Icasa was set up to ensure the regulation of broadcasting in South Africa, but it can’t seem to get its own act together. Melina Meletakos investigates.
With South Africa’s switchover from analogue to digital technologies effectively having come to a standstill, the broadcasting and information and communication technology (ICT) industries need a strong regulator more than ever.
But as the Independent Communications Authority of South Africa (Icasa) staggers from one crisis to the next, the regulator hardly appears up to the task.
In October 2014, minister of communications Faith Muthambi caused a stir when she told four of Icasa’s nine councillors – whose terms were coming to an end – to leave the regulator without staying on for the 45-day handover period.
Muthambi’s interpretation of the Icasa Act was widely criticised, and her right to interfere with the appointment and removal of councillors was questioned.
The vacant posts were eventually advertised in mid-February but until the positions are actually filled, the remaining counsellors will have to function with half of the council workforce. A number of analysts believed that Muthambi intended reducing the number of counsellors permanently, which is why the appointment process was delayed and the handover period revoked.
This is all happening while Icasa’s oversight responsibilities in fact fall under both the department of communications and the department of telecommunications and postal services. This is due to President Jacob Zuma splitting the previous department of communications into two. Analysts have criticised him, saying the move was “bizarre” at a time when industries were converging.
Proof that the regulator has serious problems is evident in its annual report for 2013/14. It states that Icasa achieved less than half (41%) of its 32 strategic targets set out for the financial year. The remaining 59% weren’t even fully achieved because Icasa’s “predetermined objectives continued to exceed the organisation’s financial and human resource capabilities”, the report said.
A report by the Auditor-General (AG) gave further proof of problems by highlighting that a total of 33% of the targets reported were not consistent with those in Icasa’s approved strategic and annual performance plans. “The reason for this could not be ascertained,” according to this report. When The Media asked Icasa why it was reporting on targets that had not been approved, Icasa spokesperson Paseka Maleka said, “Management unintentionally reported on targets without emphasis on ensuring that there is consistency in the wording. Processes have already been put in place to avoid such similar cases in the future.”
“This admission is a case of a lack of perceptive leadership and oversight of the Icasa council because it is accountable for achieving these goals,” says a well-placed and respected industry expert who consults to Icasa. He and other sources asked not to be identified because they still work with Icasa.
The problem, he says, is that there is no performance management system in place to monitor whether councillors are fulfilling their duties. This is despite the Icasa Act stating that the minister, along with the National Assembly, is obliged to establish a performance management system and do appraisals once a year.
Former minister of communications Yunus Carrim was in 2013 quoted as saying that the department of communications had developed a performance management tool to assess the annual performance of the regulator. This has not been implemented.
Income and expenditure
According to the annual report, Icasa spent 95% of its total revenue of R383 956 953, while only 88% of its expenditure budget was spent.
The money Icasa has to spend is divided among several programmes. While it has recently been implementing its budget better, it is still not nearly using enough of the amount allocated. Only R19 299 898 of the R59 465 274 allocated licensing and compliance budget was used. Similarly, R21 082 690 of the R57 125 705 engineering and technology budget was not spent. However, the audit and risk committee’s report, which appears in the annual report, highlights that these differences in expenditure “indicates that management has not carefully and diligently considered the budgeting process for the year”.
The AG’s report notes that Icasa CEO, Pakamile Pongwana, did not prevent irregular, fruitless and wasteful expenditure, as is required by the Public Finance Management Act (PFMA) and treasury regulations.
Icasa is evading responsibility by using delays in procurement processes as an excuse for underspending in these key areas, says the consultant. “The fact that this is not in place in 2014, 14 years after the establishment of Icasa, is ridiculous.” Icasa’s two exclusive areas of oversight are licensing and spectrum management. The implications of under-spending in licensing and compliance and engineering and technology is that the authority is unable to complete its core mandate, he adds.
Icasa’s inability to manage its income and expenditure comes down to poor planning and not having a firm grasp of the PFMA, says a former senior Icasa staff member. “There are things that Icasa does that are multi-year projects, so what happens is that these get split into phases. However, what you are supposed to do is have all the documents ready in advance. The PFMA says you can’t go out to tender unless you have the money. In the private sector, what you would do is go out to tender before the start of the financial year, so on the first day of the financial year you can place the order,” he explains. “Icasa doesn’t do that because people are overworked and don’t have a sufficient understanding of project planning and project management.”
What happens, he adds, is that you have 12 months to spend the money but it takes four months to get the proposal out. “You are lucky to get the money you need.” He attributes the struggle to obtain money for the projects to poor management, which is exacerbated “by not having the right skills”, he says.
Condition of Icasa’s assets
The deterioration of most of Icasa’s assets is another reason given for its inability to achieve its mandate, according to the annual report.
The authority relies on the national treasury and the department of communications for funding its infrastructural needs. This includes things like monitoring equipment for both broadcasting and postal, and motor vehicles used for monitoring purposes.
Icasa categorises its assets as ‘poor’, ‘fair’ and ‘good’, and each of its group of assets is scored accordingly. As much as 70% of Icasa’s technical equipment has been classified as poor, as has 50% of its motor vehicles, both of which require “urgent recapitalisation”, according to the annual report. Half of the authority’s assets is technical equipment and “given the age and condition this is now a major concern for the authority and requires replacement,” the report says.
It also notes that Icasa was expected to develop a self-funding model as a solution to its funding woes. “The discussions on the self-funding model are still underway with the ministry and treasury,” Maleka told The Media. “No decision has been made so far.”
“The reason to move towards a self-funding model is not to give us adequate funds but to give us political independence,” says the former Icasa employee. “It’s not entirely understood by some and, needless to say, many people in the department of communications and the department of telecommunications and postal services like to keep their hands on the purse strings.”
The AG found that “the institution did not ensure that there was an adequately functioning internal audit unit that identified internal control deficiencies”. His report notes that the accounting officer “did not exercise oversight responsibilities regarding the usefulness and reliability of the performance reporting and related internal controls”.
This finding, says the consultant, is a “serious indictment”. “They are basically saying that their ship is out of control, the captain is missing and there is mutiny on the bounty.”
This problem is echoed in the audit and risk committee’s report, which is responsible for ensuring that Icasa’s internal audit function is independent and has the necessary resources to carry out its duties. The committee was not “satisfied” that the internal audit “properly discharged its functions and responsibilities to the Authority during the year under review”.
The committee was cognisant that the AG’s report and the internal audit report found indications of “deficiencies in the system of internal control”. The internal audit unit was supposed to conduct 22 audits for the year but only completed 13 (59%). It ascribes this non-achievement to resource constraints and the uncertainty around whether the internal audit function should be outsourced or an in-house function. “A decision was made to have it as an in-house function and the process to fill the vacant position is at an advanced stage,” according to the report.
The AG’s other concerns
Icasa’s financial statements also reveal that the regulator set up an investigation into the “fruitless and wasteful expenditure” in developing what was termed “an intangible asset”, which they only explained as a “work in progress (WIP)”. The money spent on this was
R1 859 697, according to the financial statements. Maleka says this investigation has been finalised and “will be presented to the Icasa council in the last quarter of 2014/15 financial year, where the recommended course of action will be tabled and approved”.
The AG’s report also highlights that Icasa underspent on a conditional grant to the amount of R93 308 102. “Conditional grants by name implies the grant has specific requirements or intentions,” says Maleka. “The equipment which relates mainly to postal equipment was being sourced from foreign companies and this process was not finalised in the 2013/14 financial period. Icasa is currently engaging the service providers.”
Additionally, there was a review of the salary increases of senior management from 1 April 2009 to 31 March 2014, with the outcome expected by 31 August 2014. The investigation, however, is still incomplete. “The review covers a significant number of years, and some of the senior management have left the employ of Icasa,” says Maleka. “The document, when complete, will be for internal purposes and, given that salaries are of a confidential nature, will not be released for public consumption.”
A broadcasting industry expert says Icasa has not followed administrative procedures in recent year and many of its challenges are due to their inability to implement the Electronic Communications Act with administrative fairness and procedure. “Within their organisation, they have sub-committees; they have different counsellors responsible for different areas and it would seem that one doesn’t always speak to the other,” she says. “It would seem that there’s this haphazard, siloed approach to what they are doing.”
It appears as though Icasa is just ticking the boxes, she adds. “The veracity, the meaningfulness, the scope and an understanding of the impact of what they are trying to do is never quite considered.” She says Icasa doesn’t do “clear regulatory impact assessments”, which are government requirements. “You always need to know what the bigger implications are for the industry because at the end of the day, they are the enabler to growth, competition and greater consumer benefit,” she says.
This post was first published in the March 2015 issue of The Media magazine.
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