PRESENTATION OF THE NATIONAL DEVELOPMENT AGENCY ANNUAL REPORT 2011/12 PORTFOLIO COMMITTEE ON SOCIAL DEVELOPMENT 06 NOVEMBER

CONTENT  INTRODUCTION  Role and Mandate  Mission, Vision and Values  Organisational Structure  STRATEGIC GOALS AND STRATEGIC OBJECTIVES  MEASURING OUR DELIVERY AGAINST STRATEGIC OBJECTIVES  FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2012  AUDIT TURNAROUND STRATEGY 2

INTRODUCTION 3

ROLE AND MANDATE  In terms of the National Development Agency (NDA) Act (Act No 108 of 1998 as amended), NDA was mandated to contribute towards the eradication of poverty and its causes by granting funds to civil society organisations (CSOs) to:  Implement development projects in poor communities, and  Strengthen the institutional capacity of other CSOs that provide services to poor communities. 4

MISION, VISION AND VALUES Vision A society free from poverty. Mission Facilitate sustainable development by strengthening civil society organisations involved in poverty eradication through enhanced grant funding and research. Values  Integrity  Accountability and Responsibility  Transparency  Excellence  Partnering 5

ORGANISATIONAL STRUCTURE 6

STRATEGIC GOAL AND OBJECTIVES 2011/12 STRATEGIC GOAL  To leverage strategic partnerships to eradicate poverty to enable poor communities to achieve sustainable livelihoods. STRATEGIC OBJECTIVES  To build and enhance the capacity of CSOs to enable them to carry out development work effectively  To grant funds, facilitate and manage poverty eradication programmes  To influence policies, practices and strategies through comprehensive research and knowledge management  To mobilise and leverage resources  To position the NDA as a premier development agency  To promote and maintain organisational excellence and sustainability 7

MEASURING DELIVERY AGAINST STRATEGIC OBJECTIVES 8

STRATEGIC OBJECTIVE 1 TO BUILD AND ENHANCE THE CAPACITY OF CSOs TO ENABLE THEM TO CARRY OUT DEVELOPMENT WORK EFFECTIVELY 9

CAPACITY NEEDS OF CSOs, TARGETED INTERVENTIONS AND TECHNICAL CAPACITY OF TARGETED CSOs ACHIEVEMENTS  Capacity needs of 146 funded projects were assessed  Capacity programmes designed and implemented as per the recommendations of capacity assessment reports in line with the target  237 ECD sites supported through eight ECD networks approved for funding against an annual target of 100.  400 volunteers capacitated to support the identified ECD projects against an annual target of 200.  199 CSOs capacity enhanced against an annual target of 40 DEVIATIONS  150 members of CSOs supporting vulnerable groups not trained as planned due to late approval of projects. 10

STRATEGIC OBJECTIVE 2 TO GRANT FUNDS, FACILITATE AND MANAGE POVERTY ERADICATION PROGRAMMES 11

CSOs INVOLVED IN NDA TARGETED SECTORS FUNDED AND NUMBER OF JOBS CREATED ACHIEVEMENTS  28 food security projects in ECD sites funded to an amount of R against a target of 20.  65 volunteer opportunities created in the rural development sector against a target of 60.  47 volunteer opportunities created in CSOs supporting vulnerable groups against a target of 10.  employment opportunities created against a target of 800.  2 research think-tank CSOs supported - Cooperative for Research and Education (CORE) – Centre for Early Childhood Development meeting the annual target.  25 partnership linkages created with government departments, private sector CSOs and local government against a target of

CSOs INVOLVED IN NDA TARGETED SECTORS FUNDED AND NUMBER OF JOBS CREATED Contd… DEVIATIONS  4 CSOs supporting vulnerable groups funded against a target of 5 – Management approved larger grants for CSOs supporting vulnerable groups resulting in one CSO not being funded.  3 CSO networks supported against a target of 5 – Networks planned for support did not complete current funding activities.  37 CSOs in rural development funded to an amount of R against a target of 40 due to a larger grant allocated to rural development projects. 13

STRATEGIC OBJECTIVE 3 TO INFLUENCE POLICIES, PRACTICES AND STRATEGIES THROUGH COMPREHENSIVE RESEARCH AND KNOWLEDGE MANAGEMENT 14

DEVELOPMENT ORIENTED RESEARCH AND POLICY ANALYSIS, DATABASE OF CSOs UPGRADED AND CSOs ADVOCACY AND LOBBYING ACHIEVEMENTS  Research agenda developed and approved by EXCO and presented to Parliament as planned.  1 planned policy paper presented on the role of NGOs and CSOs in policy formulation.  2 planned study reports commissioned and submitted on ECD and CSO fundraising challenges.  2 partnerships and linkages built with Journal Storage (JStor) and Development Bank of South Africa (DBSA) / South African Local Government Association (SALGA)  Supported CSOs in the Northern Cape through sponsorship of their annual general meetings. DEVIATIONS  The agenda on lobbying and advocacy was not developed. 15

MONITORING AND EVALUATION OF NDA FUNDED PROJECTS UNDERTAKEN ACHIEVEMENTS  36 monitoring and evaluation performance reports produced and analysed  11 projects visited  3 case studies produced  16 mid-term evaluations performed  20 close-out evaluations conducted  Monitoring and evaluation framework reviewed and implemented DEVIATIONS None 16

CSO PARTICIPATION IN NATIONAL AND INTERNATIONAL FORA FACILITATED ACHIEVEMENTS  Supported CSOs in the Northern Cape through sponsorship of their annual general meetings.  Supported the Natal Women’s Resource Centre.  Supported provincial MDGs structure formations that resulted in four Provincial task teams in place in KwaZulu-Natal, Eastern Cape, Limpopo and Free State. DEVIATIONS None 17

LESSONS LEARNT AND BEST PRACTICES ON POVERTY ERADICATION INTERVENTIONS PUBLISHED ACHIEVEMENTS  Best practice report on ECD capacity building developed for Masikhule ECD centre  Best practice report produced for Super Grand Agric Feed Mill Cooperative DEVIATIONS None 18

STRATEGIC OBJECTIVE 4 TO MOBILSE AND LEVERAGE RESOURCES 19

RESOURCE MOBILISATION STRATEGY APPROVED AND IMPLEMENTED ACHIEVEMENTS  Resource mobilisation strategy approved and implemented. DEVIATIONS  R11,7 million raised in cash against an annual target of R200 million  R7,5 million – ECD, Free State  R1,5 million – Biomass project  R2,7 million – DSD Mpumalanga In-kind  R (free broadcast)  ± R8 million (journals)  8 partnership agreements were signed and implemented against a target of 10 due to delays in finalisation of agreements with University of Johannesburg and the National Economic Development and Labour Council (Nedlac) 20

STRATEGIC OBJECTIVE 5 TO POSITION THE NDA AS A PREMIER DEVELOPMENT AGENCY 21

ENHANCE STRATEGIC ENGAGEMENTS WITH KEY STAKEHOLDERS ACHIEVEMENTS  Stakeholder management / communications strategy approved and implemented as planned. DEVIATIONS None. 22

IMPROVED INTERFACE BETWEEN CIVIL SOCIETY AND GOVERNMENT ACHIEVEMENTS  Facilitated 14 engagements between CSOs and government on poverty eradication and development against a target of 4. DEVIATIONS None. 23

STRATEGIC OBJECTIVE 6 TO PROMOTE AND MAINTAIN ORGANISATIONAL EXCELLENCE AND SUSTAINABILITY 24

ORGANISATIONAL CAPACITY STRENGTHENED, MONITORING AND EVALUATION OF ORGANISATIONAL PERFORMANCE ACHIEVEMENTS  Human resources strategy approved and implemented  A performance management system (PMS) implemented as follows:  Executive scorecard replaced by directorate scorecards  Critical leadership competencies introduced and implemented DEVIATIONS  A high-level organisational structure aligned with strategic plan developed and approved by the Board but not fully implemented.  10% Half-yearly performance management reviews not conducted for staff who joined the NDA in the middle of the performance cycle, including those on maternity and sick leave.  35% Year-end appraisal reviews not conducted for EXCO and employees who joined the NDA in the middle of the performance cycle, including those on maternity and sick leave. 25

ORGANISATIONAL SYSTEMS AND PROCESSES REVIEWED AND IMPROVED ACHIEVEMENTS  The following key internal controls were managed and successfully implemented:  Monthly and quarterly management accounts for Exco, Board sub- committees and Board  Weekly and monthly bank and general ledger reconciliations  Finance and procurement policies reviewed.  Half-yearly and annual fixed assets counts performed.  Automated supplier database.  Implemented Effective risk management  Key audit findings from prior year audits addressed  Audit findings tracked and addressed through quarterly progress report at QRM meetings 26

ORGANISATIONAL SYSTEMS AND PROCESSES Contd… ACHIEVEMENTS  Coordinate and manage NDAwide budgets in line with PFMA. The following budgets coordinated and submitted to the Executive Authority and Treasury:  Estimates of national expenditure (ENE) budget (submitted in Jan 2012)  Five-year budget for 2013 –2017 (submitted to Exco and Board)  Medium-term expenditure framework (MTEF) budget (submitted in August 2011)  Coordinate and manage interim and statutory year-end audits  2011/12 annual financial statements submitted to Treasury and the Auditor- General timeously in line with PFMA deadlines  2012 audit preparations well underway and various memos sent to departments to manage 2012 year-end 27

ORGANISATIONAL SYSTEMS AND PROCESSES Contd… ACHIEVEMENTS  Ongoing implementation of IT governance framework.  Needs and gap analysis finalised to assist in systems selection in terms of the information and communications technology (ICT) systems revamp project.  Reviewed ICT infrastructure in terms of systems revamp project.  Fraud prevention plan and whistle blowing policies reviewed, approved and implemented.  Disaster recovery plan approved.  Board meetings held according to statutory requirements.  Delegations of authority reviewed and approved.  Memoranda of agreement (MoAs), memoranda of understanding (MoUs) and service-level agreements (SLAs) drafted, reviewed, vetted and signed off. 28

ORGANISATIONAL SYSTEMS AND PROCESSES Contd… DEVIATIONS  The following HR policies and procedures were developed but not approved by Board: \  Code of conduct  Long service and excellence awards  Integrated Employee wellness  Conflict of interest  Enterprise-wide risk assessment conducted, 2011/12 risk register updated but not approved during the year under review.  Draft audit report issued on portfolio analysis of Development Management Directorate but not finalised.  Project write-backs and review of projects closeout audits not finalised due to resource constraints.  Review of integration between communication, research and development management not achieved.  Review of NDA funding process not achieved.  Board performance assessments not achieved. 29

Financial Performance for the year ended 31 March

EXECUTIVE SUMMARY TO THE FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2012 HIGHLIGHTS  The transfer from the DSD was restored to previous levels after a significant reduction in 2011 (R 83,4m : 2011, R 144,7m : 2010) to R 163,4m in 2012 financial year.  The entity raised a total of R 11.7m in the current year as part of the resource mobilisation strategy to expand the revenue streams for the NDA.  Funds worth R 77.5m were committed to projects in 2011/12 financial year compared to R 49.5 million in 2010/2011 representing a 57% increase in direct project funding year on year.  Total cash of R 83,1m was disbursed to funded projects including those approved in previous years, resulting in reduction in projects liability of 13% from R 95.5 m in 2011 to R 83.1 m in

EXECUTIVE SUMMARY TO THE FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2012 (Cont…) LOWLIGHTS  The desired Mandate vs Admin expenses ratio of 60: 40 was not achieved, a ratio of 50: 50 was achieved in the current year. This split was occasioned by the escalating fixed costs that will be remedied in subsequent financial years through increased resource mobilisation.  Interest income was down 45% compared to previous year. The reduction implies that a significant source of funding to the organisation was no longer available. The decrease in interest income can be partly attributed to the delay in transfers of tranches by DSD and decrease in prime rate.  The entity’s funding remains a concern due to historical below inflationary increase in the funding from Treasury. This impacts negatively on our ability to perform at the expected level of our legislative mandate. 32

SUMMARISED STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH

STATEMENT OF POSITION AS AT 31 MARCH

35 AUDIT TURNAROUND STRATEGY

PROCESS FOR IMPLEMENTING AND VERIFYING AUDIT TURNAROUND STRATEGY  An audit turnaround strategy has been developed and approved by the Audit Committee and the Board to address all identified weaknesses from the regulatory audit.  The corrective action is currently been implemented by management, assessed by internal audit and monitored by the audit committee on quarterly basis.  The progress implementation report on the turnaround strategy will be submitted to the AGSA and the Ministry as part of the quarterly audit dashboard.  corrective actions will be taken by management on non implementation of the turnaround strategy. 36

2011/2012 SIGNIFICANT AUDIT FINDINGS AND PROGRESS FINDINGSPROGRESS 1.Procurement of goods not followed in procuring consulting and professional services 60% - procurement policy amendment awaiting Board approval. Policy awareness for all NDA staff conducted. Benchmarked the proposed amended policy to DSD and Treasury. 2.Supply chain process not followed for purchases incurred Approval of a automated procurement system. Corrective action is currently being taken against non compliance. Reviewed an automated supplier database. 3.No tender processes for purchases Policy reviewed to align with the tender threshold from R200k to R500k in line with Treasury Regulations. Tightens controls around approval of deviations. 37

2011/2012 SIGNIFICANT AUDIT FINDINGS AND PROGRESS (Cont…) FINDINGSPROGRESS 4.Supporting information for targets cannot be verified Supporting information was verified through provision of portfolio of evidence. Monitoring and evaluation framework with a verification process is currently being developed and will be finalized by 30 November Predetermined objectives actuals reported on are based on project proposals Register of project’s beneficiaries is submitted to record information on the numbers and will be verified through the monitoring process. 6.Supporting information for targets cannot be verified Supporting information was verified through provision of portfolio of evidence. Monitoring and evaluation framework with a verification process is currently being developed and will be finalized by 30 November

2011/2012 SIGNIFICANT AUDIT FINDINGS AND PROGRESS (Cont…) FINDINGSPROGRESS 7.Targets not verifiedSupporting information was verified through provision of portfolio of evidence. Monitoring and evaluation framework with a verification process is currently being developed and will be finalised by 30 November More than 20% of targets not achieved Achievement of targets is monitored and verified monthly and quarterly. Corrective action is put in place to address negative deviations on target achievements within defined timeframes. 9.Actual targets disclosed as achieved in the annual report do not match the supporting documents provided Supporting information was verified through provision of portfolio of evidence. Monitoring and evaluation framework with a verification process is currently being developed and will be finalized by 30 November

SUMMARY OF AUDIT FINDINGS PER UNIT PER 2011/2012 YEAR END AUDIT 40 FUNCTIONAL AREASIGNIFICANT MATTERS OR MATTERS AFFECTING THE AUDIT REPORT OTHER IMPORTANT MATTERS ADMINISTRATIVE MATTERS TOTAL FINDINGS Procurement3115 Accounting-3912 Strategy; AR & APP63-9 Governance-6-6 Human Resources-4-4 Development Management (Projects) -437 Research & Development --22 Legal & Risk-1-1 Information Technology -2-2 TOTAL

PROGRESS ACHIEVED IN ADDRESSING SIGNIFICANT FINDINGS TO DATE FUNCTIONAL AREASIGNIFICANT MATTERS/ MATTERS AFFECTING AUDIT REPORT PROGRESS TO DATE ON SIGNIFICANT FINDINGS Procurement3  2 Findings 100% complete  1 Finding 60% progress achieved to date Strategy; AR & APP6  60% Progress achieved to date TOTAL9 41

SUMMARY OF FINDINGS THAT REQUIRE SYSTEMS IMPLEMENTATION 42

Thank you 43