1. Presentation to The Social Development Portfolio Committee Parliament
Cape Town 21 November 2007

2. STRUCTURE OF THE PRESENTATION
Background (CEO)
Performance against targets (CEO)
Annual Financial Report (CFO)
Report of the Auditor-General (CFO)
Projects Report (DMD)
Human Resources (CEO)
Way Forward (CEO)
8. Questions and comments

3. BACKGROUND 1. Key sections of the Annual Report are:
The Overviews by the Minister; Chairperson of the Board and the CEO
Emphasis by the Minister and Chairperson of the Board included:
The NDA strengthens the second economy by providing grants to Civil Society Organisations (CSOs) and, through its capacity building programme, ensuring that CSOs are equipped with skills required to make them sustainable.
Through the strategic goal of organisational transformation, much emphasis has been placed on governance issues and improving systems and processes.
This resulted in the NDA receiving a clean, unqualified audit with no emphasis of matter from the Auditor-General – a praiseworthy and pleasing achievement.
Much needed stability and focus was brought to the NDA.
The revision of the NDA’s strategy and restructuring of the NDA presented challenges including 29 staff members taking voluntary severance packages.

4. BACKGROUND continued
Despite the challenges faced, the NDA started to vigorously implement its five year strategic plan.
This has positioned the NDA as a key and relevant contributor to the fight against poverty.
Grant funding was undertaken through two approaches – Requests for proposals and programme formulation.
Funding of 95 projects for R110,97 million was approved by the Board and R49,5 million was disbursed during the year.
A capacity building programme on which R25,7 million will be spent over 2 years was introduced.
The Board’s term of office was drawing to a close and a new Board has been appointed.
The Minister paid tribute to the Board members for the good work they had done in building the NDA.
The Chairperson thanked the Minister for the confidence he had placed in the Board and for his unbridled support
The Chairperson also paid tribute to his fellow Board members, the CEO and the staff.

5. POVERTY STATISTICS Levels of Poverty
The current estimates of poverty by HSRC show that the proportion of people living in poverty in South Africa is as follows:-
Approximately 57% of individuals in South Africa were living below the poverty income line in 2001, unchanged from 1996.
This translates into 26m people being classified as poor.

6. Poverty Distribution by Province
POVERTY STATISTICS
Poverty Distribution by Province
Province
No. of poor persons (million)
% of population in poverty
Poverty gap (R billion)
Share of poverty gap
Eastern Cape
4.6
72%
14.8
18.2 %
Free State
1.8
68%
5.9
7.2 %
Gauteng
3.7
42%
12.1
14.1%
Kwa-Zulu Natal
5.7
61%
18.3
22.5%
Limpopo
4.1
77%
11.5
Mpumlwana
57%
7.1
8.7%
North West
1.9
52%
6.1
7.5%
Northern Cape
0.5
1.5
1.8%
Western Cape
1.4
35%
5.0%
South Africa
25.7
81.3
100.0%

7. PERFORMANCE AGAINST TARGETS
STRATEGIC FOCUS FOR THE YEAR
The strategic goals for the year were:
Organizational transformation
Partnering with strategic stakeholders to accelerate the fight against poverty
Mobilizing resources for community development,
Empowering communities for sustainable development, and
Increasing the communication of credible researched information
The organizational transformation goal received the highest priority and focused on building a performance culture; people competencies; leadership development; improving business processes and systems; good corporate governance; building brand credibility and confidence with our stakeholders.

8. PERFORMANCE AGAINST TARGETS continued
ACHIEVEMENTS IN THE YEAR
Developed and implemented a performance management system
Restructured the organization in line with organizational goals and objectives
Employed high calibre executives and implemented leadership development training programmes
Conducted competency profiles for executives and senior management for the purpose of development
Deployed a Workplace Skills Programme and published Quality of Work Life policies
Implemented an integrated Enterprise Resource Planning system (ERP)
Established professional corporate governance systems such as the internal audit, and legal and risk units
Re-branded the organisation and implemented programmes of communications which improved the
organisation’s credibility among our stakeholders and the public as a whole
Established partnerships with most of the key Development Finance Institutions (DFI) by actively participating in the DFI forum and its activities

9. PERFORMANCE AGAINST TARGETS continued
ACHIEVEMENTS IN THE YEAR continued
Signed partnership agreements with the Department of Trade and Industry (the DTI) on poverty alleviation and development projects
Funded, organised and participated in a number of key conferences and seminars on poverty and development
Improved our overall administrative and management system.
The Board has approved funding of 95 projects amounting to R110,97 million. Of these, 33 projects worth R27,27 million emanated from the Request For Proposal (RFP) process and 42 projects worth R57, 96 million emanated from the Programme Formulation (PF) process.
The Board has also approved 20 projects worth R25,73 million for a 2 year Capacity Building Programme.
An amount of R49 million was disbursed. This was less than the R62 million disbursed in the previous financial year mainly due to the following factors:

10. PERFORMANCE AGAINST TARGETS continued
ACHIEVEMENTS IN THE YEAR continued
Ongoing forensic investigations conducted following the discovery of fraud resulting in some project files being withheld for extended periods
Payment of lower amounts to projects as first tranches/cash flow to cover capacity building;
Late submission of projects to the NDA Board for funding;
More stringent tranching/cash flow and risk management as a result of identified projects’ institutional capacity challenges; and
Delays in meeting Board conditions.
Further details of the performance of the NDA during the year
under review are included in a narrative form in pages 16 to
31 of the Annual Report and a Schedule of the performance of
the organisation in a tabular format is also available.

11. ANNUAL FINANCIAL REPORT
The report will cover
Statement of Financial Performance
Statement of Financial Position
Report of the Auditor-General

12. STATEMENT OF FINANCIAL PERFORMANCE
INCOME
Grants
Other
Interest
EXPENDITURE
Direct Funding
Projects Support
Staff cost
Administration cost
Net (deficit)/surplus for the year ( )

13. STATEMENT OF FINANCIAL POSITION
ASSETS
Current Assets
Cash & cash equivalents – Government
Cash and cash equivalents –European
Accounts receivable
Non-Current Assets
Property, plant and equipment
__________
TOTAL ASSETS
FUNDS & LIABILITIES
Funds
Development Fund
Projects Fund
Administration Fund ( )
Current liabilities
Accounts payable
Committed projects
Interest payable – European Community
TOTAL FUNDS AND LIABILITIES
2006
__________
( )

14. OVERVIEW OF THE ERP SYSTEM
WHY THE ERP SYSTEM WAS
SOURCED
Key Challenges
PTS challenges
Lack of system integration
Paper based environment
Lack of accountability / ownership
Loss of documentation
Lack of automated and performance reports
Inadequate/Lack of automated controls
Lack of audit trail / logs
Heavy reliance on manual controls
Lack of exception reports
ERP Selection
Review of business model
Review of business processes
Develop IT strategy (business needs)
Selection of ERP partner, Microsoft Dynamics v9 using the IT Strategy

15. OVERVIEW OF THE ERP SYSTEM
Phase One
(Completed)
Phase Two
Phase Three
(Outstanding)
Travel Management
Phase 1 Enhancements
Human Resources
Projects Registration
Project Contract
Marketing & Comms
Project payments
Monitoring & Evaluation
Research & Development
Document Management
Procurement Process
Company Secretariat
Helpdesk
Funds Allocation
Time & Expense
Courier Services
Risk Management
Stationery Management
Petty cash

16. OVERVIEW OF THE ERP SYSTEM continued
Project Registration
Project Contracting
Monitoring & Evaluation
Project payment
Captured
Contract by PAD
M&E report by DM
Province create Payments
Assigned to DM
Amount, Date, M&E dates & Conditions
PM approved report
PAD prepares supporting docs
Referred
Contract review
M&E for Write Back
DMD approve payment
Approved
Confirm project signature on the contract
Finance release payments
Rejected by PM
Confirm NDA signature on the contract

17. REPORT OF AUDITOR-GENERAL
The NDA received a clean unqualified audit with no emphasis of matter from the Auditor-General
Attention was drawn to the following other matters that are ancillary to the Auditor-General’s responsibilities in the audit of the financial statements:

18. REPORT OF AUDITOR-GENERAL continued
MATTER
1. Material non-compliance with applicable legislation
The audit committee’s terms of reference have neither been approved by the board, nor is it reviewed annually as required by Treasury Regulation In addition, no disclosure has been made in the National Development Agency’s annual report on whether or not the audit committee has adopted formal terms of reference and if so, whether the committee satisfied its responsibilities for the year, in compliance with its terms of reference, as required by Treasury Regulation
2. Material corrections made to the financial statements submitted for audit
2.1 Accrued expenses were increased by R
2.2 Operating lease expenses were increased by R to comply with International Accounting Standard IAS 17.
2.3 Impairment of an accounts receivable of R
2.4 Increase of R to Committed Projects, being accounts that were fraudulently manipulated in the prior year.
MANAGEMENT PROGRESS
1. These matters will be rectified once the new Board has taken office and a new Audit Committee has been appointed.
2.1 The NDA financials that were given to the auditors were completed in
the second week of April, which was meant to assist the auditors by
giving them enough time to audit. The accruals include invoices that
were received in May and June after the financials had been
submitted to the auditors.
2.2 Last year, our understanding was that we would process all adjusting
journals at once. Had we been advised that passing adjusting
journals is a reportable matter, we would have passed these journals
before 31 May 2007.
2.3 This was noted and addressed
2.4 We note the comment. However the effect of the fraud was corrected last year and this year at the global level rather than at each project creditor account.

19. REPORT OF AUDITOR-GENERAL continued
MATTER
Reinstatement of projects to the value of R that
were previously written off.
3. Matters of governance
3.1 The following policies and procedures appear on the Policy Register of the National Development Agency but the policies were not approved by the Board:
Information Technology Security
Disaster Recovery and Backup Plan
Information Technology Standard, Policies and Procedures
Funding system description
Grant making policy framework and criteria
National Development Fund policy
General controls in the information technology environment
4. An information systems (IS) audit of the general controls surrounding the financial and human resources applications was completed in June 2007.
The most significant findings identified were the following:
4.1 Certain user security settings regarding access to the network and application were not adequately set to protect the information against unauthorised access.
4.2 The access activities of users were not adequately monitored and managed to ensure accountability.
MANAGEMENT PROGRESS
2.5 The write back of R10 million was processed in anticipation of Board approval. However, the Board rejected projects to the value of R4 million presented as write back projects because the reports supporting the write backs were not detailed enough. Hence the adjustment.
3. The policies will be presented to the new Board for approval.
4. Advanced technology that addressed these issues was purchased and installed.

20. DEVELOPMENT MANAGEMENT (PROJECTS) REPORT
Grant Trends / Allocations to the NDA
2001/2
2002/3
2003/4
2004/5
2005/6
2006/7
2007/8
R’m %
Grant
92.7
96.7 4%
103.2 7%
109 6%
121.5
11%
128.7
135.2 5%

21. DEVELOPMENT MANAGEMENT (PROJECTS) REPORT contnued
NDA Funded Projects for the Year Ended 31 March 2007
Commitments R110,97 million
Disbursements R49.0 million
Number of projects 95

22. DEVELOPMENT MANAGEMENT (PROJECTS) REPORT continued
GRANT COMMITMENTS
Year
2005/2006
2006/2007
Province
Number of Projects Approved
Amount Committed per Province (R)
Limpopo 17 13
Mpumalanga 11 9
Eastern Cape 36 14
Northern Cape 4 5
Western Cape 8
KwaZulu-Natal 15
North West 2
Free State 3 10
Gauteng
National
TOTAL
104 95

23. HUMAN RESOURCES DEMOGRAPHIC OVERVIEW
NDA is demographically represented in all 9 provinces
It is operationally structured into a National Office and 9 provincial offices
Each provincial Office is headed by a Provincial Manager who reports to the Development Management directorate.
Each Province is also divided geographically based on districts with Development Managers (project specialists) responsible for the project management function at local level.

24. HUMAN RESOURCES continued_
The total staff complement at the NDA at 31 March 2007 was 88 of which 37 were male and 51 were female. A breakdown of staff in the provinces is as follows:
Province
Number of staff
Gauteng 5
Eastern Cape 6
Free State
Northern Cape 2
KwaZulu-Natal 3
Mpumalanga 4
Limpopo
North West
Western Cape
Head Office 50

25. WAY FORWARD
Our challenges for the coming financial year are in the following areas:
Induction of the new Board and its Committees
Revision of the strategy and funding cycle process
Our institutional capacity
Organisational and individual performance
Limited funding sources
Updated database of civil society organisations
Up to date researched information on poverty and development trends at macro and micro levels
An appropriate funding model
A reviewed NDA Act and Delegations of Authority

26. WAY FORWARD continued
Going forward, we have revised the MTEF Strategy, which contains the following strategic goals:
• Organisational transformation
• Partnering for development
• Community empowerment for sustainable development
• Communication of credible and relevant development information.
We have plans in place to address the challenges identified above. These include
Speeding up organisational transformation for completion by the end of the 2007/2008 financial year
Placing greater emphasis on financial resource mobilisation
Improving and increasing the output of our researched information
Completing the establishment of our Civil Society organisations database
Completing the process of establishing an appropriate funding model and delegations
To amend the NDA Act and Delegations of Authority.