Urgent need to overhaul the National Skills Fund

All forms of state corruption drain resources intended for service delivery and are to be condemned, but one form that is particularly tragic in its consequences is the depletion of funds intended for skills development.

SA has an unemployment rate of nearly 34%, with most of the unemployed being unskilled, while youth unemployment is the highest in the world at a rate of about 64% among those aged between 15 and 24 years. Imparting skills to these people can be life-changing, lifting them out of poverty and joblessness.

So it was extremely disheartening to learn this week that the National Skills Fund (NSF), a public entity designed to drive the government’s skills development programme, has been tainted by possible corruption. Although, given the grip that corruption has on all levels of government and society, perhaps this should not come as a surprise.

The NSF was allocated R4bn for the 2022/2023 fiscal year and since 2018 has disbursed nearly R8bn to a variety of skills development programmes benefiting 407,495 individuals. But the fund does not have a track record of sound financial management if reports by the auditor-general are anything to go by. The regression set in around 2018/2019.

The auditor-general found almost R5bn of its funds were unaccounted for, and gave it a disclaimer for the 2019/2020 and 2020/2021 fiscal years. A disclaimer is the worst possible audit outcome and indicates an entity could not provide auditors with evidence for most of the figures in its financial statements.

The auditor-general’s findings for 2019/2020 — which the NSF disputed — included that the fund failed to keep records for skills development expenditure. No audit assurance could be given that the expenditure was regular and that the money was spent for the purpose for which it was allocated.

These findings prompted parliament’s standing committee on public accounts (Scopa) to demand a forensic report into 10 projects funded by the NSF to the tune of about R390m. The report found that there were reasonable grounds for suspicion that corruption or fraud or theft occurred in all of them and recommended that the projects be investigated by the Hawks. This is probably just the tip of the iceberg. Deficiencies in the decisions about grant allocations by NSF officials and the monitoring of supported projects were highlighted in the report.

Given the seriousness of the findings, it is regrettable that higher education & training minister Blade Nzimande and his department have not acted with speed on the recommendations of the forensic report, which he received in March. He informed Scopa chair Mkhuleko Hlengwa, in a letter requesting that the forensic report be kept confidential, that the department was still finalising its internal processes six months later. He has insisted that action will be taken against all the implicated people.

The minister has in the past expressed grave concern about negative findings by the auditor-general and in 2020 he initiated a review of the NSF business model, operational processes, governance structure and decision-making processes. The ministerial task team started its work in early 2021 and it is understood that the minister is now studying its report.

He placed the department’s director-general, Gwebinkundla Qonde, on precautionary suspension in July 2021 because of his role in the NSF malaise (Qonde’s contract came to an end in 2021) and suspended NSF CEO Mvuyisi Macikama, who subsequently resigned. Nzimande has expressed concern that the directorgeneral of the department to which the NSF reports is also the accounting authority for the fund.

Nothing further has been heard of the outcome of the review process, which seems to have taken an inordinately long time. It is not clear when the task team submitted its report to Nzimande and how long he has been sitting on it. The minister needs to provide an update of what the review has uncovered and what his plan of action is to deal with its findings. The NSF is too important to be allowed to operate suboptimally.

THE REVIEW PROCESS SEEMS TO HAVE TAKEN AN INORDINATELY LONG TIME