Independent Development Trust

Presentation to

Portfolio Committee for Public

Works:

2009/10 Annual Report

November 2010

Independent Development Trust

Presentation to

Portfolio Committee for Public

Works:

2009/10 Annual Report

November 2010

Content of PresentationContent of Presentation

Compliance Statement

Opening Remarks

Statements: Minister; Chairperson

Trustees Report

Performance Report

Annual Financial Statements

Concluding Comments

Compliance Statement

Opening Remarks

Statements: Minister; Chairperson

Trustees Report

Performance Report

Annual Financial Statements

Concluding Comments

Compliance StatementCompliance Statement In terms of Section 55 (1) (b) of the Constitution, the National Assembly must provide mechanisms to effect oversight of among other any organ of state.

Hence this account to the Portfolio Committee on the IDT’s performance over the 2009/10 financial year and application of public resources with which the IDT has been entrusted, is being presented in respect of the Committee's oversight responsibility and to enable the Committee to recommend the IDT’s Annual Report to Parliament .

In terms of Section 55 (1) (b) of the Constitution, the National Assembly must provide mechanisms to effect oversight of among other any organ of state.

Hence this account to the Portfolio Committee on the IDT’s performance over the 2009/10 financial year and application of public resources with which the IDT has been entrusted, is being presented in respect of the Committee's oversight responsibility and to enable the Committee to recommend the IDT’s Annual Report to Parliament .

Statement: Executive AuthorityStatement: Executive AuthorityCore mandate of Public Works (PWs) is impacted by the key priorities of the MTSF. DPW has several public entities and professional bodies within its jurisdiction, and IDT has a unique role and contribution as the only development agency within the PWs familyE.g., On the ground in all provinces providing first-hand feedback on the relevance and impact of the legislation, policies and programmes on people’s lives; cross-cutting role evolving; and its rapid response rate Proud of the IDT’s performanceThe Minister has been able to witness the IDT’s footprint in numerous marginalised communitiesThat the IDT has sustained its proud record of achieving its 8th successive unqualified report.Noted the challenges with regard to the reporting of non-financial performance information and recognise that the Auditor-General (AG) introduced specific reporting requirements with effect from 2009/10. However, given the agility of the IDT, the Minister was confident that the organisation will be able to correct the concerns raised by the AG

Core mandate of Public Works (PWs) is impacted by the key priorities of the MTSF. DPW has several public entities and professional bodies within its jurisdiction, and IDT has a unique role and contribution as the only development agency within the PWs familyE.g., On the ground in all provinces providing first-hand feedback on the relevance and impact of the legislation, policies and programmes on people’s lives; cross-cutting role evolving; and its rapid response rate Proud of the IDT’s performanceThe Minister has been able to witness the IDT’s footprint in numerous marginalised communitiesThat the IDT has sustained its proud record of achieving its 8th successive unqualified report.Noted the challenges with regard to the reporting of non-financial performance information and recognise that the Auditor-General (AG) introduced specific reporting requirements with effect from 2009/10. However, given the agility of the IDT, the Minister was confident that the organisation will be able to correct the concerns raised by the AG

Statement: ChairpersonStatement: ChairpersonSignificance of 2010 for the IDT: 20th anniversary. The Board expanded its oversight from the boardroom to the villages where the IDT works and the Board has witnessed the concrete manifestation of the IDT’s mission at workSynergies between the new social policy priorities and the IDT’s strategic focus Despite being impacted by the global economic crisis, the IDT performed wellExtracted lessons, e.g., the Board provides the strategic direction, principles and policies on that which is unacceptable so as to empower development practitioners to make decisions in response to the possibilities in different communities.The Shareholder and the Board having a shared concern and commitment to decisively address the IDT’s sustainability challenges.

Significance of 2010 for the IDT: 20th anniversary. The Board expanded its oversight from the boardroom to the villages where the IDT works and the Board has witnessed the concrete manifestation of the IDT’s mission at workSynergies between the new social policy priorities and the IDT’s strategic focus Despite being impacted by the global economic crisis, the IDT performed wellExtracted lessons, e.g., the Board provides the strategic direction, principles and policies on that which is unacceptable so as to empower development practitioners to make decisions in response to the possibilities in different communities.The Shareholder and the Board having a shared concern and commitment to decisively address the IDT’s sustainability challenges.

Trustees ReportTrustees Report

Trustees ReportTrustees Report

Compliance Statement: Page 11Mandate of the IDT (Page 11-13):

Operated within the 1997 Cabinet mandate to support government in the delivery of its social policy agenda and programmes. Maintained the broad social policy objective of attaining a better quality life for all whilst adapting to the state led shifts and nuances as dictated and articulated by government’s Medium Term Strategic Framework (MTSF) and 5-year Programme of Action. In doing so the IDT has maintained its relevance and responsiveness. Corporate Strategy aligned to the prevailing social policy agenda and ten (10) strategic priorities

Corporate Governance (Page 13): sound corporate governance is integral to the IDT’s business enterprise and ethics

Executive Authority: Complied with provisions of the Shareholder Compact.Reporting to Parliament: Presented 2010/12 and 2011/13 and Corporate Plan; 2008/09 Annual Report

Compliance Statement: Page 11Mandate of the IDT (Page 11-13):

Operated within the 1997 Cabinet mandate to support government in the delivery of its social policy agenda and programmes. Maintained the broad social policy objective of attaining a better quality life for all whilst adapting to the state led shifts and nuances as dictated and articulated by government’s Medium Term Strategic Framework (MTSF) and 5-year Programme of Action. In doing so the IDT has maintained its relevance and responsiveness. Corporate Strategy aligned to the prevailing social policy agenda and ten (10) strategic priorities

Corporate Governance (Page 13): sound corporate governance is integral to the IDT’s business enterprise and ethics

Executive Authority: Complied with provisions of the Shareholder Compact.Reporting to Parliament: Presented 2010/12 and 2011/13 and Corporate Plan; 2008/09 Annual Report

Corporate Governance: Board of TrusteesCorporate Governance: Board of Trustees

Board Structure (page 15):Board comprising 12 Trustees assumed office 1 October 2007Due to resignations and appointments 10 Trustees in office at the start and 9 Trustees by the end of the financial year Names of Trustees

Responsibilities (page 15)Board’s responsibilities are facilitated by a governance structure through Board Committees and a delegation of authority framework. Reserved specific matters and others delegated to CEOGeneral powers contained in the Trust Deed and the main responsibilities in the Board Charter

Functioning of Board (page 17): Meets quarterly and special meetings as and when necessary. Meets with the CEO in the absence of the other Executives at each meeting.Attendance

Board Structure (page 15):Board comprising 12 Trustees assumed office 1 October 2007Due to resignations and appointments 10 Trustees in office at the start and 9 Trustees by the end of the financial year Names of Trustees

Responsibilities (page 15)Board’s responsibilities are facilitated by a governance structure through Board Committees and a delegation of authority framework. Reserved specific matters and others delegated to CEOGeneral powers contained in the Trust Deed and the main responsibilities in the Board Charter

Functioning of Board (page 17): Meets quarterly and special meetings as and when necessary. Meets with the CEO in the absence of the other Executives at each meeting.Attendance

Board Committees (Page 17-23) Board Committees (Page 17-23)

Outline of functions of committees, main achievements, dates of meetings and membership

Audit Committee: Same members

Finance Committee

Strategic Planning and Programmes CommitteeHuman Resources and Corporate Services CommitteeRemuneration Committee

Income of Trustees and Executives (Page 108 -109)

Outline of functions of committees, main achievements, dates of meetings and membership

Audit Committee: Same members

Finance Committee

Strategic Planning and Programmes CommitteeHuman Resources and Corporate Services CommitteeRemuneration Committee

Income of Trustees and Executives (Page 108 -109)

Financial Overview (Page 25-31)Financial Overview (Page 25-31)

Financial Performance Information:

Enhanced focus on sound corporate governance and risk management

The IDT’s internal accounting and administrative controls provide reasonable assurance to all stakeholders that their interests are safeguarded and that all transactions are executed and recorded in accordance with generally accepted business practices and strict internal policies and procedures

Financial resources

The IDT’s current and future financial capacity is critical as a means to allow it to fulfill its mandate in the development arena.

Translated financial demands of the long term strategy of the organisation require financial resources beyond its existing capacity. This can only be addressed through additional external

Financial Performance Information:

Enhanced focus on sound corporate governance and risk management

The IDT’s internal accounting and administrative controls provide reasonable assurance to all stakeholders that their interests are safeguarded and that all transactions are executed and recorded in accordance with generally accepted business practices and strict internal policies and procedures

Financial resources

The IDT’s current and future financial capacity is critical as a means to allow it to fulfill its mandate in the development arena.

Translated financial demands of the long term strategy of the organisation require financial resources beyond its existing capacity. This can only be addressed through additional external

Financial Overview (Page 25-31)Financial Overview (Page 25-31)

Undertook a comprehensive review of programme recoverables:

Strict verification and ageing of all programme related transactions up to and including the 2007/09 financial year.

Results tested against strict criteria to determine reasonable expectations to recover such costs from clients

Based on this evaluation, the Board approved an amount of R29,6m to be written off in order to appropriately restate the balance sheet item in respect of total programme expenditure over the period of +R 3,5 billion

Does not represent wasted or lost resources as contracts were delivered to the satisfaction of clients

Exposure of this nature is unlikely to recur as since 2008 payments for services are drawn down directly from dedicated client-contract bank accounts

Undertook a comprehensive review of programme recoverables:

Strict verification and ageing of all programme related transactions up to and including the 2007/09 financial year.

Results tested against strict criteria to determine reasonable expectations to recover such costs from clients

Based on this evaluation, the Board approved an amount of R29,6m to be written off in order to appropriately restate the balance sheet item in respect of total programme expenditure over the period of +R 3,5 billion

Does not represent wasted or lost resources as contracts were delivered to the satisfaction of clients

Exposure of this nature is unlikely to recur as since 2008 payments for services are drawn down directly from dedicated client-contract bank accounts

Financial Overview (Page 25-31)Financial Overview (Page 25-31)

Investment of main fund and other sources of income

Main source of funding = income from investment of main fund. Income partially applied to fund operations

Capital applied in poverty eradication projects and thus gradually diminishing

At 31-Mar-10 balance= R 652m

Uncertainty in global markets, results in high volatility

Fund performance monitored by an Investments Committee which contributed to revenue receipts exceeding budget targets by 48% notwithstanding market fluctuations

Increased capacity and commitment to recover costs from public sector (and few private sector) programmes

Developed a Costing Model to identify cost drivers, have a sound basis for determining management fees and baselines for future financial planning

Investment of main fund and other sources of income

Main source of funding = income from investment of main fund. Income partially applied to fund operations

Capital applied in poverty eradication projects and thus gradually diminishing

At 31-Mar-10 balance= R 652m

Uncertainty in global markets, results in high volatility

Fund performance monitored by an Investments Committee which contributed to revenue receipts exceeding budget targets by 48% notwithstanding market fluctuations

Increased capacity and commitment to recover costs from public sector (and few private sector) programmes

Developed a Costing Model to identify cost drivers, have a sound basis for determining management fees and baselines for future financial planning

Financial PerformanceFinancial Performance

Budget Actual %

Expenditure R 370,2 m R 351,5 m

(Note)

95%

Mud Schools - R 44,3 m -

Write-down of

Programme

Recoverables

- R 29,6 m -

Revenue R 82,0 m R 109,4 m 133%

Application of

InvestmentsR 316,0 m

Financial Overview (Page 25-31)Financial Overview (Page 25-31)

Long-Term Sustainability

IDT established with a R 2bn government grant in 1990

Until 2005, investment income from the balance of this grant covered operational expenses

Growth in business and volatility in market impacting on interest rates has resulted in a growing margin between expenditure applied and revenue since 2006

Capital base is depleting challenging the financial sustainability of the IDT post the 2011/12 financial year

IDT’s L-T Strategic Vision is aligned to social policy agenda (MTSF) as the development agency of choice.

Thus IDT has recorded its future funding requirements with National Treasury

Long-Term Sustainability

IDT established with a R 2bn government grant in 1990

Until 2005, investment income from the balance of this grant covered operational expenses

Growth in business and volatility in market impacting on interest rates has resulted in a growing margin between expenditure applied and revenue since 2006

Capital base is depleting challenging the financial sustainability of the IDT post the 2011/12 financial year

IDT’s L-T Strategic Vision is aligned to social policy agenda (MTSF) as the development agency of choice.

Thus IDT has recorded its future funding requirements with National Treasury

Risk Management (Page 31-33)Risk Management (Page 31-33)

Risk Management embedded in IDT's business processes

Key players:

Accounting Authority: Audit Committee in particular

Executive Management

Risk Champions

See Risk Management Infrastructure on Page 33

Risk Management embedded in IDT's business processes

Key players:

Accounting Authority: Audit Committee in particular

Executive Management

Risk Champions

See Risk Management Infrastructure on Page 33

Performance ReportPerformance Report

CEO’s Report (Page 35-47)CEO’s Report (Page 35-47)

Launched the 2010/30 Strategic Vision: strengthening its focus on poverty eradication and shifting the application of the IDT’s own resources to champion community-driven development4th national democratic elections the most salient event in the national calendar over the 2009/10. Full impact thereof could not be anticipated. E.g., needed to evaluate its strategic objectives and targets against the new social policy agenda MTSF (Jun-09). Encouraged by the strong congruence between the priorities of the MTSF and IDT’s own strategic prioritiesHence although not planned could participate in the 100-days Programme; enabled appointment as programme implementation agency for the EPWP and the Comprehensive Rural Development ProgrammeEconomic recession: Minister of Finance called for maximum value for money, severe austerity measures and the elimination of all possible leakages of public funds. This call’ resulted in departmental budgets being limited to that which could reasonably be delivered with tight budgets & non-transfer of programme funds

Launched the 2010/30 Strategic Vision: strengthening its focus on poverty eradication and shifting the application of the IDT’s own resources to champion community-driven development4th national democratic elections the most salient event in the national calendar over the 2009/10. Full impact thereof could not be anticipated. E.g., needed to evaluate its strategic objectives and targets against the new social policy agenda MTSF (Jun-09). Encouraged by the strong congruence between the priorities of the MTSF and IDT’s own strategic prioritiesHence although not planned could participate in the 100-days Programme; enabled appointment as programme implementation agency for the EPWP and the Comprehensive Rural Development ProgrammeEconomic recession: Minister of Finance called for maximum value for money, severe austerity measures and the elimination of all possible leakages of public funds. This call’ resulted in departmental budgets being limited to that which could reasonably be delivered with tight budgets & non-transfer of programme funds

CEO’s Report (Page 35-47)CEO’s Report (Page 35-47)Given this context, the IDT’s 200/10 performance attests to it being a responsible public entity and a responsive development agency. Strived to deliver what it set out to do and to embrace the opportunities and demands within its operating environment.Since 2005 embarked on a journey to shift focus from outputs to the delivery of development outcomes. Measurable evidence of the desired transformation and development only begins to emerge in the medium to long-term. Thus in 2009/10 evidence of the shift to outcome driven development has become more visible. Contributory factors:

IDT has maintained the trust of its clients and delivered on its targets and commitmentsRaising the bar setting targets. Thus, for the first time the IDT broke through a barrier by delivering programmes in excess of R1.5 bnImproved responsiveness and rapid planning ability: raised other sources of business to compensate for the clients who had budget constraints & deliveredGaurding non-negotiables, e.g., quality and on-time deliveryBalancing innovation & accountability whilst at the same time being fully compliant with the PFMA as confirmed by the 8 successive unqualified audits)

Given this context, the IDT’s 200/10 performance attests to it being a responsible public entity and a responsive development agency. Strived to deliver what it set out to do and to embrace the opportunities and demands within its operating environment.Since 2005 embarked on a journey to shift focus from outputs to the delivery of development outcomes. Measurable evidence of the desired transformation and development only begins to emerge in the medium to long-term. Thus in 2009/10 evidence of the shift to outcome driven development has become more visible. Contributory factors:

IDT has maintained the trust of its clients and delivered on its targets and commitmentsRaising the bar setting targets. Thus, for the first time the IDT broke through a barrier by delivering programmes in excess of R1.5 bnImproved responsiveness and rapid planning ability: raised other sources of business to compensate for the clients who had budget constraints & deliveredGaurding non-negotiables, e.g., quality and on-time deliveryBalancing innovation & accountability whilst at the same time being fully compliant with the PFMA as confirmed by the 8 successive unqualified audits)

CEO’s Report (Page 35-47)CEO’s Report (Page 35-47)

Significant improvement in performance if compared with previous years. E.g., 2008/09 when the IDT achieved 11 (73.4%) of the 15 key performance areas

indicators and targets

Key LessonsEntry year of the 2010/30 strategic vision- underestimated the lag-time between committing to a strategic shift and such a shift being evident in the operations and delivery. Targets are set to support the social policy agenda without taking adequate account of the realities of how development works on the ground

Significant improvement in performance if compared with previous years. E.g., 2008/09 when the IDT achieved 11 (73.4%) of the 15 key performance areas

indicators and targets

Key LessonsEntry year of the 2010/30 strategic vision- underestimated the lag-time between committing to a strategic shift and such a shift being evident in the operations and delivery. Targets are set to support the social policy agenda without taking adequate account of the realities of how development works on the ground

NO. OF TARGETS PER

STRATEGIC OBJECTIVE

PERFORMANCE TOTALPARTIALLY ACHIEVED

FULLY ACHIEVED

EXCEEDED

SO 1: 1 1 7 9SO2: 4 1 10 15SO3: 3 7 3 13

TOTAL 8 (21.6%) 9 (24.3%) 20 (54.1%) 37SUMMARY 21.6% 78.4% ACHIEVED OR EXCEEDED

CEO’s Report (Page 35-47)CEO’s Report (Page 35-47)

Several achievements, supporting the shift to community-mandated development, which is not reflected in the corporate scorecard, for example:

Finalisation of outcome indicators and a monitoring frameworkOpportunities for integrated development through the implementation of CRDP in nodal points15 localised research projects, which includes an Impact Study on the IDT Funded Mud School Programme

Strategy in the hands of its staff at all levels. IDT strives to attract, develop and retain people who are technically proficient, socially conscious and committed to social justice. Have within the staff establishment individuals who have chosen to carve their careers as development workers at the IDT. This +IDT’s investment in change management is growing a cadre who are the foot-soldiers of developmental state at work

Several achievements, supporting the shift to community-mandated development, which is not reflected in the corporate scorecard, for example:

Finalisation of outcome indicators and a monitoring frameworkOpportunities for integrated development through the implementation of CRDP in nodal points15 localised research projects, which includes an Impact Study on the IDT Funded Mud School Programme

Strategy in the hands of its staff at all levels. IDT strives to attract, develop and retain people who are technically proficient, socially conscious and committed to social justice. Have within the staff establishment individuals who have chosen to carve their careers as development workers at the IDT. This +IDT’s investment in change management is growing a cadre who are the foot-soldiers of developmental state at work

Structure and Business Practice (page 49-61)Structure and Business Practice (page 49-61)

Structure:

Operational model combines centralised systems, process, policies and functions with decentralised operations, which informs the structure

Innovations and operations of the four (4) Business Units:

Office of the CEO

Development Programmes Services

Integrated Development Services

Corporate Services

Financial Services

High level Organogram

Human Resources Management Report (Appendix 1): Page 117)

Structure:

Operational model combines centralised systems, process, policies and functions with decentralised operations, which informs the structure

Innovations and operations of the four (4) Business Units:

Office of the CEO

Development Programmes Services

Integrated Development Services

Corporate Services

Financial Services

High level Organogram

Human Resources Management Report (Appendix 1): Page 117)

Annual Financial

StatementsPage 63-113

Annual Financial

StatementsPage 63-113

Auditor General’s Report (Page 67-69) Auditor General’s Report (Page 67-69) The IDT received its eighth consecutive unqualified audit report for the year ended 31 March 2010.

“In my opinion, the financial statements present fairly, in all material aspects, the financial position of the IDT as at 31 March 2010 and its financial performance and its cash flows for the year then ended, in accordance with South African Statements of Generally Accepted Accounting Practice and in a manner required by the PFMA.

I draw attention to the matters below. My opinion is not modified in respect of these matters:

Restatement of corresponding figures

The impairment of programme recoverables to the amount of R 29 602 826”

The IDT received its eighth consecutive unqualified audit report for the year ended 31 March 2010.

“In my opinion, the financial statements present fairly, in all material aspects, the financial position of the IDT as at 31 March 2010 and its financial performance and its cash flows for the year then ended, in accordance with South African Statements of Generally Accepted Accounting Practice and in a manner required by the PFMA.

I draw attention to the matters below. My opinion is not modified in respect of these matters:

Restatement of corresponding figures

The impairment of programme recoverables to the amount of R 29 602 826”

Auditor General’s Report (Page 67-69) Auditor General’s Report (Page 67-69)

Report on other Legal and Regulatory requirements:

“Reported achievements against targets not valid and accurate when compared to source information

Reported achievements against targets not reliable as inadequate supporting source of information was provided”

Report on other Legal and Regulatory requirements:

“Reported achievements against targets not valid and accurate when compared to source information

Reported achievements against targets not reliable as inadequate supporting source of information was provided”

Financial OverviewFinancial Overview

The financial statements fully compliant with SA GAAP.

Expenditure base exceeds revenue generation capacity.

Revenue generating capacity volatile due to bonds in investment portfolio.

Deliberate thrust to increase cost recoveries on managed infrastructure programmes.

The financial statements fully compliant with SA GAAP.

Expenditure base exceeds revenue generation capacity.

Revenue generating capacity volatile due to bonds in investment portfolio.

Deliberate thrust to increase cost recoveries on managed infrastructure programmes.

Concluding RemarksConcluding RemarksProudly and confidently present the 2009/10 year-end results to the Portfolio Committee.

Aware of the fact that the Committee might not have had the chance to witness the “IDT at work” during its Oversight visits

As is evident from the map at the front of the report, the IDT has clear and definite footprint in all provinces. Hence, we would like to invite the Committee to:

Visit the IDT projects during the current year.

Proudly and confidently present the 2009/10 year-end results to the Portfolio Committee.

Aware of the fact that the Committee might not have had the chance to witness the “IDT at work” during its Oversight visits

As is evident from the map at the front of the report, the IDT has clear and definite footprint in all provinces. Hence, we would like to invite the Committee to:

Visit the IDT projects during the current year.

Thank you

Thembi Nwedamutswu

Chief Executive Officer

thembin@idt.org.za

Thank you

Thembi Nwedamutswu

Chief Executive Officer

thembin@idt.org.za

www.idt.org.za