1. PRESENTATION TO THE PORTFOLIO COMMITTEE DEPARTMENT OF TELECOMMUNICATIONS AND POSTAL SERVICES /2016 ANNUAL REPORT October 2015

2. INTRODUCTION Background
The 2015/16 Annual Report covers the following reporting period: 01 April 2015 to 31 March 2016.
During the reporting period, the Department functioned under the organisational structure of the former Department of Communications, which is not aligned to its newly assigned mandate and functions.
Therefore, the Department is currently in the process of revising the organisational structure so as to put in place an organisational structure and related processes, functions and systems which are fully aligned to its mandate and strategy.
Presentation Outline
Auditor-General’s findings
Performance against 2015/16 APP, with specific focus on targets not achieved
2015/16 Financial Performance
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3. AUDITOR-GENERAL’S FINDINGS
The Department has received an Unqualified Audit for the 4th year in a row.
The Department has in place an Audit Action Plan to ensure that the AG’s findings are addressed.
The implementation of the Audit Action Plan is monitored on a regular basis by the Internal Audit Unit.
Progress against the Audit Action Plan is provided at management meetings as well as to the Audit Committee.
Comparison of AG’s Findings 2014/15 vs 2015/16
AG’s Findings
2014/15
2015/16
Audit report 3 2
Management letter 27 15
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4. FINDINGS IN THE AUDIT REPORT
Details
Action Plan
Expenditure management
Irregular expenditure – 8% of virement exceeded
Virement register maintained by budget office
All virements including shifting of funds reported to National Treasury on a monthly basis
Procurement and contract management
Reasons and motivation for deviations from normal SCM process not reasonable as required by practice note
Contract list has been developed
Contracts monitored on a regular basis
Additional capacity in the SCM unit – recently appointed Deputy Director as well as the Assistant Director
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5. KEY FINDINGS IN THE MANAGEMENT LETTER
Details
Action Plan
Pre-determined objectives
Achievement incorrectly reported in the APR (1 target)
Internal controls enhanced to confirm that performance information is supported by accurate, valid and complete evidence
Expenditure management
Payment to suppliers not made within 30 days
Centralised the receipt of invoices 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.
Human resource management
HR Plan not submitted to DPSA timeously
The HR Plan implementation report for 2015/16 was submitted to DPSA on 08 June 2016
The HR Plan will be reviewed once the organisational structure is finalised
Performance Agreements not concluded and submitted within the required timeframe
Consequence management measures have been put in place with regards to performance agreements not being concluded and submitted within required timeframe
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6. RESOLVED AUDIT FINDINGS FOR 2014/15 FY
Status
HR Management
Adequate controls were put in place and disciplinary measures were taken for non-compliance of submission of Performance Agreements
An intensive process was followed to advertise and fill vacant funded posts in 2015/16 FY. Only four funded positions are currently not filled.
Control measures have been put in place to ensure compliance with leave policies and procedures.
Relevant HR Policies due for review were reviewed and extensions were granted for those policies where the timeframe lapsed.
Misstatement in financial statement
Regular follow undertaken ups with SOC Branch as well as SAPO
Guidance from National Treasury as sourced regarding the finalisation of the matter
Payment of suppliers in 30 days
(Partially Resolved)
Receipt of invoices is now centralized and a template to track and monitor the payment of invoices is in place.
The amount of invoices not paid within the 30 days has significantly gone down, invoices not paid are exceptions to the rule (for example suppliers who do not provide requested information in time)
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

7. Programme 3: ICT Policy, Research and Capacity Development (1)
Target
Status
Comments on non-achievement
Rapid Deployment
Policy
Fully achieved
n/a
ICT Capacity building
programmes
Information Ethics Programme in NHI sites prioritizing schools and health centres
Partially achieved
The MoU with the African Centre of Excellence for Information Ethics was only concluded in beginning of the fourth quarter, hence the Programme was not
implemented in Free State, Mpumalanga and Kwa-Zulu Natal as planned.
However, the remaining Provinces are currently being prioritised by the African Centre of Excellence for Information Ethics.
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

8. Programme 3: ICT Policy, Research and Capacity Development (2)
Target
Status
Comments on non-achievement
ICT and Gender mainstreaming (Mobinet and Techno-Girl Projects)
Fully achieved
n/a
ICT and Children mainstreaming (Child Online Protection Programmes)
ICT and Youth Mainstreaming (e-Social Cohesion Programme)
ICT and Disability Mainstreaming (ICT Accessibility
Programme)
Roaming Policy / Policy Direction
Draft Local Loop Strategy
Policy Direction on Data Cost
Monitoring and evaluation framework - to assess implementation of interventions to reduce the cost
to communicate
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9. Programme 3: ICT Policy, Research and Capacity Development (2)
Target
Status
Comments on non-achievement
White Paper on National Integrated ICT Policy
Partially achieved
Due to the requirement from ESEID Cabinet Committee for revisions to be made in the White Paper, it was not gazetted as planned.
The Department has since revised the White Paper accordingly and has subsequently obtained Cabinet approval on 28 September 2016.
Alternative Dispute Resolution Regulations
Fully achieved
n/a
ICT B-BBEE Charter Council
ICT B-BBEE Sector
Code
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10. Programme 3: ICT Policy, Research and Capacity Development (3)
Target
Status
Comments on non-achievement
Annual ICT B-BBEE Sector Compliance Report
Partially achieved
Delays in the appointment of the Council
required the Council to prioritize the alignment of the Sector Code ahead of the development
of the Sector Compliance Report.
Although the Annual ICT B-BBEE Compliance
Report was finalized by 31 March 2016, the final approval by Minister and submission to the DTI was achieved after the reporting period on 13 April 2016.
Digital Entrepreneurship Programme to enhance ICT adoption and usage by SMMEs
Lack of HR capacity due to the extended
absence of the project manager owing to ill health negatively impacted on the project
However, Digital Entrepreneurship is being
Implemented through the Digital Opportunities
Programme which is currently under way.
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

11. Programme 3: ICT Policy, Research and Capacity Development (4)
Target
Status
Comments on non-achievement
ICT Research Framework
focusing on competitiveness and innovation
Partially achieved
Progress was largely impacted by the resignation of the Project Manager which resulted in HR capacity constraints.
However ICT Research is currently being prioritised in the 2016/17 FY in collaboration with DST.
Annual South African ICT Statistical Compendium
Fully achieved
n/a
National Address System Policy
Philatelic Strategy and Annual and Commemorative Stamp Programme
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12. Programme 3: ICT Policy, Research and Capacity Development (5)
Target
Status
Comments on non-achievement
Policy directive on regulation of ETOEs and R ing
Fully achieved
n/a
National e-Strategy
Partially achieved
Due to a change in the approach there were delays in achieving the target.
However the development of the e-Strategy
has been identified as a priority project
in the 2016/17 financial year and is well underway through consultation with relevant stakeholders.
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

13. ICT Infrastructure Support (1) Comments on non-achievement
Programme 5:
ICT Infrastructure Support (1)
Target
Status
Comments on non-achievement
Phase 1 of Digital
Development plan - connectivity to
1296 identified
government
institutions
Partially achieved
Project was hampered largely by delays in the
appointment of the connectivity service provider.
However the appointment of the connectivity service provider is being addressed through the current tender process.
Implementation plan for Phase 2 of Digital Development
Fully achieved
n/a
Roadmap for the establishment of a wholesale open access network
Policy direction
on spectrum
for broadband
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14. ICT Infrastructure Support (2) Comments on non-achievement
Programme 5:
ICT Infrastructure Support (2)
Target
Status
Comments on non-achievement
Virtual Cybersecurity Hub
Fully achieved
n/a
Cybersecurity Awareness
Internet strategy
SA Positions and proposals for WRC-15
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15. Programme 4: ICT ENTERPRISE DEVELOPMENT AND SOC OVERSIGHT (1) Target
Status
Comments on non-achievement
ICT SMME Support Programme
Partially achieved
The project was hindered by HR capacity constraints however, the project has been assigned to the ICT Policy and Strategy Branch who have already consulted relevant stakeholders and plan to finalise the draft Support Programme by October 2016.
Licensing
of Postbank (facilitation and monitoring)
Fully achieved
n/a
Appointment of Postbank Board members
Background checks of candidates took longer than anticipated to complete. Furthermore, delays in feedback from the SARB caused additional delays.
However, on 04 July 2016 SARB granted SAPO authorisation to establish the Bank in terms of section 13 (1) of the Banks Act. SARB subsequently committed to prioritise completion of its feedback on the Postbank Board nominees. This feedback will facilitate the appointment of Postbank Board members
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16. Programme 4: ICT ENTERPRISE DEVELOPMENT AND SOC OVERSIGHT (1) Target
Status
Comments on non-achievement
Establishment of the Postbank Holding Company
Partially achieved
Delays due to the need for extensive engagement with relevant stakeholders including SARB and National Treasury to clarify the conflicting requirements of the Postbank Act and the Banks Act with regard to the public company requirements.
However, on 04 July 2016 SARB granted SAPO authorisation to establish the Bank in terms of section 13 (1) of the Banks Act. Priority will therefore be given to Bank Controlling Company requirements in the 2016/2017 financial year.
Incorporation of the Postbank Company
The project was hampered by delays in obtaining SARB’s decision on the request for authorization to establish the Bank and the Postbank Board appointments.
However, on 04 July 2016 SARB granted SAPO authorisation to establish the Bank in terms of section 13 (1) of the Banks Act. Priority will therefore be given to Incorporation of the Postbank Company
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17. Programme 4: ICT ENTERPRISE DEVELOPMENT AND SOC OVERSIGHT (2) Target
Status
Comments on non-achievement
Deployment of Post Offices / Points of Presence (PoPs) infrastructure (oversight & monitoring)
Fully achieved
n/a
Review of the mandates and
funding models for state owned companies
Partially achieved
Review of the mandates and funding models of Sentech and SITA were not finalised as planned. However the project has been incorporated into the SOC rationalisation process.
In terms of the iNeSi Bill it was dependent on further engagements between the DTPS and the DHE&T, which is currently underway. The Departments have agreed in principle on the revised iNeSI Model. The iNeSI Business Case and iNeSI Bill are being revised in line with the revised iNeSI Model. The iNeSI Bill will be introduced to Parliament in 2017/18 financial year.
Development of Oversight Model for the State Owned Companies
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18. Programme 2: ICT INTERNATIONAL AFFAIRS (1) Comments on non-achievement
Target
Status
Comments on non-achievement
Bilateral Exchange Programmes, focused on e-Government
Fully achieved
n/a
Bilateral Agreement(s) with neighbouring countries and harmonization of frequency spectrum in the Region
Collaboration with the ITU and UPU to develop models to improve connectivity and financial services in rural and underserviced
areas through the postal network
Partially achieved
Delays were due to a revision in the approach proposed by the ITU to conduct a feasibility study because of transfer of funds from the previous completed SA-ITU UPU Cooperation Agreement
UPU Quality of Service Fund projects to improve
sub regional postal services
Progress of the Postbus project was impacted by delays in the appointment of the service provider by SAPO. This process was however finalised in February 2016, hence new timelines have been developed towards finalising the project.
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19. Programme 1: ADMINISTRATION Comments on non-achievement
Target
Status
Comments on non-achievement
Information Technology & Knowledge and Information Management Strategic Plan
and Enterprise
Architecture
Fully achieved
n/a
Internal Control
Framework
Partially achieved
The Department did not map, review and standardise all the Departmental processes largely due to the lack of specialised skills to undertake the mapping process.
However the project is being prioritised in the 2016/17 APP.
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20. FINANCIAL PERFORMANCE
2015/16
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21. STATEMENT OF FINANCIAL PERFORMANCE (1)
2015/16
2014/15
REVENUE
R’000
Annual appropriation
Departmental revenue
Direct Exchequer receipts -
Aid assistance
TOTAL REVENUE
Current expenditure
Compensation of employees
Goods and Services – operational exp.
Interest and rent on land
Total current expenditure
Content – First level
Second level
Third level
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

22. STATEMENT OF FINANCIAL PERFORMANCE (2)
2015/16
2014/15
R’000
Transfers and subsidies *
Expenditure for capital assets
Tangible capital assets
3 425
10 213
Software & other intangible assets
2 056
205
Total expenditure for capital assets
5 481
10 418
Financial transactions in assets & liabilities
447
363
TOTAL EXPENDITURE
Content – First level
Second level
Third level
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

23. STATEMENT OF FINANCIAL PERFORMANCE (3)
2015/16
2014/15
R’000
Voted funds surrendered
54 981
Departmental revenue
Direct Exchequer receipts -
Transferred to National Treasury
Content – First level
Second level
Third level
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

24. APPROPRIATION STATEMENT Expendi-ture as % of final appro-priation
2015/16
2014/15
Programme
Final Appro-priation
Actual Expen-diture
Variance
Expendi-ture as % of final appro-priation
1. Administration
1 166
99.5%
2. ICT International Affairs and Trade
43 310
41 542
1 768
95.9%
45 667
45 431
3. ICT Policy Development
97 132
73 979
23 153
76.2%
78 183
4. CT Enterprise Development
1 272
99.7%
5. ICT Infrastructure Development
77 797
85.9%
TOTAL
92.5%
Content – First level
Second level
Third level
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

25. Content – First level Second level SUMMARY OF ECONOMIC CLASSIFICATION
2014/15
2013/14
Economic Classifi-cation
Final Approp-riation
Actual Expen-diture
Variance
Variance as
% against final allocation
Final Appro-priation
Actual Expenditure
Current payments
80.1
Transfers and subsidies
765
99.9
Payments for capital assets
7 350
5 481
1 869
74.6
10 419
10 418
Payment for Financial assets
447 -
100
363
TOTAL
92.5
Content – First level
Second level
Third level
Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

26. DETAILS OF TRANSFER PAYMENTS Adjusted Appropriation Act R’000
Actual Transfer
R’000
Variance
USAASA - DTT: Distribution and project management costs -
USAASA - Operations
66 429
USAASA - DTT: Set top box, installation
Universal Service and Access Fund
52 380
SA POST OFFICE
NEMISA
36 601
Sentech: Dual Illumination
Foreign Government / International Organisation
25 394
24 629
765
TOTAL
Content – First level
Second level
Third level
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27. THANK YOU
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