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WEDNESDAY, 14 APRIL 2010
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – OLD ASSEMBLY CHAMBER
Members of the Extended Public Committee met in the Old Assembly
Chamber at 15:01.
House Chairperson Mr K O Bapela, as Chairperson, took the Chair.
The House Chairperson (Mr K O Bapela): Hon members, we will not
repeat meditation and prayers because we had that in the National
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
Debate on Vote No 4 – Home Affairs:
The MINISTER OF HOME AFFAIRS: Hon Chairperson, hon members of the
Assembly, members of the portfolio committee, Ministers, Deputy
Ministers and distinguished guests, may I take this opportunity to
recognise the presence of leaders of various legal entities that
support the work of Home Affairs. These include the CEO and the
EPD 14 APRIL 2010 PAGE: 2 of 171
chairperson of the Film and Publication Board, Ms Thoko Mpumlwana
and Ms Makhasi; acting chairperson of the Refugee Appeal Board, Mr
Tjerk Damstra; chief executive officer of the Government Printing
Works, Mr Tom Moyane; chairpersons of some of the newly formed Home
Affairs stakeholder forums, councillor Winneth Mtolo from Sisonke
and councillor Winile Ngavile from O R Tambo Municipality.
My gratitude goes to the chairperson of the Portfolio Committee on
Home Affairs, hon Ben Martins, and the entire committee for their
support, robust interaction and oversight. May I express my
gratitude to the Deputy Minister, hon Malusi Gigaba; the senior
management of the department and all those officials who are honest
Hon Chairperson, April is a highly significant month in the history
of our country. Sadly, it marks the date on which the process of our
oppression began, with the landing of Jan van Riebeeck on our
shores. Happily, April is also when it ended, with the attainment of
our democracy. Critically, April reminds us of the supreme
sacrifices that people of this country made in order for us to be
here and to achieve peace, freedom, democracy and justice while
reclaiming our dignity.
Therefore, in this month we have to remember some of our heroes, our
patriots, our revolutionaries whom we should all emulate; people
like Comrade Chris Hani, the late president O R Tambo and Comrade
EPD 14 APRIL 2010 PAGE: 3 of 171
Solomon Mahlangu. Let me take this opportunity to salute his
brother, who is with us today in the gallery. [Applause.]
We also join the National Assembly in extending our heartfelt
condolences to the family and friends of the late Deputy Minister of
Health, Dr Molefi Paul Sefularo. Our thoughts and prayers reach out
to his wife, Kgomotso, and their children.
Hon members, in the context of 2010 being designated “the year of
action” by the President of the Republic in his state of the nation
address, we will redouble our efforts to speed up and improve the
quality of service delivery.
In the Budget Vote speech last year, we committed to a concerted
registration and identity document campaign over the next two years,
directed at consolidating a secure and accurate national population
register, the NPR.
Led by President Jacob Zuma, we launched the registration and
identity document campaign on 23 March 2010 at Libode in the Eastern
Cape, after having piloted it in the Sisonke and O R Tambo District
It is worth noting that we are also establishing forums nationally
with a view to involving the citizenry directly in service delivery
by monitoring performance, combating corruption and providing
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support, both to Home Affairs and to citizens who are experiencing
The strategic outcomes of this campaign are: firstly, entrenching
the culture of registering the birth of every child within 30 days
of delivery; secondly, issuing identity documents to every South
African of 16 years and older; and thirdly, discontinuing the late
registration of births. To this end, we registered 1 147 000
children and adults last year. Of those, 354 588 were people who
were registered for the first time and who where over the age of 16.
We hope we will indeed complete the late registration drive and do
away with it. Due to the intensity of the campaign, we also issued
834 353 identity documents to first-time applicants, which is
200 000 more than in the previous year.
Fourthly, we are also reviewing legislation pertaining to the
registration of births, deaths and marriages. Fifthly, the ID
campaign has started. Therefore, we urge all politicians to join us
in the campaign now and not wait for the 2011 local government
elections to take place, since there will be no such special
Hon members, South Africa is about to witness a momentous and
historic occasion for our country and, indeed, our continent,
Africa: the most beautiful spectacle in the world, the 2010 Fifa
World Cup. We would like to reiterate the readiness of our
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government and people to host a successful 2010 Fifa World Cup in
this land of Shaka, Moshoeshoe, Sekhukhune, Hintsa, Makhado and
others. Home Affairs stands ready to welcome the multitude of
soccer-loving fans from across the globe: Africa, Asia, America,
Europe, Oceania, South America, the Middle East and the Gulf.
Our contribution to the successful hosting of the 2010 World Cup
includes the first-ever and historic “event visa” to facilitate the
movement of spectators and visitors from around the world. All
spectators in possession of a Fifa match ticket are eligible to
apply for the event visa, free of charge, following the normal
procedures at South African diplomatic missions.
We have introduced the advanced passenger processing system for
airlines flying into South Africa. This system enables the screening
of passengers before they depart for South Africa. The training of
airline liaison officers was recently completed and their deployment
will begin in May to assist airlines to verify travel documents and
personal particulars presented by travellers in the country of
There will be dedicated express lanes at selected international
airports and co-located border posts with neighbouring countries. A
24-hour operational centre in Pretoria has been established to
provide statistical information for operational planning and
incident reporting in liaison with security agencies.
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In collaboration with Sars and other relevant departments, we are
implementing an enhanced movement control system to facilitate the
secure movement of people in and out of the country in preparation
for the 2010 Fifa World Cup. The system is being piloted at O R
Tambo International Airport and will be rolling out to 34 priority
ports of entry before the World Cup.
We also promise to fight the scourge of corruption which is
affecting not only Home Affairs but society in general. We have
enhanced our countercorruption strategy while elevating the
countercorruption and security unit into a fully fledged branch,
which will be led by a deputy director-general. We have also
appointed countercorruption specialists to further capacitate that
Progress has been made in enhancing the security of our systems. We
have upgraded and extended the use of biometric access control to
prevent illegal access to the department’s systems and thus ensure
an audit trail and accountability. Another important
countercorruption measure is the inclusion of the details of the
mother on the birth certificate, while enhancing its security
In our intensive efforts to improve and enhance operational
efficiencies, the department has made significant progress on the
following: firstly, the passport backlog, which we talked about in
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our last Budget Vote, has been eliminated. In 40 offices where the
live capture in biometrics is available, the turnaround time for
passports is now between 14 and 30 days. Secondly, the track and
trace system has been extended to cover the registration of births,
marriages, deaths, passports and some immigration permits. This has
expedited processes and enhanced security while enabling us to
contact citizens via SMS. Thirdly, we have improved access to Home
Affairs services by establishing 21 new facilities. Members will
remember that last year we said we will open 13 offices, but we are
happy to report that we exceeded that, and opened 21. [Applause.] A
new refugee reception centre was also opened in Musina. There has
been an aggressive campaign using mobile units to access rural areas
Fourthly, to get Home Affairs front offices right, we are piloting
an electronic queue management system that will function by
providing ticket numbers to the clients. It also informs clients on
their approximate waiting time while reducing congestion in public
areas. We are piloting this at Khayelitsha and it has reduced the
waiting time from 45 to 25 minutes. Fifthly, we have successfully
relocated the refugee reception centre, which was a problem last
year, from Nyanga to Maitland. The Maitland office is bigger, better
and more efficient. Sixthly, our refugee reception centres are now
issuing asylumseeker permits within one day, unlike previously, when
they were issued within a week. [Applause.]
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Hon members, despite these achievements, more needs to be done to
complete the sustainable transformation of the Department of Home
Affairs. Our priorities for this financial year, among others, are:
firstly, ensuring an accurate, credible and secure national
population register and that birth will be the only entry point into
our population register. To that end, we have connected 142
hospitals to Home Affairs systems, so that mothers can register
their babies even before they leave the hospitals. [Applause.] In
this financial year, we will be connecting 120 more.
Secondly, we will also be opening 10 new front offices to extend our
footprint. Thirdly, we are happy that the KwaZulu-Natal MEC for
social development, Dr Meshack Radebe, has agreed that their one-
point development centres will also give space to Home Affairs. That
will allow us to get into rural areas where we don’t have offices.
Thirdly, we are undertaking a review on immigration policy,
especially to try and separate the economic migrants from genuine
asylumseekers. We have started consultations on this process because
we understood that we couldn’t just sit and legislate from our
offices but needed to consult. We have started with Cosatu and we
will also be consulting with various stakeholders in the coming
months, and eventually we will bring legislation here to Parliament.
Fourthly, we are committed to achieving an unqualified audit within
one year and a clean audit within two years. I know this is not easy
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but that’s what we are aiming for. The internal audit and risk
management functions have been strengthened and controls are being
implemented. Such controls include a new revenue receiving system
which has been installed in l00 high-volume offices. Sixthly, we are
putting infrastructure in place in all our front offices to ensure
our readiness when the smart card is introduced, hopefully in the
next financial year.
Seventhly, there is a need to re-orientate Home Affairs officials
and introduce change interventions in order to engender an ethos of
pride and service excellence. We will develop a workforce that is
self-motivated, ethical, competent and accountable. Eighthly, a
learning centre is being established and will be the vehicle for the
training of staff, not only in these values but also in increasing
their competencies. Lastly, we have appointed the deputy directors-
general and filled the posts that were vacant last year, except the
chief information officer’s post and the newly created post of
Deputy Director-General: Countercorruption. A number of critical
chief director and director posts have been filled.
Hon Chairperson, we would like to take this opportunity to introduce
our new director-general, Mr Mkuseli Apleni, appointed on 1 April
2010. It wasn’t an April fool’s joke. He was appointed. [Applause.]
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We express our gratitude for the services of our outgoing director-
general, Mr Mavuso Msimang, and wish him well in his future
endeavors. Other details will be given by the Deputy Minister.
I would like to say, in conclusion, I am confident that with your
support, hon members, and that of society at large, we will succeed
in building and transforming Home Affairs - building on that
foundation that has been laid as the department of excellence and as
an employer of choice. I hope that this Budget Vote will meet with
your support and approval. Thank you. [Applause.]
The HOUSE CHAIRPERSON (Mr K O Bapela): Thank you, Minister.
[Applause.] Order! Minister, you were able to save two minutes from
your time. You didn’t finish your speech in 20 minutes but in 18
minutes. Well done! So you will add those two minutes at the end.
Mr B A D MARTINS: Chairperson, esteemed hon Members of Parliament,
hon Minister of Home Affairs, hon Deputy Minister of Home Affairs,
valued stakeholders, distinguished guests, I thank the hon Minister,
Dr Nkosazana Dlamini-Zuma, for her honest and frank appraisal of
work done, work in progress and challenges faced by the department.
It is common cause that transparent and accountable governance is
strengthened when comprehensive, objective and critical departmental
documents are tabled for public scrutiny and legislative oversight.
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The Minister’s argument in defence of her Budget Vote has just borne
testimony to this principle.
In linking performance targets to budgeted expenditure, she has
provided Members of Parliament with information on how the
department is spending money authorised by the legislature, thus
enabling Parliament and society to keep the department and its
agencies, namely the Independent Electoral Commission, IEC, the
Government Printing Works, GPW, and the Film and Publication Board,
FPB, accountable for service delivery commitments.
In keeping with its oversight responsibility, the Portfolio
Committee on Home Affairs will continue to engage the Department of
Home Affairs and the State Information Technology Agency, Sita,
without fear or favour with regard to financial procurement and
other issues pertaining to the Who Am I Online and smart card
identity document projects.
The Who Am I Online project is supposed to form a part of the
department’s information technology strategy objectives, along with
the Home Affairs National Identification System, Hanis, which, in
turn, includes the smart card. The information technology objectives
of the department fall within its broader service delivery
objectives and the objectives of its turnaround strategy.
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Furthermore, the Who Am I Online project is expected to eliminate
waste and reduce the cost of providing services to the public. With
this project the department means to switch from the use of paper-
based to a paperless system where all transactions are processed
online and in real time. We therefore urge the department to
finalise matters relating to this project and the smart card
identity document project, which was suspended by the Minister in
order to conduct a forensic investigation into tender processes
which were not completed by Sita. Matters relating to these two
important projects have dragged on for too long.
With challenges here and there, the department’s turnaround strategy
continues to bear fruit. Better and friendlier services are rendered
and promoted, and the scourge of corruption continues to be fought
wherever it rears its ugly head. There is still a long way to go,
but the positive gains which are being made are seen by the public
The department continues to fulfil its civic function of acting as
the custodian of citizenship and identity. It regulates immigration,
which remains critical for development and security. It further
enforces the Immigration Act and determines the status of
asylumseekers and refugees in accordance with its international
obligations and the Bill of Rights.
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The benefit of hindsight reveals that budget accountability has
historically focused mainly on targeting the performance of
government departments and agencies at the output level. Government
has now adopted an approach which provides a new methodology that is
focused on the attainment of a number of desirable outcomes using
measurable outputs and well-defined activities to achieve better
value, as well as better value for money. The department’s policy
priorities for 2010-11 seek to meet government’s new prescripts. It
does this largely through providing the necessary documents for
citizens and migrants to access social services and the economy.
In this regard, it has had a key role to play in better facilitating
access to several of the priorities in the 12 desired outcomes
outlined by the Presidency earlier this year, which include the
following: In education, it facilitates the registration of students
for identity documents in schools and the phasing out of late
registration of births. In health, there is an expanded capacity for
the registration of births and deaths in hospitals but much more is
needed, especially in rural areas. In the fight against corruption
and crime, the department continues to fire and discipline corrupt
officials while also improving the monitoring of income and
It is noted that the department and two of its entities, namely the
Government Printing Works and the Film and Publication Board,
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received qualified audits last year. We hope that this will change
this current year.
The Independent Electoral Commission needs to be commended for its
sterling performance and unqualified audit. [Applause.] The
Independent Electoral Commission continues to perform exceptionally
well and all signs show that we can expect an even better-planned
and executed local government election next year.
With regard to the economy, access to documents provided by the
department is crucial and the improved delivery times of documents
assist applicants. However, reports of identity document application
problems still abound, and need to be addressed and monitored
With regard to skills, facilitating the improved procurement of
skills by companies through better corporate accounts procedures is
crucial for the economy but needs to be balanced against the
socioeconomic and security needs of South Africa.
With regard to rural development, we have seen an expansion of the
capacity and footprint of the department in rural areas, as well as
a sharing of resources in the combined government service/Thusong
centres, thereby improving service delivery and cost efficiency.
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The department’s policy priorities for 2010-11 seek to meet
government’s new prescripts and include the following: one,
affirming, recording and securing the identity of all citizens and
other individuals who live in South Africa; two, facilitating and
regulating immigration in the interests of national security and
development; and three, ensuring that departmental officials respond
to the needs of all citizens by delivering an accessible, honest,
caring and efficient service.
Of crucial concern this year are the commitments made to Fifa for
the 2010 World Cup. In this regard the department has improved the
related delivery of travel documents, as witnessed during the recent
multi-portfolio committee visits to border posts and Fifa World Cup
host cities. Initiatives include a new events visa being rolled out,
having airline liaison officers in countries participating in the
World Cup and advanced passenger registration, all of which will
improve the speed of processing the arrival and welcoming of guests
during this exciting event. The department’s role in achieving these
outcomes largely requires co-operation from other departments.
In conclusion, the Constitution of the Republic Of South Africa
guarantees everyone dignity and the right to have their dignity
respected and protected. It is through the interventions of the
Department of Home Affairs that citizens and foreign nationals are
given access to government services in order to make their lives
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better. The ANC supports Vote No 4. Together, we can do more.
Mrs J F TERBLANCHE: Chairperson, hon Minister, Deputy Minister,
members and colleagues. In my budget speech last year I acknowledged
the fact that the Minister is open and honest about the problems
facing this department and is committed to turning it around. There
are, indeed, many improvements to be seen in certain areas: a number
of critical posts have been filled, a new passport system is in
place and, through the work of the anticorruption unit, a number of
corrupt officials were suspended. Furthermore, the national
population registration campaign was launched on 23 March and will
hopefully go a long way towards ensuring the integrity of the
national population register.
However, a lot of work still needs to be done before some of the
serious challenges the department is facing have been dealt with and
in order for the department to give our citizens and immigrants the
world-class service they deserve.
In the department’s 2008-09 annual report, the Auditor-General
delivered a qualified opinion and raised several urgent matters. The
most shocking is departmental revenue amounting to R365 million
which cannot be accurately assessed due to the lack of an audit
trail. Irregular expenditure in the amount of R198,2 million has
also been recorded. This is simply unacceptable.
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Equally unacceptable is the situation where one of the entities of
Home Affairs, the Government Printing Works, appears before the
portfolio committee and reports that the department owes them
R126 million for the printing of the new passports since April 2009.
Minister, I hope you will be able to recall that this amount has
since been paid, and that measures were put in place to prevent a
recurrence. I have asked a parliamentary question about this matter,
but this question and some others have not yet been responded to.
With reference to immigration services, huge concerns remain about
the treatment that economic migrants and asylumseekers receive in
our country. I hope that the new immigration policy as well as
amendments to the Refugees Act and regulations will address this. I
would like to ask the Minister whether there is a target date for
the finalisation of this policy.
Yesterday afternoon we received notice that we will have a briefing
by the department and the State Information Technology Agency, Sita,
on the forensic audit report next week. Hopefully the mystery will
be solved at last and perhaps some progress will be made with regard
to the smart ID card.
I would also like to take this opportunity to thank two officials in
the operational response unit, Melanie Shaaban and Annie Bodlo, for
their continued assistance with the constant flow of problems that
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arrive in my inbox. For the sake of this debate, I would like to
read two extracts from such cases. Phumzile Lassiter wrote:
I am only praying to God that you guys still remember me, because
today I can say it out loud that my children have clearly become
the victims of South African Home Affairs. A few months ago, I
wrote a letter to thank you guys for taking part in helping me and
my children, and I still would like to say “thanks” again.
However, something must have gone really wrong, because even
though their ID numbers show me as their mother when pulled from
the system, the microfilm from the regional Home Affairs still
prints their grandmother’s name as their mother on the full birth
We applied and waited four months for this full birth certificate
after the amendment, which took three years and eight months, was
completed back in October 2009. Now I am being told that no one
knows what is going on, and that I need to reapply and wait for
four months again. I say, “No, this should have been done more
than three years ago, and my children should not suffer any
Please, I am pleading as a mother to you, as mothers too, let’s
stop the suffering of our South African children, even if it’s one
family at a time.
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The next one is from David Jankelowitz, who wrote:
I am having an unbelievable issue with Home Affairs that I am
pulling my hair to resolve. I first applied for an unabridged
birth certificate for my son on 26 November 2009. I was told that
it would take 6 to 12 weeks to complete. I am now into week 20. I
lodged the application at Randburg Home Affairs, where they told
me that, to follow up going forward, I must call the call centre.
Mr Jankelowitz did phone the call centre, 16 times, after which he
went back to the Randburg branch on 11 March and reported the
People there were very unwilling to assist me and told me that the
manager was on leave. At this point, I feel like my hands are tied
behind my back as I am powerless to obtain a document that I am
legally entitled to, have paid for, and also followed the correct
procedures to obtain. I am desperately looking for assistance in
I receive complaints like these on a daily basis from citizens who
are frustrated and disillusioned by the service rendered by the
Department of Home Affairs. Minister, I am sure you will agree – our
citizens deserve better. [Applause.]
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Mrs Z B BALINDLELA: Chairperson, hon Minister, in our African
culture one’s identity is always linked with the question of where
one’s umbilical cord is buried. The answer to this is: in the kraal.
I think with regard to all of us, including you, Minister, our
umbilical cords are buried in the kraal. It is through
identification documentation that all South Africans have access to
an identity. This provides citizens with a sense of dignity and
access to our freely given constitutional rights. So, really, the
new kraal in this sense becomes the Department of Home Affairs.
It is at Home Affairs where we begin the journey of identity. If
Home Affairs grinds to a halt, so do all our identities. If our
identity is stolen, we cease to be. If we are married without our
knowledge, we are locked into something from which it is hard to
extricate ourselves. If we are old but our identity document falsely
states that we are in fact young, we lose out on pensions. If our
identity document states that we are dead whereas we are alive, and,
similarly, if we are males but the document states that we are
females, we are truly in a difficult situation. [Applause.]
Therefore, we really appeal to Home Affairs to work swiftly,
systematically and honestly to address this issue, which lies at the
core of all South Africans and their identity.
Mphathiswa bendiphethe neyam buqu ndizama ukutshintsha igama lam
lasekhaya ndifake elasemzini. Okokoko ke ndihleli ndilinde impendulo
ukusuka kumhla we-10 kuDisemba mhla ndenza isicelo soko. Namhlanje
EPD 14 APRIL 2010 PAGE: 21 of 171
ke ngumhla we-14 kuApreli kusathiwa ndikwinqanaba lesibini
kumanqanaba emine. Ndiyacela ke ngoko Mphathiswa ukuba ukhe
usiphandele ukuba eli nqanaba lingunombolo ntoni-ntoni lizakuphela
nini na. [Kwahlekwa.] (Translation of isiXhosa paragraph follows.)
[Minister, I even had my own ID to change my maiden name to my
married name. I have been waiting since 10 December, the date on
which I made the application. It is 14 April today and I am told
that my application is at level two of the four levels. I would like
you, Minister, to investigate when these levels will come to an end.
This department is not only important in supplying us with the
correct identity but also in supplying other departments with the
correct identification statistics in order to organise their
budgets. It is true what Minister Manuel said about the country’s
2011 census, namely that “Statistics South Africa would have to rely
on effective data management by government departments if it was to
build a credible national statistical system which would allow for
evidence-based policy-making and monitoring as there is always a
danger of population undercount”.
Loo nto ke ithetha ukuba siliqhwabela izandla kakhulu iphulo
olenzayo Mphathiswa, lokuba abantu bazifumane izazisi zabo. ICope
iyalixhasa eli phulo kwaye nabo abantu basekhaya mabazilande izazisi
zabo, kuba sihamba kakhulu kula duladula ukujonga okwenzekayo phaya.
EPD 14 APRIL 2010 PAGE: 22 of 171
Uyakufika iibhokisi ngeebhokisi zezazisi zingalandwanga. Bade aba
duladula banyanzeleke baphume baye ezikolweni ukuya kukhwaza.
Ndicinga ukuba abantu basekhaya noko mabazame ukuzilanda izazisi
zabo. (Translation of isiXhosa paragraphs follows.)
[That means we highly appreciate the initiative you have taken
Minister, in order for people to get their IDs. Cope supports this
initiative and also urges our people to fetch their IDs because we
visit that mobile office often to monitor what is happening there.
You will find IDs that have not been collected are packed in many
boxes. These mobile offices end up visiting schools to read out the
names. I think our people must try to collect their IDs.]
I just want to say something quickly about the new passport system.
Cope is happy to learn that as a result of the new passport system
the average turnaround time is between 10 and 19 days.
Siyayivuyela loo nto kwaye siyifumene into yokuba ... [We appreciate
that and we have also found out that ...]
... the features include a seven-layer polycarbonate page where
personal details and a photograph are laser-engraved.
Intle kakhulu loo nto leyo. Sinethemba lokuba ... [That is
wonderful. We hope that ...]
EPD 14 APRIL 2010 PAGE: 23 of 171
... we are now in line with the requirements of the International
Civil Aviation Organisation. On the smart card ...
... Mphathiswa, hayi, siyafuna ukuthi iintliziyo zethu zibuhlungu.
Kungaqhuma kubasiwe. Ikhona into engalunganga ngale nto yesmart
card. Khawusincende ke Mphathiswa ngophando olukhawulezileyo kwaye
sibone kakuhle. (Translation of isiXhosa paragraph follows.)
[... Minister, we want to register our anguish. We cannot just be
unhappy as a result of nothing; surely there is something going
wrong. Something is wrong with the smart card. We would like an
urgent investigation, Minister, in order to understand better.]
We learnt today that something will be presented to us ...
... kwaye siyiqhwabela izandla kakhulu loo nto. [... and we highly
On the co-ordination of border control ...
... ixhala lethu lelokuba ingathi oku kuza kuba nguphelasonwabe emva
kweNdebe yeHlabathi yeFifa. Kunga ingaqhubeka ke le nto kuba sibona
umahluko omhle kakhulu, amagosa ajongeka esebenza. Amatyala
orhwaphilizo ayaqwalaselwa. Ngoku ke sifuna ukuba loo nto ingabi
sayeka nasemva kowama-2010. Siyacela ke Mphathiswa usincedise
ngecandelo lama-22 lamaphepha-mvume obumbacu sizokufumana iindlela
EPD 14 APRIL 2010 PAGE: 24 of 171
zokuncedisa abantu bethu. Naleyo into sikuvile namhlanje uyithetha,
Kukho ke into ebalulekileyo kuthi malunga nabakhangela igwiba
lobumbacu, osixeleleyo ukuba iza kuba njani apha kubo. Loo nto ke
kunga singazi ukuba kuza kwenzeka nini oku. Kuba siyazi ukuba ...
(Translation of isiXhosa paragraphs follows.)
[... what concerns us the most is that this will be less significant
after the Fifa World Cup. How we wish that this could continue
because there is quite a lot of improvement and officers seem to be
really working. Cases of fraud are being attended to. We therefore
want that to continue even beyond 2010. We also appeal to you,
Minister, to assist with section 22 permits issued to asylumseekers
so that we could find ways of assisting our people. We heard you
mentioning that earlier, and it is appreciated.
There is something important that you mentioned to us members and to
asylumseekers on how this will affect them. We would like to know
when this will happen. Because we know that ...]
... we want to be careful that we don’t label refugees and
asylumseekers as threats to our society. In this way we normalise
violence, which results in furthering xenophobia.
EPD 14 APRIL 2010 PAGE: 25 of 171
Okokugqibela ke ndifuna ukuthetha ngokulungela owama-2010. Enkosi
kakhulu kumaLungu ePalamente kunye nosihlalo abaye basinika ithuba
lokuba sihambele izixeko ezizakusingatha imidlalo yeNdebe
yeHlabathi. (Translation of isiXhosa paragraph follows.)
[Lastly, I want to talk about our readiness for the 2010 Fifa World
Cup. Let me thank the Chairperson and Members of Parliament for
giving us the opportunity to visit the cities that will host the
Fifa World Cup games.]
Seven parliamentary committees are overseeing the readiness of the
Into entle iyanconywa, yaye silubonile uhlobo abasebenza ngalo.
Sinethemba lokuba baza kuqhubeka kanjalo. Ukongeza, uMphathiswa
siyambona ezama namanyathelo okulwa urhwaphilizo. Ngamagosa ali-159
esele sivile ukuba anqunyanyisiwe. Kodwa ke, Mphathiswa,
mabanganqunyaniyswa nje kuphela; mabade bahambe ngamasela,
ngamatutu. Basimosha kurhulumente, kanti kufuneka kulungisiwe
kurhulumente. (Translation of isiXhosa paragraph follows.)
[We need to give credit when it is due and we have seen how
dedicated they are in their work. We hope that they will sustain
that. To add more, we are aware of the initiatives that the Minister
has come up with in fighting corruption. We have heard that 159
officers have been suspended. They must not just be suspended;
EPD 14 APRIL 2010 PAGE: 26 of 171
action must be taken against them and they must leave because they
are thieves. They are corrupting the government instead of serving
I’m very encouraged to see that the department has made progress
since last year. I am also aware that many challenges still lie
ahead, especially with the upcoming Fifa 2010 World Cup.
Siyabulela kwamanye amasebe esingakhe sikwazi ukuwakhankanya:
iKomishoni eziMeleyo yoNyulo, iBhodi elawula imiBoniso Bhanyabhanya
noPapasho kunye nemisebenzi yoshicelelo. Ezi zimbini ke ziphethwe
ngamakhosikazi asebenzayo. (Translation of isiXhosa paragraph
[We also thank other departments that we could not mention: the
Independent Electoral Commission, the Film and Publication Board and
the broadcasting authority. These two departments are headed by
The HOUSE CHAIRPERSON (Mr K O Bapela): Hon member, your time has
Nkskz Z B BALINDLELA: Ndicela nje ke Tata ukubulela umntu omnye,
uSihlalo wekomiti yethu. Awu! indoda kaThixo ithi ayinayo newotshi.
[Kwahlekwa.]. Ithi Tata laa ndod’ abantu inxiba the cheapest watch
EPD 14 APRIL 2010 PAGE: 27 of 171
in the room. [iwotshi yelona xabiso liphantsi kweli gumbi.]
[Kwaqhwatywa.] (Translation of isiXhosa paragraph follows.)
[Mrs Z B BALINDLELA: Sir, I would like to thank just one person, the
chairperson of our committee. Oh shame! A man of God indeed who says
that he does not even have a watch. [Laughter]. Sir, that man claims
that he wears the cheapest watch in the room. [Applause.]]
Ms H N MAKHUBA: Chairperson, Ministers, Deputy Ministers, hon
members and guests, on behalf of the IFP, let me first welcome the
newly appointed director-general, Mr Mkuseli Apleni. We look forward
to a good working relationship. In order for the Department of Home
Affairs to fulfil its civic functions of acting as a custodian of
citizenship and identity, the regulator of immigration and of ports
of entry, and the promoter of international relations, it requires a
highly dedicated, efficient and competent leadership and staffing
In the area of performance delivery, we note that the department has
had a mixture of successes and failures regarding target turnaround
times for the issuing and reissuing of identity documents. We
further note that it has set itself even higher turnaround goals for
the 2010-11 period. We hope the department is not following a
strategy of overpromising and then delivering less. We caution it to
rather set incremental goals that are more readily achievable.
EPD 14 APRIL 2010 PAGE: 28 of 171
Another issue is misinformation given to citizens when they interact
with officials at Home Affairs offices. Such misinformation results
in a citizen having to make five different trips to the departmental
office in order to complete an application for an identity document
or passport. This is unacceptable and its cause must be identified
However, praise is in order for the department’s call centre, which
is efficient in the handling of public queries. We also praise the
call centre for its proactive approach to the Who Am I Online
project, which promotes the transition to a paperless working
environment. The issuing of identity documents at schools is also a
step in the right direction and should greatly alleviate the burden
on the Home Affairs frontline offices. Proactive initiatives such as
these will go a long way in assisting government departments with
Currently the department’s major focus is on preparations for the
2010 Fifa World Cup and the sudden influx of foreign tourists and
football teams that will begin within the next 57 days. We trust
that the Minister is prioritising the changes to immigration
procedures, as specified by Fifa. We also trust that the football
fans will have a problem-free entry and a problem-free exit from
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Another great concern is the human trafficking that will occur. Are
all our officials at our ports of entry properly trained to identify
and handle situations of this nature, if and when they arise?
The IFP is concerned that within the department the spectres of
corruption and a poor work ethic still rear their heads. The
department must continue to deal with this swiftly and decisively
because it eventually leads to total departmental dysfunction. This
impacts negatively on the lives of our citizens because they receive
substandard service in their dealings with the department.
While doing an admirable job during elections, the Independent
Electoral Commission has still not remunerated some election
officers in rural areas for the work done during the elections of
last year, April 2009. This is unacceptable and must be rectified,
because these election officers are among our needy people. We are
facing local government elections in 2011 and do not wish to see a
repeat of this situation.
The smart card ID system, which was introduced more than 10 years
ago and approved by Cabinet in 2001, has yet to materialise. Last
year the Minister indicated that the smart card process had been
stopped. The Minister also admitted last month that National
Treasury has not given the department any budget allocations for the
project this year. The Minister needs to provide clarity on this
EPD 14 APRIL 2010 PAGE: 30 of 171
These are but a few of many challenges that face the Minister and
her team during this year. This is an extraordinary year in that we
have the World Cup, and it’s the year in which the department will
have to step up its game in order to achieve the lofty goals it has
set for itself. We wish you well, Minister. In conclusion, the IFP
supports the vote. Thank you. [Applause.]
Mrs T M A GASEBONWE: Chairperson, hon Minister Comrade Dr Nkosazana
Dlamini-Zuma, hon Deputy Minister Gigaba, hon members and guests, I
am honoured to participate in this budget debate. The Budget Vote
process is an opportunity to assess how far we have come in our
programmes and projects and whether what is being appropriated by
the national Budget speaks to the priorities that the ANC has set
The Department of Home Affairs is committed to ensuring the
efficient determination and safeguarding of the identity and status
of citizens and the regulation of migration, to ensuring security,
to promoting democracy, and to developing and fulfilling South
Africa’s obligations. These obligations are substantial, and in a
constitutional democracy like ours, we are constitutionally duty-
bound to perform. Judging by the Budget Vote’s additional
allocations, the Independent Electoral Commission, IEC, Film and
Publication Board and Government Printing Works, GPW, have shown
steady increases over the Medium-Term Expenditure Framework, MTEF.
EPD 14 APRIL 2010 PAGE: 31 of 171
The IEC and GPW received the largest portion of the budget
allocation during the 2010-11 financial year. The IEC received an
increase from R937 million to R1,4 billion. The budget increase for
the IEC is obviously influenced by the 2011 local government
elections. The increase in funding of these entities is compatible
with the ANC’s commitment to multiparty constitutional democracy,
which has requirements for regular elections. This received much
debate at the 51st National conference of the ANC in Stellenbosch in
2002. The conference looked at the responsibility of the ANC
government in providing the essential documented support for all
Indeed, printing and publication work contribute to essential
communications and the battle of ideas. The 2007 Polokwane
conference reaffirmed the importance of all forms of communication
by the state in the national democratic revolution and the battle of
ideas that need to be cultivated for a socially and politically
conscious and responsible nation to function.
The ANC recognises that, while there is a lot of progress on this
front, there is much that still needs to be done. The ANC’s
commitment to the freedom of the media is well known and entrenched.
This principle was first adopted in the Freedom Charter and is
entrenched in our Constitution. The ANC’s commitment to freedom of
expression in society, including the media, is located within the
context of the Constitution of the Republic. These rights need to be
EPD 14 APRIL 2010 PAGE: 32 of 171
weighed against other constitutional rights, such as the right to
human dignity and privacy. The ANC is of the opinion that the media
needs to contribute to the building of a new society and be
accountable for its actions. This relates to both broadcasting and
the print media.
Given that we are undergoing a process of national democratic
revolution, the media should contribute to the transformation of our
country. Building social cohesion and promoting the values of a
caring society and nation are an essential part of the battle for
ideas and must underpin and inform the manner in which the
publication and printing board operates.
In the state of the nation address, President Zuma called for
efforts to promote greater economic growth through the reduction of
communication costs. He committed government to reducing broadband
costs, cellphone, landline and public-phone rates, and I quote him
when he said that “we will work to increase broadband speed and
ensure a high standard of Internet service, in line with
international standards”. This suggests the multifaceted nature of
my debate involving technology, the Constitution and socioeconomic
The Government Printing Works generates revenue mainly from printing
identity documents, forms, examination papers and passports. Revenue
EPD 14 APRIL 2010 PAGE: 33 of 171
is expected to increase over the Medium-Term Expenditure Framework
During the MTEF period, spending will focus on expanding activities
directed at preventing child pornography on the Internet. These
activities include working closely with international organisations,
researching human trafficking trends, classifying films, monitoring
suppliers for compliance, and building relationships with
Chairperson, in this regard, one has to draw the nation’s attention
to the fact that child pornography is one of the fastest-growing
Internet businesses, estimated to be worth billions of rands. Our
debate must call for active popular participation of civil society
in order to shape and take part in instilling the correct values,
ethos and cultural norms that we wish to entrench in the minds of
Therefore, we welcome the pressure, led by the Film and Publication
Board, the department, the ANC and broader civil society, which
brought about the termination of the research project that DStv
wanted to launch on a 24-hour pornographic pay channel. More than
20 000 images of child pornography are posted online every week,
approximately 20% of all Internet pornography involves children and
there are approximately 100 000 websites that offer illegal child
pornography. While such information may enrage or frighten people,
EPD 14 APRIL 2010 PAGE: 34 of 171
it will not alter the conduct of those who take pleasure in or
profit from the exploitation of children unless the public and
government are prepared to be decisive in decisions and actions to
protect the children.
We believe that the department’s budget must be distributed
precisely to crack down on this and demonstrate clearly the
government’s resolve to effectively reinforce the global effort to
combat this crime. Child pornography and the exposure of children to
pornography must be made an abomination in society. There should be
a comprehensive implementation of an information and communication
technology, ICT, strategy that will ensure that the Film and
Publication Board is up to date with new technologies that impact on
content delivery and media distribution.
There is a need to strengthen the implementation and enforcement of
the Films and Publications Act through the further development and
maintenance of organisational capacity. The Constitution is
unambiguous on this point. It states that everyone has the right to
freedom of expression, which includes freedom of the press and other
media, and freedom to receive or impart information or ideas. The
democratic state has, since 1994, continued to uphold and respect
the letter and the spirit of our Constitution, aware that our
Constitution is a historic, legally binding document that marks out
the contours of the new dispensation and its attendant values. Among
others, the Department of Home Affairs has the responsibility to
EPD 14 APRIL 2010 PAGE: 35 of 171
ensure that the people of South Africa ensure that our children grow
up in a society marked by consistent observation of high moral
standards. Ironically, the prevailing interpretation of reality in
our public discourse continues to portray these open and above-board
processes as an act of constitutional violation and a threat to
It should be noted that the Government Printing Works has extended
its services throughout the region and continent. The budget speaks
to this. It has crafted for itself a reputation as being one of the
best, most secure and most specialised printing agencies on the
continent. In recent years, the Government Printing Works won the
contract to provide the African Union with diplomatic and service
passports, which were successfully delivered on Africa Day.
Over the years, the Government Printing Works has assisted the
Independent Electoral Commission, and other countries, with the
provision of ballot papers for elections. All of these strides make
the relocation of the Government Printing Works to a new and more
convenient site and a specially designed complex all the more
urgent. Furthermore, the Government Printing Works needs to
accelerate a forensic laboratory capability to analyse passports,
identity documents, visa labels or any high-security, face-value
documents in order to complement other law enforcement agencies in
the fight against identity fraud.
EPD 14 APRIL 2010 PAGE: 36 of 171
In conclusion, the Department of Home Affairs has to co-operate very
closely with the South African Police Service, specifically at
forensic levels. The finalisation of the process to convert the
Government Printing Works into a specialist security printing agency
is urgent in order to address the crucial matter of the secure ...
The ANC supports the budget. [Applause.]
Mr J J MCGLUWA: Chairperson, the Department of Home Affairs has
become infamous over the years as a department plagued by
corruption, scandal and poor service delivery.
The influence of this department is far-reaching. It does not only
affect the lives of all South Africans but also of millions of
people who enter our country from Africa and the rest of the world.
The ID was relieved that someone of the calibre of Minister
Nkosazana Dlamini-Zuma was put in charge of the department and we
have already seen some improvements. These have included a slow yet
convincing transformation into the delivery of a service that is
efficient, accessible and corruption free. This confidence, however,
will never blind us to the qualified audits the department gets year
EPD 14 APRIL 2010 PAGE: 37 of 171
With the 2010 Fifa World Cup on our doorstep, we can only be proud
to say that in terms of our ports of entry we are ready. We also say
that there are minor challenges, like the access control at the Cape
Town Airport at Customs and also the siege of the baboons at the
Beit Bridge port in Limpopo. It is a pity that we did not have the
opportunity to visit other Southern African Development Community,
SADC, countries, seeing that the World Cup is on African soil.
We support the increased budget for the Film and Publication Board,
but we feel we could do more to clamp down on child pornography and
the increasing sexual exploitation of children and women, especially
as the 2010 Fifa World Cup looms.
I would also like to voice the ID’s concern about the lack of
representation of females in middle management. There is a need for
us to address these imbalances.
I strongly feel that the Minister owes us an explanation about what
exactly happened with the forensic audit reports on the Who Am I
Online project and the review requested by the State Information
Technology Agency, Sita, into the smart card project tender control
process. In addition to the upcoming smart card briefings by Sita on
20 April, we demand to see the forensic audit report.
It does not make sense that Sita, the very organisation that the
Minister herself said didn’t do as it was supposed to do, will now
EPD 14 APRIL 2010 PAGE: 38 of 171
be giving us a briefing on the forensic report that none of us have
According to media reports, the Minister publicly condemned Sita for
the delays in the smart card project. And now we are expected to
trust Sita to give us its own sanitised version of the report!
Why is it that the Who Am I Online project report, given to the
former Minister on 10 February 2009, had not been seen by the
portfolio committee until today? What does the department have to
hide? The ID supports this budget. I thank you.
Dr C P MULDER: Chairperson, the hon Minister started her
intervention this afternoon by reminding us that we are in the month
of April. Then she reminded us about the arrival of Jan van Riebeeck
358 years ago. She made the point that that was the beginning of our
We all know that history can be interpreted from different points of
view and angles. What I do know is that South Africa today is the
most modern country in Africa. What I do know is that we have the
strongest economy in Africa. We have one of the most modern
constitutions in Africa. I was just wondering if it could be that
not only those people who came then played a role, exclusively. It
is definitely not so. All South Africans made a difference in making
EPD 14 APRIL 2010 PAGE: 39 of 171
such a huge success of this country. Perhaps we should be careful
before we just make statements.
The aim of the Department of Home Affairs is to efficiently
determine and safeguard identity and status, regulate migration,
ensure security, promote development and fulfil its international
This department is in the very frontline, in terms of the
expectations of all our citizens. All citizens throughout their
lives will, on more than one occasion, come into contact with this
department. It might be with the registration of a child’s birth,
registering as a voter, or applying for an ID document or passport.
It might be when they get married, change their name or surname or
even when they die.
Unfortunately this department has, over the last couple of years,
not had the best track record of service delivery, efficiency or
being a bastion against corruption. Because of this, there has been
a need to create a new Department of Home Affairs and we have been
hearing about a dramatic turnaround strategy for quite some time.
However, this is not the first time.
Six years ago, on 24 February 2004, a briefing was given to a joint
committee of Parliament on a turnaround strategy for the Department
of Home Affairs. The point of departure was that the Department of
EPD 14 APRIL 2010 PAGE: 40 of 171
Home Affairs needed “a decisive turnaround strategy”. That specific
strategy was not successful. A new strategy was implemented in the
last two years. At last we are now experiencing and seeing the
positive results of a new Department of Home Affairs and for that we
are very thankful.
That did not just happen by itself. In the 2003-04 financial year,
R1,9 billion was given to this department. In the current financial
year, it is R5,7 billion. That is an increase of 200%. When one
gives such huge amounts of money, we obviously need to see the
results at some stage.
Die Departement van Binnelandse Sake werk met die status van
persone, deurdat hulle verantwoordelik is vir die toekenning en
uitreiking van statusgewende dokumentasie. In daardie opsig kan
foute nie bekostig word nie. Burgers is geregtig op dokumentasie wat
effektief is. (Translation of Afrikaans paragraph follows.)
[The Department of Home Affairs deals with the status of people, on
account of the fact that they are responsible for the granting and
issuing of status documents. In that respect, they cannot afford to
make mistakes. Citizens are entitled to documentation that us
In December last year, the hon Minister announced that she had
suspended 31 officials, and that was over and above the other 28
EPD 14 APRIL 2010 PAGE: 41 of 171
officials that were also suspended in the last week of November. Can
the hon Minister please give us some feedback about what happened?
We cannot allow ... [Time expired.]
Ms P MADUNA: Chairperson, hon Minister, Deputy Minister, Members of
Parliament and guests, this Budget Vote debate takes place against
the backdrop of the department’s immigration programme that deals
with matters relating to refugees and asylumseekers. The allocation
of the budget reflects a steady decline. This objective reality
needs to be assessed against the priorities of the strategic plan of
the Department of Home Affairs and the centrality of immigration
policies and functions.
The ANC policy on migration, immigrating refugees and xenophobia is
very clear. If migration is managed properly, it can lead to
development in the country and its gross domestic product, GDP, with
benefits for all.
In recent years, the rise in the number of immigrants to South
Africa has been accompanied by increasingly visible acts of
xenophobia against foreign nationals, particularly those from other
African countries. Xenophobia, the hatred of foreigners, is one of
the global challenges which the ANC has tried to address through
international forums, continental bodies and within our borders.
EPD 14 APRIL 2010 PAGE: 42 of 171
The xenophobic sentiments evident in parts of South Africa run
against the current of the country’s main political traditions and
are in sharp conflict with the strong nonracial culture of the ANC
and the majority of the citizens of our country.
Since its formation in 1912, the ANC became the pivot of African
unity in South Africa and beyond, its broad, outward-looking
progressive nationalism reflecting both the humanist traditions of
African democratic inclusiveness and the universal values of the
major religions of the world. The ANC’s formation stirred the human
solidarity of the African continent. The government and peoples of
the African continent played a central role in the achievement of
democracy and nonracialism in South Africa.
The instance of xenophobia in South Africa is largely linked to
immigration. The South African government in recent years
repatriated more than 270 000 people. The great majority of these
people were undocumented foreign nationals from various countries in
Africa. More than 100 000 came from Mozambique; more than 60 000
from Zimbabwe; more than 7 000 from Lesotho; and more than 3 500
each from Swaziland and Malawi.
The figures do not tell the whole story of undocumented foreign
nationals who illegally cross South Africa’s borders in search of
safety and better opportunities. There are thousands of foreign
nationals who, while they do not possess legalised documents, stay
EPD 14 APRIL 2010 PAGE: 43 of 171
undetected in the country for long periods of time. In addition,
there are thousands from the continent who are refugees and others
who hold various types of permits, including documents for work and
In the political management of this scenario, it is important that
we align ourselves with what the United Nations High Commissioner
for Refugees, UNHCR, resolved as far back as 1951. They resolved
that we make a clear distinction between political refugees and
economic migration and deal with these two distinctively different
The increase in immigration was a predictable consequence of South
Africa’s democratic breakthrough in 1994. More immigrants are going
to come to South Africa. This will continue to be the case each year
until both the political and economic conditions on the continent
change for the better.
There is another positive dimension and long-standing advances that
tend not to be highlighted on this debate, namely that for years
South Africans have lived side by side with foreign nationals. They
worked together in the mining migrant system, lived together in the
townships, studied together and shared accommodation in institutions
of higher learning.
EPD 14 APRIL 2010 PAGE: 44 of 171
Since 1994, South Africa has benefited from migration, and the ANC
has always advocated the revision of immigration policies. The need
for job creation and scarce skills has been part of the relationship
between the Department of Home Affairs, citizens and foreign
It was obvious that the new conditions of democracy, peace, justice
and prosperity in South Africa would bring to the country many
foreign nationals, especially from the African continent. The new
arrivals would, in the main, include asylumseekers from those parts
of the continent where political conflict still rages, as well as
economic refugees fleeing from hunger and want in their own
Regarding immigration control, successive colonial and apartheid
regimes used immigration control as one of their tools to convert
South Africa into a colony of a special type. While the immigration
of whites was encouraged and assisted as part of a deliberate
recruitment programme, blacks were carted, through controlled
immigration and forced removals, to areas that were reserved for
occupation by Africans, coloureds and Indians.
An indication of things to come was the enactment in 1913 of the
Immigrants Regulation Act. The Act also proscribed the movement of
black people in South Africa and made them foreigners in the land of
EPD 14 APRIL 2010 PAGE: 45 of 171
Fighting xenophobia includes supporting the progress of regional
integration with all the countries of the Southern African
Development Community, SADC, and commitment to the vision of the
African Renaissance. The ANC is also committed to upholding the
letter and the spirit of the Constitution, which protects the human
rights of both South Africans and immigrants within the country.
While xenophobic elements in society will call for further
limitation of the rights of foreign nationals, such limitations
themselves are likely to result in an increase in xenophobia.
It is important to understand the phenomenon of xenophobia in the
context of globalisation, which also threatens to reinforce the
material basis for racism on a global scale. The process of
globalisation is also associated with the emergence of new forms of
racism, xenophobia, and gender and related intolerances.
While the free movement of capital and goods across national borders
is encouraged and growing, the movement of people across borders,
especially the movement of unskilled labour from less developed to
the more developed countries, is becoming increasingly
The ANC supports the establishment of a human rights-based system
for migration control through legislation. The ANC will work to
ensure that its structures are equipped to assist foreign nationals
to legalise their stay in South Africa. It will work with other
EPD 14 APRIL 2010 PAGE: 46 of 171
forces on the continent to encourage economic growth and social
development across Africa.
The ANC is committed to promoting community awareness of tolerance
and respect for the rights of foreign nationals and their
integration into local communities.
The question that remains to be answered is: What is to be done to
deploy resources through the budget where they are needed most?
After all, the ANC budget must enhance the vision of building a
caring society and working towards a peaceful national democratic
society. This position is in line with the ANC’s stance at the 52nd
national conference in 2007 of building a peaceful and caring
A word of caution is also necessary. We are aware that South
Africa’s new constitutional democracy is being taken advantage of by
all sorts of different groups externally with different agendas.
Hence part of the approach is to ensure that the Department of Home
Affairs is working together with the criminal justice cluster to
develop a policy and system that will ensure that illegal acts are
captured in a data system that will assist in monitoring the
movements of perpetrators and the enforcement of South African laws.
There is a need to strengthen border post services while, on the
other hand, it is necessary to speed up satellite infrastructure to
EPD 14 APRIL 2010 PAGE: 47 of 171
ensure connectivity. It is equally important to have the border post
network incorporated into the overall departmental network.
In conclusion, it must be noted that social integration has been
entrenched in our country over the years. Equally, adversarial
incidences tend to reverse the gains of the past in a society that
is transforming itself from a racist legacy.
This budget is important in taking forward the progress of the
Department of Home Affairs. The ANC supports Budget Vote No 4 for
the Department of Home Affairs. Working together, we can do more. I
thank you, comrades. [Applause.]
The DEPUTY MINISTER OF HOME AFFAIRS: Chairperson, hon Minister of
Home Affairs, hon Ministers and Deputy Ministers, hon members, my
daughter, Lerato, ladies and gentlemen, first and foremost I would
like to take this opportunity to pay special tribute to our fallen
colleague, Dr Molefi Sefularo.
Chairperson, 100 years ago, on 31 May 1910, after the bloody South
African War - inaptly dubbed the Anglo-Boer War - the Union of South
Africa was established as a “white man’s country” where the black
majority was purposely excluded, denied universal franchise and
treated as cheap labour. The Union finally formalised the political
unity between the Brits and Boers, and for almost a century race was
to play a decisive and divisive role in the politics of our country.
EPD 14 APRIL 2010 PAGE: 48 of 171
Our country has traversed a long journey to where we are today.
While we still carry with us the painful imprints of our past, today
we are a nation and people steadfastly committed to constructing a
new future based on unity, equality and respect for each other’s
rights and diversity.
The Republic of South Africa born 16 years ago is a firm negation of
the racist chauvinism of 1910 and a resolute affirmation of the
historic vision that South Africa belongs to all who live in it,
black and white.
The Department of Home Affairs, which has the honour to present its
Budget Vote today, is part of this vision. It is determined to do
all it can to affirm all our people’s yearning to belong to a common
nation, share a common identity and toil towards a common future. We
remain resolute in our commitment never again to allow this
department to be used to divide South Africans, but to be part of
the broad movement to affirm our people’s common identity and
In order to enhance our skills base and our leadership capabilities,
we announced plans to establish the Home Affairs learning academy.
Because we committed ourselves, we are pleased to announce that we
did finalise the academy’s business case and a Home Affairs
qualification, focusing on the core business of the department and
customer care. The learning academy will begin to be operational in
EPD 14 APRIL 2010 PAGE: 49 of 171
this financial year. We have further decided that the academy will
deal with policy development and knowledge management for the
For this financial year, our training will focus on the training of
supervisors and front office officials in customer service,
operational excellence and other needs-based interventions.
Furthermore, because the situation at Home Affairs is not normal, we
have met with Business Unity South Africa, Busa, and agreed that
they shall, on our behalf, engage the banks to second managers to
train our officials, especially those involved in front office
operations, in order to improve customer service.
Furthermore, to contribute to the programme of enhancing youth
employability, the department intends this year to recruit 244 young
people for the internship and 300 for the national youth service
programmes. The recruitment of interns is already under way and they
will soon join the department.
In the last financial year we committed ourselves to improving the
operational efficiency and effectiveness of refugee affairs. Our
intention was to improve the turnaround time for the determination
of refugee status and significantly increase the quantitative number
of decisions made by our officials. We wanted to radically improve
EPD 14 APRIL 2010 PAGE: 50 of 171
the protection mechanisms for genuine asylumseekers and refugees, in
line with our international obligations.
In this regard, we have improved the number of days it takes to
issue section 22 permits from seven days to one day. We have
increased the numbers of our refugee status determination officers
and we have increased the number of their decisions made from an
average of five decisions per week to an average of seven decisions
We still face a serious challenge to improve the quality of the
decisions and compliance with newly designed methods of work and
business processes. However, we intend to establish an additional
centre in Bloemfontein during this financial year.
More importantly, this year we intend to begin the complete overhaul
of the strategic thrust of refugee policy and legislation. This
overhaul will impact extensively on the asylum processes, the
details of which shall be announced during the course of the year.
Through this exercise, among others, we hope to separate economic
migrants from genuine asylumseekers. This is precisely why we began
engaging various stakeholders, such as trade unions, on the issue of
economic migrants, with the purpose to evolve a policy on the
matter. We intend to continue with this very important exercise and
EPD 14 APRIL 2010 PAGE: 51 of 171
broaden the stakeholders’ engagement and, as the Minister indicated,
to bring legislation to the National Assembly.
Last year, we also committed ourselves to intensifying the campaign
against xenophobia. We are pleased to report that as part of this
effort we have already trained 102 community development workers and
23 secondary schools in affected areas in Gauteng. We are also
working with the SA Police Service and other key stakeholders,
professionals and activists.
Fighting xenophobia is ultimately the responsibility of the public
as a whole, so this programme must be premised on mobilising
communities at large. In this financial year, we will improve the
department’s institutional capacity to lead and co-ordinate
sustainable interventions by creating a directorate. We will
finalise and launch the programme.
As you would know, the Films and Publications Amendment Act was
finally signed into law by the President. Both the Act and the
regulations are now operational. We will finalise the appointment of
the council of the Film and Publication Board within 30 days.
We continued to make strides in the past financial year,
particularly in the fight against child pornography through mass
outreach campaigns. We are still awaiting the report of the Law
Reform Commission on our request for advice on the possibility of
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prohibiting pornography in certain areas, including the Internet and
mobile phones. We are committed to having legislation in this
regard, in order to protect our children. Those who want to view
pornography must do so in the privacy of well-regulated adult shops.
It is for this reason that we celebrated with most South Africans
when MultiChoice stepped down from the idea of establishing a 24-
hour pornography channel. We applaud all South Africans who stood
firm in their rejection of this nefarious idea and regret that
MultiChoice even thought of this in the first instance. We must
steadfastly continue to refuse to accept that pornography be brought
into our living rooms.
Among the priorities for this financial year is that we develop a
turnaround strategy to ensure the alignment of the Film and
Publication Board structures, systems and processes with the new
We will also establish a dedicated unit to oversee the roll-out of
the Fifa World Cup projects regarding child protection, focusing on
the roll-out of a massive public awareness campaign on the risks to
children. An amount of R15 million has been dedicated to this
Over the past few years, we have been seized with the challenge of
the transformation of the Government Printing Works, GPW, to
EPD 14 APRIL 2010 PAGE: 53 of 171
position it as the security printer of choice for government and the
SADC region. We have decided to position it as a key player in the
smart card and passport industry.
In this regard, we are pleased to report that we have completed the
conversion the of GPW into a government component. We should soon
complete the appointment of its advisory board in terms of the Act.
At this stage, we are in the process of changing the organisational
structure of the GPW and finalising the migration of its staff to
the new structure.
The conversion has made it possible for the GPW to negotiate and
implement a special salary dispensation for artisans, which should
help address the challenge of the recruitment and retention of
skilled artisans for the organisation.
Following years of adverse audit opinion, the GPW is well on its way
to a clean audit. We have finally recruited a well-qualified and
experienced chief financial officer. We will further procure more
modern equipment in order to prepare the organisation for the new
challenges ahead. And in a few months we will complete the second
pavilion that will result in the relocation of the entire factory
from that old dungeon at the old premises to a new and refurbished
EPD 14 APRIL 2010 PAGE: 54 of 171
Regarding the debt that was reported in the portfolio committee, we
wish to inform hon members that by the time it was reported to the
portfolio committee the department had already made a formal
acknowledgement of the debt. By the end of March this year the debt
was paid up. New tariff requests are being made to National Treasury
in order to avoid the recurrence of the same problems in future.
Chairperson, I wish to conclude by thanking the Minister for her
studious and steadfast leadership and support, as well as the
director-general, senior managers and all the officials in the
Ministry and department for their support in the execution of our
mandate. I hope my daughter was not as bored by this speech as she
was last year.
Hon members, we commend this Budget Vote to you. However, we regret
that you need to expect the report from Sita because they were the
ones that were doing this report on the smart card. I want to
promise that Sita will not provide the portfolio committee with a
sanitised report but with the report as they have done it. That is
part of the process of informing the portfolio committee. Thank you.
Mr S N SWART: Chairperson, the ACDP shares the view that while there
has been great improvement in the department, there is still a long
way to go. We’ve served on the portfolio committee for a number of
years and we do see improvements, but we are concerned about long
EPD 14 APRIL 2010 PAGE: 55 of 171
waiting times and long queues at the offices, fraud and corruption
and, of course, the qualified audits. We look forward to a time when
there will no longer be a qualified audit.
Clearly, this department is a crucial one. Considering last year’s
economic downturn and the many citizens who needed to access social
welfare grants using their identity documents, the department plays
a very important role.
Fraud and corruption is an issue that everyone has raised and it is
a matter of great concern. The ACDP believes a big part of this is
the late registration of births. The Minister raised that issue. The
ACDP appreciates that many people live in rural areas far away from
Home Affairs offices. However, late registration should ideally be
limited to very exceptional cases, particularly after the first year
of birth. We support the target that the department has set in this
The ACDP also fully supports the attempts just elucidated by the
Deputy Minister and involving the Film and Publication Board to
combat adult and child pornography. We believe pornography is the
theory, rape the practice. We must take further steps. All strength
to you, Deputy Minister, with this legislation. Don’t wait for the
law commission, bring the legislation to Parliament. Let’s have a
look at it and see what we can do to assist you in that regard.
EPD 14 APRIL 2010 PAGE: 56 of 171
Regarding the soccer World Cup, we are concerned about the
trafficking issue. We would like you to give us a further indication
on whether sufficient measures are in place to prevent the smuggling
of vulnerable women and children into South Africa.
Chairperson, I see my time has expired, but from the ACDP’s side we
would like to congratulate the new director-general and thank all
those dedicated and honest officials who, over the years, have been
turning this department around. We support this Budget Vote. Thank
Mrs M M MAUNYE: Chairperson, hon Minister, hon Deputy Ministers,
comrades and hon members, this budget is being delivered in “the
year of working together to speed up effective service delivery to
the people”. In declaring this, the ANC seeks to ensure that each
government department responds to this theme and it is within this
context that we engage in this debate today.
The Budget Vote reflects that the Services to Citizens programme of
the Department of Home Affairs had an increase of 4,68% in nominal
terms. In real terms, this is a decrease, which, of course, must be
of concern. The reasons for this, however, need to be articulated
during this debate. What cannot be doubted is the commitment to the
delivery of services that meet the needs of all citizens alike.
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Pressures on this Budget Vote have been amplified by the increase in
applications for travel documents, passport systems, identity
documents, the upcoming Fifa World Cup and the 2011 local government
The ANC believes that the civic services have to underpin the
turnaround strategy and the turnaround strategy must speak to this.
The strategy brings together and harnesses all our resources in a
coherent and purposeful effort that can be sustained into the
future. In this regard our people, with their aspirations and
collective determination, are our most precious resource.
The turnaround strategy requires a partnership between the
Department of Home Affairs, communities and civil society. What
informs us historically is the Reconstruction and Development
Programme, which focused on the most immediate needs of our people.
It relies in turn on their energies to drive the process of meeting
The ANC is in the process of constructing a developmental state. The
nature of this state promotes participation, accountability and an
active, informed and empowered citizenry. It respects and engenders
a culture of human rights in society. It acts as the key force for
social integration and nation-building. It has to ensure the
necessary institutional capacity to play an interventionist role in
catalysing socioeconomic transformation, working in partnership with
EPD 14 APRIL 2010 PAGE: 58 of 171
different social forces. In this regard, the ANC’s 2004 election
manifesto, the people’s contract, called for integrated service
Local communities know better their daily experience and needs.
These need to be addressed in an integrated manner. It is through an
integrated approach that quality service delivery can be
accelerated. In the same vein integrated approaches recognise that
human needs are diverse and consistently changing.
This approach has to be driven, and as Members of Parliament we have
a constitutional and direct responsibility to do this. Meeting the
people’s needs means that our constituency offices have to be turned
into mobilising centres, centres of information and centres of
activism, promoting within the meeting of people’s needs the concept
of an activist Parliament.
In this manner, we can ensure an integrated approach with government
while at the same time exercising oversight on the programmes
directed towards serving the people’s needs. The active working
relationship between Members of Parliament and the communities,
especially in the areas of jurisdiction of this Budget Vote, is
crucial. It is a relationship that should be issued-based to advance
quality service to our people.
EPD 14 APRIL 2010 PAGE: 59 of 171
This budget picture speaks to the priorities of the ANC at present.
The turnaround strategy has reduced the time taken for the reissuing
of identity documents to 30 days through operations management,
process reviews and an ID track and trace system. The turnaround
time for the first-time issue of an ID has increased to 90 days,
because the first issue requires birth records and for permanent
residence or naturalisation to be verified, which takes up to two
months. Also, implementing the biometric access control management
system resulted in slower mass data inputs. The average turnaround
time for a passport is 19 days.
On-line fingerprint verification had been introduced at 226 offices
by the end of September 2009. As the ANC, we regard this as
significant progress. This technology-based approach enables front
office personnel to verify the identity of clients on application,
reducing the need to forward applications to the central ID
production facility. Temporary identity certificates can be issued
on the spot.
In the 2008-09 financial year the department opened 45 new service
points, of which 20 are permanent service points, 7 are district
offices and 18 are services centres. In 2009, the contact centre
handled about 1,1 million contacts, which included calls, faxes and
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Even prior to the turnaround strategy, the department had recognised
that operational efficiency required modern, integrated information
systems and communication networks, especially at service delivery
points. There have been ongoing improvements to systems and
processes, including their management. These include: a new passport
system implemented in April 2009; security features improved on
birth certificates; on-line birth and death registration done at 119
hospitals; on-line verification rolled out to 273 offices; the
implementation of track and trace functionality with regard to birth
registration; third-party on-line fingerprint verification piloted
with the South African Banking Risk Information Centre, Sabric;
measures being put in place for the 2010 Fifa World Cup successfully
piloted during the Confederations Cup and Fifa draw in December; a
campaign under way to reduce backlogs in late registration of
births; backlogs in provinces have been reduced; 176 late-
registration-of-birth committees in place and functional, and other
The ANC has consistently treated the fight against corruption as a
priority and has given its full support to the anticorruption
partnerships. A national anticorruption programme was developed and
adopted by the public, business and civil society. It should be
remembered that combating corruption and crime is one of our
EPD 14 APRIL 2010 PAGE: 61 of 171
Significant progress has also been made in areas of capacity
constraints and improvement of infrastructure. With regard to the
flow of skills into the public sector, the customisation of the
induction and orientation programme for pilot departments is
progressing, but there are challenges.
The turnaround strategy has to bring about real change in the
Department of Home Affairs, in line with the spirit of Batho Pele.
The transformation of Home Affairs has gained momentum. This
turnaround was not about superficial restructuring but about deep
and fundamental change. The transformation process within the
department will not be an event but a deep-seated process. As a
result, it was anticipated that there would be certain levels of
difficulty, particularly the need for a larger budget to ensure the
One of the key elements of the turnaround strategy is to get the
right people into the right positions within the new structure. The
ANC refers to the entrenchment and necessity of a new cadre with a
new consciousness that must serve the people with dignity and
dedication. It also means that as transition occurs, from the old
Home Affairs model to the new one, there is the need to consolidate
gains. The department should ensure that people are able to do the
jobs they are required to do, and that they are placed in positions
on the basis of their strengths and skills. [Time expired.] Thank
EPD 14 APRIL 2010 PAGE: 62 of 171
Mr M MNQASELA: Chairperson, the hon Minister of Home Affairs,
Nkosazana Dlamini-Zuma, hon Deputy Minister of Home Affairs, Mr
Malusi Gigaba, other Ministers and Deputy Ministers present here,
hon members, distinguished guests, ladies and gentlemen ...
... ndiyafuna ukubulela kwakhona kwimibutho namaqumrhu akhoyo:
iKhomishoni eZimeleyo yoloNyulo, IEC, iMisebenzi yoShicelelo
kaRhulumente, kunye neBhodi elawula imiBoniso Bhanyabhanya
noShicelelo. [... I also want to thank the organisations and
agencies that are present: The Independent Electoral Commission, the
Government Printing Works and the Film and Publication Board.]
Obviously, we do see the large delegation from the department. I
think it is very important to acknowledge that. We thank them for
Elona yeza lokunyanga le ngxaki bekuthethwa ngayo apha nguzifozonke
owawufudula usetyenziswa phaya ekhaya mhla kukho ingxaki. [The best
solution to this problem is potassium permanganate which was used in
the olden days as a cure for all illnesses.]
Last year, when the Budget Vote of this department was tabled, I
described this department as one ravaged by malnutrition and
kwashiorkor. At the time, my statement was valid and appropriate in
reference to the situation that prevailed then. Obviously, my tone
has now become “softer” and “simpler”, as the President of the
EPD 14 APRIL 2010 PAGE: 63 of 171
country used to say when he tried to uplift his standard. One of the
reasons why my tone might be different is that there has been some
improvement in the work done by the department, especially by the
However, yesterday we learnt from the SABC that the Public Protector
is sitting with complaints from more than 660 people who have given
up hope of ever getting their identity documents. This is totally
unacceptable and something must be done to address the plight of
However, as I have said, there has been improvement in some areas of
civic service. What I do not understand, though, is why the Minister
reduced the budget for the human resource component of
administration. I think this goes against the objectives and needs
to be looked at.
Our major challenge remains the full implementation of the
turnaround strategy and its substantive implications for the people
of our country. Had the Minister acceded to the request for a
meeting by the DA made on 5 November 2009 to discuss some of the key
priorities of the department, together with the full implementation
of the turnaround strategy ...
... ndinalo ithemba lokuba ezinye zezi ngxaki ngesibonisene saze
sancedisana ngazo zingenzeki ngale ndlela zenzeka ngayo. [... I
EPD 14 APRIL 2010 PAGE: 64 of 171
think that we should have engaged one another on some of these
problems in an effort to assist and to avoid the way in which they
are happening right now.]
It is also important to note that the disclaimers and qualified
audit opinion regarding both the Department of Home Affairs and its
two entities, the Government Printing Works and Film and Publication
Board, remain a grave concern. We need a department that is free of
suspicion, controversy, corruption, fraud, etc. We are a young
nation and the department must employ its resources to overcome the
challenges that arise from this.
We need to pay even greater attention to the problems faced by the
nation’s youth, both those in school and those outside the
environment of schooling. We also need to encourage our young people
who stay in the informal settlements, townships, cities, towns and
suburbs to go and apply for birth certificates on time. Obviously, I
support the Minister when she says that people must apply for birth
certificates at hospitals immediately after giving birth. However,
we need to encourage those who are younger than 16 to speedily go
and apply for IDs.
I also want to point out that the department fails to meet its
targets and objectives. It continues to increase targets without a
clear plan. We will never meet those objectives if we do not plan
properly. These become unrealistic and misleading to the nation.
EPD 14 APRIL 2010 PAGE: 65 of 171
Targets regarding the turnaround strategy and the time it takes for
the first issue and the reissuing of IDs and passports need to
remain the same. They don’t need to change, nor do we need to make
them shorter because we know very well that we are still struggling
to meet targets set out in the turnaround strategy of last year.
That is a word of advice, which I think you will welcome, hon
The structural setup ought to remain the same yet somehow we need to
make sure that we have enough staff to attend to those people who
come and queue at these offices. There is much that needs to be
The amendment to the immigration policy of the department needs to
be expedited. Of course, this is unlikely to happen before the World
Cup tournament, but a plan ought to be made to accommodate the
implementation of the advanced passenger processing unit. This
particular system, which the Minister alluded to, is one that will
enable us to deal speedily with passengers travelling to our shores.
Obviously, they do not want to be held up in long queues. However,
without this particular policy we will face challenges in terms of
the law - unless we have other means to try and circumvent that.
I am also worried about the issuing of event visas. I’ve heard the
Minister try to allay our fears, but I don’t think we have catered
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for all the eventualities linked to it, especially with the absence
of the controversial Who Am I Online project.
We need answers regarding the two main projects. A project that
remains controversial in this department is the smart ID card. I
know that not only the DA but all parties, including the ANC, are
worried about the smart ID card and the Who Am I Online projects. In
the portfolio committee we agreed that these must be addressed and
we need to not shy away from raising them, regardless of the parties
we belong to. [Interjections.] I don’t know where you are coming
from. [Interjections.] And you should be wary of getting involved in
the affairs of this department.
An HON MEMBER: Yeyakho leyo. Zange siyithethe loo nto thina. [That
is your opinion. We never said that.]
Mr M MNQASELA: This is the Department of Home Affairs, not the
housing or any other portfolio committee. [Interjections.] We need
Let me also say that we need to improve the relationship between the
Ministry and the members of the portfolio committee. I think –
Minister, you will agree - we met only once with the Minister and
her delegation. That should not be encouraged. We need to meet more
often to address these issues.
EPD 14 APRIL 2010 PAGE: 67 of 171
An HON MEMBER: Kwakusetyenzwa nini? [Kwahlekwa.] [When will the work
be done? [Laughter.]]
Mr M MNQASELA: During my visit to at least four provinces last week
- this included Gauteng, North West, the Eastern Cape ...
Bayabuza ukuba kusetyenzwa nini. Ndiyanixelela ukuba kuyasetyenzwa
ngoku. [Uwelewele.] [There are those who ask when the work will be
done and I am telling you that the work is being done as we speak.
I came to the conclusion that our borders are in serious crisis. I
think everybody agrees and I’m happy that the Minister has said in
this House that measures are being put in place to try and do
something about it. I was worried and I must say that we are going
to cry if something is not done urgently. Our children will be
facing a serious crisis. We must remember that not all households
Sishiya abantwana emakhaya behleli bodwa. Ngenye imini kufike
izigebenga okanye izigilamkhuba, zibathathe. Ngamanye amaxesha
ziyabadlwengula okanye ziye kubathengisa esitalatweni. Loo nto
ithetha ukuba siza kuba nengxaki yabantwana abazakushatshazwa
zizigebenga nezigilamkhuba ezingaziyo ukuba zizokwenza ntoni na apha
kweli lizwe. Abanye abazanga kubukela imidlalo kuphela, baze
kusebenza. (Translation of isiXhosa paragraph follows.)
EPD 14 APRIL 2010 PAGE: 68 of 171
[We have left children alone. One day criminals or thugs will come
and abduct them. Sometimes they rape them or sell them in the
streets. That means we are going to have a problem where children,
who are going to be abused by criminals, do not know what they want
in this country. Some are here not only to watch the games, but have
come for business.]
The promise by the department is to address those issues within the
framework of 2010. We wish the department could take that beyond
Let me also say that we need to fast-track the establishment of the
border management entity because the current Border Control
Operational Co-ordinating Committee, BCOCC, is in a shambles. This
will ensure that we have a more effective structure to reassess and
investigate a fresh approach to the management of our ports of
Refugee reception centres remain a hotbed of fraud and corruption.
This is bad for South Africa. Refugees and asylumseekers wait
indefinitely for their legal documents and those seeking appeal are
even worse off.
For many people of this country, the Department of Home Affairs has
become the department of horror attacks, and that’s a very big
EPD 14 APRIL 2010 PAGE: 69 of 171
problem. We do not want to wake up not knowing whether we are
Njengoko umama uNosimo Balindlela ebesitsho, ungazi nokuba utshatele
kubani na, ufile na okanye uyaphila. [As mama Nosimo Balindlela said
earlier, you don’t even know whom you are married to, or whether you
are dead or alive.]
In conclusion, I need to acknowledge the good work and challenges we
experienced as the DA. My colleague, Juanita Terblanche, mentioned
those challenges. I think they were clear and should be taken in a
good spirit. We do not have Director-General Mavuso Msimang present
here because he has since resigned – retired, thank you. You know,
isilungu siyabhida [English can be confusing] So, I need to
acknowledge him in absentia for his service to our beautiful land
and bid him farewell. We welcome the new director-general, Mr
Mkuseli Apleni, and wish him well in his new job.
Ndiyabulelela kakhulu Mhlalingaphambili. Enkosi [Thank you very
much, Chairperson.] [Applause.]
Mr Z L MADASA: Chairperson, before I specifically address people in
the House I would first like to address those who are outside the
House and remind them that the Department of Home Affairs is part of
the security of this country. So, while we have the right, according
to the Constitution, as Members of Parliament and as members of the
EPD 14 APRIL 2010 PAGE: 70 of 171
public to debate, we must also take into account our interests as a
I’m not going to talk about apartheid here, because people go crazy
when one mentions the word. But this is our history. Apartheid was
declared a crime against humanity. Obviously, the system was there
because it had support: people voted for it and sustained it, while
others were fighting it. The interesting thing about all this is
which section of our community it is that is now finding it
necessary to campaign all over the world, saying this country is a
crime capital, counting the number of babies who die per day, the
number of people raped per hour, per second - people have amazing
statistics. You would have expected that section of our community to
have made known the number of people killed by security forces, per
hour, per day, per second, at the time when that serious crime was
committed against humanity. This did not happen.
Those people who are talking would keep quiet, if they were sober
and sensible. The World Cup is coming and it’s mostly about
rebranding South Africa and Africa. We know there is no money to be
made in this thing. Our people and the government are paying for it,
but the bigger picture is rebranding, for medium-term and long-term
economic benefits. In my view, the people who like to portray us as
a crime capital are foolish. They are shooting themselves in the
foot. If you analyse the situation in our country, businesspeople
who have big businesses such as hotels will benefit from this World
EPD 14 APRIL 2010 PAGE: 71 of 171
Cup. Yet they are the very people who are campaigning against the
country - although they were not campaigning during the crime of
apartheid. Ordinary, poor people don’t have such businesses. They
will have small stalls far away from this thing.
This is the point I’m trying to make to those who are listening and
have ears: During your consistent campaign to brand us a crime
capital, you were joined by the Europeans, as reported by a
gentleman from Germany, the United Kingdom and their right-wing
tabloids, which ran exaggerated sensational headlines such as,
“Don’t go to that country! You’ll be killed by elephants, baboons
and rapists! You need to have equipment if you go there!” The point
is, you don’t know this is an economic war. Those Europeans are just
not playing the game. They know that if this country is successfully
rebranded, tourists will come here and their economies will be
affected. They don’t want that.
While people here are playing racist and crime games, they are
losing business to those Europeans. Whether they are racist or not,
they are South Africans. We are losing business and those people are
gaining business. As a consequence, ticket sales and bookings are
slow. I don’t know if they realise that they’ve campaigned against
themselves. This is what has happened. I want to make this point to
those people out there.
EPD 14 APRIL 2010 PAGE: 72 of 171
On the other hand, people like to go to newspapers selectively when
they debate. Let me follow what they normally do. Today, I read a
newspaper. I read about a German expert on security. This gentleman
is a chairperson of a committee and came here for fact finding. He
is now reporting in Germany. He says, “We are impressed by the South
African leadership and the preparation of security arrangements.” He
goes on to say, “It is perfect.” The same gentleman blames these
tabloids. He says, “There is no problem in South Africa; we are
Before him, I heard a lady from the United States on a radio talk
show. When there was a debate about readiness, she also assured
business, saying, “We are working with South Africans; our citizens
are coming here to watch and play football; we are happy about
security.” It’s funny because on that talk show it was South
Africans who were saying, “We are not ready”. [Laughter.] This
American woman had to defend us! This is the madness we have in this
Hon Minister, I want to bring something to your attention, if you
were not aware of it. When we were doing oversight visits to check
the readiness of our cities, we went to the Crown Mines Refugee
Centre. There we found that they had “peace boards”. These refugee
peace boards are small compared to the job at hand, and they had to
move around the country. A suggestion was made that these need to be
EPD 14 APRIL 2010 PAGE: 73 of 171
Secondly, with regard to the procedures, apparently people abuse the
system. They apply for refugee status, they lose, and then they
appeal, knowing there is a backlog in the appeal process. Given the
liberality of our Constitution, once they are appeal applicants,
other rights can be exploited. And so, gradually, they gain more
rights to be South Africans. This is the game they are playing. The
suggestion was then made that perhaps there should be a pre-appeal
process, whereby only appeals that have merit will be heard and the
others can fall through the system.
Another issue, and I’ve made this point before, is no matter what we
are doing security-wise from the perspective of the Department of
Home Affairs and its systems, we can’t do these things perfectly as
an island. We need to continue to pursue our Southern African
Development Community, SADC, neighbours to join us. We can have a
perfect system here but if people are going through our neighbours
to come to us, we won’t be able to contain the situation. Therefore,
we need to enjoin them to come on board so that we have integrated
policies and systems. I know it’s going to take a while but we need
to continue to fight that war.
Lastly, I would like to answer some of the issues raised here by our
fellow South Africans in the House. I observed that the other
parties heard that the department is doing well but it’s difficult
for them to admit it. [Laughter.] Hon fellow South Africans, when it
EPD 14 APRIL 2010 PAGE: 74 of 171
comes to debate, we need to raise policy issues. If you get reports
from the public, remember not to change them. File them ...
Mrs J F TERBLANCHE: Chairperson, I rise on a point of order. It is
not parliamentary to shout across and call a member by their
surname. Could you please tell the member that they should address
people as “honourable”?
The HOUSE CHAIRPERSON (Mr K O Bapela): Hon member, that is a good
point of order. You are “hon Terblanche”. Hon member, please refer
to other members as “hon members”.
Mr Z L MADASA: Chairperson, I want to say that when we get reports
from the public, we must remember that we are all Members of
Parliament and representatives of the public. The first port of call
is that we would try to thrash out these issues and pursue the
department. If they don’t deal with the issues, we take them to the
highest office: to the director-general, Deputy Minister and
Minister. We do this before the debates start. Let’s not pile up
evidence for the debate and wait for the day of the debate to say
it. Let’s not work like those hon members. We must not collect
evidence from the South African Broadcasting Corporation, SABC, and
other people and pile it up, waiting for the day of the debate to
mention those issues. No, let’s take up the issues with the
department. We are representatives; the department must listen to us
EPD 14 APRIL 2010 PAGE: 75 of 171
and take up the issues so that when the debate comes, everything is
more or less done.
Lastly, when we are debating – just to give some free lessons – if
the Minister is addressing issues that you were perhaps going to
raise, and you realise that the Minister has addressed the issue,
take your pen and tick it off. [Applause.] Thank you very much.
The MINISTER OF HOME AFFAIRS: Chairperson, I would like to thank all
the members who participated and all those who sat through this
debate. I don’t have enough time to address all the hon members’
points, but since most of them belong to the portfolio committee, we
can answer some of them there. So, hon members should not feel
offended if I do not deal with their point.
I do want to deal with a few points. One, the Who Am I Online
project is not linked to a service provider. Who Am I Online is the
actual programme, and that programme is ongoing. I want to assure
you that it was supposed to deliver for 2010, and it is going to
deliver. As I said, it is already being used, it is already being
piloted and it is going to be rolled out. After 2010, it will be
rolled out to all the other ports that were not deemed priority for
2010. So, that will continue.
Two, I want to correct hon McGluwa. [Interjections.] There is no
such report that was given to the former Minister. The report that
EPD 14 APRIL 2010 PAGE: 76 of 171
was given to the former Minister was the report from the Auditor-
General. The forensic audit started only after the Minister had
gone, and she had left terms of reference which we gave to the
professor who was doing the forensic audit. He did those, but new
questions arose and we have given him those questions.
I want to assure you there is nothing that we are going to hide. As
soon as that final report comes to us, we will hand it over to the
portfolio committee’s chairperson. There is nothing to hide. Whether
it is good or bad, we will give it to you, so do not keep saying
there is a hidden report somewhere.
Three, the State Information Technology Agency board is the one that
stopped the tender from being finalised at Sita, and they instituted
a forensic audit. So, it is appropriate for them to bring it here,
and our director-general will be there. Do not worry about
sanitisation. That will not happen. Everything will be presented. If
the department did something wrong, it will be said. Both the
current and former director-general will be there, so you will be
able to deal with matters right there, on the spot. I wanted to
clear that up.
I also want to deal with some of the problems. Yes, just as you
receive all these e-mails, I receive SMSs and all sorts of things.
The difference is that I do not bring them here, I deal with them.
EPD 14 APRIL 2010 PAGE: 77 of 171
[Applause.] But as long as you send them to us, we will try and
assist, because that is what we do.
I am sure that if hon member Balindlela was really worried about
changes to her passport and ID taking a long time, she would have
come to me and said, “Hey, Minister ...”. But she waited so that she
could report it here. It is fine, hon member, we understand.
I now want to deal with a very difficult problem, one that is
causing the public a lot of grief. This is the problem of duplicate
IDs. That is causing a lot of problems. I will not go into detail,
because I do not have a lot of time. I just want to say that part of
the problem was that in the past the rule stated you had to find out
the facts of both people before you resolved the problem. That is
what made some of the problems last for so long.
We have changed that now. We now deal with the issue of the person
who approached us, and in that way we have now been able to reduce
that backlog from 29 000 to about 6 000. [Applause.] I do not have
enough time to say all those things, but we are dealing with them.
I also want to say something about our employees. The budget for
employees has increased. In 2009-10, the increase was R1,6 million,
now it is R1,9 million. Next it will be R2,1 million, so I do not
know about your arithmetic!
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I want to say to hon Mulder, yes, as far as I know, Van Riebeeck
landed here, caused havoc, oppressed us, colonised us, did
everything. Yes, the economy is great, but the majority is poor. The
majority of the minority who colonised us is rich. So, I am not
saying the economy is not good, but it is skewed. Let us have
another debate, if you want, but that is a fact. We cannot say it is
not factual. It is factual and I stand by what I said.
Perhaps, hon Mnqasela, I should address you by the title you
normally use when you write to me: the Deputy Shadow Minister of
Home Affairs. [Laughter.] The reason I have not had a meeting with
you is that you give me very short notice. I cannot deal with that.
At least, if you say to me we should meet, I can look at my diary,
but if you say you want to meet me at a certain time on a certain
day, it is difficult, hon Shadow Minister. [Laughter.]
On the question of the appeal board, yes, we will try to look at
that, and we are dealing with SADC members. I had meetings with my
counterparts from Lesotho, because that is where one of the major
problems is, and we have agreed on certain things, which I will
explain. I know we do not have the time now, but we are dealing with
that. We are going to be meeting with them one by one, and then meet
collectively. We are dealing with that.
Chairperson, do I still have my two minutes? Oh, good. I also want
to deal with the audit. We are very honest with you: We are not
EPD 14 APRIL 2010 PAGE: 79 of 171
expecting a clean audit within two years, not before 2012-13.
Because we have quantified the problems, we are putting measures in
place, but we have seen that we will not have a clean audit for
another two years. We are honest about this, but we are doing our
work in order to get there, and we hope that we will get there.
So, I hope next year you will not be asking what is happening with
the audit. In the portfolio committee, we can tell you what measures
we are putting in place and why we are saying it will take us at
least two years to get there. We will not claim easy victories. We
will just tell you the truth. Thank you. [Time expired.] [Applause.]
The Committee rose at 17:12.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
National Assembly and National Council of Provinces
1. The Minister in The Presidency: Performance Monitoring and Evaluation
EPD 14 APRIL 2010 PAGE: 80 of 171
(a) Report and Financial Statements of the National Youth Commission for 2008-09,
including the Report of the Auditor-General on the Financial Statements and Performance
Information for 2008-09.
2. The Minister of Trade and Industry
(a) Agreement between the Government of the State of Kuwait and the Government of the
Republic of South Africa on Economic and Technical Cooperation, tabled in terms of
section 231(3) of the Constitution, 1996.
(b) Explanatory Memorandum on the Agreement between the Government of the State of
Kuwait and the Government of the Republic of South Africa on Economic and Technical
(c) Trade Cooperation Agreement between the Government of the Republic of South Africa
and the Government of the Sultanate of Oman, tabled in terms of section 231(3) of the
(d) Explanatory Memorandum on the Trade Cooperation Agreement between the Government
of the Republic of South Africa and the Government of the Sultanate of Oman.
EPD 14 APRIL 2010 PAGE: 81 of 171
1. REPORT OF THE PORTFOLIO COMMITTEE ON ENERGY ON BUDGET VOTE 28:
ENERGY, DATED 13 APRIL 2010
The Portfolio Committee on Energy, having considered the Strategic Plan [2010-11/2012-13] and
Budget Vote 28: Energy, reports as follows;
On 15, 16 and 23 March 2010, the Portfolio Committee on Energy was briefed by the Department of
Energy on the following:
The Department of Energy Budget Vote 28 and Strategic Plan (2010-11/2012-13).
Human resources and general staffing structure of the newly set-up Department of Energy.
Overview of Budget Vote 28 and Strategic Plan
The Department of Energy’s mandate is to ensure secure and sustainable provision of energy for socio-
economic development; whilst the mission is to regulate and transform the sector for the provision of
secure, sustainable and affordable energy. The strategic plan of the Department seeks to deliver results
along eight strategic objectives that include promoting energy security through reliable, clean and
affordable sources; universal access to energy sources, transformation of the energy sector, and
strengthening the operations and management of the Department. The eight strategic objectives are:
1. To ensure energy security
2. To achieve universal access and transform the energy sector
EPD 14 APRIL 2010 PAGE: 82 of 171
3. To regulate the energy sector
4. Effective and efficient service delivery
5. Optimal utilisation of energy resources
6. To ensure sustainable development
7. To enhance the Department of Energy culture systems and people
8. To promote corporate governance
The strategic plan of the Department outlines in detail the objectives, measures, Medium Term
Expenditure Framework targets and initiatives of the four departmental programmes, namely;
Programme 1: Administration
Programme 2: Hydrocarbons and Energy Planning
Programme 3: Electricity, Nuclear and Clean Energy
Programme 4: Associated Services
The purpose of the following State Owned Entities reporting to the Minister of Energy is to provide
related services in support of the Department’s mandate through funded and non-funded statutory
bodies and organisations.
National Nuclear Regulator
National Energy Regulator of South Africa
Research and Development
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Central Energy Fund – CEF (PTY) LTD
South African Nuclear Energy Corporation
Electricity Distribution Industry Holdings
The Strategic Plan of the Department of Energy was informed by Government Priorities, the State of
the Nation Address (2010), National Budget Speech (2010), the Budget Vote Speech (2009) and sector
The budget split stands at a 30/70 ratio between the Department of Energy and the
Department of Mineral Resources for support services, although functions have been
The Department has an interim structure that ensures that all critical positions to establish a
new department are filled immediately.
There has been great cooperation between State Owned Entities, who have assisted in the
setting up of the new department
The first phase of capacitating the Department of Energy has been completed (the matching
and placement of the former Department of Minerals and Energy personnel).
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The second phase (advertising and filling of vacant posts) has begun and this should be
completed by the end of the first quarter.
Additional capacity will be obtained with the mid-term budget adjustments later this year.
Line function has maintained two branches, namely; Hydrocarbons and Energy Planning, as
well as Electricity, Nuclear and Clean Energy.
There are plans for gradual increase of the line functions capacity to realise the full structure
of the new Department of Energy by the end of the Medium Term Expenditure Framework.
The Department’s legislative focus for this year is as follows;
The Seventh Constitutional Amendment Bill
The REDs Establishment Bill
The Electricity Regulation Amendment Bill
New Generation/ Independent Power Producers Regulation
The Petroleum Products Amendment Act, 2003
The National Energy Act, 2008
Review of the fuel specification regulation, so as to advance to higher and cleaner fuels.
Programme 1: Administration (Support Services)
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The main focus of the programme is on the establishment of the new department, with focus on
operational structure, capacity and the provision of skills. The programme also has its focus on the
setting up of governance structures, including the internal audit functions, audit committee, risk
management and fraud prevention, procurement and finance committees, amongst others. The review
of the international agreements, aligning them to government’s objectives, falls under the programme,
so does the communication strategy, finance as well as the strengthening of the Department’s State
Owned Entities oversight function.
Update on the Split Process
In May 2009, the President of the Republic announced the split of the Department of Minerals and
Energy into two departments, namely the Department of Energy and the Department of Mineral
A National Macro Organisation Steering Committee was established to oversee the process of re-
organising government departments. Various work streams were formed to focus on specific functions
such as Organisational Scoping, Human Resource Audits, Change Management and Communication,
Labour and Legal, Infrastructure and Assets, ICT, Finance and Budgets. An internal steering
committee for the split was established and work stream leaders were appointed. A consolidated
transitional plan was compiled and progress reports by work streams are being submitted to the
Departmental Steering Committee every second week.
The functional analysis of functions was finalised. A determination on the transfer of functions was
obtained from the Minister of Public Service and Administration. The departmental structures have
been designed and approved by both Executing Authorities. The process currently awaits concurrence
EPD 14 APRIL 2010 PAGE: 86 of 171
on the Departmental structures from the Minister of Public Service and Administration. Allocation of
funding for newly- created positions has been obtained, but for critical posts only. All new positions in
Support Services have been profiled and evaluated.
A Change Management and Communication Strategy was developed and approved by the Steering
Committee. A submission on the appointment of the Matching and Placement Committee for support
services staff was approved by both Directors-General. The placement of all employees on separate
Persal systems will be finalised on 15 March 2010. The recommendations for placements shall be
considered by both Directors-General for approval, upon which formal placement letters will be issued
to affected employees. In cases where employees are not satisfied, an appeal process will commence.
Once the matching and placement of staff is finalised, all funded vacant posts will be advertised no
later than 30 April 2010.
Throughout this process, consultation with employee organisations on the split was done. A Labour
Relations Forum has been established. A collective agreement on the relocation of employees to
Trevena Campus and the split of the Department was concluded in the Departmental Bargaining
Programme 2: Hydrocarbons and Energy Planning
Programme Focus Areas
1. Integrated Energy Planning Strategy – caters for the provision of an integrated energy plan that
recognises the interdependence of all forms of energy, which will be formulated by the end of
the current year.
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2. Fuel specifications and standards.
3. Liquefied Petroleum Gas (LPG) price regulation – supports greater use of LPG for thermal
4. Biofuels pricing framework – development of a framework to guide the implementation of the
biofuels strategy to expand the market.
The programme will advocate for the amendment [or development, review where applicable] of the
1. Petroleum Amendment Act of 2003, to ensure improved governance of the petroleum sector.
2. National Energy Act of 2008, to enable integrated energy planning and ensure energy security.
Between 2010 and 2011, the promulgation of Regulations for the mandatory provision of data
will be done.
3. There will also be a review of fuel specifications and standards, albeit the opposition by major
4. A review of the Liquid Fuels Charter, to usher in a new empowerment dispensation for the
liquid fuels industry, is also part of the plans.
EPD 14 APRIL 2010 PAGE: 88 of 171
5. The development of an energy modeling system for South Africa as a tool to develop an
Integrated Energy Plan.
6. The development of an appropriate pricing mechanism for Regulatory Accounting throughout
the liquid fuels value chain to promote appropriate behaviour.
7. Develop integrated energy centres (IeCs) to contribute towards the eradication of poverty.
Inadequate support for line function, particularly ICT systems
Understanding of energy issues (or lack thereof)
Programme 3: Electricity, Nuclear and Clean Energy
Electricity Strategic Objectives
To create and maintain a secure balance between electricity supply and demand;
To diversify primary energy mix in the new build programme;
To create incentives for energy efficiency and demand side management programmes;
To create a sustainable electricity distribution industry.
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The following programmes form part of the Electricity, Nuclear and Clean Energy branch plans for the
Integrated Resource Planning;
Private sector participation in the electricity generation sector;
Energy Efficiency and Demand Side Management Scheme
Distribution Asset Rehabilitation
Establish the Regional Electricity Distributors
The branch plans to improve governance of the nuclear sector, specifically in relation to nuclear safety,
nuclear non-proliferation and nuclear technology. The Nuclear Energy Policy of 2008 will come under
review. Decisions on new nuclear power plants will be effected, with specific focus on Nuclear Fuel
Cycle, Regulatory Framework, Skills and Training, Stakeholder engagement and communication,
industrialization and localization, and the funding and procurement processes.
The establishment of the Radioactive Waste Disposal Institute is currently ongoing, as well as that of
the National Committee on Radioactive Waste Management.
EPD 14 APRIL 2010 PAGE: 90 of 171
The finalization of the Energy Efficiency Strategy (2005) will be pursued, and the EES will advocate
for a final energy demand reduction of 12% by 2015, with the industrial sector contributing 15%.
There will be a review of the Energy Efficiency Accord. The Department plans to develop the
Monitoring and Verification system for Energy Efficiency and Demand Side Management. The
Municipal Energy Efficiency; and the Public Buildings Energy Efficiency projects will be
implemented. The other programmes include;
Energy Efficiency and Demand Management campaigns will be implemented, to enhance
the uptake of energy efficiency initiatives
The finalization of the Renewable Energy Policy (2003)
Implementation of the National Solar Water Heating Programme, which seeks to install 1
million solar water heaters by 2014
Operationalisation of the Working for Energy Programme
Implementation of the South African Wind Energy Programme
Implementation of the Biofuels Strategy
Implementation of the Tradable Renewable Energy Certificates
Operationalisation of International Renewable Energy Agency engagements.
Integrated National Electrification Programme (INEP)
The programme seeks to manage the electrification planning, funding and implementation process,
with the aim of eliminating the electrification backlog so as to achieve Universal Access.
EPD 14 APRIL 2010 PAGE: 91 of 171
The focus areas include; managing the electrification planning process, and subsequently its funding
allocation and implementation processes. The INEP will be monitored in line with the Energy White
The Backlog Classification is as follows;
% INFORMAL FORMAL
PROVINCE BACKLOG BACKLOG BACKLOG BACKLOG
Eastern Cape 673,694 19.88% 67,369 606,325
Free State 200,633 5.92% 70,222 130,411
Gauteng 715,195 21.11% 572,156 143,039
Natal 813,315 24.00% 162,663 650,652
Limpopo 340,064 10.04% 51,010 289,054
Mpumalanga 222,755 6.57% 44,551 178,204
North West 192,774 5.69% 48,194 144,581
Cape 49,375 1.46% 17,281 32,094
Western Cape 180,351 5.32% 126,246 54,105
Total 3,388,156 100.00% 1,159,691 2,228,465
Source: Department of Energy
One of the challenges the Department of Energy faces with regards to its vision for universal access by
2014 is funding. Below is an outline of the funding requirements for this programme to be realised;
EPD 14 APRIL 2010 PAGE: 92 of 171
FINANCIAL BULK REFURBISHMENT/
YEAR CONNECTIONS INFRASTRUCTURE REHABILITATION TOTAL/YEAR
2009-10 R 4,554,560,933 R 1,066,368,279 R 666,018,943 R 6,286,948,156
2010-11 R 4,625,652,151 R 2,087,695,645 R 759,261,595 R 7,472,609,392
2011-12 R 4,698,165,194 R 2,109,449,558 R 865,558,218 R 7,673,172,971
2012-13 R 4,772,128,498 R 2,131,638,549 R 986,736,368.92 R 7,890,503,417
Totals R 18,650,506,778 R 6,465,571,031 R 6,465,571,031 R 29,323,233,937
Source: Department of Energy
Programme 4: Associated Services
State Owned Entities are the extended arm of government and need to advance government priorities.
They are established as instruments of socio-economic advancement, and should have the means to
contribute to the improvement of the standard of living of the citizens of South Africa and create
sustainable economic and social benefits. This branch facilitates the oversight role over the State
Owned Entities as mentioned in the overview.
Department of Energy Oversight Role
The Department is responsible for the alignment of strategies and plans of the SOEs. It must also
ensure the balance between the government priorities and commercial priorities of these entities. The
Minister is responsible for shareholder board appointments. The Associate Services branch also
EPD 14 APRIL 2010 PAGE: 93 of 171
oversees board participation by departmental representatives. It must also monitor and evaluate the
The oversight on the electrification programme – as defined in the Division of Revenue Act- is the
responsibility of the Department, and applies to both Eskom (Schedule 7) and the Municipalities
The Department of Energy will focus on improved oversight, monitoring and evaluation in line with
government priorities and addressing the concerns of citizens raised through the Presidential Hotline. It
will also focus on the alignment of planning cycles.
The Department will hold the shareholders’ annual strategic workshop in July/August, so as to
articulate government priorities and alignment of strategies.
Transfers to State Owned Entities
Below are the allocation to State Owned Entities for the 2010/11 financial year;
ENTITY AMOUNT PROGRAMME
1. NECSA R574,1m Capex R10,7m
Operational budget R554m
2. NNR R20m Operational budget
3. EDIH R61,6m Operational budget
4. INEP R2,808bn Electrification programme
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Source: Department of Energy
Budget Allocation- Energy
Nominal Real Nominal
Budget Rand Rand %
Programme change change change
R million 2009/10 2010/11 2011/12 2012/13 2009/10 - 2010/11 2009/10 - 2010/11
Administration 68.8 104.2 127.7 106.9 35.4 28.9 51.45 41.94
Energy Planning 55.3 1 558.6 1 564.6 1 571.2 1 503.3 1 405.4 2718.44 2541.47
and Cleaner Energy 340.0 408.8 513.7 116.5 68.8 43.1 20.24 12.69
Associated Services 3 293.4 3 463.8 3 533.6 3 744.0 170.4 - 47.1 5.17 -1.43
TOTAL 3 757.5 5 535.4 5 739.6 5 538.6 1 777.9 1 430.3 47.32 38.07
Source: Research Unit
After the split of the two departments, an amount of R75 million was transferred to the Department for
the 2010/11 financial year. The MTEC proposal involved mainly the reprioritization of funds after the
National Treasury ruled out any possibility of new funding. An amount of R150 million was re-
EPD 14 APRIL 2010 PAGE: 95 of 171
allocated from the Integrated National Electrification Programme. The Department of Energy did not
benefit, whilst the Department of Minerals received approximately R65 million. The amount was then
ear-marked for transfer back to the Department of Energy as it was reprioritized from the related
programmes. The National Treasury has been informally informed of the decision. The agreement
between the two Accounting Officers was drafted and is awaiting approval.
Potential financial challenges
The funding of new generation capacity, which is always funded from savings.
Discontinuation of energy efficiency (demand side management) allocation on the final year
of the MTEF cycle (2012/13) – which will be replaced by tariffs.
The structure is not yet fully funded.
The universal access cost projections are far above the allocated budget.
Concerns and questions by the members of the Portfolio Committee
The Portfolio Committee raised a number of issues (for clarity and follow-up) and concerns throughout
the briefings by the Department; and the summary of responses is included in the above overview.
Amongst these were
The matching and placement of staff; as well as job creation by the formation of the new
Security of supply during the 2010 Soccer World Cup
The status quo with regards to the establishment of the Radioactive Waste Disposal Institute
EPD 14 APRIL 2010 PAGE: 96 of 171
Ethanol and Biofuels (in relation to Renewable Energy)
Independent System Market Operators
Liquefied Petroleum Gas
Integrated Resource Plan – timelines
Integrated Human Resource Plan – the Department presented this on 23 March 2010, to the
satisfaction of the Committee
The Portfolio Committee on Energy recommends as follows;
more practical, reachable targets on the electrification programme (in the context of
Universal Access) and solar water heaters (renewable energies) should be set by the
Department in light of the limited financial resources at its disposal. A further briefing on the
said subject was presented by the Department on 13 April 2010.
the Department should ensure that its ongoing restructuring process is used as an
opportunity to achieve gender equity.
the Committee would support the Department of Energy in its efforts to improve the energy
mix by 2012, and expressed appreciation that the Department was now separate from the
there was a need for better awareness on nuclear energy and the associated programmes on
the Department should follow up on the implementation of the Free Basic Electricity Policy.
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the Department of Energy presented an Integrated Human Resources Plan to the committee
on 23 March 2010 as reported above.
The Portfolio Committee on Energy recommends that Budget Vote 28: Energy be approved by the
Report to be considered.
2. REPORT OF THE PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND
ADMINISTRATION ON BUDGET VOTE 11, DATED 14 APRIL 2010
Budget vote 11 was referred to the Portfolio Committee on Public Service and Administration, for
consideration and report, on the 2nd March 2010. It was noted that the 2010/11 budget vote 11
comprised of three previously separate votes. The Committee undertook to receive briefings from the
affected department and entities.
The Committee received briefings from the Department of Public Service and Administration, the
Public Service Commission and the Public Administration Leadership and Management Academy on
their strategic plans and their allocation from budget vote 11.
2. Overview of Budget Vote 11
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Budget vote 11 is divided between six programmes of the Department of Public Service and
Administration (DPSA). Each programme of the department has a specific purpose. Table 1 (below)
shows the Budget allocated per programme:
Table 1: Budget per programme
2009/10 2010/11 2011/12 2012/13
Total Total Total Total
MTEF Allocation R million R million R million R million
1) Administration 115.3 138.8 140.6 147.4
2) Human Resource Management and Development
48.1 48.9 39.2 41.5
3) Labour Relations and Compensation
117.4 57.2 57.2 58.1
Management in Government
4) Information and Technology Management in
40.1 45.4 45.2 47.3
5) Service Delivery Improvement throughout
191.6 186.7 188.3 195.1
6) Governance for Public Service and
170.3 174.6 186.7 194.7
Total expenditure estimates 682.8 651.6 657.2 684.1
The DPSA’s overall budget allocation for 2010/11 is R651.6 million, which is a nominal decrease of
4.57 per cent from R682.8 million to R651.6 million. In real terms, there is a decrease of 10.56 per
cent. The budget is divided into six programmes, namely Programme 1: Administration, Programme 2:
Human Resource Management and Development in Government, Programme 3: Labour Relations and
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Compensation Management in Government, Programme 4: Information and Technology Management
in Government, Programme 5: Service delivery improvement throughout Government, and
Programme 6: Governance for Public Service and Administration. Each programme will be discussed
in detail below.
2.1 Programme 1: Administration
Programme 1 is allocated R 138.8 million, which is a nominal percentage increase of 20.38 per cent
from R115.3 million to R138.8 million, or a real percentage increase of 12.82 per cent. Its purpose is
policy formulation, strategic leadership and overall management of the department. This programme
houses Management and Corporate Services sub-programmes. The Ministry and Deputy Ministry sub-
programmes are also funded from this programme.
2.2 Programme 2: Human Resource Management and Development in Government
Programme 2 is allocated R48.9 million, which is a nominal increase of 1.66 per cent from R48.1
million to R48.9 million, or a real decrease of 4.72 per cent from its allocation in 2009/10. Its purpose
is to develop and implement an integrated strategy, monitor employment practices, conduct human
resource planning and diversity management, and improve the health and wellbeing of public service
employees. The sub-programmes under this programme are:
Employment Practice and Career Management;
Senior Management Service;
Human resource Planning;
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Employee Health and Wellness; and
Human Resource Development.
Some of the objectives and measures of this programme are:
To provide information on skills in the public service by phasing in the HR Connect skills
database in all government departments by 2011;
To monitor the implementation of the gender equality and job access strategic frameworks
through quarterly reports to assess national and provincial departments’ progress in attaining
the set targets of 50 per cent women at senior management service level and 2 per cent
persons with disabilities at all levels by 2014; and
To improve the working environment in frontline offices through capacity development and
supporting 300 employee health and wellness managers and practitioners each year in health
risk assessment and management.
2.3 Programme 3: Labour Relations and Compensation Management in Government
Programme 3’s budget allocation is R57.2 million, which is a nominal decrease of 51.28 per cent from
R117.4 million to R57.2 million, and a real decrease of 54.34 per cent from its allocation for 2009/10.
The purpose of this programme is to develop and implement compensation policies and guidelines for
the public sector; and ensure coordinated bargaining and effective programme management for the
establishment of the single public service. The sub-programmes of this programme are Management,
Remuneration and Macro benefits, Negotiations and Labour relations, Special projects and Job
evaluation and Single public service.
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Some of the objectives of the sub-programme are:
Review of the pension provisioning in the public service by:
- reporting progress to the department on discriminatory practices in pension
provisioning by March 2010; and
- implementing the agreed upon and costed practices and developing an institutional
framework and governance arrangements to support the envisaged comprehensive
social security system by March 2011.
Improve the medical subsidy policy by implementing a revised post-retirement medical
assistance provision by March 2011 for employees on salary levels 1 to 5 and who are
members of the Government Employees Medical Scheme; and
Coordinate the design of the programme for the single public service and oversee its
- Establishing the pilot urban mall, which will be a centre where citizens can access
government services, in Maponya Mall by June 2010;
- Developing the single public service regulations by March 2012 in order to enact the
overarching single public service legislative framework;
- Designing and implementing the single public service change management programme
by March 2013;
- Establishing a geographic information system by March 2014; and
- Developing a government access strategy by March 2015.
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2.4 Programme 4: Information and Technology Management in Government
Programme 4 has an allocated budget of R45.4 million. This amount is a 13.22 per cent nominal
increase from RR40.1 million to R45.4 million, and a real increase of 6.11 per cent. The purpose of
this programme is to ensure the effective use of information technology in government and facilitate
the use of information technology for modernising government and establishing e-government
practices, within an acceptable information security environment. The sub-programmes are
Management, E-Government, Information and Communication Technology Governance, Information
and Communication Technology Infrastructure and Community Development and Access.
Some of the objectives and measures include the following:
Improve frontline service delivery by completing a connectivity blueprint and bandwidth
strategy for connecting schools, libraries, clinics and municipalities by September 2010;
Reduce government ICT costs through printer consolidation, telecommunications (voice and
data) and the way software is managed by March 2011; and
Ensure a configured and structured government IT environment by developing a
consultative, government wide IT plan to assist departments by March 2011.
2.5 Programme 5: Service delivery improvement throughout Government
Programme 5 is allocated R186.7 million, which is a nominal decrease of 4.9 per cent from R191.6
million to R186.7 million, or a real decrease of 16.6 per cent from its allocation for 2009/10. The
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purpose of this programme is to allow for the engagement in supportive interventions and partnerships
which improve efficiency and effectiveness; innovative learning and knowledge based modes; and
practices of service delivery in the public service.
Programme 5’s sub-programmes include: Management, Batho Pele, Service Delivery mechanisms
Service delivery Facilitation, Community Development Workers, Public Administration Leadership
and Management Academy (PALAMA), Centre for Public Service Innovation (CPSI), Public Service
Education Training Authority (PSETA). Funding in all the sub-programmes is mainly used for
compensation of employees and related expenditure in goods and services.
Some of the sub-programmes’ objectives and measures include:
To increase departments’ compliance with submitting annual service delivery improvement
plans by giving departments content comments and reporting to Cabinet and through the
auditor-general on departments’ submissions;
To improve the rollout of community development workers’ programme by implementing a
policy on the programme by March 2013; and
To implement service delivery improvement plans throughout the public sector by training
500 trainers in 2010/11 on the rollout of service delivery improvement plans through the
Batho Pele change management engagement programme.
2.6 Programme 6: Governance for Public Service and Administration
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Programme 6 is allocated R174.6 million. This budget is a nominal increase of 2.52 percent from
R170.3 million to R174.6 million, and a real decrease of 3.91 per cent, if compared with its allocation
for 2009/10. The purpose of this programme is to improve governance and public administration for
improved service delivery in Africa and other participating countries worldwide, in support of the
vision of efficiency and increased public participation in governance; fight against corruption and
carry out participatory monitoring. The sub-programmes of programme six are Management, Public
Sector Anti-Corruption, International and African Affairs, Monitoring and Evaluation, African Peer
Review Mechanism, Research, and the Public Service Commission.
Some of the objectives and measures for programme six are:
To ensure that South Africa contributes to the African Agenda and benefits from continental
best practices in governance and public administration by actively participating in the
seventh Pan African conference of African ministers of public service in October 2010;
To promote national anti-corruption values and interests at regional and international levels
by participating in the quarterly Organisation for Economic Cooperation and development
working group on bribery in international business transactions, the United Nations
Convention against Corruption intergovernmental working group, and the biannual United
Nations Convention against Corruption conference of state; and
To assess the performance of departments’ human resource policies through the public
management watch system by providing ongoing analytical and evaluation reports on the
implementation of the Department of Public Service and Administration’s policies.
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National Treasury reported that a decision had been taken to shift oversight responsibility for the PSC
and PALAMA to the DPSA, in terms of the Public Finance Management Act (1999). This decision
poses two challenges for the Committee, the accountability of the Accounting officers for the PSC and
PALAMA, and the misplacement of the PSC within the DPSA, given its constitutional responsibility
over the Public Service. These two challenges are discussed, in detail, below.
3.1 Accountability of the Accounting Officers of the PSC and PALAMA
Previously, PALAMA and the PSC had separate budget votes from the Department of Public Service
and Administration. The current amalgamation of the three votes into one vote does pose a challenge
of accountability, in terms of the Public Finance Management Act, No.1 of 1999, of the three
accounting officers affected. PALAMA and the PSC’s Director-Generals (DGs) were previously the
accounting authorities for the separate budget votes. With the new funding arrangement however,
questions arise as to whether the DGs for PALAMA and the PSC are still accounting authorities, in
terms of the PFMA, and whether they now have to report to the DG of the Department of Public
Service and Administration, given that funds are transferred out of Budget vote 11 for their respective
3.2 Misplacement of the PSC budget within the DPSA’s budget allocation
All entities that are allocated funds from budget vote 11 are accountable to the Minister of Public
Service and Administration, except the PSC, which is accountable to the National Assembly. The
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budget vote does not make explicit reference to the accountability of the PSC to the National
The PSC’s constitutional mandate is to be impartial and independent from Government. It will be
unable to maintain its independence if its funding is sourced through a government department that it
is not accountable to.
The mandate of the PSC is separate from the DPSA’s mandate, yet it is presented in the budget vote
performing essentially the same functions as the DPSA,
as a government body, and
accountable to the Director-General of the Department of Public Service and
Briefings by the DPSA, PSC, and PALAMA on their strategic plans and their budget allocation from
Budget vote 11 enabled the committee to explore the implications of the budget vote amalgamation for
the three affected entities.
5.1 The Portfolio Committee recommends that the National Assembly approves budget vote 11 for
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The Portfolio Committee further recommends as follows:
5.2 The challenge posed by the accountability of the accounting officers for PALAMA and the
PSC should be reviewed and resolved by the Minister of Finance, in consultation with the
Minister of Public Service and Administration and the Chairperson of the Public Service
5.3 The Public Service Commission’s budget allocation for 2011/12 should be placed either
separate, or as part of Parliament’s budget vote. This should allow the PSC to maintain its
constitutionally enshrined independence from government; or its budget is allocated from the
body it is accountable to.
Report to be considered.
3. REPORT OF THE PORTFOLIO COMMITTEE ON ECONOMIC DEVELOPMENT ON
OVERSIGHT VISIT TO COMPANIES IN DISTRESS, DATED, 23 FEBRUARY 2010
1. The Purpose and Terms of Reference
The Portfolio Committee on Economic Development undertook an oversight visit to companies in
distress on 3 and 17 – 19 November 2009. The purpose of the visits was to investigate how the specific
companies in distress have performed after the Industrial Development Corporation’s (IDC) financial
intervention. Four companies that were said to be in distress and financed by IDC’s intervention fund
were identified. The committee specifically set out to check the authenticity of these companies and
investigate the impacts of such intervention by the IDC.
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The four identified companies are:
Vrede Textiles (Pty) Ltd (Western Cape)
Laser CNC (Pty) Ltd (KwaZulu-Natal)
York Timber Holding Ltd (Mpumalanga)
Automotive Leather Company (Pty) Ltd (Gauteng)
In December 2008, the Presidential Economic Joint Working Group, comprising organized Labour,
Business and Government, and other social partners met to consider how South Africa should
collectively respond to the existing economic conditions resulting from the international economic
crisis. South Africa, therefore, agreed on a collective response to the economic challenges facing South
Africa. The agreement to a collective response culminated into development of a ‘Framework for
South Africa’s Response to the International Economic Crisis’ (Framework Response).
The ‘Framework Response’ has been internationally commended for bringing together social partners
to forge a collective response. It has also been held up as an example of how countries can respond to
the economic crisis in a sustainable manner.
The framework provides the basis for a wide range of actions needed to mitigate the impact of the
crisis on the country and the citizenry. It was founded on the following broad principles:
avoiding unfair placement of the burden of the economic downturn on the poor and the vulnerable;
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supporting and protecting, in as far as possible, activities aimed at strengthening the capacity of the
economy to grow and create decent jobs;
maintaining the already planned high levels of investment in public infrastructure, while
encouraging the private sector wherever possible, and to maintain and improve their levels of fixed
direct investment and corporate social investment programmes; and
interventions must be timely, tailored and targeted as is appropriate.
The Department of Economic Development has been assigned the responsibility to oversee the
implementation of the Framework Response. The Department, therefore, briefed the Committee on
progress made with regards to the ‘framework agreement’. One of the areas where progress has been
made relates to addressing the problems of access to credit and working capital. In this area, the
Industrial Development Corporation (IDC) made R6 billion available over the next two years to
respond directly to the crisis.
The delegation consisted of:
Ms E.M. Coleman – Chairperson
Ms D. Tsotetsi
Ms P. Bhengu
Ms H. Line
Mr Z.C. Ntuli – Whip
Mr X. Mabasa
Dr S.B. Huang
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Mr S. Ngonyama – (only attended the Atlantis (Western Cape) and Durban (KwaZulu-Natal) leg of the
4. The oversight findings on the four companies
4.1. Vrede Textiles (Pty) Ltd
Vrede Textiles (Pty) Ltd is located in Atlantis, Western Cape Province. It was one of the companies
that was said to be in distress and the committee identified it for oversight and to assess the status quo
and developments after the financial intervention by the IDC. The IDC had been financially assisting
the Vrede Textiles since 1997. During the period of assistance to this company, nine different loan
facilities to the total sum of R21, 6 million were approved to Vrede Textiles.
The recent loan facilities were approved in June 2009. They comprised the following:
A working capital loan of R2, 5 million;
An unconditional loan of R300 000 to fund a marketing study and promotion grant; and
A guarantee of R500 000 to support the raising of Letters of Credit by Vrede’s bankers.
4.1.2. The purpose of the visit
To investigate and examine the progress made by Vrede Textiles (PTY) Ltd. after the financial
intervention of the IDC.
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4.1.3. Factors that influenced the IDC to fund the company
After exercising due diligence with regard to financial intervention, the IDC approved the support to
the Vrede Textiles because of the following factors:
The company has the potential to turnaround,
It has sufficient management capacity,
Intervention may result in saving of jobs (59 employees),
The company has the potential to become 100% black owned.
In addition to the funding approval, the IDC’s Business Support Unit has commenced interacting with
Vrede Textiles to assist the company with establishment of a viable marketing plan, one of the major
weaknesses in the company.
4.1.4. Factors that led to distress
Two factors that led to the distress were as follows:
There has been a slow erosion of Vrede’s market share over the last few years because of the entry
of new competing products, fashion changes and cheaper imports from many other countries, for
example, China. Due to the influx of Chinese products, Vrede’s sales dropped from R16.6 million
in 2004 to R13 million in 2008.
The effects of the world economic meltdown gravely exacerbated Vrede’s position with decline in
turnover, including substantive decreases in exports to some of its traditional customers in the
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United Kingdom and the United States of America. The resultant operational losses depleted
Vrede’s cash reserves.
A commonly held view was that, unless additional funding could be raised, the company’s
shareholders would have had to consider closing the company down, hence support to Vrede Textiles
(PTY) Ltd through financial intervention fund of IDC.
4.1.5. Jobs saved
The Vrede Textiles employs 61 employees on a permanent basis, 48 of them are wage earners and 13
are salaried workers. All of those jobs would have been lost had the company closed down. With the
financial aid, Vrede Textiles have not yet had to retrench workers. However, they applied to the
Department of Labour to be placed on the labour lay-off scheme.
4.1.6. Participation by the Vrede Textiles in the Employee Training Labour Lay-off Scheme
As indicated above, Vrede Textiles Ltd had applied to the Department of labour to be placed on the
labour lay-off scheme. The committee is still awaiting the outcomes of the application process.
4.1.7. Turn-around strategy
The Managing Director of Vrede Textiles informed the Committee that the loan which Vrede Textiles
received from the IDC managed to pay off their Accounts Payables (creditors). Vrede Textiles further
applied for exemption from wage increases and annual bonuses for 2009 due to the difficult position
they found themselves in. If they were to pay annual bonuses, bonuses alone would amount to R400k
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(excluding holiday pay). Vrede Textiles do not foresee having such funds available in view of their
losses in 2009. It was only in October 2009 that Vrede Textiles exceeded R1m turnover for the month
and that was the most for 2009.
Indicators of a turnaround in sales comes from the fact that they have received a first order from China
after exhibiting their product in China during August/September 2008 as well as repeat order from the
Philippines. They have also received orders from the USA, UK and Australia, which initially dried-up
when the economic crisis started.
With the future in mind, Vrede Textiles have started their own assembly line, where they could make
up their own finished blinds. The Managing Director believed that the approach gave Vrede Textiles
an additional opportunity as a supplier on the Government database. He further reported to the
committee that Vrede Textiles have never gone the procurement route before and this was considered a
new source of income for Vrede Textiles.
According to the IDC, the turnaround plan of Vrede Textiles includes:
Strengthening the marketing structure of the company through, inter alia:
- employing a dedicated sales and marketing person;
- engaging a market consultant to develop a comprehensive marketing plan;
- pursuing new export markets through participation in international trade fairs;
- subscribing to the Proudly SA campaign and by being listed on the Government Supplier
- product enhancement initiatives, for example, DIY.
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Ensuring strict financial oversight with company auditors,
Pursuing the establishment of a Workers’ Trust to increase worker motivation, support and morale.
With regard to development of the Workers’ Trust, Mr V. Jacobs (Managing Director) stated that the
major shareholder, Mr B Lipschitz, indicated to him that he “wants out”, on condition that Mr Jacobs
takes the liability of the company (R5m). The committee was briefed that Mr Jacobs would take 60%
shareholding while 40% would go to the Workers’ Trust. Mr Jacobs, however, said that this process
was still at an early stage of discussions and that it had not been discussed with the workforce.
The performance monitoring mechanisms put in place by the IDC include the following:
Quarterly management accounts to be submitted to the IDC,
Submission of audited annual financial statements to the IDC,
Regular personal contacts by the IDC accounts manager,
Participation of the IDC Business Support Unit in engaging a marketing consultant and developing
a marketing plan,
IDC assistance in setting up a Workers’ Trust and share transfer.
4.1.8. Committee observations
Vrede Textiles had very little information regarding the labour lay-off scheme, even though they
applied to the Department of Labour to be placed on the scheme. No feedback, however, was
received from the Department.
The delegation observed that there was confusion with regards to the intention of the funding.
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Vrede Textiles applied to the Department of Labour to be exempted from paying holiday bonuses
(December 2009) to its employees.
The company did not have a permanent employee responsible for marketing.
Little or no interaction between the various departments (for example, Department of Trade and
Industry, Department of Labour) and the IDC.
The R300 000 loan allocated to Vrede Textiles to fund a marketing study and promotion grant
(unconditional) would not be sufficient for this purpose.
Without the IDC intervention, 61 employees would otherwise have been unemployed.
The viability of Vrede Textiles is questionable. The delegation observed that the Managing
Director is focused more on operations and had little knowledge on the financial aspects of the
The issue of the Worker’s Trust was still at the early stages of development.
The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on
Labour to Vrede Textiles during the 3rd term in 2010.
The committee makes the following recommendations:
The IDC should submit a report regarding the marketing grant to the committee two (2) weeks
after the House has considered the report.
4.2. Laser CNC (Pty) Ltd
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Laser CNC (Pty) Ltd, one of the identified companies in distress, is located in Durban, Kwazulu-Natal.
The committee sought to enquire on the latest developments after the financial intervention by the
The IDC has approved a R3 million term loan facility and a revolving credit line facility with a limit of
R3 million to bridge its short and medium term working capital requirements respectively.
4.2.2. The purpose of the visit
To investigate and examine the progress made after the financial intervention of the IDC.
4.2.3. Factors that influenced the IDC to fund Laser CNC (Pty) Ltd
Prior to the economic slowdown, both the automotive and capital equipment sectors experienced
unprecedented growth which was incidentally characterised by a general shortage of critical
components. Suppliers such as Laser were compelled to commit to pre-production runs schedule. This
was done with the intention to shorten lead times on certain key components in anticipation of a
continuing stronger demand. However, the sudden global economic slowdown has compromised the
group’s liquidity and left the company in an overstocked position. Hence, the R3 million term facility
is required under the auspices of the companies in distress fund to improve the company’s liquidity
4.2.4. Factors that led to distress
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Since its inception, Laser’s financial performance has been sound and consistently achieving positive
year-on-year turnover growth. However, as from the last quarter of 2008, the company has been
experiencing declining turnover and suppressed order book from its traditional major customers
including amongst others Bell Equipment Ltd (contributed 65% of 2008 Turnover). The slump in
demand: volumes were attributable to the sudden global economic slowdown, particularly within
Laser’s targeted market sectors namely, capital equipment, automotives and construction were heavily
affected by the slump. The downturn coupled with the pursuant recession caused a working capital
4.2.5. Jobs saved
Initially, Laser CNC employed around 200 employees. Between March to May 2009, Laser CNC had
to close down two production centres and reduced the employee costs, by retrenching 72 workers
before the implementation of the labour lay-off scheme.
4.2.6. Participation by the Laser CNC in the Employee Training Labour Lay-off Scheme
The committee was informed that the retrenchments took place during March – May 2009 before the
implementation of the labour-layoff scheme.
4.2.7. Turnaround strategy
In response to the challenges in the market place, Laser’s management formulated a survival and turn
around plan that entails the following:
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Broadening of its product offering with a view to further diversify its markets and customer base
outside its traditional markets.
Working capital optimisation through implementation of improved demand forecasting tools and
reducing stock holding levels.
Right-sizing the business: This has been achieved by closing down two production centres and
reduction in employee headcount by having retrenched 72 workers. This happened between March
and May 2009 before the implementation of the labour lay-off scheme. However, Laser CNC
reported that they had contact details of those who were retrenched and if the need arose to re-hire
some or even all of them, they would do so.
Exploring alternate business opportunities, which include for example Navistar (a manufacturing
company in Johannesburg). Laser noted that the first order for Navistar will be during February –
The slump in demand from traditional markets led to Laser seeking new business opportunities. Some
of the new business secured includes work on the Durban International Airport, Moses Mabhida
Soccer Stadium and the new King Shaka International Airport, which were under construction at the
time of the visit. The proposed revolving credit facility was distinctly earmarked for this type of ad hoc
On how to address the issue of seeking potential customers in Africa, Laser reported that they would
be attending a trade show in Kenya on 29 November 2009. Laser also briefed the committee about
their efforts to contact DTI on how to attract potential customers in Africa. However, at the time of the
visit, all efforts did not yield any successful results.
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According to the DTI, companies that are within the automotive sector might get further assistance via
the Manufacturing Incentive Programme (MIP), which is a cash back grant and the New Industrial
Development Programme. The programme may fund interventions to a maximum of R30m.
Laser acknowledged that there was no union representative on the management team. Members of the
Committee raised concern around this matter but also encouraged the management of Laser to explore
a positive relationship with trade union members and non-trade union members.
Laser noted that they are in the process of working on their BBBEE compliance. They had a meeting
scheduled with a consultant to discuss how Laser can obtain BEE status.
4.2.8. Committee observations
Laser CNC is in the process of obtaining BEE status. However, this is at a very early stage.
Too much emphasis was placed on one major client (Bell Equipment).
The retrenchment of workers was done before implementation of the labour-lay scheme.
Little or no collaboration and communication between the Departments of Trade and Industry,
Department of Labour and the IDC.
Without the IDC intervention, a further 128 workers would have been without work.
There was no labour (union) representation on the management team.
There was little or no communication with the labour movement within the company about
In the event that demand increases, those employees retrenched would be re-hired.
Some of the workers retrenched, have been employed on a temporary basis.
Within DTI, there are other means of financial aid to SMME’s.
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The larger share of Laser CNC’s business comes from one client, Bell Equipment.
The IDC representative came unprepared to the meeting.
The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on
Labour to Laser CNC during the 3rd term in 2010.
Laser CNC should consider those workers retrenched, to be re-instated, once the company
Collaboration and communication between the Departments of Trade and Industry, Department of
Labour and the IDC need to be reinforced and strengthened.
Laser CNC, with the assistance of the DTI and the IDC must explore potential clients in Africa.
4.3. York Timber Holdings Ltd – Sabi (Mpumalanga)
York Timber Holdings Ltd is found in Sabi, Mpumalanga Province. The Committee identified this
company because it was considered to be in distress and had received financial aid from IDC. The
committee therefore sought to determine the latest developments and assess progress made after the
financial intervention by the IDC.
Since early 2008, demand for all timber products declined steadily in line with the global economic
recession. The decline in demand resulted in a subsequent stock build-up across the sawmilling
industry. Market conditions deteriorated further during the beginning of 2009 with the demand for
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lumber declining significantly by 25% to 35% followed by discounting of prices, further increases in
stock levels and increased pressure on working capital. In this period, York’s profit margins also
declined as Komatiland Forests (“KLF”) increased log prices (bi-annually between 35 & 40% per
annum) directly affecting not only York’s retained earnings, but also all other long term contract
holders. York’s interim and final year-end June 2009 results were therefore well below budget
(reduction in sales of ca 25% and EBITDA with 100%) and for the first time York has breached some
debt funding covenants based on the year-end June 2009 reporting period.
4.3.2. Purpose of the visit
To investigate and examine the progress made after the financial intervention of the IDC.
4.3.3. Factors that influenced the IDC to fund the company
The following funding was approved by IDC’s Special Credit Committee (17 September 2009) and
Board of Directors (Board meeting 07/2009 on 29 September 2009):
IDC follow its rights including those of the BEE SPV’s to the extent of R213 million and retain the
existing equity stakes of 29.8% and 12.8% for IDC and the BEE SPV’s respectively. The total “fresh”
injection of equity, in the form of ordinary (IDC) and preference shares (BEE SPV’s), will thus
amount to R213 million. Due to the proportional repayment of all lenders, IDC will receive a payment
of around R28.5 million with the capital balance of the loan facility reduced to R42.7 million.
Although it is proposed that some of the terms of the loan funding will be relaxed, the security position
is improved as original capital security taken remains in place after the R450 million reduction in the
total syndicated debt package. The current shareholder value of York is R721 million, which will
increase to R1.1 billion after the partial debt repayment.
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4.3.4. Factors that led to distress
Since early 2008 demand for all timber products declined steadily in line with the global economic
recession, resulting in a subsequent stock build-up across the sawmilling industry. Market conditions
deteriorated further during the beginning of 2009 with the demand for lumber declining significantly
by 25% to 35% followed by discounting of prices, further increases in stock levels and increased
pressure on working capital. In this period, York’s profit margins also declined as Komatiland Forests
(“KLF”) increased log prices (bi-annually between 35 & 40% per annum) directly affecting not only
York’s retained earnings, but also all other long term contract holders.
York has already implemented the closure, mothballing and reduction in operations as per one of its
work stream strategies. It resulted in the retrenchment of 791 people. The approved funding would,
however, save a further 4060 existing job opportunities provided in several rural locations in the
Mpumalanga province, i.e. 1,983 in forestry and 2,077 in sawmilling division.
4.3.6. Participation by the York Timbers in the Employee Training Labour Lay-off Scheme
York Timbers indicated that they did apply to be placed on the labour lay-off scheme, but still had to
4.3.7. Turn-around strategy
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Several strategies were identified and task teams established to implement the turn-around strategies
based on the approval by the Board of Directors. The IDC was also notified about the strategies and
worked closely with the Sub-Committee and the various task teams.
One of the strategies was a decision to close three operations and reduce throughput at the Sabie
sawmill in order to re-align current market conditions with the processing capabilities of York’s
sawmilling operations. This however resulted in significant retrenchments. York’s overhead cost
structure was also scrutinised and reduced. The reduction included an average reduction in salaries of
10%, mainly for senior managers, and the remaining wage staff received an 8% increase and to date
York has not experienced any strike actions.
The start-up of the Driekop sawmill after the destruction of its Wetmill in 2007 by extreme forest fires
has also been completed and will improve York’s sales mix thereby increasing the average selling
price and enhancing gross profit margins.
Due to the re-alignment of processing facilities, 791 people had to be retrenched. The wage-earning
staff was consulted through processes that involved CEPPAWU & DUFUAWA while the salaried
staff was consulted on an individual basis. York had also embarked on a remedial action plan to assist
all retrenched individuals through interventions, such as re-skilling of existing and retrenched staff and
facilitation of counseling to promote skills and abilities of retrenched staff. York and IDC have been
in discussions with DTI with regards to possible funding to support the above mentioned actions.
Cost cutting and restructuring initiatives at head office level have also been completed with a 10%
reduction in salaried staff remuneration. Current performance is ahead of plan with actual
retrenchment costs amounting to R11 million compared to the original budgeted figure of R17 million
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resulting in a saving of R6 million. Cost savings with regards to mill closures and downsizing will
also have a positive impact going forward.
The total outcome after retrenchments and restructuring initiatives is that York will reduce its
overheads by R85 million for the financial year ending 30 June 2010. York also reported that they
have approached the Premier of Mpumalanga, where they informed the Premier that they are willing to
supply wood to the province in order to assist in the province’s housing developments.
4.3.8. Committee observations
Without the financial intervention of the IDC, 4060 employees would otherwise have been
Even though York Timbers applied to the Department of Labour to be placed on the labour lay-off
scheme, they still had to retrench employees.
In the event that demand increases, those employees retrenched, would be re-hired by York
Strategic partnerships have been forged with Indian companies, to address the increase in demand.
There is a good working relationship between the management and the labour movement.
Mr Meer, an IDC Divisional Executive, is a non-executive on the board of York Timbers.
York Timbers continues with their corporate social investments in Mpumalanga.
The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on
Labour to York Timbers during the 3rd term in 2010.
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York Timbers should consider those workers retrenched, to be re-instated, once the company
4.4. Automotive Leather Trim (Pty) Ltd T/A Automotive Leather Company (ALC)
The Automotive Leather Company is found in Rosslyn, Gauteng Province. It was one of the identified
companies in distress which the committee sought to oversee its work in order to determine what were
the latest developments are after the financial intervention by the IDC.
The Automotive Leather Company’s capability extends to the manufacture of all related Interior Trims
which includes: Seat covers, trim inserts; steering wheel covers as well as gear and handbrake grips
From design and development to finished production, ALC employs class leading technology; for
example, automated CNC sewing, coating of leather used in PIP processes, airbag sewing, micro
perforation, in-house CAD capabilities, e-data transfer, video conference facilities and storage, right
through to delivery worldwide.
4.4.2. Purpose of the visit
To investigate and examine the progress made after the financial intervention of the IDC.
4.4.3. Factors that influenced the IDC to fund Automotive Leather Company
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The stress on liquidity led to ALT falling in arrears with its trade creditors. The company immediately
embarked on a restructuring program which included retrenchments of 231 employees and cost
reduction exercises in order to adjust to a lower intake of customer orders
Despite the restructuring, the company still required funding to finance its immediate liquidity needs
and therefore approached the IDC for finance. The IDC has provided ALT with total funding of R25
million to assist with working capital to execute future orders.
The IDC reported that the funding approved for ALT is what is termed, a quasi-equity loan (where the
loan is split). The IDC indicated that each application is considered case-by-case, in other words the
needs and circumstances of the different companies are taken into account, when approving the
4.4.4. Factors that led to distress
The global economic downturn negatively impacted Automotive Leather Trim (ALT) which
experienced a 30% reduction in sales year to year since October 2008. The drop in sales resulted in a
reduction in cash flow. The burden on liquidity was further impacted by overstock of raw materials in
relation to reduced sales level.
4.4.5. Jobs saved
The intervention funding resulted in the retention of 447 jobs. Manpower was budgeted to increase by
100 people over the next 6 months due to the expected increase in sales with the prospect of increased
sales as a result of the expected launch of the new car models.
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ALT noted that retrenchments started in June 2008, where 231 employees were retrenched. At that
stage, ALT had lost the E-class business, which formed a bigger part of its turnover, from Mercedes
Benz. ALT also indicated that the NUMSA was informed of this at an early stage and various
informative meetings were held with employees. ALT Management further indicated to the delegation
that they envisaged employing 200 people till March 2010.
4.4.6. Participation by ALC in the Employee Training Labour Lay-off Scheme
ALC noted that they are not part of the labour lay-off scheme, since retrenchments already started
during June 2008 (before the implementation of the scheme).
4.4.7. Turnaround plan for the company
Due to the loss in sales, ALT embarked on an intense marketing drive which had seen them being
awarded a contract from BMW for the new 5 and 7 series. ALT has also been awarded contracts by
Lear and Nissan which would assist them in turning the company around.
The IDC would analyse the client’s monthly management accounts to monitor and ensure the business’
4.4.8. Committee observations
Without the intervention of the IDC, 447 employees would otherwise have been unemployed.
In the event that demand increases, those employees retrenched, would be re-hired by ALT.
The majority of ALT’s business is dependent on one major client, BMW.
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ALT will be employing 200 workers till March 2010.
There is a good working relationship between the management and the labour movement in the
The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on
Labour to the Automotive Leather Company during the 3rd term in 2010.
ALT must explore opportunities to expand its client base.
York Timbers should consider those workers retrenched, to be re-instated, once the company
One of the main objectives of the IDC’s financial funding to these companies in distress was to save
jobs. The evidence from the oversight visit on the four identified companies in distress shows that the
financial assistance of the IDC had managed to save 4 696 jobs.
The Committee was pleased to note the assurance by all the companies visited that they would in
future rehire those employees retrenched, once the respective companies became viable and self-
sustainable. However, the delegation was concerned that there was little or no co-ordination between
the activities of the IDC, the Departments of Trade & Industry and Labour.
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The committee/delegation wishes to note that even though there were successes with those
interventions reported above, the IDC still needed to strengthen and reinforce its interventions so that
the intentions and objectives of the interventions could be fully realized.
The committee would like to thank the management of the four companies that were visited; the
Industrial Development Corporation and the Department of Trade and Industry for making the
oversight visit a success.
Report to be considered.
4. REPORT OF THE PORTFOLIO COMMITTEE ON ECONOMIC DEVELOPMENT
OVERSIGHT VISIT TO DIFFERENT ENTRY POINTS FOCUSING ON CUSTOMS
FRAUD, DATED, 23 FEBRUARY 2010
1. The purpose and terms of reference
The Portfolio Committee on Economic Development undertook an oversight visit to KwaZulu-Natal,
Mpumalanga and Gauteng on 17-19 November 2009. The purpose of this oversight visit was to
oversee the interventions by the South African Revenue Services (SARS) with regard to strengthening
and providing additional capacity at the different entry points as agreed to in the ‘Framework
Response’. The oversight was focussed on the following:
Risk management plan (includes cooperation with other countries on implementation of the
Fraud prevention plan,
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Mitigating strategy or plan,
Co-operation and collaboration, that it, intra and inter-departmental,
The number of officials implicated in fraudulent activities since 2008; and the number of cases
Human resources capacity ,
Challenges encountered by SARS with regard to capacity at different points of entry.
2. Background to the oversight visit
SARS performs several important roles in international and local trade. This is performed as part
of its mandate to support the economy and provide the revenue needed by the government to
build democracy. One of SARS' core functions is to provide customs service that maximizes
revenue collection, protects South Africa's borders and facilitates trade. These functions are
carried out through:
Enforcing customs and related trade laws;
collecting duties and taxes;
ensuring the social welfare of citizens by controlling the import and export of prohibited and
restricted goods; and
Ensuring timeous clearance of goods and facilitating the speedy movement of travellers
through South African borders.
The ‘Framework for South Africa’s response to the international economic crisis’, approved by the
Joint Economic Presidential Working Group on 19 February 2009, is the basis for a national response
to the impact of the international economic crisis on South Africa. It enjoins the government to take
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necessary steps to strengthen the ability and capacity of the SARS in order to address customs fraud
which has also led to many job losses.
Paragraph 3.9 of the ’Framework for South Africa’s response to the international economic crisis’
“The parties acknowledge the problem of customs fraud and illegal imports and are concerned
that as a result of the global economic crisis, the level of illegal imports may increase. They
recognize the progress made in building an effective enforcement mechanism. They agree that
urgent attention should be given and additional capacity be devoted to official enforcement
capacity, including SARS, to further improve their effectiveness and impact”
The above quotation captures the significance of the oversight which the committee undertook to
ascertain if there was any progress made regarding that call for urgent attention to be given on
providing additional capacity to enforcement agency. Prior to the oversight visit, the Committee was
briefed by SARS on customs fraud in South Africa. Subsequent to the briefing, the Committee
identified three different modality points to be visited, namely sea, air and land. The following points
Durban Harbour – KZN
Lebombo Border Post – Mpumalanga
OR Tambo International Airport - Gauteng
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The delegation consisted of the following members of the Portfolio Committee:
Ms E.M. Coleman – Chairperson
Ms D. Tsotetsi
Ms P. Bhengu
Ms H. Line
Mr Z.C. Ntuli – Whip
Mr X. Mabasa
Dr S.B. Huang
Mr S. Ngonyama (only attended the Durban Harbour (KwaZulu-Natal) leg of the oversight visit)
4. The findings
4.1. Durban Harbour
Durban Harbour is one of the busiest ports in the world. It comprises 1884 ha port area, 53 commercial
berths, 136 km of roads, 280 km, 12 bridges, 1dry dock and 1 floating dock. As a marine modality,
Durban Harbour was identified for oversight in order to ascertain what interventions or mechanisms
had been put in place to effectively and efficiently deal with customs fraud.
The core functions of Durban Customs include trader management, trade administration, border
control, container security initiative, post clearance audits and inspections, regional training, regional
risk management and passenger movement.
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The Harbour is currently surrounded by industrial and residential property. The location of the
Harbour has continued to constrain the potential for expansion and has been noted as one of the major
challenges. SARS has also noted Richards Bay Harbour has limited container traffic. Therefore, to
ease the burden on the Durban Harbour, some of the traffic would be diverted to Richards Bay which
is suitably located and which can be expanded as well.
4.1.2. Purpose of the visit
To oversee interventions by SARS with regard to strengthening and providing additional capacity at
Durban Harbour as a marine modality.
4.1.3. Committee’s observations
The delegation noted that the presentation made by SARS Durban Harbour did not address issues
which the committee had requested them to address. The delegation further expressed that the report or
information, as requested, should have been on the marine modality with a specific focus on Durban
The Committee envisage scheduling a two day follow-up visit to Durban Harbour during 2010.
4.2. Lebombo Border Post
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Lebombo Border Post, as a land modality, was identified by the committee to ascertain what
interventions or mechanisms have been put in place to effectively and efficiently deal with customs
fraud at the border post.
4.2.2. Purpose of the visit
The purpose of the visit was to oversee the interventions by SARS with regard to strengthening and
providing additional capacity at Lebombo Border Post as a land modality.
4.2.3. Briefing by SARS Lebombo Border Post
Internal and external stakeholders
Internal stakeholders at Lebombo Border Post consist of the Border Control Operational Coordination
Committee (BCOCC), South African Revenue Services (SARS) South African Police Services
(SAPS), NIB (Department of Home Affairs), Departments of Agriculture, Department of Health,
National Intelligence Agency). Other departments include: Transport, Public Works, South African
National Defence Force, Department of Environment Affairs and Tourism, Department of Trade and
Industry. In addition, the Border post works closely with the local and district municipalities.
External stakeholders include: clearing agents, for example, tax practitioners; and transport
associations. The border post has also established a working relationship with the World Customs
Organisation (WCO). Through the BCOCC, Lebombo Border Post, have established a customs to
customs and inter border engagements with their Mozambican counterparts. There is also close
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cooperation and collaboration between Southern African Developmental Countries (SADC) and the
Southern African Customs Union (SACU) countries.
SARS also reported about a working relationship that exists particularly with countries such as
Malawi, Tanzania, and Mozambique. However, there is no formal forum for direct and formal
interaction and discussion on issues from operational perspectives. SARS informed the Committee that
SA and Mozambique continue to share information on the inflow of trade between the two countries,
and on how to address the overall risk mitigating strategies.
Management of SARS at Lebombo Border Post acknowledged that they did not have a strategy to
integrate communities so that they assist SARS to combat customs fraud. At the time of the oversight
visit, SARS was using media to inform the public in the surrounding areas on customs fraud and the
impact of buying illicit goods and this campaign was done in local languages. SARS acknowledged
that they needed to develop an integrated and collective approach for dealing with customs fraud with
the assistance of communities.
One Stop Border Post (OSBP)
SARS-Lebombo Border Post reported that the government intends to create ‘one stop border posts’
(OSBP). At the time of the visit, the committee was briefed that Phase One of construction was already
underway on the South African side of the border post and it was envisaged that it would be partly
finished by March 2010, the passenger hall was half complete, and the cargo bypass was expected to
be completed during February 2010.
Risk Management (Compliance)
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A private company called G4 was deployed to all gates at the border post and their primary duty is to
secure the premises. The SAPS presence can be found at all gates, and they check for stolen vehicles
and other criminal activities. They also perform checks based on security measures. Customs officials
and the Customs Border Control Unit (CBCU) are located at all the exit gates. These officials are
responsible for checking compliance to declarations made, identification of undeclared goods and
The presence of those officials and other institutions ensure the realization of Customs mandate of
detection of illicit goods, contraband cigarettes, drugs, and currency, precious and semi-precious
Methods of detection
Automated and manual validations: It relates to what SARS defines as the Customs Risk Engine
where the risk level of the client or product is measured. The level of such a risk will determine, if
it necessitates, a physical search. The system also deals with the Passenger Processing System
(PPS) and the Electronic Data Interchange (EDI)
Paper trail and transaction audits
Physical examination of cargo: The border post has specialist team dealing with physical
examination of cargo. The examination is determined by the risk level as shown above.
Scanning of baggage
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Gate control checks (G4 security)
CBCU and dog unit checks
Fraud Prevention Management
The committee was briefed that the E-release would be operational by the 1st of December 2009 and
that the export declaration process would be reviewed. The committee was also informed that the
review process would include the procurement of the clearance stamp that is already underway, and
the Lebombo stamps would only be used at the border post and G4 security would assist with controls.
Some of the mitigating strategies at Lebombo Border Post include:
SARS envisage strengthening and reinforcing the CBCU unit. They reported that a further 12
members were undergoing training at the time of the visit;
The G4 security company would also allocate additional staff;
The mode of operation for enforcement would be implemented by December 2009;
The submission on the EDI system has become mandatory; and
The continuous execution of the risk management plan.
Officials implicated in fraudulent activities
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The committee was informed that SARS – Lebombo Border Post had four disciplinary cases, of which
two officials were charged (but later resigned), one was dismissed and one acquitted. In addition to the
four cases, a security guard was also dismissed for dereliction of duty from the warehouse.
Human Resource capacity
The Lebombo Border Post has a staff complement of 123 employees. The staff placements comprises
three shifts of import teams, three shifts of export teams, and three shifts of passenger teams, two
teams of CBCU and a dog unit.
4.2.4. The Committee’s observations
Having heard the presentation from SARS Lebombo Border Post, the committee made the following
G4 Security’s (a private security service provider) personnel were not vetted;
The SARS’ advocacy campaigns in the surrounding communities were not as effective as it might
The private security personnel at the warehouses where goods were being stored could easily be
over-powered by syndicates. It appeared that there was not enough security capacity at the
Only four disciplinary cases were investigated at the border post, and all have been concluded.
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SARS needs to take concrete and firmer steps with regards to the safekeeping of goods in
warehouses. (Enhancement of warehouse security).
Vehicles at the border post need to be regularly maintained and be replaced after a particular period
of use or a certain number of kilometres travelled.
4.3. OR Tambo International Airport
OR Tambo International Airport, an air modality, was identified by the committee to ascertain what
interventions or mechanisms had been put in place to effectively and efficiently deal with customs
fraud at an international airport.
The purpose of the visit to the OR International Airport was to oversee the interventions by SARS on
strengthening and providing additional capacity at the International Airport.
4.3.3. Briefing by SARS
Risk Management Strategic Plan
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The Chief Officer, Mr. G. Ravele, presented an overview of SARS’ activities relating to customs
fraud. The Chief Officer briefed that committee on the Risk Management Framework guiding SARS’
interventions to support their strategic goals. As a result, the process then permits SARS to focus
resources on high and medium risk areas.
Components of the Risk Management Strategy comprises: (1) environment scanning; (2) Risk
identification; (3) Risk analysis (which includes training, development of standard operating
procedures and governance thereof); (4) development of a risk mitigation plan; and (5) monitoring &
For the period 2009/10, SARS’ Risk Management priorities include the following:
Support for the SARS accreditation program
Prohibited goods such as illicit drug trafficking
2010 FIFA World Cup
Cooperation and collaboration
The BCOCC is the key inter-departmental coordinating mechanism for border agencies. SARS
reported that the National Integrated Border Management Strategy (NIBMS) was adopted by Cabinet
in January 2008. The strategic goals of this strategy include coordination of activities of border
agencies, provision of strategic direction for Ports of Entry; and protection of the South African society
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SARS also indicated that the inter-agency cooperation is formalised by way of Memoranda of
Understanding with inter alia: The Department of Trade Industry, South African Police Services,
Department of Water and Environmental Affairs, South African Post Office, Ports Health, and
Cooperation with other countries
Cooperation takes place at:
Multilateral level – The World Customs Organisation that represents 176 customs agencies and
development treaties, instruments and best practices;
Regional level – SARS actively participates in SADC and SACU customs structure
Trilateral level – The India-Brazil-South Africa (IBSA) Customs Forum
Bilateral level – MOU’s are concluded with major strategic trade partners where there is a need to
exchange intelligence and information.
SARS indicated that eight (8) bilateral treaties are in place including treaties with China, India and the
USA; Nine (9) other treaties are signed but awaiting ratification; and nine (9) other treaties are under
It was also reported that SARS intends intensifying cross border investigations, focussing on the
following countries: Botswana, Lesotho and Zimbabwe. Focus areas for those investigations would
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include clothing and textiles which relates to under-invoicing, origin transgressions and Duty Credit
Customs Branch Overview: OR Tambo International Airport (ORTIA)
Customs Operational Mandate
The Customs Operational mandate includes appointing places of entry/exit; specific customs activities;
and visible control activities, including anti-smuggling checks and rummages. With regard to
movement control, SARS has to account for all goods entering, transiting and leaving the Republic.
SARS also have to maximise the use of electronic pre-arrival information and electronic
communication with Release Authorities ensuring integrity across the supply chain.
Customs challenges at the Port
SARS informed the committee of the following challenges at the port:
Organised crime (under-invoicing, round tripping, ghost exports, smuggling, counterfeit,
Increased complexity of international trade (intra-trade within multi-national corporations, transfer-
pricing, increase trade volumes),
Capacity to deal with new threats (biological and chemical war agents, weapons of mass
destruction, commercial fraud).
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Current Customs capabilities at ORTIA inter alia include:
Non intrusive inspections: body, baggage & container
Visible border control (CBCU)
Post Clearance Inspections
Seize or forfeit goods
Risk Management Capability at the Port
SARS informed the committee that the port-based Risk Compliance Unit is responsible for:
conducting standardised risk assessments, port specific trend and threat analysis, conducting industry
compliance research, providing in-debt profiles and evasion tactics for customs operations. SARS
further explained the high level risk management processes focusing on advanced passenger profiling,
advanced cargo profiling and real-time declaration processing.
The enforcement and risk division within SARS also deal with audits, criminal investigations, anti-
corruption and security, and debt collection. The division also work closely with the legal and policy
division that deals with litigation and appeals.
Within the port, there exists close collaboration with the following departments: South African Police
Services, Airport Company of South Africa, National Intelligence Agency, Department of Home
Affairs, Department of Health, and Department of Agriculture.
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The illicit economy: Transhipment
According to SARS, South Africa is emerging as a significant hub of international criminal activity
whose operations are masked as a legitimate commercial business activity. South Africa also has a
modern financial system linked to financial markets worldwide, which facilitates money laundering.
SARS noted that Nigerian traffickers are finding South African air and sea ports to be attractive
gateways for transhipping illicit goods into the West European market.
SARS anti-corruption & security
SARS emphasised that cross border crime has risen as international syndicates target new democracies
whose borders they view as weak. SARS’ personnel are actively recruited and offered large sums of
money to collude with criminals. The current economic recession contributes to economic pressures
resulting in greater vulnerability of staff to bribery and corruption. According to SARS, incentives
combined with opportunity and the ability to justify illicit behaviour is fuelling fraud and corruption.
Risk assessment showed that all areas of SARS, including Customs, are affected by fraud and
Customs Area of operation
SARS highlighted that customs is responsible for facilitating cross-border trade. Customs, according to
SARS, mitigates risk in a number of ways; namely, utilisation of risk engines, conducting inspections,
introducing Standard Operating Procedures and policies to regulate the environment.
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Anti-Corruption and Security (ACAS) Unit area of operation
ACAS is responsible for monitoring the Customs systems, processes and people and to identify
additional risks. ACAS’ aim is to deter, detect and counter fraud and corruption and to secure SARS
people, information and property.
Specific objectives include:
Prevention of fraud & corruption – from an ethics side it deals with the code of conduct for
officials. Pre-screening and vetting of the CBCU and SARS BCOCC members have been
prioritised for vetting for this financial year. SARS noted that Ethics Awareness Workshops were
held this year at Lebombo Border Post, Durban and ORTIA. With regard to information security, it
relates to officials affirming an oath of secrecy, protecting information and managing documents.
Detection and punitive capacity – at SARS there is a zero tolerance for corruption (dismissible
offence), anonymous reporting channels, joint projects with SAPS at various Port of Entries,
naming and shaming of convicted employees.
SARS indicated that there has been a spike of cases in the last quarter and with the onset of the
recession, there has been a high incidence of cigarette theft from warehouses (tobacco is a serious
issue with almost 80% of warehouse thefts involving cigarettes). SARS stated that they have noticed
the abuse of SARS assets is very high in customs.
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4.3.4. Committee observations
Due to the limited time available, the delegation was unable to properly engage with the SARS
Management of OR Tambo International Airport.
The Committee envisage scheduling a joint oversight visit to OR Tambo International Airport with
the Portfolio Committees on Police and Transport during June 2010.
The Committee note that considerable progress has been made with regards to risk management at
those points visited, especially at OR Tambo International Airport and Lebombo Border Post.
However, the Committee acknowledges that there are still loopholes in the risk management system
particularly with reference to customs fraud in the air and land modality. The Committee will,
therefore, endeavour to assist SARS (and other departments) to address a range of critical issues that
emerged during the oversight visit.
The Committee was however very disappointed with the SARS Durban Harbour because of its failure
to provide the necessary information requested by the committee.
Report to be considered.
5. REPORT OF THE PORTFOLIO COMMITTEE ON SCIENCE AND TECHNOLOGY
ON BUDGET VOTE 33: SCIENCE AND TECHNOLOGY, AND CORPORATE
STRATEGY 2010-2013, DATED, 14 April 2010:
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The Portfolio Committee on Science and Technology, having considered and concluded its
deliberations on Budget Vote 33: Science and Technology, and the Corporate Strategy 2010 – 2013,
reports as follows:
On 10 March 2010, the Committee was briefed on the strategic plan and budget by the Department of
Science and Technology’s Acting Director –General at the time, Dr Thomas Auf der Heyde and
assisted by Deputy Minister, Mr Derek Hanekom.
The presentation by the Department of Science and Technology (DST) included a focus on their
strategic context, overview and key policy developments, principal goals, outputs, achievements and
challenges, medium-term priorities and initiatives, selected medium-term output targets, monitoring
and evaluation, gross expenditure on research and development and the financial resources of the
The Corporate Strategy was informed by Government’s Medium-Term Strategic Framework, the Ten-
Year Innovation Plan and the National Research and Development Strategy.
DST’s principal goals are to enhance SA’s knowledge-generation capacity, develop innovation
capacity and the necessary science and technology innovation (STI) human capital to meet the needs
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of society. The idea is to build a world-class STI infrastructure to extend the frontiers of knowledge,
train the next generation of researchers and enable technology development and transfer. Thereby
positioning SA as a strategic international research development and innovation (RDI) partner and
making the exchange of knowledge, capacity and resources between SA and its regional and
international partners possible.
Outputs, past achievements and challenges
Some of the achievements highlighted to the Committee were:
the launch of the SumbandilaSat (a micro earth observation satellite);
the completion of the construction of 7 dishes of the KAT-7 (MEERKAT precursor);
the launch of the SA HIV and AIDS research and innovation platforms;
82 research chairs that were awarded;
an increased number of people participating in the National Science Week Programme;
the launch of a R100 million Platinum Development Fund to promote commercialization of
platinum group metal technologies in South Africa;
SA’s election as Vice-President of the Non-Aligned Movement Science and Technology Bureau
for the next four years;
R178 million leveraged by DST through official donor assistance;
the finalization of the 10-year Global Change research plan;
the roll-out of rural broadband connectivity using a wireless mesh network, that reached 150
schools in Nkangala District Municipality in Mpumalanga and part of the Sekhukhune District
in Limpopo; and
the establishment of a Titanium Centre of Competence was at an advanced stage.
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The challenges in implementing some key performance areas included the economic recession, which
resulted in substantial reprioritization, lack of intergovernmental co-ordination; the disparity of the
financial and academic year calendars, which impacted on the disbursement of funds; and the strain
on resources with the establishment of new entities.
The Committee was presented with an overview of medium-term priorities, deliverables and medium-
term initiatives. The Committee was further briefed referring to a table which listed the major
objectives, measurement indicators and output targets of the Department.
Monitoring and evaluation
One of the specific requests to the Department had been to to elaborate on the existing monitoring and
evaluation mechanisms to assess their programmes and projects. The Department summarized their
monitoring and evaluation mechanisms as follows:
monitoring and evaluation would be informed by the Presidency’s Outcomes framework,
published in January 2010;
strong focus on outcomes and indicators in the corporate strategy;
a dedicated monitoring and evaluation unit within the Department;
business plan very closely aligned with corporate strategy;
quarterly reports with indicators;
development of an internal Performance Information Management System;
shareholder compact a key instrument used to link public entities’ targets to DST targets; and
project funding to entities will be informed by programme objectives to assess the potential
long-term impact of the interventions.
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Gross Expenditure on Research and Development (GERD)
Under Gross Expenditure on Research and Development it was reported that the 2007/8 Research and
Development (R&D) survey showed spending on R&D amounted to R18.6 billion, that is 0.93 per cent
of GDP. Spending decreased from 0.95% (2006/7) to 0.93% (2007/8). Private sector spending on R&D
amounted to 57.7%.
Medium-term expenditure estimates
The estimated expenditure for the 2010/11 financial year amounted to R4.6 billion, increasing to R4.9
billion in 2011/12 and decreasing to R4.5 billion in 2012/13. 92.1% of the funds allocated go to public
entities with the remainder to goods and services, compensation and payments for capital assets.
Programmes such as Research, Development and Innovation are allocated 28%, Human Capital and
Knowledge Systems is allocated 38%, Socio-Economic Partnerships receives 27%, International Co-
operation and Resources amounts to 3%. The historical spending trends (2005-2009) of the
Department reflect that over the years the Department spent the allocated to it.
Summary of Committee deliberations
1. Members wanted to know how effective expenditure on R&D was and whether it was
measurable. The Department’s response was that they were only in a position to measure their
outputs and that it was difficult to control the outcomes and socio-economic impact of projects
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2. Members enquired about the decrease in the amount allocated by Treasury in 2013 and what
informed the cut? The response was that with less funding, National Treasury requested all
government departments to review their budgets. The Department had to reprioritize
programmes in such a manner that it did not necessarily stop programmes.
3. Reference was made to energy as one of the Grand Challenges identified by DST, but
information was limited regarding DST’s role in alternative energy solutions and the amount
spent on that. In response, the Committee was assured that though much of DST’s involvement
in the field of energy was at a research level, a considerable amount of work was being done on
the energy front, especially in the field of hydro-energy and that a number of projects were under
way. The Department’s entity for energy research is the South African National Energy
Research Institute (SANERI).
4. With regard to the Anglo Platinum Development Fund partnership and the initiatives in fuel cells
and battery development, Members enquired to what extent there will be international
collaboration given the amount of work done on battery development internationally or will the
focus be on local manufacturing only. The Department indicated that it was in the process of
reviewing the investment potential against the benefits.
5. The extent to which innovations in biotechnology, nanotechnology and advanced manufacturing,
etc. linked with other or existing beneficiation programmes, was questioned. The Department
indicated that there were a number of areas where the sole focus is on value-add. Four platforms
were developed for the different types of metals such as precious metals, ferrous metals and light
metals. The by-products of the metal industries allowed for advanced manufacturing in, for
example, the area of chemicals. Other initiatives were in the agricultural sector. The Department
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undertook to do a full briefing with the Committee at a later stage on some of the socio-
economic development projects.
6. A question was raised around the strategy for retaining scarce skills. An example was made of
engineers finding themselves in other jobs outside engineering. The Department explained that
this was a global phenomena and that retention strategies needed to be developed at institutional
level instead of governmental level.
7. Reference was made to the DST’s target of 2% of GDP spend on R&D within a period of ten
years and whether such a target was possible. In response, the Department clarified that the 2%
target was merely a DST aspiration and that it was not a formal target.
8. Members enquired about the small-scale trout farming and abalone projects and whether it was
limited to the Western Cape only. The response was that the aquaculture projects included trout
and commercial abalone farms in the Western Cape as well as other marine fishery pilot projects
in the Eastern Cape and KwaZulu Natal provinces.
9. Clarity was required around the four new health initiatives mentioned in the presentation, its
location and whether the initiatives were in response to a challenge identified. The Committee
was informed that the choice of area for a project was informed by the needs of the region and
community as well as the suitability of available technology. In some cases, proposals for pilot
projects are referred to DST by other government departments.
10. Further examples of the rural quality of life improvement initiatives were required. The
Department referred to pilot programmes launched in communities in the Eastern Cape and
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Limpopo with regard to alternative energy for use of television and stoves as well as for lighting
11. Members wanted to know how the Department plans to address the challenges they have in
implementing some of its targets. The impact of the economic recession on certain programmes
were noted and captured. The DST reported that the challenges of intergovernmental co-
ordination on integrated projects were being addressed through fostering closer working
relationships. Cabinet is also in the process of reviewing the cluster system in order to improve
12. One of the outputs identified was awarding 4900 students with bursaries during the period 2010-
2013, members enquired to what extent was race, gender, disability and rural entrants were being
considered when awarding those bursaries. The DST assured the Committee of their
commitment in ensuring that bursaries are awarded in accordance with the equitable distribution
of the general population and that the Department and its entities were mindful of the need to
address the issues concerning gender, race, impoverished backgrounds and persons with
13. Members enquired:
why the target for the Technological Innovation Agency (TIA) to be fully operational has
shifted from 2010 to 2013.
what the potential problems were of amalgamating entities under TIA,
the reasons why the CEO of TIA was in an acting position,
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the reason for the change of the target date for the appointment of a CEO from 30 March 2010 to
30 November 2010; and
the reason for the lengthy delay in the appointment of the CEO.
The Department explained that at the time the TIA Board was appointed, the Agency could not yet be
considered as fully operational. The establishment of the Agency took more time than anticipated.
The different entities being merged into TIA had their own employment policies and contracts and it
was necessary to consult with all personnel involved. The Department was involved in managing the
process of aligning policies and introducing new processes such as access to funding. The Department
undertook to revert back to the Committee around the appointment of the CEO.
1. The Committee noted that some of the targets set for strategic priorities have changed and would
therefore require more details from the Department regarding factors necessitating these
2. The Committee would engage the Department on the question of the awarding of Research
Chairs, which they felt was not well-co-ordinated. The Committee encouraged a co-operative
relationship between the Department of Science and Technology and the Department of Higher
Education to discuss issues in this regard and that the Committee should be kept abreast around
developments of these discussions.
3. The Committee undertook to closely monitor the amalgamation of several entities into TIA amid
insecurities raised by some of the entities’ management regarding their positioning within TIA.
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4. The Committee noted that the target for the SA National Space Agency (SANSA) to come into
operation seemed to have shifted to March 2013, the Committee required clarity on this as they
were under the impression that SANSA was already in operation.
5. The Committee noted the important role that agencies such as the Technology Innovation
Agency, National Space Agency and the National Intellectual Property Management Office have
played in facilitating the development of cutting-edge science and technology capabilities in the
country. For this reason, the Committee was disappointed to learn that these agencies were not
yet fully operational or that the initial target dates for operationalisation have been shifted to later
6. Members noted that very little was reported about progress being made since the Sumbandila
satellite was launched and will be requiring an update from the Department on the matter.
7. The Department will be required to provide detailed presentations on the role of science and
technology in energy security, the development of alternative energy-generation technology and
energy as one of the Department’s grand challenges.
8. The Committee would require the Department’s participation and input when they receive a
presentation from the University of the Western Cape on Indigenous Knowledge Systems in the
9. The Committee was satisfied with the Department’s track –record of unqualified reports by the
EPD 14 APRIL 2010 PAGE: 156 of 171
10. The Committee was satisfied with the Department’s historical spending trend of actual
expenditure in relation to the amount voted for.
The Portfolio Committee on Science and Technology, having considered and concluded its
deliberations on Budget Vote 33: Science and Technology, and the Corporate Strategy 2010 – 2013,
recommend that Budget Vote 33, be approved by the House.
Report to be considered
6. REPORT OF THE PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND
ADMINISTRATION ON THE PSC REPORT: EVALUATION OF SUPPLY CHAIN
MANAGEMENT PRACTICES WITHIN THE R200 000 THRESHOLD, DATED 14
The Public Service Commission (PSC) is constitutionally established as an independent institution that
has the following powers and functions (Section 196(4) of the Constitution of the republic of South
a) to promote the values and principles set out in Section 195 of the Constitution, throughout the
EPD 14 APRIL 2010 PAGE: 157 of 171
b) to investigate, monitor and evaluate the organisation and administration, and the personnel
practices, of the Public Service;
c) to propose measures to ensure effective and efficient performance within the Public Service;
d) to give directions aimed at ensuring that personnel procedures relating to recruitment, transfers,
promotions and dismissals comply with the values and principles set out in Section 195 of the
e) to report in respect of its activities and performance of its functions, including any finding it
may make and directions and advices it may give, and to provide an evaluation of the extent to
which the values, and principles set out in section 195 are complied with;
f) either of its own accord or on receipt of any complaint –
(i) to investigate and evaluate the application of personnel and public administration
practices, and to report to the relevant executive authority and legislature;
(ii) to investigate grievances of employees in the public service concerning official acts or
omissions, and recommend appropriate remedies;
(iii) to monitor and investigate adherence to applicable procedures in the public service; and
(iv) to advise national and provincial organs of state regarding personnel practices in the
public service, including those relating to the recruitment, appointment, transfer,
discharge and other aspects of the careers of employees in the public service; and
g) to exercise or perform the additional powers or functions prescribed by an act of Parliament.
The PSC is accountable to the National Assembly (Section 196(5) of the Constitution, 1996). In this
respect, the PSC compiled a report on the Evaluation of Supply Chain Management Practices within
the R200 000 Threshold which was tabled in Parliament on the 26 January 2010, and referred to the
EPD 14 APRIL 2010 PAGE: 158 of 171
Portfolio Committee on Public Service and Administration (the Committee). The Committee received
a briefing from the Public Service Commission on the 10 March 2010.
In light of the President’s State-of-the-Nation Address for 2010 and its strong emphasis on eradicating
corruption in the Public Service, the Committee would like to submit this report and recommendations
to the National Assembly for consideration.
2 Overview of the Public Service Commission’s report on the Evaluation of Supply Chain
Management Practices within the R200 000 Threshold
Government enacted the Public Finance Management Act, 1999 (PFMA) and the Preferential
Procurement Policy Framework Act, 2000 (PPPFA) in support of reform objectives in public service
procurement. The PFMA served as a base document for good governance in procurement, while the
PPPFA was designed to ensure that previously disadvantaged sectors of South African society have
access to compete for government work.
The PFMA and its subordinate regulations, codes and procedures have established a clear framework
for Heads of Departments as accounting officers on how to manage their procurement processes.
Despite the legislative and policy prescripts implemented by government to manage the risks of fraud
and corruption in Supply Chain Management (SCM), incidents of financial mismanagement, which
includes SCM processes, remain prevalent in the Public Service.
The R200 000 threshold is the maximum amount that could be processed by a department, without the
need for a bid or tender process to be undertaken. i.e. only three quotes would be necessary, for a
department to take an informed procurement decision.
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According to the PSC, the objectives of the evaluation were:
To establish whether government departments adhere to departmental procurement policies
within the threshold of R200 000,
To identify areas of weakness in the supply chain management cycle that make procurement
processes susceptible to fraud and corruption,
To provide recommendations with regard to the curbing of incidents of irregularities, fraud
and corruption regarding procurement processes.
2.1 Scope and methodology of the evaluation
The evaluation covered the period from 1 April 2005 to 31 March 2007. It was undertaken in the
national and provincial departments of Public Works and Housing. The decision to focus on the
departments of Public Works and Housing was taken due to the nature of their operations, which
involves a large degree of outsourcing to service providers. The evaluation focussed on the Supply
Chain Management (SCM) practices of these departments under the R200 000 threshold.
The methodology used entailed communication with the targeted departments for information and
data, random sampling of transactions valued under the R200 000 threshold, review of documentation
supporting transactions identified as part of the sample and conducting interviews. The limitation
experienced in the evaluation was the tardiness of departments to respond to the PSC’s requests for
information and data. The PSC decided on a 2% random sample of transactions to evaluate, which
amounted to 1679 transactions. Focus was given to supporting evidence for key components of the
procurement process, which were in turn tested against the requirements prescribed in the SCM Policy
of each department:
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Evidence of invitation for quotations;
Evidence of appropriate quotations;
Evidence of evaluation of quotations;
Evidence of request for services/goods from service providers; and
Evidence of payment.
Interviews were conducted with SCM managers and/or other officials in the Finance section in
departments that formed part of the scope of the evaluation.
2.1.1 Limitations of the evaluation
Even after departments were asked for information, summonsing departments was undertaken by the
PSC. Despite the constitutional responsibilities of the PSC and the legislative responsibility of
government departments to assist the PSC in executing its responsibilities, some departments did not
form part of the study due to late or non-submission of the requested information. The KwaZulu-Natal
Department of Housing, the Western Cape Department of Public Works and the Eastern Cape
Department of Housing did not supply the requested documentation. The National Department of
Public Works only provided documents after the study was concluded, and thus could not be included
in the evaluation.
2.2 Public Service Commission’s findings
For each step of the evaluation process that was undertaken the tables below succinctly summarise the
findings of the evaluation:
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Table 1: Evidence of invitation for quotations
Department Evidence of invitation of Average rate of compliance
National 54% 71%
Eastern Cape 83% 71%
Free State 81% 71%
Gauteng 58% 71%
KwaZulu-Natal 65% 71%
Limpopo 72% 71%
Mpumalanga 97% 71%
North West 87% 71%
Northern Cape 64% 71%
Western Cape 47% 71%
It was found that the average rate of compliance to procurement rules relating to invitation of
quotations was 71%. In 29% of all transactions evaluated there was no evidence that quotations were
obtained before orders were placed with service providers. Western Cape scored the lowest, while
Mpumulanga scored the highest in terms of providing evidence for invitations of quotations. National
departments were only able to provide 54% of the required evidence for proof of invitations for
Table 2: Evidence of appropriate quotations
Department Evidence of appropriate Average rate of compliance
National 40% 55%
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Eastern Cape 79% 55%
Free State 65% 55%
Gauteng 19% 55%
KwaZulu-Natal 53% 55%
Limpopo 62% 55%
Mpumalanga 84% 55%
North West 69% 55%
Northern Cape 41% 55%
Western Cape 42% 55%
In respect to receipt of the required number of quotations or appropriate written authorisation for
deviation from the required number of quotations, only 55% of all transactions sampled complied. It
was noted as a concern that, at National level and in four provinces, compliance in this area was below
the 55% average. Gauteng provided the least evidence, while Mpumulanga provided the most evidence
for appropriate quotations. National departments could only provide 40% of the required evidence for
Table 3: Evidence of evaluation of quotations
Department Evidence of evaluation of Average rate of compliance
National 38% 54%
Eastern Cape 72% 54%
Free State 65% 54%
Gauteng 19% 54%
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Department Evidence of evaluation of Average rate of compliance
KwaZulu-Natal 49% 54%
Limpopo 62% 54%
Mpumalanga 80% 54%
North West 72% 54%
Northern Cape 45% 54%
Western Cape 42% 54%
The average rate of compliance to procurement rules relating to the evaluation of quotations was 54%.
This was unacceptably low and indicates that the application of the criteria for awarding of orders for
goods/services are not well controlled and monitored, and therefore could be prone to abuse. Gauteng
provided the least amount of evidence, while Mpumulanga provided the most evidence for the
evaluation of quotations. National level was only able to provide 38% evidence for evaluation of
Table 4: Evidence of requests for good/services from service providers
Department Evidence of requests for Average rate of compliance
goods/services from service
National 88% 69%
Eastern Cape 91% 69%
Free State 87% 69%
Gauteng 71% 69%
KwaZulu-Natal 24% 69%
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Limpopo 60% 69%
Mpumalanga 50% 69%
North West 93% 69%
Northern Cape 56% 69%
Western Cape 72% 69%
Only 69% of all transactions evaluated complied with the requirement that requests for goods and
services from service providers must be recorded. Failure to issue specific instructions and/or orders to
service providers exposes the departments, to amongst other irregularities, risk of incorrect deliveries
and inferior quality of goods and services. In the absence of a specific instruction and/or order to
service providers, departments are limited in their ability to terminate appointments of service
providers or to litigate in the event of a dispute. KwaZulu-Natal provided the least amount of evidence
for requests of goods and services, while the Eastern Cape Province provided the most evidence for
requests for goods and services from service providers. In this instance, Mpumulanga only supplied
50% evidence and Gauteng provided 71%, while National departments provided 88% evidence of
requests for goods and services.
Table 5: Evidence of Payment
Department Evidence of payment Average rate of compliance
National 93% 94%
Eastern Cape 85% 94%
Free State 96% 94%
Gauteng 98% 94%
KwaZulu-Natal 98% 94%
Limpopo 99% 94%
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Mpumalanga 92% 94%
North West 90% 94%
Northern Cape 94% 94%
Western Cape 92% 94%
A total of 94% of transactions evaluated complied with the requirements of the due payment process.
This level of compliance indicated that diligence is over the payment process. In this stage of the
procurement process, the Eastern Cape provided the least amount of evidence, while Limpopo
supplied 99% of the requested evidence showing proof of payment. National deaprtments provided
93% evidence of proof of payment.
The weakness in compliance to the prescribed SCM process identified in the report indicated that the
application of SCM processes requires extensive improvement. These weaknesses make SCM process
susceptible to the following irregularities, amongst others:
Verbal requests for quotations so as to favour a service provider by providing incorrect
information to competing service providers;
Sending out invitations to quote at the last minute to competing service providers in order to
favour a preferred service provider
Inconsistent information being sent out irregularly in requests for quotations;
Irregularly requesting less than the prescribed number of quotations to bypass the due
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Applying inconsistent rationale when evaluating quotations for the same goods/services.
Delivery of goods and services which do not correspond to the original quotation received
from the service provider;
Cover quoting, whereby an official of a department colludes with an external service
provider to submit multiple quotations under differing entity names;
Kickback schemes, where officials benefit financially from the awarding of a tender to a
specific service provider;
Irregularly directing orders to a business entity in which a government official has a vested
Deliberate manipulation of the evaluation criteria to reach a decision favouring an
irregularly preferred service provider;
Overpayment of service providers; and
Unauthorised expenditure in violation of the PFMA.
The PSC found that there were major shortcomings of the evaluation of sampled departments’ SCM
components relating to the invitation of quotations, the evaluation of the quotations and the processes
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of issuing orders to service providers for goods and services. In general, the PSC found that
departmental policies complied with legislation and regulations. The shortcomings in procurement,
unearthed in the evaluation related specifically to technical implementation of the policies, which
require diligent application of specific anti-fraud initiatives, such as proper documenting of
transactions, record-keeping and written deviation reports. Record-keeping of this nature could also
assist in alleviating persistent qualified audit reports of government departments.
3. Findings of the Committee
The KwaZulu-Natal Department of Housing, the Western Cape Department of Public Works and the
Eastern Cape Department of Housing did not supply the requested documentation. The failure to
comply with the request for information and documentation is a contravention of the Section 9 of the
Public Service Commission Act, 1997. It was agreed that these departments should be held
accountable for their contravention of legislation.
The National Department of Public Works only provided documents after the study was concluded,
and thus could not be included in the evaluation. It was established that this information should have
been available when requested, if the SCM processes were taking place as envisioned. It was
worrisome that the PSC’s request for information and data was responded to late.
It was worrying that the first few steps in the SCM process were not followed, but payment was in
most instances, efficiently executed. It was the first and the second level of the SCM process that was
susceptible to fraudulent interventions. The fact that the last few steps in the process were done well,
showed that dereliction of duty by officials was not as a result of ignorance, as they were aware of
EPD 14 APRIL 2010 PAGE: 168 of 171
their responsibilities, but neglected to follow proper procedures in the first few steps of the SCM
Tenders are an integral part of the SCM process. The PSC’s evaluation was alarming, especially given
that only 2% of transactions within the R200 000 threshold was sampled. The threshold, has
subsequently shifted to R500 000, which meant that there was a larger amount of transactions that did
not require a formal tender process to be undertaken.
The findings of the evaluation identified major shortcomings in the application of the prescribed
procurement policies, procedures and controls. The lack of thorough and comprehensive
documentation of the approval of reasons for deviations from prescribed procurement procedures is of
Record-keeping of invitation of quotations, the number of quotations, deviations, evaluation of
quotations and communication of successful suppliers is particularly weak. These shortcomings make
the procurement process highly susceptible to the risks of maladministration, fraud and corruption. The
lack of proper recordkeeping also results in inadequate audit trails
The lack of recordkeeping contributes to the likelihood that the allegations of irregularities in
procurement may not be successful in that the high number of control of weaknesses identified will
themselves disguise irregularities harder to uncover.
The findings of the PSC Report, and its recommendations are supported by the Committee.
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The Committee recommends as follows:
1) Ministers and MECs should report to the National Assembly the implementation of the following
recommendations by 29th October 2010:
In order to ensure the integrity within the SCM process, departments should continuously be
supported by ongoing training, education and communication of the due SCM process.
Audits of the SCM process should be aimed at identifying weaknesses which contribute to
fraud, corruption and other irregularities. Such audits should not only be in the form of generic
internal audit reviews, but also on remedial action, which is in many instances delayed.
Departments should perform regular fraud detection reviews, which should ensure timely
identification of potential fraud and other irregularities.
Departments should ensure that the same officials should not be assigned the responsibility of
requesting quotations, evaluating quotations and making recommendations on the appropriate
entity to who an order should be placed. These different steps in the SCM process should be
assigned to different officials to ensure the segregation of duties and thus to strengthen control
over the process.
The procurement process should be adequately supervised. Such supervision should ensure that
the process is dealt with in a transparent manner and that adequate records of all phases of the
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procurement process are maintained. It should also be ensured that the necessary authorisations
within the confines of the delegations of authority be obtained.
The timely and accurate reporting of suspicions of fraud, corruption and other irregularities by
all employees should be encouraged by management and specific mechanisms to facilitate
whistle-blowing within departments should be developed and implemented in accordance with
the Protected Disclosures Act, 2000.
To mitigate the fraud risks associated with requests for quotations, such as irregularly
favouring a service provider by providing incorrect information to competing service providers,
the issuing of a formal request for quotations should be compulsory across all departments.
In instances where less than the prescribed number of quotations has been obtained, deviations
should be recorded in writing and authorised in terms of the delegations of authority.
Payment of invoices should not be made in the absence of the original quotation submitted and
a copy of the original order attached to the original invoice.
Legislation and regulations make provision for the compilation of a list of prospective service
providers per commodity and type of service. This list should be updated quarterly and all
quotations should be invited from such a list. Enforcement of adequate service provider probity
before inclusion on the supplier database limits the risk of different service providers with the
same owners supplying the same goods / services being included on the supplier database.
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It is critical that all officials involved in supply chain management declare all interests
including actual, perceived or potential on a regular basis. They should also sign confidentiality
agreements not to disclose any information received during the procurement process. This will
address the risks of giving preferential or prejudicial treatment or undue advantage of
information in favour of a particular service provider and conflicts of interest.
It is also critical that departments conduct ongoing performance evaluations of suppliers
contracted to departments. Departments should be evaluated in areas such as quality of services
provided, ability to meet deadlines and total costs incurred by departments to deliver services.
2) The KwaZulu-Natal Department of Housing, the Western Cape Department of Public Works and
the Eastern Cape Department of Housing should report to the National Assembly by the 28 May
2010, reasons for their non-submission of information to the PSC for its investigation into the
Evaluation of Supply Chain Management Practices within the R200 000 threshold.
3) The National Department of Public Works should supply reasons to the National Assembly for
its late response to PSC’s request for information in its evaluation of Supply Chain Management
Practices within the R200 000 threshold.
Report to be considered.