NSF & EWSETA 2023/24 Annual Performance Plan

Meeting report

National Skills Fund 2023/24 Annual Performance Plan

Dr David Mabusela, Acting Chief Executive Officer, National Skills Fund (NSF), took Members through the Fund's 2020-2025 strategic plan and 2023 annual performance plan (APP)..

Its skills development funding disbursement was budgeted at an average of R3.602 billion per year over the medium term expenditure period (MTEF) period. 10% of the skills levy collected was budgeted for operational expenditures to ensure a sound service delivery environment and effective resource management within the NSF. An average of R3.305 billion would be disbursed towards education and training, with an average of R300 million disbursed towards improving the post-school education and training (PSET) system.

The NSF was projecting to collect R4.6 billion through the skills levy. An amount of R212 million had been budgeted for administration expenses, of which R138 million was for employee costs and R74 million for operating and other expenses.

Due to new interventions approved for implementation in 2022/23 for the duration of the five-year strategic period ending 31 March 2028, projections for the 2022/23 and 2023/24 financial year have been revised for the skills development disbursements, to R3.189 billion and R3.391 billion. The PSET system improvement programme budget has been revised to R501 million in 2022/23 and R510 million in 2023/24. This was due to delays in the number of capacity development projects funded as per the approved implementation plan for the prior year, and the number of interventions funded that were earmarked and not yet implemented.

[See the presentation for further details]

Energy and Water Sector Education and Training Authority (EWSETA) 2023/24 Annual Performance Plan

Ms Mpho Mookapele, Chief Executive Officer (CEO), EWSETA, presented the entity's briefing, which covered its programmes in the areas of skills delivery; how it plans to build a skilled workforce for the energy transition of the country; research on the skills needed and the role of technical and vocational education and training (TVET) colleges in the hydrogen economy; its strategic focus on water and energy; and 2023/24 outcomes, outputs and targets.

[See the presentation for further details]

Discussion

The Chairperson noted that the budget and performance needed to be linked, and that the NSF had received an unqualified audit outcome. She asked what the discussions with the Auditor General of South Africa (AGSA) on the audit work had been, and if its advice was heeded to improve the audit performance.

As for EWSETA, it sounded like it was advocating, not accounting. If the board was about activism, then that was something Members appreciated. She welcomed the need for increased stakeholder partnerships. When entities were aligned with the language of the Committee, it was encouraging because before they went outside the sector, they needed to get their own stakeholder engagements in the sector checked.

She asked about the EWSETA resignations, and if there were any plans to counter that challenge; the relationship between the entity and the Department of Science and Innovation (DSI) on the hydrogen economy; the building or manufacturing of solar panels through the technology stations of the DSI, and the relationship between the EWSETA and the DSI on those technology stations; the SETA’s ability to monitor the entities or service providers to which the EWSETA provides funds, and who the beneficiaries are; the mechanisms in place to ensure that the beneficiaries are using the money for what it was intended for, especially the service providers; and the reasons behind the decreased number of targets and what informed the decision.

She also wanted to know if EWSETA had picked up any "double-dipping" by beneficiaries.

Ms C King (DA) asked the NSF about the mitigating strategies to bring the entity back. There had been calls for a proper Special Investigating Unit (SIU) investigation due to internal control issues, and she asked if the investigation had been promulgated and about its timeframe. Had the information communication system (ICT) system been implemented or not? Would students who were sent to the war countries be affected in their studies? Would students going to study abroad and not get recognition of their international qualification be unable to find employment in their own country? She expressed concerns about the NSF's unfunded mandate.

She said there were many students receiving funding from different SETAs and entities. She asked if there were any plans in place to have an integrated system to mitigate that challenge and open up more funding for other students. She referred to the NSF’s concerns about their reliance on human resources (HR) of the Department of Higher Education and Training (DHET), and asked if they had any plans to ensure they were less reliant on the DHET. Regarding the NSF’s under-spending and the R1.7 billion surplus available, what were the plans to ensure this money was reinvested to avoid any under-spending?

Ms King was concerned that the EWSETA had budgeted for a forensic investigation budgeted, and wanted to know what the nature of the forensic investigation that took place last year was, and how the budget for legal fees would be managed to avoid further SIU investigations.

Ms D Sibiya (ANC) thanked the NSF for the efforts that it had employed to improve its performance. As for the EWSETA, what training did the entity do concerning new technologies in the water/energy sector? What were the explored options for technology on energy through the ocean economy?

Dr W Boshoff (FF+) acknowledged the progress of the NSF. Its financial model was 10% of what was levied in the skills development levy, which was 1% of the national remuneration of South Africa. This gave some idea of the magnitude of what it was working with, but it seemed that the NSF and SETAs worked in silos. What was the NSF’s perception of breaking down the silo walls in the skills development area? The skills training area was reconstituted once every 20 years -- was it not time for a fundamental restructuring?

He asked the EWSETA how many employees the small service providers had, as they were the largest absorbers or service providers for skills development training; if there was an appetite for collaboration between the entities and the SETAs; and why only 40% of employers in the water sector paid levies – why was the other 60% not paying?

Mr B Yabo (ANC) focused on the EWSETA, and said that its presentation had outlined points that called for the creation of bodies such as the SETAs. It was impractical to move the creation of the SETAs outside the context of the country’s past. For those who would have been beneficiaries of a system that lasted until democracy, there was a need to fast-track the numbers and targets.

He asked about the effects of the brain drain in these sectors, and what was being done to mitigate them. Skills transfer should not only speak to capacitation in theory, but produce an outcome that would assist the country moving forward. The critical delays in the construction and completion of the Medupi and Kusile power plants reflected a lack of skills, because what was designed on paper and what was constructed did not match or talk to each other, so the power plants could be classified as a failure. There was also so much corruption around the construction of these plants.

Mr T Letsie (ANC) said the AGSA had picked up the double-dipping of learners participating in different programmes. This was the service providers' doing, not the SETA. There were about 617 learners who were registered at EWSETA, and he asked if it had a system to track whether learners were enrolled in other SETA programmes. How were the stipends paid?

He believed that it was courageous that the SETA had a bursary programme, and asked how it was administering the bursaries. He said there were concerns around the accreditation of the qualifications, and just last week, the Committee asked the Quality Council for Trades and Occupations (QCTO) if it had the capacity for the accreditation of qualifications from all 21 SETAs.

There was a problem with the duplication of programmes, which was not helpful. This did not make an impact. Mr Letsie supported the "One Country, One Plan" document before Cabinet. They had to have "One Department, One Plan."

Mr Letsie said the NSF should develop a training system or database that would record all the learners that had been trained and the different skills that they were trained in. Members wanted to see the impact of the NSF's APP. If Members asked for an integrated database system of all the learners that had been trained, it would take the whole year because no system recorded the learners, the skills they acquired and who trained them. It also seemed that there was no system for how learners could be trained. He suggested that the Department develop an integrated system that includes all the SETAs, the learners and the skills training provided, and by whom that training was provided.

Developing these qualifications was extremely important, but some programmes were no longer relevant. If this function was with the QCTO, how did the Department facilitate this function with the sector? Students were trained at TVET colleges but could not find employment. He had lobbied the Department to facilitate how the SETAs, the NSF, and the TVET colleges could provide the right skills.

In an APP, Members wanted to see the correlation between the budget and the targets and how these spoke to each other. The AGSA would raise the point that with many entities, there were challenges of targets that could not be met. Was the AGSA part of the APP development of the entity? Was the APP developed internally or procured from a service provider? If the APP was developed internally, were the SMART (Specific, Measurable, Achievable, Relevant and Time-bound) principles consulted or aligned with the SMART principles? Some of the indicators or targets lacked descriptors. Was there a consideration to amend the APP? He also wanted to know about the certification backlog.

The EWSETA could work directly with municipalities, and even the Department of Mineral Resources and Energy (DMRE). Was it possible that there could be better collaboration between the SETAs in addressing many other issues, including the duplication of programmes?

Members visited the University of the Western Cape (UWC) to learn about their hydrogen technology. Had the SETA considered partnering with the Council for Scientific and Industrial Research (CSIR) and the UWC to explore this hydrogen technology better? Could a list of graduates within the water and energy sector be obtained to assist graduates with employment?

He wanted to know if the critical positions at the NSF had been filled, or what the status of the process of filling the vacancies was. The Nexus forensic report would have painted a bad picture of the entity -- the NSF had incurred R1.7 billion in irregular expenditure. He asked about the timeframes in the targets; the reconfiguration of the ICT infrastructure; and if the NSF had the capacity internally to achieve its 49 targets, considering the vacancies that were not yet filled. He said its performance against targets had been dismal over the past two financial years, which raised the question of whether it had the capacity to achieve the 49, because the previous targets had been much lower than the current ones, but could not be achieved. He asked about the status of the risk register; if the NSF had a policy on the 4th Industrial Revolution  (4IR); if it had identified an area where it would have its own offices, and if it was renting or owning the office space; the estimated costs of relocation to the new identified offices; if the position of Director for Skills Development, which had been vacant for some time, had been filled, and if not why it had not been filled, and what the NSF had done to ensure that this position was filled.

In the State of the Nation Address (SONA) debate, he had asked the President to consider using local companies for platforms like the Zoom that Parliament uses, but it did not seem there was political will to use local companies. They were paying Zoom from America; were there no local companies? The President had been asked to find a way for South African information technology (IT) companies to be given the space to compete.

How did the NSF ensure that the training programmes commenced and ended timeously? What mechanisms did the NSF have in place to ensure that these programmes were completed on time? What was the dropout rate in its programmes and what plans did it have to curb the dropout rate?

Mr T Mogale (EFF) said that during the first term of President Mbeki, the country had had many talks about skills, and different initiatives was put in place for skills development and training. Some 20 years later, they were still talking about the lack of skills, yet SETAs and other entities had been established. Where was the problem? Why were they not getting the critical skills needed to drive the South African economy and develop? Was the challenge funding? It seemed there was a duplication and silo mentality in many entities operating in this sector. Perhaps the legislation should be reviewed on this so that each entity has a very clear set of mandates that they need to deliver on, and avoid duplications.

He wanted to understand what the entities were doing to prepare South Africans for the ever-evolving times and economies. One could not, 28 years later, be told that in the hydrogen economy, it was a terrain of white males. This meant they had failed. What were institutions like NSF and SETAs really doing to deal with these issues?

Japan would take its best-performing students to the Western institutions of higher learning, and come back with critical skills for their own countries. How many South African students have been taken to the Massachusetts Institute of Technology (MIT) to obtain critical skills? In terms of the critical skills needed for the country, why were the best students not being sent to the best institutions in the world? South African students should be sent in their masses to the Western countries to learn, so they could come back and build new industries that could help South Africa move forward.

Were the entities working with institutions to identify graduates for in-service training? The purpose was not to tick the boxes for compliance, but to deal with the issues of poverty and inequality. What was the fate of the young people that obtained training from the programmes? How were they being assisted in getting jobs? Should one not consider narrowing the NSF’s mandate to assist with the acquisition of critical skills?

Mr S Ngcobo (IFP) asked the NSF about the measures put in place to ensure that it received improved audit outcomes; if it had any internal corruption hotline for whistle-blowers; measures for progressive skills development in rural areas; the criteria for selecting learners that the NSF funded; and if it took into account the learners from previously disadvantaged areas and rural areas, as well as people living with disabilities, and funded skills in the expanded public works programme (EPWP) programme.

He asked the EWSETA about the outstanding certificates and the reduction of the backlog, and for the reasons why municipalities were reluctant to work with the EWSETA.

Ms J Mananiso (ANC) asked for a detailed spreadsheet of where the learners were demographically spread, and the district municipalities the entities were working with.

She said the SETA had received a qualified audit opinion, and asked for the submission of a report detailing how it intended to address the findings and implement the recommendations of the AGSA. How could one achieve a unified approach from entities under the Department?

She encouraged both entities to use the national percentages for people living with disabilities instead of thumb-sucking percentages for quotas. She asked about constituency-based programmes and where they were located. She echoed the call for a reduction in the backlog of certificates.

She welcomed the programme of partnership with TVET and community education and training (CET) colleges.

She asked the EWSETA if it had a plan to identify the TVET colleges that had the space but lacked the infrastructure for skills development and training.

She acknowledged the progress made with consequence management at the NSF, its improved audit outcome, and the administration budget reduction.

She asked the entities to send their MOUs with other entities for Members to review the contents, and if the entities were delivering on their MOU agreements.

The Chairperson thanked Members for their input and comments. She asked the chairpersons of the entities to make closing remarks. Responses should be submitted in writing, because Members had asked many questions that needed detailed responses. The questions must be grouped and responded to accordingly. Both entities must respond to the questions within seven working days. She appealed to the entities to send the responses timeously.

A follow-up meeting would be necessary, and it must cover the Master Skills Plan to cover issues around coordination, duplication and impact. She hoped that the Department’s engagement with stakeholders in putting together the master plan included the research institutions under the Department of Science and Innovation. Entities like the SAQA, Council on Higher Education (CHE) and the QCTO could play a critical role in shaping the Master Skills Plan.

The certification backlog needed to be reduced. The NSF was in a mess, and it needed to go out there to tell the country what it NSF was doing. The SETAs had to take charge of the narrative and what they were doing to turn the tide.

Responses

Department of Higher Education
 
Mr Zukile Mvalo, DDG: Skills Development, DHET, said that given the time the meeting took, it showed the interest of Members in the issue of skills development in the country. The recent Quarterly Labour Force Survey (QLFS) reported that they had lost about 182 000 skilled managers in the country. These were well-trained professionals. They had gained 141 000, which indicated that the more they train, the economy absorbs.

There was a need for technicians, and the critical skills list showed that some of these skills were not available in the country and would have to be imported. There had been a loss of about 1 000 technicians.

For craft and related trades (artisans), there was a growth of 60 000, quarter to quarter. From year to year, they were looking at 110 000 people being employed. For those with less than matric, unemployment was at 37%, and for those with matric, it was at 35%. For those coming from TVET colleges, it was over 20%, and for university graduates, it was lower at around 10%. Most sectors of the economy were non-responsive.

The Master Skills Plan must be concluded by the end of this year. There was a high rate of mismatch in the country, at 32%.

The integrated data system was something being taken seriously, and it would address some of the ills regarding performance-related information. The Department was establishing a committee that would conduct some coordination in the sector against the background of the White Paper for PSET.

The Department was in engagement with Saudi Arabia, which had taken an interest in learning from South Africa about the SETA system, and had asked for assistance.

The Chairperson encouraged the delegation that if they wanted to conduct an international study tour, they should visit Vhembe TVET College. She was impressed with the technological and scientific advances at the institution. It could be utilised as a benchmark, because the learners in the institution were so confident of the skills they had acquired. Members would like to see this kind of milestone in the sector.

Due to time constraints, she requested the entities submit their responses in writing within seven working days.

The meeting was adjourned.