independent development trust portfolio committee on public works presentation draft corporate plan...
TRANSCRIPT
Independent Development Trust
PORTFOLIO COMMITTEE ON PUBLIC WORKS
Presentation
Draft Corporate Plan 2012/1320 March 2012
Independent Development Trust
PORTFOLIO COMMITTEE ON PUBLIC WORKS
Presentation
Draft Corporate Plan 2012/1320 March 2012
PRESENTATION OVERVIEWPRESENTATION OVERVIEWPRESENTATION OVERVIEWPRESENTATION OVERVIEW
1. REVISITING THE IDT STRATEGIC PLAN
2. PROGRAMMES
3. CORPORATE GOVERNANCE
4. BUSINESS CASE AND ANNUAL PERFOMANCE PLAN
5. FINANCES, FUNDING MODELS, and RISKS
6. LEGISLATIVE AND POLICY OVERVIEW
7. RECOMMENDATIONS
______________Q&A and Closure______________
1. REVISITING THE IDT STRATEGIC PLAN
2. PROGRAMMES
3. CORPORATE GOVERNANCE
4. BUSINESS CASE AND ANNUAL PERFOMANCE PLAN
5. FINANCES, FUNDING MODELS, and RISKS
6. LEGISLATIVE AND POLICY OVERVIEW
7. RECOMMENDATIONS
______________Q&A and Closure______________
Revisiting and reconfirming the IDT Revisiting and reconfirming the IDT Strategic Plan as submitted to parliamentStrategic Plan as submitted to parliament
The IDTThe IDTThe IDTThe IDT
PURPOSE: To support and add value to the national development agenda. We do that by deploying our resources in the initiation and delivery of innovative and sustainable development programmes, which make a measurable difference in the levels of poverty and underdevelopment.VISION: “… to be the leading knowledge-based development agency” MISSION: “The IDT, together with strategic partners, will enable poor communities to access resources, recognise and unlock their own potential and continuously improve their quality of life”
PURPOSE: To support and add value to the national development agenda. We do that by deploying our resources in the initiation and delivery of innovative and sustainable development programmes, which make a measurable difference in the levels of poverty and underdevelopment.VISION: “… to be the leading knowledge-based development agency” MISSION: “The IDT, together with strategic partners, will enable poor communities to access resources, recognise and unlock their own potential and continuously improve their quality of life”
OUR GOALS FOR THE MTEF...OUR GOALS FOR THE MTEF...
Contribute to the realisation of the SONA on the character and content of the state which is defined as an “administration…that …knows where people live, …understand their needs, and respond faster.”Advancing the social policy objectives through the implementation of Advancing the social policy objectives through the implementation of a diverse range of programmes across national departments and all a diverse range of programmes across national departments and all spheres of government.spheres of government.Contribute to organisational sustainability and ensure 10Contribute to organisational sustainability and ensure 10thth unqualified unqualified audit.audit.
Contribute to the realisation of the SONA on the character and content of the state which is defined as an “administration…that …knows where people live, …understand their needs, and respond faster.”Advancing the social policy objectives through the implementation of Advancing the social policy objectives through the implementation of a diverse range of programmes across national departments and all a diverse range of programmes across national departments and all spheres of government.spheres of government.Contribute to organisational sustainability and ensure 10Contribute to organisational sustainability and ensure 10thth unqualified unqualified audit.audit.
OUR GOALS FOR THE 2011/12, OUR GOALS FOR THE 2011/12, 2012/132012/13, 2013/14 FINANCIAL YEARS, 2013/14 FINANCIAL YEARS...OUR GOALS FOR THE 2011/12, OUR GOALS FOR THE 2011/12, 2012/132012/13, 2013/14 FINANCIAL YEARS, 2013/14 FINANCIAL YEARS...
STRATEGIC STRATEGIC GOALSGOALS
STRATEGIC STRATEGIC GOAL GOAL STATEMENTSTATEMENT
STRATEGIC STRATEGIC OBJECTIVESOBJECTIVES
OBJECTIVE OBJECTIVE STATEMENTSTATEMENT
WEIGHTWEIGHT
Sustainable Development
The implementation of targeted and people-centred interventions for sustainable development in marginalised and impoverished communities
Empowered communities
To build empowered and cohesive communities through the delivery of integrated social infrastructure with particular emphasis on rural areas
15%
Integrated Social Infrastructure
The effective delivery of integrated developmental social infrastructure in marginalised communities
50%
STRATEGIC STRATEGIC GOALSGOALS
STRATEGIC GOAL STRATEGIC GOAL STATEMENTSTATEMENT
STRATEGIC STRATEGIC OBJECTIVESOBJECTIVES
OBJECTIVE OBJECTIVE STATEMENTSTATEMENT
WEIGHTWEIGHT
Effective and Efficient Administration
To ensure that the IDT is an efficient, effective and compliant public entity and development agency
Effective, Efficient and compliant Administration
To ensure excellence in delivery
20%
Transformed IDT
To plan and implement the transition of the IDT from the current state to a transformed ideal state
15%
OUR GOALS FOR THE 2011/12, OUR GOALS FOR THE 2011/12, 2012/132012/13, 2013/14 FINANCIAL YEARS..., 2013/14 FINANCIAL YEARS...OUR GOALS FOR THE 2011/12, OUR GOALS FOR THE 2011/12, 2012/132012/13, 2013/14 FINANCIAL YEARS..., 2013/14 FINANCIAL YEARS...
33rdrd Quarter Financial Performance Trends Quarter Financial Performance Trends33rdrd Quarter Financial Performance Trends Quarter Financial Performance Trends
1 635
2 251
345 442 000
598 457 000
881 987 000
1 215 471 000
1 509 817 000
1 825 579 000
2 096 343 000
2 495 705 000
2 993 654 000
0
500 000 000
1 000 000 000
1 500 000 000
2 000 000 000
2 500 000 000
3 000 000 000
3 500 000 000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar TOTAL
2009/10
2010/11
2011/12
Expenditure per programme type: Expenditure per programme type: 33rdrd Quarter 2011/12 Quarter 2011/12Expenditure per programme type: Expenditure per programme type: 33rdrd Quarter 2011/12 Quarter 2011/12
Environmental Intervention
Food Security
Health Care & Fac.
Justice Fac.
Other
Poverty Relief EPWP
Sanitation
School Building
Sports, Arts & Culture
Water & Sanitation Welfare Support & Fac.
Improved alignment with government Improved alignment with government priority outcome areaspriority outcome areasImproved alignment with government Improved alignment with government priority outcome areaspriority outcome areas
Government Priority AreasSocial Development
(R'000)Infrastructure
(R'000)Total
(R'000) % Cohesive, caring and sustainable communities 3 708 110 144 113 852 4 YEconomic development, jobs and livelihoods 151 086 48 713 199 799 7 FEducation, human resources and skills development 5 295 1 741 921 1 747 216 58 &Effective public service, democratic institutions and the developmental state 3 122 3 122 0 @Fight against crime and corruption 365 809 365 809 12 p
Health 338 344 115 344 453 12 hRural Development, Land & Agrarian Reform and Food Security 56 958 30 194 87 152 3 KSustainable resource management and use 18 613 87 079 105 692 4 P
Other 18 354 8 205 26 559 1 Total 257 474 2 736 180 2 993 654 100
Programme Management: Programme Management: Selected issuesSelected issues
www.ikhwezifarms.co.za
PROGRAMMES OUTLAYPROGRAMMES OUTLAY
Some policy level reflectionsSome policy level reflectionsSome policy level reflectionsSome policy level reflections
Infrastructure planning must be integrated with IDP’s and provincial plansThe current invoice based transfers is working to the detriment of the IDT and service providers, should reconsider tranche type paymentsFunding for the costs of social facilitation so as to contribute to integrated outcomes based interventionsProcurement and or recruitment plans as well as maintenance plans are criticalCommunity involvement in identification, planning, implementation, and maintenance of infrastructure programmes critical for sustainable developmentCreate lessons learnt and linkages between NSS, CRDP, Veterans
CORPORATE GOVERNANCECORPORATE GOVERNANCE
Staff EstablishmentStaff EstablishmentStaff EstablishmentStaff Establishment
Termination Reason Total
Contract
Expired 24
Death 1
Ill Health 2
Resignation 19
Grand Total 46
2525
Last Year this time
Head Office Functional Structure: National Treasury Business Case August 2011Head Office Functional Structure: National Treasury Business Case August 2011
A functional design was proposed that best addressed the design principles and was presented in the Business Case submitted to National Treasury in August 2011
Functional structure as presented in National Treasury Business Case
Recommended “To-Be” Structure of New IDT:Key Regional Functions mapped into Positions
Implications
Implications
■ Regional teams operate as flat teams that mirror Operations Support at H.O.
■ Main team resides at regional office while programme funded teams on the ground are able to grow based on programme growth
■ Each region has support functions that are specific to its size/complexity of operations
■ Regional teams operate as flat teams that mirror Operations Support at H.O.
■ Main team resides at regional office while programme funded teams on the ground are able to grow based on programme growth
■ Each region has support functions that are specific to its size/complexity of operations
v
PMU Team at Regional Office
Strategy & Partnership Manager
Strategy & Partnership Manager
Programme Manager:
Institutional Support
Programme Manager:
Institutional Support
IT
SCM
Human Capital
Support Functions
Operations Manager
Operations Manager
Admin & Finance Manager
Admin & Finance Manager
Core Operations
Support Functions
• Strategy development• CRM• Resource Mobilisation• Political Liaison• Business Development• etc
Programme Manager:
Programme Delivery
Programme Manager:
Programme Delivery
Programme Manager:
Community Empowerment
Programme Manager:
Community Empowerment
PMU at Regional Office deploys teams to Hubs
and Programmes
Team Leader
The value chain was then unpacked to a positional structure at regional level
Project Accounting
Contract Management
Gender and racial spreadGender and racial spreadGender and racial spreadGender and racial spread
2012/13 2012/13 CORPORATE PLANCORPORATE PLAN
Rationale for TransformationRationale for Transformation
“The defining feature of this administration will be that it knows where people live, understands their needs, and responds faster”
President Zuma 2010
South Africa ranks 110th in the UN Human Development Index, just below Krygystan. SA’s gap between rich and poor i.e. Gini coefficient of 0.68 is the highest in the world, overtaking Brazil
DHSDAFF DoH
CoGTA DBE DWCPD
DRDLR DWA DPW
Tourism
DOL
DSD
DOTDED DTI DEA
Int Donors
SA Donors National
CSIRegional
CSI
Donors/DFI’s Private Sector
Development Funding
Development Gap
Community Community Community CommunityCommunity Development
NGO Sector
National DFI’s
ProvDFI’s
Space exists for single nation wide agency to bridge gap between government and communities by facilitating, coordinating and integrating holistic approach to development, focused on empowering people and supporting their institutions to enable communities to access and leverage programmes & services
GovernmentDevelopment Gap
Given Gap and Journey Map the IDT in the Medium Term Shall…Given Gap and Journey Map the IDT in the Medium Term Shall…
Be a development agency that offers programme Management, Institutional Support, and Community Mobilisaton as well as development advisory services to all spheres of the public service as well as other development partners. Emphasis is on the eradication of chronic intergenerational poverty, especially among the rural poor.
Maintain its VISION of being “the leading knowledge based development agency”
Readjust its MISSION to “The IDT, together with strategic partners,will enable poor communities to recognise and unlock their own potential for sustainable development”.
Be a development agency that offers programme Management, Institutional Support, and Community Mobilisaton as well as development advisory services to all spheres of the public service as well as other development partners. Emphasis is on the eradication of chronic intergenerational poverty, especially among the rural poor.
Maintain its VISION of being “the leading knowledge based development agency”
Readjust its MISSION to “The IDT, together with strategic partners,will enable poor communities to recognise and unlock their own potential for sustainable development”.
Given Gap and Journey Map the IDT in Given Gap and Journey Map the IDT in the Medium Term Shall…the Medium Term Shall…Given Gap and Journey Map the IDT in Given Gap and Journey Map the IDT in the Medium Term Shall…the Medium Term Shall…
Maintain its values of : People Centred, Having Integrity, Professionalism, Accountability and being VisionaryPrepare Communities to receive, own, manage and sustain their own development through:
delivering Social Infrastructure where Social Infrastructure is seen as all the necessary measures, facilities and networks required for sustainable development in such communities
Maintain its values of : People Centred, Having Integrity, Professionalism, Accountability and being VisionaryPrepare Communities to receive, own, manage and sustain their own development through:
delivering Social Infrastructure where Social Infrastructure is seen as all the necessary measures, facilities and networks required for sustainable development in such communities
IDT’s response to the development gapIDT’s response to the development gap
Shares Knowledge…
• Stakeholder management • Resource mobilization
Mobilise Communities…
• Sustainable livelihoods• Asset based approaches
BuildPartnerships…
Support Institutions…
Delivers Programmes…
• Action research • Learning & innovation
• Policy/planning support• Technical expertise
• Programme planning • Delivery management
What we doWhat we do
Key
Fo
cus
Are
asC
entr
es o
f E
xcel
len
ce
Head OfficeHead Office• Coordinates adaptive strategy; by facilitating regular best practice Coordinates adaptive strategy; by facilitating regular best practice
sharing and dissemination of learningsharing and dissemination of learning• Fosters supportive corporation between regions; by providing Fosters supportive corporation between regions; by providing
benchmarking, M&E, impact Management and Knowledge benchmarking, M&E, impact Management and Knowledge Management, leading to innovative policy recommendations that Management, leading to innovative policy recommendations that ensure consistently improving deliveryensure consistently improving delivery
• Secures national/international support, resources and cooperationSecures national/international support, resources and cooperation
GP FSEC
WC NWNC
MPU
LIM
KZN
HO
• Strategy: Shift to community development• Services: Develop communities, support
institutions and deliver programmes• Structure: Decentralised regions set
strategy, implement local development, coordinated by HO
“Butterfly”Transformation
Scenario
High-level service value chainHigh-level service value chainHigh-level service value chainHigh-level service value chain
PARTNERSHIP WITH COMMUNITIES
PARTNERSHIP WITH LOCAL
GOVERNMENT
PARTNERSHIP WITH GOVERNMENT,
FUNDERS, SUPPLIERS AND COMMUNITIES
1
2
3
30%
40%
30%
FUNDINGFUNDING
Rm
IDT Historical Financial Performance IDT Historical Financial Performance
Historically the IDT has been operating unsustainably on a deficit budget Historically the IDT has been operating unsustainably on a deficit budget since 2006, using the declining investment fund to top up the shortfallsince 2006, using the declining investment fund to top up the shortfall
R-243m
R366m
R81m
R42m
The IDT’s revenue in 2010/11 of around R123m (management fees of around R81m and investment income of about R42m) is not enough to offset expenditure of around R366m; leaving a loss of +/-R243m
What is the financial plan?What is the financial plan?
The transformation of the IDT requires a recapitalisation by Government in order to invest in the development of communities
RmActual
2010/112011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Total
Programme Value R 2,272 R 4,096 R 4,781 R 5,615 R 6,348 R 7,263 R 7,989 R38,364
IDT Revenue Generation
R 124 R 174 R 206 R 247 R 292 R 340 R 373 R1,757
Effective Management Fee Rate
3.59% 3.76% 4.12% 4.32% 4.5% 4.62% 4.62% 4.2%
IDT Overhead Expenditure
R 348 R 378 R 398 R 430 R 462 R 493 R 537 R 3,046
Initiatives R 19 R 120 R170 R 200 R 215 R 220 R 225 R 1,169
Deficit (R 243) (R 324) (R 362) (R 383) (R 385) (R 373) (R 389) (R 2,459)
Funding Required - R 150 R 300 R 300 R 400 R 400 R 400 R1,950
The IDT will implement a cumulative R38.36bn of programmes on behalf of Government for communities over the 2011 – 2017 period. To do this requires a forecasted recapitalisation of R1.95bn
Funding streamsFunding streamsFunding streamsFunding streams
Treasury recapitalisation and:Management fees to be increased significantly to an average of between 4.2 – 5%IDT’s role legislated to ensure an allocation of fundsAccess to donor funding via the TAU and other sPublic/Private PartnershipsAccess to other sources of funding such as a revised delivery mechanism of the National Lotteries Distribution Funds
Treasury recapitalisation and:Management fees to be increased significantly to an average of between 4.2 – 5%IDT’s role legislated to ensure an allocation of fundsAccess to donor funding via the TAU and other sPublic/Private PartnershipsAccess to other sources of funding such as a revised delivery mechanism of the National Lotteries Distribution Funds
Funding streamsFunding streamsFunding streamsFunding streams
However since there is currently no treasury allocations approved survivalist scenario….
Scenarios for 2012/13Scenarios for 2012/13
Implications of the scenarioImplications of the scenario
The IDT will have about R2million in the 2014/15 financial year assuming it raises the business at or above the projected management feesGoing concern status will change and AG may have to comment on itTo get there about 130 employees may have to be retrenched over the next two yearsDrastic reduction in resources invested in community development Major downscaling of the community driven development orientation component in the programme delivery processesDropping of the institutional support and community development oriented targets for example support to civil society organisations such as SAWID, Local Authorities and Community Based Organisations, Downscaling of the measures that seek to position the IDT as the leading knowledge base development agency for example the Development Week and other knowledge generation and sharing initiatives.
The IDT will have about R2million in the 2014/15 financial year assuming it raises the business at or above the projected management feesGoing concern status will change and AG may have to comment on itTo get there about 130 employees may have to be retrenched over the next two yearsDrastic reduction in resources invested in community development Major downscaling of the community driven development orientation component in the programme delivery processesDropping of the institutional support and community development oriented targets for example support to civil society organisations such as SAWID, Local Authorities and Community Based Organisations, Downscaling of the measures that seek to position the IDT as the leading knowledge base development agency for example the Development Week and other knowledge generation and sharing initiatives.
Implications on Building Empowered and Cohesive CommunitiesImplications on Building Empowered and Cohesive Communities
Implications on Building Empowered and Cohesive CommunitiesImplications on Building Empowered and Cohesive Communities
Implications on integrated social Implications on integrated social infrastructure deliveryinfrastructure deliveryImplications on integrated social Implications on integrated social infrastructure deliveryinfrastructure delivery
Implications on integrated Social InfrastructureImplications on integrated Social Infrastructure
Selected Transformation Risk MatrixSelected Transformation Risk MatrixSelected Transformation Risk MatrixSelected Transformation Risk Matrix
Category of Risk
Nature Total Gross Risk
Risk Mitigation Total Net Risk (after mitigation)
Regulatory Risk Undefined/ unfunded mandate leaves IDT in Limbo
12 Moderate Clear legislative mandate and sustain long term funding
6 Low
Change from schedule 2 to 3 may reduce rapid response capability
12 Moderate Balance of short term Government reporting cycle with long-term variability of community engagement
9 Moderate
Communication Risks
Client base and partners negatively affected by transformation
6 Low Customer satisfaction survey and securing of delivery agreements
4 Low
Staff insecurity 16 High Essential to reassure staff of IDT continuity
4 Low
Business Risks Loss of skills, talent, experiences and business acumen
16 High Ensure skills identification and retention plan in place
4 Low
Failure to deliver on current projects as project portfolio grows during transformation
10 Moderate Strengthen M&E systems and selective capping of projects
2 Negligible
Selected Transformation Risk MatrixSelected Transformation Risk Matrix
Category of Risk
Nature Total Gross Risk Risk Mitigation Total Net Risk (after
mitigation)
Financial Risks
Lack of long-term funding to match long-term community programmes
12 Moderate Long-term strategy within legislated mandate & align to national objectives
1 Negligible
Unsustainable financial structures and funding models remain
15 High Benchmarked and optimised financial structure
4 Low
Legal Risks Continuity of contractual obligations of new corporate entity maybe negatively affected
4 Negligible Follow clear supply chain processes and transform all contracts to new entity
1 Negligible
LEGISLATIVE ANALYSIS
The BriefThe Brief
The IDT has submitted its Business Case to the DPW and the National TreasuryIn the Business Case certain mandates are given to the IDT, which include the delivery of a revised social infrastructure with the service offerings of (1) Community empowerment, (2) Programme management and (3) Institutional capacity building The Business Case Document also identified the development gaps in South Africa leaning on the Review on DFI’s as undertaken by the National TreasuryIn addressing these gaps it was argued that an enabling legislation would be required to enable the IDT to functionIt is the Minister’s expectation that the IDT would provide a rationale for the need for such legislation so that the policy unit can evaluate the need and process the policy outputs
The IDT has submitted its Business Case to the DPW and the National TreasuryIn the Business Case certain mandates are given to the IDT, which include the delivery of a revised social infrastructure with the service offerings of (1) Community empowerment, (2) Programme management and (3) Institutional capacity building The Business Case Document also identified the development gaps in South Africa leaning on the Review on DFI’s as undertaken by the National TreasuryIn addressing these gaps it was argued that an enabling legislation would be required to enable the IDT to functionIt is the Minister’s expectation that the IDT would provide a rationale for the need for such legislation so that the policy unit can evaluate the need and process the policy outputs
The HistoryThe HistoryPhase I: “Support Equity” – The ushering in of a new South Africa was characterised as a divided society which required an equitable redistribution of the country’s wealth (amongst others). Consequently, the IDT’s early history concentrated on grant funding development actors as the Government focused on establishing an equitable policy framework. During the period, 1990 – 1998/9 the IDT expended R2.8bn on 8, 800 projects country-wide.Phase II: “Service Delivery” – Having laid the policy foundations for a new South Africa the emphasis on the rights based approaches created an increased demand for services. In March 1997, Cabinet endorsed a recommendation of a Cabinet Advisory Committee that, inter alia, "The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organisation, an independent agency or a funding agency." Thus with the promulgation of the Public Finance Management Act (PFMA) in 1999 (Act No. 1 of 1999 as amended in 2010) the IDT was listed as a Schedule 2 Public Entity. At the time the organisation’s main fund stood at R1.3bn and the IDT was deemed financially sustainable along with other state owned entities (SOEs) listed as Schedule 2.
Phase I: “Support Equity” – The ushering in of a new South Africa was characterised as a divided society which required an equitable redistribution of the country’s wealth (amongst others). Consequently, the IDT’s early history concentrated on grant funding development actors as the Government focused on establishing an equitable policy framework. During the period, 1990 – 1998/9 the IDT expended R2.8bn on 8, 800 projects country-wide.Phase II: “Service Delivery” – Having laid the policy foundations for a new South Africa the emphasis on the rights based approaches created an increased demand for services. In March 1997, Cabinet endorsed a recommendation of a Cabinet Advisory Committee that, inter alia, "The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organisation, an independent agency or a funding agency." Thus with the promulgation of the Public Finance Management Act (PFMA) in 1999 (Act No. 1 of 1999 as amended in 2010) the IDT was listed as a Schedule 2 Public Entity. At the time the organisation’s main fund stood at R1.3bn and the IDT was deemed financially sustainable along with other state owned entities (SOEs) listed as Schedule 2.
The HistoryThe History
Phase III: “Infrastructure Provision” - In recent years, taking advantage of the infrastructure focus the IDT has played an instrumental role as Government’s implementing agency for infrastructure provision in for the social sector (in the main), helping lay the platform for future growth. The IDT’s programme portfolio grew from R260m in 1998/99 to R2.5bn in 2010/11 and is projected at over R4bn in 2011/12 and has been effective in creating infrastructure oriented models of poverty eradication mainly targeting rural, marginalised and vulnerable communities.
Phase III: “Infrastructure Provision” - In recent years, taking advantage of the infrastructure focus the IDT has played an instrumental role as Government’s implementing agency for infrastructure provision in for the social sector (in the main), helping lay the platform for future growth. The IDT’s programme portfolio grew from R260m in 1998/99 to R2.5bn in 2010/11 and is projected at over R4bn in 2011/12 and has been effective in creating infrastructure oriented models of poverty eradication mainly targeting rural, marginalised and vulnerable communities.
Current Legislative MandateCurrent Legislative Mandate
The Constitution and the RDPThe Constitution and the Reconstruction and Development Programme
are the founding documents for an all encompassing social contract, against which the IDT contextualises its development mandate and objectives.
Integration, coordination and a sustainable programme among all three spheres of government which would be delivered in partnership with civil society, business and state owned entities;
People centeredness;Fostering of economic expansion and greater development as a
way of ending endemic violence; and
The Constitution and the RDPThe Constitution and the Reconstruction and Development Programme
are the founding documents for an all encompassing social contract, against which the IDT contextualises its development mandate and objectives.
Integration, coordination and a sustainable programme among all three spheres of government which would be delivered in partnership with civil society, business and state owned entities;
People centeredness;Fostering of economic expansion and greater development as a
way of ending endemic violence; and
Supportive International CommitmentsSupportive International Commitments
International Covenant on Economic, Social and Cultural Rights remains relevant as advanced by resolution 41/128 of 4 December 1986 “on the Right to Development”mutually reinforcing goals and objectives of global agreements and outcomes of major United Nations meetings and conferences including the World Summit for Social Development (1995, Copenhagen), the World Conference on Women (1995, Beijing), the Millennium Summit (2000, New York), and the World Summit for Sustainable Development (Johannesburg, 2002), Millennium Development Goals (MDGs), African Union’s (AU) New Partnership for Africa’s Development (NEPAD); SADC Protocol on Gender and Development: the principles and objectives of the African Women’s Decade; and the Southern African Development Community’s (SADC) Regional Indicative Strategic Plan (RISDP) which also identify and explore communities of practice as a model for collective action.
International Covenant on Economic, Social and Cultural Rights remains relevant as advanced by resolution 41/128 of 4 December 1986 “on the Right to Development”mutually reinforcing goals and objectives of global agreements and outcomes of major United Nations meetings and conferences including the World Summit for Social Development (1995, Copenhagen), the World Conference on Women (1995, Beijing), the Millennium Summit (2000, New York), and the World Summit for Sustainable Development (Johannesburg, 2002), Millennium Development Goals (MDGs), African Union’s (AU) New Partnership for Africa’s Development (NEPAD); SADC Protocol on Gender and Development: the principles and objectives of the African Women’s Decade; and the Southern African Development Community’s (SADC) Regional Indicative Strategic Plan (RISDP) which also identify and explore communities of practice as a model for collective action.
Current Legislative and Policy ImperativesCurrent Legislative and Policy Imperatives
South Africa’s legislative and policy framework takes into cognisance “the fact that the struggle to eradicate poverty and underdevelopment in our own country is fundamental to the achievement of our own national goal to build a caring and people centred society”The Ten-Year Review of Governance which was reemphasised by the ‘Towards a Fifteen Year Review’ report showed that social infrastructure backlogs still existed, and that unacceptably high-levels of poverty remained in the countryThe South African Government has reaffirmed its position with respect to prioritising holistic development and has restated its ongoing commitment to being a developmental state. Implicit in the adoption of the developmental state paradigm is the long term desire to reconfigure state-society-capital relations towards certain outcomes which locate the state at the centre of societal transformation.
South Africa’s legislative and policy framework takes into cognisance “the fact that the struggle to eradicate poverty and underdevelopment in our own country is fundamental to the achievement of our own national goal to build a caring and people centred society”The Ten-Year Review of Governance which was reemphasised by the ‘Towards a Fifteen Year Review’ report showed that social infrastructure backlogs still existed, and that unacceptably high-levels of poverty remained in the countryThe South African Government has reaffirmed its position with respect to prioritising holistic development and has restated its ongoing commitment to being a developmental state. Implicit in the adoption of the developmental state paradigm is the long term desire to reconfigure state-society-capital relations towards certain outcomes which locate the state at the centre of societal transformation.
Current Legislative and Policy ImperativesCurrent Legislative and Policy Imperatives
Implicit in the adoption of this terminology is the pursuance of selected packages of policies which are directed at steering economic and social activity towards long term economic and social outcomes. In the medium term these are expressed in government’s Medium-Term Strategic Framework (MTSF) as interspersed by the annually reviewed cluster based Programme of Action (POA). The embedding of performance monitoring and evaluation into government’s planning approach, right down to a quarterly cycle, introduces greater agility, through ensuring that adaptation of plans in response to changes in the environment and past performance (or underperformance) takes place at regular intervals.
Implicit in the adoption of this terminology is the pursuance of selected packages of policies which are directed at steering economic and social activity towards long term economic and social outcomes. In the medium term these are expressed in government’s Medium-Term Strategic Framework (MTSF) as interspersed by the annually reviewed cluster based Programme of Action (POA). The embedding of performance monitoring and evaluation into government’s planning approach, right down to a quarterly cycle, introduces greater agility, through ensuring that adaptation of plans in response to changes in the environment and past performance (or underperformance) takes place at regular intervals.
Historic Refinements on mandateHistoric Refinements on mandate
Presidential Decision 2 February 1990 establishes IDT, supported by July 1990 Cabinet decision and Deed of Trust establish IDT on 14 August 1994
“It is in everybody's interest that a more acceptable and better balanced situation with regard to living and other standards should come about in South Africa with all possible speed…today’s Budget creates, by way of a transfer from the 1989-90 surplus, a fund specifically dedicated to the reduction of socio-economic backlogs in our country” Minister of Finance Barend du Plessis 14 March 1990
“R2 000 million…is to form the basis of a Trust to be administered outside the direct ambit of the Government…The Trust is to be managed by Mr Jan Steyn, who is well known for his leadership in the field of socio-economic development” President F W de Klerk 16 March 1990
Presidential Decision 2 February 1990 establishes IDT, supported by July 1990 Cabinet decision and Deed of Trust establish IDT on 14 August 1994
“It is in everybody's interest that a more acceptable and better balanced situation with regard to living and other standards should come about in South Africa with all possible speed…today’s Budget creates, by way of a transfer from the 1989-90 surplus, a fund specifically dedicated to the reduction of socio-economic backlogs in our country” Minister of Finance Barend du Plessis 14 March 1990
“R2 000 million…is to form the basis of a Trust to be administered outside the direct ambit of the Government…The Trust is to be managed by Mr Jan Steyn, who is well known for his leadership in the field of socio-economic development” President F W de Klerk 16 March 1990
Historic Refinements on mandateHistoric Refinements on mandateHistoric Refinements on mandateHistoric Refinements on mandate
Corporate Form Options and Corporate Form Options and analysisanalysis
Corporate Form Options and Corporate Form Options and analysisanalysis
The TrustThe Trust
If It isn't broken why fix it?If It isn't broken why fix it?
The TrustThe Trust
If It isn't broken why fix it?If It isn't broken why fix it?
AdvantagesAdvantages
A Trust is a relatively simpler form of legal entity, which has very fewIn the case of the IDT, the beneficiaries are determinable through the description of its primary goal, which is to use its resources together with strategic partners, in ways which in the opinion of the Trustees will best serve to enable poor communities in the Republic of South Africa to access resources and recognise and unlock their own potential, so as to continuously improve their quality of life.The IDT is already registered with the Master of the High Court as a trust under Registration No. IT669/91. In relation to its governance structure, the IDT is already listed as a major public entity under Schedule 2 to the PFMA and is governed by Treasury Regulations
A Trust is a relatively simpler form of legal entity, which has very fewIn the case of the IDT, the beneficiaries are determinable through the description of its primary goal, which is to use its resources together with strategic partners, in ways which in the opinion of the Trustees will best serve to enable poor communities in the Republic of South Africa to access resources and recognise and unlock their own potential, so as to continuously improve their quality of life.The IDT is already registered with the Master of the High Court as a trust under Registration No. IT669/91. In relation to its governance structure, the IDT is already listed as a major public entity under Schedule 2 to the PFMA and is governed by Treasury Regulations
DisadvantagesDisadvantagesDisadvantagesDisadvantages
“Classification Framework and Corporate Forms”, the National Treasury lists amongst what are termed “Prohibited Corporate Forms”, Trusts established in terms of the Trust Property Control Act. “Independence” of Trustees --- Deed and the shareholders compact, all of which are further subject to the PFMA.Consequently, the National Treasury concludes, inter alia, that “given the logical moves by the Government to make the IDT more accountable and align its activities with the national development agenda, the continuation of the IDT’s legal status as a trust is an anachronism.”
“Classification Framework and Corporate Forms”, the National Treasury lists amongst what are termed “Prohibited Corporate Forms”, Trusts established in terms of the Trust Property Control Act. “Independence” of Trustees --- Deed and the shareholders compact, all of which are further subject to the PFMA.Consequently, the National Treasury concludes, inter alia, that “given the logical moves by the Government to make the IDT more accountable and align its activities with the national development agenda, the continuation of the IDT’s legal status as a trust is an anachronism.”
ConclusionsConclusionsConclusionsConclusions
The IDT can in the short term maintain its Trust Status but in the long run this must be shed with no implications on the name
The IDT can in the short term maintain its Trust Status but in the long run this must be shed with no implications on the name
Non Profit CompanyNon Profit Company
To the benefit of society…To the benefit of society…
Non Profit CompanyNon Profit Company
To the benefit of society…To the benefit of society…
AdvantagesAdvantagesAdvantagesAdvantages
The New Act introduces new terminology and categorises companies as non profit and profit companies. To a large extent the rules on how a company must state and use its name and what must be included as part of the name remain the same. As an example, a non-profit company must have “NPC” as part of its name. Companies will still have to describe themselves with reference to the category they fall into.Whether the IDT proceeds with a NPC or remain a Trust, it makes no difference from a tax perspective provided that the entity complies with the provisions of the Non Profit Organisation Act 71 of 1997 read with the Income Tax Act 58 of 1962 to qualify for tax exemption in terms of the Income Tax Act.
The New Act introduces new terminology and categorises companies as non profit and profit companies. To a large extent the rules on how a company must state and use its name and what must be included as part of the name remain the same. As an example, a non-profit company must have “NPC” as part of its name. Companies will still have to describe themselves with reference to the category they fall into.Whether the IDT proceeds with a NPC or remain a Trust, it makes no difference from a tax perspective provided that the entity complies with the provisions of the Non Profit Organisation Act 71 of 1997 read with the Income Tax Act 58 of 1962 to qualify for tax exemption in terms of the Income Tax Act.
Disadvantages and ConclusionsDisadvantages and ConclusionsDisadvantages and ConclusionsDisadvantages and Conclusions
The fact that it may now be much simpler to form a Non-Profit Company may not necessarily be an issue in the bigger scheme of things. This is more so, when one considers that there are no real benefits that the IDT would derive from such a legal structure, which it could not derive from its current legal structure as a trust. The fact that there would be directors, instead of trustees does not give the IDT any added benefit. The PFMA still prevails over the New Companies Act.
The fact that it may now be much simpler to form a Non-Profit Company may not necessarily be an issue in the bigger scheme of things. This is more so, when one considers that there are no real benefits that the IDT would derive from such a legal structure, which it could not derive from its current legal structure as a trust. The fact that there would be directors, instead of trustees does not give the IDT any added benefit. The PFMA still prevails over the New Companies Act.
Schedule 2 Public with Schedule 2 Public with Enabling Enabling
To the benefit of the entire public service…To the benefit of the entire public service…
Schedule 2 Public with Schedule 2 Public with Enabling Enabling
To the benefit of the entire public service…To the benefit of the entire public service…
AdvantagesAdvantagesAdvantagesAdvantages
The process of creating the entity in question becomes a result of a comprehensive consultation process; Once a bill becomes an act of Parliament, its provisions cannot be amended easily or frequently, as would be the case with an agreement such as the Deed or memorandum of incorporation;Even if the enabling legislation were to be amended, this should not always affect the main object of the ActThe enabling legislation should at least create a high degree of certainty with regards to the relationship between the Schedule 2 public entity and its line ministry as well as other Government departments and other public entities, including the applicable funding mechanism.
The process of creating the entity in question becomes a result of a comprehensive consultation process; Once a bill becomes an act of Parliament, its provisions cannot be amended easily or frequently, as would be the case with an agreement such as the Deed or memorandum of incorporation;Even if the enabling legislation were to be amended, this should not always affect the main object of the ActThe enabling legislation should at least create a high degree of certainty with regards to the relationship between the Schedule 2 public entity and its line ministry as well as other Government departments and other public entities, including the applicable funding mechanism.
DisadvantagesDisadvantagesDisadvantagesDisadvantages
Schedule 2 public entities are largely required to be self-funding entities. They may still be funded from the fiscus by means of grants but they are expected to raise their own funding.
The process of establishing a Schedule 2 public entity governed by its own enabling legislation can be rather protracted,
Furthermore, the IDT should take note of the National Treasury’s cautionary remarks against the IDT trying to keep its Schedule 2 PFMA status.
Schedule 2 public entities are largely required to be self-funding entities. They may still be funded from the fiscus by means of grants but they are expected to raise their own funding.
The process of establishing a Schedule 2 public entity governed by its own enabling legislation can be rather protracted,
Furthermore, the IDT should take note of the National Treasury’s cautionary remarks against the IDT trying to keep its Schedule 2 PFMA status.
ConclusionsConclusions
The IDT given the proposed mandate, scope and agility could be secured if we were to opt for this with reporting lines to transversal Department such as Public Works, DPSA, Treasury and Presidency
The IDT given the proposed mandate, scope and agility could be secured if we were to opt for this with reporting lines to transversal Department such as Public Works, DPSA, Treasury and Presidency
Legislative ProcessLegislative Process
Cabinet MemoDiscussion document, known as the green paper be drafted by the line ministry White PaperDraft Bill Furthermore, a memorandum explaining the objects of the proposed legislation is required from the Minister.Joint Tagging Mechanism (“JTM”) for classification in terms of the rules of Parliament. (sec 75 & 76)
Cabinet MemoDiscussion document, known as the green paper be drafted by the line ministry White PaperDraft Bill Furthermore, a memorandum explaining the objects of the proposed legislation is required from the Minister.Joint Tagging Mechanism (“JTM”) for classification in terms of the rules of Parliament. (sec 75 & 76)
Schedule 3 Public with Enabling Schedule 3 Public with Enabling To the benefit of the entire To the benefit of the entire
public service…public service…
Schedule 3 Public with Enabling Schedule 3 Public with Enabling To the benefit of the entire To the benefit of the entire
public service…public service…
Advantages and DisadvantagesAdvantages and DisadvantagesAdvantages and DisadvantagesAdvantages and DisadvantagesThe possible advantages and disadvantages of a Schedule 3 public entity are similar to those of a Schedule 2 public entity. Please also refer to the discussion of the legislative process. The main differentiating factor between Schedule 2 and Schedule 3 public entities is the nature or type of functions these public entities perform and the financing mechanisms. We briefly discuss some of the examples of these entities below, namely IDC, DBSA, SITA, and the South African Civil Aviation Authority. These entities have been selected at random, simply to illustrate the nature of Schedule 2 and Schedule 3 public entities, including their functions, funding mechanism and line ministries respectively. In the case of the DBSA, the aim is also to illustrate the point about IDT’s cross-cutting mandate.
The possible advantages and disadvantages of a Schedule 3 public entity are similar to those of a Schedule 2 public entity. Please also refer to the discussion of the legislative process. The main differentiating factor between Schedule 2 and Schedule 3 public entities is the nature or type of functions these public entities perform and the financing mechanisms. We briefly discuss some of the examples of these entities below, namely IDC, DBSA, SITA, and the South African Civil Aviation Authority. These entities have been selected at random, simply to illustrate the nature of Schedule 2 and Schedule 3 public entities, including their functions, funding mechanism and line ministries respectively. In the case of the DBSA, the aim is also to illustrate the point about IDT’s cross-cutting mandate.
Our recommendationOur recommendation
By virtue of the type of services offered by the IDT, vis-a-vis schedule 3 public entities, which mainly focus on regulatory and research work, we recommend that the IDT be listed as a schedule 2 public entity with its own enabling legislation. As already alluded to above, this means that should its Business Case be approved, of becoming a schedule 2 public entity with its own enabling legislation, it would then, in the main, be expected and required to finance its own operations. The Business case does address in crystal clear terms, how the IDT intends meeting this obligation.Consider 70/30 funding mechanisms as with the research institutions and bodies
By virtue of the type of services offered by the IDT, vis-a-vis schedule 3 public entities, which mainly focus on regulatory and research work, we recommend that the IDT be listed as a schedule 2 public entity with its own enabling legislation. As already alluded to above, this means that should its Business Case be approved, of becoming a schedule 2 public entity with its own enabling legislation, it would then, in the main, be expected and required to finance its own operations. The Business case does address in crystal clear terms, how the IDT intends meeting this obligation.Consider 70/30 funding mechanisms as with the research institutions and bodies
Stakeholder ConsultationStakeholder ConsultationStakeholder ConsultationStakeholder ConsultationStakeholder High-level Proposals
StrategyStrategy StructureStructure ScheduleSchedule Funding Funding source/modelssource/models
DPSA Community Empowerment and Infrastructure Programme Management
Maintain current structure with emphasis on Programme Management
Preferably 2 Management Fees at up to 10%
Treasury Infrastructure Programme Management
Downsize Pref 3 Management fees and Treasury allocations
Basic Education Revised Social Infrastructure Right Size Management Fees and Treasury
Health Project Management Develop technical consultancy on infrastructure
Treasury Allocations
Minister of Justice Maintain current strategy proposition and name
Improve client relations ? Treasury Allocations
Deputy Minister of Public Services and Administration
Strengthen support to institutions of governance and maintain CDW with consideration of integrating Veterans
? 2 Management Fees
Stakeholder ConsultationStakeholder ConsultationStakeholder High-level Proposals
StrategyStrategy StructureStructure ScheduleSchedule Funding source/modelsFunding source/models
Correctional Services Project Management Right Size Pref 2 Management Fees and Treasury
SANCO Civil Society and Local Government Empowerment
Local IDT offices and field workers
Treasury Allocations
Presidency Revised Social Infrastructure Delivery
Treasury Allocations
Social Development Community Empowerment
Maintain Current Structure with emphasis on Community Development
Pref 2 Treasury Allocations
PRC Revised Social Infrastructure
Right Size Consider 3 70/30 funds raised to treasury allocation
RecommendationsRecommendations
The Committee notes the business case and survivalist/sustainability scenariosThe Committee approves the tabling of the survivalist scenario (in the absence of funding) as the Annual Performance Plan and the Business Case Scenario as the Five Year Strategic Plan of the IDTThat the Committee supports the IDT’s quest to increase its management fees as it is a critical assumption scenarios, in line with the Minister’s approvalsThe Committee notes progress on the legislative and comparative analysis on the legislative mandate
The Committee notes the business case and survivalist/sustainability scenariosThe Committee approves the tabling of the survivalist scenario (in the absence of funding) as the Annual Performance Plan and the Business Case Scenario as the Five Year Strategic Plan of the IDTThat the Committee supports the IDT’s quest to increase its management fees as it is a critical assumption scenarios, in line with the Minister’s approvalsThe Committee notes progress on the legislative and comparative analysis on the legislative mandate