Presentation to The Social Development Portfolio Committee Parliament

1
Presentation to The Social Development
Portfolio CommitteeParliament

• Cape Town21 November 2007

2
STRUCTURE OF THE PRESENTATION

• Background (CEO)
• Performance against targets (CEO)
• Annual Financial Report (CFO)
• Report of the Auditor-General (CFO)
• Projects Report (DMD)
• Human Resources (CEO)
• Way Forward (CEO)
• 8. Questions and comments

3
BACKGROUND

• 1. Key sections of the Annual Report are
• The Overviews by the Minister Chairperson of the
  Board and the CEO
• Emphasis by the Minister and Chairperson of the
  Board included
• The NDA strengthens the second economy by
  providing grants to Civil Society Organisations
  (CSOs) and, through its capacity building
  programme, ensuring that CSOs are equipped with
  skills required to make them sustainable.
• Through the strategic goal of organisational
  transformation, much emphasis has been placed on
  governance issues and improving systems and
  processes.
• This resulted in the NDA receiving a clean,
  unqualified audit with no emphasis of matter from
  the Auditor-General a praiseworthy and pleasing
  achievement.
• Much needed stability and focus was brought to
  the NDA.
• The revision of the NDAs strategy and
  restructuring of the NDA presented challenges
  including 29 staff members taking voluntary
  severance packages.

4
BACKGROUND continued

• Despite the challenges faced, the NDA started to
  vigorously implement its five year strategic
  plan.
• This has positioned the NDA as a key and
  relevant contributor to the fight against
  poverty.
• Grant funding was undertaken through two
  approaches Requests for proposals and programme
  formulation.
• Funding of 95 projects for R110,97 million was
  approved by the Board and R49,5 million was
  disbursed during the year.
• A capacity building programme on which R25,7
  million will be spent over 2 years was
  introduced.
• The Boards term of office was drawing to a close
  and a new Board has been appointed.
• The Minister paid tribute to the Board members
  for the good work they had done in building the
  NDA.
• The Chairperson thanked the Minister for the
  confidence he had placed in the Board and for his
  unbridled support
• The Chairperson also paid tribute to his fellow
  Board members, the CEO and the staff.

5
POVERTY STATISTICS

• Levels of Poverty
• The current estimates of poverty by HSRC show
  that the proportion of people living in poverty
  in South Africa is as follows-
• Approximately 57 of individuals in South Africa
  were living below the poverty income line in
  2001, unchanged from 1996.
• This translates into 26m people being classified
  as poor.

6
POVERTY STATISTICS
Poverty Distribution by Province
7
PERFORMANCE AGAINST TARGETS

• STRATEGIC FOCUS FOR THE YEAR
• The strategic goals for the year were
• Organizational transformation
• Partnering with strategic stakeholders to
  accelerate the fight against poverty
• Mobilizing resources for community development,
• Empowering communities for sustainable
  development, and
• Increasing the communication of credible
  researched information
• The organizational transformation goal received
  the highest priority and focused on building a
  performance culture people competencies
  leadership development improving business
  processes and systems good corporate governance
  building brand credibility and confidence with
  our stakeholders.

8
PERFORMANCE AGAINST TARGETS continued

• ACHIEVEMENTS IN THE YEAR
• Developed and implemented a performance
  management system
• Restructured the organization in line with
  organizational goals and objectives
• Employed high calibre executives and implemented
  leadership development training programmes
• Conducted competency profiles for executives and
  senior management for the purpose of development
• Deployed a Workplace Skills Programme and
  published Quality of Work Life policies
• Implemented an integrated Enterprise Resource
  Planning system (ERP)
• Established professional corporate governance
  systems such as the internal audit, and legal and
  risk units
• Re-branded the organisation and implemented
  programmes of communications which improved the
• organisations credibility among our
  stakeholders and the public as a whole

9
PERFORMANCE AGAINST TARGETS continued

• ACHIEVEMENTS IN THE YEAR continued
• Signed partnership agreements with the Department
  of Trade and Industry (the DTI) on poverty
  alleviation and development projects
• Funded, organised and participated in a number of
  key conferences and seminars on poverty and
  development
• Improved our overall administrative and
  management system.
• The Board has approved funding of 95 projects
  amounting to R110,97 million. Of these, 33
  projects worth R27,27 million emanated from the
  Request For Proposal (RFP) process and 42
  projects worth R57, 96 million emanated from the
  Programme Formulation (PF) process.
• The Board has also approved 20 projects worth
  R25,73 million for a 2 year Capacity Building
  Programme.
• An amount of R49 million was disbursed. This was
  less than the R62 million disbursed in the
  previous financial year mainly due to the
  following factors

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PERFORMANCE AGAINST TARGETS continued

• ACHIEVEMENTS IN THE YEAR continued
• Ongoing forensic investigations conducted
  following the discovery of fraud resulting in
  some project files being withheld for extended
  periods
• Payment of lower amounts to projects as first
  tranches/cash flow to cover capacity building
• Late submission of projects to the NDA Board for
  funding
• More stringent tranching/cash flow and risk
  management as a result of identified projects
  institutional capacity challenges and
• Delays in meeting Board conditions.
• Further details of the performance of the NDA
  during the year
• under review are included in a narrative form in
  pages 16 to
• 31 of the Annual Report and a Schedule of the
  performance of
• the organisation in a tabular format is also
  available.

11
ANNUAL FINANCIAL REPORT

• The report will cover
• Statement of Financial Performance
• Statement of Financial Position
• Report of the Auditor-General

12
STATEMENT OF FINANCIAL PERFORMANCE

• 2007 2006
• INCOME 150 701 122 172 713 532
• Grants 123 012 000 121 482 000
• Other 7 938 146 35 415 061
• Interest 19 750 976 15 816 471
• EXPENDITURE 163 207 584
  124 062 814
• Direct Funding 9 237 644 55 668 925
• Projects Support 4 708 840
  3 685 324
• Staff cost 33 327 581 33 364 954
• Administration cost 32 794 723 31 343 611
• Net (deficit)/surplus for the year (12 506 462)
  48 650 717

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STATEMENT OF FINANCIAL POSITION

• 2006
• 264 742 848
• 249 217 694
• 12 239 987
• 3 285 167
• 2 496 332
• __________
• 267 239 180
• 148 779 338
• 46 562 057
• 104 472 581
• (2 255 297)

• ASSETS 2007
• Current Assets 282 297 362
• Cash cash equivalents Government
  266 904 677
• Cash and cash equivalents European
  12 974 667
• Accounts receivable 2 418 018
• Non-Current Assets
• Property, plant and equipment
  2 846 570
• __________
• TOTAL ASSETS 285 143 932
  
• FUNDS LIABILITIES
• Funds 132 594 161
• Development Fund 46 562 054
• Projects Fund 87 119 364
• Administration Fund (1 167 257)
  

14
OVERVIEW OF THE ERP SYSTEM

• WHY THE ERP SYSTEM WAS
• SOURCED
• Key Challenges
• PTS challenges
• Lack of system integration
• Paper based environment
• Lack of accountability / ownership
• Loss of documentation
• Lack of automated and performance reports
• Inadequate/Lack of automated controls
• Lack of audit trail / logs
• Heavy reliance on manual controls
• Lack of exception reports

• ERP Selection
• Review of business model
• Review of business processes
• Develop IT strategy (business needs)
• Selection of ERP partner, Microsoft Dynamics v9
  using the IT Strategy

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OVERVIEW OF THE ERP SYSTEM
16
OVERVIEW OF THE ERP SYSTEM continued
17
REPORT OF AUDITOR-GENERAL

• The NDA received a clean unqualified audit with
  no emphasis of matter from the Auditor-General
• Attention was drawn to the following other
  matters that are ancillary to the
  Auditor-Generals responsibilities in the audit
  of the financial statements

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REPORT OF AUDITOR-GENERAL continued

• MATTER
• 1. Material non-compliance with applicable
  legislation
• The audit committees terms of reference have
  neither been approved by the board, nor is it
  reviewed annually as required by Treasury
  Regulation 3.1.8. In addition, no disclosure has
  been made in the National Development Agencys
  annual report on whether or not the audit
  committee has adopted formal terms of reference
  and if so, whether the committee satisfied its
  responsibilities for the year, in compliance with
  its terms of reference, as required by Treasury
  Regulation 3.1.9.
• 2. Material corrections made to the financial
  statements submitted for audit
• 2.1 Accrued expenses were increased by R2 834
  984.
• 2.2 Operating lease expenses were increased by
  R663 321 to comply with International Accounting
  Standard IAS 17.
• 2.3 Impairment of an accounts receivable of R495
  456.

• MANAGEMENT PROGRESS
• 1. These matters will be rectified once the new
  Board has taken office and a new Audit Committee
  has been appointed.
• 2.1 The NDA financials that were given to the
  auditors were completed in
• the second week of April, which was meant
  to assist the auditors by
• giving them enough time to audit. The
  accruals include invoices that
• were received in May and June after the
  financials had been
• submitted to the auditors.

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REPORT OF AUDITOR-GENERAL continued

• MATTER
• 2.5 Reinstatement of projects to the value of
  R4 149 196 that
• were previously written off.
• 3. Matters of governance
• 3.1 The following policies and procedures appear
  on the Policy Register of the National
  Development Agency but the policies were not
  approved by the Board
• Information Technology Security
• Disaster Recovery and Backup Plan
• Information Technology Standard, Policies and
  Procedures
• Funding system description
• Grant making policy framework and criteria
• National Development Fund policy
• General controls in the information technology
  environment

• MANAGEMENT PROGRESS
• 2.5 The write back of R10 million was processed
  in anticipation of Board approval. However, the
  Board rejected projects to the value of R4
  million presented as write back projects because
  the reports supporting the write backs were not
  detailed enough. Hence the adjustment.
• 3. The policies will be presented to the new
  Board for approval.
• 4. Advanced technology that addressed these
  issues was purchased and installed.

20
DEVELOPMENT MANAGEMENT (PROJECTS) REPORT
Grant Trends / Allocations to the NDA
21
DEVELOPMENT MANAGEMENT (PROJECTS) REPORT contnued
NDA Funded Projects for the Year Ended 31 March
2007

• Commitments R110,97 million
• Disbursements R49.0 million
• Number of projects 95

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DEVELOPMENT MANAGEMENT (PROJECTS) REPORT
continued
23
HUMAN RESOURCES

• DEMOGRAPHIC OVERVIEW

• NDA is demographically represented in all 9
  provinces
• It is operationally structured into a National
  Office and 9 provincial offices
• Each provincial Office is headed by a Provincial
  Manager who reports to the Development Management
  directorate.
• Each Province is also divided geographically
  based on districts with Development Managers
  (project specialists) responsible for the project
  management function at local level.

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HUMAN RESOURCES continued_
25
WAY FORWARD

• Our challenges for the coming financial year are
  in the following areas
• Induction of the new Board and its Committees
• Revision of the strategy and funding cycle
  process
• Our institutional capacity
• Organisational and individual performance
• Limited funding sources
• Updated database of civil society organisations
• Up to date researched information on poverty and
  development trends at macro and micro levels
• An appropriate funding model
• A reviewed NDA Act and Delegations of Authority

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WAY FORWARD continued

• Going forward, we have revised the MTEF
  Strategy, which contains the following strategic
  goals
• Organisational transformation
• Partnering for development
• Community empowerment for sustainable
  development
• Communication of credible and relevant
  development information.
• We have plans in place to address the challenges
  identified above. These include
• Speeding up organisational transformation for
  completion by the end of the 2007/2008 financial
  year
• Placing greater emphasis on financial resource
  mobilisation
• Improving and increasing the output of our
  researched information
• Completing the establishment of our Civil Society
  organisations database
• Completing the process of establishing an
  appropriate funding model and delegations