National Youth Development Agency 2018/19 Annual Report

Meeting report

The Chairperson acknowledged the contribution to the Portfolio Committee of Mr L Mphithi (DA), Ms A Hlongo (ANC), Ms F Masiko (ANC) and Mr S Ngcobo (DA), saying their inputs as young Members were of value to the Committee, and applauded their dedication and commitment serving the needs of all South Africans. She encouraged the Members not to be discouraged by any political differences within the Committee and to continue focusing on representing South African voters.

The Minister was unable to attend as she was currently in Ethiopia at the Fourth Specialised Technical Committee on gender equality and women’s empowerment. The Deputy Minister and acting Director General were presenting the 2018/2019 Annual Report to the Select Committee on Health and Social Services, and could not attend the briefing. She had been informed by the Director General yesterday that they would not be attending the briefing.

She said the Committee was scheduled to meet on 19 November with the Portfolio Committee of Police to discuss the issue of gender-based violence (GBV) and femicide. After consulting with the Chairperson of the Portfolio Committee of Police, she had agreed to extend the invitation to all other committees.


NYDA Annual Report 2018/19: Analysis by Parliament Researchers

Ms Tasneem Matthews, Parliamentary Researcher, and Ms Kashifa Abrahams, Committee Content Adviser, presented an overview of the National Youth Development Agency’s (NYDA’s) performance for the 2018/19 financial year.

Financial Performance

Ms Matthews focused on the budget allocation and expenditure of the Agency, and gave a brief historical overview of its financial performance since 2009. Key issues that were raised were the debt the NYDA had inherited from previous entities and financial mismanagement. However, over the last five years it had received clean audits and the Auditor General (AG) had indicated that it had been performing well in this area. In the 2018/2019 financial year, the NYDA had not had any irregular or wasteful expenditure. She acknowledged that the AG had flagged some items in the NYDA’s report, but these findings would be investigated at a later stage as they are relevant only for the next financial year.

The NYDA had reported an overall budget of R477.1m, of which R60m came from donor funding. However, the annual report had accounted for only R31m of donor funding which had been transferred to a flagship grant. It was unclear what area the rest of the R60m had been spent on. This was a key area the Committee would enquire about further.

Three key financial performance areas of the NYDA were highlighted -- the economic participation programme, administration and employee costs.  The analysis noted that the annual report gave a breakdown of expenditure, but it had inconsistent figures in areas like the number of staff. This was an additional area that had been noted for the Committee to enquire about.

The NYDA had been doing well and had met and in some cases exceeded all performance targets which were approved by the previous Committee. It had also met all of its targets for the 2019 period. The Committee had already engaged with the NYDA to amend some of the targets for further clarity. It was noted that the NYDA had made minor changes and reworded some of the targets, which was acknowledged in the annual report. However, concern was raised around changes that had been made and not acknowledged, specifically around governance and administration. The Committee was encouraged to find out why these particular changes were made, and also to seek clarity on what exactly the NYDA’s governance and administration entailed, because it was currently quite unspecific. The Committee had already engaged with the Agency around this issue, and would continue to do so.

Information gaps

The NYDA had been citicised for lacking detail in some of the information it provided. It acknowledged having 33 committed stakeholders, but did not specify how many were public or private entities and how much they were willing to provide in donor funding, if any. In the annual report, the Minister noted 30 service delivery channels had been established and operationalised, and listed kiosks and outreach vehicles as examples. There was a need for more information on the number of youths that had received funding and whether or not outreach vehicles were servicing disadvantaged youths in rural areas. 

Vacancies

At present, the NYDA had three board members instead of seven, and while the Committee and Parliament were in the process of filling these vacancies, there were questions around any challenges they were experiencing in the interim.  Additionally, the NYDA had noted vacancies at full-service provider branches. The Committee was encouraged to find out if these positions had been filled and the impact the vacancies had had on service provision in areas where they were yet to be filled.

Sponsorships

The NYDA reported 137 bursaries had been granted out of 145 applications. It was recommended that the Committee ask for the criteria for scholarships, the reasons applicants were denied and how the Agency supports unsuccessful candidates.  Additionally, the NYDA should explain how it manages and avoids double sponsorship, as potential grant recipients were eligible to apply to the Agency as well as other departments, like the Department of Public Works (DPW), which had similar incentive schemes.  It was recommended that the NYDA potentially develop a system that identifies individuals who had already received grants, and from which province and department they had received them.

Material Impairments

Ms Abrahams highlighted key financial issues which required more attention. The AG had noted that the NYDA had material losses amounting to R81.8m resulting from loans that had been written off. This was despite having checks and balances for identifying beneficiaries, and a credit risk policy. The Committee was encouraged to engage with the Agency to find out key reasons for loans being written off and what mitigation strategies had been set in place to prevent this challenge in the future, as these were not detailed in the annual report.

National Youth Fund and National Skills Fund

The NYDA currently had implemented the National Youth Fund and National Skills Fund, but it had not specified the amount of funding allocated to each specific function. This would improve the Committee’s oversight of the programmes.

Discussion

Ms Masiko thanked the researchers for the analysis they had provided, and said it was clear and helpful to the Committee. She referred to the analysis of the NYDA board, and wanted to know if it was fair to ask the NYDA how it was dealing with decision-making and capacity issues, given the fact that it currently had three board members instead of seven. It had already indicated that it was facing challenges in this area. It was the responsibility of the Committee, together with the Department, to ensure that the board was fully staffed and ran effectively.

Ms Matthews responded, and said she agreed that it was beyond the control of the board and that it was the responsibility of the Committee to expedite the process of filling the vacancies. She clarified that the question was not posed as a critique, but was rather more supportive, to see if the NYDA was coping and how the vacancies were impacting on its ability to perform its day-to-day functions.

Mr Mphithi referred to the NYDA donor funding. He asked if the report had indicated that the agency had received R60m in donor funding but only detailed the use of R31m, therefore leaving R29m unaccounted for. He said that the decision-making of the board impacted on the functionality of the NYDA. Given this, he asked which programmes and processes were being affected by the current vacancies. It was crucial for the Committee to know this information in order to understand the NYDA’s challenges.

Ms Matthews emphasised that the NYDA was not hiding that it had received R60m in donor funding -- this was clearly indicated in its report. However, the financial statement had documented only where R31m had been allocated. The NYDA needed to clarify where the rest of the funds had been allocated.  The NYDA had written to Parliament to discuss how it would function in the interim while vacancies were still being filled.

Ms Abrahams confirmed that a letter dated 6 August 2019 had been received from the Ministry of the Presidency for Women, Youth and Persons with Disabilities, informing the Assembly that the Minister had  approached the Minister of Finance to invoke the provision that the remaining three members of the board be approved as the accounting authority for the NYDA while awaiting the finalisation and filling of the remaining vacancies. This request had been approved by the Minister of Finance in accordance with Section 49 (3) of the Public Financial Management Act (PFMA).

Dr Herman Tembe, Legal Advisor: Parliamentary Office on Institutions Supporting Democracy (OISD) referred to Section 49 (3) of the PFMA, and said that it stated that the Minister may delegate another public entity to assume the role of accounting authority. In the case of the NYDA, no public entity with similar functions had been identified and delegated, ultimately making the provision legally flawed.

The Chairperson agreed with Dr Tembe, and said she was not aware of any public entity that had been identified to work with the NYDA. The issue of the filling of board vacancies had to be done together with the National Council of Provinces (NCOP).  She had communicated with Dr Tembe and the House Chair to establish a sub-committee to fast track the process of appointing board members. She would report back to the Committee after meeting with the Chairperson of the Select Committee of the NCOP, to present concrete plans for the future. She had written to the House Chair stating that they needed to advertise the posts as soon as possible to ensure the board functioned seamlessly at the beginning of the next financial year.

She said it was unfair to ask if the NYDA was coping, because it was a known fact that the vacancies had presented some challenges. Regarding the appointment of a temporary accounting authority, she said that the Minister, Deputy Minister or Director General would have been the appropriate people to provide information on which entity had been approved to assume the role.

Mr Mphithi referred back to Section 49 (3) of the PFMA, and agreed with Dr Tembe that the Act made provision for a relevant public entity. This was completely different from the document provided by Ms Abrahams, which quoted the decision made by the Minister approving the three board members as an accounting authority. He asked how the Minister had understood and interpreted the Act. It was crucial for the Committee to engage with the NYDA, because if the Minister had afforded the three board members accounting powers based on their interpretation of the Act, this was unlawful.

He raised concern that although it was not their fault, the three board members had presumably been making decisions that were illegal for the last couple of months. The Minister’s absence was an issue he had raised on multiple occasions.  He was disappointed that none of the Department’s leadership had attended the briefing, and said that this shed a bad light on the Committee and impacted on its ability to effectively address material issues presented by the NYDA and its overall ability to perform oversight. He emphasised his concern over the Department’s attitude towards the Committee. On the occasions the Minister and Deputy Minister were present, they always left in the middle of the meetings. This set a bad example for officials, who were following the Department’s lead. He recommended that the Department either made Committee meetings a priority and attended when scheduled, or that the Committee scheduled meetings after consulting with the Department to ensure their attendance.

Ms C Phiri (ANC) referred to the investigation into the World Festival of Youth and Students which had been initiated in 2011, but had still not been finalised. She asked how productive it was to continue asking for a progress report if previous Committees had done the same without fruitful responses. She asked what guarantee the Committee had that it would receive a different result. Rather than asking the same questions, the Committee should discuss recommendations to present to the NYDA when they joined the meeting, or ask for a substantive explanation on why a progress report had not been delivered. She raised her concern about rising unemployment rates and asked if mobile outreach vehicles and satellite programmes were reaching unemployed youths in rural areas. In her opinion they were not, so she asked what was being done to expand the reach of the programmes.

The Chairperson recommended that Ms Phiri pose her question directly to the NYDA. The issue of write-offs should be left for a later date.

Ms Masiko said it was important to discuss the write-offs, because these were large sums of money that had not been used appropriately. The NYDA should present a strategy on how it intends to address the problem.

The Chairperson suggested that Members should focus on current issues like donor funding and the board assuming the role of accounting authority. These challenges were more relevant than those stemming from 2011.  She thanked the researchers, and invited the NYDA to join the meeting.

Presentation by NYDA

The NYDA, represented by Mr Waseem Carrim, Chief Executive Officer (CEO) and Mr Thami Mkhwanazi, Chief Financial Officer (CFO), joined the meeting.

The Chairperson said that the Committee would not allow Mr Carrim and Mr Mkhwanazi to make a presentation on behalf of the NYDA in the absence of its board members. The board already did not form a quorum, and its absence now posed an additional challenge. She invited input from the Committee.

Ms Phiri agreed with the Chairperson, and said the NYDA was not taking the Committee seriously. Mr Carrim and Mr Mkhwanazi could not stand for the entire entity, and the board had to answer about its specific role. She asked that the Chairperson excuse Mr Carrim and Mr Mkhwanazi.

Mr Ngcobo concurred, and said the NYDA should return with all its board members.

Ms Masiko asked if the Committee had received any formal apology from the board members, especially its Chairperson.

Mr Carrim responded that the chairperson of the board had asked him to apologise on his behalf for his absence because he was travelling. The chairperson had appointed him to represent the NYDA.

Dr Tembe said it was unfortunate that the board was not present. The board was the governance structure of the NYDA, and Mr Carrim and Mr Mkhwanazi provided operational and strategic support for the Agency. However, he could not advise the Committee on what to do.

Ms T Mgweba (ANC) supported the Chairperson’s proposal, and said all board members should be present.

Mr Carrim clarified that before the financial statements and annual report were due for final approval, he had sought the advice of the Auditor General to discuss should be done, given the board did not form a quorum to approve the documents. The AG had advised him to approve the documents in accordance with Section 49 of the PFMA.

The Chairperson said that the Committee’s understanding of Section 49 was that there should be an entity appointed to work with the NYDA, and that it had not been informed of any by the Department. Therefore, it was crucial for the board to be present to address the issues it was accountable for. It would be unfair for the Committee to engage with the NYDA without its full governance structure, in addition to the absence of the Department.

Based on this, she thanked the NYDA and invited them to return the following Tuesday.  She would unfortunately not be present next week because she would be writing exams, and would be representing the Speaker at the Southern African Development Community (SADC). Ms Masiko would be the Acting Chairperson.

Mr Mphithi said he hoped the Minister and Deputy Minister would be present next week. He suggested that it would be helpful to notify the Minister prior to the meeting that the Committee wanted clarity on the decision to appoint the board as the accounting authority.

The Chairperson agreed with Mr Mphithi, and asked the Committee Secretary to write to the Minister. She said Ms Masiko would be responsible for ensuring that the Minister and Deputy Minister attended. 

Adoption of minutes

Ms N Sonti (EFF) said she had given her apologies for the previous week, but they were not included in the minutes.

The Chairperson said that the Committee had not received a formal written apology from Ms N Sonti (EFF), and that a medical note was not sufficient. The Committee required a formal apology.

She commented on the format used by Parliamentary Committees, and said that they had adopted the correct standard.

Ms T Masondo (ANC) noted the omission of the oversight discussion.

The Chairperson said Ms Abrahams should present the dates for the oversight at the following meeting. The Committee had agreed that Members would dedicate one day where it would address all constituency issues. She asked for a mover for the adoption of the minutes, including the amendment on oversight.

Ms Masiko moved the adoption of the minutes.

Mr Mphithi supported the adoption of the minutes, with the amendments.

The meeting was adjourned.