PRESENTATION TO PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING

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PRESENTATION TO PORTFOLIO COMMITTEE ON HIGHER
EDUCATION AND TRAINING

• 17 February 2010
• Committee Room V454, 4th Floor Old Assembly

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REQUEST TO DHET AND STRUCTURE OF PRESENTATION

• Overview and mandate of the National Skills
  Authority (NSA)
• Overview and mandate of the SETAs
• Analysis of financial performance of all SETAs
  for the 2008/09 financial year
• Efficiency challenges in the National Skills Fund
  (NSF)

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1. Overview and mandate of the National Skills
authority
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NSA COMPOSITION

• Chairperson (Appointed by the Minister)
• 5 members each nominated through NEDLAC from
• Labour,
• Business
• Community (women, youth, people with
  disabilities, urban and rural civic).
• 5 State (DoL, DTI, DoE, DPSA and DPLG)
• 5 Education Skills Development providers
• Public
• Private
• FET
• HESA
• BET)
• 5 Ministerial discretionary appointments (SAQA, 2
  Employment Services 2 People with special
  knowledge)

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Functions, Administration, Support and Financing

• Skills Development Act (1998) as amended 2008
  (Act 37 of 2008)

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Functions of National Skills Authority (1)

• (a)    to advise the Minister on (i)     a
  national skills development policy (ii)    a
  national skills development strategy(iii)   guid
  elines on the implementation of the national
  skills strategy (iv)  the strategic
  framework and criteria for allocation of
  subsidies funds from the National Skills Fund
  and(v)     any regulations to be made
• (b)     to liaise with SETAs on
  (i)             the national skills
  development policy(ii)           the national
  skills development strategy and(iii)         
  sector skills plans

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Functions of National Skills Authority (2)

• (c) to report to the Minister on the progress
  made in the implementation of the national skills
  development strategy
• (d)  to conduct investigations on any matter
  arising out of the application of this Act
• (d) to liaise with the QCTO on occupational
  standards and qualifications and
• (e) to exercise any other powers and perform any
  other duties conferred or imposed on the
  Authority by this Act.
• (2)           For the purposes of investigations
  referred to in subsection (1) (d), the Authority
  has the prescribed powers of entry and to
  question and inspect.
• (3)           The Authority must perform its
  functions in accordance with this Act and its
  constitution.

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Skills Development Planning Unit (in original
legislation, later amended)

• (1)           Subject to the laws governing the
  public service, the Director-General must (a)
  establish a Skills Development Planning Unit in
  the Department and (b) provide the Unit with
  the personnel and financial resources necessary
  for the performance of its functions.
• (2)           The functions of the Skills
  Development Planning Unit are (a) to research
  and analyse the labour market in order to
  determine skills development needs for
  (i)         South Africa as a whole
  (ii)        each sector of the economy and
  (iii)      organs of state (b) to assist in
  the formulation of (i)         the national
  skills development strategy and (ii)       
  sector skills development plans and (c)  to
  provide information on skills to (i)        
  the Minister (ii)        the National Skills
  Authority (iii)      SETAs (iv)     
  education and training providers and (v)      
  organs of state.

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Summary of NSA Functions

• Advising the Minister (policy, strategy,
  implementation, NSF allocations)
• Liaising with SETA (policy, strategy, sector
  skills plans)
• Reporting to Minister on progress in the
  implementation of the national skills development
  strategy
• Review Accounts and Balance Sheet of NSF annually
• Receive and utilising information from the Skills
  Development Planning Unit

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Key Outcomes of NSA Strategic Planning, December
2009

• Strengthening the NSA to perform its advisory
  functions
• Process to align HRDSA and NSDS
• Content
• Reporting/ communication between HRDSA and NSA
• New NSA Chair to be appointed before February NSA
  Meeting
• Job description for NSA EO to be approved at the
  February NSA meeting after which the post will be
  advertised and filled

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2. Overview and mandate of SETAs
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LEGAL FUNCTIONS OF SETAS

• A SETA must, in accordance with any requirements
  that may be prescribed
• (a) develop a sector skills plan within the
  framework of the national skills development
  strategy
• (b) implement its sector skills plan by-
• establishing learning programmes
• approving workplace skills plans and annual
  training reports
• allocating grants in the prescribed manner and in
  accordance with any prescribed standards and
  criteria to employers, education and skills
  development providers and workers and
• monitoring education and skills development
  provision in the sector by the QCTO

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• (C) promote learning programmes by
• identifying workplaces for practical work
  experience
• supporting the development of learning materials
  
• improving the facilitation of learning and
• assisting in the conclusion of agreements for
  learning programmes, to the extent that it is
  required

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• (g) liaise with the National Skills Authority on
  
• the national skills development policy
• the national skills development strategy and
• its sector skills plan
•  
• (h) submit to the Director-General
• any budgets, reports and financial statements on
  its income and expenditure that it is required to
  prepare in terms of the Public Finance Management
  Act and
• strategic plans and reports on the implementation
  of its service level agreement

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Establishment of SETAs

• SETAs were established in terms of section 9 of
  the Act for a period of five years and must
  perform all the functions as require in the
  relevant legislation and national strategies
  which includes the National Skills Development
  Strategy (NSDS).
• 20 SETAs were established on 31 March 2005 in
  Government Gazette No. 27445 and three SETAs that
  were affected by the amalgamation process on 1
  July 2005 in Government Gazette No.27757. These
  SETAs were established for a five-year period up
  to March 2010.

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• The current period of establishment of all SETAs
  was extended from 31 March 2010 to 31 March 2011
  in Government Gazette No. 32916 of 5 February
  2010 to inter alia enable the Minister to consult
  with all stakeholders regarding the SETA
  landscape and to align the NSDS II to
  Governments strategies.
• The Minister has also extended the current NSDS
  II for the same period.
• The Department and the SETAs will have to
  continue with the re-establishment processes in
  order to ensure that there will be compliance
  with all requirements to be re-established by the
  Minister on 1April 2011

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Key Responsibilities SETAs

• 23 SETA's that cover all economic sectors by
  allocated standard industrial classification
  codes
• Responsibilities
• Manage stakeholder relations and skills demand
  needs in the sector
• Develop sector skills plans and signal sector
  skills demand and priorities
• Disburse mandatory grants against employer
  workplace skills plans and annual training
  reports
• Disburse discretionary grants for national and
  sector skills development activities (projects,
  learnerships, apprenticeships, bursaries,
  workplace experience, internships, skills
  programmes, ABET)

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• Improve quality of learning in the workplace
  through learning development planning
  (qualifications and learning programmes,
  curriculum development support), assessment and
  certification
• Quality assure learning achievements (currently
  as SAQA accredited ETQAs accredit providers,
  approve learning programmes and certificate
  successful achievements, register assessors)
• Manage learnership agreements and apprenticeship
  contracts for employed (18.1) and unemployed
  (18.2) learners
• Support development of Institutes of Sectoral and
  Occupational Excellence

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Service Level AgreementsSection 10A of the
Skills Development Act

• For each financial year, every SETA must conclude
  with the Director-General a service level
  agreement concerning
• (a) the SETAs performance of its functions in
  terms of this Act and the national skills
  development strategy
• (b) the SETAs annual business plan and
• (c)  any assistance that the Director-General is
  to provide to the SETA in order to enable it to
  perform its functions.
• If the Director-General and a SETA cannot agree
  on the contents of a service level agreement
  within the prescribed period, the Minister must
  determine the contents of the service level
  agreement after consulting the National Skills
  Authority.
• The determination by the Minister in respect of a
  service level agreement is final and binding.

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2010/11 SETA SLA PROCESS

• The Department embarked on a process to ensure
  that there will be compliance with all
  legislative requirements to conclude the 2010/11
  SLAs.
• SETAs were required to align the 2010/11 SLA
  success indicators/targets to Government
  priorities
• All the SETAs have submitted their 2010/11 SLAs
  to the Department for approval and these are in
  process of being considered

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3. Analysis of financial performance of all SETAs
for the 2008/09 financial year
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Section 14A of Skills Development Act

• The Minister may issue a written instruction to a
  SETA if
• (a) the SETA is not performing any of its
  functions or not complying with its service level
  agreement
• (b) the SETA is not managing its finances in
  accordance with this Act
• (c)  the SETAs membership is not representative
  of the constituencies contemplated in section 11
  or
• (d) the SETA has not prepared and implemented an
  employment equity plan as contemplated in section
  20 of the Employment Equity Act, 1998 (Act No.55
  of 1998).
• An instruction issued under subsection (1) must
  set out
• (a) the reason for issuing the instruction
• (b) any provision of the Act that the SETA has
  not complied with and
• (c)  the steps that the SETA is required to take
  and the period within which such steps must be
  taken.

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Performance of SETAs 2008/09 Financial Year

• For the 2008/09 financial year all of the SETAs
  have in general met the approved criteria in
  terms of their SLAs. However, some SETAs under
  performed on some aspects of the criteria e.g.
  Governance and funds management.
• The Programme (SETA Co-ordination) is managing
  the underperformance/non compliance in terms of
  the relevant requirements

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ANALYSIS OF FINANCIAL PERFORMANCE OF SETAs

• The AG has audited the financial performance of
  the SETAs for the 2008/09 financial year and the
  findings of the AG are reflected in the SETAs
  Annual Reports that were tabled in Parliament.
• SETAs have indicated in their financial
  statements submitted to the Department that funds
  have been allocated to projects within the sector
  as well as surplus funds that should be rolled
  over to the next financial year, if approved by
  National Treasury (NT).
• The Department and NT raised concerns about the
  funds allocated to projects and not spent in the
  next financial year on the projects as well as
  the surplus funds that seem to increase and not
  be utilized by SETAs to address the training and
  education needs within their sectors.

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ANALYSIS OF FINANCIAL PERFORMANCE OF SETAs (2)

• NT has indicated that consideration should be
  given to amend relevant legislation to ensure
  that funds will be utilized to address education
  and training needs within all sectors.
• The Department is in a process to determine the
  most appropriate action to be taken to ensure
  compliance with relevant legislation as well as
  to address this

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Performance of SETAs 2008/09 Financial year (3)

• The following SETAs received either a disclaimer
  or a qualification from the Auditor General (AG)
  on their financial management for the 2008/09
  financial year and didnt meet all the
  requirements in terms of the relevant
  legislation/SLAs.
• ESETA Disclaimer
• PSETA Disclaimer
• CETA Qualification
• MAPPP Qualification

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ESETA Disclaimer

• The SETA failed to submit their annual report by
  the required date
• The AG issued a disclaimer for the 2008/09
  financial year
• AG was unable to determine the occurrence,
  accuracy, completeness and classification of the
  monies used
• Letters requesting a response/programme of action
  regarding the non compliance with the relevant
  legislation were sent to the SETAs Chairperson

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PSETA Disclaimer

• The PSETA has had governance and leadership
  problems since inception.
• The Minister issued a section 14A instruction and
  requested the SETA to address a number of
  governance issues in order to ensure compliance
  with legislative requirements
• SETA failed to submit their annual report by the
  required date
• The AG issued a disclaimer for the 2008/09
  financial year
• Letters requesting a response/programme of action
  regarding the non compliance with the relevant
  legislation were sent to the SETAs Chairperson
• This SETA is under discussion between the 2
  departments

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CETA Qualification

• The AG issued a qualification for the 2008/09
  financial year
• Areas identified by AG were basis of accounting,
  significant uncertainties, unauthorized,
  irregular or fruitless and wasteful expenditure
• Letter requesting a response/programme of action
  regarding the non compliance with the relevant
  legislation were sent to the SETAs Chairperson
• The SETA appointed a new Governing Board in March
  and they are in a process to address the problems
  identified by DHET and the AG

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MAPPP Qualification

• The board suspended chairperson on 30/07/2009
  following a string of allegations leveled against
  him.
• DHET is conducting an investigation into these
  allegations
• The AG issued a qualification for the 2008/09
  financial year
• The SETA has exceeded its 10 administration
  budget for the year 2008/9
• MAPPP-SETA has failed to remain below the
  prescribed 10 administration budget since its
  re-establishment in 2005.
• The SETA board indicated that they are confident
  that there will be no over-expenditure in the
  2009/10 financial year.
• A letter requesting a response regarding the non
  compliance with the relevant legislation has been
  sent to the SETAs acting Chairperson

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AUDIT PERFORMANCE 2005/6 2008/9
SETA 200506 200607 200708 200809
SETAS   Managed by DPSA   Managed by DPSA   Managed by DPSA   Managed by DPSA
CETA Qualification Disclaimer Qualification Qualification
ESETA Qualification Qualification Disclaimer Disclaimer
MAPPP Qualification Unqualified report Adverse Opinion Qualification
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ACTIONS COMTEMPLATED TO ADDRESS NON-PERFORMING
SETAS

• After the necessary investigations currently
  underway are concluded, the Minister will be
  advised to act in terms of the following options
  available in the legislation
• Section 9A- The Minister may amalgamate two or
  more SETAs after consulting with the NSA and may
  dissolve a SETA is it is unable to perform its
  functions
• Section 14A The Minister may issue a written
  instruction to a SETA if it is not performing or
  complying with the SLA/not managing its finances
  accordingly. Should the SETA not comply with the
  instruction the Minister may direct the DG to
  withhold all or a part of their levy for such a
  period and on such conditions as the DG may
  determine/invoke section 15 of the SDA
• Section 15 The Minister may after consultation
  with the NSA and the SETA in question direct the
  DG to appoint an Administrator to perform the
  functions of the SETA

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• The NSA Subcommittee has considered the report of
  the DHET on SETA performance and its
  recommendation to the February NSA meeting is
  that the NSA should advise the Minister to take
  action with regard to poorly performing SETAs

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4. Efficiency challenges in the National Skills
Fund (NSF)
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Efficiency challenges in the NSF OUTLINE

• INTRODUCTION
• LEGAL OBLIGATIONS
• HISTORICAL OVERVIEW CURRENT STATUS
• KEY CHALLENGES
• PROPOSALS

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INTRODUCTION

• Established in 1998 through the Skills
  Development Act,1998
• Took over Training of Unemployed Persons (TUP
  Fund) operations in 1999
• Received 1st levy in 2000
• Received mandate through NSDS1(2001) and then
  NSDS2 (2005)
• The Fund is just a decade old

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LEGAL OBLIGATIONS

• Skills Development Act (1998) as amended 2008
  (Act 37 of 2008) identifies the following key
  obligations
• Use of the money in the fund
• Control administration of the fund
• Role of the NSA PFMA requirements

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Use of the Fund

• Fund Projects identified in the National Skills
  Development Strategy (NSDS) as National
  Priorities or
• Fund other projects related to the achievement of
  the purpose of the Act as the DG determines
• Administration of the NSF within prescribed limit

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Control Administration of the NSF

• Director-General DHET is the accounting
  authority of the NSF and must
• 1.Control the fund
• 2. keep proper records (financial, assets
  liabilities)
• 3. prepare annual financial statements
• 4. Appoint executive officer who is in the public
  service

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Other legal obligations

• NSF to be managed in accordance with PFMA
• The NSA to advise Minister on the strategic
  framework and criteria for the allocation of
  funds from the NSF
• Investment of surpluses
• DG to submit annual financial statements to NSA
  for information
• Unexpended balances can be carried over to next
  financial year

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KEY CHALLENGES FOR THE NSF

• Alignment with priorities of DHET
• Improving institutional mechanisms and capacity
• Establishing provincial capacity after NMOS

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ALIGNMENT WITH PRIORITIES OF DHET

• The NSF will forge greater alignment with DHET
  Priorities by
• Responding to capacity challenges within the FET
  System (including through the COSI project)
• Seek opportunities for high impact delivery
  around job creation

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INSTITUTIONAL MECHANISM

• NSF must address institutional limitations to
  effective delivery by
• Reviewing grant allocation mechanisms in line
  with DHET priorities
• Review grant support systems of the NSF

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CAPACITY OF THE NSF

• Address the capacity of the fund by
• Appoint CEO
• Increase capacity
• Improve and modernise systems
• Deal with under-spending (through partnerships,
  grant intermediaries)

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THANK YOU