The department of employment & labour and its minister, Thulas Nxesi, are determined to spend more than R15bn on efforts to meet an ambitious target of creating 2-million “work opportunities” by the end of financial 2024 in March.
But some officials and advisory board members of the Unemployment Insurance Fund (UIF) are concerned this drive — which saw members of the adjudication committee of the UIF’s labour activation programme (LAP) holed up in a Johannesburg hotel for days deciding which projects to back — will result only in waste.
“We’re already in November now, and December is a flat month. People will come back around January 15, leaving us with two months,” said an official close to the project.
“What can be done in two months when the LAP has been failing all along to spend much less than that all these years?”
The R15bn will come from the UIF’s surplus funds, and will be added to the R2.8bn originally budgeted for the LAP in the current financial year, but which has not yet been spent. The department will need permission from finance minister Enoch Godongwana to spend the money.
The Sunday Times has learnt that the UIF officials are preparing a submission to Godongwana to allow the UIF to access the R15bn and meet the ambitious employment target in the “immediate future”.
The Sunday Times has also learnt that just two weeks ago the officials were locked in urgent meetings to prune a list of R23bn in training projects that need to be approved this financial year. The officials, including LAP adjudication committee members, sequestered themselves in the Crowne Plaza hotel in Rosebank, Johannesburg, and emerged only after bad weather resulted in part of the hotel’s roof caving in, injuring at least one committee member.
They had adjudicated to the tune of R62bn, but the minister told them to go and trim it down to R30bn, with the instruction that the money must be found. Inside, there is worry that this will be a repeat of Thuja
— Insider close to the project
Some LAP employees are now afraid their signatures and fingerprints will be left at what they believe could become a crime scene, because the projects have a litany of issues — the first being the rush to allocate the extra R15bn with less than six months left in the financial year.
“They had adjudicated to the tune of R62bn, but the minister told them to go and trim it down to R30bn, with the instruction that the money must be found. Inside, there is worry that this will be a repeat of Thuja,” said one insider.
The R30bn Nxesi wanted was halved by UIF actuaries who, officials said, warned this month that only R15bn could be taken from its surplus funds without impacting on the UIF’s going-concern status.
Last year, the Sunday Times exposed how Thuja, owned by Mthunzi Mdwaba, was awarded R5bn of UIF money to run an untested job-creation scheme that had not been subjected to any due diligence.
The LAP is tasked with enhancing the employability of jobless people through skills training, enabling entrepreneurship through enterprise development, preserving jobs through the temporary employer/employee relief scheme for distressed companies, helping to turn around struggling businesses through Productivity South Africa, and collaborating with government departments and entities to “massify” job- and enterprise-creation efforts.
But, despite good intentions, the programme has glaring deficiencies, one of which, employees and internal UIF documents say, is the failure of the interim LAP adjudicating committee, which assesses proposals and recommends projects, to adhere to its own procedures and criteria.
“As a result, recommended entities have not fully administratively complied [with their obligations], such as submitting annual financial statements, Sars tax certificates, work experience [documents], [and so on],” said an internal LAP progress report.
The report, produced this month, also states that the LAP is not adequately capacitated and lacks a learner-management system.
In addition, the interim committee is not meant to exist for longer than three months, after which it should be replaced by a permanent one. However, the interim committee has been in place for nearly four years.
Also of concern for officials is the fact that the committee’s chair, Thulani Tshefuta, held a meeting with Mdwaba at a Pretoria hotel while Thuja’s proposal was before his committee for adjudication. At this meeting, evidence before forensic investigators shows Tshefuta allegedly advised Mdwaba to not subject his proposal to due diligence.
They did not even care about the fact that some of the projects were not properly adjudicated or did not meet the funding criteria. They just pushed for the money to be found
— A senior official
A government official close to the programme said there were concerns Nxesi and senior officials, during a series of meetings in the past two months, did not appear concerned that the committee had recommended projects far exceeding the R2.8bn approved budget.
“They did not even care about the fact that some of the projects were not properly adjudicated or did not meet the funding criteria. They just pushed for the money to be found,” the official said.
“The minister kept on saying he was tasked by the president to create 2-million job opportunities by the end of March, so one does not know whether this is driven by the elections or not.”
On Wednesday, Nxesi announced his court bid to have the controversial R5bn job-creation scheme between the UIF and Thuja reviewed and set aside. At the briefing, he downplayed the meeting between Tshefuta and Mdwaba, saying that in the end the LAP adjudication committee did not recommend funding Mdwaba’s proposal.
Nxesi also denied any wrongdoing by the LAP, saying: “When I arrived, I requested an investigation into the LAP by the Special Investigating Unit, and they found nothing. What is key, is to improve its operations.”
Nxesi said that, after he had seen young people trained by LAP service providers for a few months and then left without jobs, he wanted now to approve only “programmes where people are going to train and then be linked to employers who are going to absorb them for a year or two”.
When asked for comment on the 2-million job opportunities drive and the tight timelines involved, Nxesi’s department said it was aware that “the enhanced project would be massively big and would require additional resources, stringent controls and focused risk management”.
“Hence the director-general and the minister have sought approval from the cabinet to bring in additional capacity to ensure the project takes off and is managed tightly. In preparation for this, the department commissioned a work study on the architecture review of the UIF and compensation fund by PwC, whose report has recommended the capacity needs and interventions [required] to strengthen the funds.
“The recommendations of PwC have since been considered and accepted for implementation,” the department said.
Recent news reports have alleged the Hawks were investigating billions of rand allocated through the programme. The UIF is also in court with three companies that were allocated millions of rand but that cannot account for how the money was spent or say how many people were trained.
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