UIF blew R221m training people who had jobs

The Unemployment Insurance Fund (UIF) has blown R221m in three months training 14,771 people who were already in jobs.

The project, part of a broader scheme to create jobs which sources in the UIF labelled a “free for all”, was the subject of an internal audit report which has since found that it was not properly advertised to allow companies to participate in a fair manner.

The 14,771 workers in KwaZulu-Natal were trained to cook and provide basic meals for pupils in KwaZulu-Natal schools who benefit from the School Nutrition Programme. They were already being paid a monthly stipend through a conditional grant from the national department of basic education.

The UIF paid R344m to a company called Fuze Institute for Humanitarian and Development Praxis to train the workers aged between 20 and 64.

Of that money, Fuze spent R22m on overalls, hats, aprons and masks; R17m for unspecified “tools of trade”; and a stipend of R1,050 a month for three months for the workers. In addition, Fuze earned a R24m project-management fee and charged R14.7m for “support” and checking whether the food handlers were going to work.

The training project is part of a programme called Employability Initiatives for the Unemployed, which falls under the UIF’s Labour Activation Programmes (LAP) that the UIF committed R2.7bn to in the hopes of creating 65,669 permanent jobs.

So far, R685m has been spent on six projects meant to employ 27,781 people with little real permanent employment created — but hundreds of millions of rand has been paid to training providers.

The 14,771 KZN school food handlers were employed on 24-month contracts months before their training even began. The KZN education department told the Sunday Times that their contracts will expire soon.

At the programme’s highly publicised official launch in March, employment and labour minister Thulas Nxesi said the R344m budget for the food-handling programme Fuze was contracted to provide included training, paying stipends, supplying protective clothing and equipment, and monitoring and evaluating the programme. He said the department of education had absorbed all of the students.

Fuze earned a R24m project-management fee and charged R14.7m for 'support' and checking whether the food handlers were going to work

The idea for the programme was born at a roadshow in 2019 where private businesses were invited to pitch their job-creation programmes to the UIF in exchange for funding.

However, the UIF internal audit report has since found that the entire R2.7bn programme could constitute irregular spending because it was not properly advertised. The report also states there was “no evidence that an advert for employability partnerships was issued by the department of employment and labour inviting proposals for potential partners”.

“The current proposals are based on an open-ended media statement/release ... which called for submission of proposals. However, the release did not provide adequate details regarding the programme specifications, objectives and adjudication criteria,” the report said.   

A UIF source said: “We don’t have a standard operating procedure to deal with private companies because this entire thing was rushed.”

Besides their food-handling contract, Fuze also landed two further contracts with the UIF — a six-month mixed farming training and enterprise development programme for 5,000 trainees at a cost of R184m, and a six-month fibreoptic installation course for 150 trainees at a cost of R5.8m. Of all their students, only 30 have landed permanent jobs.

In response to questions, Fuze said the fact that the 14,771 food handlers were employed was “a win” for them.

Fuze also said that 30 of their fibreoptic students got permanent jobs while the others received six-month contracts with different companies.

“The final close-out reports which were submitted to the UIF-LAP all corroborate our assertions that the project was, in fact, a resounding success. The UIF-LAP has commended Fuze on a job well done during this phase of the training,” the company said.

“It is also pleasing to note that all the learners are working: the food handlers were absorbed by the department of basic education; the mixed-farming learners were placed as co-operatives in five farms and eight agri-hubs and the fibre-optics learners are installing fibre on two large farms.”

However, the Sunday Times has established that the students were trained between October and December last year — after their contracts began at the beginning of 2021. Furthermore, the training was already budgeted for in the conditional grant for the national school nutrition programme disbursed by the department of basic education.

In the Western Cape, the training that covers menu compilation, meal preparation and measurements, the feeding calendar, gas and safety and hygiene, is done over two hours — with the only cost to the department venue hire and refreshments.

Basic education department spokesperson Elijah Mhlanga said the provincial education departments employed 61,344 voluntary food handlers to feed more than 9.7m pupils at 21,756 schools nationwide. They were employed on 24-month contracts and paid a monthly stipend of R1,581 — which includes a R15 UIF contribution. After two years, their contracts end to allow others an opportunity. A source in the KZN education department said they had begun advertising for a new cohort. 

Mhlanga said training workshops for the food handlers are rolled out every year by provincial departments “with the support of environmental health practitioners from the local municipality”. 

“Training budgets cover logistics (transport), venue and refreshments and varies per province,” he added.

We don’t have a standard operating procedure to deal with private companies because this entire thing was rushed

—  UIF source

A senior KZN official working on the programme said training for all 61,344 food handlers in the country would cost less than a third of the money the UIF paid to Fuze. 

To explain the cost, Fuze said it covered “facilitation, learner assessment, learner moderation, portfolio of evidence, arch lever files [sic], training manuals, learner guides, workbooks, facilitators’ guides, notebooks, and writing materials”. The company said its training was accredited by both the Culture, Arts, Tourism, Hospitality and Sports Seta (Cathsseta) and the SA Qualifications Authority.  

Economist Duma Gqubule lamented that such a large sum of money was apparently being misspent in KwaZulu-Natal, which was in dire need of investment after losing billions of rands in infrastructure in the recent civil unrest and floods.

“You could have used this as an opportunity to train and upskill people in related sectors, and even allow them to use these skills to work elsewhere later,” he said.

The UIF was, by March last year, the Public Investment Corporation’s second-largest client with R116bn invested.

In response to questions, UIF spokesperson Trevor Hattingh denied that there was anything untoward with the programme or the contract given to Fuze.

“The UIF implemented programmes to empower beneficiaries with skills to compete in the labour market, prior [to] the mandate shift [that came with the move from] the department of labour to the department of employment and labour.

“The focus is [now] on employment... The aim was to retrain and impart skills that are responsive to the current job market and to ensure that participants are assisted to secure permanent jobs,” he said.

“The UIF has been implementing LAP projects for some time now. These were massified in 2017 when the UIF committed to fund efforts to create employment opportunities through this programme”.

After the internal audit report was issued at the end of March, the department initially halted all payments and sought advice from the National Treasury on how to proceed. A UIF source said that in September, as the department awaited word from the Treasury, UIF commissioner Teboho Maruping issued a directive that the UIF should continue to pay the service providers as per a new advert, which addressed matters raised by internal audit, that was issued in September.

Hattingh confirmed that the “internal audit report found that the media statement calling for proposals did not meet the requirements of an advert as prescribed by the LAP standard operating guide.”

“The finding, however, was narrowly conceived because it did not consider the fact that an advert could also mean a published media statement calling for proposals ... In addressing the finding, a decision was then taken that a new advert with a deadline of September 26 would be issued as a continuation of the media statement issued earlier.”

In response to questions, the Treasury said it had received further information it had requested from the UIF at the end of last month and was “currently assessing these documents to provide a response to the UIF”.

The UIF is still reeling from corruption surrounding the Temporary Employment Relief Scheme (TERs) during the Covid-19 lockdown when, according to a report by the auditor-general, billions of rand were stolen in schemes involving senior officials.