1. I Public Works & Infrastructure I CGO I Pretoria
Briefing to the
Public Works & Infrastructure Portfolio Committee on the Independent Development Trust
30 OCTOBER 2019
I Public Works & Infrastructure I CGO I Pretoria

2. TABLE OF CONTENTS 1. Background 2. Problem Statement of IDT 3. Summary4.
Way Forward 7.
Thank You

3. BACKGROUND
The IDT was established in 1990, as an independent, civil society, temporary grant-making agency with a R2 billion Government endowment to be invested, with the returns to be utilised to enable disadvantaged communities to access resources, recognise and unlock their potential to continuously improve their quality of life.
In 1997 Cabinet revisited the IDT’s mandate. Cabinet wanted IDT to offer its services primarily to the State and thus decided that IDT should cease to be a grant making organisation and rather focus more on programme management, which was one of the IDT’s service offerings to the State at no cost to the latter and with no adjustments to its original endowment from the fiscus. During this time, the IDT generated interest from its endowment funds, which it used for its services, one of them being social facilitation, in order for projects to gain acceptance by the communities where they are implemented.
This model of not charging fees for its services adversely impacted on the IDT’s capital base. This was exacerbated by increasing overheads stemming from its growing portfolio of programmes and decreasing interest rates.
In 2006, a financial remodelling exercise was undertaken and it indicated that the IDT’s endowment funds would be exhausted by 2012/13. In light thereof, the IDT embarked on a course of securing its long-term future. The interventions were two fold: one sought to introduce a cost-recovery mechanism to a category of the IDT services (i.e. programme management) as part of a short-term intervention, while the other sought to initiate a process of developing a business case for long-term sustainability, in accordance with the revised mandate of the organisation.

4. PROBLEM STATEMENT OF THE IDT
Erosion of the R2 billion Government endowment – substantially exhausted by 2010/11
Changed mandate in 1997 – in order to increase services offered to the State with no adjustments to its funding
Change in Mandate – Changed from a Development Funding Institution (DFI) to State Social Infrastructure Development entity.
Increasing overheads stemming from its growing portfolio of programmes and decreasing interest rates.
Cost-recovery mechanism failed to generate sufficient revenue (clients not paying, thereby exposing IDT to litigation as a result of not being able to pay service providers). Clients have questioned the programme management fee, seen as an added cost, often not budgeted for when planning for projects.
Earlier versions of the Business Case failed to address the revised IDT’s core function and its long-term financial sustainability.

5. SUMMARY
Briefing to the Portfolio Committee on the proposed way forward for the IDT, due to:
The change in IDT’s mandate that took place in 1997 was never effected in the Trust Deed;
Erosion of the R2 billion Government endowment and as a result substantially exhausted by 2010/11
IDT was never converted from a schedule 2 to a schedule 3A public entity;
The serious audit findings as determined by the Auditor General in the latest Management Report;
There has been no progress made in implementing any aspect of the 2018 Turnaround Plan.

6. WAY FORWARD
With the current challenges at IDT and the enhanced mandate of the Department of Public Works and Infrastructure, the intention is to submit a memorandum to Cabinet to request Cabinet to allow and recommend DPWI to realign the mandate of IDT and DPWI.
The intention is to take a memorandum to Cabinet dealing with the problems of IDT and the proposed way forward of placing IDT under administration as a transitional arrangement, with the intent to phasing it out over the next financial year.

7. Thank You
Department of Public Works and Infrastructure Head Office: Public Works CGO Building Cnr Bosman and Madiba Streets Pretoria Central Private Bag X65 Pretoria 0001 Website: