The National Development Agency (NDA)

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1 1 111 Kerk Street Johannesburg 2000 P.O. Box 5965 Johannesburg Tel/Fax Cell: This document is also contained in our website: under overlapping efforts and failure to align roles yield contradictory outcomes of development. The National Development Agency (NDA) This agency is directly located under the Department of Social Development to carry forward the mandate of development and poverty eradication. It is a statutory body established in terms of the National Development Agency Act number 108 of 1998.Their Primary mandate as reflected in the Annual Report of 2008 is to contribute towards the eradication of poverty and its causes. The outstanding vision of the Agency is to develop a society free from poverty. It is clear therefore that any evaluation and assessment regarding the performance of the agency will have to be done against the above stated mandate, vision and mission. According to the former minister of Social Development, NDA received R787 million since the year The ultimate intention is to enable broader civil society to engage in poverty eradication initiatives. According to NDA S Annual Report of 2007/2008: The Agency has spend R (over eight million Rand) on salaries for ten Executive Directors. The highest paid Director is receiving R1.8 million per annum. R was spend on phones, cellular phones and faxes pushing all the staffing costs to 35.5 million. Marketing and communication: R Miscellaneous: R Consulting and professional fees R Accommodation and travel R According to our calculations taken from the annual report of 2007/2008 NDA has spend R on its cost structure and effectively paid R to projects

2 2 The ratio above indicates that the Agency spends 52% of its total annual expenditure on its cost structure. If this has been a recurring trend since the year 2000, 52% of the financial input of 787 million will be spend on the Agency s cost structure. The Agency has spent R on consulting and professional fees and R paying salaries for 10 directors. Are these highly paid directors not specialists in skills required by the Agency? If not, for what has the Agency employed them? Why has the agency spent so much money to consultants and professional fees? Specifically what are these specialized skills consultants supplied to NDA? How have the specialized skills helped the NDA to achieve its core objectives of poverty eradication and job creation? Are there any objective and verifiable success indicators to this effect? The Report reflects R (One hundred and thirty three million) committed to projects, and 61 million net deficit for the year, meaning the Agency is 61 million Rand below zero. The Funded projects appearing on the Report include: Project Name Province Amount Itsoseng basadi poultry Free State R Catholic Community Free State R Makhuduthamaha Limpopo R Mvelaphanda Community R Winterveld citrust North West R Bakwena ba Mogopa R Zibo Enterprise Gauteng R Intsika R Ikusasalethu Kwazulu R Umzumbe R Masizame Eastern Cape R Paprika Co operative Eastern Cape R Hopetown Northern Cape R Custodia Northern Cape R Bitterfontein Western Cape R

3 Laingsburg Thusong R Mphatlalatsane Cooking oil R Shabalala Community R Total R The above projects appear on the 2007/2008 Annual Report. We assume these are the best of the best on record. A slight scan on the above listed projects opens a lot of questions regarding their sustainability and their job creation capacity. The total funding for the above projects adds up to R just a drop in the ocean compared to R787 million the NDA has received since the year We must admit that this is just one year expenditure on projects and not all projects can be listed on an annual report. There is a need to assess and evaluate all projects funded since 2000 to establish an overall picture of NDA S performance. ZIBO is a cluster of four projects in Bekkersdal North West of Johannesburg. It is one of the funded projects listed above. Two were Sewing Projects; one was a Floor Polish Manufacturing Project and the fourth was for bead works.. The main economic activity in the area is mining and farming (in a minimal scale). It is important to note that the mining sector in this area provides and favours the male population with employment and more in particular the migrant labour. The NDA approved R around 2005 after encouraging these four projects to cluster. The floor polish manufacturing project received only R since the funding approval and presently unable to purchase raw materials to continue. All the project members are unemployed women without income. Some have left the project to try other means to feed their starving children. The unemployment rate in a project location is reaching the crisis proportions, as a result many young girls and desperate women resort to prostitution as their main source of income. This funding was approved around 2005, yet the only record of is made in The question here is WHY?. This alone point to a need for an overall investigation of all projects funded by this agency since the year 2000, to assess and evaluate the impact of the above mentioned financial input of R787 million versus the output and outcome. The evaluation and assessment tool must emphasis the following: The baseline statistics of sustainable jobs created The income stream generated by the jobs created to match the financial input the agency has paid to projects and to sustain themselves since the year The total turnover of the income stream generated by the jobs created, has to give an indication as to whether the graph is steadily moving towards the direction of the breakeven, where we can satisfactorily conclude that at least we neither have made loss nor a profit.

4 Out of a total number of projects funded and jobs created: How many have collapsed and what was the cause How many have stagnated, How many still exist sustainably? How many are growing and at what rate? 4 This survey will surely give us a clear indication of the relevance of this Agency. It is very much important to emphasize this point because in job creation the bottom line is money generated to be carried home by the poor. We cannot compromise and gloss over this reality. No money generated, no jobs created. No short cuts. It is against this benchmark that all job creation and poverty alleviation efforts must be measured. Outputs and outcomes must go beyond financial inputs if we are realistic about pushing back the frontiers of poverty. Portraying the Government in the best possible manner and ignoring other indicators undermine development, compromises service delivery and deepens poverty on the ground. Looking at the Financial Report of NDA, one is tempted to believe that the agency itself is unsustainable and failing to generate income for its internal costs recovery, operational and financial self sufficiency to add value in development. Against this background we are tempted to conclude that the Agency is a duplication of the welfare function of the Department of Social Development with enormous waste of resources and fruitless expenditure. We have the impression that it adds no value to development except being just a self serving Ivory tower and fruitless money dispensing machine Our Recommendation It is our recommendation therefore that this agency is disbanded and its role be transferred to Social Department with an accelerated focus on welfare activities. The role of job creation and economic empowerment be removed from Social Development and be transferred to relevant departments like DTI. The name of Social Development be changed to Welfare Department which should solely focus on social welfare issues. It is critical to mention that development, job creation, poverty reduction, performance monitoring and evaluation do not exist for their own sake, but are at the center of government initiatives, and motivation to improve human life and provide decent living for all. To achieve the above mentioned objectives, reconfiguration of ministries and departments, adoption of a new style of governance is necessary. Presently NDA funds youth projects in the presence of Umsobomvu, which has been christened the National Youth Development Agency; funds women cooperatives while the Department of Social Development and DTI at the provincial and local level do the same thing and funds training while Sector Education and Training Authorities (SETAs) carry the same mandate as core business. Lane straddling and duplication of efforts yield contradictory development outcomes.

5 5 African Business And Manufacturers Development Association (ABUMDA) 111 Kerk Street Johannesburg Box 5965 Johannesburg NPO Tel/fax: Contact person Bradley M. Tshabalala Date:15 October 2009 National Development Agency The Chief Financial Officer A Request for answers, queries and clarification on NDA s annual report. 2007/08 According to the former minister of Social Development, NDA received R787 million since the year The ultimate intention was to develop the broader civil society sector to engage in poverty eradication initiatives and participate in the mainstream economy. According to NDA S Annual Report of 2007/2008: The Agency has spend R (over eight million Rand) on salaries for ten Executive Directors. The highest paid Director about R1.8 million per annum. R was spend on phones, cellular phones and faxes pushing all the staffing costs to 35.5 million. Marketing and communication: R Miscellaneous: R Consulting and professional fees R Accommodation and travel R

6 According to our calculations taken from the annual report of 2007/2008 NDA has spend R on its cost structure and effectively paid out R to projects 6 The ratio above indicates that the Agency spends 52% of its total annual expenditure on its cost structure. If this has been a recurring trend since the year 2000, 52% of the financial input of 787 million will be spend on the Agency s cost structure. Page 56 reflects R paid to suppliers, however there are no explanatory notes explaining in detail the items making up this amount specifically. The Report reflects R (One hundred and thirty three million) committed to projects, and 61 million net deficit for the year, meaning the Agency is 61 million Rand below zero). However on page 74 the Agency closed the year with R in money market, call account and cash on hand. Does the Agency have capacity to utilize funds? Does NDA have the evaluation and assessment tool emphasizing the following? The baseline statistics of sustainable jobs created The income stream generated by the jobs created to match the financial input the agency made to projects and to sustain itself since the year The total turnover of the income stream generated by the jobs created has to give an indication as to whether the graph is steadily moving towards the direction of the breakeven point of the financial input made by the Agency. Out of a total number of projects funded and jobs created: How many have collapsed? What was the cause and how much the Agency has lost as a result? How many projects that are stagnated? How many exist sustainable and growing? How many are growing and at what growth rate? What is their aggregate annual turn over? How many sustainable jobs created since the year 2000? Does NDA have an enterprise wide risk management program? If yes, how effective is it? Is it able to identify possible risks that should be managed or avoided? Was it able to identify and help NDA deal with the risk of failure of Projects? What about internal auditing function, does NDA have one? If yes, does it report directly to the chairperson of the board? Is it effective? Can it avail its company wide report on systems of control review and operational effectiveness auditing? Can the Agency avail a data base, amounts and projects location of all projects funded since 2000 to autonomous Civil Society Organizations, for their own independent assessment of the Agency s performance?

7 This survey will surely give us a better precise indication and overall impact of NDA s intervention on poverty eradication and job creation, its relevance and irrelevance in the sector. 7 How does the Agency measure its success rate to evaluate and assess the resonance of its efforts with its mandate of poverty eradication? It is very much important to emphasize this point because in job creation the bottom line is money generated to be carried home by the poor. We cannot compromise and gloss over this reality. No money generated, no jobs created. No short cuts. It is against this hall mark that all job creation and poverty alleviation efforts must be measured. Outputs and outcomes must go beyond financial inputs if we are realistic about pushing back the frontiers of poverty. In job creation there are no short cuts, financial inputs must relate to financial outcomes, otherwise poverty eradication through employment creation is rhetoric. The only accurate measuring tool at our disposal is the use of financial inputs and outputs against financial outcomes. We are precisely more concerned about the resources NDA spends on its entire logistical support, its costs structures and resources committed to Projects against the aggregate turn over generated by end users or beneficiaries, and the portion carried home by the poor to feed their families. (impact) To be more precise we must further say, before NDA s intervention an employer or the project generated a turn over of X amount, and employed Y number of workers, and after NDA s intervention the same employer or the project has an increased turnover of X amount and added more Z number of workers. The difference between the two will give us an indication of NDA s effectiveness in terms of its programmes and impact on Poverty eradication, such as X above. The aggregate national financial implications of the above mentioned outcomes, against the total financial inputs made by NDA, should give us a clear overall picture of NDA s performance. Your co operation will be highly appreciated. Bradley Mathondwane Tshabalala. The Chairperson (ABUMDA) From: African Business and Manufacturers Development Association. (ABUMDA)and South African Active Civil Society Organizations (SAACSO)

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