current reporting period, the total balance of irregular expenditure is R52 million, including the R3.1 million incurred in the previous financial year.
The balance of the Irregular Expenditure of R32 million was accumulated over the years before 1 April 2021.

With regards to Fruitless and Wasteful Expenditure, USAASA had incurred R140 000 in the current reporting period as compared to R722 000 in the previous reporting period.

The incurred Fruitless and Wasteful Expenditure resulted from a penalty and interest charged by SARS for late payment of PAYE and SDL to SARS.

USAF received a Disclaimer audit opinion with findings.
The basis for the disclaimer is that the auditors were unable to obtain sufficient and appropriate audit evidence: 198 • that management had properly accounted for inventories for the current and previous years, as the public entity did not maintain a register of inventories held by third parties that could be reconciled to the financial statements; • that broadcasting digital migration project expenses were properly accounted for due to the status of accounting records; • for the restatement of the corresponding amounts for BDM expenditure and provisions in the financial statements; • for payables from non-exchange transactions due to the status of accounting records; and • for administrative expenses due to the status of accounting records.
Emphasis of matter related to: Uncertainty relating to the future outcome of litigation as USAASA is a defendant in several lawsuits.
Audit of the annual performance report Sufficient appropriate audit evidence not obtained for the achievement of 22 157 installations of subsidised set-top-boxes at qualifying households reported against the target installation of 810 000 subsidised set-top-box kits at qualifying households, due to the lack of accurate and complete records - Programme 1 – Business Operations: Number of the subsidised Set-Top- Box kits installed at Qualifying households.
Audit of compliance with legislation • Annual financial statements are not submitted on time and in the prescribed financial reporting framework.

• No consequence management against officials who incurred irregular expenditures and fruitless and wasteful expenditures.
Internal control deficiencies raised by the Auditors • Audit action plan implemented by management was not effective as significant deficiencies in internal control, identified in the prior year, relating to the accounting for inventory and BDM expenditure was not addressed during the year under review.
• No proper record keeping to ensure that complete, relevant and accurate information for inventory, payables from non-exchange transactions and administrative expenses is accessible and available to support financial statements.

199 • Lack of appropriate internal control process to properly account for all installations of set-top boxes at qualifying households.

• Lack of adequate consequence management processes for transgressions against applicable policies, laws and regulations.
Irregular and Fruitless and Wasteful Expenditure USAF has exercised control over Irregular Expenditure as none was incurred for the current year (2021-2022) and the previous financial year (2020-2021).

The balance of Irregular Expenditure disclosed for an amount of R63.2 million was accumulated over the period before the previous financial year of 2020-2021.
In terms of Fruitless and Wasteful Expenditure, an amount of R1.431 million was incurred compared to an amount of R193 thousand from the previous financial year that USAASA has identified in the current year.

Disciplinary steps were not taken against officials in both Entities who had incurred irregular expenditures as investigations were not performed.
12.4 NEMISA The National Electronic Media Institute of South Africa 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 Public Finance Management Act (1999).

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.
Below are some of the national policies recognising the need for the development of digital skills in South Africa from which the mandate of NEMISA is derived from: • National Development Plan 2030 • National Skills Development Plan • 2014 SA Connect Broadband Policy • 2016 National Integrated ICT Policy White Paper • White Paper on Post-School Education and Training • Digital Skills Strategy • National Human Resources Development Strategy • National Digital Skills Partnership 200 The outcomes of NEMISA are structured as follows: 12.4.1 Operational Highlights NEMISA’s 2021/22 APP and in particular, Programme 3 aimed to substantially increase its digital skills delivery to make headway towards its five-year targets as stated in the 2020 -2025 Strategic Plan.
For 2021/22, twenty-one out of twenty-two planned targets were achieved, representing an overall achievement of 95 per cent.

During the 2021/2022 financial year, there were in total of 240 beneficiaries trained through NEMISA’s accredited training qualifications by the Media, Information and Communication Technologies Sector Education and Training Authority (MICT SETA).

97 (40%) beneficiaries were trained on a full qualification and 143 (60%) on various youth skills programmes.
The newly developed curriculum and learning material for the Digital Photography skills programme generated high interest, with learners skilled in digital content creation, digital photography, and graphic design (editorial design or layout and design).

For the year under review, NEMISA achieved all five skills development, youth and woman empowerment targets.

A summarised performance is provided below: • The target to retain 90 per cent of the interns in the internship was achieved.
• 74 443 people were trained in Digital Literacy, versus the set target of 60 000 people.

This constitutes 14 443 more than that planned.

• 240 learners completed their annual training in creative media courses vs the annual target of 120.

• 2 988 citizens were trained in specialist technology courses, which is 238 more than the annual target of 2 750.

• Furthermore, 870 people are reported to have attended the digital transformation advocacy and awareness campaign.
This is 70 more than the annual target of 800.

201 NEMISA, through their provincial CoLabs hosted at local universities, played a vital role in delivering various training programmes across the country during the 2021/22 Financial Year.

The highlight for CoLabs in the year 2021/22 was the training project that saw NEMISA enter into a partnership with SITA and the Department of Military Veterans.

The training occurred in various provinces, and the NEMISA LMS was successfully used.
The training was done in collaboration with the various CoLabs.

2021/22 Financial Year is the first year of the Coursera project.

This project became highly popular with the students.

Some students went above and beyond and completed many courses during their six months of access to the site.
The Ya-Rona Digital Ambassadors programme is a digital literacy training programme and was rolled out to Limpopo (Colins Chabanevand Elias Motsoaledi Local Municipalities) and Free State province (Five local municipalities in Lejweleputswa District Municipality) in 2021/22 financial year.

The project appointed 105 trainers/ambassadors, some of whom left the programme due to better opportunities.
12.4.2 Financial Performance The reporting period presents a year where most NEMISA staff worked from home for most of the year.

The desired total revenue target of R98.8 million was exceeded by 23 per cent, and training projects put on hold during 2020/21 due to COVID-19 were completed during 2021/22 financial; this increased operating expenses when compared to the 2020/21 financial year.
* R7.3 million of the surplus related to funds was received from the Department of Military Veterans for digital skills training of military vets.

The expenditure will be incurred in the 2022/23 Financial Year.

NEMISA made a surplus of R13,6 million (2021: loss of R82k), total revenue of R121,5 million (2021: R64,9m) increased by 87 per cent when compared to 2020/21, and total expenditure of R107.9 million (2021: R65.0m) increased by 66 per cent when compared to 2020/21.
202 The Non-exchange revenue accounts for 92 per cent (2021: 97%) of NEMISA’s total revenue, and operating expenses (training-related expenses), as well as employee costs, account for 78 per cent (2021: 65%) of NEMISA’s total expenditure.

The Performance Comparison graph to the right indicates a summary of NEMISA performance for the 2021/22 Financial Year: Statement of Financial Performance (R’m).
NEMISA has an improved net assets of R18.4 million (2021: R4.9m) and a strong cash flow balance of R59.8 million (2021: R62.7m).

The Entity remains liquid, and solvent, the cash position and working capital have improved, the company has a net current asset position of R11.3 million (2021:(R1.1m)) and a current ratio of 1.1:9 (2021: 0.9:8).

12.4.3 Audit Opinion NEMISA received an Unqualified audit opinion with findings for the fifth year in a row.
Auditors reported material findings on Compliance with legislation regarding the preparation of Annual financial statements.

Internal control deficiencies raised by the Auditors • Lack of adequate oversight responsibility regarding the preparation of the annual financial statements, annual performance report, and compliance, as well as related internal controls, which resulted in material misstatements in the financial statements, and the annual performance report are free from material misstatements.
• Inadequately implementation of proper record-keeping in a timely manner to ensure that complete, relevant, and accurate information is accessible and available to support financial and performance reporting.
12.5 Independent Communications Authority of South Africa (ICASA) The Constitution of the Republic of South Africa (RSA) 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 Public Finance Management Act No 1 of 1999 (PFMA).
ICASA’s mandate is set out in the Independent Communications Authority of South Africa Act, Act No 13 of 2000 (ICASA Act), Electronic Communications Act, Act No 35 of 2005, as amended (the EC Act), 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 203 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.

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 Independent Communications Authority of South Africa Act 13 of 2000, as Amended The Act 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 ensuring affordable services of high quality for all South Africans.
The Authority also issues licenses to telecommunications and broadcasting service providers', enforces compliance with rules and regulations, protects consumers from unfair business practices and poor quality services, hears and decides on disputes and complaints brought against licensees and controls and manages the effective use of radio frequency spectrum.

ICASA is a Chapter 9 institution (an institution which supports democracy) in terms of the South African Constitution.
12.5.1 Performance Highlights The Authority planned to deliver fifty-three (53) outputs during the year under review.

Forty- six (46) were delivered, and seven (7) were not delivered, which translated to an overall annual achievement of eighty-six-point-eight per cent (86.8%), see table below: 204 The forty-six (46) outputs the Authority has delivered through various Programmes during the year under review have contributed to different medium-term outcomes in different ways.
ICASA published the ICT COVID-19 National State of Disaster Regulations; the Authority continued to ensure access to broadband connectivity for the increased usage associated with more people working from home and university students conducting online studies.

The Regulator further assigned temporary radio frequency spectrum for the following bands; 700MHz, 800MHz, 2300MHz, 2600MHz and 3500MHz to all stakeholders up to 30 June 2022.

The Minister of Finance, Hon.


Enoch Godongwana 2021, during his Medium-Term Budget Policy Statement, identified the release of Spectrum as one of the key structural reforms that will accelerate the South African government’s economic recovery plans.

For the year under review, one of the Authority’s major victories was licensing a high-demand radio frequency spectrum.
This process was marred with various litigation activities due to our important work defending the decisions made within the confines of the regulatory framework.

The spectrum auction yielded over R14 billion for the National Fiscus.

The licensing of the spectrum will go a long way in bridging the digital divide gap, facilitating the deployment of digital infrastructure for consumers and the business sector, enabling the digital economy, and participating in the fourth industrial revolution.
During the year under review, the objective was to review various regulatory interventions to ensure continued customer service.

ICASA did so by engaging multiple stakeholders in the form of public hearings, responses to questionnaires, comment solicitations and one-on-one meetings to assist us in making informed regulatory decisions.

One of the key documents is the annual State of Information and Communications Technology (ICT) Report.
The Authority amended the Must-Carry regulations by inserting Regulation 6A, which aligns the regulations with section 60(3) of the ECA.
Amongst others, the Authority published the final Regulations and Reasons Document following the conclusion of the market inquiry into mobile broadband services to assess the state of competition in the mobile broadband services sector and to determine whether there are markets or market segments that may require regulation in the context of a market review in terms of section 67(4) of the ECA.

205 On 01 November 2021, South Africans took to the polls to vote in the local government municipal elections.
The elections are a pivotal historical event for our young democracy, and a right many have fought for.

The Electronic Communications Act calls upon the Authority to allocate airtime to political parties and independent candidates to ensure fair coverage of the various political campaigns throughout the broadcasting period.

Guided by the regulations, ICASA allocated PEB (s) and PA(s) to ensure that our citizens were equipped and informed in deciding whom they elect as their political representatives.
ICASA’s continued participation in the International Fora, coupled with the confidence displayed by our counterparts, demonstrates how our capabilities are viewed internationally and validate South Africa’s standing in the global ICT arena.

One of the key highlights of the international programme was the signing of the Memorandum of Understanding with the United States Federal Communications Commission.
Non-performance and underlying reasons: 12.5.2 Financial Performance During the last quarter of the financial year, the Authority successfully auctioned High Demand Spectrum.

Invoices for the successful bidders were raised during March 2022, which significantly increased the Receivables from the non-exchange balance.

The invoices are due in May 2022, being the 2022/23 financial year.
206 The statement of financial position also reflects an increase in the bank balances, which represent the timing differences between the licensees paying their invoices and ICASA transmitting the funds to the National Revenue Fund (NRF).

The Authority remains solvent, given that its assets exceed its liabilities.

Revenue increased by just over R20 million compared to the 2020/21 financial year, whereas expenditure increased by R53 million.
The increase in expenditure is mainly due to the additional legal fees the Authority incurred in defending the various litigation.

The second item that contributed significantly to the increase in expenditure is the increase in consulting and professional fees, which was undertaken as part of the Annual Performance Plan targets.

The result is a profit of just over R8 million (R38,8 million for 2020/21).

In conclusion, the Authority spent 72 per cent of its budget of R674 million.
The Authority remains a going concern for the foreseeable future.

12.5.3 Audit Opinion Annual Financial Statements ICASA received an Unqualified audit opinion with findings.

The emphasis of matters relates to material Impairments - National Revenue Fund - impaired receivables from non-exchange transactions amounting to R87 770 681 (2021: R71 692 160) because of potentially irrecoverable receivables from non-exchange transactions.
Audit of compliance with legislation Expenditure management: • the entity did not take effective and appropriate steps to prevent the irregular expenditure of R33 million as required.

• payments were not made within 30 days or an agreed period after receipt of an invoice, as required.

Internal control deficiencies raised by the Auditors • Management Controls were not always effective in ensuring oversight, monitoring and review of compliance with laws and regulations.
• Management did not implement adequate controls to prevent and detect non- compliance with laws and regulations, which resulted in irregular expenditure.

• Management did not implement adequate controls to ensure that payments to suppliers are made within 30 days after receipt of an invoice.

207 • Management did not implement adequate controls to ensure that the submitted annual financial statements were free from material misstatement.
Digital Migration The court case on the digital migration deadline resulted in ICASA not fully allocating the spectrum amount of R14 billion in the current financial year and only recognising R8.6 billion.

The following recommendations are to be addressed: ICASA Council should further strengthen its oversight responsibilities over internal controls relating to credible financial reporting to address the payments not made within 30 days.
12.6 Film and Publications Board (FPB) The Films and Publications Act, 1996 (Act No.
65 of 1996), as amended, regulates the creation, production, possession and distribution of films, games, and certain publications to: • 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; • protect children from exposure to disturbing and harmful material and premature exposure to adult material; • make the use of children in pornography and exposure to pornography punishable; • criminalise the possession, production and distribution of child pornography; and • 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: • Technology-driven content regulation; • Public education (empower adults and protect children); • Legislative review (technologically neutral legislation regime); • International and local partnerships (to ensure better regulation of the web) – with a renewed focus on local partnerships; • Research, Compliance Monitoring and Monitoring and Evaluation to inform future priorities; • Resource mobilisation and develop appropriate funding models; and • Strategic institutional alignment.
208 12.6.1 Performance Highlights For the period under review, the Entity achieved a 66.7 per cent performance rating against the targets planned for the period translating to 10 of the 15 targets achieved during the reporting period.

The amendments to the FP Act expanded the mandate of the FPB to include all content distributed online and on other digital platforms.
Whilst the Constitution guarantees the right to freedom of expression, section 16 (2) of the Constitution identifies certain expression which would not be entitled to such protection, such as expression that amounts to propaganda for war, incitement of imminent violence or advocacy of hatred based on race, ethnicity, gender or religion, and that constitutes incitement to cause harm.

The regulation of the distribution of content distributed in SA continues to be a core function of the FPB.
The inspection of all content distribution platforms to identify consistent non-compliance results in enforcing compliance through the raids conducted in partnership with Law Enforcement Agencies.

The partnership with LEAs is a regulatory imperative for the FPB to yield visible and tangible enforcement of the FP Act, and to assist in expediting and increasing prosecution rates for the illegal distribution of physical content.
Eighty-eight raids were conducted during the year under review, and an estimated 36 066 illegal or pirated discs with a street value of R12 million were confiscated, and analysed.

The bulk of it consequently destructed on 18 June 2021, 24 November 2021 and 31 March 2022.

An alarming number of discs that were confiscated contained adult pornography.
The 3 770 discs confiscated during the raids have multiple individual pornographic films with at least six found to contain scenes that include bestiality – an act of sexual conduct that is illegal and punishable by law in SA.
Non-performance and underlying reasons: FPB’s non-achieved targets related to: (i) production of Content Classification Index indicating baseline confidence levels; (ii) Implementation of the Brand Repositioning Strategy; (iii) Disseminate the findings of the 2019/20 Convergence Survey; (iv) obtaining clean audit opinion; (V) Implementation of the Change Management Projects Phase II and Phase III; as well as (vi) 95 per cent implementation of the ICT plan.
209 Non-achievement was attributed to (i) failure to find a suitable service provider in the niche market; (ii) The Brand Repositioning Strategy that could not be implemented due to delays in finalising corporate identity guidelines designed.

This project depended on the approval of EXCO and the Council; hence it could not be implemented.
(iii) one abstract that was submitted to one publisher based on a clause restricting the same research from being published with different publishers (iv) Phase II and Phase III Change Management not being implemented due to the inability to secure a session with EXCO for the service provider as well as (V) the entity delivering 41/44 of planned activities in the ICT plan constituting 93 per cent achievement due to delays in obtaining a proposal for Disaster Recovery and Business Continuity Service from SITA.
12.6.2 Financial Performance Financially the Entity ended the period in a positive financial position, with our assets far exceeding our liabilities.

While revenue, particularly from regulation fees, increased (R8.8m) relative to the previous period (R7m), we are worried by the rising expenses headlined by employee costs (R57m – 2021 and R65m -2022).

This amount covers the remuneration of the classifiers as well.
12.6.3 Audit Opinion The FPB received a Clean audit opinion (Unqualified with no findings) from the AGSA in the 2021/22 Audit Report.

This implies that there were no material misstatements in the financial statements and non-compliance with all relevant legislation and performance objectives.
12.7 South African Broadcasting Corporation (SABC) The South African Broadcasting Corporation (SOC) Limited (“The SABC”) is a Schedule 2 (“Major Public Entity”) entity in terms of the Public Finance Management Act No.

1 of 1999 (“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 Independent Communications Authority of South Africa (“ICASA”) Regulations and license conditions of the Corporation’s five television channels and 18 radio stations.

210 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 must adhere to its respective licence conditions and the provisions of the Broadcasting Act, including the SABC Charter.

The SABC has advanced the view that the Broadcasting Act should not contain a distinction between the two services because, in practice, it has a unitary model that governs its services.
Due to this arrangement, the SABC is unable o prepare separate Annual Financial Statements for each group of services (PBS 15 radio stations and two TV channels; PCS, three radio stations and one TV channel).

However, after developing a framework for allocating overheads, the Management Accounts distinguish between PCS and PBS.

12.7.1 Performance Highlights During the year under review, the SABC Board has had a full complement of the Executive team, which contributed to the corporation's stability.
Even though the financial predicament was also spurred by the COVID-19 pandemic and the subsequent and unfortunate negative economic environment did not assist much in resolving legacy issues.

As the world faced arguably the worst global pandemic for a century, alongside an ‘infodemic’ of pervasive mis/disinformation, the role of an independent, trusted public broadcaster became more important than ever.
The Honourable State President appointed eight Non-Executive Directors (NEDs) on 11 April 2019, resulting in a fully quorate and functional Board.

One vacancy arose because of resignation in the previous financial year.

Dr Renee Horne was subsequently appointed on 15 June 2022 to the Board of 12 Non-Executive Directors and three Executive Directors.
The general performance of the SABC is summarised below in terms of its Turnaround Plan and is followed by the assessment of each of the five pillars’ performance indicators.

The SABC’s Turnaround Plan is based on the principle that the sustainability of the public broadcaster – through the financing of public mandate programming – is crucial to constitutional democracy.

During the year under review, the SABC remained steadfast in attaining its strategic imperatives governed by its Turnaround Plan.
The SABC operations include a provincial office in each of the nine provinces.

A Regional Operations Manager, representing the Corporation in all the corners of the country, heads each 211 provincial office.

The year under review was the first under the new organisational structure informed by the SABC’s new Target Operating Model.
In terms of mandate delivery, the Corporation continued to excel in its quest to keep the nation informed, educated and entertained through content that also promotes social cohesion.

In addition to near-flawless broadcast performance for the year, two occasions from the year under review stand out.

The first was the coverage of the unfortunate July 2021 unrest.

The second highlight was the outstanding coverage of the local government elections held in November 2021.
Furthermore, despite resource constraints, the SABC News provided unrivalled elections coverage, including pre-and post-election coverage.

However, most of its revenue remained challenging.

Initial improvements in revenue generation witnessed in the early part of the year could unfortunately not be sustained due to internal and external factors.

Internal factors are related to continued audience declines due to challenges in timeously securing new television content and sufficiently marketing it.
The year ended with the SABC having implemented 96 per cent of the key actions in the SABC Turnaround Plan that were within its control.

212 12.7.2 Financial Performance Despite an improvement in an overall loss, the SABC continued to suffer losses for a 4th consecutive year.

The net loss amounted to R201 million, a 62 per cent reduction from R530 million in the 2020-21 Financial Year.
The income statement projections continue to indicate operating losses of R123 million, indicating that the SABC will continue to operate at a loss soon.

The reporting period constitutes the second full year of implementing the Turnaround Strategy and utilising the R3.2 billion recapitalisation funding from the National Treasury.

The desired revenue targets were not met, largely due to a drop in audience share, which impacted advertising revenue (the most significant revenue stream for the Corporation).
However, as in previous financial periods, there were savings and underspending of expenditure; see the graph below on Turnaround Strategy implementation.

For the 2022 Financial Year, the SABC experienced a net loss cost-to-income ratio of 105 per cent, a little less than the 112 per cent in 2021; this remains unsatisfactory.

Net cash flow from operating activities shows a negative increase of 14 per cent from R403 million to R459 million.
Payments to employees show an increase of 3 per cent from R2.1 billion to R2.2 billion despite the 495 vacancies as of 31 March 2022.

There was an increase in investment of content inventory by 33.9 per cent, up from a 20 per cent decrease in 2021.

R119 million worth of capital expenditure was incurred in the current year compared to the R116 million incurred in 2021.

The SABC has experienced a downward trajectory in revenue generated over the past five years.
The graphs below (Revenue Performance) indicate the proportionate percentage shares of the various revenue streams to the total revenues of the SABC over the current and previous Financial Years.

213 While Advertising Revenue has significantly dropped, more important to note is the undesirable decline in grant funding to 3.2 per cent, down from 3.9 per cent whereas it is crucial for the SABC’s portion of the unfunded mandate, see graph above.
There is a total reduced Advertising Revenue (AdRev) of R288 million from R3.35 billion in 2021 compared to R3.1 billion in 2022, further splitting advertising revenue between television and radio platforms.

All in all, AdRev declined by 8 per cent in 2022 as compared to 18 per cent in 2021 due to the decline in audience share.

In total, revenue was R1.34 billion or 21 per cent below target.

12.7.3 Audit Opinion The Corporation received a Qualified audit opinion with findings.
Bases of qualification were that auditors could not obtain sufficient appropriate audit evidence that the irregular expenditure for the previous years had been accounted for due to the public entity not implementing adequate procedures to identify and record all instances of irregular expenditure.

R2 898 million (2021: R2 855 million).

Emphasis of matters related to: Going Concern - the SABC has incurred a net loss of R201 million (2021: R530 million).
Significant judgement: defined benefit asset - The SABC has a defined benefit pension plan of R1 670 million (2021: R1 796 million).

Significant judgement: TV licences - the SABC has recognised TV licence fees of R815 million (2021: R788 million) of the total licence fees billed of R4 446 million (2021: R4 416 million).

The public entity has not recognised TV licence fees to the amount of R3 631 million (2021: R3 628 million).
214 Significant uncertainties - the public entity is a defendant in several lawsuits.

The ultimate outcome of these matters could not be determined currently.
Audit of annual performance report Material findings were reported on the usefulness and reliability of the performance information of the selected strategic goal (Strategic Goal 2): • Content and Platforms: Percentage of new programmes broadcast within the year: achievement of the “not applicable” reported against the target of 20 per cent in the annual performance report due to the unavailability of the programme scheduling system.
• Share of diary quarter-hours listened to percentage: achievement of the “not applicable” reported against the target of planned targets of Public Broadcasting Services (PBS): 67 per cent and Public Commercial Services (PCS): 8 per cent in the annual performance report due to a new measurement not being comparable to the previous measurement.
Audit of compliance with legislation • the annual financial statements submitted for auditing was not prepared in accordance with the prescribed financial reporting framework.

• uncorrected material misstatement of irregular expenditure resulted in the financial statements receiving a qualified opinion.

• Auditors could not obtain sufficient appropriate audit evidence that disciplinary steps were taken against some of the officials who had incurred and/or permitted irregular expenditure.
• effective and appropriate steps were not taken to prevent irregular expenditure, and fruitless and wasteful expenditure.

Internal control deficiencies raised by the Auditors • Management did not prepare regular, accurate and complete financial and performance reports that are supported and evidenced by reliable information.

• Non-compliance with legislation could have been prevented if management had properly reviewed and monitored compliance.
12.8 State Information Technology Agency (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 215 self-funding, and the 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 Government.
The establishment was from the amalgamation of several entities listed below, which had different operating methods, procedures, skills sets, infrastructure and technologies which had to work seamlessly to deliver on its mandate: • Infoplan (Pty) Ltd, the ICT Service Provider to the Department of Defence; • Central Computer Services of the Department of State Expenditure; and • Sub-component Information Systems within the Department of Safety and Security.
The mandate of SITA as stated in the Act is as follows: • 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 • to promote the efficiency of departments and public bodies through the use of information technology.
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 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 2021/22 financial year was the second year of the newly planned and authorised five-year SITA Strategic Plan, carried out through the 2021/22 Annual Performance Plan (APP).
12.8.1 Performance Highlights The overall work and performance contract for SITA for this financial year, was built around nineteen (19) targets.

Our performance output resulted in eleven (11) targets being fully met, and eight (8) targets were not achieved.

The annual performance result is at 57.89 per cent, and 216 more service delivery detail and reasons for variations are included elsewhere in the relevant sections of this annual report.
This is a drop compared to the 60 per cent and 72.2 per cent achieved in Financial Year 2019/20 and Financial Year 2020/21, respectively.

SITA has revised its customer-centricity programme to eliminate internal inefficiencies and address critical areas of customer service challenges.

Several service improvement initiatives and meaningful customer engagements through various government platforms to improve customer satisfaction and address customer service delivery challenges were also implemented.
SITA continued to prioritise supporting the implementation roadmap of the Department of Communications and Digital Technologies (DCDT) for the national e-Government Strategy, which is focused on digital transformation and modernising the public service to improve service delivery to our citizens.
A key achievement for SITA in this financial year has been the data centre modernisation plan, in which the first phase of the upgrade is almost completed, as we set our sights on meeting hyperscale infrastructure requirements.

A significant number of employees were trained on core skills such as cloud computing and software development.

In addition, SITA embarked on a leadership skills assessment.
On 16 February 2022, the Constitutional Court, in a majority judgment, held that the Regulations were invalid and that the Minister of Finance usurped its powers when promulgating the Regulations.

As a result, SITA was compelled (complying with a National Treasury instruction) to suspend all procurement processes advertised on or after 16 February 2022 until NT directed otherwise.

This negatively impacted some of the planned APP targets for the financial year.
SITA’s APP success was predicated on several performance-based elements, most of which were beyond SITA’s control.

The consequence of the continuing Covid-19 pandemic outbreak, which resulted in protracted procurement procedures, was one of the primary identified performance constraints that have hampered SITA’s capacity to deliver quality service delivery.

217 12.8.2 Financial Informations The Entity continues to be financially sustainable.
The Entity's financial performance has improved compared to the previous financial year despite some of its challenges during the financial period, as illustrated below.

Even though the Covid-19 pandemic has negatively impacted South Africa’s current political and economic landscapes, SITA has achieved an EBITDA of R633.7 million, which is likely to rise further in the current financial year, with a net collection rate of 91 per cent.
On the other hand, a 2 per cent growth rate has been realised from the 10 per cent revenue growth baseline based on 2020-2021 SITA’s service portfolio in scope.

Fruitless and wasteful expenditure amounting to R3 714 310.45 was incurred in respect of software licences that were not deployed.

In addition, a new case was identified amounting to R8 662.80 expenditure paid to the City of Tshwane for interest charges.

12.8.3 Audit Opinion SITA received a Qualified audit opinion with findings.
Emphasis of matters was as follows: Areas of qualification: • Revenue • Cost of Sales • Operating Expenses • Property, plant and equipment • Intangible assets • Trade and other receivables • Income tax expense • Capital and Operational commitments • Cash flows from operating activities Emphasis of matters related to: • Restatement of corresponding figures • Material losses – Disposal of Assets Audit of compliance with legislation • Annual financial statements 218 • Expenditure management • Procurement and contract management Internal control deficiencies raised by the Auditors • Action plan not implemented effectively, resulting in material findings.
• Lack of adequate oversight regarding compliance and related internal controls to prevent irregular expenditure and fruitless and wasteful expenditure.

• Effective systems of internal control were not implemented to ensure accurate financial statements.

Significant findings arising from the submitted AFS indicated that the accounting standards were not applied properly when preparing the AFS.

R3.7 million of software licences paid for that were not deployed.
SITA services were rendered after the contract expiry date, an invalid extension of contracts, payments made to suppliers who were not taxed compliant at the date of award, and shortened advertisement periods.

R250 million incurred at SITA detected in prior years related to ongoing contracts Lastly, SITA Accounting Authority must further strengthen its oversight responsibilities over internal controls relating to credible financial reporting.
12.9 SAPO The South African Post Office SOC Limited was established on 1 October 1991 as a company in terms of the Companies Act, No.

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), the SA Post Office was designated as a state-owned company (SOC) as per the South African Post Office Limited Act No.

22 of 2011, as amended.

The SA Post Office is also a major state entity in terms of Schedule 2 of the PFMA No.

1 of 1999 (as amended).

There has been an overall decline in the service delivery environment of the SA Post Office because of Covid-19 combined with the constrained financial position.
219 The strategic objectives over the 2021/22 Financial Year considered 7 key areas focusing the SA Post Office towards ensuring compliance with and supporting the 4IR principles identified by the UPU.
The seven strategic objectives identified for the Strategic Plan: • Financial Sustainability • Optimised Assets and Infrastructure • Customer and Communities First • Efficient Systems & Processes • Business Modernisation & Digital Transformation • Culture of Excellence • Corporate Governance 12.9.1 Operational Highlights There was no amendment to the Annual Performance Plan 2021/22 Financial Year as approved by the Board of Directors.
A total of 17 Key Performance Indicators (KPIs), aligned towards attaining the strategic objectives per the Corporate Plan, were set and measured for the 2021/22 Financial Year.

Performance for the 2021/22 Financial Year has been poor, with only 3 KPIs achieving 100 per cent of the planned target or 18 per cent overall achievement on target.

Non-achievement was attributed to different reasons ranging from lack of funding to the challenges with the availability of the tools of trade.
This also impacted on the entity’s ability to implement corrective measures for previous audit findings.

Furthermore, the financial challenges experienced by the SA Post Office have directly contributed to the poor performance on performance targets.
In response to the Covid-19 threat, the Covid-19 Steering Committee was constituted on 23 March 2020, with the Chief Risk Officer as the Chairperson with Executives from various Business Units also forming part of the Committee to ensure representation across the organisation.

Similar structures were replicated at the regional level, reporting into the main Steering Committee.
220 The Steering Committee remained in force to manage the remnant risks associated with the pandemic, in particular, the obligation of the employer to provide an occupationally safe environment.

As at 31 March 2022, the SA Post Office had 2 768 confirmed Covid-19 cases, 2 691 recoveries, 5 active Covid-19 cases and 72 Covid-19-related fatalities.

The recovery rate improved from 93.1 per cent to 97 per cent from December 2021 to March 2022, expressed as a percentage of confirmed cases.
During October 2021, the Post Office of Tomorrow strategy was developed under the guidance of the Minister and Deputy Minister of Communications and Digital Technologies and the SA Post Office Board of Directors to move the organisation on the journey towards digitalisation and modernisation.

The SA Post Office had numerous leadership vacancies during the 2021/22 Financial Year, and the new CEO's appointment on 1 April 2021 has brought stability to the Organisation.
The positions of Chief Financial Officer, Chief Operating Officer, Chief Information Officer and Chief Audit Executive remained vacant during the 2021/22 Financial Year.

A number of vacancies on the Board of Directors have persisted during the 2021/22 Financial Year.

The position of Chairperson of the Board of Directors is currently performed by Mr Sipho Majombozi in an acting capacity.

The average mail carry-over per month increased from 2.73 million items to 4.03 million items at the end of March 2022.
The withdrawal of vehicles has further contributed to the decline in delivery performance.

The mail delivery performance as at 31 March 2022 was recorded at 68.36 per cent, substantially below the ICASA regulated standard of 92 per cent.

Social Grants The payments of social grants are of national importance, and payment continued at the SA Post Office branches and cash pay points during the financial year.
The SA Post Office also extended this service to assist with the payment of Special Relief of Distress (SRD) grants, introduced by the SA Government, to offer relief to South Africans worst affected by the Covid- 19 pandemic and the associated economic downturn.

Payment of the SRD grants continued during the financial year.
221 The SASSA/SA Post Office Social Disbursement Accounts (SDAs) decreased by 10% during the 2021/22 FY, bringing the total number of beneficiaries to 7 204 262 compared to 7 964 381 during the 2020/21 FY.

Digital Terrestrial Television (Broadcast Digital Migration Project) The SA Post Office continued to play a vital role in the objective of migrating television transmission from analogue to digital.
During the 2021/22 FY, the SA Post Office registered a total of 362 425 indigent households to receive subsidised Set-Top-Boxes and distributed approximately 356 000 Set-Top-Boxes to qualifying households.

Online MVL An online platform for the renewal of motor vehicle licences was successfully launched.

eCommerce Logistics has made good progress in fulfilling the last mile, clearing, warehousing and delivering eCommerce products and services.
The Customs Declaration System (CDS) and upgraded International Postal System (IPS) have strengthened the technology backbone to operate in the eCommerce space.

Many customers were successfully integrated into the IPS platform, including Wish.Com, Mail Americas, Signature Mail, ICE, and CNE.

A number of vacancies on the Board of Directors and Executive level have persisted during the 2021/22 Financial Year.
The SA Post Office Group headcount was reduced from 15 826 at 31 March 2021, to 14 460 as at 31 March 2022, a reduction of 1366 employees.

12.9.2 Financial Performance The revenue target of R4.812 billion has not been attained at R3.033 billion (63%).
The lower- than-projected revenue performance is due to the lingering effects of the Covid-19 lockdown and the associated business impact, increased customer migration to digital alternatives and transaction volumes, together with the weak financial position of the SA Post Office and suppliers not having been paid, thus withdrawing services, further impacting revenue generation.
222 The low revenues have further contributed to the nonpayment of trade, international, and other payables, including accruals, amounting to R4.4 billion.

In addition to the above, a further amount of R2.8 billion is owed to Postbank.

The expense budget for the 2021/22 Financial Year at R6.912 billion was achieved at R6.130 billion.

Staff expenses comprise approximately 61 per cent of all expenses, followed by Security and Property expenses at 9 per cent, respectively.
During the 2021/22 Financial Year, a total of 3 437 crime incidents were reported with a total reported loss value of R105.2 million.

The SASSA withdrawal cumulative transaction value for the financial year is approximately R119.2 billion, with 55 per cent withdrawn at ATMs, 33.9 per cent at Retailers, 4.4 per cent at SA Post Office branches and 6.6 per cent at Cash Pay Points (CPPs).
During the 2021/22 Financial Year, there has been a continued mismatch between monthly revenues generated and corresponding operating expenditure, resulting in a deficit to meet monthly financial obligations.

The revenue shortfalls have added further pressure to the already constrained cash flow position of the SA Post Office and the achievement of the planned strategies in the corporate plan.

12.9.3 Audit Opinion SAPO received a Disclaimer audit opinion with findings.
The basis of the disclaimer is summarised as follows: • Going concern - audited Annual Financial Statements show material losses of R2,181,243,000 and liabilities exceed assets by R4,081,666,000, a material amount • The Auditor could not obtain sufficient appropriate audit evidence that management had properly accounted for the following in the financial statements.
The Auditor was unable to confirm the disclosed amounts by alternative means and determine whether any adjustments were necessary to the disclosed amounts.
• Funds collected on behalf of 3rd parties R467.893.000; • Trade and other receivables (including uncleared control accounts) R1.478.151.000; • Payable to the Postbank R1.992.606.000; • Trade and other payables R1.304.432.000 and R1.263.150.000; • Financial service revenue R1.256.295.000; • Other operating expenses R1.979.290.000 and R1.972.420.000; • Fruitless and wasteful expenditure.
223 Failure to recognise the following items disclosed in the financial statements according to the requirements of the applicable mandatory accounting standards (IFRS): • Right-of-use assets and lease liability (IFRS16: Leases) R195.233.773 and R132.829.223; • Cash and cash equivalents (IAS1:Presentation of financial statements) resulting in R76.497.300 understatement and overstatement; • Related parties (IAS24:Related party disclosures) resulting in R761.620.215 understatement; • Accumulated loss (IAS1:Presentation of financial statements); • Comparative figures (IAS8:Accounting policies, changes in accounting estimates and errors).
The Emphasis of matters related to: • material impairment of R703 996 000 that was incurred as a result of the impairment of the loan to the Courier and Freight Group (Pty) Ltd; • material losses due to criminal conduct that was incurred as a result of fraud and theft; • an amount of R861 000 000 of growth funds that were withdrawn from the PRMA investment to finance a portion of the company’s current obligations; and • contingent liabilities as SAPO group is a defendant in number of lawsuits.
Going concern – SAPO liquidity challenges as a result of losses of R2.4 billion for the 2021/2022 Financial Year and R2.2 billion for the 2022/2023 Financial Year.
Audit of the annual performance report • Material findings identified on the usefulness and reliability of the reported performance information regarding the following performance indicators under this strategic objective 4: o Key performance indicator 4.1 - Achieve the regulated Mail Delivery standard; o Key performance indicator 4.3 - Rollout of IPS equipment.
224 Audit of compliance with legislation • Annual financial statements were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records.

• Strategic planning and performance management - Corporate plan submitted to the director-general of the Department of Communications and Digital Technologies designated by the executive authority did not include the affairs of the subsidiaries of SAPO.
• Expenditure management - Effective and appropriate steps were not taken to prevent fruitless and wasteful expenditure amounting to R242 637 000 and Irregular Expenditure amounting to R611 708 000.

• No consequence management against officials who incurred irregular expenditure and Fruitless and Wasteful Expenditure and allegations of fraud at the retails which exceeded R100 000 were reported to the SAPS, as required.
• Procurement and contract management - some of the goods and services were not procured through a procurement process which is fair, equitable, transparent, and competitive.

13.
Observations 13.1 The Department The Committee noted: • • • its appreciation for the presentation made by the Department; that the Department obtained an unqualified audit with findings; that the Department achieved 32 out of the 35 or 91 per cent annual targets committed to during the 2021/22 financial year; • with concern that entities of the portfolio have regressed in most performance areas; • with great concern that the majority of entities did not correctly apply the Public Finance Management Act (PFMA); • with great concern that the highly paid financial experts were making mistakes in respect of the application of the PFMA; and that management should be held accountable; • with concern that management across most entities did not implement proper record- keeping; • with concern that there were delays in the approval of the final Framework on Digital Transformation and Digital Inclusion; 225 • with concern that the target of the integrated plan of action in support of the GBV Action was still pending due to the delays; • that the target for analogue switch-off of SABC television transmitters was not met due to the court litigation; • that the Broadcasting Digital Migration (BDM) policy has a detrimental effect on all entities implementing the project (USAASA/USAF, SAPO and SENTECH) and directly impacts negatively on the SABC mandate; and • with great concern that there seems to be a leadership crisis across most entities.
13.2 Sentech The Committee noted: • • • its appreciation for the presentation; that Sentech received an unqualified audit opinion with findings; that Sentech achieved 7 out of 11 targets which translates to 64 per cent of performance achieved; • that the expected credit losses of R82 million (R74 million 2021) were raised on the trade debtors balance and that more than 80 per cent of the expected credit loss pertains to community broadcasters; • that the merger between Sentech SOC Limited and BBI has the potential to embody competitiveness within the market; • with concern that the annual financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework; • with concern that the auditors identified material misstatements in the annual performance report; • with concern that there is inadequate oversight responsibility on the preparation of accurate financial information performance information by management which resulted in material misstatements; • that the merger with BBI has left the entity with uncertainty and many skilled staff have left the organisation; and • that Sentech had not incurred any losses.
13.3 SABC The Committee noted: • • its appreciation for the presentation made by the SABC; that the SABC received a qualified audit opinion with findings; 226 • with concern that the SABC had 50 targets, of which 23 targets were achieved translating to 43.4 per cent performance achieved; • that the SABC incurred a net loss of R201 million; • with greater concern that the entity was a defendant in a number of lawsuits; • that the Auditor General indicated internal control deficiencies, • with concern that there seems to be a leadership crisis at the entity; • with respect that the financial statements were not prepared correctly; • with great concern about the irregularity of the security contract that was wrongly awarded; • with concern that an amount of R2 million was used for the rental payments of unoccupied offices; and • that without the Department and the Committee support speeding up enabling legislation, the total turnaround of the SABC shall be impossible irrespective of which Board and Executives are appointed to the Corporation.
13.4 NEMISA The Committee noted: • • • • • its appreciation for the performance improvement made by NEMISA; that NEMISA received an unqualified audit opinion with findings; that most targets were achieved except only one target of the 22; that AGSA noted internal control deficiencies; that there was a lack of adequate oversight responsibility regarding the preparation of the annual financial statements, annual performance report, and ensuring compliance; • that there was inadequate implementation of proper record-keeping practices.
13.5 .ZADNA The Committee noted: • its appreciation for the presentation; • with further appreciation that .ZADNA obtained a clean audit (unqualified audit opinion with no findings); • that .ZADNA has managed to achieve 11 out of the 14 planned targets translating to 79 per cent achievement; • that the targets that were not achieved related to the promulgation of the registry and registrar license framework, the registration of the 25 000 domain names and increasing 227 the namespace by 0.25 per cent through the Companies and Intellectual Property Commission.
13.6 ICASA The Committee noted : • appreciated the work done by ICASA to date; • • that ICASA obtained a unqualified audit opinion with findings; that ICASA achieved 46 of its planned 53 targets, which translates to a performance of 86.8 per cent; • with concern that ICASA does not pay debtors on time.
13.7 FPB The Committee noted : • its appreciation for the presentation; • with further appreciation that FPB obtained a clean audit (unqualified audit opinion with no findings); • that the FPB achieved 10 of its planned 15 targets, which translates to a performance of 66.7 per cent; • that FPB’s non-achieved targets related to: (i) production of Content Classification Index indicating baseline confidence levels; (ii) Implementation of the Brand Repositioning Strategy; (iii) Disseminate the findings of the 2019/20 Convergence Survey; (iv) obtaining clean audit opinion (V) Implementation of the Change Management Projects Phase II and Phase III; as well as (vi) 95 per cent implementation of the ICT plan; • with serious concern about the vacant posts at the entity; • • • that the FPB had accumulated a surplus of R46 million; that the assets of FPB exceed liabilities; improvement in finances of the FPB; and • with concern that the R2.8 million was paid to ex-executives.
13.8 USAASA/USAF The Committee noted : • its appreciation for the presentation; • with concern that USAASA obtained a qualified audit with findings; • that USAASA achieved 3 of its 6 planned targets which amount to 50 per cent; • with concern that USAASA’s audit outcome was a regression; 228 • that USAASA targets that have not been achieved related to (a) 100 per cent of valid invoices paid within 30 days from the date of receipt, (b) reduction of Wasteful and Fruitless expenditure (c) reduction of Irregular Expenditure; • that non-achievement was attributed to (a) delays in the analysis, classification and investigation of Irregular Expenditure due to capacity constraints (b) the departure of the ACFO led to delays in the appointment of an authorised official to release payments on the banking payment platform; • that USAF achieved 6 of its 12 planned targets which translates to 50 per cent • • achievement; that USAF obtained a disclaimer with findings; that USAF targets that have not been achieved related to the subsidised Set-Top-Box installations coordinated and monitored in four Provinces (FS, NC, NW and Limpopo), subsidised digital television installations, provision of broadband internet connectivity to 280 sites, amongst others; • with concern that there was a finding on property, plant and equipment; and • that a performance improvement was noted in respect of USAF.
14.9 SITA The Committee noted : • • • • that SITA achieved a qualified audit opinion with findings; that SITA has managed to achieve 11 out of the 19 planned targets translating to 57.8 per cent; that the entity continues to be financially sustainable; that the financial performance of the entity has improved when compared to the previous financial years; • with concern that the accounting methods were under par; • that SITA incurred material losses in respect of the disposal of assets; • with concern that there was a finding of property, plant and equipment mismanagement; and • with great concern that R1.5 million was paid for an event that did not happen.
14.10 SAPO The Committee noted: • that SAPO’s performance worsened compared to the prior year’s performance of 29 per cent; • with great concern that SAPO only achieved three (3) of its planned 17 targets; 229 • with concern that SAPO obtained a disclaimer however with reduced material matters as compared to the previous Financial Year; • that the non-achievement of SAPO’s targets was attributed to different reasons ranging from lack of funding to the challenges with the availability of the tools of trade; • that the above impacted the entity’s ability to implement corrective measures for previous audit findings; • with concern that SAPO experienced liquidity challenges as a result of losses of R2.4 billion for the 2021/2022 Financial Year and R2.2 billion for the 2022/2023 Financial Year; • that SAPO indicated that the implementation of the Post Office of Tomorrow Strategy was expected to improve its financial performance; • that financial assistance is required to settle the historical debt and implement the Post Office of Tomorrow; • with concern that the audit opinion of the disclaimer indicated that the information was not available and that it required clarity in this regard; • that SAPO indicated that no increases were paid to executives and that allowances have been taken away; • with concern that SAPO has a management problem and that, except for the CEO position, everyone is still acting in a contract position; • with serious concern that the positions of Chief Financial Officer, Chief Operating Officer, Chief Information Officer and Chief Audit Executive remained vacant; • with concern that there was an exodus of talented skills; • with appreciation that SAPO welcomes the investigation by law enforcement agencies on allegations of employees medical aid payments fraud; • SAPO's assurance that employees were covered by Medipos Medical aid scheme.
However, a decision to stop medical aid payments post retirement/employment was taken in 2020 due to financial challenges; • with concern that the total liabilities of SAPO are more than R4 billion and that SAPO was in a terrible financial state; • with concern that SAPO gave notification to withdraw its employer group participation resulting in the withdrawal of its representatives in the Board of trustees; • hat an amount of R457 million was given to support employees who qualified for the post-retirement medical aid, and SAPO was in the process of paying out lump sums to qualifying employees as it is a liability to SAPO; and • with concern on the accumulation of court litigations at SAPO.
230 15.
Recommendations: 15.1 Department The Committee resolved that the Minister should: • 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 Auditor General are addressed; • ensure that clear action plans are shown in respect of work done; • ensure that the Department does not delay the implementation of BDM; • ensure that the Department reports back to the Committee with updates in respect of timelines on the BDM issues; • ensure that all entities involved in the BDM project are held accountable for their role in the finalisation of the BDM process; • ensure that all non-compliant entities are held accountable; • ensure that the Committee partake in oversight visits to have proper interaction with all entities, including those performing well; • ensure that remedial action is in place to ensure that all issues across all entities are addressed; • ensure that we set up a further meeting of the committee to meet with underperforming entities; and • ensure that progress reports are provided to the Committee ahead of time to deal with relevant issues.
15.2 Sentech The Committee resolved that the Minister should: • ensure that the entity has processes in place to comply with the Auditor General’s findings; and • ensure that Sentech addresses compliance issues with the prescribed financial framework for its annual financial statements.

15.3 FPB The Committee resolved that the Minister should: • ensure that all vacant posts are filled; and 231 • ensure that the entity has processes in place to comply with the Auditor General’s findings.
15.4 .ZADNA The Committee resolved that the Minister should: • ensure that the Entity maintains a clean aidit; and • ensure that consequence management is applied to the two staff members accused of stealing from the entity.

15.5 NEMISA The Committee resolved that the Minister should: • ensure that the entity has processes in place to comply with the Auditor-General’s findings; • ensure that there was an adequate implementation of proper record-keeping; and • ensure that all key vacancies are filled.
15.6 USAASA/USAF The Committee resolved that the Minister should: • ensure that the entity has processes in place to comply with the Auditor-General’s findings; • ensure that all targets are attained; • ensure that processes in respect of consequence management would be implemented; • ensure that all key vacancies are filled at USAASA/USAF; and • ensure that the transition period of winding up USAASA and transformation of USAF into a Digital Development Fund does not compromise adherence to audit action plans that respond to AGSA findings.
15.7 ICASA The Committee resolved that the Minister should: • ensure that processes are in place for ICASA to pay its debtors on time; • ensure that ICASA achieves a clean audit in future; and • ensure that proper action plans are in place to address all issues raised by the Auditor- General.
232 15.8 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 Auditor- General; • ensure that consequence management is implemented; • ensure that processes are in place to deal with the legislative constraints at the entity; and • ensure that SABC operations continue irrespective irrespective of whether a new Board is in place or not.
15.9 SITA • ensure that consequence management processes are applied for the transgressions and mismanagement; and • ensure that the entity has processes in place to comply with the Auditor General’s findings.
15.10 SAPO The Committee resolved that the Minister should: • • • • • • • ensure that proper action plans are in place to address all issues raised by the Auditor- General; ensure that SAPO expedite the development and implementation of performance improvement plan & audit action plans; ensure that SAPO complies with all issues of outstanding legislation; ensure that the SAPO is sustainable to provide the much-needed services and this includes mobilising additional funding from National Teasury; ensure that all outstanding vacancies are filled; ensure that SAPO participate in the investigation by the Hawks into alleged medical fraud; and ensure that consequence management is effectively implemented at SAPO.
The Committee noted that the recommendations by AGSA, which suggested a refresher course for all management across all entities, should be considered; 233 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.
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.

Report to be considered.

234 1 5.


REPORT OF THE STANDING COMMITTEE ON THE AUDITOR-GENERAL ON THE INTEGRATED ANNUAL REPORT OF THE AUDITOR-GENERAL FOR THE FINANCIAL YEAR 2021/22, DATED 21 OCTOBER 2022 The Standing Committee on the Auditor-General, having considered the Integrated Annual Report of the Auditor-General 2021/22, referred to it, reports as follow: 1.
Introduction The Public Audit Act (the PAA) requires the Auditor-General (AG) to submit the annual report, the financial statements, and the audit report on those statements within six months after the end of the financial year to which they relate, to the Standing Committee on Auditor-General (SCOAG) through the parliamentary processes.
The AG satisfied the afore-said requirements by submitting the Auditor-General of South Africa’s (AGSA) annual report, financial statements, and audit report to the Speaker for tabling in the National Assembly and for referral to the SCOAG.
In exercising its responsibility, the SCOAG invited the AG, her management team, and the Independent Audit Committee to make a presentation on the AGSA’s Integrated Annual Report and financial statements, including the Report of Independent Auditors on the Financial Statements and Performance Information for 2021-22 financial year.

Flowing from that interaction, the SCOAG highlighted and deliberated on some key issues raised in that interaction, concerning the tabled Integrated Annual Report of AGSA.

2.
2.

Corporate Governance structures of AGSA The Accounting Officer of AGSA is the Deputy Auditor-General (DAG).

The DAG is appointed in terms of Section 31 of the PAA.

He is expected to amongst others, take all reasonable steps to ensure that full, true, and effective records of all income and expenditure and all assets, liabilities, and all financial transactions of the AGSA are in place.
In the same vein, the AG has to take all reasonable steps to ensure that AGSA 235 2 has and maintains a system of internal audit under the control and direction of an Audit Committee.

Mr Vhonani Chauke was appointed as the Deputy Auditor-General effective from 1 July 2021.

Another critical governance structure is the Audit Committee (AC) of AGSA.

This committee is established in terms of section 40 of the PAA.
Members of the Audit Committee (AC) of AGSA are appointed by the AG in compliance with section 40 of the PAA as amended.

Further, the PAA provides that those members may not be in the employ of AGSA; and their term of office is not time-bound.

The AC of AGSA is responsible for oversight of the financial and non-financial reporting processes, the integrity of the system of internal control, and risk management.
Currently, it consists of four (4) members, including its Chairperson, who are all independent, knowledgeable, have the requisite business, financial, and leadership skills, and do not hold any political office.

The second structure that plays a critical role in assisting to oversee AGSA is its Internal Auditors.

The current Internal Auditors were appointed through a tender process that was overseen by the AC of AGSA.
The primary role of the internal auditors is to conduct internal audits and advise the AC and AGSA Management on possible areas that need to be strengthened.

Currently, Ngubane & Co are employed as the internal auditors of AGSA.

The existence of external auditors also plays a crucial role to ascertain the prudent financial management of AGSA’s resources.

The appointment and role of the External Auditors are prescribed in the PAA.
Section 39 (1) of the Act, which provides that the oversight mechanism (the SCOAG) must appoint, annually, an independent external auditor to audit the accounts, financial statements, and financial management and performance information of the Auditor-General.

Whereas section 39 (2) (b) of the Act stipulates that any such person appointed as an external auditor may not be a staff member in the administration of the Auditor-General.
The current External Auditors, Crowe Jhb were appointed in December 2017 after the contract of Kwinana ended.

The AC has facilitated the appointment of External Auditors through a fair, equitable, transparent, and cost-effective process; and in line with AGSA’s transformation agenda.

236 3 3.

Financial performance information The AGSA has generated an actual revenue of R4.4 billion for the 2021/22 financial year, which is more than R3.4 billion generated in the 2020/21 financial year.
This represents an increase of R1 billion or 29 percent when it is compared with the revenue generated in the 2021/22 financial year.

It should be noted that about 23 percent of the R1 billion increase in the actual revenue generated by the AGSA, relates to revenue from the catch-up audit work that could not be completed in the previous financial year.
The other remaining increase was achieved through proactive continuous plans that included, a drive to achieve efficiencies through a staff pooling between national and provincial business units; and a determination by the AGSA’s audit team to achieve better productivity and recoverable rates For the 2021/22 financial year, the AGSA has achieved a surplus of R40 million, which is a better performance than the R293 million net deficit achieved in 2020/21 financial year.
The net surplus achieved under this period is less than R55,9 million which was budgeted for the year.

The recorded net surplus represents 0.92 percent of the audit revenue and it is less than the AGSA’s target of between 1%- 4%.
The achieved surplus can be attributed to efficient management of overhead expenses and cost containment, which was important given the state of the country’s economy, In spite of the above, at the end of 2021/22 financial AGSA’s financial diligence has led to a favourable balance of R770 million, which is more than the R576 million recorded in the 2020/21 financial year.
This increase in favourable bank balance can be translated into 2, 1- months and a day cash reserves, compared to 1.7-month cash reserves recorded in the previous financial year.

Basically, with the current cash reserves, and assuming that no other cash AGSA will receive, it can only take AGSA two months and one day to operate.

3.1.

Outstanding debts For the 2021/22 financial year, the debt owed to AGSA has decreased in overall.

At the end of 31 March 2022, AGSA was owed an amount of R1 060 billion.
This amount is less than the 237 4 R1 085 billion which was recorded at the end of the previous financial year.

This shows a decrease of 2.3 percent year-on-year.

It is worth noting that the outstanding debts to AGSSA have been increasing since the previous financial years, except for the 2016/17 financial year.

For instance, in the 2017/18 financial year, AGSA’s total debts amounted to R650 million.
For the 2018/19 and 2019/20 financial years, the outstanding debts recorded an amount of R744 million and R931 million respectively.

It is further reported that the main contributors to the increase in the recorded outstanding debts to AGSA are local government auditees (municipalities), which accounts for 52 percent or R548 million of the total outstanding debts (R1 060 billion).
The outstanding debts to the local government of R548 million show a decrease of R174 million when it is compared to R722 million recorded at the end of the 2020/21 financial year.

In addition, there is a noticeable increase in the outstanding debts from the SOEs, especially those that are being liquidated.
Importantly, AGSA indicated that other than implementing its enhancement collection strategies introduced in 2014 such as litigation, and ring-fencing, strategies like engagement with National Treasury, have yielded a positive result because an amount of R94 million was collected through the intervention of the Director-General of the National Treasury 4.

Other critical issues emanated from the Integrated Annual Report of AGSA 4.1.
Scope of section 4 (3) Audits Section 4 (3) of the PAA states that the Auditor-General may audit and report on the accounts, financial statements, and financial management of- (a) Any public entity listed in the Public Finance Management Act; and (b) Any other institution not mentioned in subsection (1) and which is- (i) Funded from the National Revenue Fund or Provincial Revenue Fund or by a municipality.
(ii) Authorised in terms of any legislation to receive money for a public purpose In spite of the above, currently, AGSA directly audits 15 out of 21 public entities listed in Schedule 2 of the PFMA (large and complex SOEs).

The number of SOEs under the audit 238 5 portfolio of AGSA has been increasing over the years.

For instance, only six (6) SOEs were under the audit portfolio of AGSA during the 2013-14 financial year.

As alluded to above, currently, there are 15 SOEs under the AGSA audit portfolio.
The latest SOE to be included under the AGSA’s audit portfolio is Transnet.

Currently, AGSA is in a process of taking over ESKOM in a few years.

For those SOEs, which are still not yet under the AGSA’s audit portfolio, the AG has enhanced their audits oversight by implementing the PAA regulations.

This has to ensure that AGSA concurs with the conditions of appointing private auditors to those SOEs.
In implementing such enhanced strict audits oversight to those SOEs, which are still yet to become under AGSA’s audit Portfolio, AGSA has identified threats of familiarity at some institutions that have been audited by the same private auditors for between five to twenty years.

To emphasise, its commitment to good governance for those SOEs, AGSA imposed some conditions, which include amongst others, that those SOEs should appoint new auditors in the previous financial year.
In this regard, AGSA reported that all those SOEs have complied with those conditions, despite that in the previous financial year, AG reported that she received pushbacks from other SOEs.

4.2.

Implementing AGSA-enhanced powers For the 2021/22 financial year, AGSA planned to achieve 80%-100% of completed actions as per the approved PAA amendment implementation plans.
At the end of the financial year, it recorded 87% performance under this target, which means that AGSA managed to implement 87% of completed actions as per the approved PAA implementation plans.

Importantly, AGSA plans to achieve 100% of completed actions as per the approved PAA implementations by the 2024-25 financial year.
In line with the above, for the 2020/21 financial year, AGSA implemented all the elements of Material Irregularities (MIs) and increased the number of auditees that implemented the MI process to 189.

For the 2021/22 audit cycle, AGSA planned to increase the number of auditees to 372.

Importantly, at the end of the year, AGSA had recorded a total of 327 MIs on its system at various stages in the process.

For these 327 MIs, AGSA estimated a total financial loss of about R14,7 billion.
The national sphere of government shares a larger amount of R8,6 billion, followed by the local sphere of government (R3.9 billion), and the provincial sphere 239 of government (R2.1 billion).

Of which local sphere of government has recorded the largest number of MIs (185 out of 327).

6 4.3.

Litigations against the Auditor General.


AG reported that over the previous 24 months, AGSA has faced with an increase in the number and complexity of legal challenges or threats of legal challenges, over the audit and audit-related services provided by AGSA.

The process of resolving those disputes in a court of law put pressure on the limited resources of AGSA, and a difficult psychological environment for AGSA’s audit team to perform their duties without fear, favour, or prejudice.
It should be noted that it is not the first time, there is a noticeable growing concern whereby there was a sudden increase in the number of auditees who resisted and contested the audit outcomes from the Auditor General.

For instance, during the 2017/18 financial year, the AGSA reported that these contestations and pushbacks from the auditees resulted to delay in the conclusion of audits and unnecessarily increased the costs of audits borne by both AGSA and the auditees.
For that year, a total of 56 auditees contested AG’s audit outcomes, of which 40 audit contestations were for PFMA auditees and 16 were for MFMA auditees.

Even though most of the reported contestations were resolved, pushbacks from five auditees stood out, mainly because two resulted in court actions and three resulted in audit reports not being tabled.

The number of contestations and pushbacks increase unabated.
For the 2018/19 financial year, the number increased to 88 auditees from 56 in the previous financial year.

While, for the 2019/20 financial year, the number increased to 98.

The reasons for such resistances were consistent throughout the financial years, which in the main include, amongst others expectation of clean audits that didn’t materialise, regression in audit outcomes, and technical disagreements.
In view of the above, it is expected that the number of contestations and pushbacks grew exponentially due to the full implementation of the PAA, whereby there would be consequences for persistent financial underperformance.

It is, therefore, against this background that the AGSA has strengthened its legal capacity to respond to this upwards 240 trend and has revisited its dispute resolution process to demonstrate its commitment to resolving dissatisfaction without the intervention of courts.
7 Appointment of External Auditors Section 39 (1) requires the SCOAG to annually appoint an independent external auditor to audit the accounts, financial statements, and financial management and performance information of the AGSA.

The Audit Committee of AGSA facilitates the appointment of external auditors through a fair, equitable, transparent, and cost-effective process that is in line with AGSA’s transformation agenda.
During the 2017/18 consideration of the Annual Report of the AGSA, the Audit Committee recommended the appointment of Crowe JHB to SCOAG.

In December 2017, the SCOAG approved the appointment of Crowe JHB as an external auditor on the condition that they present to SCOAG a transformation plan by 30 June 2018, which they only managed to submit in July 2018.
It is worth noting that SCOAG recommended that the Audit Committee should furnish it with quarterly reports on the implementation of the transformation plan of Crowe JHB.

In pursuance of the above, for the period under review and the previous financial year, the SCOAG never received any progress report from the Audit Committee until the previous two weeks, whereby a progress report was received.
Currently, the Audit Committee has once again recommended the appointment of Crowie JHB as the External Auditor of AGSA.

5.

The Committee Observations and findings: The Committee made the following observations: 241 1.

The Committee noted the report in terms of the transformation of the Crowe JHB, as it was a condition of their appointment.
Subsequently, their B-BBEE score has improved from level 7 to level 4 since 2019 and their target as per their transformation plan was B-BBBE Level 3 contributor for the year 2022, which it managed to achieve.

8 2.

The Committee noted that AGSA has achieved a net surplus of R40 million for the 2021/22 financial year.
Thus, section 38 (4) of the Public Audit Act as amended empowers the AGSA to retain the whole surplus or a portion thereof, following consultation with the National Treasury and after approval by SCOAG.

If approved, such surplus is used for working capital and general reserve requirements.

The portion of a surplus not retained is paid back into the National Revenue Fund.

3.

The Committee noted that the amount owed to AG has in overall decreased during the 2021/22 financial year.
For the financial year, the outstanding debt amounted to R1 060 billion, Local government is the main contributor to this debt, while there is a notable growth trend of outstanding debts from SOEs.

The Committee noted with concern this new trend, in particular the fact that most SOEs are becoming financially unsustainable.

This can lead to more SOEs defaulting in paying audit fees to AGSA and therefore, adding up to the challenge of outstanding debts.

4.
4.

The Committee noted the total of 327 MIs that is recorded on the AGSA’s system at various stages in the process.

It further observed that for these 327 MIs, AGSA estimated a total financial loss of about R14,7 billion.

In this regard, the Committee suggested that the issue of MIs requires a strategy whereby the Office of the Auditor-General needs to shift its focus, particularly around the area of accountability 5.
The Committee noted that AGSA has faced with an increase in the number and complexity of legal challenges or threats of legal challenges, over the audit and audit- related services provided by AGSA.

The process of resolving those disputes in a court of law has put pressure on the limited resources of AGSA, and a difficult psychological environment for AGSA’s audit team to perform their duties without fear favour, or prejudice.
In this regard, has elected to strengthen its legal capacity to respond to this upwards trend and has revisited its dispute resolution process to demonstrate its 242 9 commitment to resolving dissatisfaction without the intervention of courts.

As per the requirements of the PAA, the AGSA has consulted with the Committee to review its dispute resolution process.

6.
6.

The Committee noted and appreciates that the AGSA continues to expand its audit portfolio of 21 Schedule 2 SEOs, which are big and complex organisations.

However, the Committee noted with concerns that these efforts put pressure on AGSA’s resources due to a continuous need for intensive training and learning of staff after taking over.

7.

The Committee has noted that in the previous financial year, there were some control gaps identified during the audit.
Further, some audit findings identified remain unaddressed primarily because of inadequate capacity and capabilities within information technology, which continue to receive leadership attention and support.

For this period under review, there is a reported improvement in information technology, which was due to amongst others, the employment of the Head of Information Technology.

8.
8.

The Committee noted the Post-Retirement Medical Aid (PRMA) initiative, which was conceived out of the need by the AGSA to harmonise employee benefits, in particular, the staff rules on conditions of service on medical aid subsidy.

AGSA benchmarked this benefit against the benefit paid by the Public Service.

Importantly, from 2002 until 2015, the benefit paid by the AGSA had been substantially higher than what the Public Service paid.
In 2016, when the Public Service benefit for the first time exceeded what was paid by the AGSA, the Office of the AG was not in a position to match those adjustments and decided against it based on financial considerations at the time.

Subsequently, four retired employees brought a court case against AGSA to review its decision not to increase post-retirement medical aid.
The High court ruled in favour of AGSA, and then the ruling paved a way for AGSA to initiate a Post-Retirement Medical Aid buy-out offer to all eligible beneficiaries.

At the end of the period under review, out of 337 beneficiaries, only 35 beneficiaries rejected the offer and accused AGSA of implementing an illegal process.

243 10 6.
243 10 6.

Committee Recommendations Flowing from the observations made by the Committee concerning the 2021/22 Integrated Annual Report of AGSA, the Committee draws the following recommendations: 1.

The Committee recommends the further appointment of the current External Auditors, as they have met their major employment conditions, that is, to achieve a better economic transformation.

As reported above, they have moved from BBBE level 7 to BBE level 3.

2.
2.

The Committee recommends that the AGSA should retain the surplus generated from the period under review years as General Reserves.

Further, the Committee, recommends that the AGSA must within 30 days of the adoption of this report provide the SCOAG with definitive plans, with timeframes, as to how the office intends to utilise the net surplus.

3.

The Committee recommends that the AG should brief the Committee in detail about the nature of the current 327 MIs in line with the PAA as amended.

4.
4.

The Committee recommends that the AG should fast-track the review of the dispute resolution process.

A detailed plan with timeframes on the process of reviewing the dispute resolution process should be submitted to the SCOAG, 30 days after the adoption of this report 5.

The Committee welcomed the efforts made by the AGSA to expand its audit portfolio, especially with large and complex SOEs.
In this regard, it recommends that AGSA should communicate any challenges it encounters when increasing auditing the number of large and complex SOEs.

Further, the AGSA should keep the Committee abreast of the progress in implementing PAA regulations with regard to concurrence in the appointment of private auditors to those Schedule 2 SOEs, which are not audited by AGSA.

244 6.

The AGSA should consider extending its current collection strategies to SOEs' debtors.
In this regard, the AG should enter into ring-fencing agreements with SOEs’ debtors to ensure that they pay their outstanding debts to AGSA.

Further, AGSA should continue to forge relations with the National Treasury in this regard as it proved effective.

11 7.

Given the challenge of outstanding debts to AGSA and the need for financial resources to audit the current 16 Schedule 2 SOEs which are already in AGSA’s audit portfolio.
It is therefore recommended to review the Funding Model of AGSA by invoking section 36 (1) (b) of the PAA, which authorises AGSA to access funding from multiple sources, including audit fees, money allocated by Parliament, and interest on investments.

8.

The Committee recommends that the AGSA should develop an audit action plan to deal with any issues identified during auditing, and submit it to the Committee for monitoring its implementation.

9.
9.

The Committee supports AGSA in its endeavours to ensure its financial sustainability by curtailing its financial liabilities.

Therefore, the Committee recommends that AGSA should continue with Post Medical Retirement Benefit buyout offer, including persuading those who rejected the buy-out offer.

Further, the Committee recommends that the AGSA should furnish it with the High Court judgment, which has been used as the basis for such an offer.

10.
10.

The Standing Committee on the Auditor-General is satisfied with the performance of the AGSA for the 2021/22 financial year and therefore recommends that the National Assembly approves the Integrated Annual Report.

Report to be considered.

245 6.


Budgetary Review and Recommendation Report of the Portfolio Committee on Public Enterprises, dated 19 October 2022 The Portfolio Committee on Public Enterprises (hereinafter referred to as the Committee), having considered the performance of the Department of Public Enterprises for the 2021/22 financial year, reports as follows: 1 INTRODUCTION 1.1 Purpose of the BRRR In terms of Section 5 of the Money Bills Amendment Procedure and Related Matters Act, No.
9 of 2009, the National Assembly, through its Committees, must annually compile the Budgetary Review and Recommendation Reports (BRRRs) that assess the service delivery performance of departments given available resources.

Committees are also expected to provide an assessment of the effectiveness and efficiency of the Department’s use of available resources, and may include recommendations on the forward use of resources.
1.2 The Role and Mandate of Committee The mandate of the Committee is to consider legislation referred to it; exercise oversight over the Department and the seven State-Owned Companies (SOCs) that report to it; consider international agreements referred to it; consider the budget vote of the Department of Public Enterprises and its entities; facilitate public participation in its processes; and to consider all other matters referred to it in terms of legislation and the rules of the National Assembly.
1.3 Description of Core Functions of the Department The Department of Public Enterprises is the shareholder representative for government on the State- Owned Companies in its portfolio.
The Department’s mandate is to fulfil oversight responsibilities at these State-Owned Companies to ensure that they contribute to the realisation of government’s strategic objectives, as articulated in the National Development Plan (NDP), the Medium-Term Strategic Framework (MTSF), the New Growth Path (NGP) and the Industrial Policy Action Plan (IPAP).

State- Owned Companies are crucial to driving the state’s strategic objectives of creating jobs, and enhancing 246 equity and transformation.
The Department does not directly execute programmes but seeks to use state ownership in the economy to support the achievement of these objectives.

It is within this context that the BRRR concerning the Department of Public Enterprises by the Portfolio Committee on Public Enterprises is presented.

1.4 Method This report is a culmination of the Committee’s engagement and interactions with the Department and the State-Owned Companies that report to it.
This entailed a very intense and thorough analysis of the strategy and operations of the Department and its entities through briefings, oversight visits and interaction with relevant stakeholders.
These included a briefing from the Department of Public Enterprises on its annual report and a briefing from the Office of the Auditor-General of South Africa (AGSA) on the audit outcomes of the Department and its entities on 11 October 2022 and deliberations on the analysis done by Parliament support staff on the financial and non-financial performance of the Department and its entities.

The report incorporates inputs from the Internal Audit unit of the Department of Public Enterprises.
1.5 Outline of the Contents of the Report The Budgetary Review and Recommendation Report (BRRR) of the Committee contains the following: • Overview of the key relevant policy focus areas; • Summary of previous key financial performance recommendations of the Committee; • Overview and assessment of financial performance; • Overview and assessment of service delivery performance; • Committee recommendations.

2.
2.

OVERVIEW OF THE POLICY ENVIRONMENT According to the International Monetary Fund (IMF) world economic outlook 2022 report states that, the global economy is experiencing a number of turbulent challenges.

Inflation higher than seen in several decades, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.
Normalization of monetary and fiscal policies that delivered unprecedented support during the pandemic is cooling demand as policymakers 247 aim to lower inflation back to target.

But a growing share of economies are in a growth slowdown or outright contraction.

The global economy’s future health rests critically on the successful calibration of monetary policy, the course of the war in Ukraine, and the possibility of further pandemic-related supply-side disruptions, for example, in China.
Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.

This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic and reflects significant slowdowns for the largest economies: a US GDP contraction in the first half of 2022, a euro area contraction in the second half of 2022, and prolonged COVID-19 outbreaks and lockdowns in China with a growing property sector crisis.
About a third of the world economy faces two consecutive quarters of negative growth.

Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024.

Upside inflation surprises have been most widespread among advanced economies, with greater variability in emerging market and developing economies.

Risks to the outlook remain unusually large and to the downside.
Monetary policy could miscalculate the right stance to reduce inflation.

Policy paths in the largest economies could continue to diverge, leading to further US dollar appreciation and cross-border tensions.

More energy and food price shocks might cause inflation to persist for longer.

Global tightening in financing conditions could trigger widespread emerging market debt distress.

Halting gas supplies by Russia could depress output in Europe.
A resurgence of COVID-19 or new global health scares might further stunt growth.

A worsening of China’s property sector crisis could spill over to the domestic banking sector and weigh heavily on the country’s growth, with negative cross-border effects.

And geopolitical fragmentation could impede trade and capital flows, further hindering climate policy cooperation.
The balance of risks is tilted firmly to the downside, with about a 25 percent chance of one-year-ahead global growth falling below 2.0 percent—in the 10th percentile of global growth outturns since 1970.

The International Monetary Fund (IMF) has halved its global growth expectations to 3.2 percent in 2022 from 6 percent in 2021 amid climbing inflation and monetary policy tightening.

Consequently, South Africa’s growth rate has also been revised downwards.
The country is expected to grow by 2.1 percent in 2022 from 4.9 percent in 2021, with 2023 expected to drop further to 1.1 percent.

In contrast, Sub- Saharan Africa is expected to grow by 3.7 percent in 2023.

This means the costs and interests rates are 248 going to be high, this imposes an emerging risk for SOCs that are highly indebted.

The Department has a role in monitoring the economic environment in order to mitigate this risk.
The National Treasury, Budget Review 2022 states the following, the economy began to bounce back from the pandemic lockdowns in 2021, but the recovery weakened in the second half of the year.

GDP growth is expected to average 1.8 per cent over the next three years.

Significant risks to the outlook include the emergence of new COVID‐19 variants in the context of low vaccination levels, rising global inflation, and continued disruptions to power supply.
Longstanding structural constraints entrench South Africa’s high levels of poverty and unemployment.

Government continues to advance a multifaceted strategy to achieve higher and sustained economic growth rates.

These reforms are intended to build private‐sector confidence and investment.

The combined impact of structural reforms, support for small business and new infrastructure investment will enable higher rates of growth and job creation over the long term.
Over the next three years, government will introduce additional measures to improve the delivery of public infrastructure and attract private capital.

Over the medium term, government will devote considerable attention to strengthening the fight against corruption flowing from the reports of the State Capture Commission, cutting red tape for small businesses and strengthening the green transition.
In line with government’s international and domestic commitments to climate change adaptation and mitigation, the National Treasury plans to pilot a climate budget tagging methodology, which can inform future spending priorities and budget reforms.
In his State of the Nation Address held on the 10 February 2022, the President outlined the overriding priorities for 2022 as follows: defeat the coronavirus pandemic, accelerate economic recovery, implement economic reforms to create sustainable jobs and drive inclusive growth and fight corruption and strengthen the State.
Since the launch of the economic reconstruction and recovery plan, government has focused on four priority interventions: • a massive rollout of infrastructure throughout the country, • a massive increase in local production, • an employment stimulus to create jobs and support livelihoods, and • the rapid expansion of our energy generation capacity.
249 Load shedding continues to have a huge impact on the lives of all South Africans, disrupting business activities, and placing additional strains on families and communities.

Due to South Africa’s aging power stations, poor maintenance, policy missteps and the ruinous effects of state capture, our country has a shortfall of around 4,000 MW of electricity.

During the past year, government has taken firm steps to bring additional generation capacity online as quickly as possible to close the shortfall.
As a result, several new energy generation projects will be coming online over the next few years.
This includes: • Over 500 MW from the remaining projects in Bid Window 4 of the renewable energy programme, which are at advanced stages of construction; • 2,600 MW from Bid Window 5 of the renewable energy programme, for which the preferred bidders were announced last year; • up to 800 MW from those risk mitigation power projects that are ready to proceed; • 2,600 MW from Bid Window 6 of the renewal energy programme, which will soon be opened; • 3,000 MW of gas power and 500 MW of battery storage, for which requests for proposals will be released later this year; • an estimated 4,000 MW from embedded generation projects in the mining sector; • approximately 1,400 MW currently in the process of being secured by various municipalities.
In addition to closing the energy supply shortfall, government is implementing fundamental changes to the structure of the electricity sector.

Eskom has established a separate transmission subsidiary, and is on track to complete its unbundling by December 2022.

The utility has continued with its intensive maintenance programme, to reverse many years of neglected maintenance and underperformance of existing plants.
To regulate all of these reforms, Cabinet approved amendments to the Electricity Regulation Act for public comment.

These far-reaching amendments will enable a competitive market for electricity generation and the establishment of an independent state-owned transmission company.

South African economy cannot grow without efficient ports and railways.

Over several years, the functioning of South Africa’s ports has declined relative to ports in other parts of the world and on the African continent.
This constrains economic activity.

The agricultural sector, for example, relies heavily on efficient, well-run ports to export their produce to overseas markets.

Fresh produce cannot wait for days and even weeks stuck in a terminal.

This hurts businesses and compromises our country’s reputation as an exporter of quality fresh produce.
Transnet is addressing these challenges and is currently focused on improving operational efficiencies at the ports through procuring additional equipment and implementing new systems to reduce congestion.

Transnet will ask for 250 proposals from private partners for the Durban and Ngqura Container Terminals within the next few months, which will enable partnerships to be in place at both terminals by October 2022.
Transnet will start the process of providing third-party access to its freight rail network from April 2022 by making slots available on the container corridor between Durban and City Deep in Gauteng.

Transnet has developed partnerships with the private sector to address cable theft and vandalism on the freight rail network through advanced technologies and additional security personnel.

This collaborative effort is already showing results in reduced disruptions to rail operations.
The Minister of Finance in his Budget speech made the following observations, Government will also reduce the continual demands on South Africa’s limited public resources from state-owned companies.

For this reason, SOCs need to develop and implement sustainable turnaround plans.

The future of our state-owned companies is under consideration by the Presidential State-Owned Enterprises Council.
Their future will be informed by the value they create and whether they can be run as sustainable entities without bailouts from the fiscus.

Some state-owned companies will be retained, while others will be rationalized or consolidated.

To reduce their continuing demands on South Africa’s public resources, the National Treasury will outline the criteria for government funding of state‐owned companies, during the upcoming financial year.
Government is aware that Eskom’s debt situation remains a concern for its creditors and its investors alike.

Government continues to support Eskom to remain financially sustainable during its transition.

To date, Eskom has been provided with R136 billion to pay off its debt with a further R88 billion until 2025/26.

Government acknowledges, however, that Eskom is faced with a large amount of debt that remains a challenge to service without assistance.
The National Treasury is working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders.

Any solution will be contingent on continued progress to reform South Africa’s electricity sector and Eskom’s own progress on its turnaround plan and its restructuring.

Government expect Eskom to take further steps towards cost containment, conclude the sale of assets and implement operational improvements to enhance the reliability of electricity supply.
The outcome of this work, which is legally and technically complex, will be announced within the next financial year.

In a recent briefing to the Committee, the Financial and Fiscal Commission (FFC) made these observations, State-owned enterprises (SOEs) play an important role in the South African economy.

• Since 1994 SOEs have been a significant vehicle for achieving economic growth and poverty reduction.

• Strengthening their role and performance is a key component of the Developmental State agenda.
251 • Improving governance frameworks and practices will be key to achieving better SOE performance and to realizing the broader goals of infrastructure development and economic growth.

• Governance and other reforms are critical to improving SOE performance and competitiveness, increasing financial sustainability through access to new sources of capital, and achieving higher levels of transparency and accountability.
Reforms can include the following key issues – Improving the legal and regulatory framework for SOE governance; – Strengthening the State’s role as owner/shareholder; – Professionalizing SOE boards and management; – Promoting the financial sustainability of SOEs; and – Enhancing the transparency and accountability of SOEs.
2.1 Key Policy Focus for the Department of Public Enterprises The Department of Public Enterprises is government’s shareholder representative for the state‐owned companies in its portfolio.

The department’s mandate is to fulfil oversight responsibilities at these companies to ensure that they contribute to the realisation of government’s strategic objectives, as articulated in the National Development Plan, government’s 2019‐2024 medium‐term strategic framework and the reimagined industrial strategy.
State‐owned companies are crucial to driving the state’s strategic objectives of creating jobs, and enhancing equity and transformation.

The department does not directly execute programmes but seeks to use state ownership in the economy to support the achievement of these objectives.
3 SUMMARY OF PREVIOUS YEAR’S BRRR’S RECOMMENDATIONS MADE BY THE COMMITTEE 3.1 The Committee recommended that the Minister of Public Enterprises should: 3.1.1 Ensure that shareholder compacts are concluded by the third quarter of the year preceding the year covered by the compact.

3.1.2 Ensure that the Accounting Officer improves controls and systems to ensure the department achieves an unqualified audit outcome and matters of emphasis from each year must be addressed in the subsequent year.
3.1.3 Ensure that the annual financial statements are submitted on time.

3.1.4 Ensure that findings on the Department and in SOCs by the Auditor General of South Africa (AGSA) are addressed.

252 3.1.5 Improve the capacitation of board audit and risk committee, the internal audit function in the Department and State Owned Companies to respond better to audit outcomes in the line with the provisions of the Public Finance Management Act.
3.1.6 Institute consequence management for executive and management who deliberately or negligently ignore their duties and contravene legislation.

3.1.7 Ensure the implementation of proactive lifestyle audits and reviews of conflicts of interest based on risk analysis in all SOCs.

3.1.8 Update the Committee on a quarterly basis on the development of SOE Bill.

3.1.9 Present the Committee with the conclusion of strategic equity partnerships and oversight plans for SAA.
3.1.10 Present to the Committee on the liquidation of SA Express.

3.1.11 Present the Committee with a progress report on the SOC restructuring process and progress updates on the unbundling of Eskom into three entities, namely Generation, Transmission and Distribution.

3.1.12 Present a model for SOCs oversight per programme, with clear targets on monitoring, evaluations and reporting within this financial year.
3.1.13 Improve communication in SOCs in order to educate the public on the role of SOCs, their capabilities and their developmental role in the economy.

3.1.14 Provide the Committee with progress update on efforts to ensure Alexkor achieves its public and commercial mandate, especially addressing socio-economic outcomes of the Richtersveld and Alexandra Bay communities.
3.1.15 Ensure that the future role of SAFCOL is clarified and that the commercial and public and public mandates are diversified and expanded, community land claims issues are resolved.

3.1.16 Ensure that the future of Denel is clarified including its restructuring process and address the issue of payment of staff in these subsidiaries Denel Dynamics, Denel Land Systems, Denel Pretoria Metal Pressing, Denel Aeronautics and Denel Vehicle Systems.
3.1.17 Ensure that SOCs protect jobs in particular highly advanced technical skills to advance the manufacturing capability of the state.

SOCs should invest in labour intensive infrastructure programmes to create employment.

3.1.18 Ensure that the restructuring of Eskom is completed within the set timeframes and maintenance of power stations is done on time.

3.1.19 Ensure the Eskom updates the Committee on its maintenance programme and plans to curtail load shedding on timeous basis.
253 3.1.20 Focus on capacitating core technical functions, develop and enhance technical skills and ensure implementation of sound operational and systems engineering business processes to ensure effective technical oversight.

3.1.21 Ensure the implementation of a methodology and manner in which Boards are appointed to ensure independence and enable effective board performance review with due consequence management.
3.1.22 Ensure that the financial management and control structures and processes are such that accurate, timeous and reliable recording and reporting of all financial transactions takes place.

These should adhere the following principles: • That the appropriate financial management systems and controls are in place to ensure the effective management of the financial affairs.

• That the financial affairs and performance reported is acceptable in terms of the corporate plans and shareholder compacts.
• Significantly enhance reporting and accountability arrangements that facilitate an appropriate oversight by the Department; and • Urgently develop technical capacity within the Department to oversee its SOCs.

3.1.23 Provide the Committee with quarterly progress reports regarding the implementation of these recommendations, and 3.1.24 Provide the Committee with timeous updates in writing on developments and events that could potentially adversely affect SOCs or the public.
This information should be submitted to the Committee shortly after receiving the information or date of incident.

4.

OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE The Department of Public Enterprises spent 99.4 per cent of its budget in the 2021/22 financial year and received an unqualified audit opinion with findings.

4.1.

Table 1.
Overview of Vote allocation and spending (2017/18 to 2021/22) R’million Table 1: Comparative Budget Allocation Department of Public Enterprises (R'm) Allocation Actual Expenditure Expenditure Performance For the Five Year Period Reviewed 2017/18 266.7 250.4 2019/20 56 883.0 56 846.4 2020/21 77 606.9 77 503.4 2021/22 39 310.3 39 058.1 2018/19 6 522.9 6 474.8 254 Percentage Spent Percentage Unspent 93.9 6.1 99.3 0.7 99.9 0.1 99.9 0.1 99.4 0.6 Source: Department of Public Enterprises (2022) As shown in the table 1 above, for the 2017/18 financial year, the DPE underspent by more than 5 per cent.
The reason given for the underspending in this financial year was mainly due to delays in filling vacant posts and delays in projects that had not commenced and other projects that still needed to be completed.

However, from 2018/19 onwards, the Department spent the majority of the allocation on Payments for financial assets in support of the state-owned companies.

This also occurred in the 2021/22 financial year.


1 The Department had an original appropriated total budget of R36.3 billion in February 2021 for the 2021/22 financial year.

However, in the adjusted estimates of national expenditure tabled in November 2021, the Department received a further R2.9 billion, with the total appropriation of R39.2 billion.
This amount was mainly for Payments for financial assets as transfers to the state-owned companies (SOCs) amounted to R36.0 billion.2 During the adjusted budget the Department received an additional R2.9 billion as a Direct charge against the National Revenue Fund in order to settle guaranteed debt and interest payments for Denel.

An amount of R17 million was also surrendered to the National Revenue Fund from Compensation of Employees due to vacant posts within all the programmes.
The balance of R272.9 million was used by the Department for its operations.

The transfers to entities included the following:3 • R31.7 billion for Eskom for settlement of government guaranteed debts; • R4.3 billion for SAA for settlement of government guaranteed debts and implementation of the business rescue plan; • R2.9 billion for Denel for settlement of government guaranteed debts; 4.1.
Financial performance 2021/22 During the 2021/22 financial year, the Department spent its budget in the following manner: Table 2.
Quarterly Expenditure for the 2021/22 financial year Programme (R'm) 2021/22 1 Department of Public Enterprises (2022) 2 National Treasury (2021a) 3 Ibid 255 2: 1: and Programme Administration Corporate Management SOCs Programme Governance Assurance and Performance Programme Enhancement, Transformation Industrialisation 3: Business and 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Appropri ated Budget Adjusted Appropria tion 26.7 57.2 84.9 121.1 159.8 150.8 12.3 20.7 29.6 47.4 61.7 59.7 20 055.9 38 518.6 38 722.6 36 858.7 36 070.3 36 064.3 Total 20 094.8 38 596.6 38 837.1 36 027.2 36 291.8 36 291.8 Direct Charges - - 0.0 3 030.9 2 923.0 Percentage of Budget Spent 55.4% 106.4% 99.1% 99.6% Source: National Treasury (2021-2022) SCOA Reports As seen in table 2 above, in the first quarter, April to June 2021, the Department spent R20.1 billion or 55.4 per cent of the R36.3 billion budget originally Appropriated for the 2021/22 financial year.
The Department spent 0.1 per cent or R27.9 million more than it projected to spend.

The higher than projected spending was due to a payment of R45 million to settle interest that was due for Denel under the Domestic Medium Term Note which is government guaranteed.
The entity was unable to settle interest that was due in June 2021 and therefore requested government to settle the debt to avoid a default and call on the guarantee.4 The majority of the Department’s operational budget was spent on Compensation of employees and Goods and services.

Of the R176.0 million budgeted for compensation of employees, R34.5 million or 19.6 per cent was spent.
An amount of R110.2 million was allocated for Goods and services, where R15.1 million or 13.1 per cent was spent in the first quarter.5 By the end of the second quarter, April to September 2021, the Department spent R38.6 billion or 106.4 per cent of the Appropriated Budget of R36.3 billion.

The higher than expected expenditure was due to a payment of R2.7 billion to settle guaranteed debt and interest payments on behalf of Denel under the Domestic Medium Term Note programme.
The entity is in financial distress 4 National Treasury (2021b) 5 Ibid 256 and was not able to settle its debt and interest hence it has requested government to settle the guaranteed debt and interest.6 An amount of R57.2 million or 35.8 per cent of its budget was spent under Administration, while Programme 2: SOCs Governance Assurance and Performance spent R20.7 million or 33.6 per cent of its budget mainly on Compensation of employees and Goods and services.
Programme 3: Business Enhancement, Transformation and Industrialisation programme spent R38.5 billion.

Spending in programme 3 was higher than expected due to an additional R2.7 billion expenditure on Denel towards settlement of guaranteed debt as stated above.7 As stated above, the Department received an additional allocation of R2.9 billion, with the total Appropriation of R39.2 billion.
The additional allocation is a Direct Charge against the National Revenue fund in order to settle guaranteed debt and interest payments for Denel.

With an available budget of R39.2 billion, the Department spent R38.8 billion or 99.1 per cent by the end of the third quarter of 2021/22.

The bulk of this amount was spent on Payments for Financial Assets.
Programme 1: Administration spent 56.3 per cent of its budget by the third quarter of the 2021/22 financial year amounting to R84.9 million, mostly on Compensation of employees and Goods and services.

Actual expenditure to the end of December 2021 for Programme 2: SOC Governance Assurance and Performance amounted to R29.6 million of the available budget of R59.7 million or 49.6 per cent of the budget has been spent.
The Business Enhancement, Transformation and Industrialisation programme had an adjusted budget of R36.1 billion and had spent R38.7 million or 107.4 per cent by the end of December 2021.8 As in the first quarter, the higher actual expenditure in the third quarter is due to the expenditure authorised to settle guaranteed debt and interest payments on behalf of Denel.9 By the end of the third quarter, actual expenditure was slower than projected on Compensation of Employees and Goods and services due to vacant posts and delays in the commencement of planned projects such as the development of the Shareholder Management Bill, state-owned companies local content verification, and delays in receiving invoices of operating leases and municipal services.
The Department spent R104.7 million or 65.9 per cent of the R159.0 million of the Compensation of employees budget, while R43.8 million or 39.9 per cent of the 6 National Treasury (2021c) 7 Ibid 8 National Treasury (2021a) 9 National Treasury (2022a) 257 R109.6 million Goods and services budget was spent by the end of December 2021.10 During the Adjustment Budget period, the Department effected shifts amounting to R289 000 and virements amounting to R278 000.11 The Department spent R39.1 billion or 99.4 per cent of the R39.3 billion appropriated budget by the end of the fourth quarter of the 2021/22 financial year.
Administration spent R121.1 million or 87.2 per cent of the R138.7 million budget, while Programme 2 spent R47.4 million or 86.4 per cent of the R54.9 million budget by the end of the financial year.

Programme 3 spent R35.9 billion or 99.4 per cent of the R36.1 billion budget for the programme.
Expenditure on direct charges was higher than the adjusted appropriation due to additional expenditure that was authorised by the Minister of Finance in January 2022 to settle guaranteed debt for Denel over and above the amount approved during the 2021 adjustments budget.12 An amount of R3 billion was spent as a Direct charge against the National Revenue Fund in order to settle government guaranteed debt of Denel.
An amount of R2.9 billion was originally appropriated during the Adjustments Budget in November 2021.13 The Department spent R140.1 million or 88.1 per cent of the Compensation of employees’ budget while R76.8 million or 88.7 per cent of the Goods and services budget was spent by the end the financial year.
As stated above, the slow spending on Compensation of employees and Goods and services was due to vacant posts and projects that were not commenced during the year.14 The Department had an official headcount of 214 posts but only 166 posts were filled by 31 March 2022, with a vacancy rate of 22 per cent.

For the period ending 31 March 2022, the Department spent R220 000 in relation to the COVID-19 pandemic.
15 4.3 Auditor General Report The Department received an unqualified audit with an emphasis of matter on the following:16 10 Ibid.

11 National Treasury (2021) 12 National Treasury (2021b) 13 Department of Public Enterprises (2022) 14 Ibid.

15 Ibid.

16 Ibid.

258 • Restatement of corresponding figures – figures for 31 March 2021 were restated as a result of an error in the financial statements of the department.
• Contingent liabilities – were as follows: o The department is a defendant in claims of R29.8 million by ex-employees for constructive dismissal, discrimination and unfair treatment.

The final outcome is yet to be determined and no provision has been made.

o The Department signed a share purchase agreement in February 2022, which is intended to dispose of 51 per cent of the government’s shares in South African Airways.
The deal requires that certain preconditions be met before the sale of shares can be concluded, which, among other things, presents a financial exposure for the government of about R3.079 billion.

Funds to cover this liability have not been appropriated in the budget.
The auditors identified the following issues with regard to compliance with legislation:17 • Annual financial statements, performance and annual report – the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework.

Material misstatements of disclosure items that were identified by the auditors in the submitted financial statement were corrected, resulting in the financial statements receiving an unqualified opinion.
• Procurement and contract management – a contract was awarded to a bidder based on evaluation criteria that differed from those stipulated in the original invitation for bidding as required by Treasury Regulation 16A6.3(a) and (b).

The following matters were raised by the auditor regarding internal control deficiencies:18 • Leadership did not adequately exercise its oversight responsibility over financial performance reporting and compliance with applicable laws and regulations.
• Senior management did not prepare regular, accurate and complete financial and performance information, which resulted to the material adjustments on the financial statements and performance report.

• Senior management did not adequately review and monitor compliance with applicable legislation, this resulted in the department incurring unauthorised and irregular expenditure.

17 Department of Public Enterprises (2022) 18 Ibid.
259 4.4 Entities The Department’s overall objectives are to provide an effective shareholder management system and to support and promote economic efficiency within each of the state-owned companies (SOCs).

The performance of SOCs has deteriorated in the period under review, with Denel unable to satisfy the going concern criteria, thus preventing the entities from submitting their annual report to Parliament by 30 September 2022.
The majority of entities have submitted their audited financial statements late to the Auditor-General due to late appointment of external auditors.

The financial performance is evidenced by the service delivery done by the entities that is enumerated in Section 5.

Section 5 highlights the performance of the entities in relation to the financial performance.
4.4.1 Alexkor The Minister of Public Enterprises, Mr. Pravin Gordhan, submitted a letter to Parliament on 07 October 2021, that Alexkor would be unable to submit their 2020/21 Annual Report by the due date owing to delays in their audit processes.

Thus, the Minister was requesting a concession for the late submission of the entity’s financial statements.19 The entity’s 2020/21 audit was finalised in March 2022, and submitted to Parliament on 02 June 2022.
The entity received a qualified audit opinion for the 2020/21 financial year, and achieved 3 of the 9 key performance targets for the year, while the Joint Venture achieved 7 of the 18 key performance targets for the 2020/21 financial year.

The qualified audit was an improvement on the disclaimer received in the 2019/20 financial year.

Alexkor’s profitability improved significantly due to improvement in the cost efficiency achieved by the PSJV.
Alexkor made a profit of R115.8 million, as well as R11.7 million from its 51 per cent share in the PSJV operations, thus bringing its total profitability for 2021 to R127.5 million.

The Minister of Public Enterprises, Mr. Pravin Gordhan, submitted a letter to Parliament on 26 September 2022, that Alexkor would be unable to submit their 2021/22 Annual Report by the due date 19 Gordhan (2021a) 260 owing to delays in their audit processes.
Thus, the Minister was requesting a concession for the late submission of the entity’s financial statements.

According to the letter, the AGSA was requested to opt in for the 2022/23 external audit of Alexkor.

Alexkor is awaiting the concurrence of the AGSA for the appointment of Ngubane & Co. as the external auditors for the 2021/22 financial year.
Due to the delay in appointing the external auditors, the audit for 2021/22 is still pending.20 4.4.2 Denel The Minister of Public Enterprises submitted a letter to Parliament on 07 October 2021, stating that Denel was experiencing serious liquidity challenges and was in the process of exploring various options in respect of the future of the company.
Consequently, the entity was not able to prepare and submit the 2020/21 Annual Report and annual financial statements.21 To-date the entity has not submitted their 2020/21 Annual Report to Parliament.

Similarly, the Minister of Public Enterprises submitted a letter to Parliament on 26 September 2022, stating that the Department has made an application for funding, the outcome of which is yet to be deliberated at Cabinet with a definitive outcome.
The final audited annual financial statements and annual reports for both the 2020/21 and 2021/22 financial years will be submitted on completion of the respective audits by the external auditors.22 Denel was unable to table its 2019/20 Annual Report and financial statements by the due date of September 2020 to Parliament, as happened with the 2017/18 Annual Report and financial statements, due to uncertainty regarding its going concern status.
Despite receiving R1.8 billion from National Treasury in August 2019, the entity still reported a comprehensive loss of R1.962 billion compared to a loss of R1.469 billion in the previous year.

The entity again received a disclaimed audit opinion for the 2019/20 financial year, for a third consecutive year, citing insufficient audit evidence to verify the figures in the financial statements.
Given the disclaimer audit opinion, the company’s financial statements were questionable.23 20 Gordhan (2022a) 21 Ibid.

22 Gordhan (2022a) 23 Denel (2019) 261 Given Denel’s liquidity constraints, a turnaround strategy was approved by the Board in February 2019, where the company embarked on a process to exit unprofitable, non-core businesses.
This created an opportunity to acquire strategic equity partners, which enabled Denel to secure market access and generate cash, thereby restoring its financial sustainability.

Denel was also engaging with interested parties for equity injections.
In November 2020, R271 million of the R576 million recapitalisation received from National Treasury was released on condition that, “Denel should deploy these proceeds in priority activities that will allow the business to restart operations with immediate cash generation”.
R167 million was allocated to projects that can deliver a return in the short term - R753 million planned to be generated to deal with creditors’ backlog.24 The entity received a further R3 billion in the 2021/22 financial year to settle government guaranteed debt and interest payments.

Denel’s guarantee facilities declined to R3.4 billion from R6.9 billion after R2.5 billion lapsed following the cancellation of the Egyptian missile contract and the maturity of R1.0 billion of its debt.
However, given that the entity could not submit its annual financial statements due to its liquidity constraints, the turnaround strategy and the capital injection does not seem to have made a huge impact on the success of the business.

Government needs to address the long-term strategy of the company and the support required by the Department of Defence and ARMSCOR.

4.4.3 SAFCOL The entity submitted its 2021/22 annual financial statements and annual report to Parliament.
The entity received an unqualified audit opinion with no emphasis of matters, an improvement on the emphasis of matte it received in the previous financial year, relating to the future implications of the COVID-19 pandemic on the entity’s future prospects, performance and cash flows.
In the previous financial year, the auditors also raised further findings regarding expenditure management and the annual financial statements, performance reports and annual reports not being submitted using the appropriate format.

In the 2021/22 reporting period the auditor only raised one matter relating to consequence management and adequate monitoring processes not implemented.
25 24 Department of Public Enterprises (2021a) 25 SAFCOL (SOC) Ltd. (2022) 262 The entity achieved 86 percent of its planned targets for the year, while revenue increased by 33 per cent.

Return on equity also improved from -1.4 percent to 2.7 percent.

The entity is showing improvement in its operations.

The profit after tax for the year amounted to R83.6 million.26 For the 2021/22 financial year, 86 per cent of the entity’s revenue is derived from log sales.
The reliance on a single source puts the entity at risk due to the high risk of damage fire poses to the business.

Thus the business is aiming to diversify their product portfolio whereby half of their revenue is derived from beneficiated products, and half from raw materials.27 SAFCOL has approximately 57 per cent of their land subject to land claims.
The company has put in place effective processes to govern the way in which they address the issues affecting the land claimants of the land under SAFCOL control.28 4.4.4 Eskom The Minister of Public Enterprises submitted a letter to Parliament on 26 September 2022, stating that Eskom was unable to submit its audited financial statements by the due date of 30 September 2022.
The letter stated that the completion of litigation confirmations, PFMA compliance and generation outstanding matters have contributed to the delay of the external audit.

The Eskom auditors have further identified significant key matters that will take some time to close out.

Eskom had to appoint new auditors, but due to the later completion of the previous financial year audit, the finalisation of the appointment of the new auditors was delayed.
Eskom reports that, as a result, the audit for the 2021/22 financial year started late.

The indications from the auditors are that they will be able to sign off the audited financial statements towards the end of October or the beginning of November 2022.29 The 2020/21 financial year was a challenging one for Eskom, given the declining global and local economic conditions that was exacerbated by the economic lockdown commencing at the end of March 2021 due to the COVID-19 pandemic.
This was evident in the reduced sales volumes which effected revenue generation.

Sales volumes decreased by 6.7 per cent due to the economic lockdown in the first 26 Ibid.

27 Ibid.

28 Ibid.

29 Gordhan (2022a) 263 part of the financial year.

Eskom is also facing liquidity and solvency risks which is threatening its ability to achieve financial and operational sustainability and to continue as a going concern.
The lack of cost-reflective tariffs granted by the National Energy Regulator of South Africa (NERSA) as well as escalating municipal arrear debt contribute to the entity’s liquidity constraints.

Eskom’s poor financial and operational performance contributes to South Africa’s challenges and remains a major risk to the South African economy.30 Eskom received a qualified audit opinion for the 2020/21 financial year, due to not fully and accurately recording irregular expenditure.
This is the fourth consecutive year that the entity has received a qualified audit.

The entity achieved 47 per cent of its performance targets for the year, or 18 of its 38 performance targets.

Eskom posted a net loss after tax amounting to R18.9 billion, a slight improvement on the R20.8 billion loss posted in the previous financial year.31 Irregular expenditure increased from R36.3 billion in 2019/20 to R37.2 billion, this will remain high as Eskom continues with its governance clean-up.
Continued findings on their procurement and contract management, and consequence management will occur as the clean-up continues.32 Eskom remains dependent on government support and continues to use debt to pay operational costs as it does not generate sufficient funds to meet its commitments.

Government provided R56 billion to Eskom for the 2020/21 financial year and has allocated R31.7 billion for the 2021/22 financial year.
This allocation is meant to stabilise the utility while government restructures it into three entities (generation, transmission and distribution) under Eskom Holdings SOC Ltd.33 During the 2021/22 financial year, Eskom received R31.7 billion for the settlement of government guaranteed debts.34 Eskom’s guarantee exposure increased by R29.6 billion to R327.9 billion due to additional drawdowns.

Eskom has a government guarantee exposure amounting to R350 billion35.
4.4.5 Transnet 30 Eskom (SOC) Ltd (2021) 31 Ibid.

32 Ibid.

33 Eskom (SOC) Ltd. (2021) 34 National Treasury (2021b) 35 Ibid.

264 The entity submitted its audited financial statements and annual report for the 2021/22 financial year to Parliament in August 2022.

Transnet’s business was negatively impacted by the COVID-19 pandemic induced economic lockdowns, which saw the South African economy contract by 7.0 per cent for the 2020 year.
This resulted in the entity’s revenue decreasing by 10.5 per cent to R67.3 billion in 2020/21, while net operating expenses increased by 16.2 per cent.

This resulted in the net loss for the 2021 year amounting to R8.4 billion, up from the R2.9 billion profit achieved in the 2019/20 financial year.36 However, the entity saw an improvement in revenue for the 2021/22 financial year, with revenue increasing by 1.8 per cent to R68.5 billion, mainly driven by improved container and petroleum volumes.
Net operating expenses decreased by 5.9 per cent to R45 billion from R47.8 billion in the previous year due to saving initiatives.

The entity was able to generate a net profit of R5 billion due to the increase in revenue and cost containment.37 The entity received an unqualified audit for the period under review as the entity received an exemption from disclosing irregular expenditure as required by the PFMA for a period of three years, starting from 2021/22 to 2023/24 financial years.
The extent of the exemption has resulted in the disclosure of the confirmed and under assessment of irregular and fruitless and wasteful expenditure (IFWE) in the integrate report of the current and one comparative year.38 Total irregular expenditure amounted to R1.1 billion in 2022 compared to R3.9 billion in the previous financial year while fruitless and wasteful expenditure amounted to R186 million in 2022 compared to R120 million in the previous financial year.39 Transnet has government guarantee’s amounting to R3.5 billion with an exposure of R3.8 billion.40 4.4.6 South African Express Airways 36 Transnet (SOC) Ltd (2021) 37 Transnet (SOC) Ltd. (2022) 38 Ibid.
39 Ibid 40 National Treasury (2021b) 265 The Minister of Public Enterprises submitted a letter to Parliament on the 07 October 2021, stating that the entity would not be able to finalise and submit the annual report within the prescribed timelines.

The Minister stated that, “SA Express was placed under provisional liquidation and the liquidator is in the process of finding a buyer for the airline.
The airline will therefore not prepare the 2020/21 Annual Report and Annual Financial Statements as the contracts of employees who would have prepared the reports were suspended prior to the year-end audit.”41 South African Express (SAX) airways was placed under Business Rescue in February 2020 due to financial pressures that resulted from poor management and state capture.

The business rescue practitioners applied to the High Court for the provisional liquidation of the airline as it had run out of funds.
The High Court placed SA Express under provisional liquidation on 28 April 2020.42 On 14 September 2022, the final liquidation order was granted by the Gauteng High Court on South African Express Airways after liquidators could not find a suitable buyer for the regional airline.

The DPE states that due to the current fiscal constraint, Government was not able to provide the post commencement finance to implement a successful rescue process.
Despite three different attempts by the provisional liquidators to attract credible buyers including a crowd funding initiative by employees to buy the airline, none had the requisite financial resources to sustain the business post the sale.

43 4.4.7 South African Airways The Minister of Public Enterprises submitted a letter to Parliament on the 07 October 2021, stating that the entity would not be able to finalise and submit the annual report within the prescribed timelines.
In the letter the Minister stated the following, “the company was placed in a business rescue included the transfer of the concurrent liabilities, lessor liabilities and lender liabilities to a Receiver vehicle.

SAA achieved solvency and liquidity status that is critical to a business to exit business rescue based on the Receivership.

Various accounting entries that relate to business rescue had to be considered and processed after the business rescue practitioners had exited the business.
The audit will be finalised once the airline fully recommences operations and the annual report and annual financial statements will thereafter be tabled.”44 41 Gordhan (2021b) 42 Department of Public Enterprises (2021a) 43 Department of Public Enterprises (2022a) 44 Gordhan (2021b) 266 The Minister of Public Enterprises submitted a letter to Parliament on 30 September 2022, stating that the entity would not be able to submit its audited financial statements within the prescribed timeline of 30 September 2022, due to the late start of the audit process.
The current audit will cover four financial years which are 2018/19, 2019/20, 2020/21 and 2021/22, and as such extra resources had to be arranged by the Office of the Auditor-General (AGSA).45 On 11 June 2021, the Minister announced that the Takatso Consortium, comprising Harith General Partners, a leading investor in African infrastructure and airports, and airline management firm, Global Airways, was selected as the preferred Strategic Equity Partner (SEP) for South African Airways.
The airline resumed flights on 23 September 2021 after it suspended its flights in March 2020 when South Africa instituted a lockdown in response to the COVID-19 pandemic.

The airline renewed the Air Operator Certificate, while the cabin crew and pilots were retrained.

The airline has an interim board and management leading the organisation, while the due diligence with regards to the sale of the airline is finalised.
The Sale and Purchase Agreement (SPA) draft is being produced and negotiated.46 4.4.7 Recommendations by the Auditor-General of South Africa The Auditor-General of South Africa recommended that the Portfolio Committee on Public Enterprises do oversight on the following: • There is an urgent need to finalise and implement the SOE reforms that have been announced by government –including the shareholder management Bill and SOE funding criteria.
This will ensure policy certainty and empower SOEs to delivery on their developmental mandates.

• The DPE’s annual performance plan must be aligned to the MTSF targets of strengthen governance systems, and ensure board stability.

Key indicators and targets for the department must include outcome/output based indicators which will see improvement of SOCs from year to year.

• Failure to submit financial statements is a contravention of the PFMA and the Companies Act.
This further obstruct accountability and oversight processes.

Decisive actions be taken against the SOC’s that failed to submit Financial statement.

45 Gordhan (2022b) 46 Department of Public Enterprises (2021a) 267 4.5 Department of Public Enterprises’ financial performance for 2022/23 The Department had an appropriated total budget of R23.9 billion of which R4.1 billion or 16.9 per cent was spent for the period April to June 2022.
This is much lower than the projected expenditure of R21.9 billion for the first quarter.

The lower than projected spending occurred in Programme 3: Business Enhancement, Transformation and Industrialisation due to lower than planned disbursement of funds to Eskom, as funds are disbursed in terms of the liquidity needs of the entity.
The entity was able to settle debt from own generated funds.47 The majority of the Department’s operational budget was spent on Compensation of employees and Goods and services.

Of the R177.5 million budgeted for Compensation of employees, R34.8 million or 19.6 per cent has been spent.

An amount of R113.1 million has been allocated for Goods and services, where R10.1 million or 8.9 per cent was spent in the first quarter.
Expenditure was slow on compensation of employees and Goods and services due to vacant posts and invoices not yet received.48 Programme 1: Administration has an appropriated budget of R166.3 million of which R30.8 million or 18.5 per cent has been spent by the first quarter.

The slow spending was due to vacant posts and outstanding invoices.49 Programme 2: State-Owned Companies Governance Assurance and Performance has a budget of R60.7 million of which R6.6 million or 10.8 per cent of the budget was spent.
The main cost drivers within the programme are Compensation of employees, and Goods and services.50 Programme 3: Business Enhancement, Transformation and Industrialisation has a budget of R23.7 billion of which R4.0 billion or 16.9 per cent of the budget was spent by the end of June 2022.

The main cost drivers in the programme are Payment for Financial Assets for transfers to state-owned companies.
As stated earlier, the disbursement to Eskom did not take place as the entity was able to settle debt from own generated revenue.

An amount of R21.8 billion was due to be disbursed to Eskom in the first quarter.

51 47 National Treasury (2022c) 48 Ibid.

49 Ibid.

50 Ibid.

51 National Treasury (2022c) 268 As at 30 June 2022, the Department had a headcount of 167, which translated to a vacancy rate of 22.7 per cent.
Spending on compensation of employees was R9.4 million or 21.3 per cent less than projected.

The underspending is due to unfilled posts.52 4.6 MTEF financial allocations for 2023/24 This section looks at the medium term expenditure framework (MTEF) for the 2023/24 financial year.

Table 3.
Current Estimates for the 2023/24 R’million Programme Allocation (R'000) 2022/23 2023/24 Variance Programme 1: Administration Programme 2: State-Owned Companies Governance Assurance and Performance 166.3 168.7 60.7 65.6 2.4 4.9 Variance % 1.4% 8.1% 3: Programme Transformation and Industrialisation Business Enhancement, 23 701.9 63.3 -23 638.6 -99.7% Total 23 928.9 297.6 -23 631.3 -98.8% Source: National Treasury (2022) Table 3 illustrates the projected allocation for the 2023/24 financial year, amounting to R297.6 million, a R23.6 billion or 98.8 per cent decrease.
Programme 1: Administration increases by R2.4 million to R168.7 million in the 2023/24 financial year.

Programme 2: State-Owned Companies Governance Assurance and Performance will increase by 8.1 per cent from R60.7 million in 2022/23 to R65.6 million in 2023/24.
Programme 3: Business Enhancement, Transformation and Industrialisation is expected to see the largest decrease of R23.6 billion to R63.3 million in the 2023/24 financial year, mostly to decreases in Payments for financial assets as the disbursements to the state-owned companies comes to an end.53 This allocation is subject to confirmation and approval by the Minister of Finance during the National Budget in February 2023.
4.7 Concluding comments on financial performance The Department is financially sound as exhibited by achieving unqualified audit opinions over the years, although findings were found with regards to restatement of figures, and contingent liabilities.

Matters 52 National Treasury (2022c) 53 National Treasury (2022) 269 pertaining to compliance with legislation and internal control deficiencies were also raised.

This can be seen as a regression on the previous year’s findings.
The Department’s budget has been dominated by transfers to the SOCs, which has skewed the Department’s budget.

The Department has spent 99.4 per cent of its budget.

However, the underspending on its operational budget was due to vacant posts and delays in the commencement of planned projects.

The Department should try to correct this trend by looking at its planning mechanisms.

The vacancy rate of 22 percent is a cause for concern as it is higher than the treasury benchmark of 10 per cent.
Performance against expenditure is addressed in Section 6 of the report, however, the Department will have to strengthen its oversight of all its entities and engage on the best way for the entities to achieve financial sustainability.

Eskom’s finances should be closely monitored to ensure that the money it is receiving from government is used to ensure the future sustainability of the company.
The Department will have to maintain close oversight over Transnet’s investment in its aging infrastructure and to reduce the effect that theft has on its railway networks.

The future role of Alexkor will have to be confirmed with the continued stabilisation of their long-term planning.

Government has to take a decision on the fate of Denel, which requires funding to support its restructuring process.
The Department needs to finalise the Sale and Purchase agreement of the sale of the 51 per cent of the shares in SAA.

The Department is faced with entities that are facing financial instability and governance challenges.

The Department will have to strengthen its oversight and monitoring of these entities and engage National Treasury on ways to overcome the financial instability of these entities.
The Department must provide the appropriate support to ensure the finalisation of the outstanding audited financial statements of the SOCs.

Corrective measures and plans need to be put in place to address the audit findings.

The Department also needs to ensure that processes and procedures are put in place to address entities’ weaknesses timeously, effectively and efficiently before these issues escalate and become problems.

5.
5.

OVERVIEW AND ASSESSMENT OF SERVICE DELIVERY PERFORMANCE 5.1 Service Delivery Performance for 2021/22 The Department has a responsibility of ensuring that there are efforts in rebuilding and reinventing State- owned Entities(SOEs) to support Government’s triple priorities i.e., reduce unemployment, poverty, and inequality.
In 270 addition, the Department has a Mandate to oversee the process of enhancing Governance and integrity of our SOEs, and implement the structural reforms required within the network industries.

Given the challenging environment in which State- owned Companies (SOCs) operate, resolute measures are required to address the SOCs financial and operational difficulties.
While these setbacks persist, the Department has remained committed to address them using effective Governance instruments to ensure proper Governance, and Management of SOCs’ oversight.

As the Shareholder, the Department continues to place particular focus on strengthening SOC Boards to ensure they comprise credible, and capable individuals with unimpeachable ethics and integrity.

Denel is a critical supplier of sovereign and strategic capabilities ensuring security of supply to the DoD.
Shifts in geopolitical dynamics in Europe, Asia and other parts of the world further justify the significance for the country to preserve and grow its current industrial defence capabilities to meet its own requirements and to grow exports.

Denel has been confronted with grave liquidity challenges which have adversely affected its operations.

As a result, Denel lost a significant number of critical skills which affected several strategic defence industrial capability areas.
Denel’s challenges are having an adverse effect on the sustainability of the local defence industry ecosystem.

Due to these financial challenges, Denel has lost a significant number of critical skills.

Several strategic defence-industrial capabilities have been affected by this.

As a systems integrator that is supported by an extensive local supplier base, Denel’s challenges are having an adverse effect on the sustainability of the local defence industry.
The impetus to return Denel to a sound footing is underway.

The SOC appointed a Chief Restructuring Officer(CRO) to accelerate the vital measures required to return the entity to sustainability.

To this effect, Denel has developed a comprehensive restructuring plan with a plausible roadmap and strategic actions.
The proposed future structure for Denel’s core capabilities, is to have a direct link to the dimensions of defence with land, air and more complex Integrated Systems grouping to exploit new opportunities and emerging technologies.

Critical success factors include Shareholder injection, strategic partnerships, disposal of non-core assets, optimisation of internal business processes and footprints.

Denel was able to unlock over R900 million from its medical trust.
This injection has allowed the SOC to address some legacy obligations such as outstanding salary payments to employees and some creditors including statutory obligations as well as support operations.

271 The need to restructure Eskom is driven by an evolving South African energy market and policy landscape.

The restructuring will augment Eskom’s business model, and place Eskom in a path to long-term sustainability, addressing the “fit for purpose” question.
The implementation of the Eskom Roadmap resulted in the formation of new independent Transmission, Generation and Distribution subsidiaries wholly owned by Eskom.

The functional separation of three divisions (generation, transmission, and distribution) was completed according to the roadmap deliverables.

In December 2021, Eskom’s Transmission Company was corporatised as a wholly owned subsidiary of Eskom.
The restructuring of Eskom was further supported by the proposed amendments to the Electricity Regulation Act (ERA) and the Electricity Pricing Policy (EPP) which is estimated to be finalised by the end of the 2022/23 financial year.

In the 2021/22 financial year, a decision to corporatise Transnet National Ports Authority (TNPA) a subsidiary of Transnet, was endorsed by the Department of Public Enterprises (DPE) and Department of Transport (DoT).
The process of ensuring that TNPA is established as a wholly subsidiary of Transnet is underway.

South African Airways SOC Limited (SAA) successfully exited the Business Rescue process in April 2021, and relaunched operations both domestically and regionally.

The airline commenced its operations in September 2021.

The subsidiaries of SAA namely, Air Chefs, Mango Airlines and SAA Technical, undertook restructuring processes aimed at improving efficiencies and financial performance of the entities.
Mango Airlines commenced Business Rescue proceedings in August 2021, as part of a process of ensuring the successful restructuring of the airline.

South African Forestry Company Ltd (SAFCOL) continue to support economic transformation to achieve a more inclusive, effective and efficient economy within communities in which the SOCs operate.

The people of Graskop and surrounding areas, received a state-of-the-art clinic valued at more than R3 million.
The number of patients visiting the clinic increased from 700 to almost 1 500 per month.

The Company has empowered more than 84 Black- Owned companies by offering technical training and non-financial support.

SAFCOL has supported unemployed youth to establish their own co-operative and as a result, this has created 12 permanent jobs and income for Limpuma Furniture manufacturing co- operative.
The Company has concluded a partnership framework with nine land claimant communities in the Vhembe District to ensure economic inclusion and participation in SAFCOL’s value chain.

272 5.2 Performance Information by Programme 5.2.1 Performance analysis The Department is primarily contributing to creating an efficient, competitive and responsive economic infrastructure network (Outcome 6) of the Medium Term Strategic Framework (MTSF).
Furthermore, the Department, through the activities of its SOCs, contributes to other outcomes such as decent employment through inclusive growth (Outcome 4), a skilled and capable workforce to support an inclusive growth path (Outcome 5) and a vibrant, equitable and sustainable rural communities with food security for all (Outcome 7).

The Department, over the medium term will continue to oversee its seven SOCs.
Furthermore, over the medium term, the department will continue to focus on enhancing reforms to stabilise SOCs’ and strengthening its oversight capacity to ensure that the SOCs in its portfolio are sustainable and contribute to investment in key infrastructure.54 The Department tabled its Annual Performance Plan (APP) 2021/22 submitted to the Committee.

It has achieved most of its planned activities according to the report.
5.2.2 Institutional Strategic Outcomes Table 4: Institutional Strategic Outcomes OUTCOMES the Strengthen Governance system of SOCs and promote institutional the alignment execution the oversight function.

in of Improved Governance and accountability.

PERFORMANCE OUTCOME The Presidential State-owned Enterprise Council (PSEC) was established in 2020/21 financial year and has made progress in line with the approved objectives.
In order to give effect to its Mandate, the PSEC is, at present, organised into three workstreams, namely: i) Governance; ii) Consolidation and Crisis Management, and iii) Finance tasks to provide oversight and strategic support towards the repositioning and revitalisation of the SOEs.
To date, the work-streams have considered the work previously done on SOCs reforms to build on the existing work, placing emphasis on the Presidential Review Commission (PRC) recommendations, and the National Planning Commission (NPC) position papers and case study.

PSEC recommended that Government adopt a centralised Shareholder Management model by establishing a Holding Company.

A Shareholder Management Bill which will be finalised and submitted to Cabinet in 2022/23 financial year is being developed.
Good Governance codes continue to be embedded within the SOEs.

In this regard, an integrity and consequence management framework has been developed to establish clear guidelines and expectation of the Shareholder.

This framework, which will manage conflict of interest in the SOCs were solidified.

The quest to recover stolen money has yielded progress, where some of the responsible officials are being prosecuted.
54 National Treasury (2020) 273 Increase the contribution of SOCs to support transformation of the South African economy.

Economic transformation and job creation.

The DPE’s Transformation Framework and Guidelines (TFG) continue to serve as a guide for SOCs within the DPE portfolio, to align their socio-economic related interventions to support achievement of the National transformation agenda.
SOCs in the portfolio adequately comply with the reporting requirements for Employment Equity (EE), in terms of all Legislative provisions associated with the EE Act, including making submissions of the EE Plans and Reports to the Department of Employment and Labour (DoEL).

The Department has developed a reporting tool as a mechanism to strengthen monitoring EE implementation, and ensure standardisation of reporting, and enable in-depth analysis of SOCs’ contribution.
The Department is also supporting interventions initiated by the Department of Women (DoW), Youth, and Persons with Disabilities (PwDs), to address gender disparities and advance the empowerment of gender, youth and persons with disabilities (GEYODI) through various initiatives in the Department and SOCs.
Thus, the Department will continue to leverage SOC preferential procurement towards empowerment of designated groups, albeit still experiencing challenges especially regarding empowerment through companies owned by youth and PwDs, which was further aggravated by both financial and economic constraints, as well as the impact of Covid-19 during the period under review.
The Department and SOCs, are however expected to increase procurement spend towards a 40% women empowerment threshold, as current oversight is in alignment to Broad-Based Black Economic Empowerment (B-BBEE) Act requirements.
The SOCs skills and training development towards achieving priorities, as outlined in various policy frameworks and strategies such National Development Plan (NDP), National Skills Development Plan (NSDP), MTSF, and Economic Reconstruction and Recovery Plan (ERRP), remain one of the critical levers in addressing the triple challenges of unemployment, poverty and inequality.
In the past two years, the training environment was also not spared, like any other economic sectors, from the constraints imposed by the Covid-19 pandemic.

Due to limited training investments, SOCs’ capacity to accept an increased number of learners into the system was reduced.
The Department continue to establish, and strengthen, partnerships with public and private sector role players as an innovative strategy for sustaining SOCs training operations, and optimisation of training facilities with excess capacity.
The Department has concluded Memorandum of Understandings(MoUs) with the Eastern Cape Department of Public Works and Infrastructure (ECDPWI), and the North West Department of Public Works Roads and Transport (NWDPWRT) towards mitigating risks associated with SOCs financial constraints, as part of optimising training facilities of Eskom and Transnet.

However, training through collaborations with both ECDPWI and NWDPWRT will only commence once Service Level Agreements (SLAs) are concluded with the two SOCs.
OUTCOMES PERFORMANCE OUTCOME Position SOCs to support the industrialisation of the SA economy.

The development of industrial capabilities to support SOCs’ core Mandate, is critical to reversing the de-industrialisation curve.

Over the years, these has been many factors that contributed to the de- industrialisation and this include electricity constraints and a rapid increase in administered prices.
To date, Government has shown support through various initiatives, such as the introduction of the amendment of the B-BBEE Act 46 of 2013 and amended Codes of Good Practice.

For these policies to have a desired impact, SOCs has been playing a major role to increase local content.

On the one hand, SOCs continue to face challenges in ensuring various procurement leverage programmes are utilised for localisation of critical industrial capabilities.
Leveraging Government and private sector procurement is a powerful instrument to promote economic growth, job creation, and industrial capability development.

Furthermore, it drives local content levels, enhances the competitiveness of the National industry, which will ultimately increase exports.

Over the medium-term, the Department has established a uniform approach towards localisations, which the 274 SOCs have adopted and contributes on efforts of re-industrialisation of the South African Economy.
Support the development of Small, Medium and Micro Enterprises (SMMEs).

Supply of energy secured.

to an Increase access affordable and reliable transport system.

SOC procurement is below the expected 40% women empowerment threshold, as current oversight is aligned to B-BBEE requirements.
Empowerment of companies owned by youth, and PWDs, also have not increased to the level of expectations, mainly due to funding constraints impacting on acceleration of SOCs provisioning of scarce, and critical skills and delivery of Corporate Social Investment (CSI) programmes.

CSI programmes infrastructure development, schools to improve quality of Science, Technology, Engineering and Maths subjects (STEM).
support community development, including Generation performance declined from 64.19% in the 2020/21 financial year, to 62.02% in the 2021/22 financial year, which resulted in Eskom implementing loadshedding to protect the system.

The deterioration in the Energy Availibity Factor (EAF) was mainly due to a high unplanned capability loss factor (UCLF) of 25.36%.

Eskom has been implementing a Generation Recovery Plan, that focuses on improving generation performance and plant reliability.
To improve the EAF, Eskom has identified seven strategic initiatives, including people development, competency development, technical excellence, station rhythm, SCM, and focusing on the future.

Transnet Freight Rail (TFR) volume performance deteriorated over the years due to historical underinvestment, operational related challenges exacerbated by economic and socio-economic environments, and the impact of Covid-19 which further deteriorated performance.
In the 2021/22 financial year, TFR railed a total of 184.2 mt (against the budget: 208 mt) compared to the volume railed in the 2020/21 financial year of 212.37 mt (budget: 230 mt).
Transnet implemented a Turnaround Strategy that focuses on the top eight commodities (categorised on six key segments) where it will leverage its position in the core operations (businesses), i.e., corridors and terminals, to resolve infrastructure challenges that have emerged in the key nodes, and within the freight system to build density.
The strategy implementation will be backed by on-going policy deliverables such as branch lines revitalisation for infrastructure investment, PSP for funding, operations and investment, and third- party access for operations.

There has been progress on the revitalisation of branch lines.

Transnet identified several branch lines to be put up for concessions aimed at increasing capacity in operations across the network.
Through the private sector participation and concessioning process, this led to the re-opening of the Paarl Franschhoek, Umtata- Amabhele and Ceres branch lines (Freight & Tourist services).

275 5.3 Programme and sub-programme performance55 The Department has three programmes.

The performance against targets are given below.

5.3.1 Programme 1: Administration and Corporate Management The purpose of this programme is to provide strategic management and support services to the Department.
The programme is currently made up of the following sub-programmes: Ministry, Office of the Director- General/Management; Security and Facilities Management; Information Management and Technology; Office of the Chief Financial Officer; Human Resources; Communications; Strategic Management; and Internal Audit.

Table 5.

Programme 1 Performance Outcome system the Strengthen of Governance promote and SOCs institutional alignment in the e x e c u t i o n o f t h e oversight function.
Output Indicator of training provided Number interventions (WSP) Develop Human Resource Plan and submit to Department of Public and Service Administration (DPSA).

Development of the DPE Enterprise Business Architecture (EA) Stakeholder Engagements framework developed.

Annual Target Actual Achievement 20 Achieved Review 2021/22 HR Plan and to DPSA by 30 June 2021. submit Achieved Development Architecture Masterplan of the Achieved Stakeholder 3-year Engagement Framework developed.
Achieved Source: DPE Annual Report 2021/2022 The Department achieved all the outcomes in this programme.

5.3.2 Programme 2: State-Owned Companies Governance Assurance, Legal Assurance, Risk Profiling and Mitigation 55 Department of Public Enterprises (2020a) This section comes from this plan.
276 The purpose of this programme is to provide and enforce SOCs’ governance, legal assurance, financial and non-financial performance monitoring, evaluation and reporting systems, in support of the Shareholder, and to ensure alignment with Government’s priorities.

Table 6.
Programme 2 Performance Actual Achievement of system independent Annual Target Output Indicator Annual assessment the of promote in Outcome Sub-programme: Governance, Legal Assurance, Risk Profiling and Mitigation Strengthen governance SOCs and institutional alignment the execution of the oversight function Development and implementation of SOCs Risk Integrity Management Framework (RIMF) Reduction in the number concerning of cases and Board members employees Annual Board Evaluation Report Board Performance in Achieved Achieved the Reduction number of cases concerning Board members and employees doing business with SOC Draft submitted Cabinet Bill to the conducting business with the SOC.
Government Shareholder Management Bill (GSMB) adopted into law by 2023. previously Review undertaken forensic audits, recommendations implemented State Capture Commission) and ensure a r e (including Quarterly of 4 reviews previously undertaken forensic audits ensure and recommendations are implemented.
Sub-programme: Financial Assessment and Investment Support Improved independent financial sustainability of SOCs 24 Number of SOC quarterly financial reviews and reports Produced Number of corporate plans reviewed Number consolidated progress SOCs’ audit findings report on of 5 2 Not Achieved Achieved 24 6 2 277 Standardised methodology frequency payment of dividend and of SOCs Dividend Policy Framework developed Achieved Source: DPE Annual Report 2020/2021 The Department achieved most of its indicators in this programme with the exception of Government Shareholder Management Bill (GSMB).
5.3.3 Programme 3: Business Enhancement and Industrialisation The purpose of the programme is to provide sector oversight to ensure that state-owned companies contribute to the advancement of industrialisation, transformation, intergovernmental relations and international collaboration services.
The programme will also support the shareholder in strategically positioning and enhancing the operations of state-owned companies.56 Through this programme, the Department contributes to the enhancement of the performance of SOCs on an ongoing basis by:57 • Conducting reviews, research and modelling of pipeline and new business enhancement opportunities within SOCs; • Assessing operations of SOCs and developing mitigation instruments in conjunction with policy departments, regulatory bodies and industry; and • Conducting research, modelling job creation and transforming instruments for SOCs to inform compact alignment imperatives, promote SOCs’ contribution to inclusive economic growth, unlock bottlenecks affecting SOCs and inform evidence-based policy formulation.
Table 7.
Programme 3 Performance Output Outcome Output Indicators Annual Target to the Improved SOCs spend on locally manufactured goods and services Sub programme: Business Enhancement Services Increase contribution of SOCs support transformatio n of the South African economy Assessment Report on % increase spend on SOCs local content Four Assessment Reports on SOCs 75% spend on local content Actual Achievement Achieved 56 Department of Public Enterprises (2020a) 57 Ibid 278 Improved SOCs contribution transformation agenda Assessment Report on % increase spend on SOCs Preferential Procurement and B-BBEE Level 6 compliance.
Socio-economic development programme of SOCs.

Assessment Reports on % programme allocation.

increase in SOC CSI Support development SMMEs.

the of Improved SOCs Enterprise Development.

spend on Economic transformation and job creation.

A minimum % of leviable amount (excluding the statutory skills development levy) on essential skills development.

Adaptation to climate change impact.


Position SOCs to support the re- industrialisation of the economy SA Annual value of Enterprise Development contributions.

Assessment Reports on SOCs 3% spent of leviable amount (spent in the supply of scarce and critical skills in occupations in demand).
DPE Environmental Implementation Plan (EIP) published in the Government Gazette reduce emissions Monitor implementation of SOC Climate Change Response Plans to and increase resilience to climate change impact Sub programme: Energy and Resources Improved Shareholder Governance and signed.

accountability Compact Consolidated Report on SOC climate change response initiatives compiled.

of Number Shareholder Compacts signed (Eskom, Alexkor and SAFCOL).
Achieved Achieved Achieved Achieved 6 Level Four assessment Reports on SOCs 75% spend on Preferential Procurement and B-BBEE compliance Assessment Four Reports on 0.2% spend on CSI SOCs programme.

Assessment Four Reports on SOCs 1% TMPS) spend.

Assessment Four Reports measuring SOCs 3% spend of leviable amount.

DPE EIP published in the Government Gazette Achieved Consolidated Report on SOC climate change response initiatives.

Achieved 3 Shareholder Compacts signed (Eskom, Alexkor and SAFCOL).
Not Achieved (Two Shareholder Compacts signed Eskom and SAFCOL) SAFCOL’s reinvestment on the Timbadola project Increase contribution by SOCs in support of the transformatio n of the South African economy SAFCOL’s revenue increase in Achieved Four Progress Reports on SAFCOL’s implementation of the Timbadola re- investment project.

Optimal operating structure for Alexkor Restructured Alexkor Achieved Four Reports on implementation Alexkor’s Shareholding structure.
the of proposed optimal 279 of Supply energy secured Increase Energy Available Factor to above 80% by 2024 Eskom planned Capacity Adherence Increase Energy Available Factor to above 80% by 2024 Increased reserve margin electricity Small-scale Explore Embedded Generation (SSEG) options to augment Eskom generation capacity by 1000 MW by 2024.
Implementation of the Eskom commitment Roadmap by 2024 (unbundling) Small-scale Explore Embedded Generation (SSEG) options to augment Eskom generation capacity by 1000 MW by 2024. the Implementation commitment Eskom Roadmap 2024 by (unbundling of Sub programme: Transport and Defence Improved Governance and accountability SOC implementation of agreed key performance indicators.
Number of Shareholder Compacts signed Improved independent financial sustainability of SOCs Monitor performance of Denel agreed client- against milestones on significant contracts (AV8 Malaysia, Hoefyster, Darter production, Aviation MRO on Rooivalk Oryx helicopters).
and A Improved investment in rolling stock and rail infrastructure Increased access to an affordable and reliable transport system on Report (Transnet, SAA and Denel) on Progress of Denel performance client-agreed against significant milestones (AV8 Malaysia, contracts Darter Hoefyster, production, Aviation MRO on Rooivalk Oryx helicopters).
reliability, Improved service predictability of service, and cost-effectiveness of the transport system with a higher customer satisfaction rate and A Corporatised National Ports Authority(NPA) as required by Section 3(2), 4 and 27 of National Ports Act No 12 of 2005. the Progress Reports on the implementation of decision on the future structure and functions of the TNPA.

Achieved Achieved Four Assessment Reports on the delivery of build Eskom’s programme (Medupi, Kusile and Power Delivery Projects).
Assessment Four Reports of Eskom’s performance generation fleet.

Two Progress Reports on the of implementation Eskom’s Roadmap Achieved Not Achieved Three 2022/23 Shareholder Compacts were not signed (Transnet, SAA and Denel).

Achieved signed 2022/23 Three Shareholder Compacts (Transnet, SAA and Denel).

Four quarterly Progress Reports on significant contracts (AV8 Malaysia, Hoefyster, A Darter production, Aviation MRO on Rooivalk and Oryx helicopters).
Achieved Four Quarterly Reports on progress on the Investment programme in rolling stock and rail infrastructure.

Four quarterly Progress Reports on corporatisation of the TNPA.

Improved port terminal Improved turnaround Improved turnaround Achieved 280 equipment reliability.

times across container terminals.

the strategic times across the strategic container terminals.
Transnet Key Strategy linked to corridors Sector development Assessment Reports providing Status Report on the implementation of the corridor strategy Achieved Four Quarterly Assessment Reports providing Status Report on the implementation of the corridor strategy.
Sub-programme: Research and Economic Modelling Increase Development of a “Just” contribution Energy Transition of SOCs to framework support of the transformatio n of the South African economy Report Progress development of Framework produced on JET Progress Report development of Framework produced on JET Achieved Global, Regional and local economic review Review Global, Regional and local Economic Report.

Achieved Four Quarterly reports on Global, Regional, and local economic reviews produced.
Industry-specific research.

Number of industry- specific research conducted.

Industry-specific 2 research conducted.

Achieved Source: DPE Annual Report 2021/22 The performance of this programme, in particular, sub-programme on business enhancement services and research and economic modelling was satisfactory as all the outcomes in both sub-programmes were achieved.
The performance in the sub-programme on energy and resources, all outcomes were achieved with the exception of improving governance and accountability which included an output indicator of three shareholder compact signed (Eskom, SAFCOL and Alexkor).

Only two shareholder compacts (Eskom and SAFCOL) were signed resulting in the target not being achieved.
The Department outlined that Alexkor’s shareholder compacts has not been signed because it is still being reviewed by the Board that was appointed in January 2022.

The performance in the sub-programme in defence and transport, all outcomes were achieved with the exception of improving governance and accountability which included an output indicator three shareholder compacts signed (Transnet, SAA and Denel).

All three of the shareholder compacts (Transnet, SAA and Denel) were not signed.
The Department outlined that negotiations on Transnet 281 shareholder compact took longer than expected.

Denel shareholder compact not concluded due liquidity constraints.

SAA shareholder compact not finalised.

5.4 Concluding Comments on Service Delivery Performance The Department is crucial in the development of the overarching policy on SOCs.
In its reporting to the Committee, the Department stated that the work of the Government Shareholder Management Bill is outstanding due to the processes initiated at the Presidential State-Owned Enterprises Council (PSEC).

The Council’s mandate includes strengthening the framework governing SOEs including the introduction of an overarching Act governing SOEs and the determination of an appropriate Shareholder Ownership Model.

The timelines for the Shareholder Management Bill has been deferred to 2023.
The Department achieved targets on most of its programmes but failed to achieve targets on sub- programmes energy and transport and defence.

Concluding shareholder compacts remain a challenge for the Department.

The shareholder compacts for Alexkor, Transnet, SAA and Denel were not concluded.

This makes it difficult for the Department to provide oversight to these entities as there are no agreeable terms set in order to monitor SOCs’ performance.
The Shareholder’s Compact represents the agreement between the Executive Authority and the Accounting Authority.

It is a reflection of the expectations of each party, expressed in terms of outcomes and outputs that need to be achieved.

The Shareholder’s Compact needs to be reviewed and adjusted on an annual basis, in line with the performance of the Public Entity over the previous financial year.

The corporate plan and shareholder compacts govern the environment of governance and accountability.
The new public financial management framework introduces accountability for all government departments and public entity management and staff who spend public money and deploy public resources in delivering services to the citizens of South Africa.
To this end, the reforms introduced by the PFMA and the associated Treasury Regulations, as well as recently published best practice guidelines, multi-year budget frameworks (“the MTEF”) and other guidelines, set a framework for accountability which is arguably the best in the world today.
The reforms introduced by PFMA clearly marks government’s efforts to: • Establish a uniform planning framework within which government departments, business enterprises and other public entities provide the relevant treasury with sufficient information that will ultimately result in a better understanding of the utilisation and deployment of scarce public sector resources; • Provide a uniform service to all citizens within a framework of affordability in service delivery; 282 • Ensure that money was spent to the benefit of the communities it was targeting; • Evaluate the spending of all entities to ensure optimum utilisation of tax revenues for the greater benefit of the majority of South Africans; and • Enhance efficiency, effectiveness and economical utilisation of financial and other resources.
The preparation of the shareholder’s compact forms the basis of performance delivery.

In delivering service in the public sector, all entities forming part of the machinery of public service delivery should work together in an orderly and focussed manner.
A well thought out agreement, prepared in consultation with the executive authority, will assist the public entity to focus its activities on the delivery of strategic or high quality services as an agent of the state for the benefit of the citizens of the country.

Agreement on the outcomes to be achieved, with relevant performance measurements attached to these, will empower the executive authority to meet the required commitments to the legislature and the people of the country.
5.5 Value-added work / Emerging risks The Auditor General of South Africa highlighted an emerging risk which the Department must monitor.

The DPE embarked on a process to sell 51% of its shares in SAA to a strategic equity partner (SEP).

While the transaction is not yet finalised pending regulatory approvals, the AGSA reviewed the process followed and the agreement signed with the SEP to determine the impact on the DPE’s financial statements.
The Auditor General of South Africa identify risks facing government with the transaction.

AGSA observes the following: • The purchase and sale agreement requires more than R3 billion to be paid by DPE to complete implementation of the BR plan.

Funds to cover this liability have not been appropriated in the budget potential non-compliance with section 38(2) of the PFMA.
The related contingent liability was disclosed in the financial statements of DPE and we highlighted it in the audit report of the DPE as an emphasis of matter.

• The department did not follow a formal process for the invitation, evaluation and adjudication of proposals from interested parties to identify the successful/preferred strategic equity partner.

• No public invite for bids or expressions of interest • No evidence that proposals were fairly evaluated based on predetermined criteria.

283 • iii.
283 • iii.

The valuation report that was used to determine the transaction value was not timeously provided for audit purposes.

This was only made during the last few days of the audit and we could not be able to perform all the required audit procedures thereon.

The observations under (2) and (3) above were only included in the management report as the transaction is yet legally finalised.

The sale is part of the department’s strategic goal to resuscitate the SAA.
Should the sale transaction not be properly processed, it may result into further losses to the state or delays in making the entity fully operational.

It is important to ensure that the transaction is advantageous to the state.

There are no clear legislative provisions for the disposal of SOEs, SOE non-core assets or SEP transactions –to ensure that the process & terms are beneficial to the state.

The DPE does not have a policy that regulates the disposal of shares in SOEs.

6.
6.

SERVICE DELIVERY AND FINANCIAL ASSESSMENT The Department spent 99.4% (R39.1 billion of R39.3 billion) of the final appropriation, of which R250 million was for Departmental operations and R38.9 billion was for Equity injection for SOCs.

The R38.9 billion was used by SOCs to settle Government guaranteed debt, of which R31.7 billion was for Eskom, R4.1 billion for South African Airways (SAA) and R3.1 billion for Denel.
The under expenditure of R252.2 million primarily related to compensation to employees due to vacant posts, and to goods and services caused by reduced travelling because of the Covid-19 restrictions.

The spending under direct charges against the National Revenue Fund (NRF) was 99.8% (R3.0361 billion of R3.036 billion) of the final appropriation.
An additional amount of R112.5 million approved by National Treasury (NT) for settling of the guaranteed debt and interest payment, has not yet been allocated to the Department.

An amount of R16.84 million was shifted as virement within the vote from goods and services in Programme 1 and Programme 2, to payments for financial assets in Programme 3.

An amount of R15.162 million is reported as unauthorised expenditure which was paid prior to obtaining approval.
The Irregular Expenditure of R972 000.00 was incurred in the previous financial years, and R2.065 million in the current financial year.

As a result of deficiencies in the appointment of a Service Provider, the Department is in the process of implementing corrective measures.

The fruitless and wasteful expenditure of R5 000.00 incurred in the previous financial years, is in the process of being investigated.
The Department 284 continues to implement control measures and monitors, detects, and addresses Irregular Expenditure to ensure compliance with the Public Finance Management Act, Act 1 of 1999 as amended (PFMA).

The Department has a responsibility to implement the ERRP and MTSF priorities in an effort to rebuild, recover, and reinvent SOEs.
The Department’s plans include: • • • • • to enhance the Governance and integrity in SOEs, and not only at Board level, but in all other levels, to introduce a new ownership model with the guidance of the Presidential SOE Council, to relentlessly focus on SOC operational improvements and efficiency, to contribute actively to economic transformation and the creation of new opportunities, and to encourage public-private partnerships that mobilise the necessary resources and skills to advance the SOE programs.
Building constructive partnerships will play a crucial role to recover and rebuild SOEs.

The Department of Public Enterprises says that it is making progress with its plans to establish a centralised shareholding company to help it control existing state-owned enterprises (SOEs) in the country.

Intentions to establish this company, given the moniker ‘Holdco’ during these initial stages, were detailed by President in March 2022.
According to the president, the centralised shareholder management model used for the Holdco is likely to entail the following: • A holding company that is 100 percent owned by the state.

• An active shareholder approach to continuously set, monitor and evaluate SOE performance in relation to commercial and development objectives.

• A group that will ensure the commercial sustainability of SOEs with minimum or no reliance on the fiscus.
• The development of an appropriate capital structure for the holding company to ensure profitability and sustainability of each SOE.

7.

SUMMARY OF REPORTING REQUESTS The Auditor-General reported that the Department’s achieved an unqualified audit with findings.

Therefore, there are no reporting requests relating to the Department.

285 8.
285 8.

RECOMMENDATIONS 8.1 The Committee recommends that the Minister of Public Enterprises should: 8.1.1 Articulate to the Committee the costs of developmental goals or public sector obligations (PSO) explicitly in the departmental budget transfer to SOCs and in the financial statements of SOCs.

8.1.2 Ensure that there is a balance between developmental goals and commercial mandates which seeks to achieve profit maximisation and return on the market value of equity.
8.1.3 Develop a comprehensive modern governance framework as a critical step in improving SOC governance and performance.

8.1.4 Strengthen the State’s role as owner/shareholder through the necessary political support and backing for the Department to execute its mandate, recruitment of professional staff with necessary financial, legal and technical capabilities, dedicated financial resources and proper monitoring and accountability for all the entities.
8.1.5 Professionalise SOCs Boards and Management through effective and transparent board nominations policy.
In line with good practice, the board nominations policy would contain: • properly defined selection criteria, such as a minimum requirement of a degree in economics, finance, or law; business and sector specific experience; proven integrity and probity; and additional proficiency and suitability requirements for large and complex businesses; • requirements for the number of independent directors; • provisions for the use of open advertising and hiring of professional selection firms to short-list candidates; • delegation of the process to the centralized ownership entity or to a specialized independent body; and the development of a directors’ pool of pre-qualified board members.
Increasingly boards are also creating nominations committees as they become more involved in developing board skills profile and identifying prospective candidates for board positions.

8.1.6 Develop a clear regulatory framework for disposal of shares in SOCs as government has plans to engage in more of these transactions.

8.1.7 Finalise and implement the SOCs reforms that have been announced by government, including the Government Shareholder Management Bill and SOCs funding criteria.
8.1.8 Ensure that the DPE’s annual performance plan be aligned to the MTSF targets of strengthening governance systems and ensuring board stability.

286 8.1.9 Appreciate that failure to submit financial statements is a contravention of the PFMA and the Companies Act.

This further obstructs accountability and oversight processes.

Decisive actions should be taken against the SOCs that failed to submit financial statements.
8.1.10 Strengthen governance and accountability by ensuring that shareholder compacts are concluded by the third quarter of the preceding financial year.

8.1.11 Provide the Committee with characteristics of the proposed Holding Company and implementation stages, provide detailed benchmarks to successful countries and a detailed SWOT analysis and a detailed business plan within the next quarter.
8.1.12 Provide the Committee with a detailed strategy and outlook on the outcome indicator increase energy available factor to above 80 percent by 2024 in the next quarter.

The Committee notes that, Government will focus on: • First, improving the performance of Eskom’s existing power stations; and • Second, adding as much new generation capacity to the grid as possible, as quickly as possible.

8.1.13 Provide the Committee with a detailed assessment of the “Just” Energy Transition.
This includes its impact on developmental mandates and how are the Department and Eskom going to repurpose its power plants and skills to accommodate the transition.

How will the Just Energy Transition initiatives going to be funded?

8.1.14 Present to the Committee a plan on mitigating the value-added work/emerging risk which the AGSA identified regarding the Department.

The Committee notes that, the DPE embarked on a process to sell 51 percent of its shares in SAA to a strategic equity partner (SEP).
8.1.14 Present to the Committee SAFCOL’s sustainability matters specifically relating to land claims and reinvestment on the Timbadola project within the next quarter.

8.1.15 Present to the Committee the future role and the optimal operating structure of Alexkor before the end of the next quarter.

8.1.16 Present to the Committee government’s strategies to combat economic sabotage, vandalism and theft of economic infrastructure at Eskom and Transnet.
8.1.17 Present to the Committee the future role of Denel, it’s restructuring and sustainability before the end of the next quarter.

8.1.18 Ensure that shareholder compacts are concluded by the third quarter of the year preceding the year covered by the compact.

8.1.19 Present to the Committee government’s approach towards filling the gap in the aviation market left by the liquidation of SAX and the business rescue of Mango airlines.

This should include the funding criteria of SOCs in the next quarter.
287 8.1.20 Ensure that the Accounting Officer improves controls and systems to ensure the department achieves an unqualified audit outcome and matters of emphasis from each year must be addressed in the subsequent year.

8.1.21 Provide the Committee with quarterly progress reports regarding the implementation of these recommendations, and 8.1.22 Provide the Committee with timeous updates in writing on developments and events that could potentially adversely affect SOCs or the public.
This information should be submitted to the Committee shortly after receiving the information or date of incident.
The Committee further recommends that the Minister of Finance should consider: 8.2.1 recapitalising Denel in order to safeguard the strategic and sovereign defence capabilities of the state, and repurpose the advanced manufacturing capabilities of Denel to enhance the capacity of the state in responding to the escalating challenges of safety and security, health and broader industrialisation initiatives.
8.2.2 creating an enabling environment to encourage public-public partnerships, where government departments and state-owned companies can collaborate to leverage on the capacity of the state.

Secondly, government departments should be encouraged to use the services of state agencies and state owned companies.
It is our view that, Denel would be self-sustainable if its industrial and advanced manufacturing capabilities were used to produce vehicles and advanced technologies to enhance the work of the police and other departments.

9.

CONCLUDING REMARKS The Committee notes that, Government will also reduce the continual demands on South Africa’s limited public resources from state-owned companies.

For this reason, SOCs need to develop and implement sustainable turnaround plans.
The future of our state-owned companies is under consideration by the Presidential State-Owned Enterprises Council.

Their future will be informed by the value they create and whether they can be run as sustainable entities without bailouts from the fiscus.

Some state-owned companies will be retained, while others will be rationalized or consolidated.
The Committee would like to express its gratitude to the Auditor-General, leadership and management of the Department of Public Enterprises, state-owned companies and the parliamentary officials supporting the Committee for their hard work and co-operation during this process.

Report to be considered.

288 7.

PORTFOLIO COMMITTEE ON HOME AFFAIRS 2022/23 BUDGETARY REVIEW AND RECOMMENDATION REPORT DATED 25 OCTOBER 2022 1.
INTRODUCTION As specified by section 5 of the Money Bills Amendment Procedures and Related Matters Act (MBAP) of 2009, the National Assembly, through its Committees, must annually assess the performance of each national department.
A Committee must submit the Budgetary Review and Recommendation Report (BRRR) annually to the National Assembly which assesses the effectiveness and efficiency of the department’s use and forward allocation of available resources and may include the recommendations on the use of resources in the medium term.
In this regard, the Portfolio Committee on Home Affairs (the Committee) oversees the Budget and Performance of the Department of Home Affairs (DHA), the Government Printing Works (GPW) and Electoral Commission (IEC).

The 2022/23 financial year Vote 5 budget allocation of R9.406 billion shows a minor decrease of 0.3% compared to the already 8% reduced allocation of R9.431 billion in the previous financial year.
In comparison to the 2020/21 financial year, the operations of the DHA were less affected by Covid in 2021/22, as the country moved down through the lockdown levels and as more services were rendered and staff returned to work.

The DHA and GPW have reported finding it difficult to return to pre-Covid levels of production and to get 100% of staff back at the office.
Issues such as co-morbidities, social distancing at the workplace, infrastructure constraints, and remote working arrangements add difficulty to management and controls.

The department nevertheless continued to provide essential services such as issuing birth and death certificates, identity documents, and visas throughout all lockdown levels.
Overall the department was able to achieve 69% of its Annual Performance Plan, 1% more than the previous year, bearing in mind that both year targets had already been adjusted downwards due to Covid.

The DHA submitted its annual report on time by the end of September 2022 as required by the Public Finance Management Act and presented to the Committee on 18 October 2022 with its 6th consecutive unqualified audit with findings.
The IEC also submitted their financial statements at the end of September as required by the PFMA.

The IEC tabled their report to the Committee on 11 October with its second clean audit in a row.

In communication from the Minister of Home Affairs with the Committee at the end of September, it was indicated that the GPW is again submitting its financial statements around a year late, and so only tabled its 2020/21 Annual Report to the Committee on 18 October.
GPW had not yet submitted its 2021/22 financials, due to the Auditor General in May each year, at the time of this report.

This was reportedly a continued result 1 289 of loss of more than a year’s financial data GPW experienced on 4 February 2021.

The data loss impacted opening balances on 1 April 2020 and transactions for the 10 months to January 2021.

On 25 March 2022 and 1 April 2022, further system crashes occurred which wiped out the data captured from 2 September 2021 to 31 March 2022.
The second data loss also eroded the data recaptured for February 2021 and March 2021.

The data losses had a significant impact on the operations of GPW and the compilation of the 2020/21 Annual Financial Statements.

The GPW again received a disclaimer audit opinion, primarily due to the above mentioned unavailability of information.
1.1 The Portfolio Committee on Home Affairs In line with the core objectives of Parliament, the mandate of the Committee is to consider and pass legislation; oversee and scrutinise executive action; facilitate international participation; facilitate co- operative government and facilitate public participation and involvement.
The key issues in the DHA, IEC and GPW are put forward by the Committee on the basis of: • 35 Committee Meetings and deliberations since the last BRRR which includes briefings by the DHA, the IEC and GPW.

In addition, the committee met with the Select Committee on Security and Justice, The Portfolio Committees on Police and Minerals and Energy, the United Nations High Commissioner for Refugees (UNHCR) and the Commission for Gender Equality (CGE).
• 28 of the above 35 meetings were on the Electoral Amendment Bill (1 of 2022) including 26 substantive submissions as part of a total of 365 submissions; with 1264 signatures across two calls for public comment.

In addition, public hearings were held across all nine provinces with 3 483 people attending and 610 oral submissions.
• Scrutinising the entities Strategic and Annual Performance Plans, the State of the Nation Addresses, policy documents, Estimates and Revised Estimates of National Expenditure, Medium Term Expenditure and budgets, quarterly reports and revised allocations, as well as other external briefings and reports.
• Conducting 4 joint oversight visits with the Portfolio Committees on Police and Minerals and Energy to 5provinces (Conducting 4 joint oversight visits with the Portfolio Committees on Police and Minerals and Energy to 5 provinces (Limpopo, Mpumalanga, Gauteng, Free State and North West) after incidents of violence attributed to illegal miners.

• after incidents of violence attributed to illegal miners.

• Committee Members’ engagement in their constituencies and electronically.
1.2 The Department of Home Affairs The mission of the DHA is to ensure the efficient determination and safeguarding of the identity and status of citizens and regulation of migration to ensure security as well as to promote and fulfil South Africa’s international obligations.

This mandate is administered through the following three overarching budget programmes: 2 290 Programme 1 - Administration: The programme provides leadership, management and support services to the Department of Home Affairs.
Programme 2 – Citizen Affairs: The programme provides secure, efficient and accessible services and documents for citizens and lawful residents.

This programme’s budget also includes the transfers to the IEC and GPW.

Programme 3 - Immigration Affairs: The programme facilitates and regulates the secure movement of people into and out of the Republic of South Africa through ports of entry; determines the status of asylum seekers and regulates refugee affairs.
It also confirms and provides enabling documents to foreign visitors legally residing within the Republic of South Africa and enforces immigration legislation and effects deportations.

1.3 The Electoral Commission The Electoral Commission of South Africa (also known as the Independent Electoral Commission (IEC) is South Africa’s electoral management body.

The IEC is an independent organisation established under Chapter 9 of the Constitution of South Africa.
The IEC is an autonomous body underwritten by the Electoral Commissions Act (No 51 of 1996).

In terms of Section 190(1) of the Constitution, the IEC must manage elections at national, provincial and municipal legislative bodies in accordance with the national legislation, ensure that those elections are free and fair, and declare the results of those elections within a period that must be prescribed by national legislation and that is as short as reasonably possible.
Section 5 of the Electoral Commission Act (No 51 of 1996) outlines the duties and functions of the IEC.

This includes managing any elections; ensure that any election is free and fair; promote conditions conducive to free and fair elections; promote knowledge of sound and democratic elections processes and compile; maintain a register of parties; compile and maintain a voters roll to mention but a few examples.
1.4 The Government Printing Works GPW specializes in the printing and development of security media, including passports, visa, birth certificates, educational certificates, smart identity documents, examination materials, and a wide range of other high security printed documents.

GPW’s financial viability is dependent on its ability to generate revenue from services rendered.
Its main clients include State departments and their statutory bodies for example the DHA, Departments of Education (Basic and Higher Education), the South African Police Service (SAPS), Department of Health, Justice and others, to which GPW provides security printing services on a cost recoverable basis.

3 291 2.
3 291 2.

THE DEPARTMENT’S STRATEGIC PRIORITIES AND MEASURABLE OBJECTIVES 2.1 Strategic Plan Outcome Targets 2020 to 2025 In support of achieving the strategic objectives of the DHA, government priorities and the NDP, the DHA identified the following MTSF commitments for delivery by the end of 2025: Outcome Indicator Baseline 31 March 5 Year Target (2025) Responsible 2020 Secure Risk-based & BMA legislation BMA incrementally Border management of strategic enacted.
rolled out as per the Management international immigration migration approach resulting in implemented South Africa’s against interests being predetermined served & fulfilling measures that ensure sovereignty, BMA Roadmap 2032 Authority to: (BMA) • 36 ports of entry • 10 segments of the land borderline & 2 community crossing points international national security, Transaction Advisor Construction & BMA commitments public safety, appointed for the redevelopment of six stability & redevelopment of 6 land ports of entry as development priority land ports of one-stop border posts entry.
completed by 2025.
• BMCS piloted at 2 A risk-based & (Immigration additional ports of strategic approach to Services & entry immigration Information • Draft Immigration implemented in respect System (IMS Bill (including of: / IS) amendments to the • Legislation Refugees Act) implemented to support the White paper on International Migration Secure entry, documented stay & departure of persons submitted to Minister for approval 160 law enforcement operations/ inspections 4 292 Outcome Indicator Baseline 31 March 5 Year Target (2025) Responsible 2020 conducted to ensure through the rollout of compliance with biometric functionality immigration & & law enforcement DHA legislation.
operations.
Secure Risk-based & 100% compliance 100% compliance with IMS management of strategic issuing of with set service set service standards international visas & permits standards for: for risk-based & migration against predefined, • Permanent strategic issuance of resulting in percentage-based residence permits visas & permits to South Africa’s targets to grow the • Business & general grow the economy by interests being economy by work visas 2024/25 as outlined in served & fulfilling international commitments 2024/25 • Critical skill visas the annual performance plans for: • Permanent residence permits • Business & general work visas • Critical skill visas Risk-based & The pilot of e-Visa E-Visa rolled out to all IS strategic visa (Phase 1 - temporary selected countries system residence visa for (106) by 2025 implemented tourist module) in 6 missions Secure & efficient Percentage of 100% (3 810 000 - Enabling documents Civic identified citizens Smart ID cards) issued to 100% of Services management of & holders of PR citizenship & permits to which civic enabling registration to documents are fulfil issued by 2024/25.
constitutional & international obligations identified citizens (CS) (including naturalized citizens) & holders of permanent residence permits (births registered within 30 calendar days & smart ID cards issued to a projected 19 050 000 by 2025).

5 293 Outcome Indicator Baseline 31 March 5 Year Target (2025) Responsible 2020 Legislation in Green Paper on the New Marriage Act Infrastructure operation in respect recognition of implemented to Planning & of the new marriages submitted regulate all marriages.
Support Marriage Act to the Minister for approval.

Percentage of 100% compliance 100% compliance with with set service service standards standard (IPS) CS set for adult passports issued (new live capture system) by 2024/25.

Efficient asylum Effective & New PI Asylum Seeker & IS seeker & efficient recording refugee system & monitoring of in compliance asylum seekers & with domestic & refugees.

international obligations.


Refugee System implemented Secure National Identity Specifications for NIS is operational by IS population System (NIS) NIS approved by 2025. register to operational as per DG.

empower requirements.

citizens, enable inclusivity, economic Legislation in Official Identity Population Register IPS operation to Management Policy Act implemented to development & regulate the submitted to Cabinet regulate the collection, national security.
collection, storage, for public storage, accessing & accessing & consultation processing of personal processing of personal information.
information DHA positioned Measures White Paper on DHA Act implemented IPS to contribute implemented to Home Affairs to effect the 6 294 Outcome Indicator Baseline 31 March 5 Year Target (2025) Responsible 2020 positively to a reflect a approved by Cabinet repositioning of the capable & repositioned DHA for implementation department as a secure developmental that contributes in December 2019.

& modern department.

state.


positively to a capable & A final draft of the developmental DHA Bill submitted state.

to Cabinet for approval for public consultation.

New PI Service Delivery IPS Model implemented in line with repositioned DHA.

DHA Access model DHA Access Model IPS approved by MMM implemented in support of the repositioning of the DHA.

Communication Communication IPS Strategy Strategy implemented implemented as per as per the the communication communication plan.

plan.
plan.

Counter-corruption Counter Corruption Counter strategy Strategy for DHA Corruption & implemented as per implemented in terms Security set targets of initiatives outlined Service in Annual Performance (CCSS) Plans.
2.2 The Department’s Contribution to the National Development Plan (NDP) The major focus of the NDP remains the same from previous years given the long-term, 2030 scope of the NDP and is to confront the triple challenge of poverty, inequality and unemployment by achieving higher growth rates.

The DHA contributes the following to the NDP: • Facilitating the acquisition of critical skills to facilitate the building of a capable state.
7 295 • Playing a role in enabling regional development by working with SADC countries to improve the efficient, secure and managed movements of people.

• Providing citizens with identity documents that give them access to rights and services.

• Through the modernization programme, seeking to reduce fraud and the cost of doing business.

3.
3.

2022/23 BUDGET AND ANNUAL PERFORMANCE PLANS (APP) 3.1 DHA 2022/23 Budget Summary and Analysis For the 2022/23 financial year, the Department receives an allocation of R 9.4 billion compared to the R 9.43 billion special adjusted allocations of 2021/22.

As stated previously, the adjusted budget includes revenue generated through the issuance of civil documents.

Without inflation (nominally), the Department’s budget decreases by 0.3 % from the previous year.
The allocation is 4.5 % lower than the previous year’s budget in real terms (after considering inflation).

This translates into a real rand value decrease of R 430.4 million.

The Department’s responsibilities, however, keep increasing considering the BMA, One-Stop-Boarder-Post and modernisation of its IT infrastructure; despite its budget decreasing in real terms for the past four financial years.

Only two of the DHA’s four programmes show a real increase in the current financial year.
The Administration branch shows a real increase of R 125.9 million or 5.31%, while the Institutional Support and Transfers Programme shows a real increase of R 179.9 million or 7.30%.
The budget increase in the Institutional Support and Transfers could be attributed to the implementation of the One-Stop Border Post and implementation of the BMA, whilst the increase in the Administration Branch could be attributed to the procurement of ICT infrastructure such as the implementation of the Automated Biometric Systems and the Advanced Passenger Processing System.
Table 1: Overall Budget 2021/22 and 2022/23 – Department of Home Affairs Programme Budget Nominal Real Nominal Real R million 2021/22 2022/23 Decrease Decrease change in change Increase / Increase / Percent Percent in 2022/23 in 2022/23 2022/23 in 2022/23 1.

Administration 2 371,5 2 609,8 238,3 125,9 10,05% 5,31% 2.

Civic Affairs 3 096,8 2 555,9 -540,9 -651,0 -17,47% -21,02% 3.

Immigration Affairs 1 499,4 1 477,7 -21,7 4.


Institutional Support 2 463,7 2 762,6 298,9 -85,3 179,9 -1,45% -5,69% 12,13% 7,30% and Transfers TOTAL 9 431,4 9 406,0 -25,4 -430,4 -0,3% -4,56% 8 296 Nominal Is when inflation is not taken into account Increase/Decrease Real Increase/Decrease Is when inflation is taken into account Source: National Treasury (2022) Both Citizen and Immigration Affairs programmes have been allocated a smaller budget compared to the last financial year.
However, since the Department’s revenue will be appropriated in September 2022, its respective programme budgets will likely increase.

The Citizen Affairs budget is significantly reduced by R651 million or 21% when considering inflation.

Programme 3: Immigration Affairs experiences a slight budget reduction of R 85.3 million or 5.69 % in real terms.
In terms of economic classification, the Vote’s main cost drivers are the compensation of employees (COE), which costs the Department R 3.88 billion or 41.2% and goods & services at R 2,91 billion or 30.98%.

The COE and goods & Services are allocated R6.79 billion or 72.18 % of the department’s total budget of R9.4 billion.

Allocation per programme Figure 2 compares the proportional allocations per the main programme between 2021/22 adjusted budget and 2022/23 voted funds.
The Citizen Affairs programme loses its majority allocation as its allocation is less by 2% from 29% in 2021/22 to 27% in the current financial year.

There is also a 1% decrease in the Immigration Affairs Programme from 17% during 2021/22 to 16% in the current financial year.
On the contrary, both the Institutional Support & Transfers Programme and the Administration Programme receive 2021/22 2022/23 Institutional Support and Transfers 28% Administration 26% Institutional Support and Transfers… Administration 28% Immigration Affairs 17% Civic Affairs 29% Immigration Affairs 16% Civic Affairs 27% a 1% and 2% increase.
The former’s allocation increases from 28% in the previous financial year to 29% in the current financial year, while the latter’s allocation increased from 26% to 28% in the current financial year.

Figure 1: comparison of the split of the Department of Home Affairs budget between programmes 9 297 3.2 DHA 2022/23 Annual Performance Plan Analysis The DHA has set out several strategic priorities in the Strategic Plan for 2019/20-2024/25 and a set of planned annual targets in the APP for 2022/2023.
This section analyses the Department’s 2022/23 APP per Programme and the budget allocated to achieve the annual targets.

In addition, the Department undertook an exercise to ensure that the targets are specific, measurable, achievable, relevant and time-bound (SMART).

Below are the performance targets per programme for the 2022/2023 financial year: The DHA has set out several strategic priorities in the Strategic Plan for 2019/20-2024/25 and a set of planned annual targets in the APP for 2022/2023.
This section analyses the Department’s 2022/23 APP per Programme and the budget allocated to achieve the annual targets.

In addition, the Department undertook an exercise to ensure that the targets are specific, measurable, achievable, relevant and time-bound (SMART).
Below are the performance targets per programme for the 2022/2023 financial year: Programme 1: Administration The Administration programme covers all functions of the DHA that support its core business, such as policy, governance, finance, human resources (HR) management and security.

It is also responsible for the provision of Information Communication Technology (ICT) infrastructure, accommodation, transport and the keeping of records.
Specific: the nature and the required level of performance can be identified; Measurable: the required performance can be measured; Achievable: the target is realistic given existing capacity; Relevant: the required performance is linked to the achievement of a goal; Time-bound: the time period or deadline for delivery is specified.

Table 4 below provides the analysis of selected Programme 1 performance indicators and targets for the 2022/23 financial year.
It should be noted that for 2022/23, Programme 1 has 18 annual targets, but only eight annual targets and performance indicators were selected for analysis.

Table 3: Programme 1 performance indicators and annual targets.
Strategic Outcome: Secure management of international migration resulting in South Africa’s interests being served and fulfilling international commitments Output Output Indicator Estimated Performance Annual Target 2021/22 2022/23 Biometric Number of selected System enhanced and 34 functionality ports of entry with operationalised at limited implemented at biometric movements counters at 4 airports (OR ports of entry (BMCS) implemented Tambo, Cape Town, King equipped with as per approved Shaka and Lanseria Enhanced specification.
International Airports).

10 298 Movement Control System (EMCS).

Enhanced e-Visa Enhancement of e-Visa New Indicator Enhanced e-Visa System.

system as per approved change request.

Source: DHA APP (2022) system released in production.

The Department has planned to roll-out the Biometric Movement Control System (BMCS) in 34 (from 24 in the previous financial year) ports of entry by the end 2022/23 financial year.
The BMCS is a new system that will replace the Enhanced Movement Control System (EMCS) used to track the movement of citizens and foreign travellers entering and departing South Africa at all ports of entry.

The new system will interface with the e-Visa system to confirm visa compliance.

In addition, it will further identify undesirable travellers and confirm citizens against the Automated Biometric Identification System (ABIS).
The DHA started rolling out the e-Visa regime in the 2019/20 financial year, starting with Kenya, then the Peoples' Republic of China, Nigeria and India.

By the end of March 2022, the e-Visa had been rolled out to 14 countries.

The e-Visa initiative contributes to the world-class visa regime supporting economic growth and job creation.

It also enhances economic recovery, increases tourism activities, and promotes investments and business growth.
Table 4: Programme 1 performance indicators and annual targets.

Strategic Outcome: Efficient asylum seeker identity and refugee system in compliance with domestic and international obligations Output Output Indicator Estimated Performance Annual Target 2021/22 2022/23 Components of the Implementation of Asylum Seeker and Refugee Asylum Seeker and National Identity Asylum Seeker and system user requirement Refugee system System (NIS) Refugee System by specifications approved.
developed into live implemented and 2023/24 Asylum Seeker and Refugee capture.

maintained system developed into life.

(Asylum Seeker ABIS in operation ABIS phase 1 operational ABIS Phase 2 and Refugee by 2022/23 (facial and operational: Iris, infant System and ABIS).

Functional Iris, Fingerprint capability).


footprint and palm infant footprint and palmprint back-end print back-end recognition capability 11 299 recognition capability Source: DHA APP (2022) functional (identification, Verification and latent search.

The introduction of the National Identity System (NIS) in table 5 is intended to replace the outdated National Immigration Information System (NIIS).

The NIS will be developed into a live capture system and integrated with other DHA systems.
This system will register the demographics and biometrics of asylum seekers and facilitate the adjudication of their cases with the option of referral to other bodies if denied.

This performance indicator complies with the SMART principle as per Treasury guidelines.

As a result, the Department's target is to have the Asylum Seeker and Refugee system developed into life capture by the end of this financial year.

Table 5: Programme 1 performance indicators and annual targets.
Strategic Outcome: DHA positioned to contribute positively to a capable and developmental state Output Output Indicator Estimated Performance Annual Target 2021/22 2022/23 Tabled DHA Tabling of DHA Bill in DHA Bill gazetted for public DHA Bill tabled in Bill in Parliament for processing consultation.

Parliament Parliament of Bill.

Source: DHA APP (2022) The output indicators and annual targets in table 6 above comply with the SMART principles as per Treasury regulations because they are measurable.
In its quest to improve the policy and legislation in support of repositioning, the Department estimated that it would have gazetted the DHA Bill at the end of the first quarter of 2022/23.

The ultimate annual target is to have the DHA Bill tabled in Parliament for processing by the end of the financial year.
The new legislation will provide a constitutionally sound legal framework for repositioning the DHA as a modern and secure department with the following critical elements: Table 6: Programme 1 Performance indicators and annual targets Strategic Outcome: DHA positioned to contribute positively to a capable and developmental state Output Output Indicator Estimated Annual Target 2022/23 Performance 2021/22 12 300 Tabled National The tabling of the Official Identity National Identification and Identification and National Identification Management Policy Registration Bill submitted Registration Bill in and Registration Bill in submitted to Cabinet for to Cabinet for approval for Parliament.
Parliament for approval.

public consultation.

processing of the Bill.

An identity management framework (policy and legislation) is needed to address how the DHA will regulate how personal information will be processed by establishing conditions which meet the minimum threshold requirements for the lawful processing of personal information.
It will also be necessary for the DHA to articulate how the digital administrative datasets under its control will be used to enable inclusivity, economic development and national security.

This annual performance target is also measurable according to the SMART principles.
Table 7: Programme 1 Performance indicators and annual targets Strategic Outcome: Secure and efficient management of citizenship and civil registration to fulfil constitutional and international obligations Output Output Indicator Estimated Performance Annual Target 2022/23 2021/22 Table Marriage Bill The tabling of the Marriage Policy Marriage Bill submitted in Parliament Marriage Bill in submitted to Cabinet for to Cabinet for approval Parliament for approval.

and public consultations.


processing of Bill.

Source: DHA APP (2022) The legislation that regulates marriages in South Africa has been developed without an overarching policy that is based on constitutional values (e.g.

equality, non-discrimination and human dignity) and the understanding of modern societal dynamics.

Instead of creating a harmonised system of marriage in South Africa, the state has sought to give recognition to different marriage rituals by passing a range of different marriage laws.
Despite all the changes that have been made in the marriage legislation post-1994, there are still serious gaps in the current legislation.

For instance, the current legislation does not regulate some religious marriages, such as the Hindu, Muslim and other customary marriages practised in some African or royal families.

Furthermore, given the diversity of the SA population, it is virtually impossible to pass legislation governing every single religious or cultural marriage practice.
It is against this background that the DHA is embarking on the process of developing a marriage policy that will lay a policy foundation for drafting a new single or omnibus legislation.
13 301 Table 8: Programme 1 Performance indicators and annual targets Strategic Outcome: Secure management of international migration resulting in South Africa’s interests being served and fulfilling international obligations Output Output Indicator Estimated Performance Annual Target 2022/23 2021/22 Tabling of the OSBP Tabling of the OSBP One-Stop-Border-Post OSBP Bill submitted to Bill in Parliament Bill in Parliament for (OSBP) Policy gazetted Cabinet for approval for processing of Bill for public comments public consultation The OSBP concept refers to the legal and institutional framework, facilities and associated procedures that enable goods, people and vehicles to stop once whereby they undergo necessary controls following applicable regional and national laws to exit one state and enter the adjoining state.
This is contrary to a traditional two-stop border post concept whereby entry/ exit procedures are carried out on both sides of the border for persons, vehicles and goods.

The DHA plans to have the OSBP Bill submitted to Cabinet for approval and public consultation by the end of the current financial year.
Programme 2 Civic Affairs The Civic Affairs branch has achieved five (5) out of the planned six (6) annual targets during the 2020/21 financial year, which translates to an 83% annual target performance achievement.

In this financial year, the Civic Affairs programme did not achieve 17% of its annual targets.

Compared to the previous financial year (2019/20), when it achieved two (2) out of three (3), the 2020/21 performance improved by 16%.
However, the 83% target achievement in the 2020/21 financial year is lower when compared to the 2018/19 financial year when it achieved 100% of its annual targets.
Figure 2: 4 Years annual target performance (2017/18 -2020/21) 120% 100% 80% 60% 40% 20% 0% 4 Years: Target Achieved 100% 80% 83% 67% 2017/18 2018/19 2019/20 2020/21 Target Achieved Linear (Target Achieved) 14 302 Source: DHA, adapted by Research Unit Table 11 below provides the analysis of Programme 2 outputs indicators and targets for the 2022/23 financial year.
Programme 2 (Civic affairs) strategic outcome is to secure and efficiently manage citizenship and civil registration to fulfil constitutional and international obligations.

The Civic Affairs branch has four output indicators and four annual targets for the 2022/23 financial year.

All indicators on programme 2 comply with the SMART principle.
As depicted in table 11 below, the first three output indicators remain the same as the two previous financial years, but the last indicator is a new indicator in the programme.

For the 2022/23 financial year, the programme has revised its annual targets from registering 700 000 to 750 000 births within 30 calendar days.

This lower target in the previous financial year was due to COVID- 19, but it has accordingly been revised upwards as lockdown restrictions have been suspended.
As a result, the DHA estimates that it would comfortably achieve and exceed the last financial year's annual target by at least 51 000 birth registration; hence the target was increased.

Before COVID-19 in the 2018/19 financial year, Programme 2 usually planned to issue 3 million smart identity documents.
However, this target was revised downwards in the 2020/21 financial year to issuing only 700 000 smart IDs and 1.6 million in 2020/21 as the department was navigating through different levels of lockdown restrictions.

For the 2022/23 financial year, the DHA annual target is to issue 2 200 000 (2.2 million) Smart ID’s.
Programme 2 had also planned 90% of machine-readable adult passports to be issued within 13 working days in the pre-COVID-19 era, but this annual target was revised downward to 70% due to the aforementioned pandemic.

For the current financial year, the DHA has accordingly returned to the annual target of producing 90% of machine-readable adult passports within 13 working days.
The new performance indicator for this Programme is the issuance of 90% machine-readable passports for children (a new live capture system) issued within 18 working days per year for applications collected and processed within the RSA (from the date of receipt of the application until the passport is scanned at the office of application).

Table 9: Programme 2 performance indicators and annual targets.
Output Indicator Annual Target Estimated Annual Target Achievement Performance 2022/23 2020/21 2021/22 15 303 Number of birth registered within 30 days 845 253 700 000 750 000 Number of smart ID cards issued to citizens 1 233 683 1 600 000 2 200 000 (including naturalised and holders of permanent residence permits) 16 years of age and above Percentage (%) of machine-readable adult 91.79% 90% 90% passports (new live capture) issued within 13 working days (from date of receipt of the application until the passport is scanned at the office of application) Percentage (%) of machine-readable passports for N/A New 90% Performance Indicator children (new live capture system) issued within 18 working days per year for applications collected and processed within the RSA (from date of receipt of application until the passport is scanned at the office of application) Source: DHA APP (2022) Programme 3 Immigration Affairs Strategic outcome is to secure and efficient management of international migration resulting in South Africa’s interests being served and fulfilling international commitments.
Unlike in 2021/22, when the programme had five output indicators, it has four output indicators for the 2022/23 financial year (see table 13 below).

As reported in the Department's Annual Report for 2020/21, the Immigration Affairs programme was the least-performing branch.

It planned ten (10) annual performance targets for 2020/21, achieving only five (5) targets.

This translates to 50% target achievement.


Compared to the three previous years, the Immigration Affairs branch achieved 100% during 2019/20, 90% in 2018/19 and 78% in 2017/18.

For 2021/22, the Department set an annual target of 220 law enforcement operations/inspections.

However, this target has been revised and increased to 540 law enforcement operations for the current financial year.
The purpose of the indicator is to ensure that undocumented persons are detected (that South Africans or businesses do not illegally employ foreign nationals and that all persons in South Africa are here on a lawful basis as per departmental legislation).

The indicator is intended to ensure that those who work illegally (with no correct visas or immigration permits to do so) or employ such persons in violation of legislation or are here illegally are either charged or deported.
The target also aims to ensure that other persons encountered, for example, during inspections or roadblocks, are here lawfully.

In short, the target seeks to locate or trace 16 304 illegal foreign nationals in South Africa and ensure that the resulting enforcement, be it prosecution or deportation, is undertaken.

The Department plans to have 85% of permanent residence visas adjudicated within eight months for applications collected within South Africa.
This is from the date of receipt of the application until the outcome is in scan at VFS Centre – office of application).

The permanent residence visas referred to here are the Critical Skills (s27b); General Work (s26a), and Business Visas (s26c).

In addition, the Department also targeted 85% and 90% of critical skills and business visas adjudicated within four weeks and eight weeks of application.
These visas should have been applied within the country, and the application process is facilitated through the VFS.

All the performance indicators comply with the SMART principles and are measurable.
Table 10: Programme 3 Immigration: Strategic Outcomes and Annual Targets Output Output Indicator Estimated Annual Performance Target 2021/22 2022/23 Enforcement of Number of law enforcement 220 540 compliance of operations/inspections conducted to secure departmental legislation compliance with immigration legislation through law enforcement operations/inspection Permanent residence Percentage (%) of permanent residence 85% 85% permits are adjudicated applications adjudicated within 8 months for according to set applications collected within the RSA(from standards date of receipt of the application until outcomes is in scan at VFS Centre-office of application) Temporary residence Percentage (%) of critical skills visas 85% 95% visas adjudicated adjudicated within 4 weeks for application according to set processed within the RSA (from date of receipt standards of application until outcomes is in scan at VFS Centre-office of application) Percentage (%) of business and general work 90% 90% visas adjudicated within 8 weeks for application process within the RSA (from date 17 305 of receipt of application until an outcome is in scan at VFS Centre-office of application) Source: DHA APP (2022) Programme 4: Institutional Support and Transfers The Institutional Support and Transfers appears for the first time as a stand-alone programme.
Funding of the BMA was budgeted for in Programme 1, while the Electoral Commission and Represented Political Parties fund was previously planned and budgeted for in Programme 2, the Institutional Support sub- programme.

The purpose of this new programme is to transfer funds to the Electoral Commission and Represented Political Parties Fund, which manages national, provincial and local government elections to ensure those elections are free and fair.
The programme will also transfer funds to the BMA to ensure South Africa’s borders are effectively defended, protected, secured, and well-managed.

The BMA Act (No 2 of 2020) has finally assented into law, and it was effected as of 1 January 2021.

The annual target for the 2021/22 financial year was to incrementally roll out BMA to 11 land ports of entry by integrating frontline immigration personnel, port health, etc.
The Department envisages that the BMA will be fully implemented and operational by the end of the 2023/24 financial year.

However, for the 2022/23 financial year, the main annual target is incrementally established by submitting pre listing documents to the National Treasury.

In line with the BMA roll-out and the African Continental Free Trade Agreement (ACFTA), the Department is planning to develop and upgrade six of the six land borders in a project known as the One-Stop Border Post (OSBP).
The annual target in terms of the OSBP in the previous financial year was to issue a OSBP Policy for public comments and finalise the contractual agreements with the contracted bidders.

For the 2022/23 financial year, the annual target is to ensure that financial and contractual agreements are concluded with the appointed bidders.
Table 11: Programme 4 Immigration: Strategic Outcomes and Annual Targets Output Output Indicator Estimated Performance Annual Target 2021/22 2022/23 Border Management BMA fully BMA Commissioner and BMA incrementally Authority (BMA) established Deputy Commissioners.

established through established as a by 2023/24.

Appointed BMA incubated as the submission of pre- Schedule 3A National a Branch within DHA listing documents to Public Entity.

Implementation protocol National Treasury.


between BMA and SARS signed Implementation 18 306 Protocol between BMA and Defence signed.

BMA rolled out at Number of ports of BMA rolled out in phases BMA rolled out at 46 selected ports of entry with BMA along 5 ports of entry by entry, designated rollout per year.

segments of the land border incorporating frontline segments of the land border law enforcement area and community crossing points.
law enforcement area: (RSA/ Immigration, Port Zimbabwe; eManguzi; Health, Agriculture Skukuza; and Access Control KZN/ eSwatini; and functions into the Mpumalanga/ BMA.

Number of land eSwatini) BMA rolled out to 1 BMA rolled out in border law community crossing point phases along 3 enforcement area (Tshidilamolomo).

segments of the land segments with Border Guard per year.

Number of community crossing points with BMA rollout per year.
Responsibility for facilities management at land ports of entry transferred to BMA.

border law enforcement area (Border Guard).

N/A BMA assumes responsibility for facilities management at 31 identified land ports of entry.
Output Output Indicator Estimated Performance Annual Target 2021/22 2022/23 Six priority land Status of Request for Proposal (RfP) for Financial and ports of entry construction for the the six land ports of entry contractual closure redeveloped as part redevelopment of the issued to the market.

reached with bidders of a public-private six (6) land ports of partnership (PPP).

entry.

in respect of land development of 6 19 307 priority land ports of entry.
Source: DHA APP (2022) 3.3 IEC 2022/23 budget allocation analysis For the 2022/23 financial year, the Electoral Commission is allocated a budget of R1.8 billion shared amongst its four programmes.

This allocation significantly decreases by R1,3 billion (42,2) in nominal terms and R1.4 billion (44,66%) in real terms.

It should be noted that the previous financial year budget was significantly higher due to the Local Government Elections held during November 2021.
Table 12: IEC Budget Allocation 2022/23 Programme Budget Nominal Real Nomina Real (R’000) 2021/22 2022/23 Increase/ Increase/ Percent change Rand Rand l Percent Decrease Decrease change in 2022/23 2022/21 in 2022/23 2022/23 Programme 840,0 838,9 -1,1 -37,2 -0,13% -4,43 % 1:Administration Programme 2: 1 905,0 781,3 -1 123,7 -1 157,3 -58,99 % - Electoral Operations 60,75% Programme 3: 327,9 162,2 -165,7 -172,7 -50,54 % -52,67 Outreach % Programme 4: Party 51,7 25,0 - 26,7 - 27,8 -51,64 % - Funding and Liaison 53,73% TOTAL 3 126,1 1 807,9 -1 318,2 -1 396,1 -42,2% - 44,66% Nominal Increase/Decrease Is when inflation is not taken into account Real Increase/Decrease Is when inflation is taken into account Source: National Treasury (2022) Programme 1: Administration’s budget has decreased from R 840 million in the previous financial year (2021/22) to R 838 million in the current financial year (2022/23).
In real terms, when inflation is considered, the budget of this programme has decreased by R 37. million (or 4.2%).

Programme 2: Electoral Operations also receive a budget cut from R1.9 billion in the previous financial year to R781,3 20 308 million in the current financial year.

This budget decrease translates to 60.7% (R1.15 billion) in real terms.

As indicated, the significant budget decreases compared to the previous financial year were due to the Local Government Elections.
Both Programme 3 and 4 receive decreased allocation for 2022/23.

Programme 3 budget declines from the previous financial year allocation of R 327.9 million to R 162.2 million in the current financial year.

In real terms, Programme 3 budget receives the most reduced budget in percentage terms by R172,2 million (52,6%).

Programme 4’s budget is reduced by 53.7%, from R51.7 million in the previous financial year to R25 million in the current financial year.
2.3 Analysis of the IEC annual performance plan per programme The IEC has set out several strategic priorities in the Strategic Plan for 2020-2025, as well as a set of planned annual targets contained in the APP for 2022/23.

This section provides an analysis of the annual targets for the 2022/2023 financial year as per IEC’s APP.

Programme 1: Administration While programme 1 strategic outcome remains the same, the number of targets decreases remains the same as in the 2021/22 financial year.
Programme 1 has a standard annual target of producing 4 quarterly reports as required by National Treasury regulations for all government departments and entities.

In order to keep the IEC operations at an optimal level, the IEC annual target is to ensure that at least 97% of the 2 214 working hours are accounted for in terms of network and system availability.

The Human Resource Unit also intends to ensure that at least 95% of the total 1 113 positions at the IEC are filled at all times.
The IEC also intends to obtain a clean audit outcome from the external auditors.
Table 13: Programme 1 annual targets performance indicators Strategic outputs Output Indicator Annual target Outcome: Strengthened Exercise leadership and Number of quarterly 4 institutional governance, monitoring and reviews of the strategic effectiveness evaluation to ensure the risk register by the effective implementation of Executive Risk IEC’s core mandate, Management strategic outcomes and Committee within 30 outputs, aligned with the days after the start of the corresponding budget next quarter.
21 309 allocations and risks compliance Provide a cutting-edge, Minimum annual 97% of 2 214 hours’ stable, secure ICT percentage network and achievement environment that meets all application systems functional needs of the availability measured in Electoral Commission and hours system-generated supports innovative report available.

business processes.
Number of funded 95% of 938 posts positions filled per calculated pro-rata over annum the year Effectively manage Obtain a clean audit Obtain a clean audit financial resources in outcome from the compliance with legislation annual external audit process (New indicator) Source: IEC Presentation (2022) Programme 2: Electoral Operations Strategic objective: Manage free and fair elections striving for excellence at voting station level; ensuring accessibility and suitability of voting facilities and processes; managing results; maximising electoral justice for all stakeholders in the electoral process; enhancing the credibility of the voters roll; ensuring compliance with legal prescripts; and continuously improve the legislative framework.
Table 14: Programme 2 annual targets performance indicators Strategic outputs Output Indicator Annual target Outcome: Free and Manage free and fair Number of elections set aside 0 (none) Fair elections in accordance Elections with the applicable Delivered electoral timetables to ensure the efficient and credible execution of the mandate of the Electoral Commission 22 310 Maintain a credible Number of registered voters as national common of 31 March of each year 26 180 000 voters’ roll that is enabled by cutting-edge technology Source: IEC APP (2021) Programme 2: Electoral Operations is the branch that ensures that the IEC’s constitutional mandate of managing free and fair elections is achieved.
As a result, one of the programme’s output indicators and the annual target is to ensure that none of the elections it organises is set aside.

In addition, the IEC has a responsibility to ensure that all adult citizens that are eligible to participate in the elections in all spheres of government do.

Consequently, the IEC’s annual target for 2022/23 is to ensure that at least 26.1 million adult citizens are registered on the voters' roll.
The target of the number of registered voters has been revised down by 360 000.

Programme 3: Outreach The primary purpose of the Outreach is to focus on the strategic outcome of informing and engaging citizens and stakeholders in electoral democracy.

This programme has 5 output indicators and 5 annual targets for the 2022/23 financial year.
The programmes strategic outcomes and annual targets are summarised below: Table 15: Programme 3 annual targets performance indicators Strategic outputs Output Indicator Annual target Outcome: Informed Provide impactful and The number of 3 and engaged research and thought research initiatives citizens and leadership to strengthen achieved per annum stakeholders electoral democracy The number of thought 10 in electoral democracy leadership interactions achieved per annum (new indicator) Actively promote and The number of CDE 24 000 foster awareness and events held per annum participation in the electoral process through civic and democracy education 23 311 programmes Interact with domestic, Number of meetings 10 regional and Electoral Commission international hold with stakeholders to build an stakeholders understanding of the annum Electoral Commission’s Indicator) key per (New role in delivering credible elections Informed Advance and promote Recorded reach across Digital (all social media and and engaged electoral processes multimedia online content: Facebook ad to citizens and through communication communications reach – 35 million impressions stakeholders campaigns on diverse platforms (digital, Twitter ad to reach – 2 million.
in electoral platforms to sustain television, print, radio YouTube ad views – 2 million democracy visibility across the and out-of-home) WhatsApp – New electoral cycle.
Google Ad words – 2 million impressions SMSs sent – 2 million Please Call Me – 150 million) Television: 6 million viewers Radio: 5 000 000 listeners Print: 6 million readers Out of home (150 billboards, 180 000 street pole posters, 2 000 transit TV screens, commuter transport – 20 long-distance buses The IEC has sets itself a target of producing 3 research initiatives per annum, up from the target of 2 research initiatives in the previous financial year.
This annual target has been reduced from the 4 annual research initiatives during 2016/18 until 2019/20.

In addition, the programme plans to conduct 10 thought leadership initiatives in the current financial year, this target is the same as the previous financial year.

Programme 4: Party Funding Programme 4 is a new programme that is responsible for managing the political party funding.
This programme focuses on the strategic outcome of contributing to the enhancement of transparency in the 24 312 elections.

The programme manages party funding and donations in compliance with legislation and strengthens cooperative relationship by providing consultative and liaison platforms between the IEC and political parties and candidates, using systems, people and sustainable processes.
Programme 4 also provides effective management of the registration of political parties and processing of the nomination of candidates for various electoral events.
The programme’s annual targets are summarised below: Table 16: Programme 4 annual targets performance indicators Strategic outputs Output Indicator Annual target Outcome: Contributed Manage party funding Number of disbursements to At least 4 (one per to the in compliance with represented parties per annum quarter) enhancement relevant legislation of Manage Party Funding Number of publications of 4 transparency in compliance with declarations by political parties in elections relevant legislation and private donors and party Provide consultative Number of liaison sessions held 10 funding and cooperative liaison with stakeholders and potential platforms between the contributors to multi-Party Electoral Commission Democracy Fund and stakeholders and potential contributors to promote funding of multi-party democracy.
Source: IEC APP (2022) The outputs and indicators covered under this programme support Outcome 4, which aims to achieve enhanced transparency in elections and party funding and its associated indicator, which aims to monitor and report progress made over the planning period.

All these outputs and associated indicators will not only assist in achieving Outcome 4 but also the impact statement of ensuring free and fair elections.
3.4 GPW 2021/22 Budget Analysis Over the medium term, the entity will focus on completing the refurbishment of its head offices and completing its master plan project, which involves building a new precinct to accommodate all its machinery.

The completion of the master plan project is estimated to cost R1.2 billion over the medium term, while refurbishment of the head offices is estimated to cost R49 million over the same period.
Accordingly, 25 313 expenditure is expected to increase at an average annual rate of 7.2 per cent, from R1.4 billion in 2021/22 to R1.7 billion in 2024/25.

The entity is set to generate 97.1 per cent (R4.8 billion) of its revenue over the MTEF period through its business operations, increasing at an average annual rate of 7.2 per cent, from R1.5 billion in 2021/22 to R1.8 billion in 2024/25.
Unlike in previous years, the GPW included only one slide on the budget (compared to 4 in 2021) and again does not provide an overview in the presentation of budget by branch/programme but rather only divided into Administration versus Operations/Production.

This makes comparative analysis specific performance almost impossible.
Table 17: GPW Budget Allocation 2021/22 Programme Budget Nominal Real Nominal Real (R000’000) Revised 2022/23 Increase/ Increase/ change change Rand Rand Percent Percent 2021/22 Decrease Decrease 2021/22 2021/22 2021/22 021/22 Administration 437 413.5 -23.5 Operations & 913.8 875.2 -38.6 -47 -87 -5.5% -10.7% -4.2% -9.5% Production TOTAL 1350.8 1288.7 62.1 134 -4.6% -9.92% Nominal Increase/Decrease Is when inflation is not taken into account Real Increase/Decrease Is when inflation is taken into account When looking at the budget allocation for 2022 compared to 2021, the GPW receives a total of R62.1 million less this year (-4.6%).
When factoring in inflation of 5.3% this equates in real terms to R134 million less (- 9.92%).

The administration budget item receives a slightly larger percentage cut than operations.

Over the medium term (3 years) expenditure is due to grow at an average of only 2% above inflation (7.2% before inflation).
3.6 GPW 2022/23 annual performance plan analysis GPW’s APP 2021/22 has a total of 18 performance targets, with critical targets aligned to the Strategic Plan, to ensure that all outcomes and desired impacts are achieved.

It should be noted that the financial years 2018/19 and 2019/20 have had similar performance outcomes in terms of the number of targets that were set (23) and achieved (18), averaging 78%.
GPW has had challenges in terms of the completion of the construction project, referred to as a masterplan project.

These challenges are among other reasons attributed to dependencies of the project, the project size and level of expertise required.

26 314 The other challenge relates to governance in terms of obtaining a clean audit opinion.

While in pursuit of our strategic targets, GPW will continue to put measures in place to improve our internal controls environment.
This will be achieved through application of good governance principles and implementation of audit recommendations.

The post audit action plan and other mechanism will be developed and monitored in order to reduce occurrences of irregular expenditure and other compliance gaps that impact on GPW’s governance.

The table below outlines various products that were produced in the last five years.
These figures reflect that the production of security and para-security documents has increased between 2015 and 2018 (with exception of the green barcoded id).

There has been a steady demand in the production of passports with an increase of 17% when comparing financial years 2015/16 and 2019/20.

The GPW retains the same number of targets per branch/ budget programme as in 2021/22 but these targets have shifted around as follows.
An issue that pertains to all targets is that only Estimated Performance is given for the year 2021/22, unlike in previous Annual Performance Plans where the last 2 years of actual performance are given as a baseline for current targets.

This is due to the late submission of the GPW annual report which is due to be tabled in May (8 Months late).

The question is whether there is sense in updating the APP on the previous years achieved targets and when it is that the final annual report will be available.
4.

ANALYSIS OF DHA, GPW AND IEC ANNUAL REPORTS 4.1 DHA 2021/22 ANNUAL REPORT 4.1.1 Introduction Key successes in 2021/22 • The Department obtained an unqualified audit opinion, with findings on compliance.

While this is its third consecutive unqualified audit, it is accompanied by findings and falling short of a ‘clean audit’ for the Department.

• The Department spent 100% of its final appropriation, as compared to 96.4% expenditure in the previous financial year.
Therefore, there is no money to be returned to the National Treasury as unspent funds.

• During the year under review, revenue collected increased significantly by approximately R349 million (109%) to R719 million, compared to the revenue collected in the previous financial year of R370.9 million.

• The Department managed to decrease its fruitless and wasteful expenditure from a recorded R640 000 in 2020/21, to R153 000 in 2021/22.
Whilst this may be regarded as progress, the Department should avoid fruitless and wasteful expenditure at all cost and those responsible should be held liable.

27 315 • During the 2021/22 financial year, the Department set a target of registering 750 000 births within 30 calendar days and managed to register 1 016 684 births, of which 751 025 were births registered within 30 calendar days.

Therefore, it exceeded its target.


Key challenges in 2021/22 The Department continues to be beset with the same challenges, similar to what was reported during previous financial years.

These are: • The Department only achieved 69% of its planned targets for the 2021/22 financial year.

Whilst this is an improvement compared to the 68% achievement in the previous year, it is still below the 80%.
• The Department incurred irregular expenditure of R46.099 million consisting of R12.877 million of irregular expenditure relating to the ABIS contract and R33.222 million relating to the Four-sight firewall contract.

• The Department continues to experience challenges with network connectivity.

This affects the live- capture system for Civil Service.

This system cannot function when off-line, and therefore, services cannot be rendered during that period of time.
• Whilst the “War on Queues” remains a priority for the Department, the frontline offices of the DHA still experience long queues coupled with network connectivity challenges.

• As in the previous financial years, the DHA has a limited number of offices, some offices are poorly located, and most do not meet the norms and standards set for modernised offices.
• A major weakness and risk for the DHA is the inadequate human resource capacity and capability in critical specialist, management areas and frontline offices.

The DHA is currently not functioning at its approved capacity (the total of filled posts versus the approved establishment of more than 20 000 officials).

Most positions that became vacant were unfunded as from 2015/16 due to the implementation of austerity measures and reducing of the compensation of employees (CoE) budget by National Treasury.
• Due to the nature of its operations, the Department is vulnerable to criminal acts, including fraud and corruption.

These acts involve both its officials and persons wishing to secure a South African passport, Identity Document (ID) or other enabling documents.

4.1.2 DHA Annual Performance The Department changed its programme structure with effect from 1 April 2021 by adding a fourth programme called ‘Institutional Support and Transfers’ to allow for greater transparency and better comparison.
Subsequently, the mandate of the Department is carried out in the following budgeted programmes: • Programme 1: Administration.

• Programme 2: Citizen Affairs.

28 316 • Programme 3: Immigration Affairs.

• Programme 4: Institutional Support and Transfers.
Table 18 provides a summary of the DHA’s budget and expenditure as at the end of the 2021/22 financial year: Table 18: Financial performance 2021/22 2021/22 Financial year Programme Adjusted Actual Variance Expenditure as budget Expenditure in Rand % of R’000 R’000 R’000 % Adjusted budget 1.

Administration 2 636 851 2 636 851 2.

Citizen Affairs 2 974 836 2 974 836 3.

Immigration Affairs 1 392 651 1 392 651 4.


Institutional Support and 2 427 098 2 427 098 Transfers Total 9 431 436 9 431 436 Source: Department of Home Affairs (2022), adapted 0 0 0 0 0 100% 100% 100% 100% 100% The DHA was allocated an adjusted budget of R9.431 billion in 2021/22, and spent 100% of its allocation.
In terms of economic classification, the following apply: R3.667 billion (compensation of employees (CoE)), R2.980 billion (goods and services), R2.443 billion (transfers and subsidies), and R331.8.

million (payment of capital assets).

The 100% expenditure is a significant improvement on the 96.4% expenditure recorded during the previous financial year.

The Department incurred under-expenditure of R317.1 million during the 2020/21 financial year.
Virements The DHA shifted an amount of R265.3 million from the rest of the programmes to fund the Administration programme, as presented in table 2, above.

The approval was granted by the National Treasury on 8 March 2022 for goods and services allocations to be used within the same vote and programme for compensation of employees of the Department in terms of section 5(1)(b) of the 2021 Appropriation Act.
In addition, approval was granted in terms of section 6.3.1(c) of the Treasury Regulations to utilise R210 million of savings from the procurement of the Passenger Name Records (PNR) system, and R40 million from the Border Management Agency (BMA) earmarked allocations towards funding various categories of goods and services and compensation of employees related items.
29 317 Table 19:Virements applied Adjusted virement % of Final Per programme budget R’000 R’000 Administration R2.371 billion R265 326 virement appropriation % 11% R’000 R2.636 billion million Citizen Affairs R3.100 billion -R125 978 -4% R2.974 billion million Immigration Affairs R1.501 billion -R109 312 -7% R1.392 billion million Institutional Support & R2.457 billion -R30 036 -1% R2.427 billion Transfers Total million R9.431 billion - 0% R9.431 billion Source: Department of Home Affairs (2022) Programme performance The DHA achieved 69% of its planned performance targets.
In numerical terms, this translates to achieving 20 out of the 29 APP targets set for the year under review.

Although performance is higher than the previous year, it is still lower than what the Department achieved in 2018/19 (73%) and 2019/2020 (75%) respectively.

The 69% achievement rate of the DHA should be understood within the context of spending 100% of its allocated budget.

Therefore, there should be a correlation between the budget spent and the performance targets achieved.
Figure 3: overall target performance According to the DHA, the reasons for non- achievement includes procurement delays, protracted consultation processes, the impact of COVID-19 and delays in finalising the Section 97 proclamation pertaining to the transfer of functions in respect of the BMA.
30 318 Figure 4 represents the annual target performance of the DHA per programme during the 2021/22 financial year: Figure 4: Summary of performance as at 31 March 2021 The Citizen Affairs programme achieved all its planned targets for the year under review (100%).

The Immigration Affairs programme achieved 50%, while the Institutional Support and Transfers achieved 57%.

The Administration programme achieved 71% of its planned targets for the year under review.
The performance per programme is depicted below: Programme 1: Administration This programme provides leadership, management and support services to the Department of Home Affairs.

The following table highlights expenditure for the Administration programme in 2021/22: Table 20: budget and target performance Adjusted budget Total budget spent Under/Over Expenditure rate R2.636 billion R2.636 billion 0 100% Expenditure No.

targets No.
targets No.

targets Targets not achieved Success rate (%) 14 achieved 10 4 71%% The programme spent 100% of its allocation, compared to the previous financial year when spending reached 91.6% equating to under-expenditure of R58.4 million.

The DHA achieved 10 out of the 14 planned performance targets, indicating a 71% performance achievement rate.

This is a regression compared to the 75% achievement rate of the 2020/21 financial year.
31 319 Table 21: Programme 1 Targets not achieved Outcome indicator Planned target Reasons for deviation Number of selected ports of entry 23 ports of entry with There was a global shortage of with Biometric movement control BMCS computer chips that negatively system (BMCS) implemented as per approved specifications impacted on the procurement process and resulted in project implementation delays.
Development of Asylum Seeker Implementation of Asylum Service provider was not and Refugee system onto live Seeker and Refugee appointed to develop a full capture as per approved system.

functional system, so that specifications (prototype) (21/22) the system becomes fully functional.

Promulgation of DHA Bill Submission of DHA Bill to DHA Bill was not submitted to (Submission of DHA Bill to Cabinet for approval Cabinet Cabinet for approval (21/22) 2021/22 for approval.
However, the DHA indicates that a letter was sent to the Office of Solicitor-General (the “OSG”) requesting assistance to appoint an independent legislative drafter.

As at end of March 2021, the DHA awaiting the OSG’s response Submission of the Citizenship, Green Paper on the The Green Paper was not Immigration and Refugees Bill to Management of submitted as planned.
The DHA Cabinet for approval (Submission Citizenship, International reports that it is awaiting the of the Green Paper on the Migration and Refugee Ministers approval and Management of Citizenship, Protection submitted to submission to Cabinet.

The target International Migration and Cabinet to request approval to submit to Cabinet has been Refugee Protection to Cabinet to for public consultation rolled over request approval for public to Q1 of the 2022/23 financial consultation (2021/22) year.
Programme 2: Citizen Affairs The programme provides secure, efficient and accessible services and documents for citizens and lawful residents.

The following table highlights expenditure for the Citizen Affairs programme in 2021/22: 32 320 Table 22: budget and target performance Adjusted budget Total budget spent Under/Over Expenditure rate R2.974 billion R2.974 billion 0 100% Expenditure No.

targets No.
targets No.

targets achieved Targets not achieved Success rate 4 4 0 (%) 100% The programme spent 100% of its allocated budget for 2021/22.

Equally, it achieved 100% or 4 of the planned targets for the year under review.

The notable achievements under the programme include: • The percentage of births registered within 30 calendar days compared against the total population of births registered was 78,33%.

This percentage is up from 73,67% during the preceding review period.
The DHA’s intention is to normalise the registration within 30 calendar days above 80%.

• A total of 2 369 245 South African citizens were issued with Smart ID cards, against a target of 1 374 142.

Since the inception of Smart ID cards in 2013, 19.19 million citizens were issued with cards by March 2022.
Programme 3: Immigration Affairs The programme facilitates and regulates the secure movement of people into and out of the Republic of South Africa through ports of entry; determines the status of asylum seekers and regulates refugee affairs.

It also confirms and provides enabling documents to foreign visitors legally residing within the Republic of South Africa and enforces immigration legislation and effects deportations.
The table below highlights expenditure for the Immigration Affairs programme in 2021/22: Table 23: Immigration budget and target performance Adjusted budget Total budget spent Under/Over Expenditure rate R1 392 billion R1 392 billion 0 100% Expenditure No.

targets No.

targets achieved Targets not achieved Success rate (%) 4 2 50% 2 33 321 The Immigration Affairs programme spent 100% of its budget.

The programme’s budget increased by 8.9% from R1.278 billion in 2020/21 to R1.392 billion in 2021/22.
With increases in expenditure for the sub- programmes: Immigration Affairs Management, Admission Services and Asylum Seekers, the expenditure for Immigration Services deceases by 15.6 % from R275 million in 2020/21 to R232 million in 2021/22.

This decrease is attributed to a budget shift from Immigration Services to Admission Services to cover the cost of APP SITA in January and February 2022.
The saving in Immigration Services was as a result of the new Lindela contract entered into during the year under review being awarded at much better rates.

In addition, the saving on passenger name records (PNR) was used to cover other expenditure.
Table 24: Immigration Targets not achieved Outcome indicator Planned target Reasons for deviation Percentage (%) of critical skills 85% of critical skills visas Only 57.2% (2 790 out of 4 876) visas adjudicated within four (4) adjudicated within four (4) of critical skills visas adjudicated weeks for applications processed weeks for applications within 4 weeks for applications within the RSA (from date of processed within the RSA processed within the RSA receipt of application until (from date of receipt of outcome is in scan at VFS Centre application until outcome - office of application) is in scan at VFS Centre - office of application) Percentage (%) of business and 90% of business and 89.2% (812 out of 910) of general general work visas business and work visas adjudicated within 8 adjudicated within 8 weeks general work visas adjudicated weeks for applications processed for applications processed within 8 within the RSA (from date of within the RSA (from date weeks for applications processed receipt of application until of receipt of application within the RSA (from date of outcome is in scan at VFS Centre until outcome is in scan at receipt of application until - office of application) VFS Centre - office of outcome is in scan at VFS Centre) application) Programme 4: Institutional Support and Transfers This programme provides institutional support and transfer funds to the Independent Electoral Commission (IEC), the Represented Political Parties’ Fund and the Border Management Authority (BMA).
The table below highlights expenditure for the Institutional Support and Transfers programme in 2021/22: Table 25: budget and target performance Adjusted budget Total budget spent Under/Over Expenditure rate Expenditure 34 322 R2 427 billion R2 427 billion 0 100% No.

targets No.

targets achieved Targets not achieved Success rate (%) 7 4 3 57% The budget of Institutional Support and Transfers programme reflects a 100% expenditure.

Expenditure increased by 6.3% from 2020/21.


The appropriation and expenditure for the sub-programme: Electoral Commission increased with 7.1% from R2.101 billion in 2020/21 to R2.250 billion in 2021/22 primarily to cater for the procurement of Personal Protective Equipment (PPE).

The appropriation for the sub-programme: Represented Political Parties Fund increased marginally, while the appropriation for the BMA) decreased by 48.9% from R19.6 million in 2020/21 to R10 million in 2021/22.
The decrease in expenditure/appropriation for the BMA is due to National Treasury approving a virement to utilise saving under this sub-programme to cater for shortfalls in other areas.

The saving is mainly due to the fact that the operationalization and capacitation of the establishment within the BMA was not finalised during 2021/22.
Table 26: Institutional Support and Transfers Targets Not Achieved Outcome indicator Planned target Reasons for deviation BMA incrementally rolled out at BMA incrementally The Implementation Protocols selected ports of entry, established with SAPS and Defence have not designated segments of the land border law enforcement area and community crossing points been concluded and the Section 97 Proclamation pertaining to the transfer of functions has not been finalised.
BMA incrementally rolled out at BMA incrementally rolled The BMA could not be rolled-out selected ports of entry, out at 11 ports of entry by to 11 Ports of Entry as the Section designated segments of the land incorporating frontline 97 Proclamation, through which border law enforcement area and immigration, port health, frontline functions would have community crossing points agriculture and border been incorporated into the BMA, facility management was not finalised.
functions into the BMA Public-Private partnership (PPP) Financial and contractual Financial and contractual closure concluded to redevelop six land closure reached with the could not be reached as the private ports of entry appointed bidders in parties have not been appointed respect the of 35 323 redevelopment of six priority land ports of entry 4.1.3 DHA Report of the Audit Committee The Audit Committee (“AC”) is established as an independent statutory committee in terms of the Public Finance Management Act (PFMA).
The AC functions within approved terms of reference and complies with relevant legislation, regulation and governance codes.

Effectiveness of Internal Control: Whilst the Audit Committee recognises that the DHA has made great strides in enhancing the internal control environment, it indicated that the system of internal controls for the period under review was not entirely adequate and effective in improving the control environment and to reduce the risk to an acceptable level.
The AC indicated that there is a great need for change and systems transformational management to enhance efficiency and effectiveness of the Department’s service delivery operation, in order to unlock value.

The AC is concerned that in some instances the matters reported in prior years were not fully and satisfactorily addressed.
Management has embarked on a number of initiatives to remedy these shortcomings, and the AC continued to monitor the corrective measures implemented during the course of the year.

Risk management: The AC expressed a concern with the level of maturity of the risk management process.

It concluded that management must take risk management seriously and embed the culture in their day-to-day activities to ensure that the strategic objectives of the department are achieved.
Internal Audit: The AC expressed satisfaction with the Internal Audit had appropriately and satisfactorily discharged its functions and responsibilities during the year under review.

Evaluation of financial statements: The AC is concerned about the significant adjustments to the financial statements submitted for audit and has engaged management to re-assess its reporting processes to ensure improved financial reports.
Evaluation of the finance function: Based on the significant changes in the financial statements, the AC is concerned with the inadequacy of financial reporting and level of control weaknesses identified and is of the view that the function requires significant improvement and capacitation.

However, it acknowledges the continuous improvement in the internal controls within the function is commended.
The AC acknowledges that based on budgetary cuts, vacancies could not be filled, which resulted in the Department not being able to operate at its optimal level.

36 324 In-Year Management and Monthly/Quarterly Reports: The AC indicated that the monthly and quarterly reports were tabled and reviewed at the Audit Committee meetings.

The AC reviewed these reports and raised questions and issues for clarity and explanations.
Thus, the AC noted the improvements to the reports mainly relating to financial and performance information.

4.1.4 Report of the Auditor General The Department obtained an unqualified audit opinion, with findings on compliance from the AG during the 2021/22 financial year.

Emphasis of matter The AG reported that, as disclosed in note 11.6 to the financial statements, an amount of R546.0 million was impaired as a result of the Department’s inability to recover these receivables.
It also indicated that, as disclosed in note 22.3 to the financial statements, an amount of R238.5 million was impaired as a result of the Department’s inability to recover fines and penalties issued in terms of the Immigration Act 13 of 2002.

Report on predetermined objectives Programme 2: Citizen Affairs: The AG reported that no material findings could be identified on the usefulness and reliability of the reported performance information under the Citizen Affairs programme in 2021/22 period.
Expenditure Management • The AG reported that effective and appropriate steps were not taken to collect all money due for accrued departmental revenue, as required by section 38(1)(c)(i) of the PFMA.

This resulted in a significant portion of the amount being impaired.

• It reported that the debtors’ impairment provision was at 87% of accrued departmental revenue, indicating that the Department struggled to timeously collect money due and impaired incidentally significant amounts.
This also formed part of the material non-compliance reported on the Department’s failure to collect money due.

• It also reported that the claims against the Department at year-end was at 76% of the next year’s budget, excluding compensation of employees as well as transfers and subsidies.
The AG made mention that these claims are too high; should they become payable in the next financial year, the Department will have little left to fund operations, settle other financial obligations, sustain optimal service delivery, and implement planned activities, programmes and projects.
Procurement and contract management The AG reported that some of the IT related goods and services, classified as mandatory, were not procured through SITA as required by Treasury Regulation 16A6.3(e) and section 7(3) of the SITA Act.

37 325 Internal control deficiencies • Inadequate review and monitoring of compliance with applicable laws and regulations relating to financial reporting and revenue management by the DHA.
• No documented policies and procedures to guide the collection of fines and penalties issued • Inadequate monitoring of implementation of action plans, as the plans did not effectively address repeat audit findings including those relating to IT.

• Reviews performed were inadequate to detect and correct material errors in the AFS, resulting in material adjustments to the financial statements.
Material Irregularities The AG identified material misstatements in the financial statements submitted for auditing relating to: • Accruals and payables not recognised • Contingent liabilities It indicated that these material misstatements were due to reviews that were not effective enough to identify the errors.

However, these misstatements were later corrected, resulting in an unqualified audit opinion on the financial statements.
Additional information contained in the Financial Statements Unauthorised expenditure: The DHA did not incur any unauthorised expenditure during the year under review.

Fruitless and wasteful expenditure: A total amount of R6 000 (as against R514 000 for 2020/21) was recorded as fruitless and wasteful expenditure in the year under review.

In addition, R85 000 was recorded for previous years’ cases, bringing the total amount to R153 000 (R640 000 for 2020/21).
This is a significant decrease that is attributed to the resolution of cases by the loss control committee.

The fruitless and wasteful expenditure is attributed to hotel and flight bookings not honoured after bookings have been made.
Irregular expenditure: During the year under review, the DHA incurred irregular expenditure to the tune of R47 million which includes R32.2 million (mandatory Information Technology (IT) goods not procured through State Information Technology Agency (SITA); R12.8 million (irregularities in Automated Biometric Information System (ABIS) procurement); and R1.2 million (other instances of irregular expenditure disclosed).
Claims against the Department: The Department is frequently cited as a respondent in civil matters and most of them are old with no movement on the part of the plaintiffs.

Thus, claims against the Department increased from 2.243 billion (in 2020/21) to R2.338 billion (in 2021/22).
These claims include, amongst others: 38 326 Litigation and Legal Enquiries (R2.107 billion in 2021/22); Labour matters (R116.6 million in 2021/22); and EOH claim against the Department for ABIS project (R115.2 million in 2021/22).

These claims arise due to unlawful arrest and detention of illegal immigrants as well as damages arising from the Department’s failure to process visas and permits on time.
Also, mainly from the fraudulent issuing of death certificates, the non-issuing of unabridged birth certificate ID document and fraudulent use of ID document and passports resulting in the arrest and detention of the lawful owners.

The Department reported that there are also litigations that emanates from tenders and contracts where companies are claiming against the Department based on certain tenders and contracts.

“Other” litigation relate to motor vehicle collisions, personal injuries and contumelies.
Revenue: During the year under review, revenue collected increased significantly by approximately R349 million (109%) to R719 million compared to the revenue collected in the previous financial year of R370.9 million.

It stated that, against the revenue target of R562 million for the year under review, the target was exceeded by R156.5 million or 27.9%.

While this is a significant improvement, the Department is still behind the revenue collected in the pre-COVID era.
In this regard, it is worth mentioning that the department collected R1.062 billion in the 2019/20 financial year.

With regard to the Department of International Relations and Cooperation (DIRCO) account, foreign revenue collected for the year under review is R87 million.

Of this amount, R62.8 million was paid into the National Revenue Fund (NRF) by DIRCO on behalf of the DHA.
It also paid into the NRF an amount of R257 million in respect of prior years; this leaves DIRCO with a balance of approximately R573.7 million owing to the Department.
4.1.5 Human Resources Employment and Vacancies The following tables summarise the number of posts on the establishment, the number of employees, the vacancy rate, and whether there are any staff that are additional to the establishment as at 31 March 2022: For years, the Department could not replace staff as and when positions became vacant, given the Compensation of Employee (COE) ceilings imposed by Treasury.
As at 31 March 2022, the staff compliment consisted of 8 277 positions filled, while the number of posts on approved establishment was 8 301.

Therefore, the DHA has a vacancy rate of 0.29% as at the end of March 2022.

Table 22: Employment and vacancies by programme as on 31 March 2022 39 327 Programme No.

posts on No.

of posts filled Vacancy rate No.


of employees approved establishment 1 019 5 396 1 878 1 016 5 378 1 875 Administration Citizen Affairs Immigration Affairs Institutional 8 8 additional to the establishment 0.29 0.33 0.16 0 31 0 0 0 & Support Transfers Total 8 301 8 277 0.29 31 Source: Department of Home Affairs (2022) It should be noted that, in the 2021/22 annual report, the Department reported that its approved structure provides for over 19 886 posts.
If one could calculate the vacancy rate at the Department using the approved structure vs. the current staff compliment, the vacancy rate at the DHA would be very high.

For example, the vacancy rate would be 58.4.

The DHA reported that underfunding has, as a result, adversely affected the vacancy rate and the capacity to deliver services.

The high vacancy rate has led to reporting lines and segregation of duty being compromised.
This resulted in a ‘flat’ hierarchical structure that compromises lines of accountability and responsibility”, thus creating a breeding ground for errors, fraud and corruption.

Employment Equity The Department during the reporting period targeted 44 vacant funded positions.

The number of workforce went down because of resignations and majority of those employed were blacks (264) and there were (18) coloureds, (2) Indian and (24) Whites employed.
In terms of Gender representation of those employed, there were 189 females and 119 males employed.
The tables below depict the difference in the expected representation and the current status of all the race groups: Race Female Male Total workforce EAP against by Race Workforce African 4 283 (51.75%) 2 979 (35.99%) 7 262 (87,74%) 12.84% Coloureds 321 (3.88%) 213 (2.57%) 534 (6,45%) Indian White 59 (0.71%) 283 (3,42%) 39 (0.47%) 98 (1,18%) 100 (1.21%) 383 (4,63%) -4.35% -1.82% -6.67% 40 328 Total 4 946(59,76%) 3 331(40,24%) 8 277 There is no much difference between the year under review and the previous financial year regarding the employment status of the Department on race and gender.
The Department argues that this is due to the fact that although majority of the people employed in the period are black, this is compared to majority of people who have been terminated in the period being black as well, 87.74%.
As per the 2012 Cabinet resolution on representation of women at Senior Management Service (SMS) level and disability target, the DHA performed as follow during the year under review: • The disability status in the Department for 2021/22 stands at 1.74% which is below the 2% target.

This is due to the fact that the work force reduced during the period.

• Representivity on SMS is at 63 (45.99%) (Female) and 74 (54.01%) (Male).
The Directive on SMS positions and employment of People with Disabilities (PWD) within the Department remains in force until the Department achieves the required targets; namely: 50% of SMS be composed of women and 2% of the workforce be composed of PWD.
Table 23: Gender Representation at SMS Level and people with disabilities Status Gender Representation at SMS Level Female Male Total SMS Members Target 63 (45.99%) 74 (54.01%) 137 50/50 People with disabilities DHA Total Total employed people with disabilities Target Workforce 8277 Recruitment 144 (1.74%) 2% The DHA reported that 73 posts were vacant funded during the financial year 2021/22; 42 of these positions are filled, and 31 positions are still vacant, (still in the process of being filled) Of the 73 posts, 23 (32%), consisting of 16 filled and 7 vacant posts, were still within the 6 months’ recruitment Turnaround Time (TAT): • 34 (47%), consisting of 22 filled and 12 vacant posts, had exceeded the 6 months’ recruitment TAT, but were still within the 12 months’ national recruitment TAT; and • 16 (22%), consisting of 4 filled and 12 vacant posts, had exceeded the 12 months’ national recruitment TAT.
41 329 4.2 GPW 2020/21 ANNUAL REPORT The GPW Annual Report for 2020/21 has only tabled in October 2022, a year after it was due as with the Previous financial year.

The 2021/22 Annual Report is already over 5 months overdue for submission to the AG.
The tabling of this Annual Report comes in a year later, due to system failure and data losses experienced by GPW on 4 February 2021, as a result of a EVA hardware crash, that hosted multiple servers, containing critical data including the tenders, e-Gazzettes, Dynamics AX (financial management system), emails and other technical systems.
4.2.1 Summary of Financial Performance The 2020/21 Annual Report provides an account of GPW’s performance against the strategic plan of 2020- 2025, the Annual Performance Plan and the budget for 2020/21.

Recovery of systems and stabilisation of the ICT environment called for a collaborative effort, inclusive of soliciting expert advice and support from external service providers.
A Migration Plan has been developed and approved by EXCO and is being implemented to turn around the ICT environment and all its operations, towards a desired end state of a stable infrastructure, network and systems to enable successful back up and restoration of GPW applications and data.

GPW has received approval by National Treasury to be audited using GRAP as opposed to IFRIS accounting standards for the 2020/21 financial year going forward.
GPW management and officials committed to attainment of set targets for the 2020/21 financial year, despite being hardest hit by the advent of COVID-19 pandemic.

During the first quarter of this year, GPW could not print essential documents such as Identity and travelling documents due to the lock down restrictions.

This was due to the temporary closure of DHA’s offices, which affected the demand for Identity and travel documents.
However, GPW remained open to produce all required government gazettes for different stages of the national lockdown, as well as other critical documents.

On average, GPW lost over half of its production capacity for the financial year, thereby impacting negatively on its revenue base.

The revenue was reduced from R1.559 billion to R745 million, due to lack of buying power by government departments as a result of the national lockdown.
The following targets, which are customer facing, had to be revised downwards: • Percentage of total workforce trained as per WSP identified priorities; • Number of countries engaged in the SADC region; as well as the • Number of local customers engaged.

42 330 As an organisation, GPW saw revenue of R815 million in 2020/21 in comparison with R1.618 billion in the preceding financial year.
GPW declared a surplus of R2.4 billion to National Treasury in accordance with Treasury Regulations in the 2020/21 financial year.

However, National Treasury granted GPW permission to retains all its accumulated surplus, in order to fund capital and facility/ asset recapitalization expansion projects.

An overall performance of 78% was achieved against the targets set for this financial year.

4.2.2 GPW Annual Performance by Programme The GPW implements its budget across 5 programmes: I.
Office of the CEO II.

Operations and Production III.

IV.

Strategic Management Financial Services V. Human Resources GPW had a total of 18 targets planned for the 2020/21 financial year.

Fourteen (14) targets were achieved, representing overall achievement of 78%, and 4 were not achieved.

Given the loss of financial data it is difficult to verify the authenticity of the performance clams.

The work of the GPWeis carried out in the following budgeted programmes.
The summary is as follows: GPW ANNUAL PERFORMANCE: 2020/21 Total planned Achieved Not Achieved targets 18 14 4 comprised of two business units, namely Information and Communication Technology (ICT) and Internal Audit (IA).

This office had planned for three but achieved two targets.

One target for IA and one for ICT were achieved.

The target that was not achieved from ICT is: 95.5% system availability.

I.
I.

The Office of the CEO is Branch Targets: 2020/21 Status Deviation or Comments Office 100% security Achieved N/A of the vulnerabilities CEO detected by security assessments mitigated 95.5% system Not Power disruption resulted in systems failure on the 4th availability achieved February 2021, resulting in data loss due to unavailability of backup data.

43 331 Implemented Backup on three sites as follows: Both Visagie and Bosman Offices have backup to disk and tape.

BCX has backup to disk and tape.


Data Restore tests are performed regularly and reported.

Infrastructure Refresh is estimated to be received in March 2023 and migration of services to the new infrastructure by March 2024.

New Datacentre colocations are identified and datacentre is being build at CSIR and SITA.
90% of approved Over Additional internal audit activities executed over 90% annual internal audit Achieved 15 out of 16 approved audit activities implemented plan implemented by 4% including two ad-hoc reviews (PPE Audit and Review of the Examination Processes II Operations and Production: All targets, although reduced, were achieved Branch Targets: 2020/21 Status Operations and 100% (1 267 244) of Identity Documents/ Cards distributed that Achieved Production conform to the client’s specifications.
100% (204 452) of Travel Documents delivered that conform to the Achieved client’s specifications 100% (15 005 351) of examination papers delivered that conform to Achieved the client’s specifications 100% (2 078) of Government Gazettes published that conform to Achieved quality and timeline specification 99% (6 498 103) of High Security Certificates delivered that conform Achieved to client specifications III Strategic Management: All targets, although reduced, were achieved Branch Targets: 2020/21 Strategic 10 local customers engaged Management 5 countries in the SADC region engaged as follow up Status Achieved Achieved 100% Business Continuity Management activities implemented Achieved 44 332 Implementation of the reviewed security model for GPW Achieved IV Financial Services: One out of 4 targets achieved (25%).
Branch Targets: 2020/21 Status Deviation or Comments Financial Unqualified audit opinion for Not Achieved Non availability of data due Services 2019/20 to system failures 3 positive working capital ratio Achieved maintained 10% net profit margin achieved Not Achieved Non availability of data due to system failures 15% progress completed to the Not Achieved Progress not attained.
DPWI Masterplan Old government garage – to facilitate Memorandum of 83 Visagie Street, Pretoria) Agreement (MoA) with implementing agent.

Infrastructure SA engaged for intervention.

V Branch: Human Resources: Human Resources planned for two (2) and achieved all targets for the financial year.
Branch Targets: 2020/21 Status Deviation or Comments Human Resources 20 unemployed young Achieved Additional 18 graduates skills people and women recruited for artisan and graduate skills development programs development programmes were identified and more people appointed 40% (220) of total Achieved Additional officials (58) were workforce trained as per trained in the production area WSP identified priorities to improve colour management 4.2.2 GPW Annual Financial Statements and Audit outcome The audit report was signed off on the 20th September 2022.
The Annual Report for the same period was prepared by GPW management and tabled by the 30th September 2022.

GPW received a disclaimer audit opinion for the 2020/21 AFS due to the data loss which eroded the general ledger.

The balances in the AFS 45 333 were not supported by the general ledger which resulted in limitation of scope.

GPW experienced the first data loss on the 4 February 2021.

The data loss impacted opening balances on 1 April 2020 and transactions for the 10 month period to January 2021.
On the 25th March 2022 and the 1st April 2022, further system crashes occurred which wiped out the data captured from 2nd September 2021 to 31st March 2022.

The second data loss also eroded the data recaptured for February 2021 and March 2021.

The data losses had a significant impact on the operations of GPW and the compilation of the 2020/21 AFS.

AFS items highlighted in Italic, were the basis of the disclaimer opinion in the 2020/21 audit.
AFS caption 2021 R’000 2020 R’000 Variance Variance Reasons R’000 % Property, plant 847 331 968 730 (121 399) (13%) Depreciation is R128.4 million and equipment Intangible assets 3763 15 241 (11 478) (75%) Write off of the e-gazette in 2020/21.

system due to the data loss.

The e-gazette system was 100% automated and was lost during the initial data loss.

Non-current 851 094 983 971 (132 877) (13,5%) Net movement, refer to assets reasons above.
Inventories 338 584 318 969 19 615 6,1% This is due to the lockdown, production was halted and stock was not moving.

Receivables 273 098 206 497 66 601 32,3% The increase in the from exchange transactions outstanding balance of Receivables can be attributed to the country-wide disruption in business activities caused by COVID-19 lockdown regulations.

The data loss also had a significant impact on the management of debtors.
VAT - 7 726 (7 726) (100%) VAT is a payable in 2020/21 receivable and is the result of the trading 46 334 activities of GPW, i.e.

the net of Output Tax and Input Tax Cash and cash 2 364 894 2 414 456 (49 562) (2%) Immaterial movement %.

equivalents Current assets 2 976 576 2 947 648 31 164 1% Net movement, refer to reasons above.
Payables from 213 156 145 566 67 590 46,4% The increase can mainly be exchange transactions attributed to the delay in payments to service providers following the data loss on 4 February 2021.

Provisions 4347 6961 (2614) (37,6%) Immaterial movement Current liabilities Lease liability Non-current liabilities 314 593 152 527 162 066 106% Net movement, refer to 46 46 47 47 reasons above.
(1) (2%) Immaterial movement (1) (2%) Immaterial movement Revaluation 5197 5196 1 0% Immaterial movement reserve Capital fund 2 539 926 2 539 926 - 0% No movement.

Accumulated 1 064 998 1 233 932 (168 934) (13,7%) The reduction in the surplus “Accumulated surplus” balance can be attributed to the deficit incurred in the 2020/21 financial year.

Total Net 3 610 121 3 779 045 (168 924) (4,5%) Net movement, refer to Assets reasons above.
Table 29: Statement of Financial Position Table 30: Statement of Financial Performance AFS caption 2021 R’000 Revaluation 5197 reserve 2020 R’000 5196 Variance Variance Reasons R’000 1 % 0% Immaterial movement 47 335 Capital fund 2 539 926 2 539 926 - 0% No movement.

Accumulated 1 064 998 1 233 932 (168 934) (13,7%) The reduction in the surplus “Accumulated surplus” balance can be attributed to the deficit incurred in the 2020/21 financial year.
Total Net 3 610 121 3 779 045 (168 924) (4,5%) Net movement, refer to Assets reasons above.

Revenue 816 675 1 618 383 (801 708) (49,5%) GPW adjusted its budgeted revenue for the 2020/21 financial year from R1.5 billion per the original budget to R745 million per the adjusted/ final budget in anticipation of the impact of COVID-19 on the operations of the organisation.
Cost of sales (785 803) (924 473) 138 670 15% Cost of sales includes a fixed component of the salaries of the Production Department of R145.8 million (2019/20: R147.2 million).

These salary amounts are payable regardless of the level of production/ printing activities undertaken.

The lockdown restrictions to combat the COVID-19 pandemic had a severe impact on operations during the period April 20 – December 20.

Gross surplus 30 872 693 910 (663 038) (95,6%) Net movement, refer to reasons above.
48 336 Other income 4 752 4 863 (111) (2,3%) Immaterial movement Expenses (204 549) (254 031) 40 101 16% Decline in expenses relating to subsistence and travel, transport cost due to the COVID-19 and lockdown restrictions.

As employees worked from home and limited travel was done.
Finance Cost 0 (2275) 2275 100% Immaterial movement Deficit/ surplus (168 925) 442 467 (611 392) (138,2%) Due to decline in revenue attributable to the COVID- 19 pandemic and the lockdown restrictions 4.2.3 Implementation of the Ministerial Review Panel Report The MRP report was officially handed over to GPW management by the Minister of Home Affairs.

Progress to date is as follows: • GPW has appointed a project manager to facilitate and monitor implementation of the MRP Report.
• Technical advisor has been appointed to provide technical knowledge, support and guidance on the implementation process.

• All recommendations in the Report have been converted into Actions plans, and heads of business units are held responsible and accountable for implementation.

• Action plans are reviewed in line with SMART principles.

• Progress reports are presented at EXCO meetings and further guidance provided where necessary.
• An implementation model has been developed to guide implementation of the Report based on categories extracted from the Report.

• A team of forensic investigators has been appointed to focus on all areas identified in the Report.

• Work streams have been established comprising of GPW officials, led by experts from the appointed forensics team, to coordinate implementation of the Report.

Reports will be consolidated and presented to EXCO and Minister.
• GTAC has been appointed to drive organisational turn around strategy and provide technical support on change management.

• A turnaround strategy has been approved by EXCO.

• A dashboard has been created to monitor implementation of recommendations on a weekly basis.

4.3 IEC 2021/22 Annual Report 49 337 4.3.1 Introduction For the period from 1 April 2021 to 31 March 2022, the IEC conducted South Africa’s sixth municipal elections in 2021 under Covid-19.
The election was delivered freely and fairly within an expedited 42-day election timetable resulting from courts denying the decision to delay the elections and the introduction of new Voter Management Devices.

Despite the challenging conditions, IEC also received its second consecutive clean audit.

The Chief Financial Officer emphasised that the IEC received a clean audit because it took into consideration the guidance of the AGSA.
The IEC had 13 performance targets in total and achieved 77 percent (10) across the following 4 programmes: Division Strategic Outcome oriented Number Number Number % Goal of achieved/ not achievement Programme 1: Goal 1: Strengthening 4 3 1 75% Administration governance, institutional targets exceeded achieved excellence, professionalism and enabling business processes at all levels of the organisation Programme 2: Goal 2: Achieving pre-eminence 2 0 2 0% Electoral in the area of managing elections Operations and referenda, including the strengthening of a cooperative relationship with political parties Programme 3: Goal 3: Strengthening electoral 5 Outreach democracy Programme 4: Goal 4: Contributed to the 2 Party Funding enhancement of transparency in elections and party funding 5 2 Total 13 10 0 0 3 100% 100% 77% 4.3.2 Annual Performance by Programme In Programme 1: Administration, there were four targets and three of the targets were achieved (75%).
The target not achieved was that the IEC was only able to fill 75% of 1113 vacant posts.

The purpose of Programme 1 is to achieve the strategic outcome of strengthening institutional effectiveness at all levels of the organisation.

It also provides the overall strategic management of the Electoral Commission, as well as centralised support and financial management services.
50 338 Outcome: Strengthened institutional effectiveness In Programme 2, the IEC reported that it did not achieve any of the targets.

The Commission had by- elections that were set aside resulting in the target not being achieved.

The Electoral Court set aside the Ward 33 election in Enoch Mgijima Municipality, because of the environmental circumstances surrounding the elections in the ward.

A target to reach 26 096 884 registered voters with a shortfall of 443 116.
The IEC reported that generally, it would have, two general voter registration weekends ahead of a general election.

But because of Covid-19 and the regulations promulgated to curb the spread of the virus, the Electoral Commission could not schedule two registration events.
Outcome: Free and fair elections of representatives delivered Total targets: 2 Target achieved: 0 % of achievement: 0% 51 339 Programme 3 Outreach This programme focuses on the strategic outcome of informing and engaging citizens and stakeholders in electoral democracy.
The programme fosters participation in electoral democracy by providing civic and democracy education on a continuous basis; voter and balloting education as may be required by each election; strategic and thought leadership on matters pertaining to electoral democracy; broadening our research agenda and issuing publications; increasing visibility through proactive consultation, effective communication, and presence among our stakeholders and communities; facilitating platforms for political dialogue; cultivating an environment conducive for the holding of free and fair elections; and constantly engaging the media.
Outcome: Informed and engaged citizens and stakeholders in electoral democracy Total targets: 5 Targets achieved: 5 % of achievement: 100% 52 340 Programme 4: Party Funding This programme focuses on the strategic outcome of contributing to the enhancement of transparency in elections and party funding.
The programme manages party funding and donations in • compliance with legislation, and • strengthens cooperative relationships by providing consultative and liaison platforms between the Electoral Commission and political parties and candidates, using systems, people and processes that are sustainable.

It also provides effective management of the registration of political parties and processing of the nomination of candidates for various electoral events.
Outcome: Contributes to the enhancement of transparency in elections and party funding Total targets: 3 Target achieved: 3 % of Achievement: 100% 53 341 4.3.3 IEC Financials and Auditing The Auditor General reported to the Committee that the IEC received a clean audit with no findings.

In programme 2 under electoral operations, there were no material findings that were identified by the AGSA and there were no material findings on political party funding.
There were no significant risks in relation to the financial health of the IEC.

The IEC incurred irregular expenditure amounting to R28 million and R5,9 million of the transactions for the prior year remained uncondoned.

As at 31 March 2022, the IEC had an irregular expenditure of R66,5 million.

Fruitless and wasteful expenditure of R1.7 million of this 98% relates to fraud which has been referred to South African Police Services the balance is interest due to late payment.
54 342 4.4 COMMITTEE DELIBERATIONS ON THE ANNUAL REPORTS Department of Home Affairs (DHA) 2021/22 4.4.1 The Committee commended the Department of Home Affairs on the made progress made on the registration of births within 30 days.

All children born from 2013 are issued with the Unabridged Birth Certificates (UBC) on the spot.

The issuance of a UBC from before 2012 is still taking more time to be processed until these old records are digitised.
The Civic Services branch has achieved 100 percent of its targets; however, the lived experiences of many ordinary people on the ground have not changed.

4.4.2 Out of the 412 DHA offices country-wide, 198 of them have been modernised (Live Capture) and can issue Smart ID Cards to citizens.

There is a need to modernise all offices to ensure that every citizen is issued Smart ID Cards.
4.4.3 The Committee noted that the Department of Home Affairs has obtained an unqualified audit opinion for the 2021-2022 financial year and that this was the sixth unqualified audit opinion in a row for the Department.

55 343 4.4.4 The Committee noted that the Department of Home Affairs progress made in procuring additional 20 mobile units and rolling out the Branch Appointment Booking System (BABS) to 160 offices in the country to curb long queues.
4.4.5 The Committee was concerned about the irregular expenditure that has increased from R507 million to R555 million and the irregular expenditure of R33 million on procurement of IT Firewalls without the involvement of the State Information Technology Agency (SITA).

The Committee noted that the DHA was planning to cancel the entire R119 million contract based on other reasons.
4.4.6 The Committee was concerned about the repeat findings and whether the DHA and GPW were implementing the recommendations of the AG and related audit action plans.

4.4.7 The Committee raised a concern that the eHomeAffairs system, that when making applications for passports and Identity Documents (IDs) on the system, One-Time-Passwords (OTP) can take up to eight (8) hours to receive.
The Committee also noted that the Contact Centre has about 120 lines with 74 contact agents and 20 other agents dealing with emails and the average waiting period was seven (7) minutes.

The issue is that Contact Centre remains unanswered for a long time.

4.4.8 The Committee noted the progress of the BMA in border operations such as Mozambique, as well as the introduction of related memorandums and budget allocations.
4.4.9 Progress on the roll out of one-stop-border posts is noted and continued updates on the implementation of the related awarded infrastructure upgrade bids.

Government Printing Works 2020/21 4.4.10 The Committee raised a concern that the GPW has not been able to table the Annual Report and Annual Financial Statements for 2021-22 due to data loss.

The data loss also delayed the Annual Report and Financial Statements for 2020-21 that were only tabled in 2022.
4.4.11 The Committee noted the Server that crashed caused the data loss and other servers that were housed by it also got affected and data was lost.

GPW did not have adequate backup systems in place on two separate occasions.

It was only now that GPW had had to deal with two years’ loss of data that it was working on the backup system for their information.

56 344 4.4.12 The Committee raised a concern that some government departments were not printing with the GPW as the state security printers.
There were no directives to government departments and entities to ensure that they print with GPW.

4.4.13 The GPW was making inroads looking to expand to markets in the SADC region and other African countries.

4.4.14 The ICT crashes where data loss occurred were close to the submission date of data for auditing and the Committee noted concern that that there could be a link between the crashes and the investigation of so-called evergreen contracts at GPW.
4.4.15 It is also observed that there are capacity challenges in the ICT and Finance sections that it noted it was being addressed.

4.4.16 After the data loss, the Minister of Home Affairs appointed the Ministerial Review Panel that issued a report where some findings and recommendations needed to be implemented.

One of the recommendations was to conduct a forensic investigation.

4.4.17 The GPW established a War Room with the State Information Technology Agency (SITA) and DHA to assist the entity.
The Minister of Home Affairs would also establish a Ministerial Advisory Council in terms of the Public Service Act.

4.4.18 The Committee noted that the GPW received a disclaimer audit opinion for the 2020-21 financial year and an audit action plan should be developed and implemented.
Electoral Commission 2021/22 4.4.19 The Committee noted the estimated 10 million people who are not registered to vote and short time left to prepare for the 2024 National and Provincial Elections especially the need for outreach and education to mobilize young people to vote.

4.4.20 The Committee commended the IEC for referring fruitless and wasteful expenditure to law enforcement for investigation.
4.4.21 There were still some technical and training issues with the new Voter Management Devices that were piloted during the 2021 Local Government elections.

57 345 4.4.22 During the 2021elections and by-elections, some people complained that they were removed from the voter’s roll and as such, they could not vote.

The IEC did not inform the voters in advance that they were removed from the voters' roll.

5.
5.

CONSIDERATION OF OTHER SOURCES OF INFORMATION 5.1 State of the Nation Addresses 2022 The 2022 State of the Nation Address makes specific mention of the Department of Home Affairs twice.

More than in any of the recent years.

This shows the increasing importance of the Department to the economic recovery of the country.

This is in regards to: i.

Attracting skilled immigrants for a thriving economy.

ii.

Stimulating Employment includes DHA interns digitising paper records.
In addition, the following matters have a bearing on the work of the DHA: iii.

Continuing work in standing against corruption.

iv.

Massive roll out of infrastructure including broadband.

v. Presidential State-Owned Enterprise Counsel and GPW.

vi.

Strengthening Democracy and reaffirming commitment to the constitution.

i.
i.

Attracting skilled immigrants for a thriving economy The first mention of the DHA is in terms needing to improve in attracting skills to grow the economy in a competitive international market.

The president mentions progress in streamlining and modernising the visa application process to make it easier to travel to South Africa for tourism, business and work.

As already noted by the Committee, the eVisa system has now been launched in 14 countries, including China, India, Kenya and Nigeria.
It will be critical in monitoring the plans of the DHA how this programme succeeds and is expanded.

The past decade has seen gradual increases in global concern around the security risks of migration often at the expense of the potential benefits.

This can be seen in South Africa with the Border Management Authority Act, which although aiming to streamline border related services has also been criticised as being more concerned with security than economic or humanitarian concerns.
The revised Critical Skills List has been published for the first time since 2014, following detailed technical work and extensive consultations with business and labour.

The updated list is said to reflect skills that are in shortage today, to ensure that the immigration policy matches the demands of our economy.
Some of the most notable jobs which have been added to the list include: • Director (Enterprise /Organisation) Chief Executive Office, Managing Director- NQF 9; • Corporate General Manager (medium enterprises or larger) NQF 8; 58 346 • Programme or Project Manager (NQF 9); • Quality Systems/ Quality Control Manager/ Quality Assurance Auditor NQF 9; • Data Scientist Master’s Degree (NQF 9).
Now that the scarce skills have been published it will be critical that technical guidelines on the qualification and implementation of the list are published.

Once published, potential candidates will know with certainty if they squarely qualify for an occupation under the list or not.

As the Committee knows, the President mentioned the comprehensive review of the work visa system, led by a former Director-General of Home Affairs, Mr. Msimang.
This review is exploring the possibility of new visa categories that could enable economic growth, such as a start-up Visa and a remote working visa.

The Committee must be briefed on the outcome of this review as soon as it is available, in order to plan for the possible legislative amendments.

This ties in with the plans set by the DHA for a revision of the entire refugee and immigration Acts.

In addition, the President mentioned establishing a team to remove red tape of too many regulations.
This has particularly been the case in the country around unduly complicated, costly and difficult immigration regulations.

This prevents companies from growing and creating jobs.

ii.

Stimulating Employment includes DHA interns digitising paper records The second direct mention of the DHA in the President’s speech is in relation to extension of the Presidential Employment Stimulus programmes, which launched in October 2020.
Job creation is a continued theme relating to the DHA in President’s speeches in the last few years.

The total number of direct beneficiaries of these programmes will soon rise to over one million South Africans making it the largest youth employment programme ever undertaken in the Country.
The employment stimulus will now also allow the Department of Home Affairs to recruit 10 000 unemployed young people for the digitisation of paper records, enhancing their skills and contributing to the modernisation of citizen services.

The digitisation of millions of old records is a long outstanding target for the DHA which has caused significant risks to the security and efficiency of services such registration of deaths, births and marriages.
This in turn also delays the provision of all relative and marriage related Visas/permits.

The Committee will in due course invite the DHA to present on the progress made in this project including the possibility of internships to provide a gateway for the DHA to reduce delays related its significant staff and cost of employment budget shortages once the digitisation project is over.
The Committee can support 59 347 continued budget allocations to absorb some of these interns into the DHA in the longer term to expand the service delivery of the Department.

iii.

Continuing work in standing against corruption Standing against corruption has also been a continued key theme in the President’s speech that related to all Government Departments including the DHA.
There was significant work done in the 5th Parliament by this Committee in investigating state capture in the Department related to undue interference in the provision of immigration documents, citizenship and recruitment.

This work will hopefully reflect in the final report of the Commission of Inquiry into State Capture that is due at the end of February and will be monitored in relation to the DHA.
The Corruption Unit Within the DHA will also be requested to provide continued updates on its work including consequences for those found guilty of fraud, corruption and negligence.

This will hopefully contribute to the SONA intention of rebuilding the State and restoring trust and pride in public institutions.

Additionally, as mentioned the modernisation and digitisation projects, are gaining momentum will also go a long way to prevent future abuse of the services provided by the DHA.

iv.
iv.

Massive roll out of infrastructure including broadband The continued boost to the rollout of infrastructure will hopefully not only enable the private sector to grow but also contribute towards the DHA ambition to own rather than rent its offices as well as help upgrade and maintain them.
The rapid deployment of broadband infrastructure across all municipalities by establishing a standard model for the granting of municipal permissions; must be of particular prioritisation for the DHA offices to overcome the hurdles in the systems allowing document provision as well as expand the footprint of modern offices able to roll out smart IDs and passports.
The DHA also has a role to play in improving the efficiency of sea ports to bring them up to speed relative to the ports in other parts of the world and on the African continent.

The limited DHA capacity and infrastructure at port forms part of the constraints to economic activity in the Country.

The DHA must motivate for the budget to increase its capacity and integration of its passenger clearance at ports both for commercial clients as well as tourists.
Significantly improved cruise ship and port security infrastructure is already in place in Cape Town harbour.

The DHA must liaise with renewed Transnet programmes to partner on improving operational efficiencies at the ports through procuring additional equipment and implementing new systems to reduce congestion in particular at the Durban and Ngqura Container Terminals.
60 348 The gradual implementation of the Border Management Authority at all land, sea and air ports must also tie in with these efforts to bolster trade, tourism and infrastructure.

The Committee is also due to conduct an oversight visit of the Sea and Air Ports to monitor progress in these initiatives.
v. Presidential State-Owned Enterprise Counsel and GPW Although the Government Printing Works is not a formally a State Owned Enterprise in terms of treasury regulations, it is nonetheless a profit making entity fully owned by Government and will thus hopefully benefit from the centralised shareholder model proposed by the President for key commercial state-owned companies.
The separation of the State’s ownership functions from its policy-making and regulatory functions, could also perhaps help address the ongoing management, infrastructure and financial/auditing challenges at the GPW by minimising the scope for political interference, introducing greater professionalism and managing state assets in a way that protects shareholder value.
In the ongoing investigations of issues at the GPW, consideration and communication should be initiated on the work that has begun in the establishment of a state-owned holding company to house strategic SOEs and to exercise coordinated shareholder oversight.
The Committee/Minister could potentially motivate that in order to ensure that GPW is effectively fulfilling its responsibilities, it forms part of the Presidential SOE Council that is preparing recommendations on SOEs to be retained, consolidated or disposed of.

vi.
vi.

Strengthening Democracy and reaffirming commitment to the constitution Lastly the Presidents reaffirmation to strengthen democracy and commitment to a Constitution that protects us all will be fostered by the work the DHA and the Committee is doing in amending the Electoral Legislation in line with the Constitutional Court ruling.

The oversight of the Electoral Commission as well as the DHA provision of enabling documents towards this goal will also continue by the Committee in its regular activities.
5.2 Joint Oversight to Areas Effected by Illegal Mining • A selection of members of the Committee joined the Committees on Police and Minerals and Energy over four weekends throughout September and October cross several provinces (Limpopo, Mpumalanga, Gauteng, Free State and North West) after incidents of violence attributed to illegal miners.
At the time of the adopting of this report, the joint reports from these oversights had not yet been adopted by the respective Committees and will be tabled separately in due course.

5.3 Responses on the 2021/22 Budgetary Review and Recommendations Report The Minister of Home Affairs tabled the following response to the 2021/22 BRRR of the Committee in February 2022.

61 349 Committee Recommendations Response Department Of Home Affairs - Issues Outstanding From The 2020 & Previous BRRR 6.1.1.
Report on the full reopening of refugee Port Elizabeth RRO (Gqeberha) offices in Port Elizabeth and Cape Town as per The PERRO office was re-opened on 19 October 2018 at court orders as a matter of urgency.

OA GIBAUD ROAD, Sydenham, Lakeside, Port Elizabeth Cape Town RRO The reopening of Cape Town RRO has been under supervision from Acting Justice De Wet since 17 May 2021.

A site has been identified at 12-16 Grenville Avenue, Epping Cape Town.
The Department is currently awaiting finalization of by the prospective landlord of various legal and funding requirements where after a detailed project plan will be made for the opening of the office.

6.1.2.
6.1.2.

Engage more urgently with the Ministers The Department continues to engage National Treasury at of Finance regarding the cutting of funding to all levels on the implications the already constrained DHA which is operating of cost cutting measures, insufficient capacity and inability at less than half its ideal capacity, since it is to fund vacant posts given the low Compensation of significantly effecting service delivery, the Employees (COE) ceiling.
On the 28 January 2022, correct statement of audit figures, as well as National national security.

Treasury approved the DHA Business Case and allocated an amount of R266 Million for the 2022/23 Financial Year for its capitalization.

6.1.3.

Strive towards a clean audit opinion and The Department remains committed to achieving a clean better adhere to in-year audit plans.

In audit outcome.
In audit outcome.

The 2021/22 audit action plan was approved particular, the impairment of departmental by EXCO on 8 December 2021 after being presented to the revenue in collecting of penalties, issues of Audit Committee and Internal Audit for validation.

The significant contingent impairment of receivables, including the DIRCO receivable, liabilities and the reduction of irregular the collection of fines and penalties and steps to prevent and expenditure.
Progress on audit plans and the reduce irregular expenditure are covered in the audit action Auditor General Management Letter must form plan.

Progress against the audit action plan is monitored at part of all future quarterly performance Back-to-basic meetings, the departmental management reporting to the Committee.

meeting (DMC), EXCO and the Ministerial Management Meeting (MMM).
Such progress reports on the audit action plan will be included in the departmental quarterly reports to the Portfolio Committee.

6.1.4.

The Department of Home Affairs should It is not possible to plan budgets to ensure that when 100% 62 350 ensure that it plans budgets properly to ensure of the budget is spent 100% of the targets are met.

There is that if 100 percent of the budget is spent, it no direct correlation between the percentage of targets means 100 percent of the targets are also met.
achieved and the budget spent as the Department does not 100 percent of the budget is spent, it means 100 report on partially achieved targets.

In other words, budget percent of the targets are also met.

is also expensed against targets not achieved.

In addition, budget is also expensed against items with no targets (e.g.

property payments; licenses; security services) 6.1.5.
The Minister of Public Works and This matter is being probed by the Department of Public Infrastructure should ensure that all officials Works and Infrastructure (DPWI).

and others who were found to have acted in the illegal procurement process of the Beit bridge fence are held accountable.

6.1.6.

The report of the Special Investigations The report has not been shared with the Counter Corruption Unit on Beit Bridge is to be implemented fully and Services Security Branch of the Department as yet.
as soon as possible.

6.1.7.

The DHA should continue to address the There are standard queue management practices in place at issue of long queues at its service offices.

all local front offices.

Office Managers and dedicated floor walkers are assisting to make sure clients are in the right queues and that queues are divided according to services.

The Department introduced and applied extension of operational hours for peak seasons to ensure that all clients are serviced where overtime is approved.
The Department has also introduced an appointment system.

Department of Home Affairs - 2021 Recommendations 6.2.1.

The Department should explain the The 2021/22 audit action plan was approved by EXCO on 8 measures it has taken to improve its reports December 2021.

This plan addresses all findings raised by relating to financial and performance the AGSA regarding financial and performance reporting.
information as suggested by the AG in its next The plan will be submitted to the Portfolio Committee as quarterly report to the Committee within the part of the next quarterly report.

modern legal system.

63 351 6.2.2.

The issue of lack of The issue of lack of policy implementation of revenue policy/implementation on revenue collection collection is addressed in the audit action plan approved by should addressed before the end of the 2021/22 EXCO on 8 December 2021. financial year.
to deal with cases that remain in the DHA's In respect of contingent liabilities, the Department has contingency liability report for a long time adopted a more pro-active approach and are following up because plaintiffs fail to prosecute the claims.

cases that have been on the register very long through the office of the State Attorney.

The challenge is that the Department as defendant has limited legal means to push for the enrolment and speedy resolution of these civil cases.
During the 2021/22 financial year, two old contractual disputes (New Dawn and Double Ring) were resolved in favour of the Department.

These two cases alone contributed over R630 million to the contingent liability opening balance.

6.2.3.

The Department should review and The 2021/22 audit action plan was approved by EXCO on 8 monitor compliance with applicable legislation December 2021.
This plan addresses all findings raised by related to financial expenditure management so the AGSA, including the issue of material restatements.

In that material misstatements are identified prior this regard, the Department has issued a bid to appoint a to the next annual financial statements are consultant with extensive experience in preparing annual submitted to the Auditor General.

financial statements to assist with third level checking.

6.2.4.
6.2.4.

Ensure that the Department of Home The Department of Home Affairs currently has 412 offices Affairs assess the financial viability of more nationwide and has a dependency on the Department of offices at malls across the country because of Public Works & Infrastructure with regards to financial the large number of people and convenience at viability on entering into leases agreements or construction malls compared to the security risks before the of offices.

next budget allocation.


To determine its financial viability of establishing offices in malls, the Department is in the process to gathering spatial information of all malls in the country, including, geographic coordinates with an aim to conduct comparative analysis with the approved DHA Hybrid Access Model which contains the total number of optimal locations for the department's offices.

This exercise will determine the malls which are in optimal locations to cover the department's 64 352 population.
Further analysis to determine financial viability of the mall locations for the establishment of DHA offices will be determined.

Treasury Regulation 16A6.4 deviation on 6 December 2021 to allow the Department to conclude negotiations with the owners of Menlyn Mall for the necessary space on a 5 year rent-free agreement.

6.2.5.
6.2.5.

Assess and report within 6 months to the Criminal Assets Recovery Account (CARA) funding is Committee on the cost and benefit of having being sourced for the installation of security cameras as security cameras, security services and cash there is currently no budget for this exercise.

collection for the staff and clients at vulnerable DHA offices.

Private security services will be decentralised to the nine (9) Provinces effective 1April 2022 along with its budget.
This will ensure better management of the SLAs by Provinces.

A decision has been taken to replace night guards with alarm systems inclusive of armed response.

Cash-In-Transit is allocated a R6m budget which will also be decentralised to offices effective 1April 2022.

The Department is however encouraging offices to go cashless in order to do away with or minimise this service; some offices are already cashless.
The Department already has a service provider on contract that provides cash-in-transit services.

The purpose of this service is to collect cash at frontline offices and bank such cash.

In order to reduce the cost of cash-in-transit services and the risk of staff and clients facing armed robberies, the Department is moving towards cash-less offices.

All offices already have card machines and encourages clients to pay by card.
The Department cannot afford to increase the number of private security officers deployed at its offices.

In this regard, the Department intends to phase out the night and weekend shifts in the 2022/23 financial year by installing alarms and procuring armed reaction services linked to the 65 353 alarms.

A cost benefit analysis will be submitted to the Committee in the 2022/23 financial year.

6.2.6.
6.2.6.

Ensure that the Department of Home The landlord completed the necessary repairs at the Bara Affairs works with landlords to ensure that the Mall.

The Department must now do the internal renovations Bara Mall Office is renovated and reopened as and counter installations prior to the office opening for the soon as possible.

public again.

A new bid for office renovations and counter installations was issued in 2021 and the bid is now subject to a pre-award review.
It is expected that this pre-award review will be concluded by 31January 2022.

Once the service provider is in place, the necessary renovations and installations can start.

Officials that used to work in this office were redeployed to the Baragwanath Hospital.

6.2.7.

A further update on the contention around The Department contract with EOH on branch server the extended contract with EOH Mthombo support lapsed.
The contract was previously extended as a (PTY) Ltd. Must be presented to the Committee result of three failed bids and no award could be made within 6 Months of this report.

because the internal audit and bid adjudication committee didn't agree with the recommendations of the bid evaluation committees.

The department will present the details to the Portfolio Committee in 2022 when such a matter is scheduled on the programme.

6.2.8.
6.2.8.

Ensure that the Department of Home Gauteng Province has requested a renewal of the lease Affairs secure a big enough office space and agreement with additional space from Public Works and are staff contingent for the Mamelodi office.

depending on the process or time frame from Public works.
Pending the approval from Public Works for development of an additional space, the Department has established and connected an operational service point at the Mamelodi hospital that is doing birth and death registration.

This will assist in reducing the volumes in visiting the Mamelodi office.

The department has a capacity challenge with the capping of its COE ceiling for the Medium Term Expenditure Framework.
The implications of not being able to recruit replacement for natural attrition posts has been highlighted to National Treasury and other forums, with the understanding that the prospect for budgetary interventions remains constrained.

66 354 6.2.9.
66 354 6.2.9.

Increase the progress made in the The department has not made much progress in the modernization of all Home Affairs offices and modernisation of additional offices due to the limitation of report on the progress in this regard in the next floor space in those offices.

The Property management team quarterly report.

is currently in the process of relocating some offices to areas that can allow for the modernisation of those offices and the details will be provided on an ongoing basis.
6.2.10.

The relevant planning and risk The department has a planning unit and a risk committee committees needed to be established or made that is fully functional.

The Branch Counter Corruption and more efficient in preventing and addressing Security Services works with the Risk Management unit to security challenges including rapid deployment look as threats and vulnerabilities in various areas of the of more Mobile units.

department including offices and mobile units.

6.2.11.
6.2.11.

It was noted that although management In instances where offices experience high volumes of of social distancing was occurring at offices, it clients, Office Managers deploy Immigration Officers needed to be monitored in the event of periodically to monitor and manage the queues.

In addition, increased demand arising.

where possible front offices solicit support from Municipalities to provide EPWP officials to assist in managing the queues.
In the case of extreme where unusually high volumes of clients is experienced the Department extends its operating hours for a specified period, in order to deal with the demand.

Based on historical experience of high influx of clients, during festive season, school opening and Easter season, the Department arranges for extended operating hours during such periods, to eradicate long queues.
The Department is also employing mechanisms to address staff attendance at a particular time to lessen new Covid-19 infections and to guarantee observations of Covid-19 protocols in all offices.

6.2.12.

The Committee welcomed the dual The partnership with Dimension Data has come to an end as connectivity links at several offices and the Dimension Data's contract with SITA has expired.
installation of power generators at 196 offices However, the work with SITA on the Strategy and but urged the DHA to increase this number.

The Investment Plan for Uninterrupted Networks still Department must also report on the partnership continues.

with SITA and Dimension Data to resolve the network connectivity within the 24 months The technology refresh of network equipment (routers and target as specified in the 2019/20 Annual switches) is ongoing.
The new procurement cycle for 67 355 Performance Plan.

routers and switches is currently at specification stage.

The procurement process for the appointment of service providers for the extension of SITA network routes, including the upgrades of SITA switching centres, is currently in progress and awards should be made by 30 September 2022 as indicated by SITA.

6.2.13.
6.2.13.

The Department should be advised to The 2021/22 audit action plan was approved by EXCO on 8 develop and implement an action plan to December 2021.

This plan addresses all findings raised by prevent irregular expenditure.

the AGSA, including the issue of irregular expenditure.

6.2.14.

Disciplinary actions to be pursued and All cases that are reported to the Branch that warrant further Cases should be opened with the Directorate for criminal investigation are referred to the SAPS.
Priority Crimes Investigations (The Hawks) to address corruption, theft or fraud more earnestly before the next annual report.

6.2.15.

The DHA should continue progress In this regard, the Department has an Optimisation roll-out towards registering births at all health facilities strategy to ensure connectivity and automation at all health in the country to prevent Late Registration of facilities with maternity wards.

To this end, One thousand Birth.


four hundred and forty-five (1445) public health facilities with maternity wards have been identified to roll out the online birth registration system.

This will enable the department to capture births and deaths immediately when and where they occur.

The plan in this regard is staggered over a 5-year period and is envisaged to be completed by 2024/25.

The plan categorises these health facilities according to priority ranging from 1to 5.
Priority 1being a health facility where the annual birth occurrence is 5000 and above, Priority 2 being 2000 up to 5000, Priority 3 being between 1000 and 2000, Priority 4 being between 500 and 1000 and lastly Priority 5 where less than 500 births occur per annum.

Thus far 41 Priority 1health facilities were completed during 2019/20 financial year and they can issue a birth certificate on the spot.
Out of the 120 priority 2 &3 health facilities, 83 were capacitated with online birth registration and can issue a birth certificate on the spot.

Out of the 120, only 21 were refurbished since the space occupied is adequate for a hospital service point and 99 could not be 68 356 refurbished due to space and budget constraints.

6.2.16.
6.2.16.

Report by April 2022 on all relevant The transfer of personnel, budgets, assets and liabilities departments transferring the required staff and from relevant organs of state to the BMA requires the budget to BMA.

listing of the BMA as an autonomous Schedule 3A Public Entity.

It is planned that the BMA will be listed in the 2022/23 financial year and the transfer of personnel,budgets, assets and liabilities will take place at the start of the 2023/24 financial year.
The requirements for the listing process have been initiated and a progress report on developments in this regard will be provided to the Committee.

6.2.17.

The upgrading of key Ports of Entry The Presidential Infrastructure Project has enlisted this should have prioritised timeframes and progress Project as a priority project.

A Request for Proposal (RfP) be reported to the Committee by the will be issued to the market in due course.

end of June 2022.
end of June 2022.

In this regard, a final draft RfP has been finalised however, three key issues require finalisation before the document can be issued to the market for bid responses, i.e.

the legal mandate of the DHA/BMA to procure the project; the user fee collection mechanism; and land availability for the project.

The DHA is addressing these issues with the support of relevant stakeholders.
Government Printing Works - Issues Outstanding from the 2020 & Previous Budget Review Recommendation Reports 6.1.8.

The GPW should report on the GPW and the DHA's legal team developed a stakeholder implications of introducing legislative engagement plan where both national and provincial provisions for ring-fencing of certain departments have been consulted on the content of the government printing work prior to the tabling of Security Printing Bill.

such legislation at Parliament.


The legislative provisions for ring-fencing of State security documents will only be introduced when the Security Printing Bill is tabled in Parliament.

GPW is awaiting an MA to be concluded between National Treasury and DPWI so that it can facilitate the handing over of the Master Plan project to the DBSA.

69 357 6.1.10.
69 357 6.1.10.

Ensure that the State Security Printers Consultation on the Security Printing Bill could not be Bill is submitted to Parliament by the end of the concluded because DHA receive a legal advice from the 2019/20 financial year.

State law advisors office that consultations on the Bill had to be extended to the provincial departments and it should also be tabled at the NCOP.
This prolonged the consultation programme beyond what was anticipated, hence the Bill could not be tabled by the end of the 2019/20 financial year.

The consultative process with provincial departments is currently underway.

Government Printing Works - 2021 Recommendations 6.2.18.
The GPW should attempt to table their GPW plans to table its Annual Report by the required time 2021/22 Annual report before May 22 and frame of September 2022, however, it has made an report on those being held responsible for the undertaking that it will table two sets of financial statements loss of financial data without the relevant by the end of May 2022. backups being in place.
An investigation is underway by the Ministerial Review Panel to establish the causes of systems failure and subsequent data loss.

GPW will hold those responsible for the financial data loss without relevant backups, responsible and accountable.

6.2.19.
6.2.19.

In its next presentation to the GPW management has developed a post audit action plan as Committee, the GPW management must well as the audit matrix which has been categorised per account for how they have addressed their branch to ensure resolution of all audit findings by all outstanding audit findings.

branch heads.

A Report on the resolution of findings will be presented to the Committee in the next GPW's presentation.

6.2.20.
6.2.20.

The GPW management must be held to The financial statements for 2019/20 have been submitted, account for extensive delays in their 2019/20 audited and tabled.

financial statements due contesting their audit findings by the AG several times.

6.2.21.
6.2.21.

The Government Printing Works (GPW) Continuous efforts are put in rebuilding the relationship executive management and labour are urged to with organised labour as follows: continue work towards improving their working DBC quarterly meetings have been revived with organised relationship to ensure a conducive work labour and a resolution was take to also revive the environment prior to tabling of the 2021/22 Bilateral meetings have also been revived.

annual report.
annual report.

EXCO held 3 consultation meetings with organised labour to review the proposed organisational structure.

However, despite all the above efforts, the PSA is still 70 358 contemplating to go on a strike over the issue of benchmarking for salaries, so that GPW management can then increase salaries of all GPW officials.
Management met with officials per branch between August and October 2021,and amongst others, explained the project of benchmarking for salaries at GPW which was concluded and closed.

Management further explained that neither GPW's CEO nor DHA's Minister have the mandate and jurisdiction to negotiate salary increases for GPW officials alone.
It was clarified that GPW is a government component which is equally bound by the broader collective agreements negotiated by the DPSA as the employer representative together with other recognised unions at the PSCBC.

GPW has been developing the picketing rules in response to those developed by the PSA on the same matter of benchmarking for salary increases.

6.2.22.
6.2.22.

The committee urged the GPW to This recommendation of the Portfolio Committee of Home amplify their engagements with the Department Affairs is the same as Recommendation 6.1.9 above.

of Public Works and Infrastructure to expedite the overhaul of the entire operational system to As reported GPW is awaiting an MA to be concluded meet requirements.
between National Treasury and DPWI so that it can facilitate the handing over of the Master Plan project to the DBSA as an implementation agent of the Master Plan.

More positions have been added in the proposed structure currently already approved by Minister of DHA and awaiting concurrence by the Minister of the DPSA in the process of being recruited on fixed term contracts to advise and support GPW on this project.

6.2.27.
6.2.27.

The GPW should have revised their The revised structure has been approved by Minister of organisational structure prior to the tabling of DHA and is currently submitted for concurrence by the their 2022/23 Annual Performance Plan/Budget.

Minister of DPSA.

The proposed structure has been incorporated into the 2022/2023 ENE submission and forms part of its Compensation of Employees budget.
A phased approach to 71 359 implementation has been adopted Electoral Commission - Issues outstanding from 2020 and prior BRRR 6.1.12.

Provide detailed motivation and budgets A detailed business case analysis of historical rental costs for the procurement of permanent headquarters vs the option of buying has been performed.

Based on the rather than continued payment of considerable analysis the option to buy is more feasible and economical rent prior to the end of the current lease for the fiscus.
agreement and in view of medium to long term financing.

6.1.13.

The IEC should work more closely with The Electoral Amendment Bill effecting the amendments the Minister of Home Affairs and Cabinet in ordered by the Constitutional Court has been submitted to ensuring that the Amendments to the Electoral the Portfolio Committee on Home Affairs for further Legislation regarding Independent Candidates consideration and processing.
recommended by the Constitutional Court are tabled as a matter of urgency before the end of October 2020.

Failing which the Minister and IEC must copy the Committee in on its correspondence to the ConCourt that it is likely to need an extension of the deadline set to effect these amendments.

6.1.14.
6.1.14.

The IEC should consider more online The Electoral Commission has already implemented and conventional media alternatives to measures to compensate for loss of face to face Outreach compensate for loss of face to face outreach opportunities.

These entail increased use of Radio programmes.

programs.

In this regard 312 slots were utilised across various community radio stations from November 2020 through to end October 2021.
Additionally, SABC Education had 2 sessions weekly in all their radio stations dealing with civic content related to electoral democracy.

Lastly content was packaged into animated short videos that were circulated on social media platforms and on TV news channels.

Electoral Commission - 2021 recommendations 6.2.29.
The lack of finances needed to retain The Electoral Commission would appreciate further employment of some permanent staff and make interaction to fully appreciate the recommendation of the 92 appointments as well as inadequate training Committee.

contributed to the challenges that were identified during the 2021 LGEs.

This must be 72 360 addressed in the upcoming 2022 budget application to National Treasury.

6.2.30.
6.2.30.

The IEC should explain the outstanding The Electoral Commission enhanced its controls and measures it will implement to ensure that implemented remedial actions regarding past irregular irregular expenditure is prevented prior to its expenditure, which is reflected in that for the current year presentation on its budget to the Committee in there were only three instances of irregular expenditure (R 2022.

69 000) relating to procurement.


Immediate remedial action was taken and new templates implemented to prevent re occurrence.

The other irregular expenditure resulted from an isolated incident involving the internal audit panel.

Re-training will be provided and appropriate remedial action will be taken to prevent re-occurrence aligned with the Electoral Commission policies.

6.2.31.
6.2.31.

The IEC must specify the details of the Note 49.2 is an analysis of the irregular expenditure (R amount of around R52 million of "other non 59,937,068) disclosed in note 49. compliant matters" on page 147 of the annual report under note 49.2.

The balance of the R52 million of other compliance matters relates to previous years (opening balance) and the current year balance of irregular expenditure.

Note 49.1 explains R40.4 million of the balance in question.
The non-compliance relates to an isolated incident involving the allocation of work in the internal audit panel.

The balance of Rll.4 million relates to historic irregular expenditure which has been investigated and for which condonation will be I has been requested.

The irregular expenditure relates to historic procurement matters for which remedial actions were put in place.

The majority of the irregular expenditure relates to rental of local offices through municipalities.
This irregular expenditure is incurred due to no fault of the Electoral Commission but due to difficulties in getting some municipalities to finalise lease agreements and issue invoices for rental due to them as lessors to the Electoral Commission.

Due to 73 361 operational requirements, the Electoral Commission requires local offices and has requested assistance from National Treasury to conclude a compliant process to remove the irregular expenditure.

6.2.32.
6.2.32.

The IEC in collaboration with key As part of its evolving research agenda, the Electoral stakeholders will need to further improve to Commission will commission research to understand the ensure that more eligible South African's are on factors influencing registration and participation intention.

the voters roll and participate in elections during This will be key in crafting strategies and campaigns for the upcoming National and Provincial Elections future elections.

scheduled for 2024.
scheduled for 2024.

6.2.33.
6.2.33.

The IEC need to increase innovative Some of the measures implemented relate to collaboration measures together with its stakeholders with the Department of Basic Education to infuse (political parties and civil society) to address the democracy education in to schools including the continuing decline in voter participation, institutionalization of a flagship school democracy project particularly amongst the youth, prior to the to coincide with the commemoration of democracy month.
2024 National Elections.

Outputs of the project are school based voter registrations and democracy education.

A cooperation framework has been agreed with Universities and TVET colleges for the use of digital platforms to disseminate electoral democracy content, opportunities for voter registration using the online platforms.

In the same light the University community is being encouraged to avail itself for roles as electoral staff and or observers during election events.
Traditional Outreach means in partnership with disability associations, institutions of traditional leadership, youth organizations and labour formations are maintained.

6.
6.

COMMITTEE’S RECOMMENDATIONS Based on findings mentioned in this report during the oversight and engagement with the Department of Home Affairs (DHA), the Electoral Commission (IEC) and the Government Printing Works (GPW); the Portfolio Committee on Home Affairs recommends that the Minister of Home Affairs should: 74 362 6.1 Issues outstanding from the 2021 and previous Budget Review and Recommendation Reports The Department of Home Affairs 6.1.1.
Strive towards a clean audit opinion and better adhere to in-year audit plans.

In particular, the impairment of departmental revenue in collecting of penalties, issues of significant contingent liabilities and the reduction of irregular expenditure.

Progress on audit plans and the Auditor General Management Letter must continue to form part of all future quarterly performance reporting to the Committee.

6.1.2.
6.1.2.

The Minister of Public Works and Infrastructure should ensure that all officials and others who were found to have acted in the illegal procurement process of the Beit bridge fence are held accountable.

6.1.3.

The Committee welcomed the dual connectivity links at several offices and the installation of power generators at 196 offices but urged the DHA to increase this number.
The Department must also report on the partnership with SITA to resolve the network connectivity within the 24 months target as specified in the 2019/20 Annual Performance Plan.

6.1.4.

Assess and report to the Committee, on the report findings on cost and benefits of having security cameras, security services and cash collection for the staff and clients at vulnerable DHA offices.

6.1.5.
6.1.5.

Revive and expand current provision of services to clients on Saturdays and after 4pm in negotiation with National Treasury for funding and trade unions for staff interests prior to the end of the 2019/20 financial year.

Consideration, in this regard should be given to the lost productive time for learners, businesses and employees as well as the essential nature of the services.

The Government Printing Works 6.1.6.


The GPW should report on the implications of introducing legislative provisions for ring-fencing of certain government printing work prior to the tabling of such legislation at Parliament.

6.1.7.

Ensure that the State Security Printers Bill is submitted to Parliament by the end of the 2019/20 financial year.

6.1.8.
6.1.8.

The Committee notes that a police investigation is underway regarding the missing Curriculum Vitae’s (CV’s) of advertised posts which were supposed to have been filled.

However, the Minister of Home Affairs should hold the Acting CEO accountable for the missing CV’s.

The Committee 75 363 expect a report from the Acting CEO on the actions taken against those responsible for safeguarding the CV’s.

6.1.9.
6.1.9.

The GPW should attempt to table their 2021/22 Annual report before May 22 and report on those being held responsible for the loss of financial data without the relevant backups being in place.

6.1.10.

Regarding human resources in the IT environment, the committee urged GPW to develop a strategy to augment skills and capacity, to ensure sustainability in the long run.

The Electoral Commission 6.1.11.


Provide detailed motivation and budgets for the procurement of permanent headquarters rather than continued payment of considerable rent prior to the end of the current lease agreement and in view of medium to long term financing.

6.1.12.
6.1.12.

The IEC in collaboration with key stakeholders will need to further improve to ensure that they meet their annual targets to register the 10 million unregistered eligible South African’s to participate in elections during the upcoming National and Provincial Elections scheduled for 2024.
6.2 Budget Review Recommendations 2022 Based on the continuous engagement with the Department of Home Affairs, the Government Printing Works and the Electoral Commission for the 2020/21 financial year, the Committee recommends the following to the Minister of Home Affairs to report back within 6 months of the tabling of this report: Department of Home Affairs 6.2.1.
The Department of Home Affairs should ensure that the registration of births is improved to be within the confines of the legislation and to not delay the issuance of the Unabridged Birth Certificates within 8 weeks.

6.2.2.

The DHA should report on the roll out of modernising their remaining 214 offices to ensure that citizens can apply for the Smart Cards and the Committee will oversee this in person.
There should be a stage where the issuance of the green ID Book should be stopped, including for naturalised citizens, because it was vulnerable to fraudulent activities.

6.2.3.

The Department of Home Affairs should roll out the Branch Appointment Booking System to all offices and expand this to include collection of documents.

76 364 6.2.4.

The applications for passports and Identity documents (IDs) through the banks should also be rolled out further to alleviate the long queues at DHA offices.

6.2.5.
6.2.5.

More budget should be allocated to expand mobile units with reliable network connectivity to be dedicated to schools and the elderly.

An annual or bi-annual schedule of mobile unit visits to schools should be drawn up in advance and children at the schools who are unable to apply for birth certificates or IDs on the day of the mobile unit visit should be referred by DHA to their nearest Home Affairs office.
The Home Affairs office must work with the Department of Basic Education and the Department of Social Development to proactively assist these children with social support and/or assist indigent fathers with free DNA testing should this be preventing the child from registering their birth.

6.2.6.

The DHA should ensure that it reduces irregular expenditure and complies with the related legislation when executing its mandate.

6.2.7.
6.2.7.

Ensure that the DHA continues to develop their audit action plans to address the negative findings identified by the Auditor-General.

6.2.8.

The DHA must improve the eHomeAffairs system and contact centre response times.

In addition, the DHA should improve on its coordination of responding to queries raised by the public and the Committee more timeously.

At the root of these challenges is the DHA ensuring that it meets its service delivery targets on issuing of documents in time.

6.2.9.
6.2.9.

The Department of Home Affairs should ensure that the hiring of the 10 000 youth to work on the scanning project is completed without unnecessary delay and report to the Committee, within 3 months, progress on this project.

6.2.10.

The DHA should provide an update on how it is addressing its on-going IT challenges, system down-time, long queues and lengthy waiting times at its offices.

6.2.11.
6.2.11.

The Minister should ensure that the findings of the Ministerial Task Team on the validity of permits, are developed into a remedial action plan.

6.2.12.

The Department must table an action plan on revision of the Immigration Policy regime to address the country's immediate immigration challenges, including the prevalence of fake IDs, passports and undocumented migrants, while ensuring that the BMA continues to be made fully operational without further delay.

77 365 6.2.13.
77 365 6.2.13.

The DHA should update or develop a new policies that will ensure it collects fines from transport operators that breach immigration laws.

6.2.14.

The DHA should ensure that it intensifies its fight against fraud and corruption within the department and that officials are referred for sanction and prosecution.

Government Printing Works (GPW).

6.2.15.


GPW should work closely with National Treasury, the DHA, SITA and the Auditor-General to ensure that the Annual Report and Financial Statements for the 2021-22 financial are submitted to the Auditor General and Parliament as soon as possible and ensure that the 2022-23 financials are submitted on time.

6.2.16.
6.2.16.

The Minister of Home Affairs should ensure that all the recommendations of the Ministerial Review Panel Report on the Data loss at GPW are implemented, particularly the consequence management, upgrade and maintenance of IT infrastructure and multiple redundancy backups.

6.2.17.

The Minister of Home Affairs and GPW should aggressively market GPW products to the African market and other parts of the world.

6.2.18.
6.2.18.

The Minister of Home Affairs and the GPW should complete reviewing all the evergreen contracts as a matter of urgency.

6.2.19.

The Committee will refer the GPW audit outcomes and loss of data to the Standing Committee on Public Accounts (SCOPA) for further oversight of its governance and the implementation of recommendations by AG, Treasury and GPW.

The Electoral Commission (IEC) 6.2.20.


The IEC must expand and report on the impact of its outreach and education to mobilize more young people to vote.

Political parties should be engaged to be more directly involved in such outreach.

6.2.21.

The IEC must report back within 6 months on addressing the remaining R66 million in uncondoned irregular expenditure.

78 366 6.2.22.
78 366 6.2.22.

The IEC must address the technical and training issues with the new Voter Management Devices well before the 2024 National and Provincial Election.

Training, particularly of temporary staff, should ensure that there is better uniformity of implementation of legislation and regulations at voting stations without political bias.

6.2.23.

The IEC must address the issue of some voters being removed from the voters' roll without being informed.

6.2.24.
6.2.24.

The continued IEC clean audit is commendable and focus should now be directed to improve performance against targets, which have remained at around 75% over the last few years.

6.2.25.

The IEC should continue to collaborate with Government Printing Works to print as much of the ballots as possible in the upcoming National Elections.

6.2.26.

The IEC must rectify that some special votes that were registered, were not visited by IEC officials to complete their votes.

Report to be considered.


79 367 8.

BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON TOURISM, DATED 25 OCTOBER 2022 The Portfolio Committee on Tourism (hereafter referred to as the Committee), having considered the financial and non-financial performance of the Department of Tourism (hereafter referred to as the Department) and South African Tourism (hereafter referred to as SA Tourism) for the 2021/22 financial year, reports as follows: 1.
INTRODUCTION The tourism sector plays a critical role in boosting the economy of South Africa through foreign currency earnings.

The sector is also of paramount importance in diplomacy as it interacts with a myriad of international markets, which improves the political and economic ties of South Africa with many countries.
The economic and political diplomacy of tourism is ever increasing as the country now participates in a number of international platforms such as the United Nations World Tourism Organisation (UNWTO); Indian Ocean Rim Association (IORA), G20, BRICS, African Union, and many other international bodies.

The Committee is conducting oversight over the Department and SA Tourism to ensure that the constitutional mandate of the portfolio is fulfilled.
The COVID-19 pandemic created an environment unconducive for the Department and SA Tourism to fulfil their mandates in the 2021/22 financial year, as South Africa was under the Disaster Management Act and operating under various alerts as per the Risk-Adjusted Strategy adopted by the Government.

Other markets also introduced lockdown levels and travel bans to curb the impact of the pandemic in their jurisdictions.
The National Treasury also introduced a procurement ban based on the Constitutional Court judgement on the Preferential Procurement Regulations of 2017.

The misinterpretation of the ConCourt judgement led to substantial delays in implementing projects and programmes tabled in the Annual Performance Plans.

This, coupled with operational deficiencies in the Department and SA Tourism culminated into a substandard financial and non-financial performance of the portfolio in the period under review.
Despite these operational realities, the overall audit outcome for the tourism portfolio has improved from the prior year.

The 1 368 Department and SA Tourism received financially unqualified audit opinions with findings on compliance with key legislation.

Having considered the Annual reports of the Department and SA Tourism, the Committee tables this report to provide the financial and non-financial performance of the institutions in the 2021/22 financial year.
1.1 Mandate of the Committee The Portfolio Committee on Tourism is an extension of the National Assembly, and derives its functions from Rule 227 of the National Assembly.

The Committee is established by Section 57 (2) (a) of the Constitution of the Republic of South Africa (Act 108 of 1996) as read with Rule 225 of the National Assembly.
1.2 Core functions of the Department The Tourism Act (Act 3 of 2014) outlines the mandate of the Department as to promote the growth and development of the tourism sector; promote quality tourism products and services; provide for the effective domestic and international marketing of South Africa as a tourist destination; enhance cooperation and coordination between all spheres of government in developing and managing tourism; and promote responsible tourism for the benefit of South Africa and for the enjoyment of all its residents and foreign visitors.
The Department and SA Tourism execute their mandates through a plethora of legislative, policy, and strategic frameworks aimed at developing and marketing South Africa as a competitive and preferred tourism destination.

The policy, legislative and constitutional imperatives that drive tourism are as follows: 1.2.1 Constitutional and Legislative Mandate The Constitution of the Republic of South Africa (Act 108 of 1996) explicitly outlines the concurrent function of tourism in the country.
Part A of Schedule 4 of the Constitution lists tourism as a functional area of concurrent national and provincial legislative competence.

Part B of Schedule 4 lists local tourism as a local government competency.

The concurrent nature 2 369 of the tourism function has its challenges that can only be addressed through cooperation and collaboration amongst the three spheres of government in the country.

At a legislative level, the Tourism Act of 2014 (Act No.
3 of 2014) enjoins the Minister of Tourism to perform specific tasks to drive tourism policy and strategic direction.

The Committee is still awaiting the introduction of the Tourism Amendment Bill to Parliament by the Minister of Tourism to address the legislative and policy gaps that have been identified in the current enabling Tourism Act.

As indicated in the previous year, the Tourism Amendment Bill will be drafted once the Department has finalised the policy review process which is currently underway.
1.2.2 Policy mandate The policy framework that informs the work of the Department includes the White Paper for the Development and Promotion of Tourism in South Africa, 1996; the National Development Plan (NDP) 2030; the National Tourism Sector Strategy (NTSS); the Medium Term Strategic Framework (MTSF: 2019-2024); Re-imagined Industrial Strategy; and Tourism Sector Recovery Plan (TSRP), as outlined below: 1.2.2.1 White Paper for the Development and Promotion of Tourism in South Africa (1996) The White paper provides the framework and guidelines for tourism development and promotion in South Africa.
1.2.2.2 National Development Plan (NDP) The NDP is the 2030 vision for the country.

The NDP recognises tourism as one of the main drivers of employment creation and economic growth and envisages the promotion of South Africa as a major tourist and business events destination.

1.2.2.3 National Tourism Sector Strategy (NTSS) The NTSS is a blueprint for the tourism sector and sets bold commitments for the sector.
The NTSS advocates for a coherent approach to promoting South Africa as a preferred destination of choice.

3 370 1.2.2.4 Medium Term Strategic Framework (MTSF: 2019-2024) The MTSF is the manifestation of the implementation of the NDP Vision 2030 and the implementation of the electoral mandate of the Sixth Administration of government.
It recognises tourism as a national priority sector that can play a key role in the country’s economic transformation, addressing unemployment challenges and developing a better Africa and world.

1.2.2.5 Re-imagined Industrial Strategy This strategy identifies tourism as one of the seven national priority sectors.
1.2.2.6 Tourism Sector Recovery Plan (TSRP) The TSRP sets out interventions to ignite the recovery of the tourism sector, and to place it on the path to long-term sustainability whilst contributing to the implementation of the Economic Reconstruction and Recovery Plan (ERRP).

1.2.6.7 State of the Nation Address The 2022 State of the Nation Address was premised on the three profound insights that were noted by the Committee in its oversight work to expedite the recovery of the sector.
These are (i) In these moments, there is both the prospect of great progress and the risk of reversal, (ii) Today, we are faced with such a moment, and (iii) The path we choose now will determine the course for future generations.

Amongst other things, the government intended to end the national state of disaster that was crippling the sector.
The President also announced that the government was streamlining and modernising the visa application process to make it easier to travel to South Africa for tourism, business and work.

In line with the commitment made in the 2021 SoNA, the eVisa system had been launched in 14 countries, including China, India, Kenya and Nigeria.
4 371 1.3 Strategic Outcome Oriented Goals of the Department and Delivery Agreement targets for 2021/22 In line with its vision of complementing the national priorities, the Department identified objectives that would accelerate the delivery of services in the tourism sector.
Outlined below are the strategic outcomes of the Department, as stated in the 2020/21 – 2024/25 Strategic Plan, which correlate with Government’s Outcomes, namely: Table 1: Strategic Outcome-Oriented Goals which correlate with Government Outcomes MTSF Priority Priority 1: Building a capable, ethical and developmental State Improved governance and accountability.

MTSF Outcome • Departmental outcome Achieve good corporate and cooperative governance.
Priority 2: Economic Transformation and Job creation • Functional, efficient and integrated government Re-industrialisation of the economy and emergence of globally competitive sectors.

Priority 7: A better Africa and world Growth in tourism sector resulting in economic growth.

Source: Department of Tourism Strategic Plan 2020/21 – 2024/25 Increase the tourism sector’s contribution to inclusive economic growth.

Increase the tourism sector’s contribution to inclusive economic growth.
In response to the above, the Department has adopted several initiatives.

These include: Priority 1: Capable, Ethical and Developmental State • The Department has implemented a comprehensive Risk Management Strategy and the Combined Assurance Model for both Financial and Performance information.

• It has also implemented an Audit Action Plan to address the audit outcomes from the 2020/2021 financial year.
This will be followed by a comprehensive review in 2022/2023 to strengthen the Systems of Internal Controls focusing on preventative and corrective controls.

Priority 2: Economic Transformation and Job Creation • The Department continues to implement the Tourism Sector Recovery Plan (TSRP), which acknowledges the need for targeted and coordinated action to mitigate the 5 372 impacts of the COVID-19 pandemic.
The Plan sets the sector on the most optimal path to recovery, transformation and long-term sustainability.

• The TSRP is also aligned with the Economic Reconstruction and Recovery Plan (ERRP), the country’s plan for overall economic recovery.

The ERRP re-affirms tourism’s position as a major contributor to the South African economy and its envisaged role in the broader economic reconstruction and recovery effort.
Priority 7: A better Africa and World • The Department monitors the Brand Strength, international tourist spending and growth in international tourist arrivals.

• This is to address reputational risks and strengthen bilateral relations with the relevant country counterparts.

1.4 Purpose of the Budgetary Review and Recommendation Report The Budgetary Review and Recommendation Report (BRRR) compilation process is governed by the Money Bills Amendment Procedure and Related Matters Act (Act 9 of 2009).
The Act sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department.

In October of each year, the Committee must compile the BRRR that assesses service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on forward use of resources.
The BRRR also acts as a source document for the Standing/Select Committees on Appropriations/Finance when making recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS).

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

1.5 Method The Minister of Tourism tabled in Parliament the Annual Reports for the Department and SA Tourism.
The Committee then scheduled a series of meetings to scrutinise and get more insights into the financial and non-financial performance of the tourism portfolio in the year under review.

On 11 October 2022, the Committee convened a meeting with the Office of the 6 373 Auditor-General in the morning, and met the Department in the afternoon.

On 18 October 2022, the Committee convened a meeting with SA Tourism.
The Committee deliberated and adopted this Budget Review and Recommendation Report on 25 October 2022, in time for the tabling of the Medium Term Budget Policy Statement by the Minister of Finance on 26 October 2022.

1.6 Outline of the contents of the Report The report constitutes five parts as outlined below: (i) Constitutional, legislative and policy mandate of the Committee and the process that was followed in developing this Budget Review and Recommendation Report.
(ii) Previous financial performance of the Department on both financial and non-financial aspects.

(iii) Financial, non-financial and service delivery issues for the period under review.

(iv) Key findings from the oversight work of the Committee, public hearings and research by external stakeholders that inform the recommendations.

(v) Recommendations to the Ministers of Finance and Tourism in terms of the budgetary requirements, performance, and service delivery improvement of the Department.

2.
2.

OVERVIEW OF THE KEY RELEVANT POLICY FOCUS AREAS The main government policy direction guiding the strategies implemented by the Department and SA Tourism is the Vision 2030 of the National Development Plan.

There are various changes in the delivery environment that necessitate a policy and legislative review process.

The Department has been dilatory in finalising the policy review process signalling no sense of urgency in the matter.
2.1 Key Government policies The following policies and strategies are due for review within this medium term: • White Paper on the Development and Promotion of Tourism in South Africa, 1996.

• Tourism Act, No.

3 of 2014.

• National Grading System.


7 374 The review of the White Paper, Tourism Act and strategies will determine which aspects of these policies should be retained and which ones should be changed to enhance the tourism sector’s performance 2.2 Overview of the revised Strategic Plan and Annual Performance Plans The revised Annual Performance Plan for 2021/22 was in line with the tabled 5-year Strategic Plan.
The Department conducts its mandate through four Programmes, namely, Programme 1: Administration; Programme 2: Tourism Research, Policy and International Relations; Programme 3: Destination Development; and Programme 4: Tourism Sector Support Services.
The following are financial allocations per Programme in the revised Annual Performance Plan: • The main cost driver under this Vote is Programme 2: Tourism Research, Policy and International Relations, which consumes more than half (approximately 56.8%) of the total Vote allocation.

This is mainly due to the significant transfer to the Department’s Entity, South African Tourism.

• Programme 3: Destination Development, experienced a significant decrease of 19.16 per cent in real terms.
The major cost driver under Programme 3 is the Working for Tourism, Expanded Public Works Programme, sub-programme.

The sub-programme’s allocation also sees a decrease from R377.0 million in 2021/22 to R311.7 million in the current financial year.

• The cost driver under programme 4, Tourism Incentive Programme, also saw a decrease for the year from R275.2 million in 2021/22 to R242.0 million in 2022/23.
The Committee was concerned about the decrease, in real terms, in allocation for both Programmes 3 and 4 as these have implications for the Department’s policy priorities.

The reason for a concern is that Programme 3: Destination Development, includes activities such as route development projects, destination enhancement initiatives and infrastructure maintenance programmes.

These activities are significant as job creators and for destination product development.
8 375 2.2.1 Strategic goals The Department’s strategic focus for the financial year was on the rejuvenation of the industry as part of the Tourism Sector Recovery Plan.

Areas of focus included tourist safety and the introduction of national norms and standards for tourism businesses.

Towards tourist safety, the Tourism Monitors Programme was implemented across eight provinces.

The Monitors can be found in several attraction sites to provide assistance and support to tourists, where required.
The norms and standards for tourism businesses were developed and gazetted by the Department.

In addition, participants of the various capacity-building programmes were also trained on the norms, to ensure safe operations in tourism businesses.

The Department continued its focus on stimulating domestic tourism demand.

The domestic market has been identified as key to the sector’s recovery.
The Domestic Tourism Scheme was implemented in the Northern Cape, Gauteng and Limpopo provinces, highlighting the role and responsibility of tour operators to help contribute in making travel accessible, enabling the participation of people with modest income and previously marginalized groups in the society.

The Department also focused on promoting collaborative investment in the sector through measures such as ensuring the effectiveness of market-entry facilitation programmes.
These programmes included capacity-building programmes, such the Wine Service Training Programme and the Hospitality Youth Programme, which are aimed at the empowerment of the youth.

The Wine Service Training Programme with training on norms and standards for safe tourism operations, was implemented in Kwazulu-Natal and Western Cape provinces.

The programme was, however, not implemented in the Northern Cape province as planned.
The Department also planned to roll-out the Hospitality Youth Programme to all nine provinces, and only managed to roll it out to three.

The timely procurement of service providers was cited as the reason for the deviation.

To support transformation objectives, the Department had purposed to pilot the Tourism Equity Fund during the financial year.
The Fund is intended to support commercially viable black- owned enterprises to acquire shares in tourism enterprises; promote the visibility of small, medium and micro enterprises (SMMEs); and facilitate the development of community assets and ownership patterns.

Unfortunately, the Department was unable to achieve this objective.
9 376 An order handed down by the High Court of South Africa on 26 April 2021 interdicts and restrains the Small Enterprise Finance Agency (SEFA) from receiving, processing or making any payment under any application for funding from the Fund.

Currently, all applications and pay-outs are on hold until the matter is resolved.

2.2.2 Departmental programmes The Department was pursuing the strategic objectives and the strategic outcome-oriented goals through these four Programmes as outlined in Table 2.
Table 2: Departmental Programmes Programme of Name Programme Administration Programme 1 the Purpose of the Programme Programme 2 Tourism Policy Relations and Research, Internal Programme 3 Destination Development Programme 4 Tourism Sector Support Services and To provide strategic leadership, management and support services to management.

The sub- programmes for Programme 1 are Ministry; Corporate Management; Management; Office Financial Management; Accommodation.
To enhance a strategic policy environment, monitor the tourism sector’s performance and enable stakeholder relations.

The related strategic outcome-oriented goal is to achieve good corporate and cooperative governance To facilitate and co-ordinate destination development.

The strategic outcome-oriented goal is to increase the tourism sector’s contribution to inclusive economic growth.
To enhance transformation of the sector, increase its development and to ensure that South Africa is a competitive tourism destination.

The strategic outcome-oriented goal is to increase the tourism sector’s contribution to inclusive economic growth.

levels and support skills Source: Adapted from the Department of Tourism 2021/22 Annual Performance Plan 2.3 Overview of key developments in the organisational and service delivery environments of the Department for 2021/22 and 2022/23 MTEF cycle.
The significant developments in the period under review include, but are not limited to: 10 377 • The election of South Africa to the UNWTO Executive Council in November 2021 has positioned the country in the global system of tourism governance to enhance international response to the needs of South Africa and developing countries.
• The Department held four successful Outreach Programmes targeting the country’s Diplomatic representatives in the Americas and Europe, Asia and Australasia, the Middle East and the Southern African Development Community.
The purpose of the Outreach Programme to the Diplomatic Community was to empower South African Ambassadors and Diplomats with key information, which they used, to keep South Africa off the “Red List.” • The Global Advocacy Programme was launched to ramp up advocacy efforts in key source markets around the world.

This advocacy programme forms part of the Tourism Sector Recovery Plan.
The Global Advocacy Programme was initiated by the Department, SA Tourism and the Tourism Business Council of South Africa (TBCSA), following protracted damaging narratives and misinformation reported globally about South Africa.

• Domestic travel contributed positively to demand in the COVID-19 period, driven by campaigns and pricing targeted for the domestic market and through this exposure propelled the market to diversify its offerings.
• The Safe Travels Campaign during the 2021 festive period encouraged travellers to #Jab4Tourism and featured tourism products from across the country which supported safe travels 3.

SUMMARY OF PREVIOUS YEAR KEY FINANCIAL AND NON-FINANCIAL PERFORMANCE RECOMMENDATIONS OF THE COMMITTEE 3.1 2020/21 BRRR recommendations 3.1.1 Summary of key financial and non-financial performance recommendations made by the Committee.
11 378 There were financial and non-financial recommendations made in the 2020/21 Budgetary Review and Recommendation Report to the Ministers of Finance and Tourism respectively.

The summary of responses are as follows: 3.1.1.1 Responses by the Minister of Finance The Committee made a recommendation that “The National Treasury should work with the Minister of Tourism to determine the budget required to ensure the full recovery of the tourism sector”.
The response by the Minister of Finance was that the National Treasury will continue to engage the Department of Tourism on funding‐related issues during the annual budget process and to support efforts to enable the recovery of the tourism sector.

Over the 2022 MTEF period, the government has set aside R360 million to support the pilot phase of the Tourism Equity Fund introduced in 2021.
It is unfortunate that the Tourism Equity Fund has been interdicted and the envisaged support to the sector and transformation imperatives have been delayed.

The Committee will conduct close monitoring of the developments around the court interdict.

3.1.1.2 Responses by the Minister of Tourism The Minister tabled the responses to the 2020/21 Budget Review and Recommendation Report to the Office of the Speaker on 12 April 2022.
This complied with the letter sent to the Ministry by the Office of the Speaker dated 7 February 2022.

The Minister was requested to respond to Committee recommendations before the end of the 2021/22 financial year, 31 March 2022.
The Minister noted some of the recommendations made by the Committee, including financial recommendations that the National Treasury works with the Minister of Tourism to determine the budget required to ensure the full recovery of the tourism sector, and that the National Treasury, after determining the amount required for sector recovery, considers appropriating a special ring-fenced budget to rescue the tourism sector.
12 379 The Minister provided comprehensive responses on other recommendations made by the Committee, especially those related to the findings of the Auditor-General.

The Committee is satisfied with the responses and will continue monitoring implementation, as some matters have not been concluded, either by the Department or South African Tourism.

3.2 2021/22 Committee Budget Report In the 2021/22 Budget Report, the Committee made a number of recommendations.
These included, but were not limited to reprioritising and allocating more budget for compensation; creating collaborative partnerships; developing a tracking tool to oversee the implementation of the Norms and Standards for the safe operation of the tourism sector; considering the policy proposals made by the Committee; conduct public education on the transformation imperatives of the Broad-Based Black Empowerment Sector Code; the Tourism Sector to conduct a Trend Analysis Study to understand the future tourism imposed by the COVID-19; harmonising norms and standards on safety for travel; exploring the African Continent Free Trade Agreement for the benefit of tourism in South Africa; engage the Cabinet on the contribution expected from other government departments in unlocking the tourism potential of the country; tightening oversight over SA Tourism; prioritising Economic Modelling to leverage funding in order to augment the available budget; improving on organisational efficiencies to maximise the utilisation of available budget; conducting an Econometric Forecasting Study to determine the trends on future international arrivals to set a realistic 2030 target om international arrivals and determine the future trends of domestic trips; developing a Partnership Model that will assist South African Tourism to identify and choose partners that will add value to the business of the organisation and leverage more funding for domestic and international marketing; engage the private sector to package value for money domestic holiday packages; packaging, coordinating and intensifying communication around the South African Variant narrative of COVID-19; intensifying the work done in villages, townships and small dorpies (VTSDs) to more than three small towns for business events as the venue requirements will change due to hybrid meetings; and prioritising the thirty Community-Based Tourism projects implemented by the Department of Tourism in the marketing of activities.
13 380 The Committee has not received responses from the Minister of Tourism on how these recommendations are being implemented.

4.

OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE The Committee assessed the budget allocation and expenditure trends in the sector over the 2017/18 – 2021/22 financial years to establish the trends for Vote 38.
The assessment confirmed the trend that the Department always spends almost 100 percent of its allocated budget whilst failing to equivalently achieve the set targets.

4.1 Budget and expenditure, 2017/18 – 2021/22 The Department has had a steady increase in the allocated budget over the past five years as depicted in Table 3.

In the 2017/18 financial year the Department was allocated R2 140 156 000 and spent R2 133 976 000, which was 99.7 percent of the appropriated budget.
In the 2018/19 financial year the Department was appropriated R2 261 817 000 and spent R2 234 802 000 which was 98.8 percent of its appropriated budget.

In the 2019/20 financial year the Department was allocated R2.392 billion and was able to spend R2.384 billion, translating to 99.7 percent expenditure.

In the 2021/22 financial year the Department was allocated R2.5 billion and was able to spend 99.7 per cent.
Table 3: Overview of budgetary allocation and expenditure 2016/17 – 2020/21 % change * Voted ** % change from Adjusted Expenditure Expenditure Voted from Allocation previous Allocation (R'million) as a Year Allocation previous adjusted for year (R'million) (R'million) year inflation (adjusted (nominal) (R'million) for inflation) percentage of Adjusted Allocation (%) 2017/18 2 140 156,0 6,5% 1 824 403,68 1,5% 2 140 156,0 2 133 976,0 99,7% 2018/19 2 261 817,0 5,7% 1 827 597,32 0,2% 2 261 817,0 2 234 802,0 98,8% 2019/20 2 392 670,0 5,8% 1 837 765,58 0,6% 2 392 670,0 2 384 392,0 99.7% 2020/21 1 481 000,0 70.29% 5,0% 1 426 860,0 1 392 249,0 97,6% 2021/22 2 545 338,0 1 002.9 2 545 338 99,7% * Real change in Rand value ** Real change in percentage terms Source: Calculation adapted from previous ENEs 14 381 The Department has established a trend of spending its budget to capacity and not achieving all the related pre-determined objectives.
This is unacceptable and the trend should change to expenditure commensurate to service delivery.

5.

FINANCIAL PERFORMANCE FOR 2021/22 The financial performance of the Department in the year under review is as follows: 5.1 Financial statements for the 2021/22 financial year The Department of Tourism’s adjusted appropriation for 2021/22 amounted to R2.54 billion.

This was an increase from the initial appropriation of R2.42 billion.
Table 4: Financial Statement of 2021/22 Virements Programme Adjusted Appropriation Final Appropriation Expenditure Variance 1.

Administration 309 776 R’000 R’000 (21 280) R’000 R’000 288 496 288 496 R’000 - Expendit ure as % of final appropri ation % 100% (20 080) 1 362 571 1 382 651 2.

Tourism Research, Policy and International Relations 3.

Destination Development 4.


Tourism Sector Support Services TOTAL Source: Department of Tourism Annual Report (2021/22) 2 545 338 2 545 338 (22 838) 386 585 530 524 363 747 466 326 64 198 - 1 358 557 4 014 99.7% 527 185 3 339 99.4% 363 538 209 99.9% 2 537 776 7 562 99.7% At the end of the financial year, the Department spent R2.53 billion or 99.7 per cent of the available budget of R2.54 billion.

This translates to R7.6 million or 0.3 per cent underspending in the 2021/22 financial year.
The underspending is mainly attributable to: • Programme 2: Tourism Research, Policy and International Relations (R4 million): The bulk of this underspending lies within the Compensation of Employees due to strict policies adhered to by the Department to reduce expenditure on Salaries and Wages.

15 382 Savings under Goods and Services were mainly attributable to the effects of COVID- 19 restrictions resulting in unspent funds linked to Travel and Subsistence.
A further underspending was realised under Transfers and Subsidies for the United Nations World Tourism Organisation (UNWTO) contributions due to exchange rate fluctuation and the National Tourism Research Framework.

• Programme 3: Destination Development (R3.3 million): The bulk of this underspending lies within Goods and Services of the Expanded Public Works Programme (EPWP) as contracts could not be concluded before year-end.
Savings under Compensation of Employees was due to strict policies adhered to by the Department to reduce expenditure on Salaries and Wages.

• Programme 4: Tourism Sector Support Services (R209 000): The minor underspending within the Programme is due to unspent funds linked to the National Tourism Careers Expo (NTCE).

The costs of the event claimed by the event partner were less than the budgeted cost, resulting in a slight saving under Transfers and Subsidies.
The Department reported that the Virement between the main divisions was towards Programme 3.

Approval was granted by National Treasury in accordance with Section 6.3.1 of the Treasury Regulations.

The Department shifted R52 million from Transfers and Subsidies: Public Corporations and Private Enterprises in Programme 4: Tourism Sector Support Services to Goods and Services in Programme 3: Destination Development.
In the 2020/21 financial year, the Department managed to spend 97.6 per cent of its budget and only achieved 87.5 per cent of its annual targets.

In the 2021/22 financial period, a similar trend can be observed as the Department managed to spend 99.7 per cent of its budget while achieving only 80 per cent of its targets.

This continued discrepancy between performance and budget spending will be monitored by the Committee.
5.1.1 Quarterly spending trends The Department and SA Tourism reported their Quarter 1 and Quarter 2 performance reports at the same time.

The service delivery functions took place within an environment riddled with COVID-19 challenges.

The two organisations could not achieve some of their pre-determined objectives as these were negatively impacted by prevailing conditions.
In this context, by the 16 383 end of Quarter 1, the Department had achieved 48 (71.64%) and spent R637.9 million (26.3%) of the R2 429.6 billion budget allocation.

By the end of Quarter 2, the Department had achieved 44 (72.13%) of the 61 targets identified for the quarter, and spent R864.9 million (35.6%) of the R2 429.6 billion budget allocation.

At the end of quarter three, the Department spent R2 billion or 78.7 per cent of the available budget of R2.4 billion.
This translates to R239.9 million or 13.6 per cent higher than anticipated expenditure against the projected expenditure of R1.8 billion for the quarter.
The faster spending was attributed to faster spending on goods and services under Programme 3: Destination Development due to the finalisation of contractual agreements and payments towards Expanded Public Works Programme projects, as well faster spending on transfers and subsidies under Programme 4: Tourism Sector Support Services due to the processing of funds towards the Tourism Equity Fund.
At the end Quarter 4 (end of the financial year), the Department had spent R2.53 billion or 99.7 per cent of the available budget of R2.54 billion.

This translates to R7.6 million or 0.3 per cent underspending against the total available budget of R2.54 billion for the 2021/22 financial year.
The underspending was mainly observed in Programme 4: Tourism Sector Support Services due to an internal departmental decision to reduce expenditure on goods and services in order to reprioritise funds towards the Destination Development capital infrastructure projects.

5.2 Transfers and subsidies The Department effected the following transfers in the 2021/22 financial year.
Table 5: Financial Statement of 2021/22 Department/ Agency/ Account Adjusted Appropriation Adjustments Total Available Actual Transfer South African Tourism National Tourism Careers Expo Culture, Arts, Tourism, Hospitality and Sport Sector Education and Training Authority (CATHSSETA) Technology Innovation Agency Tourism Grading Support Tourism Equity Fund TOTAL R’000 1 297 038 4 129 181 3 000 - R’000 - - R’000 1 297 038 4 129 R’000 1 297 038 3 918 - - 181 181 3 000 3 000 15 200 15 200 15 200 - 1 304 348 242 800 258 000 242 800 1 562 348 242 800 1 562 137 Source: Department of Tourism 2021/22 Annual Report % of Available Funds Transferred % 100 95 100 100 100 100 Final Appropriation R’000 423 027 - 172 3 000 - 426 199 17 384 The Department also transferred R258 million to the Tourism Incentive Programme; R2.6 million to the United Nations World Tourism Organisation (UNWTO); R431 000.00 to the Federated Hospitality Association of Southern Africa (FEDHASA); and R4.3 million to households, incorporating R1.4 million bursaries (non-employee); R2.9 Employee Social Benefits; and R10 000.00 claim against the State (Cash).
5.3 Auditor-General Report The report of the Auditor-General is presented for both the Department and SA Tourism.

5.3.1 Auditor-General’s Report with regard to the Department of Tourism Opinion The Department received a financially unqualified opinion with findings on compliance with key legislation.

The opinion was unchanged from the previous financial year.
• I have audited the financial statements of the National Department of Tourism set out on pages 102 to 145, which comprise the appropriation statement, statement of financial position as at 31 March 2022, the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, as well as notes to the financial statements, including a summary of significant accounting policies.
• In my opinion, the financial statements present fairly, in all material respects, the financial position of the National Department of Tourism as at 31 March 2022, and its financial performance and cash flows for the year then ended in accordance with the Modified Cash Standard (MCS) and the requirements of the Public Finance Management Act 1 of 1999 (PFMA) and the Division of Revenue Act of South Africa, 2021 (Act No.9 of 2021) (Dora).
Basis for opinion • I conducted my audit in accordance with the International Standards on Auditing (ISAs).

My responsibilities under those standards are further described in the Auditor- General’s responsibilities for the audit of the financial statements section of my report.
18 385 • I am independent of the department in accordance with the International Ethics Standards Board for Accountants’ International code of ethics for professional accountants (including International Independence Standards) (IESBA code) as well as other ethical requirements that are relevant to my audit in South Africa.

I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.
• I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Emphasis of matter • I draw attention to the matter below.

My opinion is not modified in respect of this matter.

Restatement of corresponding figures • As disclosed in note 31 to the financial statements, the corresponding figures for 31 March 2021 have been restated as a result of an error in the financial statements of the department at, and for the year ended, 31 March 2022.
Usefulness and reliability of the reported performance information • I performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents.

I performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.
• I did not identify any material findings on the usefulness and reliability of the reported performance information for Programme 4: Tourism Sector Support Service.

19 386 Annual financial statements • The financial statements submitted for auditing were not fully prepared in accordance with the prescribed financial reporting framework by section 40(1) (b) of the PFMA.
Material misstatements of disclosure items identified by the auditors in the submitted financial statements were corrected, resulting in the financial statements receiving an unqualified opinion.

Other information • The accounting officer is responsible for the other information.

The other information comprises the information included in the annual report, which includes the audit committee’s report.
The other information does not include the financial statements, the auditor’s report and those selected programmes presented in the annual performance report that have been specifically reported in this auditor’s report.

• My opinion on the financial statements and findings on the reported performance information and compliance with legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion on it.
• In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements and the selected programme presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
Internal Control Deficiencies • I considered internal control relevant to my audit of the financial statements, reported performance information and compliance with applicable legislation; however, my objective was not to express any form of assurance on it.

The matter reported below is limited to the significant internal control deficiencies that resulted in the finding on compliance with legislation included in this report.
• Senior management reviewed the financial statements however the review conducted did not identify a material misstatement in the financial statements submitted for audit.
20 387 5.3.2 Auditor-General’s Report with regard to South African Tourism Opinion • I have audited the financial statements of South African Tourism set out on pages 91 to 133 which comprise the statement of financial position as at 31 March 2022, the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, as well as notes to the financial statements, including a summary of significant accounting policies.
• In my opinion, the financial statements present fairly, in all material respects, the financial position of South African Tourism as at 31 March 2022, and its financial performance and cash flows for the year then ended in accordance with Standards of Generally Recognised Accounting Practice (GRAP) and the requirements of the Public Finance Management Act 1 of 1999 (PFMA Basis for opinion • • I conducted my audit in accordance with the International Standards on Auditing (ISAs).
My responsibilities under those standards are further described in the auditor- general’s responsibilities for the audit of the financial statements section of my report.

I am independent of the entity in accordance with the International Ethics Standards Boards for Accountants’ International code of ethics for professional accountants (including International Independence Standards) (IESBA code) as well as other ethical requirements that are relevant to my audit in South Africa.
I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.

5.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Usefulness and reliability of the reported performance • I performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents.
I performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.
• I did not identify any material findings on the usefulness and reliability of the reported performance information for Programme 3: Leisure Tourism Marketing 21 388 Adjustment of material misstatements • I identified material misstatements in the annual performance report submitted for auditing.

These material misstatements were in the reported performance information of programme 3: Leisure Tourism Marketing.
As management subsequently corrected the misstatements, I did not raise any material findings on the usefulness and reliability of the reported performance information.

Annual financial statements • The financial statements submitted for auditing were not fully prepared in accordance with the prescribed financial reporting framework as required by section 55(1)(b) of the PFMA.
Material misstatements of disclosure items and explanatory information identified by the auditors in the submitted financial statements were corrected subsequently, resulting in the financial statements receiving and unqualified audit opinion.

Expenditure management • Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R6 800 498 as disclosed in note 36 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA.
The majority of the irregular expenditure was cause by failure to follow a procedure process in terms of the Treasury transcripts to invite competitive bids.

Internal control deficiencies • I considered internal control relevant to my audit of the financial statements, reported performance information and compliance with applicable legislation; however, my objective was not to express any form of assurance on it.
The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on compliance with legislation included in this report.

• Management did not address previously reported deficiencies relating to oversight of the financial reporting process, including detailed reviews of the financial statements by delegated officials, and related Internal controls.

• Management did not timeously implement measures to monitor compliance with applicable legislation.
22 389 5.4 Summary of key issues contained in reports of Finance/Appropriation Committees In the period under review, the Department and SA Tourism had no issues raised by the finance or appropriation committees.

5.5 Summary of key financial issues contained in any other relevant report(s) The Standing Committee on Public Accounts (SCOPA) did not raise any issues with regard to spending by the Department.
The issues on the COVID-19 expenditure are detailed under the Report of the Auditor-General and Committee observations.

No financial issues were identified from other sources in the period under review.

5.6 2021/22 MTEF financial allocations 5.6.1 Summary of funding submissions to the National Treasury for the 2021/22 MTEF.
The detailed funding submissions made to the National Treasury for the 2021/22 financial year were as follows: • With regard to the court interdict on the implementation of the Tourism Equity Fund: o Follows up on the court interdict against the Tourism Equity Fund and engages relevant stakeholders to understand the transformation imperative in the tourism sector.
o Adopts a counteroffensive strategy to push-back all and any malicious attempt by civil society organisations to derail the implementation of tourism transformation programmes.

• Impresses on the Cabinet to work on repealing and rescinding the Treasury Note issued on 25 February 2022 that put appointment of new service providers in abeyance as this has serious implications in the implementation of the 2022/23 Annual Performance Plan.
• Adopts a zero tolerance attitude to officials who commit fraudulent activities and apply serious consequence management to prevent any future financial maleficence.

23 390 • Provides clarity on the relief and recovery interventions the Department will implement in assisting tourism establishments that were affected by the floods in KwaZulu-Natal, northern Eastern Cape and North West provinces.

• Provide equitable budget for leisure tourism and business tourism to leverage more from both.
• Engage the Office of the President of the Republic of South Africa to relocate Brand South Africa from the Presidency to be the entity of the Department of Tourism to align marketing and brand work of the country.

6.

OVERVIEW AND ASSESSMENT OF SERVICE DELIVERY PERFORMANCE The service delivery performance assessment is presented for both the Department and SA Tourism.
6.1 The Department of Tourism The achievement in the four Programmes was as follows: Table 6: Achievement of Targets Per Programme Programme Planned Targets 16 12 1.

Administration 2.

Tourism Research, Policy and International Relations 3.

Destination Development 4.


Tourism Sector Support Services Total Source: Adapted from DoT Annual Report 2021/22 9 10 9 18 44 55 Achievement % achieved 87.5% 91.6% Total Achieved 14 11 Non Achievement % not achieved 12.5% 8.3% Total not achieved 2 1 100% 55.5% 80% 8 11 44.4% 20% Table 6 indicates that the Department was able to achieve 44 (80%) of its 55 identified targets, with 11 (20%) targets not achieved.
6.1.1 Programme 1: Administration 24 391 The purpose of this programme is to provide strategic leadership, management and support services to the Department.
Table 7: Programme 1- Administration Total Targets set Targets achieved Targets not achieved Budget allocated Adjusted budget Final Appropriation Budget spent 16 14 (87.5%) 2 (12.5%) R305.3 million R309.8 million R288.5 million R288.5 million (100%) As can be seen from the table above, the Department achieved only 14 of its 16 targets set for the financial year under this programme, while spending 100 per cent of its budget.

The mismatch between performance and budget spending needs to be queried.
The Department maintained its vacancy rate at 10 per cent as planned.

As of 31 March 2022, the Departmental post establishment was at 512, with 461 positions filled and 51 positions vacant.

Budget cuts affected the filling of posts.

In terms of staff turnover for the financial year, 57 employees exited the Department.

These include 13 (22.8%) resignations, nine (15.7%) transfers to other Departments and two (3.5%) retirements.
The Department exceeded its target on minimum representation (3%) of employees with disabilities by 1.6 per cent.

Support to small, micro and medium enterprises (SMMEs) continued, with the target of 100 per cent of expenditure on procurement from enterprises on B-BBEE status levels one to five achieved.

The Department continues to equip and sensitise employees on issues around diversity, disability management, ethical conduct and sexual harassment.
The work environment needs to be a safe space for employees.

The Department reported that the following targets were not achieved: • 50 per cent women representation at the Senior Management Service (SMS) level, as a result of both natural attrition and a restrictive budget for compensation of employees (CoE).

Women’s representation was maintained at 46.9 per cent.
The baseline for CoE was increased for 2022/23 and the Department reported that it will ring-fence the necessary posts and facilitate a process of attracting and retaining women at this level.

25 392 • 100 per cent payment of compliant invoices within 30 days.

At 95.5 per cent, the target was not achieved due to officials being late in submitting invoices to the finance office.
Amid the tourism sector’s recovery stemming from COVID-19, it is advised that this occurrence not become a trend in the Department.

The Department has indicated its attempts at strengthening internal controls around this issue.

About 28 interns are completing their 24-month internship programme with the Department.

The Department also supported 87 external and internal bursars during the 2021/22 financial period.
6.1.2 Programme 2: Tourism Research, Policy and International Relations The purpose of this programme is to enhance the strategic policy environment, monitor the tourism sector’s performance and enable stakeholder relations.
Table 8: Programme 2- Tourism Research, Policy and International Relations Total Targets set Targets achieved Target not achieved Budget allocated Adjusted budget Final Appropriation Budget spent Underspending 12 11 (91.6%) 1 (8.3%) R1 382.2 billion R1 382.7 billion R1 362.6 billion R1 358.6 billion (99.7%) R4 million As can be seen from the table above, the Department achieved 11 of its 12 targets and spent 99.7 per cent of its budget.
This results from unspent funds for travel and subsistence, strict policies applied on the compensation of employees and savings under Goods and Services.

The question that arises is whether this can be considered a saving, given that not all targets under this programme were achieved.

The Department achieved its objective of monitoring and evaluating tourism initiatives.
This was achieved through the development of reports focusing on tourism performance, the impact of COVID-19, the implementation of norms and standards and tourism recovery.

Findings from these reports inform policy and the creation of an enabling environment for private sector operations.

Unfortunately, the Department did not finalise the review of the Green Paper on the Development and Promotion of Tourism in South Africa, thus not achieving the set target 26 393 as planned for the financial year.
A delay of this nature affects the creation of an enabling regulatory environment for tourism development and growth.

The finalisation of this document will inform legislative amendments, such as addressing issues around the sharing economy, of the Tourism Act No.

3 of 2014, which can only be reviewed once the process has been finalised and the revised White Paper is adopted as the new policy of government on tourism.

The Department continued its oversight responsibility over South African Tourism.
The Entity continues to operate without a Chief Executive Officer.

The possible merger between South African Tourism and Brand South Africa continues to be elusive, with no exact dates and possible organisational structure yet presented to the Committee for engagement.

The Department was able to achieve its objective of advancing the country’s tourism priorities through participation and engagement in bilateral and multilateral processes.
This also saw South Africa securing a seat at the United Nations World Tourism Organisation’s Executive Council, placing the country in a prominent position to lobby for support for the Continent.

These fora also include South Africa’s participation in the implementation of the SADC Tourism Programme and African Union Plan of Action on Tourism.

6.1.3 Programme 3: Destination Development The purpose of the programme is to facilitate and coordinate tourism destination development.
Table 9: Programme - Destination Development Total Targets set Targets achieved Budget allocated Adjusted budget Final Appropriation Budget spent Underspending 9 9 (100%) R305.6 million R466.3 million R530.5 million R527.2 million (99.4%) R3.3 million The Programme’s final appropriation was R530.5 million in the 2021/22 financial year, the bulk of which (R377.4 million or 71.1 %) was allocated to the Working for Tourism sub- programme.
Working for Tourism consists of the Expanded Public Works Programme (EPWP) and Expanded Public Works Incentive Programme.

27 394 The Department achieved all of its targets set for the programme and spent 99.4 per cent of its budget.

The Department attributes the underspending within Goods and Services of the EPWP, as contracts could not be concluded before year-end; including savings under Compensation of Employees (CoE) in the programme.
The Department reported that prioritised initiatives from the tourism spatial masterplans have been incorporated into One Plans for DDM (district development model) districts.

The identified district municipalities include OR Tambo, eThekwini Metro, Pixley ka Seme and Namakwa.

Support to these districts is important, especially those based in rural areas, to ensure that funding is obtained for the initiatives and that economic objectives are achieved as planned.
Funding, effective planning, relevant product development and economic linkages can grow the rural tourism market, which continues to be an untapped market in some South African towns.

The Department continues to provide support to SANParks, through its maintenance of infrastructure in the various national parks across the country.

The Department also reported that work on 30 community-based tourism projects was supported and monitored.
The projects are spread across eight provinces and include lodges, hiking trails, museums and accommodation facilities.

In the new financial year, the implementation of these projects has been transferred to the Development Bank of Southern Africa (DBSA).

The Department exceeded its annual target for work opportunities.

Against a target of 3 826, the Department created 5 328 work opportunities.
About 1 502 additional work opportunities were created resulting from the easing of lockdown restrictions, the overlapping of projects and the commencement of high labour-intensive projects during the financial year.

6.1.4 Programme 4: Tourism Sector Support Services The purpose of this programme is to enhance transformation, increase skill levels and support the development of the sector to ensure that South Africa is a competitive tourism destination.
Table 10: Programme 4 - Tourism Sector Support Services Total Targets set Targets achieved Targets not achieved 18 10 (55.5%) 8 (44.4%.)

28 395 Budget allocated Adjusted budget Final Appropriation Budget spent Underspending R436.6 million R386.6 million R363.7 million R363.5 million (99.9%) R209 000 The Department only achieved 10 (55.5%) of its 18 targets set under this programme and yet spent 99.9 per cent of its budget.
The target on the Tourism Equity Fund (TEF) was not achieved due to the High Court interdict.

In April 2021, an order of the High Court against the Department interdicted the processing or making of any payment under any application for funding from the TEF, pending a review of the Fund’s criteria.

Consequently, the rollout of the TEF has been suspended pending confirmation of the validity of the criteria of the Fund.
The target on business support and development through the three incubators, Tech, Tour Operator and Food Services was achieved, including the provision of the implementation report.

The Department also finalised support provided through the Manyeleti, Phalaborwa and Mier Incubators.
However, within the same target, the Department reported that it was unable to implement the two community-based enterprises’ incubation programmes, due to procurement stipulations and delays resulting from the separated planning approach adopted per project.

A service provider for the programmes will be appointed in the next financial year.

The Department continued its initiatives in supporting women in business, however, it was unable to provide the required support to 225 SMMEs as planned.
Lack of demand from provinces saw the Department only supporting 181 women-owned SMMEs.

Recruitment attempts will continue in the new financial year.

Another target not achieved is the implementation of the Tourism Monitors Programme in all provinces.

The Department reported that due to procurement irregularities, the tender process had to be restarted, and the programme could not be implemented in the Limpopo Province.
The following capacity-building programmes were not fully implemented: - Food Safety Quality Assurer Programme – did not take place in Kwazulu-Natal.

- Chef/Professional Cookery Programme - did not take place in the North West.

- Wine Service Training Programme - did not take place in the Northern Cape.

29 396 - Hospitality Youth Programme – only took place in six instead of nine provinces, with only 340 participants instead of the planned 1000.
Concerning all these capacity-building programmes the Department cites challenges with securing a suitable service provider.

In its reporting, the Department does not clarify the number of participants that benefitted from some of the programmes.

The Department continues to support women in tourism through its Executive Development Programme.

The Department was also able to host the National Tourism Careers Expo (NTCE), which was placed on hold due to COVID-19.
The event plays a significant role in promoting tourism careers to school learners and empowering teachers.

The target on the Educator’s Development Programme was also achieved, which empowers tourism educators with new knowledge about the sector.
6.2 South African Tourism 2021/22 Service delivery performance 6.2.1 Overview and assessment of financial performance 6.2.1.1 Programme 1: Corporate Support The purpose of this programme is to provide support to the organisation and ensure compliance with statutory requirements.

The programme focuses on providing efficient, effective and proactive legal, governance, enterprise risk and compliance support.
Table 11 depicts that the Entity achieved only 5 (62.5%) of its 8 targets by the end of the financial year and yet spent 95.7 per cent of its budget.
Table 11: Programme 1 - Corporate Support Total Targets set Targets achieved Targets not achieved Budget allocated Adjusted budget Actual budget Budget spent Underspending The Entity reported that: 8 5 (62.5%) 3 (37.5%) R126 000 million R101 353 million R154 768 million R148 118 million (95.7%) R6 650 million (4.3%) 30 397 • It was unable to address all 164 audit recommendations, which form part of the audit action plan, with only 73 per cent actions completed.
This target relates to the Entity’s objective of promoting good governance.

Audit recommendations are made to assist organs of state in achieving this objective.

Under-performance of the Entity under this target does not bode well for its governance.

For those addressed, the Entity reported that consequence management was applied at the impacted business units.

• The turnaround time for the payment of invoices improved from 22 days in quarter two to 12 days in quarter four.
Therefore, the target was achieved for the financial year.

This benefits suppliers who have been negatively impacted by the COVID-19 pandemic.

• The target on automating business processes was not achieved, about 80 per cent of the work was not done.

Based on the Entity’s reporting, the scope of work on this project was understated.

Only the business processes for the Tourism Grading Council were automated.
The Committee was concerned about the implications of this incomplete work on business operations.

• The target on the staff engagement score was also not achieved.

The target looks at the engagement levels of staff each year; the higher the engagement, the more satisfied staff tend to be.

Ultimately, it measures the culture of the organisation.

By the end of the financial year, a service provider had not yet been secured for the project.
Equity targets were all achieved as a result of a targeted recruitment drive approved by the Board.

The Entity reported that by 31 March 2022 its vacancy rate was 7.9 per cent with 16 vacancies against 202 positions.

About 24 permanent positions were vacant at the end of the financial year, however, eight of these were filled with fixed-term contractors to ensure business continuity.
Vacant management posts also include that of the Chief Strategy Officer and the three hub heads for the United Kingdom (UK), Ireland and Central and South Europe.

6.2.1.2 Programme 2: Business Enablement 31 398 The purpose of this programme is to enhance collaboration with various stakeholders.

It also provides centralised tourism intelligence to support evidence-based decision making, for future marketing initiatives aimed at stimulating visitor demand.
Table 12: Programme 2 - Business Enablement Total Targets set Targets achieved Targets not achieved Budget allocated Adjusted budget Budget spent Underspending 5 3 (60%) 2 (40%) R84 900 million R80 761 million R55 740 million (69%) R25 021 million (30.9%) The Entity achieved 3 (60%) of its 5 targets for the end of the financial year and spent 69 per cent of its budget.

Spending was thus more or less aligned with programme performance.
The Entity reported that the following targets were achieved for the financial year: • The target on the SA Tourism Reputation Index, which focused on conducting a survey to establish a new baseline, was achieved.

The Index calculates whether stakeholders see SAT as a leader in the tourism industry in South Africa.

The five-year target will be calculated after establishing the baseline.

• All the tourism sector performance reports were produced.
The reports are significant in keeping track of the sector’s performance and in turn play a crucial role in informing business strategies adopted to market and grow tourism.

Data from these reports provide results of the Entity’s marketing endeavours, which are aligned to its strategy for increasing tourism’s contribution to the economy.

• The planned sector engagement meetings were hosted for the year.
These meetings entail deliberations with tourism sector stakeholders, with a focus on activities in support of the Tourism Sector Recovery Plan (TSRP).

The following targets were not achieved: 32 399 • The 100 per cent implementation of approved Memoranda of Understanding (MoUs) with Provincial Tourism Authorities (PTAs), was not fully completed.

The Entity reported that only 95 per cent of MoUs were implemented.
In its quarter four reporting, it indicated that about 36 of the 38 action items from the Activity Plan with the PTAs were implemented.

The Lilizela Awards, which honour entrepreneurs in the hospitality sector, was not implemented as a result of COVID-19 restrictions.

• Go-live and support (B2B and B2C portals) – The Entity reported that the project has been discontinued, due to a flawed process followed to appoint a service provider.

A forensic investigation was undertaken and concluded.
The portal was to be used to develop a two- way communication that centralises communication between the industry and the Entity.

The portal would allow for open communication, transparency and aligned marketing messages, which are key elements for good governance and economic growth.
6.2.1.3 Programme 3: Leisure Tourism Marketing The purpose of the programme is to create demand through travel acquisition and growing brand equity for South Africa as a leisure and business events destination in identified markets.

The Entity achieved only 10 (83.3%) of its 12 targets by the end of the financial year and spent 89.8 per cent of its budget.

Spending was thus more or less aligned with programme performance.
Table 13: Programme 3 - Leisure Tourism Marketing Total Targets set Targets achieved Targets not achieved Budget allocated Adjusted budget Actual budget Budget spent Underspending 12 10 (83.3%) 2 (16.7%) R1 015 222 billion R1 109 613 billion R1 026 687 billion R922 293 million (89.8%) R104 394 million (10.2%) The report on target performance is as follows: • The Entity exceeded its targets on both international and regional tourist arrivals, as a result of South Africa’s removal from the ‘red list’ and successful regional brand and deal-driven campaigns.
33 400 • The target on increasing domestic travel was exceeded by 49 per cent (4.6 million holiday trips), with spend doubling at R25.8 billion.

• However, the same cannot be said for domestic day trips where the target of 116.1 million was not achieved, at 82.5 million.

The Entity cites lockdown, travel restrictions and limited disposable income as some of the reasons for the unmet target.

• The target on the Brand Strength Index survey was not achieved, as the survey was not undertaken.
The tender for the survey has been re-advertised and has been moved to the new financial year.

• The Entity was able to deliver on its target of launching domestic deal-driven campaigns for the year.

The campaigns assisted in driving demand for domestic travel.

Domestic tourism continues to be highlighted as a significant pillar for the recovery of the sector.

• Another target achieved includes tourism activation at the World Expo 2020 in Dubai.
According to the Entity, more than 51 000 people visited the South African Pavilion at the Expo.

6.2.1.4 Programme 4: Business Events The purpose of this programme is to grow South Africa’s business events industry.

The programme is also aimed creating inclusive market access and transaction platforms for the country’s tourism businesses and their products.
Table 14: Programme 4 - Business Events Total Targets set Targets achieved Targets not achieved Budget allocated Adjusted budget Actual budget Budget spent Overspending 7 5 (71.4%) 2 (28.6%) R126 500 million R104 166 million R106 259 million R108 085 million (101.7%) R1 826 million (1.7%) The Entity achieved 5 of the 7 targets set for the financial year and yet overspent on its budget by 1.7 per cent.

The Committee was concerned about overspending in this Programme.
34 401 The business events industry was amongst the most severely impacted sectors by the COVID- 19 pandemic.

However, the 2021/22 financial year saw South Africa’s business events industry host regular events, for the first time since the start of the pandemic.

During the year, South African Tourism submitted 81 bids for international business events to be hosted in the country between 2022 and 2027.
The 81 bid submissions have a combined estimated economic impact of R1.217 billion and the potential to attract 41 322 international and regional delegates to the country.

Thus far, South Africa has secured 31 of the 81 bids submitted for the 2021/22 financial year.

These secured business events will contribute R380 million to South Africa’s economy between 2022 and 2027 and attract 13 170 international and regional delegates.
In terms of target performance, the Entity reported that: • The target on the Global Business Events campaign was achieved.

The campaign is targeted at increasing tourism’s contribution to inclusive economic growth by positioning South Africa as a business events destination.

This also includes the domestic business events campaign, which is targeted at positioning South Africa as a business events destination for the domestic market.
• Eighty-one bids were successfully submitted, exceeding the 77 bid submissions targeted for the year.

The achievement of this target means favourable economic returns for the local destinations that will succeed as hosts.

• The annual target aimed at hosting three business events at villages, townships and small dorpies (VTSDs), in support of promoting inclusive development, was achieved.

Three events were hosted at the Gariep Dam (Free State), Phokeng (North West) and Upington (Northern Cape).
The towns were selected as a result of bids submitted for hosting rights.

• The target on hosting Africa’s Travel Indaba was not achieved.

The event was not held due to COVID-19.

However, the Entity hosted the Africa Travel and Tourism Summit, which was a hybrid event, later in the year during September.

• The Entity was able to host Meetings Africa between 28 February and 2 March 2022, as most restrictions were lifted and the event was attended physically by delegates.
The event was attended by 1 734 delegates and featured 216 exhibiting companies.

35 402 • However, the target on the Lilizela Awards was not achieved.

The event did not take place as planned due to the impact of COVID-19 on tourism businesses, which the event sought to recognise and honour.

6.2.1.5 Programme 5: Tourist Experience The purpose of this programme is to ensure the delivery of quality-assured tourist experiences, which are diverse, unique and enriched.
Table 15: Programme 5 - Tourist Experience Total Targets set Targets achieved Targets not achieved Budget allocated Adjusted budget Budget spent Underspending Programme performance entailed the following: 10 9 (90%) 1 (10%) R65 million R49 147 million R39 658 million (80.7%) R9 489 million (19.3%) Table 15 indicates that the Entity achieved 9 (90%) of its 10 targets by the end of the financial year and spent 80.7 per cent of its budget.

Spending was thus more or less aligned with performance.
• The target on the Net Promoter Score (NPS) was achieved.

The NPS measures a consumer’s willingness to recommend South Africa to others.

It is used to determine customer satisfaction and is also a proxy for brand loyalty.

This information is sourced through South African Tourism Departure Surveys.

• The annual target on the grading of tourism establishments was not achieved for the year.

Only 3 605 establishments were graded instead of the planned 4 707.
This came as a result of memberships that were not renewed.

The Entity is encouraged to work with the Department on a promotional drive focused on the benefits of quality assurance to stimulate previous members’ interest and recruit new businesses to grade their establishments.

• The annual target on the Enterprise and Supplier Development programme was achieved.

The programme is aimed at ensuring that SMMEs attend tradeshow platforms in which 36 403 SAT participates.
The lifting of travel restrictions saw the exhibition sector open its doors once again, in turn offering opportunity for SMMEs to showcase their products.

• The target on establishing a baseline for the Basic Quality Verification programme was completed as planned.

The programme seeks to provide basic quality support for SMME accommodation establishments by recognising new entrants in the sector who are not able to be graded at the outset.
• The Entity achieved both targets on procuring from B-BBEE status level 1-5 businesses and women-owned, youth-owned and businesses owned by people with disabilities.

The intentional effort to procure from said businesses is commended and is significant in ensuring inclusivity in the sector.

6.2.2.
6.2.2.

Financial Statements for the 2020/21 financial year South African Tourism primarily derives income from transfers made by Government as a contribution to operations, with other revenue generated through voluntary Tourism Marketing South Africa (TOMSA) levies allocated through the Tourism Business Council of South Africa (TBCSA), interest on investment, grading income, and sundry income (income from exhibitions such as INDABA and Meetings Africa).
Table 17: Budget and Expenditure Summary 2021/22 2020/21 2021/22 Programme Budget Actual (Over) / Budget Actual (Over) / % (Over) / (R’000) Expenditure Under (R’000) Expenditure Under Under Expenditure Expenditure Expenditure 1.
Corporate 111 445 111 344 101 154 768 148 118 6 650 4.3% Support 2.Business Enablement 33 807 39 841 (6 034) 80 761 55 740 25 021 30.9% 3. Leisure 266 423 405 555 (139 131) 1 026 687 922 293 104 394 10.2% Tourism Marketing 4. Business 23 291 30 836 (7 545) 106 259 108 085 (1 826) (1.7%) Events 5.
Tourist 44 061 34 487 9 574 49 147 39 658 9 489 19.3% Experience Total 479 027 622 063 (143 036) 1 417 622 1 273 894 143 728 10.1% Source: South African Tourism Annual Report (2021/22) 37 404 Revenue from Government transfers was received at R1.297 billion.

The income from TOMSA levies was R58.8 million, R8.8 million higher than the projected R50 million.

The Entity’s sundry income for the financial year was R16.8 million, significantly lower than the projected R58.3 million.
This under-recovery has been attributed to a decrease in exhibition income due to a lower number of exhibitions at Meetings Africa and the cancelled Africa Travel Indaba.

Grading revenue received was R15.0 million, higher than the projected R12.2 million and interest from investments was R4.8 million, slightly higher from the previous year’s R2.9 million.

Table 17 depicts that the Entity spent R1.27 billion (89.9%) of its budget of R1.41 billion for the 2021/22 financial year.
A significant portion of this underspending is in Programme 2 (Business Enablement) at 30.9%; Programme 3 (Leisure Tourism Marketing) at 10.2% and Programme 5 (Tourist Experience) at 19.3%.

The underspending relates to unmet targets under each programme.
6.3 Key reported achievements The following are some of the key achievements reported by the Department in the 2021/22 financial year: Some of the achievements by the Department include: • Championing the removal of “red listing” of South Africa through diplomatic efforts.
Furthermore, through structured engagement with the Sector, tourism has been able to make a case for its readiness to operate safely and this has yielded good results; • South Africa secured a seat at the UNWTO Executive Council which is the highest decision-making body between the United Nations General Assembly and successfully lobbied the UNWTO to back African States and call on the world to reopen their borders.
• Sponsored a framework for the establishment of the Africa Tourism Unit for the African Union Commission in an effort to strengthen regional integration that was closely 38 405 followed by a regional collaboration and synchronization of policy including the MoU signed with Kenya, during the Kenyan President’s visit to South Africa; • Bilateral engagements held with key Investors in the UAE and Gulf Cooperation Council Region who have shown interest to invest in tourism-mega projects; • Supportive interventions led by the Ministry and SA Tourism to reconnect Destination South Africa through air service development working through multi-stakeholder public and private sector structures; • Growing interest in investment in tourism as demonstrated by investors from the Gulf Region during the Department’s engagements at the Dubai Expo in December 2021; • The implementation of the Food Safety Quality Assurer Programme with training on norms and standards for safe tourism operations, including COVID-19 Protocols in the Western Cape and Gauteng provinces in line with project plans, targeting 300 unemployed and retrenched youth; • The implementation of the Chef/Professional Cookery with training on norms and standards for safe tourism operations, including COVID-19 Protocols in the Free State and Northern Cape provinces in line with project plans, targeting 300 unemployed and retrenched youth; • The implementation of the Hospitality Youth Programme (Food and Beverage) in KwaZulu-Natal, Western Cape, North West, Gauteng
 and Mpumalanga provinces, where 340 youth were being trained or active in the Eastern Cape (100), Western Cape (140) and Northern Cape (100); and • The Wine Service Training Programme (Sommelier) with training on norms and standards for safe tourism operations, including COVID-19 Protocols was implemented in KwaZulu-Natal, Western Cape and Northern Cape provinces targeting 252 unemployed and retrenched youth 39 406 Achievements by SA Tourism: • Number of international tourist arrivals achieved (April 2021 – February 2022): 2 417 452.
• Number of domestic holiday trips achieved (April 2021 – February 2022): 3.7 million.

• Total tourism revenue: R53.63 billion • Total Tourist Foreign Direct Spend (TTFDS): R16.3 billion (April – December 2021).

• Total Direct Domestic Spend (TDDS): R37.3 billion achieved (April – December 2021).

• Number of bid submissions: 82 bid submissions • Number of accommodation establishments graded (April 2021 – March 2022): 3 605.
• Number of graded rooms (April 2021 – March 2022): 89 075 6.4 Non-financial Audit outcomes and steps taken to address adverse audit findings Similarly, to the previous audit period, the Committee is generally dissatisfied with the non- financial audit outcomes raised by the Auditor-general in the period under review.
The following are some of the findings and remedial actions taken: • Implementation of the Presidential Employment Stimulus Package (PESP) - This was done through expenditure on tourism projects that would create employment.

The Department only had six months to rollout the programme and agreed with the PESP team on a target of 1 162 learners in the programme.

The Department created 919 by the end of March 2022.
The remedial action will be through better coordination between all role players; Presidency, National Treasury and the Department could have prevented the under achievement of the target.

It is also acknowledged that factors such as the increase in the wage rate to R23 per hour also contributed to the under achievement.

It will be prudent if future employment initiatives will be more focused on sustainable job creation.
• Implementation of the Expanded Public Works Program (EPWP) - The Department is responsible for the implementation of EPWP projects under the Working for Tourism (WFT) programme previously known as the Social Responsibility Implementation (SRI).

This is aimed at creating employment and training opportunities to unemployed 40 407 youth through projects where labour (people from the local communities) is used as well as training people to function within the tourism sector (e.g.

chefs, hospitality, etc.).


The planned annual target was 3826 but this was overachieved by 1502 as the 5328 job opportunities were created.

The reason for the over achievement is that some projects which commenced in 2020/21 and had delayed because of COVID-19 lockdown restrictions in the tourism sector were able to continue in 2021/22.

In addition, some skills projects which by design enrol a large number of youth commenced in quarter three of 2021/22.
6.4.1 Previous year issues The portfolio’s overall audit outcomes in the previous audit period had regressed from the prior year.

• The audit outcome of the Department remained unchanged as financially unqualified with findings on compliance with legislation.

The Department was commended for submitting financial statements that were free from material misstatements.
• SA Tourism received a qualified audit opinion as a result of a limitation of scope on expenditure and receivables from non-exchange transactions.

• The quality of the annual performance reports regressed in the portfolio.

The Department had a material misstatement on consistency as the description of the indicators in the annual performance report submitted for audit differed from the description in the annual performance plan.

This inconsistency was subsequently corrected by management.
• At SA Tourism there was a material finding on the usefulness of the target for programme 3: leisure tourism marketing, which was not specific.

The Auditor-General could not determine the actual achievement due to insufficient measurement definitions and processes.

41 408 • Although material non-compliance in the Department’s supply chain management was reported, this was an improvement on the number of findings from the previous year.
The SA Tourism’s material non-compliance was in procurement and contract management, as supply chain management processes were not followed for expenditure incurred by SAT and paid by a third party.

This resulted in irregular expenditure of R34 million.
• On the six recommendations for the Tourism Relief Fund (TRF), which was audited in the previous year as part of the COVID-19 proactive audits, the only action taken was to hand over the duplicate payment of R50 000 to the state attorney for recovery from the beneficiary.

The other five recommendations were not implemented.

• The Department also had a relief fund for tour guides, with a budget of R30 millions of which R17,28 million was used by 31 March 2021.
The COVID-19 Relief Fund for Tour Guides under distress (TGRF) granted beneficiaries R1 500 per month for three months.

The findings were that some of the tour guides grants that were approved, and paid were to, individuals who received other grants such as the Sassa R350 grant; beneficiaries who did not meet the set criteria; and beneficiaries who were approved without validating their ID numbers.
6.5 Other service delivery performance findings The impact of targets not achieved in the period under review includes, but is not limited to the following: • Delayed transformation in the tourism industry; • Lack of support for small, medium and micro enterprises in the tourism industry; • Lack of support for women in tourism particularly in the rural provinces; • Lack of job creation; • Inability to apply strategies to improve the South African Brand when marketing the country; and • Domestic tourism is still under pressure due to lack of support by South Africans.
42 409 6.6 Relevant external research assessing performance of the Department 6.6.1 Travel and Tourism Development Index As reported, the Travel and Tourism Development Index, which is updated by the World Economic Forum every two years, benchmarks and measures “the set of factors and policies that enable the sustainable and resilient development of the tourism sector” within 117 countries, including South Africa.

The 2021 survey was released towards end-May 2022.


South Africa was ranked 68th in 2021, unchanged from the 2019 ranking.

Its score is below the global average and similar to the score ascribed to Kazakhstan, Montenegro, Dominican Republic and Serbia.

The following insights are worth noting by the Committee: South Africa scored highly in the category related to the demand drivers of tourism, in particular Natural Resources (national parks and nature reserves, landscapes, richness of fauna, etc.
), in which it ranks an impressive 13th in the world; non-leisure resources (factors that drive non-leisure travel, including medical travel, ranked 21st); and cultural resources (ranging from archaeological sites to entertainment facilities, ranked 26th).

In key areas, South Africa’s tourism score is shockingly low.

A key example is South Africa’s global ranking of 112/117 in Safety and Security.

This reflects the extent to which a country exposes locals, tourists and businesses to security risks.
Another clear area of weakness is passenger rail and port infrastructure (ranked 73rd).

Uplifting South Africa’s transport infrastructure and reducing crime would benefit a huge array of industries extending well beyond the tourism sector.

This, in turn, would lift consumer and business confidence, encourage private sector fixed investment and create employment, thereby boosting government’s tax revenue collection and overall popularity.
Yet government appears content to merely highlight its policy intentions, rather than implement key reforms.

Furthermore, South Africa ranks a respectable 43rd in the world in terms of the price competitiveness of its tourism sector.

It is known, internationally, as a relatively low-cost travel destination, although the market can accommodate both the budget-conscious traveller, as well as those tourists looking for a more luxurious experience.
43 410 Exploring the World Economic Forum’s detailed assessment of South Africa’s travel and tourism sectors, it can be argued that the country is being underrated in a few key areas.

These include a rating of 109/117 in environmental sustainability, which includes factors such as the protection of natural resources and exposure to weather-related events.

While South Africa falls short in some areas, this ranking seems very harsh and undeserved.
The same can be argued for South Africa’s ranking of 71/117 in tourist service infrastructure, which includes the availability of tourist accommodation, car rental, resort and leisure facilities and ATMs.

In addition, the World Economic Forum’s Travel and Tourism Development report does an excellent job in highlighting the correlation between the development of the tourism sector and a very broad range of social, economic and policy metrics.
For example, the reliability of police services matters much more to the development of tourism than the cost of hotels.

Exploring these relationships can help to identify the most important areas for development.

Overall, SA’s tourism sector is in the process of recovering from the impact of the COVID-19 restrictions.

Domestic flights have increased substantially relative to 2020, and on some routes (depending on the airline) business is back to around 70 per cent of pre-COVID volumes.
Unfortunately, while outbound international travel has also increased meaningfully, inbound international travel continues to lag.

The above insights have a direct bearing on the Committee’s oversight over the portfolio in regard to the Department and the Entity reporting directly to it, and the overall government departments and entities that have a direct and indirect impact to tourism development.

7.
7.

FINANCE AND SERVICE DELIVERY PERFORMANCE ASSESSMENT At the end of the financial year, the Department spent R2.53 billion or 99.7 per cent of the available budget of R2.54 billion.

This translates to R7.6 million or 0.3 per cent underspending against the total available budget of R2.5 billion for the 2021/22 financial year.
The underspending was mainly observed in Programme 4: Tourism Sector Support Services due to an internal departmental decision to reduce expenditure on goods and services in order to reprioritise funds towards Destination Development capital infrastructure projects.

This indicates a healthy spending pattern, consistent with previous financial years.

The concern is 44 411 that the spending did not translate to the achievement of the government MTSF targets pursued by the Department.
For SA Tourism, the revenue from transfers was projected at R1.297 billion, constituting 95.7 per cent of R1.355 billion projected revenue for the last quarter.

Overall, actual revenue was R1.345 billion or 99.3 per cent of projected revenue for the year.

Expenditure on goods and services was R919.4 million which was R238.6 million or 35.1 per cent higher than the projected amount of R680.6 million for the fourth quarter.
Actual compensation on employees was R172.5 million, which was R59.6 million or 24.4 per cent lower than the projected expenditure of R232.1 million for the fourth quarter.

Slower spending was due to vacant positions not filled due to the anticipated merger between Brand SA and South African Tourism.
On service delivery performance, the following factors are notable: • Implementation of Food Safety Quality Assurance Program (NDT) - The target relates to training of unemployed and retrenched youth on norms and standards for safe tourism operations.

The under achievement was due to lack of a suitable service provider to implement the programme in the province of KwaZulu-Natal (KZN).

The Department has since revisited the terms of reference and procurement processes are expected to restart soon.
The programme was however implemented in other provinces as planned.

The impact of the under achievement is a delayed opportunity to provide skills and practical work experience in the area of food safety quality assurance to unemployed youth in KZN.

The accounting officer should closely monitor the implementation of the strategy to overcome the under achievement which is prioritising the procurement of a service provider for implementation of the Food Safety Quality Assurance Program in KwaZulu-Natal.
Procurement processes should be adequately planned to prevent under achievement of targets due to procurement delays.

• Training of chefs in norms and standards of the industry - The Department did not achieve this target which relates to training of chefs on norms and standard for safe tourism operations.
The under achievement was due to the non- implementation of the programme in the North-West province due to legal processes underway related to the 45 412 validity of Preferential Procurement Regulations of 2017 and restriction imposed by National Treasury on the advertisement of tenders following the judgement handed down by the Constitutional Court.

The programme was implemented successfully in other provinces as planned.
The impact of the under achievement has delayed the opportunity to provide training to chefs in norms and standards of the tourism industry and creation of jobs in the North-West Province.
The accounting officer should closely monitor the implementation of the programme to overcome the under achievement which is prioritising the procurement of a service provider for training of chefs in norms and standards of the industry in the North-West, noting that legal processes are not always in the control of the Department.
• Implementation of the Hospitality Youth Program to train youth in the tourism industry - The target relates to the training of unemployed youth on norms and standards for safe tourism operations.

The under achievement was due to delays in the appointment of service providers for Gauteng (GP), North-West (NW), Mpumalanga (MP), Limpopo (LP), KwaZulu-Natal (KZN) and Free State (FS) Provinces.
The delay in the appointment of service providers was due to legal processes related to the validity of Preferential Procurement Regulations of 2017 and restriction imposed by National Treasury on the advertisement of tenders following the judgement handed down by the Constitutional Court.

The impact of the under achievement is a delayed opportunity to provide training to youth in the hospitality industry as well as the creation of jobs in GP, NW, MP, LP, KZN and FS.
The accounting officer should closely monitor the implementation of the strategy to overcome the under achievement which is prioritising the procurement of a service provider for the implementation of the Hospitality Youth Program, noting that legal processes are not always in the control of the Department.

• Number of day trips not achieved by SA Tourism - The target relates to the number of day trips taken by a South African within the country which is outside their usual place of residence.
The target was not met due to less travel undertaken by South Africans because of the COVID-19 pandemic and the resultant lockdown restrictions for the greatest portion of the financial year.

Although the effect of COVID-19 is not within the control of the entity, the likely impact of a lesser number of day trips is reduced demand overall in the tourism sector, ultimately affecting job creation and retention.
46 413 The accounting authority should compile a strategy for improving under achievement of this target going forward.

Initiatives already implemented such as the “Sho’t Left” campaign are starting to bear fruits as can be seen in the significant increase in value of domestic holiday direct spend.

• Brand Strength Index not achieved by SA Tourism - The target measures the South African brand performance.

SA Tourism seeks an improvement in the brand strength index.
The target was not met due to the tender for the service provider to conduct the survey having been cancelled and re-advertised and was being evaluated at year end.

SA Tourism intended to conduct the survey in the 2021-22 financial year.

As an all- encompassing measure of brand performance, SA Tourism seeks an improvement in the brand strength index.
Delays in conducting the brand strength survey may affect the ability of the entity to apply strategies to improve the South African Brand as they market the country as a preferred tourist destination.

The accounting authority should closely monitor the finalisation of the procurement process to ensure the timeous conduction of the brand strength survey which informs the target.

8.
8.

KEY FINDINGS - COMMITTEE OBSERVATIONS AND RESPONSES The Committee and the Auditor-General made a substantial number of findings in both the Department and SA Tourism in the 2021/22 audit period.

As in the previous financial year, the Committee bases most of its observations on the findings of the Auditor-General to ensure a seamless oversight work on how these are addressed and resolved.
The observations are catergorised as follows: Generic observations with both the Department and SA Tourism 8.1 Technical issues 8.1.1 Non-attendance of the Minister at Committee meetings The Committee noted with serious concern that the Minister did not appear before the Committee when the Department and SA Tourism were presenting their 2021/22 Annual 47 414 Reports to Parliament.
This is considered as a serious dereliction of duty and tantamount to the Minister not taking the oversight of the Committee and her accountability to Parliament seriously.

The non-attendance of the Minister left the Committee uncertain in a number of issues that required direct responses and clarification by the Minister.

These include, but are not limited to: • The policy review process and the timeframes for concluding this process which hampers commencement of the legislative review process.
• Clarity on the imminent merger of SA Tourism and Brand South Africa.

• The process of the appointment of the Interim Board of SA Tourism and its legal standing.

8.1.2 Audit findings The overall audit outcome for the tourism portfolio improved from the previous financial year.

The Department and SA Tourism received financially unqualified audit opinions with findings on compliance with key legislation.
The improvement in the overall audit outcome is due to the improvement at SA Tourism which had received a financially qualified opinion in the prior year with findings on compliance and predetermined objectives.

In the prior year, SA Tourism was qualified on marketing expenditure and receivables from non-exchange transactions as management did not have sufficient controls to ensure completeness of expenditure incurred by third parties on behalf of the Entity.
8.1.3 Expenditure management (irregular expenditure) The irregular expenditure in the portfolio decreased from R21,29 million in 2020/21 to R8,6 million in the 2021/22 financial year.

SA Tourism remains the biggest contributor to irregular expenditure, accounting for 79 per cent of irregular expenditure for the year.
The irregular expenditure incurred by SA Tourism relates mainly to non-compliance with Supply Chain Management (SCM) prescripts which was due to lack of preventative controls to ensure compliance with SCM legislation.

The irregular expenditure incurred at the Department was 48 415 mainly due to a multi-year contract declared irregular in the prior year wherein expenditure is still being incurred, therefore there was no new irregular expenditure.
8.1.4 Implementation of the Audit Action Plan The performance of the portfolio improved, albeit with repeat findings.

The improvement in the audit outcome is attributable to the effectiveness of the action plan implemented by the accounting authority of SA Tourism, as well as the existence of effective governance structures to implement and monitor the audit action plan.
While the audit outcome for NDT remains unchanged from the prior year, there was a notable improvement in areas of compliance with supply chain management and predetermined objectives.

The improvement is attributable to the effectiveness of the action plan implemented by the accounting officer.
While the action plan was effective in addressing prior year findings, the emergence of new findings is indicative of the need to implement preventative controls that will strengthen the overall control environment.

The accounting officer and accounting authority should ensure that the portfolio has embedded preventative controls necessary to improve audit outcomes to achieve clean administration and avert regression.
Future action plans should be tailored at achieving clean administration and not only addressing prior year findings.

8.1.5 National Treasury support for the sector The Committee noted from the Consolidated Spending Plans issued by the National Treasury that the Department of Tourism will continue to focus on supporting recovery in the tourism sector while accelerating the move towards a stronger, more equitable and resilient tourism economy.
Accordingly, R360 million is allocated over the medium term to support the pilot phase of the Tourism Equity Fund introduced in 2021, R240 million is allocated to enhance tourism assets and infrastructure, and R80 million has been reprioritised to support short‐term jobs in tourism.

It was noted also that, to support tourism and improve the visa application process, the Department of Home Affairs has reprioritised R10 million over the MTEF period.
Observations with regard to the Department 8.2 Governance and operational issues 49 416 8.2.1 Policy and legislative review The Committee noted that the policy review process was not finalised in the 2021/22 financial year as it had not been signed off by the Minister.

The Department reported that the draft Green Paper on the Development and Promotion of Tourism in South Africa was developed.

The document has been submitted to the Executive Authority for consideration but had not been signed off.
The Committee noted these delays with concern as this has a ripple effect in further delaying the commencement of the legislative review process, which is long overdue.

The Committee is of the view that the Department is not taking the matter of policy and legislative review seriously, and this attitude should change henceforth.

8.2.2 Audit opinion The Committee noted that the Department received an unqualified opinion with emphasis of matter for the 2021/22 financial year.
The Auditor-General indicated that the financial statements present fairly, in all material respects, the financial position of the National Department of Tourism as at 31 March 2022, and its financial performance and cash flows for the year then ended in accordance with the Modified Cash Standard (MCS) and the requirements of the Public Finance Management Act 1 of 1999 (PFMA) and the Division of Revenue Act of South Africa, 2021 (Act No.9 of 2021) (Dora).
However, there was emphasis of matter as the Auditor-General drew attention to the matter of “Restatement of corresponding figures”.

As disclosed in note 31 to the financial statements, the corresponding figures for 31 March 2021 have been restated as a result of an error in the financial statements of the Department at, and for the year ended, 31 March 2022.
Notwithstanding the matter of emphasis, the Department shows stability and return to good governance and improvement in financial management as the Department obtained an unqualified audit opinion similar to the 2020/21 and the 2019/20 financial years.

The Committee is, however, concerned with the historical irregular expenditure expressed by the Auditor-General.
8.2.3 Assessment of expenditure against achievement of predetermined objectives The Department continued with its expenditure pattern similar to previous years as it spent R2 537.8 billion or 99.7 per cent of its total appropriated budget of R2 545.3 billion.

At a financial 50 417 expenditure level, this expenditure is commendable as the Department was able to spend almost all of its budget for the reporting period.
It depicts a constant expenditure pattern over the years as the Department spent 97.6 percent in 2020/21; 99.7 per cent in 2019/20; 98.9 per cent in the 2018/19; 99.7 per cent in the 2017/18 and 95.5 percent in the 2016/17 financial years.

On the achievement of targets, the Department achieved 80 percent, which is 44 of the 55 predetermined objectives in the Annual Performance Plan for the 2021/22 financial year.
In the previous financial year, the Department achieved 56 of the 64 annual targets, accounting for 87.50 per cent performance.

This indicates that in the current reporting period, the Department had a slight underperformance compared to the previous financial year.

The Committee is concerned that the 11 targets not achieved are mainly those geared toward uplifting small businesses in the tourism industry, transformation of women and youth as well as the indirect creation of jobs.
This means the performance of the Department in the period under review did not achieve the MTSF targets pursued by the Department.

8.2.4 Irregular expenditure The Department incurred R1.8 million irregular expenditure in the 2021/22 financial year.
This amount comprises R1.7 million from non-compliance with SCM Procedures - irregular award of tenders - tender not awarded to the tenderer who scored the highest points; and R150 000.00 from non-compliance with SCM Procedures - Irregular award of tender - three quotes not obtained.

This is a marked improvement as the Department incurred R34 932 million irregular expenditure in the previous financial year.
The Committee should insist on consequence management for staff who do not comply with SCM procedures should they be found to have deliberately contravened the policies.

8.2.5 Fruitless and wasteful expenditure The actual fruitless and wasteful expenditure for the 2021/22 financial year is only R21 million.

This comprises R125 million from flight amendments and no shows for shuttles and accommodation with regards to travel bookings.
Of this, R104 million was written off by the Department for late cancellation/no-show/flight amendments with regard to travel bookings.

The non-compliance with financial statements led to the restatement of R194.8 million fruitless and irregular expenditure in the 2021/22 financial year (restated from the 2020/21 financial year).

This emanated from flight amendments and no shows for shuttles and accommodation 51 418 with regards to travel bookings.
The Department should be commended from having conducted an investigation and recovered the said fruitless and expenditure amount.

8.2.6 Unauthorised expenditure The Department did not incur any unauthorised expenditure in the 2021/22 financial year.

This should be commended as the Department did not incur unauthorised expenditure in the previous reporting period as well.

This is commendable and the Department is urged to continue strengthening its internal controls to avoid unauthorised expenditure.
8.2.7 Underspending The Department incurred underspending of R4 015 million in Programme 2: Tourism Research, Policy and International Relations; R3 338 million in Programme 3: Destination Development and R209 000.00 in Programme 4: Tourism Sector Support Services 8.2.8 Virements The Department shifted an amount of R52 million from Transfers and Subsidies: Public Corporations and Private Enterprise in Programme 4: Tourism Sector Support Services to Goods and Services in Programme 3: Destination Development.
8.2.9 Voted funds surrendered to the Revenue Fund The Department surrendered R7 562 million back to National Treasury in 2021/22 compared to R34 611milion in the 2020/21 financial year.

The surrender of funds to the Revenue Fund by the Department, no matter how small, remains a concern as the portfolio is not appropriated enough funds to fulfil its mandate.

8.2.10 Leave entitlement It is of concern that the Department has a negative Leave Entitlement amounting to R125 574.45.
The Committee noted with concern that at this stage the Department is not able to reliably measure the long-term portion of the Long Service Awards.

Due to the utilisation of Leave within the first quarter of the Leave Cycle (Leave taken without any Leave Credits 52 419 available).

The category “Other” comprises Long Service Awards.

“Leave Entitlement” provision for 2020/2021 has been decreased from R24.841 million to R24.814 million.
This is due to Leave that was not captured on time for the 2020/2021 financial year.

The Department should ensure a proper capturing of leave on the system.

8.2.11 Impact of the court interdict on the Tourism Equity Fund The Committee noted that the Tourism Equity Fund (TEF) is still affected by the court interdict.

The target relating to the TEF which was meant to offer grant-funding support for black industrialists in the tourism sector was not achieved.
This programme has been halted due to a court interdict which prevents the Department from disbursing the funds.

Even though the delay is not within the control of the department, this delay impacts negatively on the progress in transforming the tourism industry.

The Committee welcomes the innovation by the Department to seek legal opinion, which allowed the Department to capitalise the fund whilst waiting for the issues around the interdict to be resolved.
Though the target was not achieved, the impact has been mitigated as capitalising the fund is a good strategy to ensure that funds are available once the court interdict matter has been resolved.

The Committee urges the Department to continue monitoring the developments around this case.

8.2.12 The World Tourism Day celebrations The Committee welcomed the invitation by the Minister to attend the World Tourism Day celebration on 27 September 2022 in Hermanus.
The Committee is, however, dissatisfied with the level of the organisation of such an event.

The Minister and the Deputy Minister opted to attend the event organised by the United Nations World Tourism Organisation and abandoned the event organised by the Department.

The Interim Board of SA Tourism was also not acknowledged at the event despite the fact that they were at the event.
There was also no participation by either the Department or SA Tourism in the proceedings that were literally handled by the municipality and the Western Cape provincial government.

The non- participation of the Department and SA Tourism is a cause for concern as the event was organised by the national government in partnership with the province.
8.2.13 Delays in recouping Tourist Guides Relief Funds 53 420 The Committee is disappointed that the Department has not been able to recover all the funds paid erroneously to recipients who did not qualify for the Tourist Guide Relief Fund.

The Committee acknowledges that an amount of R51 700 had been recovered as at 31 March but by September 2022 the amount recovered was around R131 000.
It is also acknowledged that 47 recipients were in the employ of the state and that some are repaying through instalments.

8.2.14 Success of departmental youth and women programmes The Committee raised concerns about the effectiveness of the youth and women programmes implemented by the Department, especially placement after completing training.
The Committee, however, noted challenges and progress in the implementation such as: • The youth and women are empowered in a number of skills spanning various careers.

They need to spend some time in the practical experience training.

Arrangements are made with host employers to expose beneficiaries on practical skills.

Stipends are paid to alleviate poverty whilst imparting skills.
• In alleviating COVID-19, the capacity building programmes included that the retrenched youth will continue being hosted by the employers.

The training offered to the youth equipped them with more skills, such as training on Norms and Standards for safe operations at tourism facilities.

• Currently, the Department is in negotiations with associations in the accommodation sector to indicate areas in which the youth could be placed.
A database has been made available to the Department of Employment and Labour to assist with placement.

The private sector is participating in the database to increase the employability of youth.

• The employability is increased through incubation programmes, such as for sommeliers and chefs to gain business skills to run their own businesses.

• Some community based projects were being identified for implementation - this is a pilot programme and will commence soon.
• The Phalaborwa and Manyeleti incubators sourced a number of women – at some point there was a rotation of over 50 women in each incubator.

54 421 • The Women Executive Development Programme partners with tertiary education institutions in ensuring that women participate fully in tourism programmes.

8.2.15 Safety and security for tourists The Committee noted with serious concern the deepening situation on safety and security for tourists.
The situation was exacerbated by the fatal shooting of a German tourist en route to the Kruger National Park in Mpumalanga on the 3rd October 2022.

The Committee also noted that three suspects have been arrested by the South African Police Services in relation to the murder of the tourist.
The Minister of Tourism is commended for her role in the matter and the efforts she showed with her team in taking time to reach out to the family of the victim, the other three tourists and getting to the bottom of what happened.

The Committee is concerned that this incident may discourage international tourists to come to South Africa and seriously have a knock on effect on forward bookings, even inducing cancellations.
The Committee acknowledges the efforts made by the Minister of Tourism on the matter of safety and security and the work with the South African Police Services, but calls for more measures to be put in place.

8.2.16 Attacks on long distance bus operators The Committee has observed increasing incidents of attacks on long distance busses.
In this regard, the Committee convened hearings with the affected parties, being the Intercape Long Distance Bus Liner and also the leadership of the South African Police Services and the Minister of Transport.

The Committee is of the view that the ranking of 112 in 117 countries in Safety and Security should provide an increased impetus in solving matters that have a potential to exacerbate the situation.
The ongoing targeted attacks on long distance busses is a ticking time bomb should international tourists be hurt in the attacks.

The matter has been escalated with the Minister of Tourism to call for an InterMinisterial Committee to work with NATJOINTS on the matter.

The Committee will impress on the Minister to provide a comprehensive feedback to the letter written by the Chairperson on how she has escalated the matter at a Cabinet level.
A decisive action by the NATJOINTS is necessary to avert incidents such as the recent killing of the German tourist in Mpumalanga.

8.2.17 Increased cost of air travel 55 422 It was noted that the Global Business Travel Association (GBTA) has predicted that air travel cost will continue to rise sharply for the remainder of 2022 and the entirety of 2023.
The organisation’s 2023 Annual Global Business Travel Forecast, which examines costs across the world, predicts that 2022 will see a full year average increase of 48.5 per cent in airfares, 18.5 per cent in hotel rates and 7.3 per cent in car-rental charges.

In 2023, airfares are expected to rise by 8.4 per cent, hotel rates by 8.2 per cent and car rentals by 6.8 per cent.
The sentiments raised by industry experts note that the rising fuel prices, labour shortages, and inflationary pressures in raw material costs are the primary drivers of the expected price growth.

The demand for business travel and meetings is back with a vengeance, of that there is absolutely no doubt.
However, labour shortages across the travel and hospitality industry, rising raw material prices, and greater awareness for responsible travel are all having an impact on services, but predicted pricing is, on the whole, on a par with 2019.

The Committee noted with concern that the demise of the domestic air carriers in South Africa has exacerbated the increase in prices for domestic flights.

This will bring more pressure on the sector, in addition to the forecasted increase in international flights.
The Committee will continue engaging the Minister on the strategies to cushion citizens from the increasing cost of air travel.

8.2.18 Vacancy rate The Department is doing well on the vacancy rate as it stood at 10 per cent at the end of the financial year.

The Departmental post-establishment was at 512 with 461 positions filled and 51 positions vacant.
The Committee noted that 2021/2022 was the first year of the implementation of the National Treasury reduction of baseline which included budget cuts within Compensation of Employees, resulting in several previously funded positions declared unfunded.

While the target on 10 per cent vacancy rate was achieved, the target on 50 per cent female representation at Senior Management Services was impacted.
Observations with regard to South African Tourism The following observations were made in relation to South African Tourism from the Report of the Auditor-General and the analysis of the Annual Report: 56 423 8.2.19 Confusion about the Interim Board and merger of SA Tourism with Brand South Africa The term of the Board at SA Tourism expired at the end of May 2022 and the Minister of Tourism published the call for nominations in Government Gazette 45909 dated 11 February 2022, in terms of the Tourism Act.
The appointees were to serve a three-year term effective from 1 June 2022 until 31 May 2025.

Nominations were invited until 7 March 2022.

The call for nominations in the Government Gazette 45909 seems to have been put in abeyance and the Minister appointed a new Interim Board for SA Tourism.

However, the new Interim Board has not been gazetted and this makes it difficult to ascertain its legal standing.
The Committee is advised to enquire from the Minister about the legal prescripts used to establish the new Interim Board.

In a press briefing on Thursday 1 September 2022, the Minister announced that the President had given the green light for the merger of Brand SA and SA Tourism.

In that press briefing, the Minister indicated that the process of legal and regulatory changes still needed to be completed.

In the meantime, there will be a combined interim board.
This will allow the two entities to collaborate as single entities under the Tourism Ministry.

It is thus important for the Committee to follow up on the merger process and the legal/regulatory requirements inherent thereto.

Of great concern, is that after the announcement by the Minister of Tourism on the imminent merger, The Presidency has subsequently made a call for nominations for members to serve on the board of trustees of the Brand South Africa trust on 17 October 2022.
The closing date for the receipt of nominations was indicated as 28 October 2022.

This leaves the state of governance at SA Tourism in tatters as the Board is not properly constituted and the Entity is without a permanent Chief Executive Officer.

The merger follows the decision of the Cabinet Lekgotla of January 2020 which directed that government entities should be rationalised and repurposed.
As part of this exercise, SA Tourism and Brand SA were identified as entities that have similar and/or related mandates.

Since this Cabinet decision, the Committee has been following up on the matter fervently, but information was not readily made available.

57 424 This matter therefore creates great confusion and the Committee is uncertain whether the merger is going ahead.
This then makes it even more confusing to understand the rationale of establishing an Interim Board for SA Tourism if the merger is not going ahead.

The Committee is also uncertain about the entire process of the merger and the legal standing of the Interim Board.

Clarification on this matter is critical as the Interim Board may approve strategies and expenditure of budget by SA Tourism.
If the Interim Board is not properly constituted, this may render all the financial expenditure approved by it as irregular expenditure, and may cause serious challenges for the Entity.

8.2.20 Audit opinion In the 2021/22 financial year, SA Tourism received a financially unqualified opinion with findings on compliance with key legislation.
The Committee noted that this was an improvement as the Entity received a financially qualified opinion in the 2020/21 financial year with findings on compliance and predetermined objectives.

In the prior year, SA Tourism was qualified on marketing expenditure and receivables from non-exchange transactions as management did not have sufficient controls to ensure completeness of expenditure incurred by third parties on behalf of the Entity.
The Committee, however, is of the view that this audit opinion should not be celebrated as the Entity did not adequately implement its Audit Action Plan and incurred numerous repeat findings.

8.2.21 Budget and expenditure patterns SA Tourism spent R1 273.8 billion of R1 417.

6 billion available in the period under review, accounting for 90 per cent expenditure.

The Entity incurred under expenditure of R143.7 million, which accounts for 10 per cent under expenditure.
On the achievement of targets, the Entity had 42 targets in the 2021/22 Annual Performance Plan.

A total of 32 targets were achieved, accounting for 76 per cent performance.

A total of 10 targets were not achieved, accounting for 24 per cent underperformance.

This indicates that SA Tourism had poor performance in both financial management (expenditure) and achievement of the pre- determined objectives.
The Committee noted the following expenditure patterns: 58 425 (i) Irregular expenditure SA Tourism had a total irregular expenditure of R6,80 million as follows: • R4.47 million was incurred on marketing procurement where competitive bidding process was not followed related to the “I Do Tourism” campaign.

• R1.5 million was incurred on expenditure without obtaining the necessary approvals, for collaboration of SA Tourism and the Eastern Cape Parks and Tourism Agency.
• R830 000.00 was incurred due to preferential points system not applied correctly on the appointment of internal auditors.

The irregular expenditure incurred by SA Tourism relates mainly to non-compliance with Supply Chain Management (SCM) prescripts which was due to a lack of preventative controls to ensure compliance with SCM legislation.

This is a cause for concern as it led to many repeat/ recurring findings similar to prior audit periods.
(ii) Irregular expenditure being investigated It was noted that SA Tourism is currently investigating irregular expenditure of R45,13 million, which is currently being subjected to consequence management processes.

Pending conclusion of investigations, the Entity might have incurred more irregular expenditure in the current financial year.

The Committee will follow up on the irregular expenditure being investigated and outcomes of consequence management.
(iii) Quality of financial statements The quality of submitted annual financial statements is an area of concern for the Entity as material adjustments were made to the financial statements that were submitted for audit for SA Tourism.

The errors identified range from inconsistencies between figures reported in the financial statements and the notes, to formula errors and inappropriate presentation.
This was mainly due to inadequate review of the annual financial statements as the errors could have been identified had timeous and proper reviews been 59 426 undertaken.

The cause for concern is that the financial statements were approved by the Board and the Audit and Risk Committee.

Given that this is a repeat finding, it begs the question whether the Entity has adequate capacity to prepare financial statements.
8.2.22 Vacant position of the Chief Executive Officer and other vacancies The Committee noted that whilst the Entity has done extremely well in filling critical vacancies, the Chief Executive Officer (CEO) position remains vacant since 1 June 2021.

The absence of the permanent Chief Executive Officer might have affected the performance of the Entity in the period under review as the organisation did not manage to implement its Audit Action Plan and incurred recurring findings.
The Entity is commended for filling the vacancy of the Chief Operations officer and the Chief Quality Assurance Officer, which was an internal appointment.

The indicates that the Entity has depth of skills and can empower its internal employees to rise to management echelons.
The Committee was, however, concerned that due to the reason by the Minister to appoint the Acting CEO to act in lieu of the Board, the new Chief Operations Officer is occupying the position of the COO and the Chief Marketing Officer.

In total, the Entity has 202 posts in its staff establishment.

A total of 186 are filled and 16 are vacant, constituting 7.9 per cent vacancy rate.
8.2.23 Failure to implement IT Governance It was observed with serious concern that the Entity performed badly in its IT governance.

This is a cause for concern as SA Tourism has no formalised processes relating to IT governance that will direct and evaluate the use of IT to support its operations.

These processes include the formalisation of the IT governance framework, IT strategic plan and IT policies.
Without these processes, SA Tourism will not be able to monitor the use of ICT to achieve its plans, use IT strategy and policies to accomplish its purpose and align the IT strategy with its goals.

The areas of work affected include, among others, the core marketing function; the National Conventions Bureau and the Tourism Grading Council.

Instead of improvement, the Auditor- General made findings that the Entity regressed on the IT environment.
This Committee will put this matter under critical scrutiny as it has serious repercussions for the business processes of the Entity and modernising the tourism sector in South Africa to be on par with the world on the usage of technology by the Entity.

60 427 It was noted with optimism that the Entity applied consequence management on the previous IT management team that failed to improve IT governance, and that the new staff has been recruited to improve the IT regime.
The Committee will continue paying attention on this significant aspect of the work of the Entity.

8.2.24 Fatal shooting of the German tourist The Committee noted that the murder of international tourists in South Africa attracted widespread reporting in international headlines.

Consequently, the US embassy in South Africa has issued a security alert advising US citizens to steer clear of the Kruger National Park’s Numbi Gate.
This alert cites an increase in crime in the area and warns travellers to use alternative entrances to the Kruger National Park The Committee commends the quick action by the Entity to immediately deploy the Chief Operations Officer to the area to be the eyes and ears on the ground.

As reported by the Entity, this led to the incident not being widely reported in the international media as there was personal contact and guidance given to the affected touring German party.

9.
9.

RECOMMENDATIONS The Committee, after a careful consideration of the Annual Reports of both the Department and SA Tourism in the implementation of the budget appropriated for Vote 38 makes recommendations to the Ministers of Finance and the Minister of Tourism respectively, for responding on or before the end of the 2022/23 financial year, namely 31 March 2023.
Recommendations to the Minister of Finance It is recommended that: 9.1 The National Treasury appropriates a ring-fenced budget that will be used to develop, enhance and market domestic tourism which is a cornerstone for successful tourism destinations.

61 428 9.2 The National Treasury appropriates budget that will allow sector recovery and assists in surpassing the 2019 performance levels before the advent of the COVID-19 pandemic.
Generic recommendations for the Department of Tourism and South African Tourism The following generic recommendations are meant to ensure that the Minister, the Board and Accounting Officers of both the Department and the Entity are collectively and individually held accountable.
9.3 It is recommended that the Minister of Tourism honours and attends all the meetings of the Committee as this is a statutory requirement that allows the Committee to exercise its oversight role effectively and for the Minister to account to Parliament accordingly.
It is recommended that the Minister of Tourism ensures that the Accounting Officer of the Department, the Board and Accounting Officer of SA Tourism: 9.4 Develop and maintain Audit Action Plans and implement these timeously to address audit findings.

9.5 Monitor performance and consequence management in relation to the reported findings on expenditure management as well as procurement and contract management at the Department and SA Tourism.
9.6 Impose consequence management on all officials that flout government policies and legislations and implement preventative controls relating to Supply Chain Management.

9.7 Strengthen controls to prevent irregular, fruitless and wasteful expenditure and impose consequence management on officials who are involved in financial malfeasance.

9.8 Improve the quality of the financial statements.

9.9 Enhance the achievement of targets and service delivery objectives.
62 429 9.10 Implement strategies to overcome challenges relating to under achievement of targets in the tourism portfolio.

9.11 Urgently submit and present to the Committee the Audit Action Plans for both the Department and SA Tourism to ensure all the identified issues are addressed effectively and efficiently.
9.12 Engage Cabinet on developing a war room comprising all departments that affect the mandate of the Department of Tourism and/or an InterMinisterial Committee that will focus on cross-cutting matters that affect tourism and ensure that government takes cognisance of the Travel and Tourism Development Index in their planning.
Recommendations with regard to the Department of Tourism The Minister of Tourism should: 9.13 As recommended in the previous financial year, expedite the policy review process and table the Tourism Amendment Act in time to be processed and finalised by the 6th Parliament.

9.14 Conduct follow up with regard to payments made to beneficiaries who did not qualify for the Tourist Guide Relief Fund and provide a comprehensive report on the recovery of the incorrectly disbursed funds.
9.15 Work closely with the Minister of Police to develop effective strategies that enhance safety and security for tourists and explore the possibility of establishing Tourism Police to be deployed in tourism crime hotspots throughout the country.

9.16 Work with the Department of Employment and Labour to address the employment patterns in the tourism sector, ensuring citizens are given preference to foreign nationals.
9.17 Work with the Tourism Business Council of South Africa to ensure that foreign nationals already employed in the sector are paid according to the minimum wage applicable in the tourism sector.

63 430 9.18 Work with the National Public Transport Regulator to ensure that tour operator licenses are issued timeously and that there is equity in the issuance of operating permits to advance transformation imperatives.
9.19 Ensure that all the Working for Tourism infrastructure projects are properly implemented and prepare a progress report on each of them.

9.20 Ensure that the tourism grading policy of the country is made free but compulsory and that this change in policy direction is captured in the new Tourism White Paper in order to facilitate the standardised quality assurance throughout the sector.
9.21 Work with the Department of Home Affairs and other stakeholders to facilitate the introduction of Digital Nomad Visa in South Africa to mordenise the tourism sector in the country to be on par with the rest of the world.

9.22 Work with the Department of Homme Affairs to roll out e-visas for many countries which form tourism markets for South Africa.
9.23 Work with the South African Local Government Association (SALGA) and the Department of Cooperative Governance and Traditional Affairs(Cogta) on maintaining tourism infrastructure throughout the country, including dealing with sewage spillage that has affected tourism in Durban.

9.24 Ensure that the Incubation Programme implemented by the Department goes hand in hand with programmes to formalise the informal tourism sector, particularly in villages, townships and small towns/dorpies (VTSDs).
9.25 Explore implementing more programmes that will empower women in the tourism sector.

9.26 Explore possibilities of formalising/insourcing Tourism Monitors into formal departmental programmes.

9.27 Intensify the implementation of the Hospitality Youth Programme.

64 431 9.28 Work with all vested stakeholders to ensure provision of ablution facilities at all tourism attractions throughout the country, especially those in rural areas.
9.29 Facilitate the development of tourist attractions for the inclusion of previously disadvantaged communities, especially in rural areas.

Recommendations with regard to South African Tourism The Minister of Tourism should: 9.30 Provide an urgent, full and separate briefing on the merger of SA Tourism and Brand SA in relation to Brand SA relocating to the Department of Tourism from the Presidency, to assist the Committee in understanding the implications on broad mandate, budget and staffing.
9.31 Provide the process followed in appointing the new Interim Board of SA Tourism and the current legal standing of the Interim Board.

9.32 If going ahead with the merger, ensure that the Board of the new merged Entity is properly constituted and dispatches its role efficiently and effectively.

9.33 Ensure that the new Board of South African Tourism initiates and expedites the process of appointing the Chief Executive Officer for the Entity.
9.34 Work with the Board of SA Tourism and the Tourism Business Council of South Africa to digitise the tourism sector in the country and ensure that the industry is on par with the world in terms of IT governance and its application.

10 CONCLUSION This Budget Review and Recommendation Report has been compiled taking all the factors in the national fiscus and the service delivery environment in which the Department of Tourism and SA Tourism pursue their respective mandate.
The report acknowledges that the 2021/22 financial was not an easy year for the tourism sector as the effects of the COVID-19 pandemic are still lingering in the sector.

65 432 The efforts of the Department to transform the sector were still hum strung by the court interdict on the implementation of the Tourism Equity Fund.

This has meant that the major transformation programmes were halted and the impact of the interdict widely felt both by the Department and the sector at large.
The brilliant thinking by the Department to capitalise the fund whilst awaiting the resolution of the matter is seen as a creative initiative that will allow smooth implementation once the court interdict has been lifted.

The performance of the Department remained unchanged on both financial management and audit opinion by the Auditor-General whilst SA Tourism had an improvement from a qualified audit to an unqualified audit with findings.
There is still a lot of work to be done by both the Department and the Entity to improve on the financial and non-financial performance.

The continuation of the non-implementation of programmes and projects due to Supply Chain Management issues remains unacceptable and the Minister is urged to seriously deal with the non-implementation of the Annual Performance Plan.

The issue of safety and security also remains a serious challenge in the sector.
Dealing with this matter needs a collective effort of various government departments, the private sector and communities.

The image of the country is already tarnished, and the destination cannot afford to lose more brand image due to crime in the country.

The Committee will continue monitoring the implementation of the Audit Action Plans for the Department and SA Tourism to improve on the audit findings made by the Auditor-General.

Report to be considered.

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