Department of Communications & DTPC Quarter 1 performance, with Minister

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Communications and Digital Technologies

03 September 2019
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

Minister Stella Ndabeni-Abrahams spoke to why Post Office CEO, Mr Mark Barnes, resigned. She spoke about the requested aid to SABC and Treasury requirements before any extra funding could be approved. The Department of Telecommunications and Postal Services had achieved 95% of its targets. The 5% underachievement was for SA Connect not meeting its target for broadband connections. The Department of Communications had achieved 50% of its targets. Most of its targets were dependent on the digital terrestrial television switchover which did not occur due to lack of funding and failed SITA procurement processes. The Department was looking at ways to fast track the project. She said the failure to switch off analogue would limit spectrum availability and the Department, together with industry, was looking at how it could find solutions. On radio frequency licensing, Minister Ndabeni-Abrahams said the Department had issued a policy directive and engaged with industry and the Department was awaiting the Regulator to kick start the process so that industry could be informed how long the process would take. She spoke about the killing of a UCT student at a Post Office building by a Post Office employee, and condemned the attack. She said the employee had been hired at a time when the Post Office had used labour brokers and no vetting had occurred. She called for harsher action against such perpetrators and said that the Department would take responsibility for the failure to ensure a secure Post Office. Members were disappointed in the Post Office’s lack of vetting of employees which should have been done.

The Department of Telecommunications and Postal Services (DTPS) spoke to the reconfiguration of the two departments, preparations for the World Radiocommunication Conference (WRC-19), corporatisation of Post Bank, the State IT Company & State ICT Infrastructure Company Bills and about the Quarter 1 performance of its entities (Broadband Infraco, Sentech, SITA, Nemisa, USAF, USSASA and .ZADNA and SAPO).

The Department of Communications (DoC) said only 50% of its targets for Q1had been met. The target to pay invoices within 30 days was not met and no procurement was done in the first quarter. In Program 2 the DTT Project Management Office (DTT-PMO) had been established but the posts had still needed to be filled. In Program 3, on Broadcast Digital Migration, the revised analogue switch off plan had not been finalised. In Program 4 Entity Oversight, all the entity reviews were done but only three reports out of 12 were written. GCIS, Brand SA and Media Development and Diversity (MDDA) would move to the Office of the Presidency in April next year. The South African Broadcasting Corporation (SABC) has posted a financial loss of R192.3 million in Q1 of 2019/20 and owed service providers R1.8 billion.

Members concerns centered on the R3.2b transfer to the SABC; the SABC COO resignation; SABC’s sports rights losses of R2.3b; media reports of SABC Board members’ interference in the SABC operations, the problem areas in corporate services uncovered at the SABC and in-fighting amongst the board; and if action would be taken against previous board members for lapses in their fiduciary duties.

Members wanted to know the reasons for the Post Office CEO resignation and the positioning of the Post Bank outside the Post Office. Members had concerns that ICASA expenditure was more than its income; that community radio stations were not paying Sentech licensing fees; the ICASA board appointments; and the absence of signed performance agreements at ICASA. Members raised concern about the cost of the huge delegation at the meeting; the final date for the amalgamation of the two departments; the Broadcast Amendment Bill; when the unachieved performance targets would be achieved; and the challenges in coordination between SITA and government departments.

Members spoke about the death of the UCT student and called for united and concerted action against such attacks against women.
 

Meeting report

Introduction by Minister
Minister Stella Ndabeni-Abrahams spoke to the resignation of the Post Office CEO, Mr Mark Barnes. She said the key reason was the non-approval by the SA Reserve Bank of the Post Office’s Post Bank proposal. The Reserve Bank said the R25m the Post Office had taken from Post Bank was an issue that made it decide that either Treasury or DTPS should be in charge of the Post Bank. The Reserve Bank had decided on the DTPS.

The Minister said R10m had been given to the SABC to contract the Government Technical Advisory Centre (GTAC) to assist SABC meet the Treasury requirements before it would approve extra funding for the SABC. GTAC would not develop a turnaround strategy, it would assist only on technical matters. The Department had agreed with Treasury about the gaps in the SABC’s responses to Treasury that needed to be addressed. R3.2b would be released in tranches to the SABC once the Treasury conditions had been met.

The Minister said DTPS had achieved 95% of its targets. The 5% underachievement was for SA Connect not meeting its target for broadband connections. DoC had achieved 50% of its targets. Most of its targets were dependent on the roll out of DTT which did not occur because of a lack of funding and failed SITA procurement processes. The Department was looking at ways to fast track the project. The failure to switch off analogue would limit spectrum availability and the Department, together with industry, was looking at how it could find solutions.

The Minister spoke about the killing of a UCT student at a Post Office building by a Post Office employee, and condemned the attack. She said the employee had been hired at a time when the Post Office had used labour brokers and no vetting had occurred. She called for harsher action against such perpetrators and said that the Department would take responsibility for the failure to ensure a secure Post Office.

Department of Telecommunications and Postal Services
Mr Robert Nkuna, Director General: DTPS, spoke to the reconfiguration of the two departments, preparations for the World Radiocommunication Conference (WRC-19), corporatisation of Post Bank, the State IT Company & State ICT Infrastructure Company Bills. He said the target not achieved was the provision of broadband services to 570 connected sites of which only 98 were connected.

Ms Joy Masemola, CFO: DTPS, presented the financial statements. The budget increased by 64.4% which was mainly due to increased allocations to SAPO of R474.6m for the Universal Service Obligation (USO) and to Sentech of R192m for the DTT. There was under-spending in Compensation of Employees due to posts not being filled and in Goods and Services due to the SA Connect Broadband project.

Mr Nkuna then spoke to the SOE entities BBI, Sentech, SITA, Nemisa, USAF, USSASA and ZADNA and SAPO’s first quarter performances (see document).

On radio frequency licensing, Minister Ndabeni-Abrahams said the Department had issued a policy directive and engaged with industry and the Department was awaiting the Regulator to kick start the process so that industry could be informed how long the process would take. The Regulator’s response was that they were still considering the policy directive.

Department of Communications
Ms Nomvuyiso Batyi, Acting DG: DOC, said only 50% of its targets had been met. In Program 1 the target to pay invoices within 30 days was not met and no procurement was done in the first quarter. In Program 2 all targets had been met and the PMO had been established but the posts still needed to be filled. In Program 3 Broadcast Digital Migration, the revised analogue switch off plan had not been finalised. On Program 4 Entity Oversight, she said this oversight had improved a lot. The one target not met was to do 12 performance review and monitoring reports. Only three reports were done even though all 12 reviews were conducted.

Mr Frik Nieman, CFO: DoC, said that three entities, GCIS, Brand SA and MDDA would move to the Office of the Presidency in April 2020.

The Acting Director General spoke to the Quarter 1 performance of its entities: SABC, ICASA, FPB, MDDA, and Brand SA. She said that the Department did not have program reviews for some of its entities.

Deputy Minister Pinky Kekana pointed out corrections in the presentation where the correct figures on p21 were later transposed to p25.

Discussion
Mr L Molala (ANC) said he would like the previous year’s quarterly report to accompany the quarterly report for a comparative view. On the R3.2b preconditioned transfer to the SABC, he did not notice a request to report on key government priorities such as job creation. He said the Committee needed to engage about where the Post Bank was to be located. He said there appeared to be challenges in coordinating with government agencies such as SITA. Could the Committee assist so that departments took responsibility in supporting SITA. What was the Department doing about ICASA’s expenditure being more than its income?

Mr C Mackenzie (DA) noted the huge Department delegation at the meeting. He wanted a final date for the amalgamation of the two departments. He said the names of Mr Jwara and Mr Leon Rolls had been put forward for the 4IR President's Commission and these were names that appeared to have vested interests. He asked that Mr Barnes’ resignation letter be made available to the Committee as well as the reasons behind the decision to take the Post Bank assets out of SAPO, because the subsidy provided by Post Bank to SAPO was essential to maintain SAPO. He congratulated Mr Nkuna on work done especially in the international arena. Referring to BBI, he said there was talk that discounted rates were being given to certain companies. Did this not fall foul of Competition Commission regulations? He was alarmed at the resignation of Dr Craig Van Rooyen, SABC COO, due to personal reasons. What were the reasons given and what steps had been taken to replace him? He said some community radio stations could not pay Sentech their licensing fees. Was it possible to have a type of garnishee order imposed so that payment took place? He said R100m was spent on Broadcast Digital Migration (BDM) consumer awareness yet BDM was not completed. How many people still needed to migrate and how many Set Top Box decoders were available? He congratulated the Minister on issuing the policy directive and asked if she had more information on the progress of the regulator, ICASA, on this directive. As the ICASA board was up for re-election, would they wait for the Board selection process to be completed before making a decision?

Ms Z Majozi (IFP) asked for the Department’s comment on what was happening to SABC employees. What was the issue around SABC’s sports rights losses of R2.3b? What was being done about SABC’s failure to pay service providers?

Ms P Van Damme (DA) echoed Mr Mackenzie's comments around the large Departmental delegation. She was disappointed in the Post Office’s lack of vetting of employees which should have been done. She was confused about the management of Brand SA and GCIS and MDDA. The budget was with the Department but how was it being managed? Why were community radio stations not paying fees and who was responsible? She said the preconditions for SABC to receive extra funding should be made public so that the Committee can do its oversight work properly. She said the Broadcast Amendment Bill was raising red flags that needed to be addressed. Serious note had to be taken on what was said at the Zondo Commission. She was concerned about media reports of SABC Board members’ interference in the SABC such as providing editorial input.  

Mr W Madisha (COPE) said he welcomed the Minister’s acceptance that problem areas had been uncovered at the SABC in Corporate Services and that these areas would be dealt with. He proposed that the Committee be given a report on the areas that had been fixed. He was worried that the Committee was playing second fiddle as sometimes its resolutions were overturned elsewhere. He said the large delegation meant the Department's travel costs would be large, yet it was expecting the SABC to be frugal. The size of the delegation needed to be looked into.

Ms P Faku (ANC) asked what the challenges were leading to the non-achievement of targets. She asked for the requirements that SABC needed to comply with, that needed GTAC’s assistance. She asked what measures were being put in place at ICASA which was spending more than its income. She asked if there were performance agreements in place at ICASA.
 
Ms S Xego (ANC) asked if there was a plan to push for the achievement of those targets that were unachieved. She asked if there were time frames in place for the SABC’s turnaround plan. On ICASA, she asked what the challenges were, as it could not spend what it did not have.

Mr T Gumbu (ANC) asked what the preconditions were, as set out by Treasury, for the SABC to get R3.2b.

Ms A Mthembu (ANC) congratulated the DTPS on attaining of 95% of targets. She then spoke on the death of the UCT student and called for united and concerted action against such attacks against women.

Response
Minister Ndabeni-Abrahams replied about the effectiveness of transfers to the SABC, that the Department had, to date, focused on SABC governance matters based on the Auditor General audit reports, but it was now looking at the economic impact of funding as well as the social impact in a district based approach.

She agreed that the Department should include comparative quarterly figures in future.

The Minister said the decision around the Post Bank was taken by the SA Reserve Bank and the Committee could ask SARB to brief the Committee.

On the ICASA overspending on allocated budget, she said the accounting officer was engaging with ICASA to ensure that spending remained within budget.

On SMMEs and why certain areas were prioritised, she had already mentioned the district based approach the Department would take and the NHI pilot would be rolled out in eight districts via SA Connect.

On the delegation size, she said that previously the Department was asked to bring officials to answer for themselves. By 1 April 2020 all agencies would be in one Department. SITA was the only entity not yet in the Department.

On the 4IR Presidential Commission members, she said that Mr Jwara’s name was not on the list and Mr Leon Rolls was nominated by his sector.

The Minister said South Africa was affiliating to many international bodies, but the Department was also reviewing its affiliations and the value it was deriving from them and developing an international strategy to promote influencing its global agenda.

On the resignation of the SABC’s COO, she replied that the previous incumbent, Mr Chris Moroleng, was dismissed. She did not know the reasons for the current COO’s resignation.

The Minister said community radio stations not paying their licensing fees was a serious challenge as ICASA continued giving licences. The Department had put a moratorium on the issuing of new licenses.

On the BDM plan, she said there had been lots of talk over many years on digital migration. The model that had been previously presented would require R3.8b in funding so the Department wanted to talk with industry on what could be done to collaborate and minimise the cost without compromising the government. There was R3.5m STB procurement monies still available.

On the term of office of ICASA board members, there would be five vacancies and this could have an impact if it was not managed correctly.

The Minister said a moratorium on the filling of Department posts had been lifted for vacant strategic posts.

The Minister said stability of the SABC was crucial. A large chunk of the transfer was for salaries. SABC needed to present a skills audit and a skills plan to the Department.

On sports rights, PSL were the owners and chose who to sell to. The SABC said the prices for these rights had tripled over the last few years so the SABC was not making any money from purchasing the rights. Engagements with the PSL were ongoing to get the matches broadcast.

The Minister said the preconditions the SABC had to meet could be made available.

She asked that the Committee wait until the Broadcast Amendment Bill was presented to the Committee.

On the Zondo Commission, she said the Department would be responding directly to the Commission.

On complaints by SABC managers about interference by certain SABC board members, she had received correspondence from board members citing interference. When there was infighting amongst board members, it was the Department’s right to intercede in the board’s affairs.

She said Corporate Services challenges would be attended to and there was a need for the two Departments to work together in a coordinated and not in a contradictory way.

The Minister replied that many ICASA councillors had not signed these performance agreements. They claimed they needed to engage with the Minister first, but to date have not come back to the Minister. The councillors had asked for salary increases, but the Department had responded that it could not respond to that until the previous issue was sorted out.

She said that the Department had asked all entities to produce a remedial report and a remedial action plan within a month.

She said the SABC’s turnaround strategy had been approved by the board, but the funding for the plan to be implemented was not yet approved by Treasury as the Department did not have money and so had approached Treasury for funding. The tranches of money would be released dependent on the progress made with the preconditions set for the SABC by Treasury. The preconditions can be released by the Department.

On Parliamentary Committee coordination, Deputy Minister Kekana said that the Department would prioritise and meet with entities and note which other committees were affected to come to an integrated solution quickly so as to prevent public speculation promoting fake news in the public domain.

On the BBI, Mr Nkuna replied that the Department was asking its entities and industry to have set-asides for SMMEs that want to participate in the industry.

On government departments not paying SITA, there were two sides to the story. In the case of the Department of Military Veterans, SITA and DMV had been stuck in trying to develop a military veterans database. With the Department of Environmental Affairs, the automated Environmental Impact Assessment system had been pending for a long time. SITA and the DEA would have two different reasons why the EIA automatic system was not yet functional. The Department was documenting the specific challenges of both sides to speed up service delivery.
 
The Department would be meeting with SAPS and the Defence Department to find out the challenges and come up with solutions.

On MDDA and Sentech, Minister Ndabeni-Abrahams replied that there would be meeting with Minister in the Presidency Jackson Mthembu’s team to fast track progress.

She said the huge Department delegation was also because they were in Cape Town for the World Economic Forum on Africa 2019, not just for the Committee meeting.

Mr Mackenzie remarked that the meeting as successful especially in the exchange of information by the Department and Ministry. He said the media analysis of SABC parlous state was due to lapses and failures by previous boards and management. He asked if action would be taken against previous board members for failing their fiduciary duties and to prevent them from serving on other boards.

Deputy Minister Kekana said that Parliament appointed the board members so the Minister could not interfere. The Department had passed along to the board what had been written about it so that the board could take action, but nothing stopped the Committee from calling the board to a meeting

Ms Van Damme said the whole board had to appear before the Committee to be interrogated and Legal Services had to be utilised to get to the bottom of what was happening in order to have a stable board.

Mr Molala proposed that the Committee receive a draft of the board’s concerns.

Ms Xego said that all the information should be available to the Committee before calling the board to a meeting.

The Chairperson said it was important to state that the Committee was not contesting the shareholder issue raised by the Reserve Bank, but the decision to separate the Post Office and the Post Bank created a problem about finances. Why should the Post Bank be a company on its own?

On ICASA councillors not signing their performance agreements, that this meant that the Committee could not play its oversight role.
 
On finances in general, especially for ICASA and the SABC, he said that in the long run these entities would collapse if irregular and fruitless and wasteful expenditure continued.

The Chairperson said that when the SABC appeared before the Committee, Treasury and GTAC had to be present as well.

He said the ICASA advertisement would be circulated to the Committee.

The meeting adjourned
 

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