Reconfiguration of Departments of Communications & Telecommunications, with Deputy Minister

Meeting report

Ministry remarks
Deputy Minister, Pinky Kekana, noted that there had been a request from the Committee to report on how the reconfiguration process of the two Departments is going. Last year that the President gave a direction that the Departments of Communications (DOC) and of Telecommunications and Postal Services (DTPS) should merge due to the overlapping roles and concurrence of the two Departments. ICASA as an example has responsibilities to report and interact with both Departments. Even policy frameworks exist in concurrence of both Departments. Therefore, to enhance coordination and bring the two more in line with each other, the two Departments will be merged, and their entities will be reconfigured.

One has to look at the policy and legislative framework that cuts across both Departments and entities. Where there are entities with boards there is also a need to strengthen governance structures. Recently all their entities were encouraged to respond to the question of what becomes the new vision, mandate, strategy for deliverables, moving forward and how as entities and as a newly merged Department can these be aligned effectively.

Three entities have been identified as key focuses for the Department, SABC, SITA, and the Post Office and Post Bank. SITA, especially because of the fourth industrial revolution, needs to respond to ensure it is well capacitated and resourced. There are many private companies that are facilitating the roles that the Post Office is supposed to be doing, therefore, there is a need to restructure and reconfigure the Post Bank and Post Office to become fully functional and perform these roles. As the Committee is consistently briefed on the reconfiguration, it is hoped it can ensure the Department is giving the necessary support to these entities to function effectively.

Reconfiguration briefing
Mr Robert Nkuna, DTPS Director General, said the merger of the two Departments is part of the National Macro Organisation of Government (NMOG) as led by the Presidency supported by the Department of Public Service and Administration (DPSA).

Slide 4 outlines the governance structure of the NMOG merger process. There is a Committee of Directors General led by the DG in the Presidency who convenes the DGs of DPSA, National Treasury, Government Communication and Information Services (GCIS), and Public Works. These are the enablers of Departmental reconfiguration at the national level. Within the DTPS and DOC reconfiguration the DG and Acting DG of the respective Departments are overseeing the merger.

The first steps for the merge into the Department of Communications and Digital Technologies (DCDT), which is already happening, is to look at the HR and the repositioning of roles. An analysis of the similarities and differences of roles within the two Departments has been done and a macrostructure draft has been created to show how the Department can be structured. This will be submitted to the Minister by the mid September and feedback is expected in October 2019.

There is also a Departmental change management plan and strategy. The main focus of this is twofold. No one will be worse off due to the merger and no one is going to lose their job. However; of course, in some instances there might be some redeployment or redistribution of responsibilities, which may require upskilling or reskilling.

On infrastructure, there is a need to physically bring the two Departments together, as DOC is in the GCIS building and DTPS is in its own building. An analysis of the space within the DTPS building has been done, and slides 8-9 show the process of relocation of the DOC and integration with other entities. The two budgets will need to be integrated into one document.

On information and communications technology (ICT) when DOC and DTPS merge and share infrastructure space they will share IT services and the analysis of this has been done. From a legal point of view, internal audits have been done but there is a need to wait for the proclamations from the President on the laws that will be transferred from the two Departments to the new Department. The laws have been transferred to the Minister and based on this the Department has been able to begin mapping out specific legislative programmes based on this.

Communications is important and takes place at two levels. Firstly, it is led by GCIS, which is comprehensive government wide communications. The Department has developed its own communications strategy that allows internal interaction between its own employees and the ten cumulative entities that interact with both Departments.

The Minister was initially appointed to Communications, but it is now Communications and Digital Technology and the new laws have been transferred to Minister in August. Other activities that will happen in August are the transfer of serving heads of Department, agreement with organised labour in reference to the replacement of staff, and ring-fencing of staff, systems and resources.

• Across August and September, a service level agreement between the affected Departments on in-year sharing of services and financial transactions will be entered into. The ADG and DG have already signed a corporation agreement that ensures a legal precedent as the Departments work together.
• Between August and October there will be a there will be a transfer of functions and approval of the macro-organisation structure.
• Currently the new Department of Communications and Digital Technologies does not have any employees; therefore, in October to November in accordance with Section 14 of the Public Service Act employees will be transferred.
• September to November, there will be an application to National Treasury on the transfer of functions, budget shifts and budget structure. This is essential in making sure that by the next financial year there is only one budget.
• There is also a need for new forward strategic thinking in how and where the Department will discharge its responsibilities, particularly in light of the fourth industrial revolution. A meeting has been had with the 10 agencies and entities to engage them in the strategic planning process.

Reconfiguration of entities is a big task for the Departments. The Departments themselves mainly deal with policy matters, whereas the bulk of implementation lies with the entities. Regardless of whether the Department achieves 100% policy compliance this does not always translate to service delivery and the Department is measured by the public in terms of service delivery. Therefore, this will be a large focus for the Department going forward. One focus will be the establishment of a state infrastructure company, through the merger of Sentech and Broadband Infraco (BBI). The view is that by merging these entities it will maximise investment in the areas of broadcasting and broadband.

SITA is also a very big player in the South African economy, but the question has been asked that with government spending and the SITA model why are there so few black millionaires?The answer is that black players in this area are resellers, or resellers of resellers, where the margins are small. A new entity will then be created that will continue the functions of SITA but emphasise localisation.

Slide 16 speaks to the future of USAASA which manages the Universal Service and Access Fund but also runs projects that are in competition with infrastructure companies. What will happen from here is to take out all regulatory functions from this entity and repurpose it into a Digital Development Fund (DDF). Funding is necessary to move into the fourth industrial revolution and the Department has conducted exercises to understand the needs of SMMEs. The development financial institutions (DFIs) more often fund brick and mortar infrastructure and not digital technology, such as software. There is a need then for a development fund specific to emerging new technology companies.

The Digital Skills Institute is also a big initiative that has been considered for many years. The institute will act as a catalyst for the massification of skills not just at an academic level but also within society. A skills gap analysis concluded this as necessary to place South Africa as a real competitor in the world market. A skills strategy has been developed and presented to the different government clusters, and approval has been received from the DGs of the Social Services and Economic Clusters, this will then be taken to Cabinet. Normally skills development would be led by the Department of Higher Education, but it is key for DCDT to be involved as there is an engagement with the industry and knowledge of what is required. Whatever is done in terms of education must adhere to the needs of the industry.

Slide 18 refers to the corporatisation of the Post Bank. When looking at nations like Brazil or India the national banks are the biggest banks, and because of this they are able to achieve universality and inclusivity. The Bank of India’s mandate is to ensure all citizens have access to banking facilities. Currently Post Bank services around 5.8 million South Africans and has around R5 billion, where around R3 billion is with the Post Office and the rest with Post Bank. The Post Bank relies on the infrastructure of the Post Office and this is something that is looking to be changed as there may be occasion where only the banking services are needed and not post office services. This is currently being engaged with heavily to ensure that any separation does not destroy the function of the other.

The regulatory entities are ICASA, FPB and .ZADNA that are being considered for merge into one regulatory entity. It is necessary to especially look at .ZADNA as it came about as a collaborative effort with industry and is not funded by the state and will need to be integrated with the other regulators and continue to independently present at Committee meetings.

On the major turnaround initiatives, the first is to diversify the portfolio of the Post Office. For the SABC, the Department has been encouraging the development of a long term, forward looking strategy which has been funded by the Department. The Department has also been sitting with Treasury to ensure that this strategy meets the requirements of the Treasury.

There is an e-commerce role that the Post Office needs to fill. With the Department, the Post Office will launch an e-commerce platform that will assist SMMEs to sell products online. This will improve the national reach of SMMEs.

Key entities will be identified for turnaround and consideration given on how the Department can be involved to assist the process. At a later date the Department will also present its finalised five-year legislative programme.

Discussion
Ms P Van Damme (DA) said there is a need to see the Department moving and not still reconfiguring in five years time. The Communications Department has not had a permanent DG in almost five years. There have been too many actors and there is a need to fill that position permanently. There is also concern about the merging of ICASA, FPB and .ZADNA because ICASA is a Chapter 9 institution. Before this is done, a sound legal opinion is needed which states this can be done in terms of law.

More information is needed on the Fourth Industrial Revolution Commission, what is it, who serves on it? There is a need to include people from the private sector who are qualified and understand that industry not just government officials and bureaucrats. How is it funded and what are they doing as deliverables?

With the SABC turnaround strategy, the Finance Minister announced a reorganisation officer would be appointed and money given to the SABC. Has there been any information on that, where is that information, who is the reorganisation officer and what will they be doing? The Broadcasting Act is clear that any final decisions will be made by the SABC board. Finally, a comprehensive update of funding for SABC is something all of South Africa is waiting for.

Ms Van Damme said that the iKamva Digital Skills Institute trained 1000 people with the R100 million given to them. That money could certainly have been better off given to private sector bodies with greater expertise in digital training.

Mr C Mackenzie (DA) said that there had been a lot of changes in the Department of Communications. Five years ago there was the construction of the two separate Departments with new Ministers, new DGs, new staff. It is amazing that even with a year to plan already, the Departments are still in the process of planning. When it comes to digital technology the pace of technological development far outpaces this government's ability to keep up with it. If two more years are spent on talking, reorganising and merging then there are serious concerns of the country being left behind by the fourth industrial revolution.

The fiscus is drained. The amount of money spent every year on the public sector wage bill is unsustainable. It is very concerning to hear that no jobs will be lost, and no-one will be worse off in the merger of the two Departments. What is the rationale for merging these two Departments to ensure efficiencies, save money and deliver a better product when there will continue to be a blow to the public service wage? On that same point though what are the retention strategies in place to retain good people?

It has been mentioned that if you take the Post Bank out of the Post Office group it is bankrupt. There are known problems with the Post Office and its ability to compete with the private sector. All over the world mail does not make a profit so there is an integrated post office with a post bank because the cross-subsidy model works for post office organisations. If that is not going to be the case, the Department needs to explain why not and how it will be dealt with.

In terms of the DDF, can its objectives be met by the existing USAASA/USAF model, if they are properly managed? It was massively corrupt and mismanaged; however, that is now over, and proper management structures are in place. It is now a matter of controlling the process and directing the revenue. Could this not achieve the same results as the DDF?

Announced a week ago by the Minister was a training collaboration with Hauwei and this is happening for free. Google and Microsoft are also training thousands of people for free. Why then is money still going to the Skills Institute?

Finally, the merger of ICASA, FPB and .ZADNA is surely a non-starter. There is no comparison or synergy between .ZADNA and ICASA.

Ms Xego (ANC) said that this is certainly a work in progress, but it needs to be managed to ensure by the 1 March 2020 it is finalised and there is one department. On slide 13 there is a process plan, it says that in August there will be the transfer of serving heads of Department. It is the 27 August now, are the things to be done in August done, if yes, good, and if not, why?

There was mention that the iKamva Digital Skills Institute Bill was sent back to the Select Committee, what was the issue there?

There is an agreement between South African Social Security Agency (SASSA) and the Post Office on the grant payments. Is there a plan to change the environment around that, because the Post Offices are not safe, and people are afraid to go there and receive pension payments?

The two departments are operating on different budgets and accounting separately. Is there something that can be done to ensure that when the Department reports to the Committee it can showcase it will be ready for 1 March?

Ms Van Damme said the Committee should issue Committee condolences on the passing of journalist Ben Said of the eNCA.

Ms Van Damme noted that last week the media reported the Multichoice SuperSport deal enabling SABC to broadcast Premier Soccer League matches for which the SABC had to pay R72 million. Regardless of whether that is the correct figure, from where did that money come? It seems this deal was kept under wraps. Why was this kept confidential?

Responses
Deputy Minister Pinky Kekana replied the reason the Department has shared this timeline with the Committee because come the 1 April the Departments will be combined as the Department of Communications and Digital Technology (DCDT). However; there must becomplete ownership from all members of the Department to reach this goal. The Committee, the Department, and SOEs are all engaged to ensure the best approach is taken to form the DCDT.

As much as possible is being done to retain staff but if people see better opportunities of course some will be lost. Sometimes opportunities have other benefits that the public service cannot compete with.

SITA, through exposure to international business and industry will produce millionaires. Government’s requirement is to provide enabling environments for investment to take place and build SMMEs. A deliberate program by multinationals is needed to encourage SMMEs, along with the support of the Department and Committee, so transformation within this sector is driven. When considering reconfiguration there is a need to reskill and upskill to retain staff rather than push people out. While understanding the public sector wage budget is bloated, there is still a need to balance that with investment in skills to drive the economy.

There is a desire to see the Post Bank and Post Office working side by side. The challenges the Post Office went through mean there is a need to re-establish public trust. The argument is that the Post Office survives because of the Post Bank and that is why delinking them is not desirable. The Committee needs a bilateral with the Finance Standing Committee to understand another possible solution. What is necessary, is the survival and the thriving of the Post Office and Post Bank because of their current and potential influence in rural areas. Access to banking services for marginalised communities is imperative.

The Fourth Industrial Revolution Commission plan will be similar to the National Development Plan. This involves various sectors and many discussions within many entities, departments and parliamentary committees. Outreach programmes and engagement with every level of South African society by all sectors is crucial to the development of this plan to ensure that when that plan is tabled, it will respond specifically to the economy of South Africa and what is required.

Ms Nomvuyiso Batyi, Acting DG, DOC, responding to the question of the merger of ICASA and .za. The Department is still working on how this merger will work, understanding that ICASA is a chapter 9 institution. ICASA and FPD are responsible for content regulation in different forms. The FPD is responsible for ensuring the protection of elderly people and children. ICASA is responsible for content that is palatable and in line with media freedoms. .za is the registration of domain names in South Africaand aligned with international organisations. An OTP provider will interact with .za at some stage to have a domain name in South Africa. The need is for a regulator that is responsible for both business and consumer.

The Department is still looking at how the DDF will achieve the same results as USAASA/USAF. There were problems with USAASA, and there is a need for any fund to be registered and have qualifications in finance, unfortunately USAASA does not have these capabilities as it stands now. There was a trust ensued in managing a fund, without ensuring the management laws were in place as far as financial qualifications and registry.

In terms of specific details towards SABC and the Departments involvement, the Department is coming back on the 17th of September. More details can be shared now; however, this will be shared at that date.

Chairperson, Mr Papo AHM (ANC), there were specific questions raised about funding, and what the Department is doing that should be addressed now.

NomvuyisoBatyi, ADG, DOC, as a background then SABC applied for a bailout last year and government currency, 1.29  which was rejected. The Department hired the government technical advisorycentre (GTAC) to assist the SABC to make a palatable application. Working together the application was made and the National Treasury published a letter that gave SABC 9 preconditions. SABC responded to these on 17th/18th July after the deadline. Because this was responded to late the DG of National Treasury and the ADG of DOC worked jointly to conserve time.

Chairperson, Mr Papo AHM (ANC), there is an understanding that a detailed report will be received in September. The question asked was in reference to the reorganisation officer and whether they have been appointed. Secondly once that had happened money was to be released to SABC, has that happened?

Ms Nomvuyiso Batyi, DOC Acting Director General, said that there are still concerns about how the Chief Reorganisation Officer (CRO) will fit into the structure of SABC and so the process of appointing a CRO is ongoing. She has written to Treasury's Chief Procurement Officer to ask for recommendations.

The Minister of Finance said on 10 July that the SABC will receive the money on meeting the preconditions. The Department has requested information from National Treasury to find out how much that will be, which has not come through yet.

In terms of the SABC – Multichoice agreement, this is a commercial agreement between SABC and SuperSport. The agreement was made between the two parties and the role of the Minister was to facilitate that agreement in the public interest. SABC is allowed to enter contracts as agreed upon by the Board. The role of the Minister is to ensure that these agreements are in the public interest.

Mr Robert Nkuna, DTPS DG, replied that ICASA is already a merger of two authorities. In 2000 the Independent Broadcasting Authority and South African Telecommunications Regulatory Authority were merged into ICASA. Then in 2006 the postal regulator was merged into ICASA as well. Everything today is about the internet which provides the challenge of how and who is best to regulate it. His further responses:
• On the 4IR Commission, there is no serving public servant who is a commissioner of the 33 people who sit on the commission. The only state official is the CSIR CEO. The expectation is the commission expedites the process so that by the end of the next financial year there will be a preliminary report.
• On training institutions in South Africa, there are many different places advertising training, but there is abuse of the system. There is a need for state intervention to deal with this.
• The projects that the Department has been running have been in conjunction and partnership with universities. The challenge though is in the massification of skills so that training is not confined only to those who reach university. Tailor made skills training needs to deal with many other issues.
• The NMOG process is regulated, particularly the process that involves the DPSA and National Treasury.
• On losing qualified people as CEOs of government entities, the CEO of the Post Office voluntarily resigned and was not pushed out, and the letter can be shared with the Committee, which is self-explanatory.
• On USAASA, it is necessary to streamline the processes so that there is no overlap.
• Safety concerns are not just at the Post Office but are across the country broadly. Though this is a challenge that needs to be dealt with, the Department only controls ensuring the Post Office service systems function.

Mr Jabu Radebe, DCDT Acting Deputy Director General, replied that the transfer of serving heads of Departments, is on schedule as led by the Presidency. The Presidency is engaging with Ministers to transfer heads into the new Departments. He noted the concern raised that the Department was aware of the merger since November 2018 but was still at the planning stage. A lot of preparation work had been done such as a skills audit, developing cooperation agreements and so forth.

Ms Joy Masemola, DTPS CFO, replied that there is a constant engagement with Treasury on issues of budget. The deadline given by Treasury is 31 December 2019, so the Departments are ready for 1 April 2020.

Deputy Minister Pinky Kekana said that Members should go through this document time and again, especially to ensure the Department responds to the services the people actually want. An example is the universal access and connectivity of the nation through broadband rollout. This will be a game changer in South Africa to ensure even people in rural areas are not left out. Connection to internet should be treated the same as access to water and electricity. Ordinary people need access to these services to improve the businesses they are involved in. Look at this reconfiguration document and see whether this will enhance product and service delivery and feed that back to the Department.

Further Discussion
Mr T Gumbu (ANC) said there is a need to interface with other portfolio committees. Instead of asking the Department when is SABC getting paid, this is something that should be asked of Treasury. This speaks to how often does the Committee interface on its own on these matters without the Department.

In future when the Department presents, especially on the reconfiguration process, perhaps a concept document can be provided prior to the meeting that gives information on the motivation for why certain entities are integrating and so forth. Otherwise it becomes one person’s word against another person. He suggested there was a need to come back with more in depth detail on the restructuring proposals.

Mr W Madisha (COPE) said the bringing together of the two departments is positive. Where there is a problem is in the multiplicity of staff in merging the two departments. Although the Minister and DG spoke about the upskilling and retraining of staff, if there are 10 Acting DDGs in one department and another 10 in the other department, there will be issues of staff not having a role within the new single department. More details are needed to understand how the Department will retain all their staff.

Mr Madisha said the Post Office is extremely important, whether this is for poorer people getting money from Checkers or simply using the postal service. Is there a chance to agree that this needs to be taken forward?

Mr Madisha noted the question raised about the Multichoice – SABC deal was not properly responded to and so further information on that is required. There is a need to fully understand this R72 million from SABC.

Mr Madisha remarked that this was always supposed to be one Department. It was a mistake by the previous administration to split them up. However, one needs to know if the workers going to be protected.

Mr Mackenzie, on the comment about no black millionaires in the ICT sector, said there is an advantage to ICT not being held down by the apartheid past. The old Telkom had those issues but this is something completely different. Of the fortunes being made in this area, there are black billionaires such as Robert Gumede of Gijima who is very famous, and the Guptas of Sahara Computers are another. This sector is creating billionaires of all people.

Mr Mackenzie said it is a great idea to have a joint meeting with Treasury to discuss Post Bank. Mr Mark Barnes is also someone who could provide financial insight at that meeting.

Mr Mackenzie said that there is a level of financial qualification needed for disbursing funds from the Universal Service and Access Fund (USAF). Did previous in USAASA CEOs not have those qualifications or is this something new? If the purpose of the DDF is to accelerate the rollout of broadband in underserviced areas, it is a noble idea but that is USAASA’s objective. Can this not be done within this organisation to expedite the process?

Ms Van Damme (DA) asked about the constant reposting of Acting DGs.

Response
Deputy Minister Kekana said that there is an understanding that Members recognise the two Departments need to become one, but this needs to happen quickly and without further bloating the public sector. There is no guarantee for anyone that their post will be retained in the same way that it functions now. There is no need to advertise the post for DOC Director General because the two departments are being merged.

When Departments are merged like this the reality is there will always be excess employees. There will be those who go through upskilling and there are opportunities to share staff with the entities the Department works with. Where there is a lack of capacity within these entities and there is a relevant skilled worker in the Department then that is an opportunity. There are standing engagements with the unions until the process is concluded.

On the Post Office and its footprint in rural areas, the Deputy Minister said there is a need to modernise, but safety and security concerns need to be taken care of. Already there are contracts between the Post Office and Telkom to ensure connectivity. Now there is a need to make everything ‘smart’ and that will be introduced into the Post Office.

Deputy Minister Kekana said that the Department is at the disposal of the Committee and can bring the heads of the relevant entities to meetings to convey the work being done and how they are engaging. SA Connect and BBI are better placed to deal with questions around connectivity. In the next engagement between the Committee and the Department, SA Connect, BBI, and Sentech will be able to inform the Committee on their own thoughts of how the reconfiguration should look.

Members need to be patient about the SABC. Finalisation of delegation of powers has been put to the Minister and these will be assigned on her return from G7. Members should be aware that the SABC has been relegated to Pinky Kekana and a meeting will be taking place soon. There will be opportunity then to come back with a comprehensive report on the SABC.

Mr Vukani Mthembu, DOC Director: SOE Support, DOC, replied about the excess staff. DPSA as the employer representative is negotiating the matter at the Public Service Coordinating Bargaining Council. This will provide the framework on how to deal with excess staff. Details of the agreement are not being shared with the Department as it is a sensitive matter. In two weeks’ time an agreement will be met.

The Chairperson said that there is an appreciation for the presentation but also a sense that at the end of meetings like this there should be a clearer understanding of what is happening. Thus if there is a presentation in August and milestones are set for August then these should be detail on how they have been done and the Committee should not need to ask if they have been done.

The Chairperson said  that the Committee has not been convinced about the separation of the Post Bank and Post Office. There is a need to engage more to understand why this is a good thing.

On ICASA as a Chapter 9 institution, the Committee is not against the idea of merger but is concerned about the potential legal challenges that surround such a constitutional entity.

Mr Gumbu said that there is still the issue of workers. The DG seems to contradict what the Director of SOE Support is saying. The matter seems to be out of the hands of the Department and in the hands of the DPSA, so the DG cannot guarantee there will be no job losses. In saying that there will be people in excess, what does this mean? The DG will be held responsible for his words.

Mr Vukani Mthembu, DOC Director: SOE Support, DOC, replied that the agreement is about how to reskill and redeploy staff that are found in excess but there will no job losses due to the reconfiguration of state.

Mr Nkuna, DTPS DG, replied that there is no intention to lay off people but people can be moved around.

Committee business
Ms Van Damme noted that Members were not informed in time about the last meeting, leading to some having to miss it. To ensure members attend meetings, it is important for the Chair to provide information about them within an adequate time.

Ms Kubheka asked for clarification about a potential administration error as some Members were aware and had received invitations to the meeting.

Mr Mackenzie commented that no formal invitation with time and place of the meeting was given. It was only through chance circumstance of checking the WhatsApp group that notification was received. This led to his having to miss the meeting.

A opposition Committee Member wanted clarity as there was as an understanding that an invite was not sent as the meeting had been postponed indefinitely.

Ms Xego said an invitation was received.

Ms Van Damme said the invitation was clearly not received formally, as some Members were telephoned, no email was sent out, and there was a need to be included in a WhatsApp group. It is clear which Members received notification and which ones did not.

The Committee Secretary took responsibility, replying that emails were sent out to Committee Members. However, the email to Ms Van Damme bounced back and this was realised when it was too late. Phone calls were not made by the secretary to any Member.

Mr Gumbu said that clearly there was no intention to leave certain Members out. However, there is clearly a need to ensure that all Members are contacted in time before meetings take place. In the case of being unable to reach via email then phone calls should be made to ensure no one is subsequently accused of excluding people from a meeting.

Ms Van Damme said that even in understanding and accepting the secretary’s apologies, the other Members here are fully aware that some Members had not been contacted and informed of the meeting and yet the Committee still went ahead with the meeting anyway. Mistakes can be made but it is unacceptable, that in full knowledge of Members not being present because they were not made aware of the meeting, that the meeting still went ahead. Therefore, a complaint will be registered with the Chair of Chairs.

The Chair recognised this and a commitment will be made that all Members are present henceforth at all meetings, as it is important to have the collective wisdom of all.

Meeting adjourned.