1 NATIONAL SKILLS FUND (NSF) PRESENTATION TO AD HOC COMMITTEE ON LABOUR 01 JUNE 2004

2 PRESENTATION OUTLINE: NSF Legislative framework Core purpose of NSF Background Overview of current funding windows & achievements for 2003/4 year NSF Expenditure Trends NSF Cash flow NSF Commitments Key challenges for 2004/5

3 NSF – LEGISLATIVE FRAMEWORK NSF was established in terms of Skills Development Act, 1998 Main source of income for NSF is 20% of skills levies collected Minister of Labour decides on allocations from NSF on advise from National Skills Authority (NSA). Director-General:Labour is the accounting officer of the NSF

4 NSF – Core Purpose Funds in the NSF may be used only to fund: Projects identified in the National Skills Development Strategy (NSDS) as National Priorities or Other projects related to the achievement of the purpose of the Skills Development Act as the DG determines

5 NSDS The current strategy has 5 Objectives and 12 success indicators: Objective 1: Developing a culture of high quality life-long learning Objective 2: Fostering skills development in the formal economy for productivity and employment growth Objective 3: Stimulating and supporting skills development in small business Objective 4: Promoting skills development for employability and sustainable livelihoods through social development initiatives Objective 5: Assisting new entrants into employment

6 BACKGROUND PRIOR TO THE SDA, DOL MANAGED THE TRAINING OF UNEMPLOYED PERSONS (TUP) FUND AND THE MANPOWER DEVELOPMENT FUND UNDER THE MANPOWER TRAINING ACT, AFTER THE PROMULGATION OF SDA IN 1999, THE MONEY IN BOTH OF THESES FUNDS WAS TRANSFERRED TO THE NSF – MEANING BEFORE THE LEVY WAS INTRODUCED IN 2000, THE NSF WAS ESTABLISHED AND OPERATIONAL FOR THE FIRST YEAR OF ITS EXISTENCE THE NSF ESSENTIALLY FUNCTIONED UNDER THE SAME RULES AND PROCEDURES THAT PERTAINED UNDER THE EARLIER LEGISLATION DURING 2000/2001 A FUNDAMENTAL REVIEW OF THE SUPPLY DRIVEN TRAINING SYSTEM UNDER TUP WAS UNDERWAY. THIS SERVED TO SLOW DOWN THE RATE OF DISBURSEMENT – AS BOTH PROVIDERS AND DOL OFFICIALS WERE ADAPTING TO THE DEMAND DRIVEN APPROACH

7 BACKGROUND..cont THE NSF COULD ONLY FIND ITS NEW FOCUS AFTER A NUMBER OF KEY INSTITUTIONS HAD BEEN ESTABLISHED AND FUNCTIONS PERFORMED, SUCH AS: -establishment of the NSA in April 1999; -establishment of the 25 SETAs in March 2000; -introduction of skills levy in April launch of first NSDS in February New roles and functions were more clearly defined for the DOL provincial offices in February 2001 THE NSF INHERITED AN ADMINISTRATION THAT WAS SET UP TO MANAGE THE TUP FUND

8 ProvSETA’sH/Off.DTI. Social Develop- ment Initiatives (objective 4) Strategic Projects (Objectives 1.1, 2.3,3,5) Other (Objective 5) SSP (Objec- tive 2) Development & Implement. of L/ships, S/Prog.’s & Providers SMME Develop- ment Strategic Occupations & Education Skills BursariesLearner- ships (Seta's) Innovation &Research Cap Building & NSDS Pro- motion Skills Support Pro- gramme Overview of current Funding Windows

9 SOCIAL DEVELOPMENT  Disbursing agent – DoL provincial offices  Project evaluation against set criteria  Training of unemployed persons  Special programmes (prisoners, social plan, people with disabilities bursaries)  Micro-and survivalist enterprise development  A total of 131,781 unemployed people received training under this window at a cost of R239,794, % of beneficiaries are black, 57% women & 1,27% persons with disabilities.(56% under the age of 35)

10 SOCIAL DEVELOPMENT Provincial office TotalAge groupsPopulation GroupsGenderDisabled <35>35BlackWhiteMaleFemale Western Cape Eastern Cape Northern Cape Free State KZN North West Gauteng South Gauteng North Mpumalanga Limpopo Total Percentage55,94%99,57%57,44%1,27%

11 STRATEGIC PROJECTS  DISBURSING AGENT – SETAS  ALLOCATIONS BASED ON STRATEGIC SECTOR NEEDS WHICH REFERENCE THE FOLLOWING FUNDING AREAS:  Development and Piloting of Skills Programmes;  Learnerships and ETDP Practitioner Development;  Small Business Development;  Strategic Occupations; and  Education Skills (including ABET)

12 STRATEGIC PROJECTS  FRAMEWORK FOR PROPOSALS HAD TO SPEAK TO CONTRIBUTION TOWARDS ACHIEVEMENT OF ONE OR MORE GOVERNMENT GOALS:  Integrated Action Plan for Economic-and Employment Growth;  Social Cluster report for social development;  HRD Strategy; and  NSDS  MINISTER OF LABOUR LAUNCHED PROJECTS IN MAY 2002  TO DATE (31/03/04) R381,4M HAS BEEN DISBURSED FROM A TOTAL COMMITMENT OF R1,1BILLION OVER THREE AND A HALF YEARS.

13 BURSARIES (SCARCE SKILLS)  Disbursing agents:-National Student Financial Aid Scheme (NSFAS) for undergraduate studies & National Research Foundation (NRF) for post- graduate studies  Contributes to addressing scarce skills-re: HRD priority area  Scarce skills areas include broadly: accounting, science, auditing, bio-informatics, bio-technology, chemistry, engineering, financial management, management studies and tourism  For 2003/4 R21,137,000 was allocated to NRF to fund 871 post-graduate bursaries ranging from honours to post-doctoral studies.

14 BURSARIES (SCARCE SKILLS)  For the undergraduate bursaries, the NSFAS disbursed an amount of R102,398,266 to cover 15,064 bursaries  To consolidate NSF bursary scheme, the scheme for people with disabilities will also be managed through NSFAS and NRF from A total of R18,272,600 has been allocated for this purpose for the 2004 academic year.

15 INNOVATION & RESEARCH Disbursing agent – DoL Head Office Objective:  Generate new or improved knowledge about skills development through research;  Enhance innovation in relation to:  -Implementation of the National Skills Development Strategy, Skills Development Act and Skills Development Levies Act; -The generation and distribution of career/labour market information to learners, providers and other users; -Skills development policy and implementation strategies. 49 proposals were received and evaluated through a public RFP process, of which 9 has been approved by the DG in 2003– total value of R16million.

16 INNOVATION & RESEARCH…PROJECT EXAMPLE PROJECT NAME: NALEDI 3D FACTORY PROJECT OBJECTIVE: Development of a Virtual Reality Application for the training of lathe and machine operators. ACHIEVEMENT: The pilot of this application has been successful, and the project managers feel confident that this product can have a significant impact on increasing skills of students aiming for employment in the manufacturing sector. The project is scheduled to be officially launched by the Minister of Labour on 5 July 2004.

17 CAPACITY BUILDING OF STAKEHOLDERS Disbursing agent – DoL Head Office Covers SETAs, Trade Union Federations, Organised Business, Training Providers, Designated community groups, i.e. - Disabled People South Africa (DPSA); - South African National Civic Organisation (SANCO); - South African Youth Council (SAYC); and - Women’s National Coalition (WNC) Programme has been implemented across 21 SETA Boards, NAFCOC, FABCOS and BSA. COSATU, FEDUSA, NACTU and SANCO also already benefited

18 NSDS PROMOTION Disbursing agent – DoL Head Office Covers marketing/advocacy & promotional activities in relation to the implementation of the NSDS including the annual national skills conferences, publications, road shows, consultations, etc. Expenditure for 2003/4 amounted to R13,7 million

19 SKILLS SUPPORT PROGRAMME Disbursing agent- DoL Head Office in partnership with DTI Linked to DTI’s Small-and Medium Enterprise Development Programme (SMEDP) & Strategic Industrial Programme (SIP), which are designed to encourage new investments (including major expansions) The programme has three funding elements: - Training grant; - Development grant;and - Capital grant.

20 SKILLS SUPPORT PROGRAMME Incentives approvals are on average for 3- year period The amounts committed to date: 2003/4 – R22,3m 2004/5 – R31,8m 2005/6 – R14,5m Actual amount claimed during 2003/4 is R15,8m facilitating the training of 2316 new workers. Of these 2200 were black (95%) and 1697 female (73%)

21 LEARNERSHIP WINDOW A “Learnership” Window has been created to support the Learnership Campaign (GDS agreement) Funds are allocated to: - SETAs who don’t have sufficient funds to fund large increases in unemployed learners to meet GDS targets; -Government departments (through PSETA) To date a total amount of R444 million for the training of 18,298 unemployed learners in learnerships; In addition, R90million has been committed to fund the provincial Employment and Skills Development Lead Employer (ESDLE) pilot projects- launched by the Minister of Labour on 24 May 2004.

22 NSF: EXPENDITURE TRENDS YEARINCOME ‘000 EXPENDITURE ‘000 SURPLUS ‘ /1314,186177,412136, /2589,343262,550326, /3802,844530,118272, /4 (un audited)924,042699,985224,057

23 NSF: CASHFLOW R’000ACTUAL 2002/3 UN AUDITED 2003/4 BALANCE B/F791,8031,064,529 INCOME802,844924,042 EXPENDITURE530,118708,601 SURPLUS272,726215,441 NET AVAILABLE1,064,5291,279,970 COMMITTED FUNDS(31/03/04) 1,449,526

24 NSF: COMMITMENTS (31/03/04) FUNDING WINDOWAMOUNT SOCIAL DEVELOPMENTR 175,000,000 STRATEGIC PROJECTSR785,526,293 SKILLS SUPPORT PROGRAMMER45,000,000 LEARNERSHIPSR444,000,000 TOTALR1,449,526,293

25 KEY CHALLENGES FOR 2004/5 Identification of new Funding Windows to support the objectives and targets of the NSDS Streamline/review policies, procedures and criteria for NSF funding. Reducing the variance between funds committed and funds spent. Review/strengthen management capacity of the NSF to ensure the effective and efficient functioning of the NSF. Development of MIS to enhance business processes/information flow processes.

26 I THANK YOU !!