Casidra’s assurance & ability to monitor pre-determined objectives; Atlantis SEZ update

Meeting report

The Chairperson welcomed everyone.

The Members and officials on the virtual platform were noted.

No apologies were received.

Powers of SCOPA to Summons

The Chairperson indicated that the item on environmental affairs and the financial and fiscal commission will not be dealt with in this meeting due to information received and can be put to rest. He asked the parliamentary official to explain the procedure so they could move to the next item.

Mr Lubabalo Stemele, Chief Parliamentary Officer, WCPP, said that he received a request for procedural advice in relation to one of the Committee’s resolutions. The Committee wanted the Minister of Finance to appear in front of the Committee and provide an explanation of the issue of the appropriation of the budget of a particular entity. In terms of the Constitution, the Committee has the power to summons any person to appear before it to give evidence, oath, affirmation, or to produce documents. The WCPP as the provincial legislature can determine and control its internal arrangements, proceedings, and procedures and create rules and regulations for its dealings. If the public accounts committee is of the view that a report or financial statement raises issues about a policy of a particular department, the committee must inform the speaker. The report or statement must be considered by both the public accounts committee, or by a joint committee with another relevant committee. The public accounts committee must advise the speaker whether a joint meeting or separate meeting is needed. Although SCOPA has powers, its powers are limited to expenditure and audit issues raised by the AG in the audited financial statements. Anything that may emanate that is policy-related, which may include budgeting and appropriation will then mean that the Committee, having identified this as an issue, has to advise the Speaker on the matter and seek to have either a joint meeting or a separate meeting with relevant committees that may have powers to exercise oversight over such department.

The Chairperson thanked Mr Stemele for the clear explanation. He asked if there were any questions.

There were no questions forthcoming.

The Chairperson indicated that the purpose of the meeting was to have an engagement with Casidra and the Office of the Auditor-General regarding the predetermined objectives of the entity and to see how it is managed so as to ensure an improved financial audit.

He requested CASIDRA to brief the Committee.

Briefing by Casidra

Dr Keith du Plessis, CEO, Casidra, indicated that the presentation will be made by Mr Nefdt.

Mr David Nefdt, Chief Programme Officer, Casidra, explained that the presentation highlights what the entity has done to address the issues raised by the AGSA.

The process changes that were introduced include:

Establishing a team responsible for the compilation and verification of Pre-determined objective information and Proof of Evidence (PoE)

Checking that information throughout the process to ensure correctness and completeness

Ensuring checks and updates are done throughout the Quarter and not just at quarter end

Checking before submission on EQPRS by the Chief Programme Officer

The specific changes in relation to Programmes 1, 2, 3 and 4 were highlighted.

The impact that the changes had on the 20222/23 financial year outcomes in relation to predetermined objectives:

In the past, the AGA only checked Programme 3 and in 2022/23, it checked Programmes 2 and 3 and received a clean audit for both programmes in the reporting period.

In the AGSA Management report, it commented that:

It did not identify findings on the completeness of indicators

It did not identify material findings on the overall presentation of performance information in the performance report

It did not identify material misstatements in the reported performance information in the performance report submitted for auditing

Mr Nefdt said that Casidra did get positive results from the measures that were instituted.

(See Presentation)

Discussion

Mr D America (DA) congratulated Casidra on the measures that were created and applied to address the gaps that were highlighted in the previous audit. He asked to what extent was the internal audit committee involved in devising the new internal control measures that were put in place and were their input valuable in constructing this new process flow of dealing with internal control measures.

Mr Du Plessis replied that internal discussions did take place and their audit and risk committee had given extensive input on how this problem should be tackled. It was an interactive process between Casidra and the chairperson of the audit and risk committee. Discussions were also held with the internal auditors.  Many people gave input in the process.

Ms L Maseko (DA) asked about the diagnostic assessment – what was the assessment for them to come up with these solutions? Where were the loopholes in the system before?

Mr Nefdt replied that as part of their inner diagnostics on what happened and why they had these challenges, they uncovered that one definite issue was the number of checkpoints that were in place previously. Previously, you had an administrator and 1 or 2 persons checking what was done and the multiple levels of checking and re-checking did a lot to ensure that the quality of information eventually presented to the AGSA for auditing was completely scrutinised. That was definitely learning that they took out of this process.

The Chairperson referred to slide 5 on the comments from the Auditor General on improved finances – how recent is this comment?

Mr Nefdt said that it is the comment for the 2022-2023 financial year.

The Chairperson sought clarity if it relates to the Annual Report that the Committee still has to consider.

Mr Nefdt confirmed this.

The Chairperson noted that they received a preview of what to expect.

The Chairperson asked if there were any comments from the AGSA.

An official from the AGSA confirmed that Casidra has implemented the measures they outlined.  The AGSAs recommendation is to implement these measures sustainably and have internal audit test this from time to time as part of their internal audit control.

The Chairperson thanked the Casidra delegation and the AGSA for the improved situation. He indicated that when they requested this information, they were not trying to put the entity in a bad light. They want to work with the entity to improve the situation. As demonstrated, it is possible. They looked forward to the later engagement on the annual report.

Briefing by the Atlantis Special Economic Zone (ASEZ)

Ms Waheeda Saib, CFO, ASEZ, reported that it was designated in 2018. At that stage, it became clear that there was a requirement to have a strong bond with the community so it could benefit from the ASEZ. Also, it was at that stage that they started a process to establish a community stakeholder forum. ASEZ was incubated within Wesgro. In 2019, it was listed as a state-owned company and listed as a public entity in December 2021.

A key milestone was the signing of a Community Stakeholder Network (CSN) Facilitation agreement in 2020 between ASEZ and community sectors in the Atlantis area. In the same year, they were also able to bring the City of Cape Town on board as a shareholder.

The entity moved from an establishment phase to an implementation phase in September 2022.

It received funding from DTIC (Department of Trade, Industry and Cooperation) for Zone 1 civils and 1st top structure in March 2022.

She highlighted that there are 4 components to the strategic positioning of the SEZ – it is not a one-dimensional entity or impact:

- Greentech investment and jobs 2

-A destination marketing asset for South Africa

-A living laboratory – pushing the boundaries of sustainable and inclusive manufacturing

 -A place-based development asset driving inclusive development

Mr Michael Webster, Acting Executive: Integrated Ecosystem Management, ASEZ, provided a detailed overview of the establishment of the CSN, how it benefits the ASEZCo, showcased some of the partners they collaborate with and highlighted figures to show impact.

The CSN was established in support of local integration within the larger socio-economic objectives and benefits of the ASEZCo and continues to be a key conduit to the community which allows the ASEZCo to communicate opportunities.

(See Presentation)

The Chairperson invited the Department Head to make an input.

Mr Velile Dube, Head, WC Department of Economic Development and Tourism, said that the entity is entering into a challenging and interesting period and it was important that the work that they want to do in developing the area connects with the people in the area, that it is relevant and contributes to their development. More importantly, the aim is to create additional jobs in the area that is so highly needed and this entity has a role to play. They have a role in attracting businesses and investments so people can benefit.

Discussion

Mr America appreciated the presentation. It gave an overview of what is happening in the entity and its operations.

He said it was pleasing to note that a vehicle has been created to facilitate community participation in the work that needs to be carried out.

He asked if the CSN is the only community structure that the entity engages and collaborates with. How broadly representative is the Committee that has been established of the communities that they are supposed to engage with?

He knows the R866,66 stipend is not a lot of money that is being paid to people. While this is little money, sometimes there is a rivalry within the community to serve on structures like the CSN, notwithstanding the small stipend but the perceived benefits that may accrue later from serving on such a structure. Did they experience that kind of internal rivalry? If any conflict arises within the CSN, what measures are in place and what role the entity plays in this regard?

Mr Webster replied that the CSN is not the only structure they engage with. They have a whole-of-society approach. All structures representing all sectors are engaged. ASEZ uses the CSN specifically as a communication conduit. The CSN is recognized as a multi-sectoral structure and represents all communities in Atlantis.

On rivalries, the CSN is elected by the community and this eliminates any rivalries. The Constitution is written in a way that if there are any disputes with regard to community members, there is a mechanism for holding members accountable for the role they fulfil. Through that Constitution, Members are elected, removed and held accountable. There have been no issues around rivalries. There were in the past very strong opinions with regard to the role CSN members played and those roles are covered in the terms of reference.

There is a conflict resolution and dispute management policy as part of the Constitution that was signed. That allows for a structured process to ensure that when there is a conflict, there is a framework that can deal with it.

On the stipend, initially during the negotiation with the CSN in 2020, it was agreed that they would receive a similar stipend as the ward committee members because they fulfil a similar function. As a result, it was felt that it would be best to align the stipend to what ward committee members receive.

The stipend covers transport, as well as air time and data costs where necessary to enable them to fulfil their role.

The Chairperson said the role that is played by the SEZ is similar to that done by the IDZ. These agencies are established for the purpose of unlocking economic opportunities in various areas. ASEZ is playing such a role. What is the relationship with the Saldanha SEZ?

Mr Dube said -speaking under correction - that in every province, there are two special economic zones. It is a programme run by DTIC. One of the main purposes is to attract investors into these zones for various reasons like industrialisation, to stimulate manufacturing increase, to promote exports and to support the growth of the economy. They play a very important role as assets owned by the state. His department has oversight over the Saldanha SEZ and Atlantis SEZ. The City and province have a part shareholding in Atlantis SEZ. Meanwhile, Saldanha SEZ is wholly owned by the province. In the main, they fulfil the same sort of activity. Whereas the strategic focus of the Atlantis SEZ is on the green economy, the Saldanha SEZ is focused on industrialisation in the maritime space and heavy industrial manufacturing.

Ms Jo-Ann Johnston, Chairperson, ASEZCo, said that the CSN is a unique structure as far as the SEZs are concerned. Saldanha has traditionally had a very different structure, which tends to be ward-based. The CSN is a formalised structure that represents various constituencies such as social and business. That is in part because this is what the community requested. The Atlantis SEZ also represents the evolution of IDZs and SEZs in the country where we are not looking at a decision where you put a special zone in a community and it’s almost as if the zone is separate or apart from the community and uses the citizens as workers. It is part of the community and a constructive and ongoing relationship is required to make sure that there is a solid understanding and shared values in making sure that the IDZ and SEZ are successful.

She stated that there are a number of SEZs in other provinces that have struggled because they did not invest sufficient time and effort into their relationship with the communities. Both Atlantis SEZ and Saldanha SEZ have placed a lot of emphasis and investment in that relationship with their communities. Atlantis has gained because of the relationship as demonstrated in the presentation.

The Chairperson thanked the entity for its comprehensive responses to the questions.

The team from Atlantis SEZ thanked the Committee for their feedback. Working with the community is hard work and challenging but they will continue to focus on the task.

The HOD thanked the Chairperson for the engagement. He appreciated the work carried out by the Atlantis SEZ in so far as engaging with the community. It is important that they work with the community and share the same objectives. It helps with productivity and success for both the entity and the community.

The chairperson thanked the entity and said it has helped to clarify many issues.

He released the entity and said the Committee will consider outstanding matters.

Resolution

The Committee agreed to send a letter to the Speaker's office about the item relating to the environmental affairs and the financial and fiscal commission for the relevant Committee to deal with.

He asked if there were any resolutions concerning the two presentations.

There were none.

The Committee agreed to use its discretion to decide whether to have physical or virtual meetings when they review the annual reports of departments and entities.

The meeting was adjourned.