NAC on Presidential Employment Stimulus Programme 4 funding; with Minister and Deputy Minister

Meeting report

The Chairperson welcomed the Committee Members, as well as the members of the National Arts Council (NAC). The Chairperson also noted the presence of Minister of Sport, Arts and Culture, Mr Zizi Kodwa and Deputy Minister, Ms Nocawe Mafu.

The NAC had come to brief the Committee on the progress of the Presidential Employment Stimulus Programme.

Apologies have been received from Mr C Sibisi (NFP) and Mr B Madlingozi (EFF).

Update on Presidential Employment Stimulus Programme (PESP)

Dr Cynthia Khumalo, Acting Director-General, Department of Sport, Arts and Culture (DSAC), said the objectives of the National Arts Council (NAC), as per the Act, were:

• To provide and encourage the provision of opportunities for persons to practise the arts.
• To promote the appreciation, understanding and enjoyment of the arts.
• To promote the general application of the arts in the community.
• To foster an expression of a national identity and consciousness of using the arts.
• To uphold and promote the right of any person to freedom in the practice of the arts.
• To give the historically disadvantaged such additional help and resources as were required to give them greater access to the arts.
• To address historical imbalances in the provision of infrastructure for the promotion of the
  arts.
• To promote and facilitate national and international liaison between individuals and
   institutions in respect of the arts.
• To develop and promote the arts and to encourage excellence.

Dr Khumalo said the NAC was responsible for funding at least 75% of the art disciplines in the arts and culture sector. The Presidential Employment Stimulus Programme aimed to provide an economic stimulus to support sector initiatives that create jobs in the creative and cultural sectors. 

In the previous financial year, 4 765 applications had been received, compared to the current year's 4 752 applications. The applications in the various disciplines were:

• Craft – 455
• Dance – 317
• Music – 1 116
• Theatre – 564
• Visual Arts – 365
• Multi-discipline – 1 164
• Literature – 271

Barriers to funding that the NAC had removed included requiring a tax clearance certificate at the time of application, audited financial statements, and copies of certified identity documents (IDs).

She said that the PESP Programme aimed at supporting the creation of employment opportunities for the sector, and therefore no provision had been made for appeals by a National Treasury directive.

See attached for full presentation

PESP consolidated progress report

The DSAC had received a budget allocation of R440m for 2022/23, and R462m for 2023/24, for the implementation of the PESP. When the open call closed at midnight on 30 June, 297 applications had been received. 907 applications were registered but not submitted. The total number of received applications was 438.

(For the full presentation, see the attached documents).

Discussion

Mr T Mhlongo (DA) asked what the Department had done so far, and what the reason was for appeals not being allowed. What was the estimated time for the implementation of the White Paper? He maintained that too many people were in the Department in acting positions. He asked about the status of the former NAC member, Tshepo Mashiane, regarding the case of dismissal, and if the matter had been resolved. How much taxpayer money had been used to deal with this case? He urged the Department to be honest with the Committee.

Ms D Sibiya (ANC) asked if the private sector had been approached to help with funding, and if the Department had considered the recommendations Dr Sithole had given them. What criteria had been used for the budget allocation, and why did Gauteng have a larger number of applications than other provinces?

Mr E Mthethwa (EFF) asked about the negative findings of the Auditor-General and what the prescribed process for consequential management would be, and what the turnaround time for this monitoring would be. Which entities were being amalgamated? Adding on to the comment made by Mr Mhlongo, he asked about the court order made against Mr Mashiane which required him to be paid retrospectively, and how much he would be paid retrospectively. He raised concerns about appeals taking too long, and that this would affect rollout plans.

Ms R Adams (ANC) asked for the reason for the high numbers presented in slide 6 of the NAC's presentation. What would be done to deal with this, and what would be done to increase the number of applications received by the Department? She asked how the Department and the NAC intended to increase their investment in art projects.

Mr M Zondi (ANC) said the two presentations were informative. He congratulated the NAC for their good work, and asked if they went beyond considering gender, race and age, because unemployment was so big in South Africa. He asked about departmental constraints, and the lack of this being mentioned in the presentation, given that the main reason given for the decline in applications was financial constraints. Had the Department explored other resources that could complement the PESP? He asked if the Department had curbed advertisements to certain disciplines.

Mr J Mamabolo (ANC) asked how the programme would benefit young children in the creative industry. He asked if any member of the NAC had benefited from the funding, and if this member had been accounted for.

Mr D Joseph (DA) asked about the audit findings, raising a concern about internal controls. He said that there was no reason why senior management should not be able to conduct their work effectively. He asked if there would be any costs saved by the merger taking place. He asked what the minimum amount required for audited statements was, the amount for the ring-fenced funding, and why the non-conflict rule did not apply to it.

Ms V van Dyk (DA) asked how the job creation was being monitored, and if any long-term employment had been created. She asked that the list of beneficiaries be made available on the online platform. How many people had received this money, and how was it monitored? Was there a platform to red flag beneficiaries who misused the money?

Ms V Malomane (ANC) referred to the barriers that the DSAC had said had been removed, and warned that this should not result in audit problems for the Department at the end of the year. She asked that the Committee be given information on who the defaulters were, and how the Department dealt with defaulters. The PESP aimed to create employment, so if a project was not completed, this would cause a problem. She asked how the Department planned to include new entrants and younger people from the job market. Why was there no provision for appeals in the NAC? Any person who was not satisfied should be allowed to appeal.

The Chairperson thanked the Committee Members for their questions and the Department for the presentations. She asked why the DSAC had not appointed permanent people, and what the financial implications were of paying people who were in acting positions.

Department' response

Minister Kodwa welcomed the constructive comments made by the Committee. He said that the NAC had provided an honest presentation. The Department was in a state of transition, and by the end of the financial year, it would have been able to implement the planned amalgamation. It would not be able to do the amalgamation and appoint people to senior positions at the same time. The idea of the PESP was very important for the sector, which had been negatively affected by Covid-19. The amalgamation would achieve the issue of cost saving. The reason for removing the barriers was to open the sector. The plan was to open the sector as much as possible.

Dr Khumalo said the Department was laying a foundation to be able to engage with the private sector on how they could contribute to the sector. She maintained that there was a willingness from the private sector to engage with the Department. It had commissioned its research wing to produce a funding strategy and model, and this had been finalised. It planned to present this strategy to the relevant stakeholders.

The issue of monitoring lies at different levels. There was monitoring done at a strategic level, but on a day-to-day basis, there was a project management unit which worked closely with project teams.

The percentage of the administration fee across all five entities was 4%, and it was based on the total amount of funding. The Department had decreased the percentage that went to administration fees to focus on funding the programmes.

She said that the nature of the employment in the industry was that the jobs were not permanent.

The issue of defaulters presented the Department with a vast challenge, despite measures to overcome this. It was not only punitive in its approach to defaulters.

NAC's response

Dr Khumalo said that the NAC had reduced their irregular expenditure, and that measures had been put in place to ensure that this kept on decreasing. The council was working hard to tighten controls. A conflict of interest did not arise when funds were sent to the NAC for a project, if the NAC had not adjudicated this. The removal of barriers to access to funding would not affect the council when they were being audited at the end of the year. She said the CEO and the CFO were in interim positions, not acting positions, until the amalgamation.

Dr Sipho Sithole, NAC board member, said that the council wanted practitioners to submit their financial reports once they received funding, to account for the money given to them. The council had a lot to learn, and had learnt that the level of funding was too low for an industry that was so big. It had also learnt that they needed to be very transparent and communicate with practitioners.

He said there was no appeal, because the money was finished at the stage of grant approval.

The private sector could not contribute to the sector if they were not given a tax break -- the Minister needed to get this for the private sector.

Ms Julie Diphofa, Acting Chief Executive Officer (CEO), NAC, said that the council prioritised capacity building and assisting applicants to understand the application criteria. It was about open communication and reminding applicants what the requirements were. The council supported applicants by letting them know what the council required from them once they had received the funding.

The Tshepo Mashiane issue could not be discussed currently because the matter was sub judice.

A point of order was raised by Mr Mhlongo, who said that the Committee could discuss sub judice matters.

The Chairperson asked that Ms Diphofa continue.

She said that Gauteng had received a lot of applications because it was an urban centre to which many people migrated, which resulted in a high number of applications. The number of applications that had passed compliance was 57%, and the quality of applications had improved this year. The council would share the document showing the demographics of the persons getting funding with the Committee.

She said no council members had benefited from the funding.

At the beginning of the application stage, applicants were required to state how many jobs they would be creating, and this was how the council got its figures for actual and projected jobs. She agreed that most of the jobs created were short-term.

She said that the council was unable to give applicants the full amount of money that they requested because of budgetary constraints. The council was currently making a list of defaulters -- and there were 50 of them. The system prioritised new entrants to the system so that they could enter the mainstream and grow on their own.

Follow-up questions

Mr Mthethwa said that he felt positive about the direction in which the NAC was going. He commended the Minister for succinctly explaining the process of amalgamation. He asked why the Department did not consider a system that showed everyone how much money the council still had for applicants. This would help with accountability.

Mr Mhlongo said that the NAC was not being open with the Committee on the issue of Mr Mashiane. He asked how much taxpayer money had been used to fight this legal battle. How many acting positions were there in the NAC? He asked that the clean audit report be shared with the Committee.

Ms Van Dyk also asked how much money would be spent on the Mashiane court case, and how the NAC prioritised capacity building without Mr Mashiane being present as the programme manager.

Responses

Minister Kodwa responded to a question posed earlier, and said that he saw no conflict in the matter of Mr Bongani Tembe, Deputy Chairperson of the NAC.

Dr Khumalo confirmed that the NAC had concluded their case with the South African Roadies Association (SARA) regarding the Mangope matter, so the matter was between the two parties and not the NAC.

Ms Diphofa said that the Department dealt with appeals. The NAC had told applicants from the beginning that they would not provide the full amount that the applicants requested because of budget constraints. The matter of Mr Mashiane’s case is currently under review, and a report would be given to the Committee after this. She said money from interest was used to deal with all legal cases, and only one person was in an acting position.

Follow- up question

Mr Mhlongo said that the NAC needed to be put under administration because they failed to be transparent. He asked why the Mashiane case had been taken to appeal.

Princess Celenhle Dlamini, Chairperson, NAC, said that the council would respond to the question raised by Mr Mhlongo in writing at a later stage.

Deputy Minister Mafu commented that today’s meeting was the calmest one the Committee had had with the NAC. She said the level of funding would never be enough, but it was important to tell the creatives this truth. The NAC could not appoint people to permanent positions before the amalgamation had taken place.

The Chairperson excused the NAC and the Department.

Committee matters

The Chairperson asked Members who would like to attend the Indaba, to communicate this to the Committee secretariat.

The Committee discussed the minutes of 1 and 5 September.

The minutes of 1 September were moved for adoption by Mr Mthethwa, and Ms Sibiya seconded. The minutes of 5 September were moved for adoption by Mr Mthethwa, and Ms Malomane seconded.

The meeting was adjourned.