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THE NATIONAL TRAINING FUND AND TRAINING LEVY By EJM Mukendwa 27th May 2011

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Title: THE NATIONAL TRAINING FUND AND TRAINING LEVY By EJM Mukendwa 27th May 2011


1
THE NATIONAL TRAINING FUND AND TRAINING
LEVY By EJM Mukendwa 27th May 2011
2
Presentation Outline
  • Introduction
  • Vocational Education and Training Act
  • Governance structure
  • Project objectives
  • Stakeholder consultations
  • Process for coming up with the recommendations
  • Recommendations
  • Funds flow and information flow
  • Input received from consultations
  • Partnership Process
  • Systems review

3
Introduction
  • The Education and Training Sector Improvement
    Programme (ETSIP) is Governments strategy to
    improve the Education Sector, which includes
    support to Vocational Education and Training
    (VET)
  • As per the VET Act, Act No. 1 of 2008, the
    Namibia Training Authority (NTA) was established
    to regulate and fund VET

4
Introduction
  • The NTA with the assistance of the Millennium
    Challenge Account (MCA) has embarked on a project
    for the establishment of the National Training
    Fund (NTF) and Training Levy.
  • This presentation will provide an overview of the
    NTF and Levy, highlight the recommendations made
    by the NTA with regard to the imposition of the
    Levy and the inputs received from the
    consultations conducted

5
Vocational Education and Training Act
  • Makes provision for
  • the establishment of the NTF Council (section 15
    b)
  • the establishment of the NTF, which will consist
    of money voted by parliament, any education and
    training levies, interest from the fund and any
    donations received by the NTA (section 24)
  • the imposition of a training levy on employers

6
Vocational Education and Training Act
  • Key objectives regarding the NTF
  • to achieve an effective and sustainable system of
    skills formation
  • to establish a stable organization and management
    system
  • to establish and maintain a sustainable
    partnership between government, the private
    sector and civil society to resource the
    provision of vocational education and training

7
Vocational Education and Training Act
  • The fund may only be applied to (section 26)
  • provide financial and technical assistance
  • fund VET programmes and projects
  • fund expenditure incurred by the NTA in the
    performance of its functions as per the VET Act
    (limited to 15)
  • fund any other expenditure incurred by the NTA or
    the Board in performing its functions
  • fund any other expenditure authorized by the Act

8
Vocational Education and Training Act
  • Any levy payable by an employer in terms of this
    Act, must be paid -
  • to the NTA or
  • to an agent designated by the Minister, after
    consulting the Board and by notice in the
    Gazette, to collect on behalf of the NTA
  • the designated agent may withhold from its
    payment to the NTA the costs of collection of the
    levy

9
Governance Structure
10
Project Objectives
  • Facilitate the establishment and
    operationalization of the National Training Fund
    Council
  • Design and Develop the NTF Frameworks (Levy
    Implementation, Regulatory Framework and the
    Training procurement Framework)
  • Develop and Support the NTF Operational Capacity
  • Support the NTA to Pilot Test the System

11
Stakeholders Consultations
  • Focused session with ISCs and SACC
  • Select industry groups session
  • Wider consultations
  • 12 May 2011 in Swakopmund
  • 18 May 2011 in Keetmanshoop
  • 19 May 2011 in Rosh Pinah
  • 20 May 2011 in Luderitz
  • 27 May 2011 in Windhoek
  • 01 June 2011 in Ondangwa

12
Process for coming up with the recommendations
  • Desktop review of previous studies on Levies
    conducted by consulting team. Best practices from
    around the world incorporated
  • Consultations conducted with individual
    stakeholders
  • Benchmarking exercise conducted (Botswana, South
    African systems and other Sub-Saharan countries)

13
Recommendations
  • Levy to be imposed should be 1.5 based on total
    payroll
  • Levy N207,069,410
  • Government N 260,000,000
  • Inland Revenue in the Ministry of Finance to be
    the collecting agency
  • The Social Security Commission was also
    considered as a collection agent

14
Recommendations
  • A maximum of 15 of collected levy will be
    utilized for administration costs for the NTA in
    any year
  • NTA Administration costs N 64,000,000
  • _at_ 15 of levy (1.5) N 31,060,411
  • Collected funds will be disbursed for, (1)
    Company Training Window, (2) Discretionary
    Funding Window. (3) VTP Support Funding Window

15
Recommendations
  • Companies with payroll of below N 200,000 will
    be exempt
  • Civil Service employer (Central Regional) will
    be exempt
  • Any religious or charitable institutions will be
    exempt from paying the levy
  • Other exemptions will be considered during the
    NTF Framework development

16
Funds Flow
NTF Dedicated Account 98 of collected levy
Employers Levy _at_ 100
IR Dedicated Account 2 Collection fees
70 Allocated for In-company Training Requirements
13 For Discretionary
Up to 15 NTA Administration fees
17
Information Flow
Sector Needs
Employers
Government Priorities
Individual Training Needs
ISC
SACC
NTA
Submissions
Training must not only be efficient and relevant
but must also be continuous and flexible to meet
the needs of the ever changing environment
18
Submissions
  • Individual Company Training Needs
  • Sector Needs
  • Training Provider Support
  • Scarce Skills Training
  • Qualifications and Standards Development
  • Programme Development
  • Artisan Training
  • Sector Research
  • SMME Development

For the purposes of funding entitlements VET is
broader than the traditional definition.
19
Definition of VET
  • The Australian National Training Authority (2004)
    describes Vocational Education Training as
  • Vocational Education and Training provides skills
    and knowledge for work, enhances employability
    and assists learning throughout life.
  • In todays Australia, VET is offered not only in
    the public TAFE system, but also through private
    and community training providers and in secondary
    schools. It can link to university study options,
    and provides up to six levels of nationally
    recognised qualifications in most industries,
    including high growth, new economy industries.

20
Definition of VET
  • The UNESCO Convention described vocational
    education and training as all forms and levels
    of the educational process involving, in addition
    to general knowledge, the study of technologies
    and related sciences, the acquisition of
    practical skills, know-how, attitudes and
    understanding relating to occupations in the
    various sectors of economic and social life.'.
  • The British Council (2011) adds that In the UK,
    vocational education and training includes
    commercial, technical and professional
    development as well as transferable personal
    skills. And in our system, nothing stays still
    for long. That's because the skills needed by the
    economy are constantly evolving in line with
    global trends and technological advances. So the
    system ensures we can be responsive to these
    needs within a quality framework which ensures
    that standards are kept consistently high.

21
Input received
  • Levy Amount 1.5 of Payroll
  • Concern raised that the percentage levy is too
    high
  • Sufficient notice should be given prior to
    imposition of the levy
  • Support systems and processes should be in place
  • Should be tax incentives for levy payers
  • Formal partnership should be established between
    Government and Stakeholders in terms of continued
    Government funding support

22
Definition of Payroll
  • The definition of payroll for the purposes of
    determining the leviable amount paid by
    employers means the total amount of remuneration
    as defined in the Labour Act 2007, paid or
    payable, or deemed to be paid or payable, by an
    employer to its employees during any month.
  • The amount of remuneration referred to in
    subsection (4) does not include any amount
  • (a) paid or payable to any person by way of any
    pension, superannuation allowance or retiring
    allowance
  • This means that the remuneration paid to
    employees below the Income Tax threshold must be
    incorporated into the remuneration for
    determining the leviable amount

23
Input received
  • Inland Revenue in the Ministry of Finance to be
    the collecting agency
  • Inland Revenues capacity to collect the levy
  • Social Security Commission is an alternative

24
Input received
  • A maximum of 15 of collected levy will be
    utilized for administration costs for the NTA in
    any year
  • Administration costs funded by levy need to be
    ring fenced for reporting purposes
  • The overall NTA operations should not be funded
    by levy

25
Input received
  • Collected funds will be disbursed for
  • (1) In-Company Training Funding Window,
  • Disbursement of funds should be efficient and
    effective.
  • Training should be monitored to ensure
    authenticity.
  • Training should be accredited to ensure
    authenticity.
  • Training Providers should be registered.

26
Input received
  • (2) Discretionary Funding Window (FW).
  • Process should be transparent
  • Proposals should be prioritised in line with real
    needs
  • Industry need to see the detail of the FW in the
    next round of consultation meetings
  • Funds should be used to prepare job seekers for
    VET

27
Input received
  • Companies with payroll of below N 200,000 will
    be exempt from paying levy
  • The exemption level should be reviewed
    periodically
  • Companies not paying levy need training
    intervention support
  • Consideration for exemption to companies
    currently paying significant amounts of payroll
    towards training

28
Input received
  • Civil Service employer (Central and Regional)
    will be exempt
  • Consideration should be given to imposing the
    levy on Government
  • Defence Forces and Police are exempt under the
    Act
  • Any religious or charitable institutions should
    be exempt from paying the levy
  • Local Authorities (Municipalities) should not be
    exempt
  • State Owned Enterprises should not be exempt

29
Input received
  • Additional input
  • Levy must be used for VET interventions in
    support of industry needs and demands
  • Systems and processes must be transparent
  • External auditing and reporting process should be
    in place
  • Turn-Around time for disbursement should be
    minimal
  • There must be a formal audit/compliance system in
    place

30
Partnership process
  • Input required from all stakeholders on
    recommendations
  • Stakeholder input will be incorporated in the
    final NTF report
  • NTF report will form the basis for the
    development of the Fund frameworks

31
Partnership Process
  • Consultation
  • Current ongoing consultations
  • Involvement
  • Involvement in the development of the frameworks
  • Consolidation
  • Participate in the piloting of the systems

32
Review of Systems
  • All systems should be reviewed on a three year
    basis in line with the MTEF
  • 1.5 levy charge
  • Exemption levels
  • Funding Windows
  • Collection Agent
  • Administration charges
  • Disbursement process, amounts and priorities

33
  • Thank You
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