SANBI, SANParks, Isimangaliso, SAWS 2019/20 Annual Reports; with Deputy Minister

Meeting report

Chairperson’s Opening Remarks
The Chairperson noted that this is a difficult period; South Africa is in the second wave of the COVID-19 pandemic. This has also affected Members; there are those who reported that they are unwell. The Portfolio Committee is beginning to see some of those Members returning. The Chairperson said that the talk of vaccines brings hope. With the process of implementing that, the Committee trusts that those who were given responsibility would do so, especially given the numbers of people lost. The Committee would pass its condolences to those families who were bereaved.

The Chairperson welcomed new DA Members, Ms Phillips and Mr Bryant. He indicated to the new Members that the Committee is working together as a team informed by what the Constitution prescribes Parliament to do. The Committee’s job is to make laws that govern the citizens of the country, as well as to do oversight over to the Executive to ensure their actions deliver on the commitments made. The Committee must also represent the people properly; Members are public representatives. That is what Members do, irrespective of their political affiliation. First, Members are citizens of the country, and second, they have chosen to serve the citizens of South Africa, guided by the Constitution.

Committee Minutes
Ms Weber proposed that the Committee does not wait a year to propose and accept minutes as it is difficult to remember even if one was in the meeting. She had gone through them and it seemed like it was true, but there can be mistakes. She proposed there must be a limit to when the Committee can accept minutes.

The Committee adopted each set of minutes dating from 11 February 2020 to 8 December 2020.

The Chairperson said that after every meeting, the next meeting must adopt the minutes.

Committee Programme for the Term
Members were given the draft programme to go through and suggest amendments.

Ms Weber asked if the Committee was doing matters arising from the minutes.

The Chairperson said that it is normal to do that. Normally when it has a meeting, it takes into account the issues that were discussed in the previous meeting. Perhaps from 8 December it might be relevant. If there was anything Members wanted to raise, the Committee would note it and see if there was anything it could do about it.

Ms Weber said that she could also put her questions in writing.

The Chairperson said that that would be fine. He said that it would be like that; Members would raise issues, and if the Committee was unable to respond now, then it would go back. It would be helpful, because then the Committee could capture what it had been doing.

He asked if there were amendments to the programme. Normally, the Committee gets a framework from the Chairperson of Committees that these are the areas of focus in this quarter. On the basis of that, a draft is issued, then the Committee must adopt it so that everyone knows why the Committee is doing this.

Mr Bryant said that there were a number of items that had not found their way onto the agenda. He wanted to see if it was possible to include those items on the agenda, if not in this term, then at least for the next quarter. The first item was captive lion breeding. There were a number of previous discussions, and a colloquium on captive lion breeding. The colloquium was adopted by the National Assembly. He requested that the Committee gets a report from the Department on the progress of the policy and the legislative review. This is with a view to putting an end to the practice of the captive breeding of lions for hunting and the lion bone trade.

His second suggestion followed on from a proposal submitted by his colleague, Ms Winkler, and supported by an IFP Member for a colloquium on the welfare of wild animals. The Chairperson had agreed, but a date had not been set for that colloquium yet. He suggested that the date for this be established, so that it can be set up. On the Kruger National Park (KNP) he wanted to suggest that South African National Parks (SANParks) provides a presentation on the benefit-sharing to the surrounding communities, arising from the signing of the Greater Limpopo Trans-frontier Conservation Area co-operation agreement. On provincial nature reserves, he requested a report from SANParks on donations and loans of animals to other entities. He requested a report on the status of the revision of the KNP management plan, which was due to be completed by 2023 as far as he understood. He asked for a report on the status of all the environmental legislation currently under review, and which will be reviewed. He noted that there was a report due to come to the Committee on adherence to the Paris Climate Change Resolutions. He requested a report on the activities of the Climate Change Coordinating Commission, which was set up in 2020. It is a “great step in the right direction”.

The Chairperson said that most of Mr Bryant’s suggestions were issues that had been discussed in the Committee. He assumed that Mr Bryant was suggesting that they form a part of the programme at some point. The Committee had taken note of the suggestions. The Chairperson asked if there were proposals for the adoption of the programme as it is now.

Ms Mbatha moved for the adoption of the programme. She thought that the new Member was supposed to send the issues through to the Secretary before the meeting, so that he could be addressed on some of the issues. She took it that it was the role of Committee Members in the DA to brief the new Member so that he knows what has happened. She recalled that there was a high-level panel on lion breeding. These are the issues that the Committee has been fighting for. Some of the things Mr Bryant asked about, would be addressed by SANParks, so it was better that he send those in writing via the Committee Secretary to be sent to the Department and relevant state-owned enterprises (SOEs).

The Chairperson said that the Committee had noted the issues Mr Bryant raised, and the Secretary will process those. As the Committee works with Mr Bryant, he would understand where the Committee is. He noted that Ms Mbatha moved for the adoption of the programme.

Mr Bryant thanked Ms Mbatha for her advice. He would ensure that he sent those recommendations through in writing to the Secretariat, so that they were both raised in the Committee and in writing. These were recommendations and suggestions for inclusions; if they could not be included, then they could be included in the next session. For this quarter, he was happy to second the adoption of the existing programme.

The Chairperson said that the programme for the quarter had been adopted.

Briefing by Department of Environment, Forestry and Fisheries (DEFF) entities
The Deputy Minister and the DEFF team joined the meeting. Deputy Minister Maggie Sotyu made remarks. The delegation included Ms Judy Beaumont, Acting Director General; Mr Shonisani Munzhedzi, Deputy Director General (DDG): Biodiversity and Conservation; Dr Thuli Khumalo, DDG: Climate Change; Mr Rannoi Sedumo, CFO. The entities were led by the CEOs, CFOs and board chairpersons.

South African National Biodiversity Institute (SANBI) Annual Report 2019/20
Ms Beryl Ferguson, SANBI Board Chairperson, took a moment to reflect and honour the late Minister Jackson Mthembu, who had once been a Member of this Committee, and “had served us very well; he had come to be known as the people’s Minister”. She wanted to reflect, and to remember him, and to remember fellow South Africans who had been lost to the COVID-19 pandemic; “may their souls rest in peace”.

It had been a very difficult year, and the entities had been affected in two financial years because of the pandemic. For the year under review, SANBI had managed to receive an unqualified audit. When she sat in the Committee meeting last year, she said that she would not want to come back and report another qualified audit. She was pleased to say that SANBI had achieved an unqualified audit. She made that commitment so she was very pleased with the result. SANBI was continuing to work towards a clean audit.

As far as irregular expenditure was concerned, SANBI had quantified it, and going forward, it was “starting on a clean slate”. It had had an independent forensic investigation, and no fraudulent or corrupt activity found or reported on the irregular expenses. Given the outcome, SANBI was in the process of consequence management, and the CEO and CFO could report on that. Ms Ferguson noted that SANBI was in the process of interviewing for its permanent CEO. Being in lockdown made it difficult; it had to do this process twice. It was looking forward to concluding this matter by the end of February 2021. The past year was fraught with unexpected challenges. It was not easy, but SANBI got through it and strove to do better.

Ms Carmel Mbizvo, Acting CEO: SANBI presented. Overall, SANBI had 43 performance indicators; 67% (29/43) were achieved; 26% (11/43) were partially achieved; and 7% (3/43) were not achieved. (See document breakdown of performance indicators, annual targets, challenges and corrective measures.)

Programme 1: Administration
This was where SANBI experienced the most challenges. 69% (9/13) of targets were achieved; 23% (3/13) of targets were partially achieved; and 8% of targets were not achieved (1/13).

The first performance indicator was “Percentage of compliance to the Employment Equity targets”, where the annual target was 47% female staff in full-time employment; it was missed by 0.6% (9 female appointments). There are positions up to middle-management level that have not as yet been advertised and filled. Corrective measures: Concerted effort will be made in 2020/21 to target more female candidates. Professional search companies will be used for headhunting suitably qualified female candidates. The second target under this indicator, 50% female staff in top and senior management, was partially achieved at 46.4%. The target was missed by 3.6%; there are senior management positions that have not as yet been advertised and filled. Corrective measures: There are about four senior management positions which will be advertised in the new financial year. Female candidates will be targeted to fill these positions. Succession development for females will be enhanced in the Institute. Professional search companies will be used for headhunting suitably qualified female candidates. The annual target of 90% black staff in full-time employment was partially achieved at 87.9%. The target was missed by 2.1% (160 black staff). This target could not be reached as SANBI did not have the number of vacancies that could be filled to meet this target. Concerted effort will be made to appoint more black staff in the current and future vacancies that will occur.

The indicator “Percentage increase in income generated” was not achieved. The annual target was a 4% year-on-year increase in income generated; year-on-year income generated decreased by 11%. There were challenges with admission fees, where fees into the Gardens decreased by 18% due to reduced visitor numbers, especially international visitors. The National State of Disaster that was announced on 15 March 2020 followed by the lockdown on 26 March 2020 resulted in several events having to be postponed or cancelled. Visitors across Gardens in March were 40% down as compared to the same month in 2019. Corrective measures: Developed a post-COVID-19 Marketing and Commercialisation Revenue Initiatives Plan. In addition, SANBI has secured funding to address infrastructure backlogs at the National Zoological Gardens to create safe ecotourism for local and international visitors.

Programme 2: National Botanical Gardens
For Programme 2 performance indicators, 40% (2/5) targets were achieved; 40% (2/5) were partially achieved, and 20% (1/5) were not achieved.

Performance indicators not achieved included:
Ÿ Number of new National Botanical Gardens (NBGs) established and operational (where the target was a planned boundary fence for a 10ha portion of the Kwelera NBGs completed.

Corrective measures for the boundary fence indicator were that SANBI has modified some of the compulsory tender requirements (whilst still complying with Treasury regulations) that should result in more bidders being eligible in future SANBI construction tenders.

Programme 3: Foundational Biodiversity Information
Of the performance indicators, 100% were achieved.

Programme 4: Biodiversity Assessment and Knowledge Generation
Of the performance indicators, 67% (4/6) achieved; 17% (1/6) partially achieved; 16% (1/6) not achieved.

Performance indicators not achieved included:
Ÿ Number of national biodiversity synthesis assessments where the target was 1 assessment completed and report compiled on genetically modified organisms (GMOs).
Corrective measures: The assessment framework has been agreed and lead authors appointed. The work will be completed in 2020/21.

Programme 5: Biodiversity Policy Advice, Climate Mitigation and Access to Information
Of performance indicators, 62.5 % (5/8) were achieved; and 37.5% (3/8) were partially achieved.

Programme 6: Human Capital Development and Education
All of the performance indicators (4/4) were achieved.

Programme 7: National Zoological Gardens
Of the performance indicators, 50% (2/4) were achieved, and 50% (2/4) were partially achieved.

Ms Mbizvo noted that one of SANBI’s biggest challenges is the current state of national zoological gardens (NZG) infrastructure. The performance indicator “Number of Visitors", 268 665 general visitors were recorded against a target of 454 000. A number of empty enclosures and loss of market share were major challenges. Corrective measures: Revamp of facilities, stocking of animals and a marketing campaign will be implemented to improve current infrastructure and to further market NZG.

2019/20 Financial Report
Ms Lorato Sithole, SANBI CFO, said SANBI received an unqualified opinion with emphasis of matter on:
1. Restatement of corresponding figures
Ÿ Corresponding figures for 31 March 2019 were restated as a result of errors in the financial statements of the entity at, and for the year ended, 31 March 2020.

2. Contingencies
Ÿ National Treasury has conditionally approved SANBI retain a surplus amount of R105.1 million.
Ÿ Contingent asset of R7 146 million for a claim against a contractor for the construction of a new office building, repairs, renovations and upgrades at the KwaZulu-Natal Herbarium.

3. Events after the reporting date
Ÿ Subsequent events and specifically the possible effects of the future implications of COVID-19 on SANBI's future prospects, performance and cash flows. Management have described how they plan to deal with these events and circumstances.

4. Irregular expenditure
Ÿ Irregular expenditure of R17.8 million for 2019/20 and R106.8 million for prior years. The irregular expenditure is still being investigated. This is due largely to procurement processes not followed or where the local content and production percentage were not stipulated.

The Auditor’s opinion is not modified due to these matters.

Cause of irregular expenditure
Ÿ Lack of evidence of procurement processes followed: R80 071 877
Ÿ Local content and production percentage not stipulated on the SBD 6.2 form: R38 153 311
Ÿ Minimum CIDB grading not stipulated in ToR although appointed service providers have minimum CIDB grading: R4 544 130
Ÿ Non-procurement for banking services: R1 847 081

The following steps have been taken:
Ÿ An independent forensic investigation has been conducted.
Ÿ None of the items were identified as fraudulent and corrupt.

The next steps to be followed with the above are:
Ÿ Implementation of consequence management.
Ÿ Requests for condonation or removal by the Accounting Authority.

Material findings on the usefulness of the performance indicators:
Programme 2 – National Botanical Gardens
Increased visitors to Botanical Gardens: The auditors were unable to obtain sufficient audit evidence that clearly defined the source information and method of collection used when measuring actual achievement. This was due to a lack of a clearly defined technical indicator description. There were no material findings on the reliability.

Financial Performance
Overall, there was a 3% increase in revenue, where a substantial portion came from externally funded projects and donations (R68 544 000). This was an increase of R2 752 000 compared to 2018/19. Government grant revenue was R509 907 000, which was an increase of R45 256 000 from 2018/19.

SANBI received R22.48m less revenue from own revenue (admission fees, sales, rent) than in 2018/19.

Expenditure
Ÿ Employee costs have remained flat year-on-year despite annual inflationary increase of salaries, remuneration to staff has increased by only R4.2 million (1%).
Ÿ The main cost drivers include personnel and personnel-related costs, information technology, security and cash collection fees, electricity, repairs and maintenance, and vehicle-related costs. 60% of spending is on personnel costs, followed by operating expenditure of 33%.

Overall, there was surplus of R41 857 000. It was an accounting surplus. Conservation garden and tourism was positive, at R48 981 035. Zoological garden and tourism was negative, at R40 158 659. Science policy and research was positive, at R24 430 974. Zoological research was negative, at R16 165 938.

Financial Position
SANBI has a net asset value of 647 724 000. It has grown by R78 055 000 from 2018/19. It was on the cash and cash equivalents where SANBI had grown. The latter is mainly funds from infrastructure that had not been implemented, as it would take more than one financial year to implement. Cash and cash equivalents was also funding that SANBI received on projects with clear deliverables that were not yet implemented.

There was slight movement on non-current assets, which include property and equipment used throughout SANBI’s 14 campuses. These increased by 79 600 000 in 2019/20.

Current liabilities saw a slight increase of R 39 809 000 in 2019/20. SANBI did have some challenges on one or two of the projects, where it was not able to transfer funds to implementers.

Cash Flow
Overall, SANBI had a net increase in cash and cash equivalents, specifically R74 397 000 in 2019/20. It had requested to National Treasury to retain this cash surplus. It had a positive response; Treasury allowed SANBI to retain some of this cash, and required it to surrender R13 000 000.

Discussion
The Chairperson said that the focus of questions should be on where there have been deviations, but he would not make prescriptions.

Ms C Phillips (DA) congratulated SANBI on the improvement of its audit report. Her first question was in relation to page 33 of the SANBI Annual Report 2019/20. What actions have been taken to improve the green star rating, especially in those places where the rating is below average? Has there been any consequence management at those venues? On page 39: The youth environmental service programme said that it intended to recruit 130 unemployed youth per year; has that target been met? On page 125: Did an external company prepare SANBI’s financials or was it done internally? On slide 13 of the presentation: Had the uncompleted project that prevented SANBI from reaching its target now been completed?

Mr D Bryant (DA) asked about the filling of the CEO position. He knew that an advertisement went out on 10 January 2020 and asked how many applications were received, and whether sufficient urgency is being given to this appointment. It mentioned that there were challenges in transferring funds to the implementers. Can the acting CEO advise on what those challenges were, and why that did not take place?

Ms A Weber (DA) said SANBI needs to understand that finance is extremely important. Though the audit report is better than last year, there is still the same noncompliance, and no evidence. After a year, there are still the same problems. It helps to have a great CEO, but the finance department “needs to up its game”, and get the evidence that is needed. Consequence management and internal controls need to be immediately implemented in the finance department.

Mr N Paulsen (EFF) asked about recruitment of women and black staff members. What is being done to ensure that SANBI not just gets the required staff, but also retains black and female staff? What has been the turnover of black and female staff in senior management positions? On the four items of irregular expenditure of R124 million, there is R80 million worth of transactions that have not gone through proper procurement process. He wanted a breakdown of how many procurement transactions are involved here.

SANBI responses
The Deputy Minister said that the team would be responding, but she was worried about the statistics that Members would like to have. If the team did not have those specific statistics, she would request that it bring the statistics later. She was concerned that with statistics, team members might give wrong statistics, and then the next time they come to a meeting, they come with something different; unless they are 100% sure about the statistics that Mr Paulsen requested.

Ms Ferguson supported what the Deputy Minister proposed. She addressed the question on filling the CEO position. SANBI received 170 applications. By the time applications closed, it went through a sifting process; it ended up with [audio cut out 01:32:29] When it did not find a completely suitable candidate, it then engaged with a search company, and it is now in the process of interviewing five candidates. All of those candidates are worthy of possible appointment. It will come back to the Committee by the end of February. She wanted to assure the Committee that SANBI has treated this appointment as urgent, but circumstances beyond its control stood in its way of making the appointment. Now that everything is in place, SANBI is moving fast to get everything sorted out. One of the candidates has also ended up in hospital with COVID-19. SANBI is treating the appointment as urgent, and will be making an appointment very soon. Where SANBI cannot respond to a question in the meeting, it will put it in writing to the Committee.

Ms Mbizvo replied on the youth programmes: This falls under Programme 6: Human Capital Development and Education. This was the programme where SANBI was able to achieve all of its targets. It has a number of interventions around the youth. The one target is human capital development interventions implemented in SANBI for black biodiversity professionals; it was able to exceed this target, where there were 148 interventions. It also has a programme around career development, where it engages with universities, and tries to attract young people to the biodiversity sector. It was able to exceed that target. It also has a target for citizen science, where it is trying to increase the number of youth and rural communities in its citizen science programme.

On the turnover rate of female staff: Ms Mbizvo had tried to get in touch with SANBI’s human resources manager, but SANBI may have to send this information to the Committee later. What SANBI is doing to retain women in management, research, and policy and information is through a number of means. It has focused a lot on ensuing that it has career pathing. A lot of work has been done around a research career path for its scientists, and this has allowed not only its female scientists to see how they can progress, and what measures they need to take to ensure they go up the career ladder. More broadly, in trying to create a working environment that is conducive, SANBI has been challenged by its Board to really articulate what it means to be an employer of first choice. SANBI has unpacked that, and has come up with what it thinks are the important elements to be an employer of first choice.

Ms Sithole responded that SANBI prepares its financial statements internally. On the challenges of getting funding to implementers by year-end, the project where there were challenges was the Umgeni Resilience Project which took place in March 2020, at the uMgungundlovu municipality. SANBI would be able to provide further details in writing on why it was unable to resolve this challenge before year-end.

SANBI agrees with the recommendation of consequence management for noncompliance, and lack of performance evidence being provided. SANBI has started with consequence management; it is being implemented as it is dealing with the issues. The statistics and breakdown of the transactions of the R80 million irregular expenditure would be provided in writing.

Further discussion
Ms S Mbatha (ANC) had a question on the Programme 4 assessment report. SANBI did not achieve that target; there were no authors who could do the study when SANBI was collecting data. Her concern was with how SANBI collects data; did it use questionnaires when there were no authors? SANBI was saying that this GMO study is a new thing in South Africa. If this is a new kind of study in South Africa, then it must benchmark, and also get a qualified person to be lead author. She was concerned whether this research would give SANBI the correct outcomes based on what it wants. If one looks at research, a person must be able to develop the objectives and research questionnaires. SANBI has data, but is it the correct data? Is it fruitless expenditure? How expensive is the research, since it is a new thing in South Africa? It is a good thing that SANBI is doing such research.

She also had a question on supply chain management noncompliance. When SANBI comes to the Committee, it must say that due to this, this is what it has done to remedy this; this is how far it is with consequence management and disciplinary actions.

SANBI cannot appoint a service provider when its tender document is not specific. The problem started with how it developed its tender specifications. SANBI must tell the Committee how it fixed the problem, starting from its tender document. How far is it with disciplinary measures? It must state who has violated compliance and what it is doing with such persons. When it comes to supply chain management, there is a lot of corruption “all over”. That is where the Committee must be strict, and it must get all the evidence. Most of the funds come from DEFF. She understood there are challenges because of COVID-19.

Ms Phillips asked if it would be possible for the Committee to have a list of the contractors that were appointed irregularly. It was fine if that came in writing later.

Ms Mbizvo responded on the GMO assessments. SANBI did have problems in accessing the data. The data comes from different institutions and departments. It took longer than SANBI anticipated, but it was able to get the required data in the end. The second challenge was to get the necessary scientists and expertise to do the assessment. There are few scientists working in this area, and finding the time for them to engage and contribute to the assessment was difficult. Scientists often have other responsibilities and many of them are working in the universities. In the end, SANBI was able to get the necessary expertise, and it now has a report; it is in the process of finalising this assessment on the impacts of GMOs.

The Deputy Minister said that to save time, she did not have much to say on the entities, except to say that the Chairperson could use his discretion and allow entities to present after the previous presenter responded to questions until the last presentation had been made, so the Committee’s time was not wasted.

South African National Parks (SANParks) Annual Report
Ms Joanne Yawitch, SANParks Board Chairperson, gave condolences to Parliament on the loss of Minister Mthembu, who SANParks worked with when he was Chairperson of this Committee, and to the Members of Parliament and staff who had been affected by COVID-19.

SANParks is pleased with its unqualified audit. When it looks at its Annual Report and the extent of its ability to meet and exceed the set targets, there was one important thing to say about context. In the last quarter of the financial year, SANParks was already experiencing the impact of the pandemic, in that lockdowns affecting international visitors to the parks started much earlier than South Africa’s lockdown. SANParks already had visitors cancelling, including a reduction in local tourism, which came on the back of an already difficult economic situation. From the Board's perspective – this is something that the CEO and CFO will speak to – the irregular expenditure remains a concern. Both the CEO and the CFO will reflect on the actions that both SANParks board and management has taken to address this and consequence management, to ensure that SANParks has a solid base in place so this problem is greatly minimised as it moves forward.

Mr Fundisile Mketeni, CEO: SANParks introduced the team: Mr Dumisani Dlamini, CFO: SANParks; Ms Lize McCourt, COO: SANParks; Ms Jill Bunding-Venter, General Manager: Strategy: SANParks. He noted that SANParks had lost six of its employees to the COVID-19 pandemic. All are affected by this pandemic.

Mr Mketeni focused on the performance indicators that were partially achieved or not achieved.

Goal 1: Sustainable Conservation
A newer performance indicator was “Percentage reduction of water consumption in Parks and Kruger”, which was partially achieved. A challenge was that “Baseline determination was not concluded as the water meters were not installed”. Corrective actions: MyCity electronic meter devices and water meters for Glen Reenen and Golden Gate Hotel have been installed in April 2020. Procurement of other meter readings is underway.

Unachieved performance indicator: “Percentage reduction of water consumption in Parks and Kruger”. Challenges included:
Ÿ A high number of pipe bursts on the main water supply line at Pretoriuskop.
Ÿ Lack in adequate awareness amongst guests and staff.
Corrective actions:
Ÿ The water tariffs must be reviewed.
Ÿ Provision of raw water for irrigation in camps and ranger posts must be implemented to phase out irrigating with fresh water.
Ÿ Old reticulation infrastructure in camps require replacement.
Ÿ The irrigation hours need to be reduced.

Partially achieved performance indicator “Percentage implementation of Annual Rhinoceros Plan”:
Challenges and corrective actions:
Ÿ Travel restrictions due to COVID-19 resulted in Rhino Communications Plan again being postponed.
Ÿ Completion of a report on socio-ecological research was dependent on key staff members.
Ÿ Kruger Rhino Strategy was not completed.

“Percentage implementation of the Annual Elephant Plan” was partially achieved. Challenges:
Ÿ The construction of the enclosures to protect sensitive riparian vegetation in Mapungubwe could not be completed due to lack of funding.
Ÿ Although a proposal to define social expectations of stakeholders about Garden Route elephants was completed and registered, ethics requirements from Nelson Mandela University imposed constraints on completion of the activity.
Corrective actions:
Ÿ Mapungubwe National Park Management is applying for new funds from the EPWP programme. The Garden Route Science Node will complete the social survey as soon as approval of ethics obtained.

“% Implementation of the Air Wing Strategy” was not achieved. Challenges:
Ÿ HCM processes and delays compounded by housing and budgetary constraints.
Ÿ Procurement and supply chain constraints.
Corrective actions:
Ÿ Appointment of replacement rotor-wing pilot to fill vacancy
Ÿ Appoint suitable service providers on contract terms.
Ÿ Improved maintenance planning and forecasting.
Ÿ Liaison with Treasury to align procurement with realities of unscheduled aircraft maintenance and high value assets.
Mr Mketeni added that SANParks has its first black pilot. It also has a new female technician in this area.

“% Implementation of SANParks Wildlife Economy and Sustainable Use Programme” partially achieved. Challenges: Extensive consultation with increased number of applicants delayed the determination of capturing costs and delivery of the animals.
Corrective measures: The project will be completed in the 2020/21. Mr Mketeni added that the wildlife economy area was one where SANParks needed to do a lot of consultation. It spends a lot of money on capturing and delivering the animals. SANParks is in phase two of implementation. In phase one, it managed to support nine emerging game farmers. SANParks needs to be meticulous on consultation, capturing and delivering animals because it is key that it sticks to its ethics to ensure animals are delivered safely.

Goal 2: Diverse and Responsible Tourism
“Total number of visitors to National Parks” was partially achieved. In November and December, SANParks already saw a decline in tourists visiting South Africa. Challenges: Domestic economic and market conditions were subdued with general declines in visits/stayovers in national parks. As a result of COVID-19, SA was placed in lockdown from midnight 26 March 2020. In preparation, national parks were vacated from 25 March 2020. Corrective actions: Resumption of business as soon as possible and continued emphasis on marketing national parks to domestic and international markets, through innovative initiatives such as stokvel marketing, and social media drives targeting non-traditional markets.

“Accommodation occupancy” partially achieved; its challenges were linked to declining tourism numbers.

Goal 3: Socio Economic Transformation
Mr Mketeni said socio economic transformation (SET) is a new pillar of SANParks that it wants to strengthen, because it wants inclusive growth and inclusive conservation.

“% of a portfolio of opportunities for SMMEs Developed and Implemented” not achieved.
A portfolio of SMMEs opportunities was developed but the document was not approved by end of financial year as more work needed to be done.

“Number of Social Legacy projects implemented” not achieved.
SANParks supports schools by contributing towards science laboratories. Only one of three social legacy project was completed - Phase 2 of Makushu Primary School ablution block.

“% Claimant beneficiation scheme implemented as per land claims identified” partially achieved.
Work in progress: The land claims beneficiation package for Colchester Land Claimants was approved by the Board for negotiation, facilitated by the Land Claims Commission.
Challenges:
Ÿ Claimants dispute over the equitable redress and rights provided in the settlement award.
Ÿ 79% (19/24) outputs in the KNP Implementation Plan were implemented.
Ÿ Activities were halted until an independent facilitator is appointed to develop the beneficiation scheme.
Corrective measures:
Ÿ Facilitate the appointment of the facilitator in quarter 1 of 2020/21.
Mr Mketeni added that the next time SANParks report, it will have a land claims scheme for KNP, Golden Gate and Addo.

“Number of Environmental Education programmes developed and implemented” not achieved.
Challenges: These plans are dependent on the finalisation of the Socio-Economic Transformation Strategy, which is still being finalised. SET Strategy to be completed in 2020/21.
Mr Mketeni added that SANParks wants to align its education programmes with the school curricula.

Goal 4: Financial Advancement  
The CFO would speak to this goal in detail.

“% Finance Strategy developed and implemented” partially achieved.
Work in progress: Finance Strategy was presented to the Board, which requested further work to be done.

Goal 5: Capability Advancement
“% of Employees from Designated EE Groups (Woman Management)” partially achieved.
Challenges: Slow turn-over of staff and moratorium on filling of vacancies.
Corrective measures:
Ÿ HCM will continue to advise line managers to increase efforts on recruitment of black female managers in the new financial year
Ÿ Maximise retention of female managers
Ÿ Recruitment of female managers to be part of recruitment plan
Ÿ Recommend that recruitment of female be part of line.
Mr Mketeni noted that some women in management have left with one SANParks general manager appointed to Parliament. Recruiting more women is an area that he centralises to his office to ensure that when SANParks shortlists, it ensures advances in this area. Turnover is a challenge, but SANParks would like to have a scheme where it incentivises women to stay in the organisation.

“% of Employees from Designated EE Groups (People living with Disability)” partially achieved.
Challenges: The target was not met due to the new requirement for submission of medical certificates confirming disability, which started in quarter 2.
Corrective actions: Roll out information sessions to obtain certification. Implementation of EE Plan.

“% closing of critical competency skills gap” not achieved.
Challenges arose because SANParks had to work with institutions in terms of competency and the skills gap. There were challenges with training institutions such as Sector Education and Training Authorities (SETAs) in achieving the targets in this area. Appointment of the service provider was not finalised due to inconsistency of the pricing schedule submitted by bidders. This process will recommence in 2020/21.

“% of payroll spent on the skills development programme” not achieved.
Challenges: Due to COVID-19, tertiary institutions could not take payments although bursary allocations approved. Corrective action: Complete payment process in Q1 of 2020/21.

Mr Mketeni noted that SANParks seeks to achieve a clean audit. Although the audit was unqualified, there were areas of emphasis that meant this performance indicator was partially achieved. SANParks was working on. Even last year when it presented to Parliament, there were areas in its report where Parliament requested it to improve on. SANParks has done a report, and it has assessed its irregular expenditure. At the next meeting, it will present what it has done in this area.

The following were also not achieved:
Ÿ Develop and implement national priority maintenance and recapitalisation management system.
The award of the tender could not be finalised by the end of March 2020, due to delays in procurement processes. It was awarded in the first quarter of 2020/21.
Ÿ Stakeholder management plan developed and implemented.
The plan was not completed due to consultation processes that could not be finalised before the end of the financial year. The stakeholder-mapping document will be finalised before the end of the 2020/21.

Overall, 68% (41/60) goals were on target; 15% (9/60) had work in progress; and 17% (10/60) were off target. Mr Mketeni added that SANParks was affected by COVID-19, but it did not want to make that an excuse. It has adjusted its plans for the year 2021/22. It would be having a board strategy meeting this week, where it would present an adjusted annual performance plan (APP) taking into account COVID-19.

Financial Performance
Mr Dumisani Dlamini, CFO: SANParks, noted:
Ÿ The economic and fiscal environment of 2019/20 was tough with SANParks having to see some decline in revenue in the last quarter of 2019/20 due to the impact of COVID-19 on tourism income. Despite all these conditions SANParks has remained resilient and continued to deliver positive financial performance.
Ÿ The net surplus has declined by 41% to R249.1m but still provides much needed resources to invest back into SANParks to ensure sustainable nature conservation and a constantly-improving guest experience.
Ÿ Over R113 million was raised from a range of stakeholders through resource mobilisation. This is an increase of 44% from the previous financial year.
Ÿ During the year, the Board approved a finance strategy which will serve as a blue print for ensuring financial sustainability over the coming decade. The strategy provides insight and guidance about how the organisation can finance its revenue growth plan and achieve objectives in a sustainable manner.

Revenue
SANParks as a Schedule 3A Public Entity generates revenue from both exchange and non-exchange revenue. The total revenue is R3.16 billion, which is 5% more than 2018/19. R2.4 billion (76%) was generated from exchange transactions (money outside of what is appropriated by the state), this is 5% more compared to 2018/19. Revenue generated from exchange is higher than the target of 72%, these results shows resilience during the difficult times.

Expenditure
Ÿ SANParks expenses comprise mainly operating and human resources expenses. Total expenditure is 92% of total revenue which resulting in ratio of income to expenditure of 1:08:1.
Ÿ Total expenditure for the year is R2 918 997 billion, which is above the previous year’s R2 587 032 billion. This is as a result of, amongst others, annual salary increases and an increase in CPI. Total expenditure increased by 13% YoY and employee-related costs by 16%.

Net Assets
Ÿ The value of assets grew by 10% to R5.6bn. Liabilities increased by 11% to R2.5bn.
Ÿ It takes on average 30 days to settle accounts payable.
Ÿ On average it collected cash from its debtors within 17 days.

SANParks’ current assets are greater than its current liabilities. Although liabilities had increased, it does not represent the money that SANParks owes to financial institutions but is the way in which it accounts. The bulk of the liabilities are to do with infrastructure grant, in which it received the money, and then kept in liabilities and expenses as it went along. (See document for financial performance, financial position, cash flow, budget / expenditure comparison).

SANParks received an unqualified audit for 2019/20. The Auditor General recommendations are being implemented. SANParks is committed to improve the internal control environment to ensure accurate financial reporting. The Annual Financial Statements were prepared based on the expectation that SANParks will continue to operate as a going concern for at least the next 12 months. COVID-19 has materially affected the tourism sector with the uncertain effects of COVID-19 beyond 2020/21. SANParks will continue to work with stakeholders to ensure financial sustainability.

Discussion
Ms Weber noted 19 parks completed the online Management Effectiveness Tracking Tool (METT) assessment. South Africa has 21 national parks, but the report says 20. Which one missed the MET assessment. The water reduction target is important for all South Africa’s national parks. For five or six months, the guests and workers were blamed for not reaching targets. There was also the burst pipe in Pretoriouskop. But those two factors cannot make up for the water reduction that did not happen. COVID-19 cannot be blamed for water meters not being installed because there were other parks that did implement water meters during COVID-19.

It was important to get a quarterly and annual report of the numbers of rhinos poached in national parks, especially KNP. In May, there was zero poaching, which was due to COVID-19. The Committee needs to know how many rhinos there are in each park. She had asked this question before but it was not answered because the poachers would then know how many rhinos there are. How will the Committee do oversight if it does not know what to measure against? Is it 300 rhinos out of 500, out of 700, out of 2 000? She requested that figures be provided privately and not shared publicly. She did think that the Committee needed to know because it did not have a measurement of how many rhinos there are. If 300 rhinos out of 500 had been poached, that would be a lot worse than 300 rhinos out of 5 000. The Committee needed to know how many rhinos were out there, with white rhinos separate from the black rhinos.

Slide 13 noted that the implementation of the elephant management plan was stopped due to lack of funding and the ethics requirements from Nelson Mandela University. She requested these requirements.

Slide 14 was due to supply chain constraints. We need to sort out our supply chain management in all of our finances. SANParks mentioned the Colchester land claims case. The cases were supposed to be finished by 2020; she wanted an indication when it would be completed as these land claims are important.

Mr Bryant noted the condolences sent to the family of ranger, Checkers Mashego, whose body was found in the KNP in December after going missing on a routine patrol. That highlighted safety challenges, not only in KNP, but also in many of the other SANParks facilities. He asked that in the interests of tourism, safety be made a significant priority going forward. It does have an impact on tourism, and if these messages are going out to the rest of the world that some of our facilities are deemed to be unsafe, that will have a negative impact. He agreed with Ms Weber on the rhino matter. There were reports of low rhino sightings. He requested that, when the Committee discusses poaching on 16 February, the Annual Rhino Plan is included. On slide 13, there was discussion of elephant numbers. He knew that there was an elephant management plan in place. It was important for the Committee to have an update on that, and also on the numbers of elephant in the KNP. It is a bit uncertain what the exact numbers of elephant are, and it was important to establish those numbers going forward.

He thought that it was fantastic that the first black pilot had been appointed, but “we do need working aircraft for these pilots to fly”. One would hope that the maintenance and improvements to those aircraft are prioritised. He asked if the Committee could have more details in the 16 February presentation on the wildlife economy. On slide 18: There is a high density of tourists in the southern part of the KNP – would they be able to advise on impact of the high numbers of tourists on the environment? He noted there were ongoing improvements at Makushu Primary School of its ablutions. Ablutions at schools are a very important issue for all parties. Phase 2 has been completed – does that mean the toilets are functioning? On slide 55, there was mention of a R7.2 million saving based on the inability to fill vacanies. The filling of those positions needs to be prioritised, and one cannot be looking at savings on vacancies as contributing to the surplus; those are positions need to be filled in terms of the Department’s obligations.

Mr Paulsen said that slide 9 notes loss of water through leakages. Has SANParks determined how much water is lost due to leakages? He asked about rhino and elephant, and if it has considered involving neighbouring villages in a citizen science programme to monitor rhinos, and to assist in ensuring animals within the parks are safe. Slide 6 states SANParks generates 76% of its revenue from exchange transactions – how is this revenue generated? It is quite a substantial amount of money. Slide 35 mentioned the lack of disabled staff. Disabled students with academic acumen were recruited during their student days and funded – has the Department considered this.

Mr Paulsen said drone technology is excellent. Has SANParks considered drone technology to replace or supplement existing aircraft, so that it could perhaps completely get rid of aircraft and use drone technology surveillance? SANParks could then just use aircraft when it needs to airlift an animal or people in the parks.

Ms Mbatha said that when she looks at the water leakage, it shows her that its day-to-day facility management is not up to standard. Water is very scarce and one cannot be losing water because of items that can be fixed quickly. How does SANParks harvest its water within its facilities? SANParks has “serious problems” with supply chain management. She asked that its next presentation speak to the plan for correcting SCM problems, because it hinders so many things.

Small, medium and micro enterprises (SMMEs) are very important to the Committee. She asked that SANParks prioritise SMMEs. On the social legacy projects, SANParks was talking about schools, but it had not achieved those targets because of internal capacity constraints. During COVID-19, how best can SANParks assist those schools? She asked that SANParks do not assign environmental education programmes to a SETA. There are so many environmental education programmes that can be done in the communities that do not need the SETA. Awareness and other issues can be dealt with, and those are very important because the community needs to understand what is happening on environmental issues. SANParks said that it sent the programme to the wrong SETA, and now it is in the right SETA. She asked that environmental education programmes be taken as a priority. Skills gaps are very important to the Committee. That needs to be finalised, and the gaps need to be closed. SANParks has the employees within its company, and it needs to assist employees with skills development. It is one of the priorities in the Department that within SANParks skills development must be implemented. The next time that SANParks presents, it must be finalised who it has taken to do environmental education in schools.

Ms Mchunu emphasised the SMME target as very important to focus on to achieve it. SANParks does not say if the target will be achieved. It is important that the Committee get a report on what needs to be done. The skills gap target was not achieved because SANParks is waiting for a service provider. Does it not have the capacity to do this internally? Slide 40 mentioned that the maintenance and capitalisation management system could not be finalised by the end of 2019/20 due to procurement delays. She asked for details. Is SANParks lacking capacity in SCM? Where are the gaps in that system?

Ms Phillips referred to the SANParks Annual Report. On page 46, it says that the stakeholder mapping document was not approved due to COVID-19. Did SANParks think about using Zoom or Microsoft Teams? She thought that was a “poor excuse” as the period under review covered only 17 days of lockdown up to 31 March 2020. Pages 165 to 167 deal with board committee meetings. Why were there no audit committee meetings after 4 March 2020? The other meetings are not well attended. On page 9, she requested a list of farms that were approved for game loans. Has the facilitator been appointed for the KNP land claims? The unspent infrastructure grant is very concerning. A lot of the park facilities are “looking a bit tatty, but we are not spending the money”. She thought that needed to be addressed. On page 45, a tender award not completed by March 2020. This is maintenance infrastructure – “we can’t afford to drop the ball”; has it actually been completed now? Slide 14 mentioned Air Wing vacancies. Can the Committee find out how many vacancies there are? Is it possible to implement a successful counter-poaching programme when there are Air Wing vacancies?

SANParks response
Ms Yawitch said that she would leave it to Mr Mketeni to answer, but there had been a number of questions that are matters of detail, such as lists of farms and vacancy rates. SANParks will be happy to provide that information that is not readily to hand in written form to the Committee.

Mr Mketeni said SANParks had noted all the comments on water reduction. There is one area in its infrastructure grant where it wants to look at water reduction, especially in KNP which is where the challenge is. Determining its baseline is helping with its plan to save water moving forward. It is a new performance indicator. It is working on that, and the comments from Members have been taken on board. On rhino poaching numbers: SANParks does a census every two years, or every year. SANParks can give those figures to Parliament, which is its estimations, based on its census, and its methodology to count rhinos in the parks. That also applies to elephants. SANParks will send information on the Colchester land claim.

The safety of tourists is “a priority to all of us”. A case in point where SANParks needs stakeholders is Table Mountain because the safety of tourists has been seen as a SANParks responsibility. It is engaging the City of Cape Town; SANParks does have a security cluster to look at safety. There are many plans to ensure that it reduces crime on the mountain. Where there is no open system, tourists are safe because there is a control point. One then knows who is entering, and one also knows who is entering illegally. SANParks is able to deal with safety where it does have control points but open system parks are a challenge.

SANParks can provide information on the wildlife economy, and on beneficiaries. Information is available on how many tourists have entered parks in the last financial year. A difficult matter is vacant positions. SANParks is going to the Board this week with a revised HR plan and a budget. SANParks does not have enough money to fund its HR operations. It is a big challenge, but SANParks is discussing the vacant positions with the Board. It will have to consider many things, but it will have to cut its HR costs, because it cannot afford the current costs with the budget that it has.

On water, SANParks is establishing its baselines. It does work with neighbours, and it does have programmes and park forums with stakeholders in every national park. The CFO could talk to the 76% of revenue that comes from exchange transactions, but most of it comes from tourism operations, which is SANParks “anchor” and “engine”.

SANParks took the point that it needed to up its game in water management. In its water harvesting strategy, it has many plans such as using borehole water and collecting rainwater. SANParks can give more details on that as water is a focus resource for all of us. SANParks does an environmental education (EE) programme at schools – it will have to strengthen its capacity there. The COO would talk to the skills gap.

On SMME opportunities, SANParks is now ready with the document. It has developed opportunities, and it is developing a catalogue for those opportunities. SANParks can present in future on how many opportunities there are, and on supplier development. Procurement is an area that SANParks needs.... [02:55:09] because one needs to have bid specification, bid evaluation, and adjudication committees. One needs to rotate people. Many things can go wrong. Therefore, there is a process consisting of 13 people, which is why it is a bit slow, but SANParks does have a procurement plan approved by the Board and National Treasury.

On stakeholder mapping, the COO can talk to that. SANParks had to pause it to ensure that it identifies its stakeholders. SANParks heard its executive committee (exco) last week, and finalised this idea. It is now a matter of finalising the document and presenting it to the Board. On the land claims, a KNP land claims facilitator from DEFF could assist SANParks on that as DEFF is running a process with the Land Claims Commission. On the vacancy rate, SANParks needs to cut down on its HR costs. It prioritises critical positions as it does not have funding to fill every position.

Ms Lize McCourt, COO: SANParks, responded to the query on why the METT assessments were on 18 out of 19 parks if there are 23 parks? The 23 parks were not in place at the time of the Annual Report. Meerkat National Park was only recently proclaimed as a national park. SANParks referred to 19 in its Annual Report because three parks are grouped together under the Garden Route National Park – Knysna, Wilderness and Tsitsikamma. Those three parks undergo one METT assessment under the Garden Route National Park. KNP was the park for which its assessment was not concluded that financial year. That work has subsequently been concluded.

The Qwaqwa land claim is in the current financial year, and SANParks is taking the proposed beneficiation to the Board to consider what has been negotiated with the assistance of the Land Claim Commission.

Ms McCourt wanted to touch on the Air Wing vacancies before touching on the big picturefor HR. The first challenge for the Air Wing vacancies is that SANParks unfortunately had to cut its human capital budget by R132 million in the current financial year because SANParks had no revenue. As a result, all of its vacancies were frozen. There are two critical vacancies in the Air Wing; this is not the total number of vacancies. In the Air Wing, SANParks has an Acting Chief Pilot but there is no Accounting Officer position. SANParks is soliciting donor funding to assist with that. It has started the recruitment process to fill the Chief Pilot position.

Overall in HR, SANParks did not meet two targets for employment equity which were women in management positions and people with disabilities. At the end of 2019/20, SANParks had 72 management level positions with 15 vacancies. Of those 15 vacancies, it could only fill three or four positions. In 2020/21, SANParks has not achieved the targets originally set, but it has reduced the target for women in management positions in accordance with its resource availability. That target reduction was approved by the Minister. SANParks has various programmes to look at the retention of women, and especially black women in scientific fields. It has the Young Scientists Programme, and also a retention policy and strategy to retain women.

In general, the turnover rate at SANParks is low; it is just high with professional women. The positions that become available are limited because male colleagues tend to stay for a very long time at SANParks. On people with disabilities, SANParks has regressed in its performance as a result of the legal requirement for medical certificates. SANParks has an arrangement in place with the People Living with Disabilities (BPLWD) board, and it gets CVs both from young graduates as well as established managers on an annual basis. SANParks has a targeted recruitment programme in place to address that. Unfortunately, due to the moratorium and the cutting of HR costs, SANParks could not make significant moves on this in 2020/21 and it is continuing with the implementation of the self-verification programme that it had previously.

On the two unachieved skills development targets, SANParks is looking at doing this work in-house. It had to cancel the previous tender for reasons mentioned in the presentation, such as the non-meeting of the criteria set, incomparability of the pricing schedules, etc. Subsequently, SANParks had to cancel the tender because of affordability. It is now working with its social science colleagues, and it will be doing this work internally. It will take a bit longer than if it had outsourced the work. On the spend on skills development, a big percentage of its expenditure is bursaries. Those bursary payments are made to tertiary institutions in February. When it attempted to make these payments in February 2020, it was turned down by the tertiary institutions because of the uncertainty of the academic year. SANParks’ inability to achieve that target was directly related to COVID-19.

Ms McCourt responded on stakeholder mapping, and why COVID-19 has been the reason for that target not being achieved. Since mid-March 2020, SANParks’ exco meetings were focused on the COVID-19 response. The meeting where this was to be discussed on 25 and 26 March 2020, was where SANParks was immediately instructed to put measures in place to implement the lockdown. That meeting where this work duly planned was to be considered, was overtaken by events..

The Chairperson said if there were follow-up questions, they could be submitted in writing.

iSimangaliso Wetland Park (ISPA) Annual Performance Report
Prof Thandi Nzama, ISPA Board Chairperson, introduced her team. She thanked DEFF and the government in general for the support it had given to iSimangaliso Wetland Park (ISP) to deliver on its mandate. She reported that the entity had managed to finalise the labour dispute matter with the former CFO, who was on suspension. The former CFO has been officially released from the employ of iSimangaliso, as of 5 December 2020. The CFO recruitment and selection has been finalised and the new CFO, Ms Xamkile Smangaliso Mntambo, will start on 15 February 2020.

She comment on the breaching of the Lake St Lucia mouth on 6 January 2021 which had been in the news. ISPA has, on a short-term basis, opened the mouth of the St Lucia estuary for ecological restoration of the estuary. This estuary was no longer functioning as an estuarine lake, but as a freshwater lake system. The ISPA has adhered to all processes of the Estuarine Management Plan, and extensive consultation was done, which culminated in the symposium held in October 2020. It is aware of the concerns about this action. The Minister has had a meeting with the CEO, and instructed ISPA to provide a full report. ISPA is currently working hard to prepare that report as per the Minister’s instruction.

She updated the Committee about the cultivation of the swamp forest, which was discussed at the previous meeting. This practice has been subdued due to numerous stakeholder engagement meetings that were organised, and are continually organised, by iSimangaliso. This practice was also subdued due to the fact that the swamp forest itself is inundated with water.

ISPA has four programmes: Corporate Support Services, Biodiversity Conservation, Tourism and Business Development, and Socio-Economic Environment Development. Of its 68 performance indicators, 59 were on target (87%), and only 9 were off-target (13%). The entity’s overall performance was therefore 87%. The financial year was difficult, and was fraught with many challenges. However, it did its best and received an unqualified audit opinion for 2019/20.

Mr Sibusiso Bukhosini, IPSA CEO, presented and focused on the unachieved performance indicators:

Programme 1: Corporate Support Services
Of the 25 targets, 19 were on target (76%). The six indicators not achieved were:
Ÿ Average number of days: Trade Creditor payment
Corrective measure: Develop a standard operating procedure for submission of invoices by creditors.
Ÿ Development of Work Place Skills plan, and submission to the SETA
Corrective measure: The Plan has been developed and will be submitted to CATHSSETA in 2020/21.
Ÿ Percentage implementation of the Work Place Skills plan
Corrective measure: Implementation of the Workplace Skills plan will take place in 2020/21.
Ÿ Implementation of Employment Equity plan targets
Corrective measure: Implementation of employment equity targets will take place in 2020/21.
Ÿ Number of employee satisfaction surveys conducted and recommendations implemented
Corrective measure: Recommendations will be implemented in the 2020/21.
Ÿ Number of key ICT systems supporting the Authority’s business
Corrective measure: Procurement of ICT system will take place in 2020/21.

Mr Bukhosini added that the employee satisfaction surveys found that employees did not have a provident fund nor did they have a pension. What this meant was that employees were going to be “a burden on the state” when they leave employment, so this issue was “raised quite sharply with the entity”. Staff members did not have access to medical aid. ISPA could not implement the recommendations as it did not have the budget but in 2020/21, it will look at implementation. The next time it presents to the Committee, it will give progress and updates on this target.

Programme 2: Biodiversity Conservation
Of the 10 targets, nine were on target (90%). The indicator not achieved was earthworks in wetland rehabilitation project as funding was not received in time to meet the target.
Corrective measure: DEFF will deposit funds on a monthly basis from now on.

Mr Bukhosini added that since the Interim CFO started there had been a significant decrease in the delay of the transfer of funds. This is a solution for ISPA because that issue has been compromising it in many ways. Now, the problem has been solved. He thanked the Minister, Deputy Minister and the CFO.

Programme 3: Tourism and Business Development
Of the 18 targets, 17 were on target (94%). The indicator not achieved was annual visitor market research.
Corrective measure: Service provider engaged as the market research report was not satisfactory.

Programme 4: Socio-Economic Environment Development
Of the 15 targets, 14 on target (93%). The indicator unachieved was number of full-time equivalent jobs.
Corrective measure: DEFF will now transfer funds on a monthly basis for Working for Water Project.

Financial Performance
Ms Nokuthula Tshabalala, ISPA Interim CFO, said ISPA had an unqualified audit opinion, with two matters of emphasis on performance information. There were no matters on financial information. One of the matters was the number of hectares burned in a controlled burning programme. There was a disagreement with the Auditor General on the evidence provided. iSimangaliso planned to have a meeting with the AG to iron out what should be evidence in that key performance indicator. The second matter was the number of cubic metres of earthworks in the wetlands rehabilitation project. The issue there was that on the plan, iSimangaliso had planned to do rehabilitation on the western shores, but the staff on the ground did rehabilitation on eastern shores. There is disciplinary action in progress for the manager responsible for this.

She gave a summary of financial results including working capital, current assets and current liabilities. iSimangaliso received numerous grants towards the end of 2019/20, and it could not start projects then. In total, current liabilities were R296.1 million, which consisted of unspent conditional grants of R257 million. The challenge there was the grants received towards the end of the year were not used by year-end. The other increase in current liabilities under “other” was [unclear 03:30:58], leave accruals, retention, and interest from grants. Retention was higher at the end of the year, because the suppliers were not paid those retentions at year-end due to projects which were not completed. This resulted in an increase in current liabilities, which caused it to exceed current assets. ISPA is currently working on that.

Accumulated profits/(losses): R628.3 million (adjusted figure).

iSimangaliso’s actual revenue was R192.9 million including the grants received.
Ÿ Park revenue was R21.8 million, which was 1.8% below budget.
Ÿ There was also a challenge with administration and management fees, which were reduced significantly, by 44% (administration) and 74% (management). This was due to delays in the roll-out and implementation of infrastructure projects. Another reason was that consultant’s contracts were ending, and iSimangaliso had to wait to implement most projects until a new panel of consultants was appointed. These consultants were part of ISPA irregular expenditure in 2018/19. It could not continue with those consultants because continuing with them was creating further irregular expenditure.
Ÿ Sundry revenue decreased by 25%.

A new tourism business strategy and fast tracking of projects is being implemented to address the reduction in revenue. iSimangaliso will be taking over tourism facilities within the park from Ezemvelo KZN Wildlife to increase revenue streams. It recorded a net loss of R2.8 million.

Total expenditure for the year was R203.2 million. The increase is attributable to:
Ÿ Contracted services and project costs increased by 42% above the budget. The increase is due to need to repair and maintain most park facilities due to deterioration of infrastructure which was not done in the prior year. There was also a challenge where iSimangaliso received numerous complaints about theft in the park, so it had to strengthen security, which resulted in increase in security costs. Houses occupied by employees and roads were also repaired. Other expenditure increased as well.
Ÿ Unbudgeted loss on disposal and write-off of fixed assets incurred due to decision by management to do a 100% asset verification of assets within the Park.

Most expenses were within the budget except for:
Ÿ Travelling costs for Board members; ad hoc but critical; Board and committee engagements. iSimangaliso will implement cost containment measures going forward.
Ÿ Workshop and meetings: This was due to critical stakeholder meetings that had to take place.
Ÿ Internal audit fees increased due to prior year projects that were done in the current year.

Discussion
Mr Modise asked about employee satisfaction as people “will never deliver services if they are not satisfied”. The presentation spoke about the survey that iSimangaliso conducted. The CEO spoke about medical aid. He wanted to check if the CEO assures this Committee that this would be resolved the next time they meet. What guarantees are there? What has iSimangaliso put in place to ensure that this is done?

On the payment of suppliers, if the Committee had time, Mr Modise would request the CEO to paint the Committee a picture. He believed that the Committee was scheduled to visit iSimangaliso at some point next week. He asked if the CEO would be kind enough to prepare that response in advance.

Ms Mbatha emphasised the payments to trade creditors; this must be fixed as soon as possible. If iSimangaliso sees a problem, it must ensure that that its creditors are trained on how to submit invoices. It cannot be that there is always no achievement according to the presentation. If one looks at the SMMEs, the SMMEs end up failing as suppliers because of non-payment. The workplace skills plan was not achieved. Can that be corrected? It is very important. Such a plan was important. The next time iSimangaliso presented, it should inform the Committee how many employees were taken for skills development or had bursaries. The implementation of the employment equity plan was not achieved. The Department of Employment and Labour is not doing its work as that is one of its priorities. This ongoing compliance is a must – it is very important. To her, not having medical aid is a problem as it is one of the benefits that employees must have. Can that be corrected in future?

Ms Phillips asked about the work skills plan as zero percent of the plan was implemented. How much of the plan has been implemented to date? On page 30 of the Annual Report, the refurbishment that iSimangaliso talked about – has it actually started? On page 32, can it provide the development plan to the Committee? On page 47, can the Committee please have a list of suppliers that were appointed that are not tax compliant? Were iSimangaliso’s financial statements prepared by external consultants or prepared in-house? She asked for details on the unspent conditional grants. Could the Committee have a list of properties that were bought or sold? On page 99, the CFO was suspended – has that been resolved?

Mr Bryant asked about the cubic metres of earthworks used in the wetland rehabilitation project. He saw that that had changed to a monthly amount – has that monthly amount been used to fund the breaking through of the sandbank between the river and the ocean, which is a controversial point at the moment?

iSimangaliso Wetland Park Authority response
Mr Bukhosini responded about the employee satisfaction survey conducted in the period under review. The survey responses contained many points. In the 2020/21 report, it would report on progress in addressing those points. A lot of those issues were being addressed.

On the payment of suppliers, suppliers were paid in time, but there was a problem with the invoices. The AG came on site and noted concerns with how service providers dated the invoices that they prepared, For example, the service provider indicates 20 December, not 15 January, which is the date of submission of the invoice. Internal control will now stamp those invoices to reflect the date of 20 December. Other than that, service providers and suppliers are paid on time. That is why one will find few issues of unauthorised, fruitless and wasteful expenditure if one looks at the financials.

On the workplace skills plan, the issue was that the plan was submitted to the wrong SETA. It was submitted to the Local Government (LG) SETA instead of the Culture, Arts, Tourism, Hospitality and Sport (CATHS) SETA. This has since been corrected, and there will be a progress report at the next meeting.

On implementation of the employment equity plan, the Board had revised the entity’s organogram. At the conclusion of the revised organogram, since it was nearing the end of 2019/20, the equity plan could not be implemented. In the current financial year, the employment equity plan is now being implemented.

On medical aid, Mr Bukhosini explained there is a contribution from the employees, and also a contribution from the employer. That is what iSimangaliso has done as it strives to be the employer of choice.

The CFO had mentioned iSimangaliso taking over the operation of seven facilities from Ezemvelo KZN Wildlife. iSimangaliso considers that as something that will be a “big game-changer”. If one looks at its financials, there is a minimum amount of money that iSimangaliso is generating itself, which puts it in a compromised position. It is working hard with the Board, and with the support of the Minister and Deputy Minister, it is trying its best, but there are challenges. There has been progress.

Mr Bukhosini replied that iSimangaliso can provide its plans on the refurbishment of facilities. It will provide pictures of how the facilities looked before so Members understand what iSimangaliso means when it says that facilities were in a derelict state, and why it had to attend to this. This includes facilities for field rangers, who are out there in the field looking out for poachers and making sure that conservation is done.

iSimangaliso can provide a list of suppliers. The issue here is not that iSimangaliso appointed service providers who were not tax compliant. The concern raised by the AG raised was that it did not find evidence that iSimangaliso did follow-up. The service providers appointed were all fully tax compliant.

On financial consultants, iSimangaliso had a problem with the previous CFO of which the Committee is aware. Since it did not have enough capacity, it had to procure services of financial consultants to assist it in the preparation of its financial statements.

On unspent conditional grants, there was an attempt from iSimangaliso’s side to control the irregular expenditure, which was due to irregular appointment. It had to correct that. The CFO's presentation noted that those grants are fully cash-backed, but that information can also be made available.

iSimangaliso has not sold any properties. The only thing that happened is that iSimangaliso had acquired assets as a result of the relationship between it and Ezemvelo. Those were old, dilapidated structures which iSimangaliso had to demolish to pave the way for the new lodge, which it is currently building.

The previous CFO was suspended, which was part of the consequence management. There was serious maladministration on the CFO’s side. There was also fruitless and wasteful expenditure and other things. That matter has been concluded, and the person is no longer with the entity, hence an interim CFO. The Board Chairperson noted in her opening remarks that iSimangaliso has since finalised the appointment of the new CFO who has gladly accepted the offer and will be assuming her duties on 15 February 2021.

The cubic metres of earthworks is for the rehabilitation of wetlands, not the estuary.

South African Weather Service (SAWS) Annual Report 2019/20
Ms Nana Magomola, SAWS Board Chairperson, introduced the team. Mr Mnikeli Ndabambi, Acting CEO: SAWS; Mr Norman Mazizi, CFO (newly appointed); Mr Lulama Gumede, Senior Manager: Finance. Mr Gumede would present the financial report, since he was the Acting CFO during the period reported on.

At the last Committee meeting, Ms Magomola had reported that the positions of CEO, CFO and Executive for Corporate Services were vacant. As mentioned, SAWS has a new CFO. The appointment of a CEO is at an advanced stage. It should be able to announce an appointment soon; it is just going through the usual protocols. The position of Executive: Corporate Services has been advertised, and the process of appointing is underway.

Ms Magomola gave context to the difficulties of the 2019/20 financial year, which included South Africa being downgraded to junk status, and also dealing with COVID-19. Additionally, when an entity has three top positions in acting roles, it “causes a destabilisation for the organisation”.

In the areas where SAWS is off target, there is improvement compared to how it performed in 2018/19. In the areas of partial achievement, Members will note that in most instances, SAWS has missed the mark by 1% to 3%. SAWS had achieved an unqualified audit. As opposed to 2018/19, the AG was pleased and complimentary to management in how it responded to the audit questions and the turnaround times. Management was able to keep to the deadlines.

Overall Summary of 2019/20 Performance
Mr Mnikeli Ndabambi, SAWS Acting CEO, said SAWS achieved 14 out of its 21 targets (67.7%).
- Programme 1: Weather and Climate Services, three of the four targets were achieved (75%)
- Programme 2: Research and Innovation, two out of two targets were achieved (100%)
- Programme 3: Infrastructure and Information Systems, five out of seven targets achieved (71%)
- Programme 4: Administration, four out of eight targets were achieved (50.0%).

Programme 1: Weather and Climate Services
A performance indicator partially achieved was:
Ÿ Percentage of Aerodrome warnings accuracy. Since then forecasters were able forecast more accurately than anticipated. Stable weather over winter months contributed to increased forecast accuracy. Mr Ndabambi added that most national meteorological services have targets of 90% and below, so SAWS is pushing itself here because it would like the aviation industry to trust it as it goes for the cost recovery, as per the current model.

Programme 2: Research and Innovation
All targets were achieved.

Programme 3: Infrastructure and Information Systems
Performance indicators partially achieved were:
Ÿ Percentage of Global Atmosphere Watch (GAW) infrastructure availability. Challenges: Load shedding resulting in multiple instrumentation failure. In addition, ageing infrastructure, as well limited capital expenditure budget negatively impacted optimal operation of GAW facility. Corrective measures: Backup power acquisition and GAW business case implementation.
Mr Ndabambi added that this infrastructure allows SAWS to verify the data, which is used to initialise the weather prediction models. This is a critical programme for a national meteorological service.
Ÿ Percentage of upper air observation infrastructure availability. Challenges: The Springbok generator was faulty since February 2020. Durban and Gough Island infrastructure remained non-operational for the majority of 2019/20. Corrective measures: Gough Island infrastructure will be replaced in the next Gough Island take-over voyage. Evaluation for a supplier to install new upper air infrastructure concluded and appointment to follow.

Programme 4: Administration
Performance indicators partially achieved were:
Ÿ Current ratio for liquidity. Challenges: Mainly due to increase in cash and cash equivalents, trade payables, unspent government grants and short-term employee benefits.
Mr Ndabambi added that this target kept being a challenge in 2020/21, especially with the impact of COVID-19. Members would notice in the latest APP that having discussed with the Department, SAWS has taken [unclear 04:08:03] out so that it waits for the financial situation to stabilise.
Ÿ Commercial revenue. Challenges: Installation of equipment for key clients was delayed. NetSuite implementation impacted on processes to load orders and release invoices. Corrective measures: More client base expected from strategic partners. These strategic partners that SAWS is assisting will start generating such revenue moving forward.

Performance indicators not achieved were:
Ÿ Level of BBBEE. There was no valid BBBEE certificate. Corrective measures: BBBEE Task Team established and appointed by CEO. Employment Equity focus towards PWDs and targeting of TVET Colleges. Spending on management training through partnership with universities will be implemented to improve the timely execution of identified development interventions.
Ÿ Percentage of workplace skills plan targets met. Challenges: Procurement of required training was delayed during the year. Most training interventions were procured towards the end of the quarter which left insufficient time for the interventions to take place. Corrective measures: Plans are in place to enable conducting of training in 2020/21. Management identified challenges in supply chain management (SCM) and corrective measures were instituted on individuals.

Organisational Structure and Employment Equity (see document.)

Financial Report
Mr Lulama Gumede, SAWS Senior Manager: Finance, presented the financial report. SAWS achieved a 16.21% growth, amounting to R445 million, compared to R383 million in 2018/19. Revenue from exchange transactions (from commercial activities) grew by R2.65 million year-on-year. This was mainly due to increased revenue from its non-regulated commercial revenue. This includes providing weather-related information to the private sector, as well as municipalities. It also provides air quality information. SAWS revenue [unclear] was on par with the previous year, approximately R128 million. Revenue from non-exchange transactions from government grants and subsidies grew by R61 million year-on-year, from R209 million to R271 million. This is due mainly to an increased grant for infrastructure maintenance.

Total expenses grew by 8.34%. The main reason for the growth was the [unclear 04:19:28] from the impairment of receivables, as well as the writing-off of bad debt. The impairment of receivables is the provision for doubtful debts, which is mainly attributed to companies that were liquidated, which amounts to about R10.18 million. These companies were in business rescue or were in provisional liquidation such as South African Airways, SA Express, Comair, and Air Zimbabwe. Air Zimbabwe and Comair are currently operating. SAWS cannot do anything about the debt owed as they are protected in terms of the Companies Act. SAWS will have to wait to recover any money from those air companies.

SAWS incurred an impairment loss of about R12 million; this was on intangible assets. These were intangible assets that were no longer in use, and it had to impair those. It had a total deficit of R46.7 million, which was reduced significantly from the previous financial year by about R24 million. One needs to take into account that most of these are non-cash items such as impairment of intangible assets of R12 million, another R12 million on impairment of receivables, as well as write-offs. There is also depreciation and amortisation of R28 million. Without those non-cash items, SAWS would not be sitting with a deficit.

Under current liabilities, Mr Ndabambi noted the unspent conditional grant – capital expenditure, which has gone up from R27 million to R54 million. SAWS received an additional R78 million of infrastructure grants, and it used about R61 million for the year, which left it with R54 million unspent at the end of 2019/20. It encountered procurement delays which have been attended to. It is hopeful that going forward, it will be able to use some of this grant. However, it might not use the full grant going forward due to the current economic situation, where it might have to sacrifice some capital expenditure (capex) for operating expenditure (opex). The unspent conditional grants and receipts were R16 million. These relate mainly to donor funds that SAWS received, especially for its research for meteorological products. SAWS has partnerships with various organisations, such as the Water Research Commission, and funding from some international organisations.

Mr Ndabambi noted that SAWS missed its revenue target by 4.26%. It achieved R445 million against the budget of R464 million. There was about R11.64 million of unspent government grants, which is mainly capital funding, due to the problems experienced within supply chain management (see document for full details on statement of financial position, cash flow and comparison of budget with actual amounts).

Report of the Auditor General
Ÿ Unqualified audit opinion achieved for the year ending 31 March 2020.
Ÿ Improvement noted by AG on the 2020 audit when compared to 2019.
Ÿ Qualification items for 2019 were resolved in 2020 resulting in an unqualified audit opinion.
Ÿ AG commended management on identifying transactions containing irregularities; management put in place processes for identifying irregular expenditure, and fruitless and wasteful expenditure. These are being attended to and consequence management will be taken when required.
Ÿ Areas for improvement:
- Material misstatements in financial statements. Management has a plan to address those going forward.
- Targets for some indicators are not specific, measurable, achievable, realistic, and timely (SMART).

Discussion
Mr Paulsen asked about those staff members implicated in corruption, who have subsequently resigned. Is SAWS still pursuing and proceeding with charges against those people?

Ms Mbatha said that SAWS was the only entity that came with an employment equity plan; it was tabled very well, and one can understand that it has done much work on it. Others must follow that example when they present to the Committee, as it is compliance needed by the Department of Employment and Labour.

SAWS responses
Ms Magomola asked the Acting CEO to respond to questions about executives who have resigned.

Mr Ndabambi replied that three people resigned. With the CFO, the investigation was completed when she was serving notice, but she was at the beginning of the period of notice, so she was suspended and charged. She was already resigning, so she left SAWS. Following her, the Senior Manager: Supply Chain, noticed that the investigation is being concluded, and both people knew what they had done. Those people deleted information on their laptops before they resigned. The previous CFO resigned before she was charged. Investigation was concluded. With the Executive for Corporate and Regulatory Services, who was also in charge of human capital management, the investigation was concluded, and the person was charged. When the person’s disciplinary date was set, she resigned. SAWS reported this executive to the South African Police Service (SAPS) because there were fraudulent activities. The CFO and the others who resigned while the investigation process was taking place, those who were not charged, including the Senior IT Manager – the reports show that the Senior IT Manager was also involved in corrupt activities and irregularities (including deleting information). The Board is seeking a legal opinion on what should be done. There were also recruitment companies involved with executive, corporate and regulatory services. SAWS is in the process of trying to recoup the money. With the executive, her pension was not paid, and it is also trying to recoup money from these recruitment agencies [04:38:53].

The Chairperson said about the people who are leaving before they are charged, has SAWS opened criminal cases against them? If one allows people to jump ship, one finds it difficult to recoup money from those people. They are South African citizens and criminal cases should be opened. He was just commenting; he was not expecting a response.

Mr Paulsen asked if the Committee could have a more comprehensive report on the criminal cases.

The Chairperson agreed. For those people who jumped ship before they were charged, the Committee would want to have a full picture of what is happening. Such people do advise each other on how best to “destabilise government, steal from government, and jump”. Could the Committee get a full picture of who has been charged, and who resigned before the conclusion of their cases.

The Chairperson apologised for the time constraints. He thanked the Department and its team and board chairpersons and CEOs of the entities for the presentations, and for the general improvement of the audit outcomes. The Committee will issue a media statement to identify areas where there are improvements, where there are challenges, and suggest what needs to be done.

The meeting was adjourned.