Independent Development Trust (IDT) Annual Report 2010/2011

Meeting report

Independent Development Trust (IDT) Annual Report 2010/11 briefing
Ms Thembi Nwedamutswu, Chief Executive Officer, Independent Development Trust, apologised for the absence of the Chairman of the Board.

Mr Vukani Nthintso, Executive Head, Independent Development Trust, indicated four minor errors on the original report, which had been corrected.

Mr Nthintso noted that the Independent Development Trust (IDT) focused on sustainable development, and its goals for the year included the statement made in the State of the Nation Address that if should be part of the administration that knew where people lived, understood their needs, and responded faster. The IDT aimed to attain sustainable livelihoods through people- centred interventions, by pioneering innovative development solutions, and ensuring excellence in service delivery. It also aimed to advance social policy objectives as well as to contribute to organisational stability. Finally, it wished to do all of this in a manner that would ensure that it continued to receive unqualified audit reports.

The IDT had focussed on sustainable development, particularly in relation to woman and youth, and its development was, wherever possible prioritised in rural areas. It was also placing more focus on people with disabilities, a special interest, in particular of the Deputy Minister. Some of the programmes to which the IDT contributed were the Expanded Public Works Programme (EPWP), Reconstruction and Development Programme (RDP), the rebuilding of mud schools and the building of Integrated Justice facilities. Growth in terms of projects had surpassed the target of R2 billion in the previous financial year.

Mr Nthintso then outlined the breakdown of the IDT’s spending, as well as giving an analysis of the specific spending on women, Black Economic Empowerment (BEE), and ‘local’ spend. Again, he stressed that spending generally occurred in the poorest parts of South Africa. Spending had increased, but it was the IDT’s contention that adequate support was not forthcoming for many of these programmes.

The report of the Auditor-General had been unqualified. However, there were certain matters of emphasis that had been raised. It was found that in relation to the predetermined objectives, the reported performance information was deficient. Other problems included inadequate compliance with laws and regulations, as well as fruitless and wasteful expenditure, which was largely related to the IDT’s late payment of Telkom fees. These problems were being addressed.

Mr Nthintso outlined the figures in respect of revenue and expenditure, management figures, fees (see attached presentation for details). He noted that the IDT had been given a financial allocation of R150 million in year 1 of the Medium Term Expenditure Framework but no allocations for years two and three, and this was a major challenge.

Some of the specific performance highlights were also highlighted (see attached presentation). In respect of some areas, IDT had minor concerns, and this included the lower-than-expected participation of women, some of the functional partnerships that had not performed as expected, and the fact that the work opportunities stood at 25 883, instead of reaching the target of 35 000. He noted that the construction of classrooms and health facilities had been problematic, often due to problems with other government departments, and cited the Eastern Cape Department of Education as one example where problems had occurred.

Other matters were of more serious concern. The portfolio growth in KwaZulu Natal had not met with sufficient support from that province. The advocacy programme needed to have deepened research capacities. More spending was required on community development. There was also a failure to reach targets in respect of youth spending, which was at 13% instead of 15%, and labour, which had reached only 10% spending, or R235.2 million, as opposed to the target of 24%.

Mr Nthintso gave a brief insight into the possible future of the IDT and similar development agencies in South Africa, which were attempting to build vibrant, active communities. Projects would be based in rural areas and would be driven at a provincial level. There were risks to this, particularly regulatory risks. One of the major risks concerned the IDT’s continued existence as a trust, and its sustainability, particularly in regard to its funding beyond year 1. Another strategic risk identified related to the relevancy of the IDT. Business risks included the fact that it was not only infrastructure development that was required, but a more comprehensive addressing of the community needs. There were also risks, particularly communication-related, in respect of labour and the perceptions of the IDT.  and the community needed to be catered to; communication risks surrounding labour relations and the perceptions of the IDT. Finally, there were political and other financial risks. Mr Nthintso requested that the Committee should note the transformation drivers, which would be addressed in future and more detailed engagements.

Discussion
Ms C Madlopha (ANC) congratulated the IDT on the quality of its report and presentation and noted the improvement from the previous year. It was, however, concerning that there was a decrease in employment opportunities, especially considering the priorities of employment in South Africa. The methodology that the IDT was using was ‘cheap and fast’, and she wondered if the IDT could not revise its methods and employ more people with the same budget.

Ms Nwedamutswu replied that new construction methods resulted in shorter projects. This resulted in less time being spent on projects and thus lower overall employment figures in certain cases. The Council for Scientific and Industrial Research (CSIR) was preparing a report based on this aspect of these programmes. There were other factors which reduced employment, and she cited the restoration of a High Court building, where a higher skill level was required.

Ms Madlopha noted the challenges around the allocation of funds.

Ms Madlopha asked clarity on youth and women’s participation in the IDT’s programmes.

A Member called for further information on the IDT’s vacancies, asking what the problem was in filling these vacancies.

Ms Nwedamutswu answered that there was a cost reduction strategy, and every vacant post was examined and evaluated as to whether it really needed to be filled. However, she noted the concerns, which were related to the fact that 2011 was supposed to be the year of job creation.

Mr Ian Ellis, Chief Financial Officer, IDT, provided the Committee with further information on the decrease in employment figures as set out in the presentation. There were two reasons for this. Firstly, resignations comprised 49% and end of contract comprised 27%. The concern related to uncertainty of the IDT’s future, and the staff were concerned about their own future in the organisation, leading to them seeking jobs elsewhere. He agreed that it was problematic when good skills were lost.

A Member wanted further information on the IDT’s strategy for working with local government, which had previously been difficult and time consuming.

A Member wanted to know whether the regulatory risks mentioned in the presentation would necessitate new legislation being drafted.

Mr K Sithole (IFP) congratulated the IDT on its achievements. However, he wanted to know how the IDT would prevent fruitless and wasteful expenditure in future, and how this was measured. A specific issue of this was mentioned.

Ms Nwedamutswu answered that this particular instance of fruitless and wasteful expenditure was related to a regional manager who had been charged with non-performance. In the process of the investigation into that manager’s performance, irregular claims amounting to R8 000 were discovered. The amount was recovered. The Chief Executive Officer had believed that the amount involved meant that it did not necessarily have to be reported to the Board, but the Auditor-General had disagreed, and had classified the amount as fruitless and wasteful expenditure.

Mr Sithole requested further information on the regulatory risks that the IDT faced.

Ms Nwedamutswu answered that there was a request for a workshop with the Committee to guide the IDT. It was hoped that a legislative framework would be developed. Additionally, the trust status would need to be reviewed in the near future, as government no longer wanted to work with trusts.

Mr J Steenhuizen (DA) commented on the previous year’s audit report and wanted to know what steps the IDT was taking to correct issues surrounding the lack of reporting.

Ms Nwedamutswu answered that this had been sufficiently addressed and would not be a recurring problem.

Mr Nthintso added that reporting standards were rigorous and it was often very difficult to comply with all aspects. In the future, the IDT would review its own performance indicators to make sure that they were verifiable.

Mr L Gaehler (UDM) congratulated the IDT on its report. He expressed some concerns about the future involvement of the IDT in the mud schools project.

Ms Nwedamutswu pointed out the sensitive nature of the debate around mud schools in South Africa. The IDT wanted to empower smaller companies and had entered into an agreement with the Department of Public Works. However, especially in the Eastern Cape, smaller contractors felt neglected. The situation was being monitored as a priority.

The Chairperson asked how far down the process the IDT had gone to become a major public entity.

Ms Nwedamutswu replied that there were a number of stages. The business case had been approved by the Minister. Consultations with various parties also needed to be undertaken to move forward. The business case would be provided to the Committee.

The Chairperson was worried about the IDT’s legal cases.

Mr Ellis pointed out that there were a number of cases from the previous year. There were cases that IDT had instituted against service providers who had not provided adequate services. There were also cases against the IDT itself, as a result of non-payment. This had often been a challenge when funds did not reach the IDT in time to effect payments. The settlement of debt due to smaller, emerging contractors had been prioritised. The situation was being monitored, and as far as possible the Departments involved were being pursued in respect of outstanding amounts.

Ms Nwedamutswu added that National Treasury was also involved, and where the IDT had tried without success to recover monies owed by Departments, Treasury would intervene.

Mr Gaehler was concerned that the IDT had “created” contractors but was now letting them down. There had been letters addressed to the President regarding the fact that some of these contractors had been forced out of business, because they had not been paid. He asked that the IDT should report to the Committee in writing on the issue.

Mr Nthintso clarified a figure in the IDT’s report to the Committee.

The meeting was adjourned.