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NATIONAL SKILLS FUND (NSF) PRESENTATION TO AD

HOC COMMITTEE ON LABOUR

01 JUNE 2004

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PRESENTATION OUTLINE:•NSF Legislative framework

•Core purpose of NSF

•Background

•Overview of current funding windows & achievements for 2003/4 year

•NSF Expenditure Trends

•NSF Cash flow

•NSF Commitments

•Key challenges for 2004/5

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NSF – LEGISLATIVE FRAMEWORK

•NSF was established in terms of Skills Development Act, 1998

•Main source of income for NSF is 20% of skills levies collected

•Minister of Labour decides on allocations from NSF on advise from National Skills Authority (NSA).

•Director-General:Labour is the accounting officer of the NSF

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NSF – Core Purpose

Funds in the NSF may be used only to fund:

•Projects identified in the National Skills Development Strategy (NSDS) as National Priorities or

•Other projects related to the achievement of the purpose of the Skills Development Act as the DG determines

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NSDS 2001 -2005 The current strategy has 5 Objectives and 12 success indicators:

Objective 1: Developing a culture of high quality life-long learning

Objective 2: Fostering skills development in the formal economy for productivity and

employment growthObjective 3: Stimulating and supporting

skills development in small business

Objective 4: Promoting skills development for employability and sustainable livelihoods through

social development initiativesObjective 5: Assisting new entrants into

employment

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BACKGROUND•PRIOR TO THE SDA, DOL MANAGED THE TRAINING OF UNEMPLOYED PERSONS (TUP) FUND AND THE MANPOWER DEVELOPMENT FUND UNDER THE MANPOWER TRAINING ACT, 1981.•AFTER THE PROMULGATION OF SDA IN 1999, THE MONEY IN BOTH OF THESES FUNDS WAS TRANSFERRED TO THE NSF – MEANING BEFORE THE LEVY WAS INTRODUCED IN 2000, THE NSF WAS ESTABLISHED AND OPERATIONAL•FOR THE FIRST YEAR OF ITS EXISTENCE THE NSF ESSENTIALLY FUNCTIONED UNDER THE SAME RULES AND PROCEDURES THAT PERTAINED UNDER THE EARLIER LEGISLATION•DURING 2000/2001 A FUNDAMENTAL REVIEW OF THE SUPPLY DRIVEN TRAINING SYSTEM UNDER TUP WAS UNDERWAY. THIS SERVED TO SLOW DOWN THE RATE OF DISBURSEMENT – AS BOTH PROVIDERS AND DOL OFFICIALS WERE ADAPTING TO THE DEMAND DRIVEN APPROACH

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BACKGROUND..cont•THE NSF COULD ONLY FIND ITS NEW FOCUS AFTER A NUMBER OF KEY INSTITUTIONS HAD BEEN ESTABLISHED AND FUNCTIONS PERFORMED, SUCH AS:

- establishment of the NSA in April 1999;

- establishment of the 25 SETAs in March 2000;

- introduction of skills levy in April 2000

- launch of first NSDS in February 2001

- New roles and functions were more clearly defined for the DOL provincial offices in February 2001

•THE NSF INHERITED AN ADMINISTRATION THAT WAS SET UP TO MANAGE THE TUP FUND

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Prov SETA’s H/Off. DTI.

Social Develop-

ment Initiatives

(objective 4)

Strategic Projects(Objectives 1.1, 2.3,3,5)

Other(Objective 5)

SSP(Objec-

tive 2)

Development & Implement. of

L/ships, S/Prog.’s &

Providers

SMME Develop-ment

Strategic Occupations & Education Skills

Bursaries Learner- ships

(Seta's)

Innovation &Research

Cap

Building & NSDS Pro-motion

Skills Support

Pro-gramme

Overview of current Funding Windows

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SOCIAL DEVELOPMENT Disbursing agent – DoL provincial offices Project evaluation against set criteriaTraining of unemployed personsSpecial programmes (prisoners, social plan, people with disabilities bursaries)Micro-and survivalist enterprise developmentA total of 131,781 unemployed people received training under this window at a cost of R239,794,000. 99% of beneficiaries are black, 57% women & 1,27% persons with disabilities.(56% under the age of 35)

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SOCIAL DEVELOPMENTProvincial

office

Total Age groups Population Groups Gender Disabled

<35 >35 Black White Male Female

Western Cape 10 164 7 260 2 904 10 036 128 5 523 4 641 253

Eastern Cape 53 726 23 253 30 473 53 662 64 20 453 33 273 357

Northern Cape 3 245 1 971 1 274 3 231 14 1 540 1 705 84

Free State 7 206 4 198 3 008 7 183 23 2 943 4 263 155

KZN 13 744 8 242 5 502 13 740 4 6 058 7 686 0

North West 10 885 7 803 3 082 10 848 37 4 971 5 914 96

Gauteng South 7 626 4 989 2 637 7 578 48 3 611 4 015 186

Gauteng North 6 688 4 009 2 679 6 499 189 3 201 3 487 166

Mpumalanga 8 332 5 597 2 735 8 277 55 4 200 4 132 72

Limpopo 10 165 6 398 3 767 10 160 5 3 588 6 577 310

Total 131 781 73 720 58 061 131 214 567 56 088 75 693 1679

Percentage 55,94% 99,57% 57,44% 1,27%

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STRATEGIC PROJECTS

DISBURSING AGENT – SETASALLOCATIONS BASED ON STRATEGIC SECTOR NEEDS WHICH REFERENCE THE FOLLOWING FUNDING AREAS:Development and Piloting of Skills Programmes;Learnerships and ETDP Practitioner Development;Small Business Development;Strategic Occupations; andEducation Skills (including ABET)

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STRATEGIC PROJECTS FRAMEWORK FOR PROPOSALS HAD TO SPEAK TO CONTRIBUTION TOWARDS ACHIEVEMENT OF ONE OR MORE GOVERNMENT GOALS:Integrated Action Plan for Economic-and Employment Growth;Social Cluster report for social development;HRD Strategy; andNSDS MINISTER OF LABOUR LAUNCHED PROJECTS IN MAY 2002TO DATE (31/03/04) R381,4M HAS BEEN DISBURSED FROM A TOTAL COMMITMENT OF R1,1BILLION OVER THREE AND A HALF YEARS.

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BURSARIES (SCARCE SKILLS) Disbursing agents:-National Student Financial Aid Scheme (NSFAS) for undergraduate studies & National Research Foundation (NRF) for post-graduate studiesContributes to addressing scarce skills-re: HRD priority areaScarce skills areas include broadly: accounting, science, auditing, bio-informatics, bio-technology, chemistry, engineering, financial management, management studies and tourismFor 2003/4 R21,137,000 was allocated to NRF to fund 871 post-graduate bursaries ranging from honours to post-doctoral studies.

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BURSARIES (SCARCE SKILLS)

For the undergraduate bursaries, the NSFAS disbursed an amount of R102,398,266 to cover 15,064 bursariesTo consolidate NSF bursary scheme, the scheme for people with disabilities will also be managed through NSFAS and NRF from 2004. A total of R18,272,600 has been allocated for this purpose for the 2004 academic year.

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INNOVATION & RESEARCH

•Disbursing agent – DoL Head Office

•Objective:

Generate new or improved knowledge about skills development through research;

Enhance innovation in relation to:

-Implementation of the National Skills Development Strategy, Skills Development Act and Skills Development Levies Act;

  -The generation and distribution of career/labour market information to learners, providers and other users;

-Skills development policy and implementation strategies.

•49 proposals were received and evaluated through a public RFP process, of which 9 has been approved by the DG in 2003– total value of R16million.

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INNOVATION & RESEARCH…PROJECT EXAMPLE

•PROJECT NAME: NALEDI 3D FACTORY

•PROJECT OBJECTIVE: Development of a Virtual Reality Application for the training of lathe and machine operators.

•ACHIEVEMENT: The pilot of this application has been successful, and the project managers feel confident that this product can have a significant impact on increasing skills of students aiming for employment in the manufacturing sector. The project is scheduled to be officially launched by the Minister of Labour on 5 July 2004.

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CAPACITY BUILDING OF STAKEHOLDERS

•Disbursing agent – DoL Head Office

•Covers SETAs, Trade Union Federations, Organised Business, Training Providers, Designated community groups , i.e.

- Disabled People South Africa (DPSA);

- South African National Civic Organisation (SANCO);

- South African Youth Council (SAYC); and

- Women’s National Coalition (WNC)

• Programme has been implemented across 21 SETA Boards, NAFCOC, FABCOS and BSA. COSATU, FEDUSA, NACTU and SANCO also already benefited

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NSDS PROMOTION

•Disbursing agent – DoL Head Office

•Covers marketing/advocacy & promotional activities in relation to the implementation of the NSDS including the annual national skills conferences, publications, road shows, consultations, etc.

•Expenditure for 2003/4 amounted to R13,7 million

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SKILLS SUPPORT PROGRAMME

•Disbursing agent- DoL Head Office in partnership with DTI

•Linked to DTI’s Small-and Medium Enterprise Development Programme (SMEDP) & Strategic Industrial Programme (SIP), which are designed to encourage new investments (including major expansions)

•The programme has three funding elements:

- Training grant;

- Development grant;and

- Capital grant.

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SKILLS SUPPORT PROGRAMME

•Incentives approvals are on average for 3- year period

•The amounts committed to date:

2003/4 – R22,3m

2004/5 – R31,8m

2005/6 – R14,5m

• Actual amount claimed during 2003/4 is R15,8m facilitating the training of 2316 new workers. Of these 2200 were black (95%) and 1697 female (73%)

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LEARNERSHIP WINDOW

•A “Learnership” Window has been created to support the Learnership Campaign (GDS agreement)

•Funds are allocated to:

- SETAs who don’t have sufficient funds to fund large increases in unemployed learners to meet GDS targets;

-Government departments (through PSETA)

•To date a total amount of R444 million for the training of 18,298 unemployed learners in learnerships;

•In addition, R90million has been committed to fund the provincial Employment and Skills Development Lead Employer (ESDLE) pilot projects- launched by the Minister of Labour on 24 May 2004.

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NSF: EXPENDITURE TRENDS

YEAR INCOME

‘000

EXPENDITURE

‘000

SURPLUS

‘000

2000/1 314,186 177,412 136,775

2001/2 589,343 262,550 326,793

2002/3 802,844 530,118 272,726

2003/4 (un audited) 924,042 699,985 224,057

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NSF: CASHFLOWR’000 ACTUAL

2002/3

UN AUDITED

2003/4

BALANCE B/F 791,803 1,064,529

INCOME 802,844 924,042

EXPENDITURE 530,118 708,601

SURPLUS 272,726 215,441

NET AVAILABLE 1,064,529 1,279,970

COMMITTED

FUNDS(31/03/04)

1,449,526

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NSF: COMMITMENTS (31/03/04)

FUNDING WINDOW AMOUNT

SOCIAL DEVELOPMENT R 175,000,000

STRATEGIC PROJECTS R785,526,293

SKILLS SUPPORT PROGRAMME R45,000,000

LEARNERSHIPS R444,000,000

TOTAL R1,449,526,293

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KEY CHALLENGES FOR 2004/5

•Identification of new Funding Windows to support the objectives and targets of the NSDS 2005-2009.

•Streamline/review policies, procedures and criteria for NSF funding.

•Reducing the variance between funds committed and funds spent.

•Review/strengthen management capacity of the NSF to ensure the effective and efficient functioning of the NSF.

•Development of MIS to enhance business

processes/information flow processes .

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I THANK YOU !!