NATIONAL SKILLS FUND

PORTFOLIO COMMITTEE BRIEFINGON THE

2010/11 ANNUAL REPORT02 NOVEMBER 2011

CONTENTS:

1. Background information on Annual Report2. Performance on predetermined objectives3. Auditor-General Report4. Financial Statements 2010-115. NSF Funding framework

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1. BACKGROUND / ANNUAL REPORT• The Department was established during the macro re-organisation

process of the National Government in 2009/10

• The Department became independently operational with effect from 1 April 2010 and the 2010/11 financial year was therefore the first reporting period of the Department

• The year under review was characterised by transitional processes

• The same year saw the development of the 3rd phase of the NSDS, following extensive consultation processes facilitated by the Skills branch under the guidance of the NSA

• As has been the practice, the performance information and annual financial statements of the NSF are incorporated in the Department’s report.

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2. Performance on Predetermined Objectives

Key Strategic Objectives and Achievements

(Annual Report: Page 281 – 285)

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2.1 To provide funds to support projects identified as national priorities in the context of the NSDS II and III

2.1.1 To support the development of priority skills through a bursary programme.2.1.1.1 Performance Indicator:Undergraduate bursaries awarded benefiting 2,800 people (Critical Skills Support).

Performance results:A total of 6,979 undergraduate bursaries were awarded for the period to support

studies in critical skills. These were facilitated, primarily through NSFAS and Career Wise (total

5,857) and the rest through partnerships with Provincial Governments.

Reason for variance:Additional resources were provided due to increased demand for bursaries in the

skills areas supported by the programme.

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2.1.1.2 Performance Indicator:Post graduate bursaries awarded benefiting 1,200 people (Critical SkillsSupport).

Performance results:A total of 856 post graduate bursaries have been awarded through apartnership with the National Research Foundation.

Reason for variance:The programme was scaled down with support focused mostly tocontinuing Masters and Doctoral fellows to the exclusion of Honours.

This programme is being reviewed in line with NSDSIII, the MinisterDelivery Agreement and the call by the PC for dedicated support to postgrad education.

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2.1.2 To support Strategic Projects targeting skills for macro-economic policy initiatives of SA.

2.1.2.1: Performance Indicator: Scarce Skills Learning programmes (learnerships, internships) benefiting 4,000 people.Performance results: 4,399 people benefited from learnerships and internships from projects implemented through provincial governments.Reason for variance: Target met.

2.1.2.2: Performance Indicator: Strategic Projects programme benefiting 8,000 people.Performance results: A total of 3699 people benefitted from other programmes (mostly skills programmes).Reason for variance: The slow take off of projects in the third round of Strategic Projects contributed to the low achievement. These projects will only commence implementation in 2011-12.

2.1.2.3: Performance Indicator: Scarce Skills Artisan programme benefiting 4,000 people.Performance results: 5,152 people were indentured on various apprenticeships during this reporting period through our partnerships with SETAs and provincial governments.Reason for variance: Target met.

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2.1.2.4: Performance Indicator: Other workplace learning programmes (WSSP, BPO&O, etc) benefitting 4,000 people.

Performance results: Projects supporting DTI incentives and Training Layoff Scheme In total 5687 workers benefited.

BPO&O training grants: Expenditure R13,6 & total new learners benefiting - 3511.

Workplace Skills Dev Support Programmes training grants: New learners trained – 756;Claims paid – R 3,3 mil; 10 - SME enterprises benefitted

Monyetla BPO&O Work Readiness Programme: 900 learners (Call centre agents)completed their training and assessed as fully competent. 696 has been employed (77%)

A further 2148 learners still in training. The project come to completion on 31 July2011.

Training Layoff Scheme: A total of 520 worker benefitted from skills interventions.

Reason for variance: Target met

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2.1.3 For NSDS III, for each new strategic priority develop draft disbursement criteria and procedures.Performance results: Following the official launch of the NSDS draft criteria were developed to support NSDS III.

2.1.4 Recommend criteria and disbursement procedures to the National Skills Authority (NSA).Performance results: Three drafts of the NSF Strategic Framework and Criteria for the allocation of funds were presented to the NSA. In reporting period this has not been finalised , however approved by Minister on 04 August 2011.

2.1.5 Finalise criteria and disbursement procedures by end March 2011.Performance results: Delivery delayed due to late launch of the NSDS III.

2.1.6 Implement NSDS III priorities from 2011 - 2014.Performance results: NSDS III priorities have been included in the DHET Strategic Plan (incorporating the NSF work-plan).

2.1.7 Monitor and evaluate impact of disbursement made.Performance results: Both the M&E and Impact strategy have not been developed .The NSF continued monitoring disbursements made through ongoing site visit to all projects.

Reason for variance – Items 1.3 to 1.7: Partially achieved.9

2.2 To provide funds to support other projects that are pertinent to the achievement of the goals of the Skills Development Act, as determined by the DG of DHET.

2.2.1 To provide training opportunities benefitting 108,460 people in the informal economy including cooperatives, social development projects and SMMEs.

Performance results:(1) The fund established a partnership with DPW (EPWP-programme) and committed of R200m in

funding. As a result of slow take off of projects, only a total of 7,158 learners received training of which 6,859 (95,8%) were placed during this period.

(2) CBO skills development support: A total of 333 CBOs benefitted from various skills interventions. An actual total of 3,728 beneficiaries participated in the programmes. Total expenditure - R19,6 million.

Some of the projects are still active and it is envisaged that the target of 400 will be achieved during the remaining period in 2011.

(3) Assist youths to establish new ventures: The NSF was advised to put on hold new projects as a result of the impending NSDSIII. This project was thus cancelled.

(4) Provide ABET to unemployed people: The ABET, meant to be implemented through DHET ABET centres had to be shelved due to the transition processes. ABET centres are under the control of Provincial Education Departments.

Reason for variance: Target not met due to difficulties experience as a result of complex transition processes.

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2.2.2 To provide capacity building grants for the FET system to improve skills development provision at a cost of R1.25 billion.Performance results: The delay in the launch of the NSDS III has necessitated postponement of this activity as these FETs were intended to facilitate skills development initiatives of the NSF.

2.2.3 To provide grants for the training of youth on life skills through the FET system to benefit 500,000 youths.

Performance results: postponed due to the delay in launching NSDS III.

2.2.4 To strengthen NSDS provision through annual skills planning grants & NSA advocacy support grants.

Performance results: Assist NSA constituency members with NSDS advocacy work.Actual total constituency members that have benefitted– 2682. Some of the projects have not yetcompleted - once completed the target of 3000 will be achieved.

2.2.5 Implement strategic projects as per criteria and disbursement procedures.Performance results: Provide funding for COSE project - An amount of R102,000 was approved to appoint consultants to research the concept. This project could not take off due to changes in the conceptual framework of the NSDS III.Provide funding for Career Information Hotline - A total budget of R99.4m has been approved for the Career Advisory Services implemented in partnership with SAQA.

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2.3 To steer the development of internal and external structures and systems that effectively enable the achievement of the abovementioned two goals (strategic objectives).

Performance results:The development of the financial system for the NSF has been put on holdpending the finalisation of the organisational structure of the DHET (andspecifically the Branch Skills).

2.4 Manage the strategic planning, administration, financial management, performance management, organizational knowledge, reporting, human resources, archiving, procurement and NSF-IT system/s services effectively and efficiently.

Performance results: These were managed in collaboration with DHET Finance.

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3. Financial Report 2010/11

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a) Context

• NSF Finance and AdministrationCorporate services forms part of the DHETFinancial Management jointly handled by DHET

and NSFChallenge regarding cash versus and accrual basis

of accountingExternal consultancy support for cash to accrual

conversion and financial reporting

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b) Financial Position of the NSF: 2010/11

R'000

Revenue 2,109,759

Expenditure 633,184

Grant Disbursements 564,373

Employee cost 12,892

Operating Expenditure 5,165

Management fees/Bank charges 1,665

Collection costs/SARS 49,089

Net Surplus 1,476,575

Total Assets 6,792,080

Total Liabilities 183,574

Net Assets/Capital and Reserves 6,608,506

The NSF received an unqualified audit opinion

Key matters raised by the Auditor-General:

Emphasis of Matters – not affecting audit opinion

Irregular Expenditure • As disclosed in disclosure note 18.1 to the financial statements, the NSF incurred

irregular expenditure of R 48.405 million as follows:Evaluation and adjudication criteria applied not the same as those indicated in the original request for proposal documentation: R46.991 millionSecondment of official from Metropolitan Life: R743 905

Restatement of corresponding figures• This is a correction of the figures reported in 2009/10 – Refer note 26.

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c) Auditor-General’s Report

d) Additional Matters – not affecting audit opinion

NSF listing as public entity• The Auditor-General is drawing attention to the

matter that the NSF is not listed as Schedule 3A public entity

Material under spending of the budget• The Auditor-General is drawing attention to the fact

that the budget was materially under-spent and the recurring nature thereof.

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e) Predetermined objectives

Reported indicators not consistent with planned strategicobjectives

Planned and reported indicators not in all respects well defined

Planned and reported targets not always measurable

Information deficient in respect of validity, accuracy andcompleteness

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• The NSF completed an action plan regarding audit findings• The plan include all areas raised in the Audit Report as well as all

other matters identified during the audit that resulted in audit queries

• The plan consists mainly of the following:Addressing the areas related to Predetermined ObjectivesInternal OperationsThe management of financial activities and the implementation of a separate financial management system to address the requirements of accrual accounting

• The action plan was approved by the Accounting Authority and progress will be monitored on a monthly basis

• Reports will also be submitted to the Audit Committee19

f) Action Plan on Audit Findings

5. NSF Funding Frameworki. Minister launched NSDSIII on January 13th, 2011ii. NSA required, ito the SDA, to advise the Minister

on NSF funding framework and allocation criteria.iii. Draft framework prepared by NSF and widely

consulted with: NSA Board NSA/NSF Sub-Committee NSA Exco Broader NSA Constituencies NSF Broad Management DHET Broad Management

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a) Key Funding Priorities

i. Human Resource Development Priorities agreed with the HRDC

ii. NSA Priorities consulted and agreed with the Minister

iii. Priorities aligned to the NSDS, supporting key MTSF and key government strategic priorities

iv. Priorities identified by the DG, supporting the purposes of the SDA

v. Skills Infrastructure priorities & capacity building of the FET sector for skills delivery

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• THANK YOU• DANKIE

• NGOMBULELO OMKHULU

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