Solidarity Fund briefing

Meeting report

The Chairperson said the Solidarity Fund of South Africa, established by the President in March 2020 in response to COVID-19, had been requested to appear before the Committee as it was working closely with government, who has been actively involved in the activities of the Fund. The government had at the outset of the pandemic “seeded almost R150 million". Due to this involvement, the Committee is interested in the interface of the government and the Fund, especially in relation to state finance and for how such funding is accounted.

The Committee also has an interest in the procurement regime, and if the Fund applies any particular legislation, as the government does, for instance, when it applies section 217 of the Constitution, the Public Finance Management Act (PFMA) and Treasury regulations, for how government has to procure, in addition to. The Chairperson wanted to know which of these, if any, is applied by the Fund and how so.

Solidarity Fund board chairperson introductory remarks
Ms Gloria Serobe, Solidarity Fund Board Chairperson, introduced the Solidarity Fund delegation which included Dr Adrian Enthoven, Deputy Chairperson, Ms Tandi Nzimande Chief Executive Officer, and Mr Martin Kingston, “Party to the Fund on the Finance side” and Chairperson of Business for South Africa's Steering Committee – COVID-19. She advised that the Fund has had two CEOs – the first left at the end of October 2020, and the second CEO, Ms Nzimande, has been with the Fund for one month. Ms Serobe requested that Mr Kingston commence with the presentation.

Solidarity Fund presentation
Mr Martin Kingston said the President announced the Fund on 23 March 2020. NEDLAC had convened a special Executive Committee a week before to discuss the advent of COVID-19, and both the business sector and government jointly proposed the concept of the Solidarity Fund and worked “tirelessly behind the scenes” to ensure that the Fund could be established as a “completely independent and autonomous agency". Independent from government and the business sector, and accountable to South Africa at large. It was answerable to its donors and funders on the one hand, and its beneficiaries on the other.

By the time the Fund was announced by the President, Ms Serobe and Dr Enthoven had been selected as Chairperson and Deputy Chairperson. Thereafter the Fund focused on strategy, and it was launched two weeks after the concept had been put forward, after which funds were disbursed.

Mr Kingston indicated that Dr Enthoven would take the Committee through how the Fund has accounted for the approximately R3.2 billion which the Fund raised from a variety of donors, individuals, institutions and NGOs, both onshore and offshore.

The Fund identified important areas which included “detection, prevention, care and support” and a focus on “behaviour change and alleviating the distress” of those most impacted. These come under three key focus areas which are: (1) Health Response, (2) Humanitarian Effort and (3) Solidarity Campaign. The Fund was now concentrating on the “second wave or phase” and also what the second phase of the Fund would entail.

Mr Kingston said that it was very important to emphasise that it was not only financial donations that have underpinned the success of the Fund: “Over 60 organisations, institutions, NGOs, onshore and offshore, have contributed their time and resources pro bono, many times full-time, particularly during the first eight months". This included in-kind donations such as sanitisers from Distell and L’Oreal, and fuel to bring in personal protective equipment (PPE). At the onset of the pandemic, there was very limited PPE in the country. Trains were also used to transport such equipment with aid of Transnet. There were a number of companies (slide 5) who contributed a “significant amount of resources, again pro bono”; EY for example contributed the time of 50 people over the last eight months, from fund administration to broader IT support through to marketing and specialist skills that were required.

In addition to these, there were also other strategic partnerships, again both domestic (such as FirstRand and Business for South Africa) and international (such as Bill & Melinda Gates Foundation, Elma Foundation and Nelson Mandela Foundation).

The primary goal of the Fund has been to ensure that they could impact and intervene “with agility” along with government, the business sector and civil society to combat the challenge of COVID-19, to mobilise and coordinate financial and in-kind contributions, to ameliorate the impact of the health crisis directly and indirectly, as well as the social consequences of the pandemic. The Fund also aimed to ensure that it could mobilise “all South Africans, indeed in solidarity, to combat the pandemic, both in terms of protection and intervention, understanding the magnitude of the infection and how we could flatten the curve, indeed push the curve, how we could extend care to those more impacted by the crisis directly and indirectly, as well as those whose lives have been supported".

Mr Kingston noted the importance of independence, transparency and accountability. The Fund had a “strong, independent” board of directors, on which there are two representatives from the government: the Minister of Finance and the Minister of Trade, Industry and Competition. They appear in their personal capacity and they account to society at large. By the same token the leadership has been effectively engaged from day one.

The Fund wanted to work in support of the national strategy, so it is working very closely not only with the Department of Health (at national, provincial and local levels), but government entities to ensure the Fund does not duplicate or replicate but rather supplements the efforts taking place. At all times it ensures that not only does the Fund account for its disbursements but demonstrates that the Fund is a “frictionless organisation” and that there has been no cost directly incurred so donor funds have gone directly to beneficiaries.

The Fund is not subject to procurement legislation or regulation of the government, because the Fund is not an arm of government. He assured the Committee that the Fund would elaborate on this or take their questions so that the Fund can ensure it satisfies Parliament—and most importantly the public at large—that all donations are properly and appropriately accounted for, and that all “procurement goes directly to source".

Finally speed and agility is a “hallmark” of the Solidarity Fund and underpins its role as a “rapid response vehicle,” recognising that government was unable to mobilise as quickly as the Fund, albeit with less resources than government.

Dr Adrian Enthoven, Solidarity Fund Deputy Board Chairperson, said they are absolutely committed to the principle that every single donation received needs to be transparently accounted for very clearly.

On the quantum of funds, around R3.2 billion had been raised, which is “unprecedented” given the time scale and in terms of mobilising a philanthropic effort of this kind, where over 2 500 companies and foundations, including multinational corporations have donated. He pointed out that 300 000 individuals have contributed. The two provinces with the highest rate of donation was the Free State and the North West. He called this “an incredible show of support across the board” in South Africa for the Fund. He reiterated that the Fund was for all South Africans and was therefore accountable to all South Africans.

In accordance with the mandate and how funds were allocated, the Fund focused on three pillars: The first is the “Health Response,” and this pillar relates to support for the national health system to prepare for the crisis, to make key interventions, where the Fund could have an “outsized” impact in helping to support the national health response.

The second pillar is the “Humanitarian Effort,” and this relates to the Fund’s mandate to support those whose lives have been affected by COVID-19, and two major areas under this pillar are (1) food security and hunger and (2) gender-based violence (GBV).

The final pillar is the “Solidarity Campaign" which initially focused on information dissemination and helping people to understand what this virus is about and how they should respond to it, and then moving on to become much more focused on behaviour change, which he would elaborate upon.

In terms of impact and reach we have been very focused at the Fund on ensuring that we cover all of South Africa and in particular the most vulnerable communities, with a balance between “urban and rural". Importantly — because of the way the Fund is structured — we are partnered with organisations across society: with government departments, civil society organisations, traditional leaders, faith-based organisations, NGOs and businesses. This has been a “national effort” where the funders play the role of pulling together all these different sectors of society to come together to fight COVID-19.

The funding criteria consisted of looking at areas of greatest opportunity to make the biggest contribution and have the greatest impact in the three key focus areas. He reiterated that it was important to ensure that the Fund targeted the areas where it would have the biggest impact, but also to focus on particular areas where impact would not have happened if the Fund had not intervened. “That principle was really important to us". This impact had to happen at scale so individual projects were not funded. There was a lot of discussion early on whether the Fund should get involved in funding SMMEs but ultimately the Fund decided that even though SMMEs were obviously heavily impacted by the crisis—that was not the area that it could have a significant and meaningful impact on.

Dr Enthoven turned to the Fund’s disbursements to date. This was really the heart of the work that we have doing over the last eight months. From mid-March, when there was an organisation, and a bank account, and a website, to build an organisation where you mobilise pro bono resources of over 30 or 40 companies, over 200 individuals working either pro bono or on a seconded basis, the projects to which the Fund committed totaled R2.7 billion (which includes a notional R327 million for “COVAX contribution. This R2.7 billion “commitment" included over 40 projects and sub-projects, involving over 200 legal agreements with counter-parties. This has been just a monumental effort.

Health Response
The funds had been disbursed to four major areas under the Health Response pillar including PPE, for which there was a critical urgency in getting it into the country to protect frontline healthcare workers. Within the first two weeks of the Fund’s formation we began a process in partnership with Business for South Africa, who provided the procurement hub. All the PPE procurement done by the Solidarity Fund was done through the volunteer group of Business for South Africa where they brought together leading healthcare procurement and logistic supply chain professionals and organisations to help support in this procurement effort. At that time the entire world was attempting to procure PPE and so this was a very difficult undertaking but in his view the Fund was very successful in rolling out our PPE procurement plan. He conceded that in some cases procurement would have taken longer than the Fund would have preferred. However, the Fund was driven by the need to ensure that it was absolutely rock solid on all the quality controls and the counter-party agreements to ensure that the money was well spent and properly accounted for. The Solidarity Fund did not just contract to buy PPE for state healthcare workers, but also for 40 000 community healthcare workers and NGOs across the country.

The second major area concerned ventilators. This arose due to the scarcity of CPAP oxygen support ventilators in South Africa and globally, since the Fund could not find these to procure anywhere in the world. The Fund therefore helped stimulate a local manufacturing project in conjunction with the National Ventilator Project, where we provided the funding for the prototype and then [subsequent] orders for 20 000 ventilators were principally manufactured by the Council for Scientific and Industrial Research (CSIR). Although the project was initiated only in July 2020, it has already added 7 000 CPAP machines to hospitals and clinics around the country.

The third major area was testing, for which there was a critical need when the crisis struck in March. The Fund very quickly stepped up to provide a R250 million grant to the National Health Laboratory Service (NHLS) to enable them to ramp up their testing capacity. In addition the Fund provided financial support to the academic laboratories, the hospitals and the Independent Community Pharmacy Association (ICPA) to help them augment the NHLS testing response. This ensured that there was no backlog, as tests were fast-tracked through these laboratories.

The final major area under the Health Response pillar was essential equipment. This was an area approved a while ago. The procurement of essential equipment needed to be re-prioritised which is why there is a big gap between the disbursements and the amounts committed or allocated. The Fund was in the process of implementing these projects now and that happens to be extremely good timing for the essential medical equipment that we are currently procuring and distributing in the Eastern Cape.

Humanitarian support
Under this pillar, two areas of major focus are (1) food relief and (2) GBV, which was significantly exacerbated, albeit not caused, by COVID-19. The Fund’s response was to be as targeted as it could be in its objective to have the biggest impact. One food relief programme which was started early on in the first phase was to provide food parcels to 280 000 households across all nine provinces. The Fund worked with over 400 community- and faith-based organisations to implement the programme.

In the second phase, food vouchers were provided to 135 000 households. The Fund focused on particular segments of the population who were unable to access government grants and who, in the Fund’s judgement, were the most vulnerable; so it was very selective and targeted. 47 000 households will be, or are currently being, supported with farming input vouchers, the majority (66%) of whom are headed by women. All this is to help stimulate food production in rural areas.

There are two parts to the GBV initiative: (1) to support the national interventions (for example the GBV Command Centre), and (2) the Fund put out a call for applications for 350 community based organisations across South Africa to help bolster its efforts to deal with this scourge in communities throughout the country.  

Behavioural change
This was a Solidarity campaign and has happened through a major communication effort across the country. For example, towards the end March, the Fund began with a radio campaign on 15 local radio stations in 12 languages across the country. This reached 28 million people. This campaign comprised 10 minute daily inserts dealing with COVID-19 and it really helped to move people away from fear, helping them understand what the COVID crisis was about. This communication programme has been supplemented with a behavioural change programme running for the last five months, called the Citizens Solidarity Programme. This project concerned the drive to change behaviour in order to contain community transmission of COVID-19 and included mask wearing, physical distancing and hygiene. This is not being done only through traditional communications channels, however, but also through partnering with trusted institutions, civil society organisations, schools, faith-based organisations, in the workplace through the Return to Work Campaign and youth NGOs. The aim was to use trusted networks to drive the required behavioural changes.

Dr Enthoven said the Fund’s main mode of operating was to partner with others, except with ventilators where direct procurement was undertaken. Governance of the Fund has been exemplary. The Solidarity Fund had to be built while it was executing on its mandate; but there is strong fund administration, monitoring and evaluation, legal support and internal control. This strength in governance can also be seen in the way that the board sub-committees and the board works; for instance, since March 2020, the board and its sub-committees have had weekly standing meetings—this is the kind of intensity of effort it has had. There have also been very clear governance processes around disbursements.

The Fund has now completed the crisis phase, for which it was established. They were now in a new phase, Phase 2 of the Fund, which involves living with the coronavirus where the health systems are intact and have responded to the first wave. It will therefore be very different for the next 12 months compared to the last eight. The Fund is now focusing on what is needed of it – which it thinks are going to be key strategic interventions in the health space while continuing its health response and humanitarian efforts.

Discussion
Dr D George (DA) thanked the Solidarity Fund for what it has done for South Africa during the pandemic. He asked for the reason for the change in CEO. He pointed out that the first CEO was pro bono and asked if this would remain so under the current CEO.

Mr F Shivambu (EFF) highlighted the fact that the Economic Freedom Fighters was the biggest payroll contributor and pointed out that its contributions are almost double what government payroll contributions have been. The EFF took this matter more seriously than other sectors of society including the public sector and civil society.

He asked how much money was spent on administration costs. He also wanted to know what the nature of the costs were, that is, if it involved salaries or rewards.

Mr Shivambu asked about the procurement policies of the Fund. He wanted to know what the procurement policies are because the Fund did not use government procurement policies which espoused a redress component such as Black Economic Empowerment. He also wanted to know the composition of the people who provided services to and for the Fund. We might have a situation where the Solidarity Fund spent the money donated by all South Africans to empower white people’s companies only. Can we get clarity on who benefited from the procurement of the Solidarity Fund? From which companies were the ventilators directly procured and where they were manufactured?

He asked why the presentation did not mention the specific faith-based organisations and NGOs but referred specifically to big companies. He asked who these civil society organisations were and what did they do. He wanted a drill-down into which traditional leaders were being referred to and where they were.

Mr Shivambu said that all this information should be made clear before there is premature celebration and for this reason detailed reports were necessary.

Mr I Morolong (ANC) asked what were the longer term plans for the Solidarity Fund beyond COVID-19. He asked how the Solidarity Fund would contribute to the better building of South Africa post COVID-19. He queried if the Fund would be interested in job creation. He asked if the Fund would be audited and, if so, when its financial statements and performance would be published.

Mr Morolong asked when and if the Fund would release an exhaustive list of all individuals and organisations that have benefited from the Fund as well as service providers. He agreed with the request to categorise fund allocations and disbursements into demographics. Who are these individuals who have benefited from the Fund?

Response
Ms Serobe clarified that the first CEO gave the first six months pro bono which ended in September 2020. However, the first CEO stayed an extra month in order to hand over to the new Solidarity Fund Chief Executive, Ms Nzimande, who commenced duties in November 2020.

In response to Mr Shivambu’s question on the cost of administration, Ms Serobe emphasised that the Fund does not carry overheads.

The new CEO is not pro bono but rather a secondment, so nothing is expended from the Fund. The Fund itself, she explained, does not intend to carry salaries or overhead expenses.

Ms Serobe replied that the procurement of ventilators was done with CSIR because you need a group of scientists to do that.

On which traditional leaders where involved, she gave an example: When it came to food distribution in rural areas, the access to the rural areas was through the traditional leaders. The Fund worked through and with the national and provincial houses of traditional leaders. Effectively, we directed this to traditional councils.

Ms Serobe replied that the Fund would be audited by PricewaterhouseCoopers (PwC), but it would be an annual audit as opposed to a six-month audit. The full audit would be for the year ending February 2021.

Ms Tandi Nzimande, Solidarity Fund CEO, responded to the question of the Fund’s long-term plans. She stated that at present the Fund ought to wrap up its operations within a 12 month period. It was set up as a rapid response fund specifically for the COVID-19 pandemic. In fact, it was anticipated that it would have wrapped up already, but due to a possible second wave, it was seen as prudent to delay this. Once the second wave is dealt with, the country should be in a better position to deal with the disease as it adapts to a new living-with-COVID phase; the society will begin to normalise how it deals with COVID-19 matters. For this reason, the expectation is that the Fund’s life will not exceed beyond the end of 2021.

On publishing a list of beneficiaries, the demographics are easier to deal with; however, the Fund is constrained by the Protection of Personal Information Act (POPI) and other legislation dealing with individual privacy. Even with the donations, there have been people who have asked for their identity to remain private. To the extent that there is no explicit consent to divulge individual data, such a release would be difficult. So a breakdown in demographics can definitely be done because that does not divulge the information of a particular individual.

Dr Enthoven replied that for every disbursement made, the Fund has reports on its website, and there is full information and transparency about who the companies are that were contracted and how much they received; a lot of this information is on the website already. For contracts which are still ongoing, such information will be made available in due course.

Ms Nzimande spoke to the question of procurement policies. She said that the Fund has a governance framework with strong procurement policies and procedures.

Follow up questions
Mr Shivambu repeated his question on how much the Fund was spending on administration costs. He emphasised "we want a figure".

He said that there seems to be a contradiction in the response about the demographic and individual breakdown of beneficiaries of the Fund. There cannot be legislation that allows people who provide services to the public to claim privacy. This information must be made available when accounting to Parliament over and above any information which may be on the Fund’s website. He asked for a breakdown on who benefited from the PPE procurement.

Ms Serobe replied that she thought she was very specific and direct on overhead expenditure, namely that no money from the Fund is spent on administration costs. Over 200 people have come in from different entities with no salaries. She hoped this is now clear.

Ms Serobe replied about the publication of the lists of NGOs and other information, saying that this information is available on the website, which is pretty much up to date.

In terms of who benefited from the PPE procurement, to the extent that the PPE came from overseas due to scarcity of such in the country, you can then say that China benefited. People procured from China to bring PPE here. Hence the Fund is also looking if local production is a possibility.

Mr Morolong asked again if the Fund was venturing into job creation in the second phase.

Ms Serobe replied the Fund is mindful of job creation, which is why when the Fund had the opportunity to look at ventilator production in the country, it jumped at that opportunity. Where we can create jobs we will, mindful that the Fund itself is a very short crisis fund, meant to respond rapidly to the issues of the time. It may not necessarily do the job creation as we would have liked to do.

The Chairperson said that the Committee would leave it there and that any follow ups could be made via the secretariat and that the Fund would be engaged in 2021 when the audit report is published.

The Chairperson thanked all attendees and adjourned the meeting.