'Only a few' Setas fail audits, 'the rest do good work'
The banking Seta has done well since its inception 14 years ago. It serves as a role model for the others, says chief executive Max Makhubalo.
Long known as state agencies that waste billions of rands each year without producing results, the sector education and training authorities (Setas) are desperate to save face and prove their critics otherwise.
Last week Max Makhubalo, chief executive of the Bank Seta, in an exclusive interview with the Mail & Guardian, attempted to make his point loud and clear: their Seta should not be tarred with the same brush as those that are underperforming and troubled by internal management and governance defects.
The interview at the Seta’s plush headquarters in Midrand, Johannesburg, was in response to a recent M&G article that reported that auditor general Kimi Makwetu has expressed serious doubts that the controversial Setas are achieving what they were designed to do.
Felleng Yende, the chief executive of the Fibre Processing and Manufacturing Seta, later joined the interview to argue her case.
Since their launch in 2000 under the labour ministry, the 21 Setas have been under constant criticism that they are failing to deliver, and waste billions of rands each year. Their 2014-2015 allocation is nearly R11-billion, money that is collected from private companies through the skills levies.
The bodies are meant to reverse the country’s skills crisis and thereby address the plight of the 3.4-million 18- to 24-year-olds who are not in employment, education or training. Tailored to facilitate training for industry needs, they are meant to enable youth participation in learnerships and apprenticeships, provide bursaries for scarce skills university and college studies, and offer organised career guidance.
Regression in audit outcomes
But the M&G cited confidential documents from Makwetu’s office, which raised doubts about progress of the bodies. At the centre of the auditor general’s reservations are persistent governance and management defects at a number of the bodies.
“Generally, there has been a regression in Seta audit outcomes for 2013-2014,” the document notes. “Performance management systems at Setas are ineffective ... There is currently no follow-throughs by the Setas to determine whether learners, who had been supported with skills development levies, have since been employed. As a consequence, the impact of projects being implemented by the Setas cannot be seen.”
Makhubalo painstakingly sought to dismiss as misconception that the Setas were “generally” failing to produce results. Just four Setas have internal problems and the rest are in good standing and performing well, he insisted.
“If there are 21 Setas and four have problems, then it’s fair to say majority of them don’t have problems, correct? So, factually it would be fair to argue that few Setas have problems. There are a lot of Setas doing exceptionally well, majority of them are doing very good work.”
But the media isn’t making up the stories about Setas reported to perform dismally, is it? “We accept that,” Makhubalo interpolated.
Such admission does mean the bodies need to get their act together, doesn’t it? “No,” he said. “A few Setas need to get their act together to the same standard as the majority of well-performing Setas. That is factual.”
Banking racial transformation
The banking Seta, for one, should be recognised for its consistent good work, said Makhubalo. “After 14 years we’re still leading the pack as a Seta, we have achieved another unqualified audit [for 2013-2014 financial year].”
The banking Seta is one of four that achieved clean audits in the previous financial year audit, a feat it has repeated since inception. The auditor general made varying findings with the rest.
“From the beginning, all our annual audits by the auditor general have been unqualified.”
Makhubalo joined this Bank Seta eight years ago. “Even before I got here, this was a successful Seta. We’re now doing twice what we used to do when I got here, with almost the same number of people we had.”
But what exactly do the banking Seta and the others count as progress? Millions of youth remain unemployed in the country’s townships and rural communities. These are the same youth seen leading service delivery protests.
Makhubalo argued that racial transformation of the banking and microfinance sector was beginning to mature and Bank Seta has had direct influence on that.
Pool of black professionals
In the 14 years the Seta has existed, it has led the change in the overall racial profile of the sector to what it is now: 43% African, 17% coloured, 13% Indian and 27% white. White people still dominate management positions, though, with 47% – compared with 23% Africans, 13% coloured and 17% Indian.
The Seta is bankrolling a bursary scheme at three historically black universities (Fort Hare, Venda and Zululand) to produce more than 800 accountants by 2018. According to their statistics, the pass rates were 92% in 2012 and 81% last year.
“The projects that we are running are aimed at improving the pool of black professionals in the [banking] sector,” said Makhubalo.
The Seta’s Letsema and Kuyasa learnership programmes (for those in matric and university graduates, respectively) have placed thousands of previously disadvantaged youth in banks across the country, Makhubalo said. This helps them gain much-needed work experience.
The executive said 84% complete the learnerships, while employment rate is over 70%.
“The success of the learnerships is probably the most visible one. If you go to any bank ... branches have gone from the faces of white women behind the counter to black women. The change is unbelievable. You can see that in Sandton branches, in Thohoyandou, Mtubatuba. So this is the effect the learnerships have had.”
No footprints among target groups
For its part, the Fibre Processing and Manufacturing Seta was beginning to turn things around and producing results, Yende said. This is a fairly new Seta, formed three years following the merger of three Setas.
Though “you cannot say we were stagnant at some point in time” owing to the merging process, the Seta has used the past three years to build.
The Seta’s new business model was only approved in March, leading Makwetu’s office to point out that it doesn’t look poised to improve its qualified audit, “mainly due to the late implementation of action plans by management”.
Said Yende: “I think our Seta has done very well. We’re in our third year, and we’re beginning to get into the growth phase – which will begin to show a lot of results out of the strategy, the business model and the systems developed over the past few years.”
The Seta is mandated to hone skills for 13 industries, including clothing, textiles, furniture, forestry and print media.
Another long-standing criticism against Setas is that they are detached from majority of the youth they should be targeting. The bodies have been criticised for that have their headquarters in plush suburbs such as Sandton and Midrand, but no footprints whatsoever in townships and rural areas where the majority of unskilled youth are located.
Not all learners are in townships
Speaking at a municipal bursary ceremony in Pietermaritzburg in February, Higher Education and Training Minister Blade Nzimande questioned the location of the bodies.
“Setas have also resumed the process of opening offices in townships and rural areas, bringing education to citizens. Honestly, what is the point of running Setas from Sandton when recipients are based in depressed communities?”
He told the ceremony that Setas are opening offices in Further Education and Training colleges. There are 34 such offices across the country.
But it’s no issue that Setas are not established in townships and villages, according to Makhubalo. “The issue of where we are physically based is a moot point. You can never be in every street in the country, that’s not logical. Neither are government offices in Mamelodi, government offices are in Pretoria. So, the argument that we actually should be [there] I think is a red herring.
“To say that Setas must be in the townships as though black people must only be in the townships and as though our learners are only black people, that’s also not real.”
He said they opted for locations that are “safe, viable to reach” for staff members, the public and employers. “Also, a place where there is sufficient broadband capacity to support the type of work we do. In townships, the amount of broadband available is problematic.”
But that’s not to say the bodies are not branching out. “What we’re doing now, most Setas have regional offices throughout the whole country. We’re opening two offices [soon] in Polokwane and East London.”