PRESENTATION TO THE PORTFOLIO COMMITTEE DEPARTMENT OF TELECOMMUNICATIONS AND POSTAL SERVICES 2016/2017 ANNUAL REPORT 03 October 2017 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

PRESENTATION OUTLINE Auditor-General’s Audit Outcomes Findings in the 2016/17 Audit Report Key Findings in the 2016/17 Management Letter Interventions to Address Audit Outcomes Significant Achievements during the Reporting Period Arears of under-achievement during the reporting period Programme Performance for 2016/17, with specific focus on targets not achieved 2016/17 Financial Performance Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

AUDITOR - GENERAL’S AUDIT OUTCOMES FINDINGS CATEGORY FY 2014/15 Audit Report 3 2 4 Management Letter 27 15 22 Overall Opinion Unqualified Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

FINDINGS IN THE 2016/17 AUDIT REPORT (1) Details Action Plan Deviation No deviation approved for procuring goods & services without obtaining at least three quotations SCM policy to be reviewed to enhance internal controls Deviation form to be completed at all times Procurement to be effected only after approval is granted. Include as Key Performance Indicator in the performance agreement of delegated official in SCM Procurement and contract management Non-compliance identified in the hygiene and cleaning services tender Central database to be utilised to verify declaration of interest All bids to be sent to Internal Audit to audit before awarding Wording of terms of reference and evaluation criteria to be objective and simple for evaluation purpose Training and development of bid committee members Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

FINDINGS IN THE 2016/17 AUDIT REPORT (2) Details Action Plan Irregular expenditure No consequence management of irregular expenditure incurred Disciplinary action to be taken against all officials who are responsible for the irregular expenditure. SCM policy to be reviewed to enhance internal controls Appointment of the irregular expenditure committee Workshops to be conducted across the department on SCM policies and procedures All irregular expenditure to be reported to National Treasury Corrected material misstatements The financial statements submitted for auditing contained material misstatements Payment of financial assets to be adequately reviewed and further be validate with entities and National Treasury regarding disclosure Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

KEY FINDINGS IN THE 2016/17 MANAGEMENT LETTER (1) Details Action Plan Irregular appointment Salary payment made to employee before appointment was approved Disciplinary action to be taken against all officials who are responsible for the irregular appointments. Recruitment and selection policy to be reviewed to enhance internal controls. Expenditure management Payment to suppliers not made within 30 days Receipt of invoices is now centralized and a template to track and monitor the payment of invoices is in place. Control measures have been put in place to ensure that the process of certification of invoices is smooth. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

KEY FINDINGS IN THE 2016/17 MANAGEMENT LETTER (2) Details Action Plan Internal Audit Internal Audit did not audit transfers made to the entities Develop and implement a comprehensive process to develop the Internal Audit Plan which contains control measures to ensure that all legislative requirements and leading practice recommended are taken into account. The Internal Audit Plan for the 17/18 financial year does cover transfer payments. Performance Agreements Performance agreements not submitted within the required timeframe Implementation of disciplinary action process Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

INTERVENTIONS TO ADDRESS AUDIT OUTCOMES In order to address the AG’s findings, the Department has developed and is implementing an Integrated Action Plan (IAP) that focuses on: Providing a systemic resolution of the findings Ensuring that root causes are effectively identified and addressed The effective implementation of the IAP is monitored on a regular basis by: The Governance Integrated Action Plan Committee The Departmental Executive Committee CD: Internal Audit Services conducts follow-up audits as independent monitoring of progress on the implementation of the IAP Audit Committee provides independent oversight, holding Executive Management to account on effective implementation of the IAP. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

SIGNIFICANT ACHIEVEMENTS DURING THE REPORTING PERIOD (1) The Department achieved 81% of its 21 planned 2016/17 annual targets (17 out of 21) while spending 86% of it budget allocation Drafting of ICT Legislation (White Paper) Department identified priority Bills so as to enable the implementation of the White Paper in the short to medium-term. The priority Bills include the Electronic Communications Amendment Bill, the ICT Sector Regulator and Tribunal Bill, the Digital Development Fund Bill, the SAPO SOC Ltd Amendment Bill and the Postal Services Amendment Bill. National e-Strategy & e-Government Strategy Department developed the National e-Strategy and the e-Government Strategy which underwent stakeholder consultation which included the Government Cluster System, following which it was approved by Cabinet for gazetting for public comment. ICT SMME Strategy Following the development of the draft ICT SMME Strategy, an extensive stakeholder consultation process was undertaken, including presentations to the Government Cluster System following which the Strategy was approved by Cabinet for gazetting for public comment and was subsequently gazetted on 31 March 2017 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

SIGNIFICANT ACHIEVEMENTS DURING THE REPORTING PERIOD (2) SOC Rationalisation The Department developed Assessment Reports on the rationalisation of BBI, SITA, Sentech and SAPO, which resulted in the development of a Consolidated Assessment Report on SOC Rationalisation inclusive of recommendations for implementation. National Radio Frequency Plan The NRFP was reviewed and updated during the reporting period. The Department incorporated the Government services spectrum into the draft NRFP that was subsequently gazetted for public comments. Furthermore, the reviewed NRFP was submitted to the Executive Authority for approval for publication in the Gazette. Advancing SA’s ICT Agenda In order to promote ICT policies and strategies at the International level and promote the South African ICT industry to increase partnerships and investments, as well as increase SA’s presence and influence, the Department developed 5 RSA Positions that were advanced at relevant international ICT forums. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

SIGNIFICANT ACHIEVEMENTS DURING THE REPORTING PERIOD (3) Automation of Business Processes (Enterprise Document Management) As part of moving towards a paperless environment, the Department sourced, installed, configured, and customised an Electronic Document Management and workflow system. The electronic system is currently being implemented through the automation of identified processes such as the leave management process. Further processes have been identified for automation. Climate and Culture Survey Department conducted an Organisational Culture and Climate Survey, with all its staff members, which informed the development of an Action Plan to improve the organisational climate and culture. The Department commenced with implementation of the Action Plan during the reporting period and will continue with the implementation of identified interventions in the 2017/18 FY. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

AREARS OF UNDER-ACHIEVEMENT DURING THE REPORTING PERIOD The Department did not achieve 4 of its 21 planned 2016/17 annual targets, as reflected below: Revision and implementation of the Organisational Structure The Department was only able to develop the Service Delivery Model as planned however all other elements related to the target were not achieved. Development of the RSA Position for BRICS Although the RSA Position for BRICS was developed, the partnership agreement could not be concluded as planned. Development of the National e-Strategy. Although the e-Strategy was developed, it was gazetted after the reporting period. Project Managing the roll-out of the Broadband connectivity. The Department was not able to develop the connectivity implementation plan or connect any of the identified sites. Further details with regards to the above-mentioned targets are reflected in the presentation Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

Comments on non-achievement PROGRAMME 1: ADMINISTRATION Target Status Comments on non-achievement Organisational Structure revised and implemented in line with Strategy Not Achieved Delays in the finalisation of the Service Delivery Model (SDM), which would inform the revision of the organisational structure, had a negative effect on the achievement of the planned annual target. However, to date, the Department has an approved SDM and has also developed its draft Functional Structure in consultation with management. Climate and Culture survey conducted and Action Plan developed Achieved n/a Core business processes identified, documented optimised and mapped, so as to enable process automation Enterprise Document Management and workflow system designed and developed Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

ICT INTERNATIONAL AFFAIRS (1) Comments on non-achievement PROGRAMME 2: ICT INTERNATIONAL AFFAIRS (1) Target Status Comments on non-achievement RSA position for UPU developed towards regulations of ETOEs, promoting postal services as a driver for socio-economic inclusion. Achieved n/a RSA position for WTSA developed to promote access to technology, manufacturing, conformance and interoperability for ICT SMME development RSA position for SADC ICT Ministerial meeting promoting access to affordable ICT infrastructure, services and regional integration RSA Position for BRICS developed focusing on skills, development, R&D for innovation and internet governance programmes Not Achieved SAPO could not sign the Partnership Agreement by March 31, 2017 due to a need for further engagement. However, SAPO has subsequently signed the Letter of Intent on 6 April 2017. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

ICT INTERNATIONAL AFFAIRS (2) Comments on non-achievement PROGRAMME 2: ICT INTERNATIONAL AFFAIRS (2) Target Status Comments on non-achievement Country Position for International Internet Public Policy developed Achieved n/a 1 South African placement in an identified Global ICT Governance Institution to influence the system of global governance 1 seat in Global ICT Governance Institution maintained Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

AND CAPACITY DEVELOPMENT (1) Comments on non-achievement PROGRAMME 3: ICT POLICY, RESEARCH AND CAPACITY DEVELOPMENT (1) Target Status Comments on non-achievement Draft ICT Legislation developed Achieved n/a Postal Services Amendment Bill developed South African Post Office Amendment Bill developed ICT SMME Strategy developed in line with ICT B-BBEE Sector Code Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

AND CAPACITY DEVELOPMENT (2) Comments on non-achievement PROGRAMME 3: ICT POLICY, RESEARCH AND CAPACITY DEVELOPMENT (2) Target Status Comments on non-achievement 3 year e-Services Programme developed Achieved n/a National e-Strategy developed Not Achieved Due to the need for extensive preliminary stakeholder consultation, the e-Strategy was not gazetted within the reporting period as planned. However, the e-Strategy has since been gazetted for public consultation in April 2017 and has undergone extensive provincial stakeholder consultation towards its finalization and approval in the 2017/18 financial year. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

ICT ENTERPRISE DEVELOPMENT Comments on non-achievement PROGRAMME 4: ICT ENTERPRISE DEVELOPMENT AND SOC OVERSIGHT Target Status Comments on non-achievement SOC Rationalisation assessment conducted and consolidated report developed (BBI, SITA, SENTECH and SAPO) Fully achieved n/a Performance and compliance of SOC against strategic plans and relevant prescripts monitored and evaluated Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

ICT INFRASTRUCTURE SUPPORT Comments on non-achievement PROGRAMME 5: ICT INFRASTRUCTURE SUPPORT Target Status Comments on non-achievement Project Manage the roll-out of the Broadband connectivity Implementation Plan (Phase 1) towards connecting 2700 sites Not Achieved The Department was unable to connect any of the identified sites. The challenge was largely due to the Department not being able to appoint the Broadband connectivity service provider, despite the SITA administered tender process which could not result in the appointment of a service provider as the bidders did not meet the technical requirements. However, the DTPS has subsequently formally mandated relevant SOCs (SITA and Broadband Infraco) to roll-out Phase 1 of SA connect. The Department and the SOCs have signed Master Service Agreements to enable implementation of the project to commence in Quarter 3. National Radio Frequency Plan (NRFP) reviewed and updated taking into consideration the outcomes of WRC-15 & national policies Achieved n/a Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

FINANCIAL PERFORMANCE 2016/17 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

FINANCIAL PERFORMANCE (1) STATEMENT OF FINANCIAL PERFORMANCE (1) 2016/17 2015/16 REVENUE R’000 Annual appropriation 2 417 412 1 405 253 Departmental revenue 831 411 26 804 435 Direct Exchequer receipts - Aid assistance TOTAL REVENUE 3 248 823 28 209 688 CURRENT EXPENDITURE Compensation of employees 205 248 181 693 Goods and Services – operational exp. 153 605 230 427 Interest and rent on land TOTAL CURRENT EXPENDITURE 358 853 412 120 Content – First level Second level Third level Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

FINANCIAL PERFORMANCE (2) STATEMENT OF FINANCIAL PERFORMANCE (2) 2016/17 2015/16 R’000 Transfers and subsidies * 1 057 493 882 049 Expenditure for capital assets Tangible capital assets 5 058 3 425 Software & other intangible assets 4 201 2 056 Total expenditure for capital assets 9 299 5 481 Financial transactions in assets & liabilities 650 047 447 TOTAL EXPENDITURE 2 075 692 1 300 097 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

FINANCIAL PERFORMANCE (3) STATEMENT OF FINANCIAL PERFORMANCE (3) 2016/17 2015/16 R’000 Voted funds surrendered 341 720 105 156 Departmental revenue 831 411 26 804 435 Direct Exchequer receipts - Transferred to National Treasury 1 173 131 26 909 591 Content – First level Second level Third level Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

EXPENDITURE PER PROGRAMME Expendi-ture as % of final appro-priation 2016/17 2015/16 Programme Final Appro-priation Actual Expen-diture Variance Expendi-ture as % of final appro-priation Administration 217 322 211 582 5 740 97.4% 223 030 221 864 ICT International Affairs and Trade 48 430 46 944 1 486 96.9% 43 310 41 542 ICT Policy Development 88 775 78 494 10 281 88.4% 97 132 73 979 ICT Enterprise Development 886 608 882 353 4 255 99.5% 490 231 488 959 ICT Infrastructure Development 1 176 277 856 319 319 958 72.8% 551 550 473 753 TOTAL 2 417 412 2 075 692 341 720 85.9% 1 405 253 1 300 097 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

Content – First level Second level SUMMARY OF EXPENDITURE PER ECONOMIC CLASSIFICATION 2016/17 2015/16 Economic Classifi-cation Final Appro-priation Actual Expen-diture Variance Variance as % against final allocation Actual Expenditure Current payments 695 254 358 853 336 401 48% 514 642 412 120 Transfers and subsidies 1 057 493 - 882 814 882 049 Payments for capital assets 14 618 9 299 5 319 36% 7 350 5 481 Payment for Financial assets 650 047 447 TOTAL 2 417 412 2 075 692 341 720 14% 1 405 253 1 300 097 Content – First level Second level Third level Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

Adjusted Appropriation Act R’000 DETAILS OF TRANSFER PAYMENTS Adjusted Appropriation Act R’000 Actual Transfer R’000 Variance USAASA - DTT: Distribution and project management costs - USAASA – Operations 69 045 USAF - DTT: Set top box, installation 589 384 Universal Service and Access Fund 55 156 SA POST OFFICE 240 000 NEMISA 77 200 Sentech: Dual Illumination Foreign Government / International Organisation 26 136 TOTAL 1 056 921 Content – First level Second level Third level Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

THANK YOU Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development