The Budgetary Review and Recommendation Report (BRRR) of the
Portfolio Committee on Communications on the Department of Communications,
dated 20 October 2011
The Portfolio Committee on Communications (the
Committee), having assessed the performance of the Department of Communications
(the Department), reports as follows:
1.
Introduction
1.1. Mandate of the Committee, including provision of Section 5 of
the Money Bills Amendment Procedures and Related Matters Act, No. 9 of 2009.
According to Section 5 of the Money Bills Amendment
Procedure and Related Matters Act, the National Assembly, through its
Committees, must annually assess the performance of each national department. The
Committee must submit an annual Budgetary Review and Recommendation Report
(BRRR) for each department that falls under its oversight responsibilities for
tabling in the National Assembly. These should be considered by the Committee
on Appropriations when it is considering and reporting on the Medium Term
Budget Policy Statement (MTBPS) to the House.
The Committee considered the Strategic Plan and Budget, 1st
Quarter Expenditure Report 2011/12 and the Annual Report of the Department on 11
March 2011, 26 August 2011 and 12 October 2011.
2.
The Department of Communications
2.1.
Mandate, Vision and
Mandate
·
To create a vibrant ICT Sector that
ensures that all South Africans have access to affordable and accessible ICT
services in order to advance socio-economic development goals, support the
African Agenda and contribute to building a better world.
Vision
·
·
Building an inclusive information society
through a sustainable world-class information and communication technologies
environment to enhance the knowledge economy.
The aim of the Department
is to develop ICT policies and legislation that stimulate and improve the
sustainable economic development of the South African first and second
economies and positively impact on the social wellbeing of all South Africans.
The Department also aims to oversee the performance of state-owned entities
within its portfolio.
2.2. Strategic Priorities and Measurable
Objectives of the Department
The Department’s core functions are to:
·
Develop ICT policies and legislation that create
conditions for an accelerated and shared growth of the South African economy,
which positively impacts on the well being of all our people and is
sustainable;
·
Ensure the development of robust, reliable and
affordable ICT infrastructure that supports and enables the provision of a
multiplicity of applications and services to meet the needs of the country and
its people;
·
Strengthen the Independent
Communications Authority of South Africa (ICASA), to enable it to regulate the
sector in the public interest and to ensure growth and stability in the sector;
·
Enhance the capacity of,
and exercise oversight over, state-owned-enterprises (SOE’s) as the delivery
arms of government; and
·
Fulfil
2.3. Measurable Objectives of the Department
3. Allocations
and Expenditures for 2010-11, and Analysis of Annual Reports and Financial
Statements of the Department
In
the 2010-11 financial year, the Department was allocated R2.138 billion, made up
of baseline allocation of R2.14 billion and adjusted estimates allocation of
R24 million.
The adjustment estimate allocation includes a rollover of R19.8
million and R4.2 million for salary and housing allowance adjustment increase.
Spending for the 2010-11 financial year amounts to R1.427 billion and
the under-.pending of R710.3 million which represents 33.2 per cent of the total
budget is made up as follows:
·
R18.7 million for compensation of employees due
to the resignation of staff members and organisational review as well as the
moratorium on staff appointment in the Department;
·
R161.5 million for goods and services which
arise from the withholding of projects and instability in the Department as
well as key internal controls that were put in place, resulting in the slow
pace of spending ;
·
R529.9 million for transfers and subsidies for;
Sentech-Digitisation (R259.9 million) and Universal Service and Access Agency
for set-top-box subsidy (R180 million) due to the delay in the finalisation of
Digital Terrestrial Television (DTT) standard; and
·
R150 million to Telkom for the 2010 FIFA World
Cup for the effective execution of the 2010 FIFA World Cup projects.
The Department of Communications budget is structured into six
programmes:
3.1.
Programme 1:
Governance and Administration
The purpose of this
programme is to provide strategic support to the Ministry and overall
management of the Department.
Out of the total
programme budget allocation of R150 million, R146 million or 96.5 per cent was
spent, which leaves R5.3 million or 3.5 per cent in unspent funds. The lower spending is attributed to
compensation of employees due to vacant positions as a result of the
organisational review and the moratorium on filling of posts for the entire Department.
3.2.
Programme 2:
Information Communications Technology (ICT), International Affairs and Trade
The purpose of this
programme is to ensure alignment between
Out of the total
programmed budget allocation of R44.6 million, R35.2 million or 79 per cent was
spent, which leaves R6.3 million or 21 per cent in unspent funds. The lower spending is attributed to
compensation of employees due to vacant positions, and goods and services due
to international trips being suspended.
3.3.
Programme 3:
ICT Policy Development
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.
Out of the total
programme budget of R110 million, R89.7 million or 82.4 per cent was spent,
which leaves R20.5 million or 18.6 per cent in unspent funds. The lower spending is mainly attributed to
goods and services as a result of delays in the implementation of projects.
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.
Out of the total
programme budget allocation of R1.617 billion, about R1 billion or 67 per cent
was spent, which leaves R534.3 million or 33 per cent in unspent funds. The lower spending in mainly attributed to
transfers of R150 million not effected to Sentech and R180 million for the
subsidy of set-top-boxes and R119. 9 million for the DTT infrastructure rollout
and dual illumination due to the review of the DTT standards.
3.5.
Programme
5: ICT Infrastructure Development
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.
Out of the total
programme budget allocation of R180 million, R44.8 million or 24.9 per cent was
spent, which leaves R135.2 million or 75.1 per cent in unspent funds. The lower spending is mainly attributed to
R109.7 million not transferred for the 112 Emergency Call Centre due to the former
Director-General’s decision to suspend the programme.
3.6.
Programme
6: Presidential National Commission
(PNC)
The purpose of this
programme is to facilitate development of an inclusive information society by
promoting the uptake and usage of ICT for improved socio-economic development
and research.
Out of the total
programme budget allocation of R34 million, R27.4 million or 80.7 per cent was
spent which leaves R6.5 million or 19.3 per cent in unspent funds. The lower expenditure is attributed to vacant
positions as a result of the organisational review.
During the presentation
of the Strategic Plan on 11 March 2011, the Department reported that the name
of the PNC will change in the next financial year (2012) to Information Society
Programme (ISP). The Presidency has been consulted regarding the dissolution of
the PNC. In the past few years, it has
functioned as a unit of the Department absorbed with its own budget.
4. Virements and Shifting of Funds
Though section 43 of the Public Finance Management Act (No 1. of
1999) makes provision for virements and the shifting of funds from one
programme to the other, as well as movement of funds within the programme,
there are certain requirements that need to be met by an accounting officer.
These conditions are as follows:
Section 43(2) of the Public Finance Management Act provides that
“the amount of a saving under a main division of a vote that may be utilised in
terms of (1) may not exceed 8 per cent of the amount appropriated under that
main division.” Moreover section 43(4) does not authorise the utilisation of a
saving in:
(a) An amount is specifically and exclusively
appropriated for a purpose mentioned under a main division within a vote;
(b) An amount
appropriated for transfers to another institution and; and
(c) An amount
appropriated for capital expenditure to defray current expenditure.
Virement was effected from programme 1 to programme 2 on the compensation
of employees to defray excess expenditure. The virement was in accordance with
section 43(1) of the PFMA.
5. The First Quarter Expenditure Report for
Financial Year 2011-12
During the first quarter of the 2011-12 financial
year, the Department of Communication’s total planned expenditure and projected
cash flows amounted to R418.5 million. However, the Department managed to
actually spend R334.5 million or 79.9 per cent which is equivalent to just 17.7
per cent of the total allocated budget of R1.9 billion.
This expenditure means that the Department has spent
far less that the general expenditure benchmark of 25 per cent per quarter. It
is also important to note that most of the economic classification categories
have reported under expenditure in the first quarter with the over expenditure
on programme 2. Lower than expected spending is mainly due to the following: non-submission
of drawback schedules; broadband ICT tender process and delays in the
implementation of projects awaiting approval by the Director-General.
The
under spending by the Department emanated from the following programmes:
Programme 2: ICT International
Affairs and Trade: Actual expenditure for the first quarter was three times the
projections for the first quarter of 2011-12. Actual expenditure amounted to R14.
9 million or 36.6 per cent of the R40.9 million allocated funds as compared to
projections of R4.4 million. Over expenditure under this programme is due to
membership fees to international organisations which were paid earlier than
projected. It was projected that the fees would only be paid late in the second
quarter. However, the invoice was received in May and hence the payment was
made to avoid penalties.
Programme 3: ICT Policy Development: Actual expenditure
amounted to R12.3 million as compared to projected expenditure of R15.4
million, representing under expenditure of 20.2 per cent. By the end of the
first quarter only R12. 3 million was spent from the total voted funds of R94.7
million. The Department cited internal administrative processes as the reason
for under expenditure.
Programme 4: ICT
Programme 5: ICT Infrastructure
Development: The programme managed to spend only R8.5 million from the R45.2 million
projected expenditure for the first quarter. The under expenditure of 81.3 per
cent is mainly due to the delays in implementation of the 112 Emergency Call Centre
projects and the broadband ICT tender as a result of tender processes.
Programme 6: Presidential National
Commission: Out of the voted funds of R34.7 million, R6.1 million was spent or 14.5
per cent was spent, while the programme had anticipated spending R8.9 million
for the first quarter. The main reason for this under expenditure is internal
administrative processes.
7.
Auditor-General’s
Report
In expressing his opinion, the Auditor-General indicated that the financial
statements of the Department present, in all aspects, a fair financial position
of the Department as at 31 March 2011 and its financial performance and cash
flows for the year ended, in accordance with the Departmental Financial
Reporting Framework prescribed by the National Treasury and in line with the
requirements of the PFMA. The Department has thus received an unqualified audit
report with the following matters needing urgent attention:
7.1 Fruitless
and Wasteful/ irregular expenditure
The
Auditor-General has found that as disclosed in note 30, irregular expenditure
was incurred as proper procurement procedures were not followed. An amount of R2.8
million was incurred in the current year and R1.5 million was incurred in the
previous year but identified in the current year.
As
disclosed in note 31, fruitless and wasteful expenditure to the amount of R1, 4
million was incurred due to interest on the late payment to American Express,
the advertisement of vacant posts, and settlement agreements. An amount of R173
000 was incurred in the previous years but identified in the current year.
7.2 Material
under spending of the budget
As
disclosed in the appropriation statement, the Department has materially under
spent the budget vote by R711 million. The implication of this is that it has
not achieved its objectives of developing ICT policies and legislation that
stimulate and improve the sustainable economic development of all
7.3 Predetermined
objectives
There
were no material findings on the annual performance report concerning the
presentation, usefulness and reliability of the information.
7.4 Compliance
with laws and regulations
7.4.1 Procurement and contract management
The
Auditor-General found that contrary to section 38(1)(g) of the PFMA the
accounting officer did not immediately report the particulars of irregular
expenditure to the National Treasury.
The Auditor-General noted that contrary to the requirements of Treasury
Regulation 9.1.1, the accounting officer did not implement an effective,
efficient and transparent process of financial and risk management to prevent
and detect irregular expenditure. The Auditor-General also found that contrary
to Practise Note 8 of 2007/8, three quotations were not sourced in some
instances
7.4.2 Expenditure management
The
Auditor-General found that contrary to section 38(1)(f) of the PFMA and Treasury
Regulation 8.2.3, payments to creditors were not always settled within 30 days
from receipt of an invoice.
7.4.3 Strategic planning and performance
The
Auditor-General found that contrary to section 38(1)(a)(iv) of the PFMA the
accounting officer did have a system of linking expenditure per projects.
7.4.4 Human Resource management
From
a sample of files tested, the Auditor-General, found that some employees were
not provided with a written contract of employment upon appointment, as per the
requirement of the Public Service Regulation (PSR) 1/VII/B1(g). Appointments
were made to posts which were not approved and funded as per requirements of
PSR1/iii/F(a) and F(d). A process was not followed for all appointments to verify
the claims in their application for a post per the requirements of PSR
1/VII/D.8
The
executive authority did not engage in HR planning with a view to meeting the
human resource needs as per the requirements of PSR1/III/B.2(d). Overtime paid exceeded 30 per cent of the
basic salary in some instances contrary to the requirement of the PSR 1/V/D2(b). Funded vacant posts were not advertised
within six months after becoming vacant and were not filled within 12 months
after becoming vacant as per the requirements of PSR 1/VII/C 1A.2
7.4.5 Leadership
Decisive
action was not taken in response to the risk of non-compliance with supply
chain management regulations highlighted by external audit findings, by
implementing controls to prevent the occurrence of irregular expenditure.
7.4.6 Financial and performance management
Manual
controls were not designed to ensure that all transactions and performance
information were completely recorded and accurately classified.
7.4.7 Governance
The
internal audit and audit committees did not function as required by the
Treasury Regulations throughout the year under review. There was no audit
committee chairperson’s report on the final AFS submitted for audit. The
accounting officer did not take corrective action to prevent non-compliance in
the human resource division by filling all critical vacancy positions during
the year
7.4.8 Transfer Payment
Funds
earmarked for community radio station and programme production projects were
not used
7.4.9 Investigations
Investigations were being carried out into alleged financial
misconduct by the Chief Operations Officer and the Chief Director: Finance
8.
Consideration of Reports of
Committee on Public Accounts
The Department did not appear before the Committee on
Public Accounts during 2010-11.
9.
Consideration of Reports of
Standing Committee on Appropriations
The Standing Committee on Appropriations (the
Committee) was established in terms of section 4 (3) of the Money Bills
Amendment Procedure and Related Matters Act (No. 9 of 2009). The Act requires the Committee to consider
and report on spending issues and on actual expenditure published by the
National Treasury. The Committee has
adopted a tradition of inviting both National Treasury and the affected departments
to account on government spending.
The Department was allocated a total budget of R2.1
billion in the 2010-11 financial year. The departmental budget comprised six
programmes namely: Administration; Information and Communication Technology
(ICT) International Affairs and Trade, ICT Policy development, ICT Enterprise
Development, ICT Infrastructure Development and the PNC. The highest share of the departmental
adjusted budget was allocated to the ICT Enterprises Development
programme. This programme was allocated
R1.6 billion.
The Department reported an expenditure of R965 million
or 45.14 per cent at the end of the third quarter. The major under spending was
on ICT Enterprises Development due to decision to close down the 112 Emergency
Call Centre project which was allocated R111.9 million. The project was however in the process of
being revived.
The Department indicated that the reasons for the slow
spending was mainly due to the high vacancy rate which came about as a result of
the organisational review and a moratorium on the filling of senior posts. It was reported that there were delays in the
implementation of projects due to instability, especially in the Department’s
Bid Committee but that has since been addressed. The point was made that the introduction of
key internal controls also resulted in slow expenditure within the
Department.
The Department mentioned that six priority projects
have been identified for the 2011-12 financial year and that the Strategic and
Business Plans for that period have been finalised. It was also mentioned that
all projects were now in line with the Department’s Strategic Plan.
The Department reported the following reasons for slow
spending on transfers to entities:
Funds were withheld due
to the lack of spending by USAASA as a result of projects not being implemented
on time. The management of USAASA has
been engaged by the Department to rectify the situation.
The under spending was
mainly due to the delay in the finalisation of the Digital Terrestrial
Television (DTT) standards. This mater
has been finalized and the standards were pronounced by the Minister.
The under spending was
due to lengthy lead times on the procurement of DTT equipment and education
content. The SABC has been engaged to
effect improvement on its spending.
The under spending
(capital expenditure and dual illumination) was caused by the delay in the DTT
standard, which has now been corrected.
The Committee felt that the Department needed to
furnish it with an organogram for the period starting from the end of September
to the end of December 2010 in order to enable it to analyse the recruitment of
senior staff during that period. It was
also stated that the list of posts that were filled during the third term of
the 2010-11 financial year needed to be provided to the Committee. A list of the six priority projects needed to
be forwarded to the Committee.
The Department undertook to furnish the Committee with
a comprehensive report on the 122 Emergency Call Centre and the Federation of
International Football Association (FIFA) legacy projects.
10.
Consideration of the 2011 State of
the Nation Address
In his 2011 State-of-Nation-Address, President Zuma
pronounced that the Small Medium and Micro Enterprises (SMMEs) are a critical
component of the job-creation drive. The
President added the campaign to pay SMME’s on time, within 30 days. To this end, the Department of Trade and Industry
payment hotline received about 20 000 calls in the past financial year and the
other departments have launched their own initiatives, for example the Re Ya
Patala (We Pay) initiative of the Department of Public Works.
The President also pronounced that all funded vacant
positions must be filled within six months.
As it stands, the Department of Communications has not filled three
critical top positions of Acting Deputy Director-General.
Notwithstanding the President’s commitment of his
administration, the Auditor-General found that contrary to section 38 (1)(f) of
the PFMA and TR 8.2.3 payments to creditors were not always settled within 30
days from receipt of an invoice. With
regard to ensuring a 30 per cent spent on Black Economic Empowerment (BEE)
owned companies, the Department, during the reporting period, far exceeded the
target by spending approximately 70 per cent of its budget on BEE owned
companies. This is contrary to the
Department’s claims that it had ensured that service providers were paid within
30 days and the Department continued to say that such payments were monitored
through generating payment reports.
11.
Entities reporting to the Committee
The Portfolio Committee on Communications has the
following entities reporting to it:
11.1 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
The Post Office is seen to be the core ICT public access network
and should be used to achieve
The total retail outlets countrywide, as at 31 March 2011, were
estimated at about 2.484. This number
includes the 26 new outlets and the upgrading and relocation of 27 others. An additional 1.7 million addresses were
rolled out against the target of 1.6 during the 12-month period which ended on 31
March 2011. The South African Postbank
Act (No. 9 of 2010) was promulgated on 3 December 2010. SAPO was allocated an amount of R306.1
million for the 2010-11 financial year.
The Committee noted that the subsidy intended for universal access
obligation would be discontinued between 2012 and 2013 and that this would have
a negative impact on the rolling out of universal access and service.
11.2
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
The SABC is
During the 2008-9 financial year, the SABC faced a severe
financial crisis alongside a serious corporate governance crisis. In addressing this crisis a guarantee of R1.4
billion was approved by Government. A
guarantee of R1 billion was granted to the SABC, with the remaining R473
million to be granted conditionally upon fulfilment of certain conditions. A
monitoring task team was appointed to monitor the performance of the SABC
against the Government guarantee targets.
The Corporation has also appointed a service provider, Delloite &
Touche, to assist in the development of a concrete turnaround plan for the
SABC. There has been some improvement in the financial performance of the SABC
for the year ended 31 March 2011. The SABC was allocated an amount of R268.9
million for the period under review.
The Committee noted that many government
departments (at all levels) are indebted to the SABC in terms of licence fees and
services and also concerned about the high costs of consultancy fees paid by
the corporation.
11.3
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
Key achievements include, amongst others, operating and maintaining
the terrestrial analogue television and radio transmission networks above customer
service levels, at 99.9 per cent.
Subsequently to the switch-on of the DTT network in 2008, Sentech
together with the SABC and Etv, has been conducting a pilot broadcasting service
on the DTT platform involving about 3 000 households. The DTT network of Sentech could potentially
reach 33.3 per cent population coverage during the period under review.
In ensuring the universal access of television and radio, Sentech
(in partnership with the SABC) has been rolling out lower power transmitters. This will mainly assist a significant number
of isolated and underserved rural communities to access radio and television
broadcasts. Sentech was allocated an
amount of R270.9 million for the 2010-11 financial year for DTT and Dual
Illumination. Only R71 million was transferred. An amount R199.9 million was
not transferred due to the delay by the Department in finalising the DTT
standards.
The Committee noted with serious concern that Sentech has not done
much work to fulfil its public mandate to provide National Wireless Broadband
Network (NBWN).
11.4
National
Electronic Media Institute of
NEMISA was established as a non-profit organisation 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. The emphasis is on equipping students to be
market-ready in a wide range of broadcasting disciplines and to have the
ability to work effectively in constantly changing conditions.
During the 2010 academic year, NEMISA had trained about 103 full
time students. Out of the total students
trained, 20 were trained in animation; 42 in graphic design; 19 inradio
broadcasting and 22 in TV broadcasting.
In addition, the entity also trained 82 learners in radio short
courses. NEMISA has also received about
450 applications for the 2011 academic year from candidates who qualified for
admission. However, due to limited
facilities at its campus some of the students could not be admitted. An amount of R32.6 million was allocated to
NEMISA for the 2011-12 financial year and has been transferred to the entity by
the Department.
The Committee would like to urge the Department to fast track the
repositioning of Nemisa.
11.5
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.
The Agency is mandated to administer the
Universal Service Access Fund (USAF) and the money in the USAF must be utilised
in accordance with Chapter 14, section 88 of the Electronic Communications Act
(ECA).
The key achievements at USAASA during the 2010/11 financial year
were the rollout of broadband infrastructure at Msinga in
USAASA and USAF have been allocated
amounts of R66.7 million and R218.6 million respectively for the period under
review. The entire amount of R66.7
million was transferred to USAASA and R38.6 million to USAF. An amount of R180
million was not transferred to USAF, which was specifically allocated for set-top-box
subsidies due to the delay by the Department in finalising the DTT.
The Committee noted with great concern the failure of the agency
to implement most of their projects which has a bearing to Universal Service
Access.
11.6
Independent
Communications Authority of
The Independent Communications Authority of South Africa Act, 2000
provided for the merger of the South African Telecommunications Regulatory
Authority and the Independent Broadcasting Authority to form the Independent
Communications Authority of South Africa.
ICASA is responsible for regulating the telecommunications and
broadcasting sectors in the public interest to ensure affordable services of a
high quality for all South Africans. In addition, ICASA also issues licences 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 manages the effective use of radio frequency spectrum.
ICASA’s key achievements during the 2010-11 financial year include
the release of the call termination regulation; final facilities leasing
regulation; and numbering plan regulations.
These regulations will assist in the liberalisation and promotion of
competition in the ICT sector. In fulfilling its mandate and in ensuring that
there is an effective and efficient service delivery, statistics on spectrum
and type approval licences were issued and the spare community broadcasting
frequencies and spectrum usage for the mostly used bands were compiled and
published on ICASA’s website. ICASA was
allocated an amount of R290.9 million for 2010-11 financial year.
11.7
.za Domain
Name Authority (.zaDNA)
The .za Domain Name Authority was established to assume
responsibility for the .za Domain Name Space.
The .za DNA was established in terms of Chapter 10 of the Electronic
Communications and Transactions Act, 2002. The Department currently provides
funding for the .za DNA until the Authority is fully operational. Funding will
then be sourced through a funding model developed in accordance with section
66(3) of the Act. The .za DNA will also oversee the implementation of an
alternative dispute resolution mechanism.
The Department is actively involved in the .za DNA and will
continue its participation until the Authority is fully operational and
sustainable.
The Committee recommends that .za DNA appear before it and the
Department must provide a report on their operation prior to the Authority appearing
before the Committee.
12 Other Sources of
Information
12.1 Delivery Agreements,
Industrial Policy Action Plan (IPAP II) and the New
Growth Path
Work on the
developmental growth path is being led by the Department of Economic
Development. The Department has since 2010 released a policy framework that
identifies the job drivers, that is where jobs can be created, key policy tools available to support
employment across the economy, as well as identify trade-offs and choices that
have to be considered. The New Growth Path identifies the knowledge economy as
a key job driver. The Department will work on the development and assessment of
interventions in support of the knowledge economy. To this end, the Department will
implement interventions to increase the uptake and usage of ICT’s in the
economy to improve efficiencies and support inclusive growth to create. With regards to the IPAP
II, the department will investigate the possibility of introducing the
telecommunications developmental pricing to support the growth of the business
process service.
The high cost of calls has been attributed to the
high interconnection rates that operators charge to terminate calls on mobile
and fixed line networks. Government has over the years made several attempts to
liberalise the ICT market by introducing the Second National Operator, Neotel,
another mobile operator, Virgin (other than Cell C, MTN, 8ta and Vodacom) and
number portability. Furthermore, the problem with high communication costs is
that they act as a tax on businesses especially Small, Medium and Micro
Enterprises (SMMEs) and are an impediment to potential economic growth. Under
such conditions the need to regulate the telecommunications industry is
imperative if the county wants to attractive to investors and create five million
jobs through the New Growth Path as an adopted government Programme.
Significant strides have been made in this
regard. Dominant mobile operators have agreed to reduce their interconnection
prices from R1.25 per minute to 89 cents per minute. More reductions are
expected to be finalised towards the second quarter of the next financial year
when both the Department and the Authority complete the process of regulating
sector prices in line with the requirements of Chapter 10 of the ECA. Through the
intervention of Parliament, ICASA has pressured the dominant sector players to
come up with ways of reducing communication costs as follows:
12.2 Interventions to support appropriate cost
structure
As part of its work, the regulator should complete the Local Loop
Unbundling process and the Minister should issue a policy directive to achieve
this. The Committee has noted the lapse of time between the gazetting of Local
Loop Unbundling and the implementation by ICASA.
The Committee recommends that:
12.3 Support for exports and import competing sectors.
The Department will soon finalise the Set-Top Box (STB) Manufacturing
Sector Development Strategy to ensure maximum benefits flow to local
manufactures and that the procurement stimulates local industrial development
in the electronics sector. The Committee held public hearing on the digital migration
process wherein a second option approach to set-top boxes was presented.
The Committee recommends that an information meeting with
engineers be convened.
13.
Committee Oversight Reports
The Committee undertook an oversight visit to the
13.1 Committee Observations
13.2.1
South African Broadcasting Corporation
(SABC)
·
There was no
interaction between the management and the employees; and
·
Most of the SABC
buildings are in a state of decay
·
There was no National
Plan for Universal Service and Access of footprint coverage
·
There was lack of gender
representativity in managerial position
·
There was no policy
framework for freelancers working at the SABC
·
Strategic positions were
not filled
·
There was poor corporate
governance.
13.2.2
South African Post Office (SAPO)
13.2.3
Sentech
·
There was a failure to
realign the signal distribution tariffs with the provisions of the Electronic
Communication Act
·
There were allegations
that the salary structure was still racially based and not competitive with
other industry players
·
The centralisation of
supply chain management resulted in unintended consequences of failure to
acquire services within required time
·
There were still
communities who were providing for their own signal distribution.
13.2.4
Independent Communications Authority of
·
There was no synergy between ICASA head office
and its regional offices
·
There was a problem with stakeholders (Sentech
and SABC) trying to solve issues without consulting the regulator (ICASA)
·
ICASA had neglected its postal services mandate
·
There was no strategic leadership
·
There were no prescribed timelines to issue
licences to potential licencees.
13.2.5 Universal Service and Access Agency of
·
There was a lack of a clear
maintenance plan on all their projects
·
The agency was dismally
failing to meet its statutory obligations.
14.
Findings of the Committee
The Committee analysed the Department’s 2010-2014
Strategic Plan, the 2010-11 Annual Report of the Department, the 1st
Quarter Expenditure Report, the 2010-11 Estimates of National Expenditure reports,
the Report of the Standing Committee on Appropriations, the Stete-of-the-Nation
Address, the revised Industrial Policy Action Plan, the New Growth Path, and the
Committee’s oversight reports.
The Committee is gravely
concerned that most of the issues that have been raised in the Auditor-General’s
report were considered by the Committee during the Department’s annual report
presentation on 13 October 2010 and on 18 February 2011. The Committee notes
with regret that not much progress has been made in addressing the weaknesses identified
by the Auditor-General.
The Committee expressed its disappointment:
The Committee noted with concern:
The committee has not expressed any view to the
additional funding request as there was no motivation by the Department.
15. Recommendations
of the Committee in respect of the Department and its entities
The Committee recommends
that the Department must:
The Committee further recommends
that:
Report to be considered