1. USAASA & USAF Annual Performance Report Presentation to the Portfolio Committee on Communications 1

2. Outline The Team USAF Performance USAASA Performance Projects Rolled Over from Prior Year – Rapid Deployment of Access Centres & Schools – Handover Project – National Strategy on Universal Service & Access The Auditor General – USAF – USAASA 2

3. The Team THE BOARD Mrs. Pumla Radebe (Chairperson) Ms. Seadimo Chaba Mrs. Zandile Mdhladhla Mr. Sam Ledwaba Mr. Kenosi Moroka Mr. Raj Lalbahadur Ms. Victoria MacDonald Board Secretariat MANAGEMENT Mr. Zami Nkosi (CEO) Mr. Zane Mheyamwa (CFO) Mr. Winile Lamani (Acting Executive: BDS) Ms. Yvunne Mashilela (Executive: Corporate Services) Ms. Makhotso Moiloa (Executive: Performance Management) 3

4. USAASA & USAF Performance Against Targets 4

5. Not Achieved Target: 469, 387 STBs subsidised Awaiting Department of Communications completion of bidding process; 84% of USAF budget unspent as a result Partially Achieved Target: 120 new centres 104 centres established at close of fiscal; remainder rolled over into new fiscal Achieved Target: 114 centres connected 98 new centres completed & connected 80 old centres revived & connected Remainder delayed due service delivery protests & relocations Achieved Data collation & mapping complete Procurement of skills to manage & report on project Qualifying criteria complete DTT Access Centres Handover/Connec tivity Upgrade BDM Capacity Building 5 USAF Projects

6. Performance Indicator Annual Target 2012/13 Achievement on Target VariationComment Implementation of the Universal Service & Access Strategy Phase 1 of the Universal Service & Access Strategy developed and approved AchievedNoneBoard processed phase 1 plus the access gap maps of phase 2 Stakeholder Facilitation & Management in support of mandate Improved stakeholder perception. Facilitate USAF project engagements AchievedNone 6 USAASA

7. 7 Performance Indicator Annual Target 2012/13 Achievement on Target VariationComment Fund Operating Guidelines Fund Manual & Standard Operating Procedures (SoP) Partially Achieved. Incomplete achievement on target; Standard Operating Procedures required; Gazetting Manual complete & approved by Board. Consultations to commence in new financial year. The document to be finalised by the end of September 2013 Human Resource Support Comprehensive organizational development drive Partially Achieved.Incomplete achievement on target; only the skills audit was performed OD deferred to align to National Strategy Skills audit complete. Complete review of policies. Executive recruitment complete.

8. 8 Performance Indicator Annual Target 2012/13 Achievement on Target VariationComment Information Technology Development & implementation of progressive IT Strategy AchievedNoneIT strategy developed and tabled to Exco. IT governance framework approved at Board meeting of 28 March 2013. Firewall fully operational. DR backup installed. Improved desktop support via additional lines, updates & regional servicing.

9. 9 Performance Indicator Annual Target 2012/13 Achievement on Target VariationComment Legal AdvisoryLegal, contract & regulatory advice. AchievedNoneDrafted and reviewed SLAs, MOUs, Lease agreements, Letters of demand, addendas and employment contracts; in addition to conclusion of disciplinary processes Implementation of Corporate Governance Model Implement integrated corporate governance policies, processes and workflows AchievedNoneGovernance framework implemented & regularly reviewed to ensure efficiency of Board operations. Company secretary appointed.

10. 10 Performance Indicator Annual Target 2012/13 Achievement on Target VariationComment Internal Audit ReviewApproved 3 year rolling plan. Develop annual operational plan. AchievedNoneAll planned audits completed 2013/14 audit plans approved by Audit Committee Financial ManagementMeet MTEF submission deadlines USAASA and USAF AchievedNone Reporting on Estimates of National Expenditure (ENE) AchievedNone Compliance with all relevant Acts of legislation, PFMA, Treasury regulation, ECA, GRAP, GAAP, PPPFA AchievedNone Offer financial services to all business units within the Agency AchievedNone

11. Performance Synopsis 50% achievement on targets [incl. DTT] 8.9% spend on budget [incl. DTT] 66.17% spend on budget [excl. DTT] 85% achievement on targets 98.11% spend on budget [excl. depreciation]

12. Mitigation of Underperformance 12

13. Programme Name: USAASA Strategic Objectives Performance Indicator Actual Achievement 2011/2012 Planned Target 2012 / 2013 Actual Achievement 2013/2014 Variation from planned Actual Target 2012/2013 Planned Mitigation of Non- Performance Ensure efficient and effective management of the Universal Service and Access Fund Fund Operating Guidelines Not Achieved. Fund Manual & Standard Operating Procedures (SoP). Partially Achieved. Incomplete Achievement. Manual complete & approved by Board. Consultations to commence in new financial year. The document is set to be finalised by the end of September 2013. Enhance the strategic and operational capacity of USAASA Human Resource Support Not Achieved.Comprehensiv e organizational development drive. Partially Achieved.Incomplete Achievement. The OD process was delayed in order to ensure it aligns with the functional requirements of the National Strategy on Universal Service and Access which is the new corporate strategy of the organization. 13

14. Programme Name: USAF Strategic Objectives Performance Indicator Actual Achievement 2011/2012 Planned Target 2012 / 2013 Actual Achievement 2012/2013 Variation from planned Actual Target 2012/2013 Planned Mitigation of Non-Performance Facilitate interventions in ensuring affordable, equitable access and useage of ICTs Number of needy households with access to digital television Not Achieved. 469, 387 needy TV owning households subsidized with STBs Not Achieved.No Achievement. Performance is DoC dependent. Ensure state of readiness. Facilitate interventions in ensuring affordable, equitable access and useage of ICTs BDM Capacity Building Not Achieved.Capacitation of engineering skill; procurement personnel; financial & transactional systems; data collation & manipulation printing of applications etc. Partial Achievement.Incomplete Achievement. Develop project financial requirement. Secure financial requirement other than rollover. Procure of necessary skill. Procure systems integration/alignmen t. 14

15. Programme Name: USAF Strategic Objectives Performance Indicator Actual Achievement 2011/2012 Planned Target 2012 / 2013 Actual Achievement 2012/2013 Variation from planned Actual Target 2012/2013 Planned Mitigation of Non-Performance Facilitate interventions in ensuring affordable, equitable access and useage of ICTs Broadband Infrastructure Not Achieved. Subsidization of 1 integrated rural broadband site Not Achieved.No Achievement. 2 Broadband projects funded in 2013/2014 financial year. Plans and essential project structures to be established. Engagements with National Treasury on financing model. Assess and ensure alignment to National Strategy on Universal Service and Access. Facilitate interventions in ensuring affordable, equitable access and useage of ICTs New access centres deployed Not Achieved120 new access centres deployed Partially Achieved104 community and school facilities deployed Roll project into new fiscal and complete all 120 planned deployments 15

16. Projects Rolled Over from Previous Year 16

17. 1. Rapid Deployment of Cyberlabs Phase 1 E- Institution Community /Thusong KZN21 MP121 EC16 NW1 TOTAL51 Phase 2 E- Institution Community /Thusong EC433 FS153 LP25 NC11 NW52 WC22 GP5 TOTAL89 17

18. Equipment per Centre: Community Centres 18

19. Equipment per Centre: E-Institutions 19

20. 2. Handover / Connectivity Upgrade 80 Centres RevivedBenefits Access to ICT services Majority employment opportunities to women Majority employment full- time in nature 20

21. Overall Equipment Replaced Nationally 21

22. 3. National Strategy on US & A Access Gap Mapping & Analysis Response to NDP Response to Growth Path Plan Response to mandate Situational Analysis USAASA StrategyUSAF Strategy International Benchmarking 22

23. Phase 1 Demand high, but affordability a challenge Coordination is central to any UAS strategy Monitoring & evaluation is critical Wireless is the best solution 23

24. Phase 2 24

25. ICT Penetration 25

26. Broadcasting Penetration 26

27. Postal Outlay against Population 27

28. 250 towns requiring points of presence 150 municipalities requiring network infrastructure Year 1Year 2Year 3Year 4Year 5 Community Broadband3040506070 Universal Mobile55555 ICT Training23455 ICT Content and Apps23455 Community Broadcasting12222 Affordable ICTs123 Persons with Disabilities482 28 Sentech: Broadcasting Masterplanning Broadband Infraco: Broadband Masterplanning

29. Fund Manual Goals To provide a procedures and guidelines for the USF operations in disbursing grants and subsidies; To enable the Agency to comply with good governance, accountability and transparency in administrating the grants or subsidies in the Universal Service and Access Fund; To provide efficient and effective means of disbursing grants and subsidies in the Universal Service and Access Fund; To be an effective mechanism for auditing the Fund when required. Characteristics Be aligned with international best practice Be aligned with Schedule 3A of PFMA Be aligned with USAASA Strategy To be aligned with USAASA medium and long term project planning To have effective project management skills for its operation 29

30. Fund Manual: Effectiveness For the manual to be effective, therefore, there needs to be: – A proper strategy, i.e., a roadmap – A proper planning structure that is guided by the strategy, that is one step ahead (e.g., planning one year in advance as a rule) – The human and other resources necessary 30

31. THE AUDITOR GENERAL USAF 31

32. “except for the possible effects of the matters described in the basis for qualification, the financial statements present fairly in all material respects…” 32

33. Material Findings “Leadership instability resulted in poor oversight of business processes & monitoring of organizational performance” Strategic planning & performance management not submitted in accordance to Treasury Regulation 30.1.1 i.e. entity documents not separated as in current year Records management systems not able to maintain reliable, accurate and complete information that is easily accessible 33

34. Material Findings: Qualified Opinion ItemIssueResolution Project Expenses“Unable to obtain sufficient appropriate audit evidence” for transactions valued at R45, 698m Relates to prior years Process of condonement underway Trade & Other Payables“Unable to obtain sufficient appropriate audit evidence” for transactions valued at R11, 593m AG visited projects to verify in May 2013 “Sufficient appropriate evidence” was re- submitted & tested by Internal Audit on 31 July, 2013 34

35. THE AUDITOR GENERAL USAASA 35

36. “the financial statements present fairly, in all material respects, the financial position of the Universal Service & Access Agency of South Africa” 36

37. Material Findings Measurability: 43% of targets not specific; 43% of targets not measurable, 29% of targets not unambiguous (management training required) Reliability of Information: unable to get sufficient appropriate audit evidence on target: “facilitate & sustain multi-sectoral partnerships…” Expenditure Management: payments not settled within 30 days Material Adjustments: to performance report; financial statements not in line with PFMA Procurement & Contract Management: goods and services under 500k procured without obtaining required quotations 37

38. Conclusion Remarkable progress was made in a period of six months delivering tangibly on the ground to various Departments of Education AG issues/inputs have been taken on-board constructively and many refined as per their requests Board turn-around strategy in the form of the National Strategy on Universal Service & Access is complete and in consultative phase Work output on National Strategy development now forms a key component of the ICT Policy Review Process Majority key vacancies have been filled 38