Parliament heard on Tuesday that the National Youth Development Agency (NYDA) had doubts around its ability to collect 94% of the money owed to them in loans. It is in a process of switching from granting loans to giving grants.
The agency appeared before the parliamentary appropriations committee to present a performance report and management accounts for the period between April and June 2013.
A document presented to the meeting revealed: "Of the R4.7-million, approximately R973 000 has actually been received by the NYDA in the first quarter. Approximately R300 000 [6%] relates to loans that are not impaired and the remainder of R4.4-million [94%] from impaired loans."
The agency’s chief financial officer Khathu Ramukumba said the collection was still very low, in line with the performance of their loan book generally, which is a challenge.
He said measures were being made to try and recover the loans that had been advanced to young people, which included taking a number of businesses that had been funded by the NYDA to court.
"We are focusing specifically on the SME loan financing because one of the challenges we are facing on micro-loans is that in certain instance the values of the loans are quite low, such that the cost-benefit relationship of pursuing these young people versus what we can actually collect out of them skews towards a fruitless exercise.
“We’ll continue to try and look for ways to encourage these young people to pay back their loans," he said.
Ramukumba revealed that the agency’s loan book as at March 31 sat at R212-million, of which doubtful repayment patterns by young people equal about R192-million.
"When we say it is doubtful, we are not saying it wouldn’t be recovered. We take a number of factors into account when we classify a portion of the loan book as impaired, like whether the young person has skipped payment, or paid less than is agreed to.
"But we continue to pursue them to make sure they pay, but also ensure that they continue to run successful businesses," said Ramukumba.
He said there were 126 cases that have been referred to the agency’s lawyers especially targeting those who benefitted as a result of an SME programme which funded up to R5-million.
Meanwhile, the deputy minister in the presidency for monitoring and evaluation, Obed Bapela, confirmed to Parliament that the agency’s suspended chief executive officer was facing charges and was the only senior management member who had been suspended.
Neither Bapela nor the NYDA’s executive chairperson Yershen Pillay was prepared to get into details about the charges, saying they would rather wait for the matter to be finalised as divulging information might compromise the process.
“We would not be able to give the details to this particular meeting, so that we do not undermine the processes that have been instituted on the suspension of the chief executive, as the person has still to appear. We don’t want to see trial in the media, we might be misquoted,” said Bapela.
Pillay said that Ngubeni’s suspension was based on a 50-page audit report, where an audit committee made recommendations to the board, which then decided to afford the chief executive officer an opportunity to address the charges.
He hinted to maladministration of about R34-million.
He revealed this while defending the allegations that have been made against him of misusing the NYDA credit card.
"When you embark on a clean-up process and you act on a report that reveals maladministration of up to R34 million, you can’t expect smooth sailing … clearly those that are implicated are not going to keep quiet. They are going to raise issues in the public domain, and we expected that,” he said.
"Why don’t you ask the question 'why now, when the chief executive has been suspended?'" Pillay said if he was found guilty of any allegations against him, he would face the necessary punishment.
The NYDA’s acting chief executive Ayanda Makaula, who had been in office for less than 24 hours, told the committee that the agency was behind in 14 of its 28 key performance areas.
She blamed this on the review that the agency has been conducting on its programmes.
“We have spent the last two and half months as the board and executive designing the grants programme, including the necessary policies and procedures for the programme to harness fairness and transparency.
"This was based on the advice of the standing committee as well as our commitment as the new NYDA to good governance,” she said.
The NYDA’s new board took office on March 22. It is believed that the members there are close to President Jacob Zuma, while the majority of its previous board members were believed to be close to expelled ANC youth league leader Julius Malema.