NATIONAL SKILLS FUND

Portfolio Committee:13 April 2011

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CONTENTS

1) INTRODUCTION2) LEGAL MANDATE OF THE NSF3) NSF STATUS IN RELATION TO THE DHET4) NSF MTEF STRATEGIC OBJECTIVES (Per DHET Strat)5) OPERATIONAL PLAN (Per DHET Strat Plan)6) CONTINUING INTERVENTION FOR SKILLS &

EMPLOYMENT7) NSF CHIEF DIRECTORATE ORGANOGRAM8) NSF FINANCIAL BUDGET ESTIMATES

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1. INTRODUCTION

a) NSF established in 1998, through the Skills Development Act, 1998

b) Took over from the Training of Unemployed Persons (TUP Fund) operations in 1999

c) Received first Levy in 2000d) Mandates derived from NSDS III (2011–2016)e) Fund is just over a decade in existence.

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2. LEGAL MANDATE OF THE NSF

Skills Development Act, 1998, as amended, outlines the key obligations pertaining to the

NSF, being:a) Use of the money in the fund:

To fund projects identified in the NSDS as National Priorities,

To fund such other projects related to the achievement of the purpose of the Act as the DG determines and

The administration of the fund within the prescribed limit, as regulated from time to time.

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b) Control and Administration of the NSF: The Director General: DHET, is the accounting

authority of the NSF and must: control the fund Keep proper records of the Fund (Financial, asset &

liabilities thereof) Prepare Annual Financial Statements.

c) Other legal obligations: NSF to be managed in accordance with the PFMA The NSA required to advise the Minister on the strategic

funding framework and criteria for the allocation of NSF funds.

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3. NSF STATUS IN RELATION TO THE DHET

a) True to DHET objectives of achieving an integrated post school system, NSF is seen as a catalytic fund in the skills development arena.

b) The NSF is a Chief Directorate within the Skills Development Branch of DHET and not a separate entity.

c) DHET has had meetings with NT and AG to look at compliance requirements to give effect to the objective treatment of NSF within the DHET.

d) Further meetings, through the CFO’s office are planned with NT.

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4. MTEF STRATEGIC OBJECTIVESa) To provide funds for identified priorities that

advances the Human Resource Development Strategy (HRDS)

b) To provide funds for priorities identified by the Minister after consultation with the National Skills Authority (NSA) that support the NSA in its advisory work, and building the capacity of the social partners (constituencies) to strengthen their role in and delivery of the National Skills Development Strategy

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c) To provide funds to support projects identified as national priorities in the context of the National Skills Development Strategy (NSDS) and support the strategic objectives of government

d) To provide funds to support other projects that are pertinent to the achievement of the purposes of the Skills Development Act, as determined by the Director-General

e) To provide funds for the operations of the NSF

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5. OPERATIONAL PLAN

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5.2. SUB PROGRAMME: CD: NATIONAL SKILLS FUND Strategic Objectives Performance

Measure No Activities Target Time-

frame Output (includes performance targets)

5.2.1. To provide funds for identified priorities that advance the Human Resource Development Strategy (HRDS)

Identify & fund HRDSA prioritized projects

1 Finalize HRDSA Priorities with HRD Council

May 2011 List of NSF funding areas approved by the DG

2 Design & Fund projects in support of HRDSA

March 2012 Minimum of 2 project funded

5.2.2

To provide funds for priorities identified by the Minister after consultation with the National Skills Authority (NSA) that support the NSA in its advisory work, and building the capacity of the social partners (constituencies) to strengthen their role in and delivery of the National Skills Development Strategy

Identify priorities related to NSA advisory work and building the capacity of the social partners (constituencies) for NSF funding

3 Establish from NSA which identified priorities require funding from the NSF.

Apr 2011 List of NSF funding priorities approved by Minister

4

Develop a framework in conjunction with the NSA on building the capacity of the social partners (constituencies) to strengthen their role in the delivery of the NSDS should take place. Implement ca

Jul 2011

Dec 2011

Framework document agreed to Al least 18 constituency projects are supported

5.2.3 To provide funds to support projects other national priorities in the context of the National Skills Development Strategy (NSDS) and support the strategic objectives of government

Finalize Implementation of NSDSII

5 Closure of 224 NSDS II projects.

Dec 2011 224 Closure reports for different funding windows Transfer of unutilized funds back to NSF Project Information Archived

6 Compile the 5-Year NSF Funding Report.

Dec 2011 5-Year NSF Funding Report completed.

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5.2. SUB PROGRAMME: CD: NATIONAL SKILLS FUND Strategic Objectives Performance

Measure No Activities Target Time-

frame Output (includes performance targets)

Design Strategic Framework & Criteria for allocation of funds under NSDS III

8 Finalize in consultation with NSA & Minister Strategic Framework and Criteria

June 2011 Framework & Criteria approved by DG/Minisetr

9 Develop grant regulations for the allocation of fund

June 2011 Grant regulation published by the Minister

10 Application guidelines & operational manuals developed

Approved Guidelines Approved operational manuals

Skills For the Green Economy

9 Invite Applications for projects

June 2011 Call for applications published

10 Provide funding to support projects

Sep 2011 At least 10 projects supported

Industrial Policy Action Plan

11 Invites applications to support IPAP skills

June 2011 Call Published

12 Allocate funds to projects Sept 2011 At least 10 projects supported

New Growth Path

13 Invite Applications for projects

June 2011 Call for applications published

14 Provide funding to support projects

Sep 2011 At least 10 projects supported

Skills for Rural Development

15 Consultation with relevant departments on framework for skills support

June 2011 Framework document approved

16 Invite applications and allocate funding

July 2011 At least 4 projects supported

Education & Health 17 Consultation with relevant departments on framework for skills support

June 2011 Framework document approved

18 Invite applications and allocate funding

July 2011 At least 4 projects supported

20 Invite applications and allocate funding

July 2011 At least 4 projects supported

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5.2. SUB PROGRAMME: CD: NATIONAL SKILLS FUND Strategic Objectives Performance

Measure No Activities Target Time-

frame Output (includes performance targets)

5.2.4

To provide funds to support other projects that are pertinent to the achievement of the purposes of the Skills Development Act, as determined by the Director-General

Administer areas indicated in the SDA that require funding from the NSF clarified with the DG.

21 Consult DHET on other SDA priorities requiring NSF funding

May 2011 List of other SDA priorities approved

22 Project funding allocated June 2011 Quarterly implementation reports

5.2.5 To provide funds for the operations of the NSF

Management of NSF operations.

24 Keep proper record of all financial transactions, assets and liabilities of the fund

Ongoing Monthly records of financial transactions, assets and liabilities maintained.

25 Staff Development in line with NSDS III challenges

Ongoing Staff development programme approved

26 Reporting systems of the NSF analyzed and plan of action developed

Sept 2011

Monitor and evaluate disbursements made wrt funding areas

Quarterly Programme funding reports

Critical to achieving its objectives, the NSF has built a wide range of partnerships with Gvt Dpts, FETC, Private providers, etc. To this end, the NSF has had the following engagements:

Dept: Rural Development [335 full bursaries at R15m] Artisan Development Technical Task Team [Committed to

fund upon completion of details being worked out] Dept: Public Entities [Additional training spaces for

Artisan training in SOE’s: we are negotiating targets] Dept: DPW [R200m partnering on EPWP–40000 Learners] FETC (DHET) [Expansion, including Skills Development

programmes] DBE: [Currently, full bursaries for 1200 teachers at R38m]

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6. CONTINUING INTERVENTION FOR SKILLS & EMPLOYMENT

a) At the beginning of the year, the Minister made the following commitments, which are in full swing at this stage:

I. Make available R150m to NSFAS to fund full cost of study in critical skills and for rural students in all institutions of Higher learning in the country,

To cover 820 1st year enrolments Over 335 financially deserving rural students 300 Students with disabilities

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ii. Further R100m allocated to a contracted agency, Career Wise,, to fund, through bursaries, full cost of study of first year and continuing students in critical skills required by the country for economic growth and innovation.

iii. Further R94m allocated to the National Research Foundation to fund students in Post Graduate, Masters’, Doctoral and high level research Programmes.

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b) The NSF has further committed R200m to the EPWP, under DPW targeted at training 40,000 beneficiaries

I. For prior training, meaning training unskilled labour for later participation in specific EPWP project in the areas concerned.

II. Onsite training – focusing on “on the job training”

III. Training for exits – at completion of projects (artisan trades, full ABET)

IV. 80% of training being contracted by DPW is through FETC’s (23 at the present moment).

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c) Currently the NSF is supporting 268 community-based organizations by training 1,935 learners in various skills that include organization management and technical skills. A total of six service providers have been

contracted to implement the skills development projects in the Eastern Cape, KwaZulu-Natal and Mpumalanga provinces at a total budget of R10m.

Mainly with Rural Focus.

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d) The NSF facilitated the provision of skills development support to 367 community based co-operatives. It had 29 active Memoranda of Agreement with service providers across all provinces. This runs up to 30 June 2011.

f) The National skills Fund (NSF), under the Industry Support Programme (per NSDS II, now IPAP in terms of NSDS III) supports the DTI by providing training incentives to newly established businesses and expansion of existing businesses in two ways:

I. Workplace Skills Development Support Programme (WSDSP)

II. The Monyetla for the Business Processing Outsourcing and Off-shoring (BPO&O) sector [3400 beneficiaries]

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7. NSF Organogram

a) The NSF currently has a staff complement of 38b) Approved and funded posts within the

directorate amount to 48.c) The Skills branch, within which the NSF falls, is

currently undergoing a process of organisational redesign, along side the rest of DHET. This will affect the NSF and its organisational outlook.

d) Provincial monitoring and presence is being worked in collaboration with the rest of the Department.

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NATIONAL SKILLS FUND 8. PROJECTION OF INCOME AND EXPENDITURE FOR THE PERIOD OF THE NSDS III

1.1  ANNUAL INCOME AND EXPENDITURE OVER THE PERIOD OF THE NSDS III

Audited Estimates Forecasts    2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

TOTAL  R'000 R'000 R'000 R'000 R'000 R'000 R'000

INCOME   1,990,592 2,064,531 2,209,048 2,363,682 2,529,139 2,706,179 2,895,612 12,703,659 EXPENDITURE   871,067 3,018,207 2,209,048 2,363,682 2,529,139 2,706,179 2,895,612 12,703,659SURPLUS / DEFICIT   1,119,525 -953,676 - - - - - -

1.1.1  NSF: EXPENDITURE BREAKDOWNAudited Estimates Forecasts

  %age 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16TOTAL

allocation R'000 R'000 R'000 R'000 R'000 R'000 R'000SARS Collection costs 10%     220,905 236,368 252,914 270,618 289,561 1,270,366NSF Admin 10%     220,905 236,368 252,914 270,618 289,561 1,270,366 HRDSA 5%     110,452 118,184 126,457 135,309 144,781 635,183Ministerial (NSA) 8%     176,724 189,095 202,331 216,494 231,649 1,016,293NSDS (IPAP/NGP/Rural Dlpt) 47% 871,067 708,003 1,038,253 1,110,930 1,188,695 1,271,904 1,360,937 5,970,720DG 10%     220,905 236,368 252,914 270,618 289,561 1,270,366Skills Infrastructure (Plus Maintenance) 10%     220,905 236,368 252,914 270,618 289,561 1,270,366                   NET AVAILABLE 100% 871,067 708,003 2,209,048 2,363,682 2,529,139 2,706,179 2,895,612 12,703,659

R'0001.2 TOTAL UNCOMMITTED RESERVES CARRIED FORWARD 3,178,063

RESERVES UTILISATIONYearly utilisation forecast 10% 20% 30% 30% 10%

  %ageTOTAL

2011/12 2012/13 2013/14 2014/15 2015/16allocation R'000 R'000 R'000 R'000 R'000

NSF Admin & IT Systems (once-off) 10% 317,806 31,781 63,561 95,342 95,342 31,781 Ok

NSF Monitoring & Evaluation systems 10% 317,806 31,781 63,561 95,342 95,342 31,781 Ok

Infrustructure seed funding 20% 635,613 63,561 127,123 190,684 190,684 63,561 Ok

Skills planning institutional machanism (seed funding) 5% 158,903 15,890 31,781 47,671 47,671 15,890 Ok

( ? )     0 0 0 0 0 Ok

( ? )     0 0 0 0 0 Ok

Balance to Project Funding 55% 1,747,935 174,793 349,587 524,380 524,380 174,793 Ok NET AVAILABLE 100% 3,178,063 317,806 635,613 953,419 953,419 317,806 Ok

NSF FINANCIAL POSITION:a) 2010/11 AFS and AG audit process to take place.b) From the 2011/12 financial year going forward, the NSF

expects to commit its annual income to skills projects targeting various government strategies as outlined in the operational plans.

c) The reserves from previous years are planned to be utilised in boasting the Monitoring and Evaluation Capacity of the Skills Delivery machinery, kick start infrastructure spending (i.e., SOE capacity expansion, skills centres, FETC’s, etc), Catalising on skills development projects in partnership with other skills providers.

d) DHET finalising funding framework in this regard.04/21/23 20

• THANK YOU

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