REPORT OF THE PORTFOLIO COMMITTEE ON
COMMUNICATIONS ON ITS DELIBERATIONS ON BUDGET VOTE 26 (DEPARTMENT OF COMMUNICATIONS
AND ITS ENTITIES), DATED 13 APRIL 2010
1. Introduction
Section 55 (2) of
the Constitution of the
The Portfolio Committee
on Communications considered the Budget of the Department of Communications on
09 March 2010. The purpose of the
meeting was to outline the department’s budget for the 2010/11 financial year
and its strategic plan for 2010 – 2013. The Department of Communications
officials who appeared before the Committee included:
Gen. (Ret) Siphiwe
Nyanda, Minister of Communications
Ms Mamodupi
Mohlala, Director-General
Mr Gift Buthelezi, Acting DDG: Policy Development
Ms Rosey
Sekese, DDG: ICT Infrastructure Development
Ms Gerda Gräbe, COO & DDG:
Governance & Administration
Mr Moseamo
Sibola, Acting DDG: ICT International Affairs &
Trade
Mr Themba Phiri, Acting
DDG: PNC on ISAD
Ms Mapitso Malaku, Acting DDG: Finance & ICT
Ms Manthekeleng Monama, Parliamentary Liaison Officer, DoC
Mr Tshidiso Molukanele, Parliamentary Officer to Minister
Ms Kedibone Sekwele,
Acting Chief Director: Human Resources, DoC
Zaytoen Anthony, Acting Director:
Cabinet-Parliament Liaison Officer
Mr A Whitehead, Special Advisor to the
Minister
Mr M Ramusi,
Special Advisor to the Minister
Mr T Rikhotso,
Ministry Spokesperson
2. Department of Communications
budget overview
The Department of
Communications 2010/11 – 2012/13 Strategic Plan is informed by the following vision:
South Africa as a global leader in the development and use of information and
communication technologies for socio-economic development and building a better
life for all through an enabling and sustainable world class information and
communication technologies environment.
The total 2010/11
budget allocated to the Department of Communications is R2 113 999 000.00.
Expenditure grew
significantly from R1.3 billion in 2006/07 to R2.5 billion in 2009/10, at an
average annual rate of 23.2 per cent. This was due to the following additional
allocations: R500 million in 2007/08 to Sentech for the national wireless broadband network; R600
million in 2008/09 and R450 million in 2009/10 to Telkom
for implementation of the ICT access network; and R200 million in 2008/09 and
R100 million in 2009/10 to Sentech to fund the ICT
infrastructure for the 2010 FIFA World Cup.
Over the medium
term, expenditure is expected to decrease at an average annual rate of 12,9 per
cent, from R2.5 billion in 2009/10 to R1.6 billion in 2012/13, as the
implementation of the 2010 FIFA World Cup infrastructure and other initiatives
come to completion. In 2010/11, a final
allocation of R150 million is made to Telkom for the
2010 FIFA World Cup. In 2011/12, R25
million is to be allocated to the Universal Service and Access Agency of South
Africa, and Universal Service and Access Fund to: build capacity and procure
the necessary supporting infrastructure to expand ICT access to South Africans
in underserviced areas; and complete the migration
from an analogue to digital technology platform. The baseline efficiency savings of R314.7
million in 2011/12 and R479 million in 2012/13, mostly caused by reductions in
the South African Post Office subsidy allocation, also contribute to the decrease
in expenditure over the medium term.
The Expenditure in
the ICT Enterprise Development programme is expected
to decrease over the medium term, from R2 billion to R1.1 billion, at an
average annual rate of 17.9 per cent due to final allocations to Sentech and Telkom in
2010/11. The decrease in transfers and
subsidies over the medium term, from R2.1 billion to R1.1 billion, is due to discontinuation
of South African Broadcasting Corporation: Technology as a programme
under SABC Public Broadcaster and the reduction of the subsidy to the South
African Post Office.
Expenditure in
compensation of employees increased from R99 million in 2006/7 to R147.4
million in 2009/10, at an average annual rate of 14.2 per cent. This strong
growth is the result of an increase in the number of staff from 326 in 2006/07
to 350 in 2009/10, and due to inflation-related salary adjustments. These were mainly senior management
appointments, including 2 Deputy Directors-General. As at September 2009, the vacancy rate of the
department was 18.3 percent. This
represented 62 funded positions that have not been filled. Almost 45 per cent
of the total staff complement is located within the Administration programme; 23.5 per cent in ICT infrastructure and 18.4 per
cent in ICT Policy Development. Over the
Medium Term Expenditure Framework (MTEF) period, spending is expected to
increase to R177.9 million, at an average annual rate of 6.5 per cent due to
inflation-related adjustments.
In the 2010 Medium
Term Expenditure Framework (MTEF) allocation, the department was requested to
include explicit savings initiatives in the Strategic Plan. It was required that through savings
measures, at least R155,48 million in 2010/11, R341,68 million in 2011/12 and
R479,04 million in 2012/13 should be saved without compromising existing, new
and expanding frontline services over the next three years.
The Department has
identified efficiency savings over the MTEF period of R40 million in 2010/11,
R43, 6 million in 2011/12 and R50, 6 million in 2012/13 across all programmes. Goods
and services items targeted for cost reduction include: consultancy services,
travel and subsistence, agency support, catering, venues and facilities, and
other operating expenditure. Savings
will be achieved by reducing the department’s reliance on consultants. In addition, the allocations to the Universal
Service and Access Agency of South Africa and National Electronic Media
Institute of South Africa have each been reduced by R2,7 million in 2010/11, R3
million in 2011/12 and R4,2 million in 2012/13.
South African Post
Office subsidy allocations are reduced by R100 million in 2010/11. R250 million
in 2011/12 and R400 million in 2012/13, and the Independent Communications
Authority of South Africa’s baseline is reduced by R45 million over the MTEF
period.
3. Departmental Budget 2010/2011
The Department
of Communications budget is structured into six programmes
3.1 Programme 1: Governance and
Administration – R151 801 000.00
The
purpose of this programme is to provide strategic
support to the Ministry and overall management of the Department.
3.2 Programme 2: Information Communications Technology
(ICT), International Affairs and Trade – R44 618 000.00
The
purpose of this programme is to ensure alignment
between
3.3 Programme 3: ICT
Policy Development - R90 112 000.00
The
purpose of this programme is to develop ICT policies,
legislation and strategies that support the development of an ICT sector, which
creates conditions for the accelerated and shared growth of the economy and to
develop strategies that increase the uptake and usage of ICTs
by the majority of the South African population, thus bridging the digital
divide.
3.4 Programme 4: Finance
and ICT
The
purpose of this programme is to oversee and manage
government’s shareholding interest
in public entities and to facilitate growth and development of Small, Micro and
Medium Enterprises (SMMEs) in the ICT sector.
3.5 Programme 5: ICT Infrastructure Development – R177 451
000.00
The
purpose of this programme is to promote investment in
robust, reliable, secure and affordable ICT infrastructure that supports the provision
of a multiplicity of applications and services.
3.6 Programme 6: Presidential National Commission – R32 525
000.00
The
purpose of this programme is to facilitate the
development of an all inclusive information society by promoting the uptake and
usage of ICTs for improved socio-economic development
and research. This programme is currently under
review and is likely to change during the 2011 Medium Term Expenditure
Framework process
4. Entities of the Department of
Communications
For the financial
year under review, the Department has the following entities and agencies
reporting to the Minister of Communications and the ICT regulatory authority:
4.1
South African Post Office (SAPO)
The
South African Post Office was established in accordance with the Post Office
Act (1958) as a government business enterprise to provide postal and related
services to the South African public. It was granted a mandate to conduct
postal services to
Total 2010/2011 Budget allocation to the South African Post Office
is R306 077 000.00 in subsidy.
The South African Post
Office has the following focus areas for 2010/11:
·
The
financial sustainability of the organisation
·
Human
capital development and management
·
Diversification
programs
·
Rural
development programs
·
Youth
development programs
The Committee
recommends that the Budget Allocation of SAPO be approved.
4.2
South African Broadcasting
Corporation (SABC)
The
South African Broadcasting Corporation was established in terms of the
Broadcasting Act (1936) as a government enterprise to provide radio and
television broadcasting services to
Total 2010/2011 Budget
allocation to the SABC is R230 014 000.00 for the public broadcaster, R38 896
000.00 for Channel Africa, R6 850 000.00 for Community radio stations, and R10
000 000.00 for Programme production.
The SABC has the
following projects/strategies/key result areas:
2011 Local Government
Elections
Digital Terrestrial
Television (DTT)
It was pointed out that
the SABC might face a financial shortfall and is depending on its bank
guaranteed loan to the amount of R1.4 billion
It was also pointed out
that there is no budget allocation for IEC and election awareness programmes.
The
Committee recommends that SABC’s budget and the
estimated R15 million requested to cover the 2011 Local Government Elections be
approved.
4.3
Sentech
Sentech Ltd was established in terms of the Sentech Act (1996) as a common carrier to provide
broadcasting signal distribution for broadcasting licensees. In 2002, Sentech was licensed, through the Telecommunications
Amendment Act (2001), to provide international carrier-to-carrier voice
services, as well as multimedia services. Sentech is
viewed as a core provider of wireless broadband in
Total 2010/2011 Budget allocation to Sentech
is R160 900 000.00 for Digitisation, and R110 000
000.00 for Digital Terrestrial Television (Dual illumination).
Sentech has the following key
result areas:
·
Analogue television until Digital Switch Over.
·
Low Power transmitter’s expansion in partnership with SABC (15 per
FY).
·
Digital Terrestrial Television (DTT)
·
2010 FIFA Soccer World Cup (satellite back-up infrastructure)
·
Radio: FM, MW, SW
·
Business Television and Radio
·
Facility Rental
·
Other (consulting)
·
Investigate the provision of mobile TV infrastructure and value
added services to
·
broadcasting signal distributors (e.g. subscriber management,
interactive services, etc
It was pointed out that the Committee calls for a further briefing
on Sentech’s strategic plan and commercial budget as
will be approved by the new Board.
The Committee recommends
that the Budget Allocation of Sentech be approved.
4.4
National Electronic Media Institute
of
NEMISA
was established as a non-profit organization in terms of the Companies Act
(1973). It provides much needed skills training at an advanced level for the
broadcasting industry. It is accredited by the Council for Higher Education and
offers diploma courses, short courses and internships in three subjects: TV
production, radio production and creative multimedia.
Total 2010/2011 Budget allocation to the NEMISA
is R32 632 000.00
NEMISA has the following focus areas for 2010/11:
Content Development: National Heritage
·
e-Health
·
GDYC Mainstreaming
·
Broadcast Digital Migration
·
Community Development
·
Media Industries New Entrants Development
·
Information Technologies Technicians Development
The Committee
recommends that the Budget Allocation of NEMISA be approved.
4.5
Universal Services and Access Agency
of
USAASA was
established in terms of Section 58 of the Telecommunications Act (1996). The
main role of the agency is to promote universal service and access to
communications technologies and services for all South Africans. It also
facilitates and offers guidance on evaluating, monitoring and implementing programmes, which propose to improve universal access and
service.
Total 2010/2011 Budget allocation to USAASA R20 000 000.00 for
infrastructure, and R46 704 000.00 as a contribution to operations.
USAASA has the following focus areas for 2010/11:
•
Development of the
Universal Access and Service Strategy
•
Publication guidelines
for US Fund application
•
All USAASA subsidized
sites mapped in a Geographical Information System (GIS)
•
Development of
measurable ICT access and impact indicators.
•
Implementation of STB Scheme-of-Ownership Model
•
Development of Competitive
Bidding Strategy and Implementation
•
Continued Implementation
of handover strategy
•
Development and
Implementation of an ICT Hub Model
•
Implementation of Rapid
Deployment Strategy
The Committee recommends that USAASA’s
budget be approved
4.6
Independent Communications Authority
of
ICASA
is responsible for regulating the telecommunications and broadcasting sectors
in the public interest so as to ensure affordable services of a high quality
for all South Africans. In addition to developing regulations, ICASA also
issues licenses to telecommunications and broadcasting service providers;
enforces compliance with rules and regulations; protects consumers from unfair
business practices and poor quality services; hears and decides on disputes and
complaints brought against licensees; and manage the effective use of radio
frequency spectrum.
Total 2010/2011 Budget allocation to ICASA is R290 923 000.00 as a
grant from the DoC, further R10 000 000.00 from
interest on income, as well as R18 000.00 from other income, totaling R300 941
000.00.
ICASA has the following
projects that have a total cost of R31 042 000.00:
The Committee
recommends that the Budget Allocation of ICASA be approved.
4.7
.za Domain
Name Authority (.zaDNA)
.zaDNA was established to assume responsibility for the .za Domain Name Space.
The .zaDNA was established in terms of Chapter
10 of the Electronic Communications and Transactions Act (ECT), 2002. The
Department currently provides funding for the .zaDNA
until the Authority is fully operational. Funding will then be sourced through
a funding model developed in accordance with section 66(3) of the ECT. The .zaDNA will also oversee the implementation of an
alternative dispute resolution mechanism.
Total 2010/2011 Budget allocation to .za
Domain Name Authority is R1 500 000. 00 for contribution to operations
The Committee recommends that the .za
Domain Name Authority budget be approved.
5. Recommendations
The Committee has
considered and examined the Business Plans (Budgets and Strategic Plans) of the
Department of Communications and the
Entities accountable to it. The Committee reports that it has concluded
its deliberations thereon and made the following recommendation:
The Committee
recommends that the Budget Allocation of the Department of Communications and
the Entities accountable to it be
approved.
Report to be considered.
Hon. I Vadi Date
Chairperson:
Portfolio Committee on Communications