Department and USAASA on Adjusted Budget & Revised Annual Performance Plan; with Minister

Meeting report

The Chairperson said this meeting was being held because the supplementary budget would have affected certain departments, and that the Universal Service and Access Agency of South Africa (USAASA) and the Department of Communications and Digital Technology (DCDT) were presenting to the Committee as their budgets had been revised downward.

Minister Stella Ndabeni-Abrahams said that changes had been made with the budget review, and the presentation would focus on the programmemes and plans being rolled out. There was continuous engagement with the National Treasury, and the plans and outcomes, as well as the means of getting extra funding, would be reviewed again in September. The Minister then handed over to Mr Omega Shelembe, DDG: SOC Oversight, DCDT.

Mr Shelembe introduced the delegation who would be presenting to the Committee, and handed over to Ms Joy Masemola, Chief Financial Officer (CFO).

DCDT: Revised budget

Ms Masemola said a R3.4 billion budget had been allocated to the Department, and referred to the funds which had been earmarked for various projects, such as the SA Connect Project, which had been allocated R184 million. R522 million had been allocated for the new model of the Broadcasting Digital Migration (BDM) project. The USAASA costs on the distribution of the South African Post Office (SAPO) amounted to R178 billion for the 2020/21 financial year.

Savings achieved with the goods and services amounting to R33 million had been mainly derived from the travel and subsistence budget, advertising, consultants and training and development venues, because these line items had been affected by the COVID-19 pandemic, and the funds allocated could not be spent. There was no budget cut for Programme 2, as it had been negatively affected by the unfavourable exchange rate during the payment of the international membership fees, and savings declared from this programme had been shifted to the line item to cover the gap.

Programme 4 was mainly driven by transfers to the entities, and its goods and services budget was very small. Following discussions with National Treasury, only R522 million had been earmarked for the BDM project, and 15% (R78.3 million) would be cut. The Department had requested the National Treasury to utilise the R242 million in interest that it would retain for the 2019/2020 financial year for the TV project to assist indigent grade 12 learners affected by COVID-19.

The budget cut amounted to R111 million, which had been confirmed by the adjustment appropriation bill.

On the impact of the budget cuts, funds had been redirected to provide for personal protective equipment (PPE), sanitisers, sick bays, decontamination of premises, the provision of data, and tools of trade for all employees to work remotely. These budget cuts had affected annual performance plan (APP) targets that were presented to the Committee, and the APP would be reviewed in line with the revised budget. The revised APP would be presented to the Minister and presented in Parliament and to the Committee.

Ms Nomvuyiso Batyi, Director-General: DCDT, described the commitments for the current financial year. There was Phase 1 of the BDM programme, which involved depletion of the stock that was currently at the Post Office, and it was being ensured that there would be stakeholder involvement and participation across all provinces. The registration and localisation framework was also taking place during Phase 1.  Phase 2 involved the voucher system which would impact the affordability of the migration of devices such as decoders and integrated digital television (IDTV) sets. She stressed that USAASA was committed to ensuring that the BDM programme was implemented.

Mr Basil Ford, Executive Caretaker of USAASA, explained how Phase 1 and 2 would be implemented by USAASA. As R78 million had been taken away, there would be a shortfall of R43 000 households qualifying to be migrated. National Treasury had approved R242 million for USAASA to provide IDTV sets to matriculants from indigent households. This programme was a part of BDM Phase 2. More than 150 000 households would receive IDTV, which would offset the reduction through the reallocation of the budget.

Mr Sipho Mngqibisa, Executive Manager: Performance Management, USAASA, presented on the background of BDM and the direct impact on the APP. He said the delivery model for the DCDT had been revised in December 2019. SENTECH would collaborate with USAASA to implement Phase 1 and the 860 000 of set-top boxes (STBs) procured in the prior years. Under USAASA, IDTV sets would be issued as part of the government’s response to COVID-19.

He highlighted Phase 2 implementation, where vouchers would be distributed to the qualifying households. Previously, from the APPs presented in Parliament, the value of the voucher system had been R578 million, but due to budget cuts, the number of qualifying households that would have been provided with vouchers in the third and fourth quarter had been reduced. Mr Ford had spoken about a project for the 2020 learners which would compensate for the shortfall.

Mr Frik Nieman, CFO: USAASA, spoke about the amount of money that had been allocated to the BDM project over the past ten years. The focus had been on the 2021 financial year. He reiterated that R578 million had been allocated, and the amount that the budget had been reduced to by the National Treasury was R78.3 million. For 2021/2022, USAASA had not been given any reduction in its budget by the National Treasury.

Discussion

Ms P Faku (ANC) asked about the budget shortage, and if all the targeted households would be covered. She asked about the proposal for the antennas and a timeframe, as the presentation had not dealt with the antennas. Had talks with stakeholders begun? She congratulated USAASA on the project to have TV sets in classrooms for matric pupils. Had a memorandum been signed with SENTECH?

Ms Batyi referred to the budget reduction in the second phase, and said R78 million had been taken from USAASA’s budget. It had been allowed to keep R242 million.

On the final date for BDM, USAASA had presented on the implementation of the model and how it saw digital migration being implemented. The finalisation date would be December 2021.

Mr Ford responded on the timeframes, and said that in BDM Phase 1, no funds had been taken away, and depletion of stock would take place. The important thing was that SENTECH would assist in accelerating the depletion of stock as it had a good footprint throughout the country, as well as the expertise to manage the installation and do the quality assurance checks which had not previously been done.

Ms P van Damme (DA) asked if the South African Broadcasting Corporation (SABC) staff could be present at the next meeting on staff retrenchments to ensure the process was unfolding in a fair manner. What had the process been thus far, and had any concerns been noted? The adjusted budget was an important trial run for the government to change with the times during the financial year.

She expressed a very strong objection to the R240 million that had been allocated for the IDTV’s for indigent matric pupils, as it made no sense. What would happen to next year’s matric pupils? There should have been a discussion with the Department of Basic Education (DBE), and money should have been allocated to provide learners with laptops, or whatever would be necessary, and which could then be allocated to next year’s learners. IDTV sets were an absolute waste of money and would not only go to the matriculant, but also to the family.

She said the Minister had been very rude in her engagement with her and other Members during the Committee’s last meeting. As she was commenting further, the Chairperson called Ms Van Damme to order.

Ms Van Damme said the Chairperson had not called the Minister to order the last time.

The Chairperson insisted that he had called both Ms Van Damme and the Minister to order the last time.

Ms Van Damme said that she was “just saying that when she (the Minister) speaks back here, she better make sure she’s on her P’s and Q’s.” She had wanted to understand the rationale behind the decision, and whether a tender had already been allocated. She insisted that the Chairperson had not called the Minister to order the last time.

Mr Ford said that USAASA had been in consultation with lawyers to compile an agreement for signatures. There had been a tender for the procurement of IDTVs, and the tender had closed on 2 July. The evaluation process would take place over one to three weeks, depending on the level of complexity. USAASA had engaged at a local and national level, and everyone was excited to assist matric pupils and ensure that IDTVs were distributed to the correct people.

Mr C Mackenzie (DA) asked about the executive caretaker role that Mr Ford held, as he had never heard of such an appointment before. He asked what the role entailed -- its duties and responsibilities. What did the vouchers look like, how much were they worth, and could they be redeemed for cash? What were they for? Were they designed for specific equipment? He asked for more details on this. The poorest of the poor must never be disconnected from the public broadcaster because if they were, they were being let down, because this was the main source of their information. What steps were being taken to prevent exploitation of the recipients of vouchers and to prevent the abuse of the system, not so much by the beneficiaries of the vouchers, but by the people who exploited them?

He expressed concern over the IDTVs for matric pupils, and asked how it would help, as he shared Ms Van Damme’s concerns. He pointed out that television sets were being rolled out to matric pupils now, but that it was 7 July and exams would be written in November. He did not understand how it would help this year’s generation of matric pupils. The matric pupils from poorer communities would lose their school year, and their chance at equal opportunities in life. Since July 2015, which was the targeted deadline for the switch off of analogue, the signal in those bands had not been protected and anyone could weigh in. What was the final completion date for the broadcasting digital migration project?

He pointed out that in Phase 2, 3.2 million people still needed to be connected. He stressed that the timeline for this, and how it had been extended, was completely unacceptable. He referred to the acquisition of set top boxes and the number of times the government had been taken to court by manufacturers over whether there would be encryption or no encryption, which had delayed the process. There were also manufacturers who had never manufactured a single box. The process had been fundamentally flawed as it was rolled out, and this could be seen in the amount of stock that was currently at the Post Office which was still to be distributed. What steps were being taken to ensure that a similar process did not recur around the procurement of IDTVs?

Mr Shelembe said that Mr Mackenzie had not been around when the role of the caretaker had been discussed.

Ms Batyi said the delivery model on vouchers had previously been explained, and vouchers would be for a device that would ensure there was migration. This included devices such as IDTVs and STBs. This had been recognised by Treasury, as well as the fact that there would be a shortfall. The Minister was tasked with searching for alternative funding in the case of a shortfall.

Mr Ford said this was a noble project, and that USAASA was trying to help matriculants across the board. The reality was that it was not late, and the school year was still fluctuating between opening and closing, and programmemes were being broadcast on TV which gave matric pupils an opportunity to catch up. When he was in matric, the most crucial time for him was just before the preliminary exams, and before the final exams. With this project, USAASA was trying to give children an opportunity who would otherwise never have had it. The matric year was the most important in pupils’ entire lives, because it was the point where doors either opened or they did not. This project made sense and had a huge impact. He said vouchers cannot be converted to cash. Every precaution was being taken to ensure that people would not sue government by going through procurement rules, and assessing this fairly.

Ms Batyi said there would be an advertising and media campaign, where those falling outside of the subsidised market could refer to and ensure that they purchased antennas that would enable them to receive DCDT channels. As a result of set top boxes, standards with the Independent Communications Authority of South Africa (ICASA) had been relaxed, and they would not only be expensive STBs, but would be of a standard that allowed manufacturers to make cheaper ones. Prior to this meeting, the Minister had met with all original equipment manufacturers (OEMs) to go through the revised standard, as published by ICASA.

Ms N Khubeka (ANC) shared Ms Faku’s sentiments, and agreed with TV sets being distributed and referred to rural areas where this was needed. She also supported the view that laptops were needed for matric pupils. She said learners were still faced with challenges in using laptops. She asked for a time frame for the project to be rolled out. Was it still possible to reach the 2021 deadline for projects, since the peak of COVID-19 was being reached? Would USAASA be able to meet this deadline, and was it managing with its duties and the setting up of set top boxes?

Ms Batyi said that during Level 5 of the Lockdown, the manufacturing and installation of set top boxes was not allowed. A period of eight weeks had been lost in meeting the deadline, and entities had received a directive that they were allowed to change APPs. USAASA and DCDT would align their directives considering the time that had been lost and the interruptions that had taken place.

The Minister said she wanted to answer a question which both Mr Mackenzie and Ms Van Damme had asked, which the delegation from USAASA and DCDT had not answered. She had noted their concern on the issue of IDTVs. She had explained at the last meeting that the money, according to Treasury rules, was a budget that was ranked first, which meant that the money could not be used to purchase other things. The money to purchase IDTVs had not been taken from another budget. Households with matric pupils would be prioritised, and the Department did not have the responsibility to purchase laptops. The only issue on procurement would be the pricing.

Further discussion

Mr Mackenzie asked about 2023, and questioned why R62 million was being carried forward as a revised baseline into 2022 and 2023, and what the implications of this were. On the tender process, in the worst case scenario, were the vouchers restricted to a specific IDTV? If the tender was awarded in July, what was the lead time to manufacture almost 300 000 television sets? Would vouchers include TV licences, as this would be a great way of funding the SABC?

Ms Faku said the work that had been done must be appreciated. It was important to appreciate that progress had been made and that timeframes be established and agreements must be signed. She said people receiving TV sets should be motivated to pay TV licences on a monthly basis so the SABC could generate revenue from this.

Ms Van Damme said the work that had been done was appreciated, but at the same time a fish could not be congratulated for swimming. The government had to be dynamic and nimble, and move with the times. It was a problem that there were learners who did not have online tools, and this was an area where government had failed. Government had shown that they could deliver, but there seemed to be a lack of political will. This highlighted a delivery problem. By the time the tender process was complete and all other processes were dealt with, these matric pupils would fail as it would be far too late when the pupils received the TV sets. She said government should think creatively about preparing learners for the Fourth Industrial Revolution. Had the Minister or the Department assessed the procurement process, and were they satisfied that the process had been undertaken fairly?

Ms Kubheka said the Department of Education was responsible for many issues that had come up, and it needed to play its role.

The Chairperson asked if the Minister wanted to respond to anything, and proceeded to summarise the meeting.

The Minister thanked her team for responding to all the critical issues that had been raised. Documentation would be shared with the Committee on issues that still required further clarity. She hoped the Committee could assist in getting funding for areas that had not been covered.

Mr Mackenzie asked about the relevance of the Universal Service and Access Fund (USAF) digital migration carrying over into 2022 and 2023, and how it fitted into the deadline of 2021.

Mr Nieman said Phase 1 would be completed by December 2021, as was reflected in the APP. Phase 2 showed that R578 million had been reduced to R500 million, and R1.1 billion in the 2020/2022 financial year, which would kick off in the third quarter of the 2020/2021 financial year. Phase 2 would be completed in the 2021/2022 financial year.

Ms Mackenzie said the information seemed contradictory.

The Minister clarified that when the plans and APP were made by the National Treasury, permission had since been given for her to seek more funding. Plans had already been submitted and would continue in terms of budget allocations. The deadline was 2021, which was why it was important to secure funding now.

Ms Van Damme asked how the negotiations were going.

The Minister said the Deputy Minister was in the process of engagements, and was preparing to meet with the unions and have a clear plan to roll out. Once she had a clear plan, she would compile a report which would be tabled to the Committee. She had started this work last week, and was currently busy with it. 

Ms Kubheka said the Department had an oversight role to play, and needed to be given a chance and be supported.

Ms Faku said it was important for the Committee to ensure that digital migration was available soon. She said the SABC would benefit from receiving TV licence fees.

The Minister said the Department was encouraging the fact that the SABC should benefit from paid TV sets, and that it was working with the regulator.

The Chairperson said the Committee would be meeting with the SABC soon. He pointed out that the Committee was not in agreement on retrenchments.

The meeting was adjourned.