Annual Report 2010/2011
Select Committee on Finance
30 May 2012
Olaotse Matshane MD: CBDA
Contents
Establishment and Mandate of the CBDA
Co-operative Banks Supervision Report
Capacity Building and Information Report
Status of the CFI sector
Report of the Audit Committee
Financial Statements 2010/11
Establishment of the CBDA
In 2007 Co-op Banks Act passed
First Board appointed in August 2008
Operations commenced 2009 with
appointment of the MD - March 2009
(resigned March 2011),
Supervisor appointed May 2009.
Mandate of the CBDA
Establishment of the CBDA - Section 54 (1)
Mandate – section 55 (1)
– Support, promote, develop cooperative banks
(incl deposit taking co-ops)
– Appoint a supervisor
– Promote establishment of (+ register & regulate)
representative bodies
– accredit and regulate support organisations
CBDA Organogram 2010/11
BOARD
PART TIME PROVIDERS
VACANT
RESEARCH, M&E
MANAGING DIRECTOR
Sharda Naidoo ( Mar 09 – Mar 11)
PERCY MOLOKOANE
PROGRAMME
ADMINISTRATOR
ROSSETA XABA
FINANCE
KHANYISO MANJEZI
HUMAN
RESOURCES ( (NT)
ROBERT MBEZA
CAPACITY BUILDING
DAVID DE JONG
SUPERVISION & REGULATION
TIMOTHY MUTYAVAVIRI
CB OFFICER
NOMADELO SAULI
DEPUTY CAPACITY BUILDING
MC KUHLEGISA
SENIOR EXAMINER
MOKGADI MAFOJANE
TEAM ASSISTANT
Vacant
Vacant
Co-op Banks Supervision Report
Strategic Goals and Objectives
Register and Supervise Co-op Banks
Ensure Appropriate Regulatory Framework
Handling Troubled Co- operative Banks
Register & Supervise Co-op Banks
Maintaining processes for early screening of
licensing applications
Evaluate applications of proposed co-op banks
- as at 31 March 2011 – 18 CFI’s eligible to apply
for registration (see page 16 of the Annual Report)
- February 2011 – Ditsobotla registered as 1st Co-op
Bank
Carry out scheduled and targeted onsite
examinations
Off-site analysis of Co-op Banks
Compliance & Review of Legislative Frameworks
Guidance notes – published to provide
guidelines to applicants
Regulatory & oversight Advisory Committee
– Joint committee - SARB supervisor, CBDA
supervisor & MD, Registrar of Cooperatives
– To review & develop policy & legislation, co-
ordinate efforts between supervisors, the
Registrar & CBDA
– Has reviewed unintended consequences &
possible amendments to the Act, minimum reg
requirements etc.
Compliance & Review of Legislative Frameworks….
Regulation and Rules – published
Institutional relationships with stakeholders
– FSB, FIC, NCR, Samaf (now sefa), SACCOL,
PASA, the dti
Participation in national & international regulatory
and supervisory forums
Annual co-operation & co-ordination plan
Capacity Building & Information Report
Strategic Goals and Objectives
Assemble an effective capacity building team
Understand existing CFI sector in depth
Support, promote & develop Co-op banks incl.
deposit taking Co-operatives
Accessible programmes to meet sector learning
needs
Implement a CFI development monitoring system
Assemble an effective capacity building team
Team – Director + 2 technical staff assigned
to:
– Develop accredited training materials
– develop capacity building tools
– Facilitate workshops
– Provide technical assistance to CFIs
– Release publications
Understand existing CFI sector in depth
Skills level Percentage (%)
University qualifications 15
College diploma 32
High school as their highest level education 53
Professional qualifications in Information Technology 3
Fairly new and have not attended any CFI related
training
67
Lack knowledge in the management of financial co-
operatives
57
Support, promote & develop Co-op
banks incl. deposit taking Co-operatives
Services providers appointed to develop
– Standardised manual accounting system
– Governance training materials
Implement a CFI Development
Monitoring system
On-site technical assistance provided to CFIs
CBU assisted CFI’s with the review and
development of new strategic plans
Capacity Building guidance committee
– CBDA, samaf, SACCOL, DGRV, and BANKSETA
– Ensure coordinated & comprehensive apprach to
education and training in the sector
CBDA & BANKSETA – coordinated a training
programme for CFI staff and board members
Status of the CFI sector
Emerging observations:
– Weak and inadequate capital levels
• Sector CAR of a low 2% over the past four years
• Dividend payments regardless of weak capitalisation
– Weak governance structures
• Majority of CFIs not holding AGMs
• ‘Permanent’ board members (with some boards
having an average age of 77, and been on board for
15 years)
• Existing boards lack adequate training
• Boards lack understanding of financial co-op model
Status of the CFI sector…
Inadequate credit risk management practices
– FSCs conservative lending i.e. FSC loan portfolios make
up less than 5% of total assets
– SACCOs aggressive lending i.e. loan portfolios average
77% of total assets
– No credit committees to provide oversight over lending, &
inadequate loan policies in place
– Inadequate capabilities in monitoring & managing
delinquent loans, including bad debts write off
Status of the CFI sector…
Weak operational capacity
- Existing credit & savings policies are out-dated/not
implemented
- Use of manual paper based systems
- Inadequate skills as reflected in the following skills
assessment conducted by the CBDA:
Status of the CFI sector…
Reporting on financial performance – FSCs do not produce conventional financial statements
(tend to report for grant funding purposes)
– SACCOs not consistent in reporting to SACCOL
– Absence of required experience and qualifications on
basic accounting skills
– Unaudited financial statements & where audited, auditors
do not understand financial co-operative model
– Sector not prioritised by auditors resulting in late
production of financials (in most cases 12 months late)
Annual Financial Statements 2010/11
- Report of the Audit Committee
- Report of the Auditor General
Report of the Audit Committee
Internal controls adequate to ensure reliable
financial records
Financial statements prepared on the basis
of appropriate accounting policies
Financial statements comply with the
relevant provisions of the PFMA
Report of the Auditor General
Unqualified report for the CBDA
Emphasis of matter
- Irregular Expenditure
- Fruitless and Wasteful Expenditure
Compliance with Laws & Regulations – Procurement & contract management
• Supplier and tax clearance certificates
– Strategic planning & performance management
• Approval of the strategic plan
• No Fraud Prevention Plan
• Submission of quarterly reports on performance
– Cooperative Banks Act
• No Deposit Insurance Fund
– Internal Control
• No significant deficiencies
Statement of Financial Position
Assets 2011 (R’000)
Non –current assets
Property, plant and equipment 100
Intangible assets 6
Current Assets
Cash and Equivalents 31
Trade and receivables 19
Total assets 156
Liabilities
Current liabilities
Trade and other payables 804
Provisions 133
Total liabilities 937
Net Assets
Accumulated deficit (781)
Total net assets and liabilities 156
Statement of Financial Performance
Revenue 2011 (R’000)
Transfers and subsidies 8,200
Sale of goods and rendering services 35
Interest, dividends and rent on land 43
8,278
Expenditure
Goods and services (4,677)
Compensation of employees (3,947)
Deprecation/amortisation and impairment (52)
(8,676)
Deficit for the year (398)
Conclusion
The CBDA has opportunity to support this sector and ensure its sustainability and viability
Sector is showing definite growth
Need to ensure it is regulated and does not put depositors funds at risk.
THANK YOU
Top Related