David Macfarlane
The country’s largest channel for directing donor funds to non-profit organisations in their fight against poverty managed to disburse a mere 26% of funds available to it in the past financial year. And R48-million donated by the European Union more than 18 months ago remained undisbursed as well.
These details emerge from the auditor general’s recent report on the National Development Agency (NDA), which has been under repeated fire for its ongoing inability to get donor money out to needy NGOs since it commenced operations in April 2000. This is the NDA’s core function, as established in the 1998 Act that brought the agency into being.
Cash-strapped NGOs have been complaining for nearly two years that the NDA lacks the capacity to serve the sector adequately. They say a range of South Africa’s high-priority areas remains seriously underfunded and neglected as a result adult education (including literacy training), early childhood development, HIV/Aids awareness, domestic violence, land reform, human rights education and rural local government, among others.
Last year an independent audit of the NDA delivered a scathing report that development experts said cast doubt on the agency’s ability to perform its core functions. Accounting firm Ngubani & Co identified nine areas of chronic mismanagement. It found that some contracts between the NDA and organisations it is funding were unsigned or simply missing; disbursement records were not up to date; and the agency was continuing to pour money into projects that did not meet its own criteria for funding.
Commenting on the 26% disbursement in the past financial year, the NDA’s acting CEO, Delani Mthembu, told the Mail & Guardian, “We are satisfied with our performance, as we have committed 67% of the funds under our direct control. As per the auditor general’s report 67% of the funds were allocated to projects of which 26% was cash disbursements. The NDA … normally releases funds in two tranches. As projects achieve agreed milestones, further tranches are released. This is a normal, generally accepted principle of project management.”
In April last year the M&G reported that the NDA had R340-million available during its first year of operation, but managed to disburse less than a tenth of that. In February this year, Mthembu told the M&G the agency had disbursed more than R142-million between May 2000 and December last year. This is less than half the total donor money to which the NDA had access during that period.
The situation concerning money from the EU appears to have remained static since the M&G first reported, in April last year, that the R48-million the EU handed over in August 2000 remained undisbursed and that a further R66-million pledged by the EU remained in EU hands as a result. At the time the NDA told the M&G that certain “preconditions”, including the appointment of “technical assistants”, had to be met before the initial R48-million could be allocated.
This week Mthembu delivered essentially the same explanation for the long delay, but added that some of the preconditions have now been met. Concerning further conditions, including “situation analysis in poverty pockets selected as target areas”, Mthembu said work “is under execution and disbursement will take place according to the established guidelines and plans”.
The auditor general’s report points out two NDA failures in the past financial year to meet its legislated obligations: it failed to establish an audit committee, as the Public Finance Management Act (PFMA) requires, and “written delegations of authority did not exist for the financial year under review”, as both the PFMA and the NDA Act require. Mthembu told the M&G this week that the NDA has rectified both matters.