ANNUAL REPORT 2014/2015 - Provincial Government · 2016. 6. 22. · Annual Report for the financial year 2014/2015. This annual report provides a perspective on the achievements and

W W W. N W D C . C O . Z A

INVEST IN NORTH WEST... INSPIRING BUSINESS, ASSISTING YOU TO BE FIRST

ANNUAL REPORT 2014/2015

INVEST IN NORTH WEST...INSPIRING BUSINESS, ASSISTING YOU TO BE FIRST

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CONTENTSPART A: GENERAL INFORMATION1. PUBLIC ENTITY’S GENERAL INFORMATION 32. LIST OF ABBREVIATIONS/ACRONYMS 43. STRATEGIC OVERVIEW 5

3.1 Vision 53.2 Mission 53.3 Values 53.4 Strategic Outcome Orientated Goals 5

4. LEGISLATIVE AND OTHER MANDATES 65. ORGANISATIONAL STRUCTURE 76. FOREWORD BY THE CHAIRPERSON 87. FOREWORD BY THE CHIEF EXECUTIVE OFFICER 12

PART B: PERFORMANCE INFORMATION1. STATEMENT OF RESPONSIBILITY 152. AUDITOR’S REPORT: PREDETERMINED OBJECTIVES 153. OVERVIEW OF PUBLIC ENTITY’S PERFORMANCE 16

3.1 Service Delivery Environment 163.2 Organisational Environment 163.3 Key Policy Developments and Legislative Changes 173.4 Strategic Outcome Orientated Goals 17

4. PERFORMANCE INFORMATION BY PROGRAMME 194.1 Programme 1: Administration and Support 194.2 Programme 2: Trade and Industry Development 264.3 Programme 3: SMME Support 284.4 Programme 4: Property Management 30

5. SUMMARY OF FINANCIAL INFORMATION 325.1 Revenue Collection 325.2 Programme Expenditure 325.3 Capital Investment 32

PART C: GOVERNANCE1. INTRODUCTION 342. EXECUTIVE AUTHORITY 343. THE ACCOUNTING AUTHORITY/BOARD 344. COMMITTEES 415. RISK MANAGEMENT 426. INTERNAL CONTROL UNIT 437. INTERNAL AUDIT AND AUDIT COMMITTEES 438. COMPLIANCE WITH LAWS AND REGULATIONS 459. FRAUD AND CORRUPTION 4510. MINIMISING CONFLICT OF INTEREST 4511. CODE OF CONDUCT 4512. HEALTH, SAFETY AND ENVIRONMENTAL ISSUES 4513. COMPANY/BOARD SECRETARY 4514. SOCIAL RESPONSIBILITY 46

PART D: HUMAN RESOURCE MANAGEMENT1. INTRODUCTION 482. HUMAN RESOURCE OVERSIGHT STATISTICS (EXPENDITURE — UTILISATION OF CONSULTANTS) 48

PART E: FINANCIAL INFORMATION1. REPORT OF THE AUDIT AND RISK COMMITTEE 602. DIRECTORS’ RESPONSIBILITIES AND APPROVAL 623. REPORT OF THE AUDITOR-GENERAL 634. STATEMENT OF FINANCIAL POSITION 695. STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME 706. STATEMENT OF CHANGES IN EQUITY 717. STATEMENT OF CASH FLOWS 728. ACCOUNTING POLICIES 739. NOTES TO THE FINANCIAL STATEMENTS 87

AGRICULTURE

CULTURE

TOURISM

North West Development Corporation Annual Report 2014/2015 1

GENERAL INFORMATION

PART A

2 North West Development Corporation Annual Report 2014/2015


1. GENERAL INFORMATION

COUNTRY OF INCORPORATION AND DOMICILE South Africa

LEGAL FORM OF THE ENTITY State Owned Company

NATURE OF BUSINESS AND PRINCIPAL ACTIVITIES Trade, investment, sustainable economic development and job creation

DIRECTORS Appointed on 5 November 2014Mr B Khumalo (Chairperson)Mr A FraserAdv VT Seboko (Ms)Ms J BrownMr D McGluwaMs N KolotiMr L MoletsaneMr M NdabaMs N MojanagaAdv H Keyter

Term ended on 4 November 2014Ms KN MosenogiMr O KhutsoaneMr R RahloaMs S Molokoane-MachikaMs IF MotsoahaeMs MJ SebataMs GA SeatlholoAdv T MogatusiMs SB Moiloa-NgodiMs C Mabe

REGISTERED OFFICE 22 James Watt CrescentIndustrial SitesMahikeng2745

BUSINESS ADDRESS 22 James Watt CrescentIndustrial SitesMahikeng2745

POSTAL ADDRESS PO Box 3011Mmabatho2735

HOLDING COMPANY North West Provincial Government

BANKERS ABSA, First National Bank and Standard Bank

AUDITORS Auditor-General of South Africa


2. LIST OF ABBREVIATIONS/ACRONYMS

ACT Agriculture, Culture and Tourism

AGSA Auditor-General of South Africa

APP Annual Performance Plan

ASHEPP Applying SHE Principles and Procedures

BBBEE Broad Based Black Economic Empowerment

BPDM Bojanala Platinum District Municipality

CCMA Council for Concilliation, Mediation and Arbitration

CEO Chief Executive Officer

CFO Chief Financial Officer

COO Chief Operational Officer

CPI Consumer Price Index

DBSA Development Bank of Southern Africa

DIRCO Department of International Relations and Cooperation

DKKDM Dr Kenneth Kaunda District Municipality

DTI Department of Trade and Industry

EDC Enterprise Development Centres

FDI Foreign Direct Investment

FEED Department of Finance, Economy and Enterprise Development

FIFO First in, first out

FMPPI Framework for Managing Programme Performance Information

GAAP Generally Accepted Accounting Practice

GDP Gross Domestic Product

GDS Growth and Development Summit

GVA Gross Value Added

HDIs Historically Disadvantaged Individuals

HR Human Resources

IAS International Accounting Standards

IASB International Accounting Standards Board

ICT Information Communication Technology

IFRS International Financial Reporting Standards

IT Information Technology

IDP(s) Integrated Development Plan(s)

IDPRF Inter Departmental Policy and Research Forum

IDZ Industrial Development Zone

IFRIC International Financial Reporting Interpretations Committee

INW Invest North West

IPAP Industrial Policy Action Plan

JCCI Johannesburg Chamber of Commerce and Industry

KPI Key Performance Indicator

LED Local Economic Development

MEC Member of Executive Council

MandE Monitoring and Evaluation

MIDZ Mafikeng Industrial Development Zone

MTEF Medium Term Expenditure Framework

MTSF Medium Term Strategic Framework

NDP National Development Plan

NIPF National Industrial Policy Framework

NMMDM Ngaka Modiri Molema District Municipality

NSDP National Spatial Development Perspective

NSS National Statistical System

NT National Treasury

NWDC North West Development Corporation

NWU North West University

PAA Public Audit Act

PFMA Public Finance Management Act

PDP Provincial Development Plan

PGDS Provincial Growth and Development Strategy

PIIS Provincial Industrial Implementation Strategy

PMR Professional Market Research

PPP(s) Public Private Partnership(s)

RDP Reconstruction and Development Programme

PwC PricewaterhouseCoopers

RIDS Regional Industrial Development Strategy

RSMDM Ruth Segomotsi Mompati District Municipality

SAMAF South African Micro-finance Apex Fund

SARS South African Revenue Services

SASQAF South African Statistical Quality Assessment Framework

SASSA South African Social Security Agency

SDI Spatial Development Initiative

SEDA Small Enterprise Development Agency

SEZ Special Economic Zone

SHE Safety, Health and Environment

SIC Standard Industrial Classification

SITA State Information Technology Agency

SOC State Owned Company

SME Small Medium Enterprise(s)

SMME Small Micro Medium Enterprise(s)

SONA State of the Nation Address

SOPA State of the Province Address

TIA Technology and Innovation Agency

TID Trade and Industry Development

VTSD Villages, Townships and Small Dorpies

WTO World Trade Organisation


3. STRATEGIC OVERVIEW

3.1 VISION

The heartbeat of trade, investment, sustainable economic development and job creation.

3.2 MISSION

To industrialise the economy, attract investments, promote exports and overcome the legacy of economic imbalances.

3.3 VALUES

BOTHOThe genesis of great

achievements including attitudes, thoughts and feelings of people who

are generous and willing and do not discriminate against age, race, colour,

geographic location, language or status.

INTEGRITYSuccess will come and go

but integrity is forever and means doing the right thing at all times

and in all circumstances whether or not anyone is

watching.

EXCELLENCEThe will to win, the desire to succeed and the urge

to reach our full potential are the keys that will

unlock the door to the North West Development Corporation’s excellence.

DYNAMISMProjecting a persuasive

image of a desirable and practical future is

extremely important to high morale, dynamism, consensus and in general

to help the wheels of society turn smoothly.

3.4 STRATEGIC OUTCOMES ORIENTATED GOALS

Strategic Outcome Oriented Goal 1 Make the North West Province the Trade and Investment destination of choice

Goal Statement

Trade and Industry Development are amongst the key policy imperatives of Government towards economic development and the Corporation is assigned by the Department of Finance, Economy and Enterprise Development to implement intervention projects to industrialise the economy.Industry growth has the potential to increase levels of investments and exports performance and this becomes part of this goal, also at the centre of this goal is supporting SMMEs to become the engine of the industrialisation agenda with a view to overcome the marginalisation barriers of previously disadvantaged communities to participate in business as well as businesses.

Strategic Outcome Oriented Goal 2 Generate revenue for the North West Province

Goal Statement The Corporation is self-funding and has the responsibility to generate revenue for the Province hence the goal of increasing its market share in the estate market.

Strategic Outcome Oriented Goal 3 Good Corporate Governance

Goal Statement The Corporation should ensure effective and efficient Financial Management, Human Resource Management and Information Technology Management.


4. LEGISLATIVE AND OTHER MANDATES

LEGISLATIVE MANDATE

• Constitution – Act No 108 of 1996;

• North West Development Corporation Act No 6 of 1995;

• Public Finance Management Act No 1 of 1999;

• National Credit Act No 34 of 2005;

• Rental Tribunal Housing Act No of 1999;

• Companies Act No 61 of 1973;

• South African Revenue Services Act No 34 of 1997;

• Basic Conditions of Employment Act No 75 of 1997 for setting standards for personnel;

• Broad Based Black Economic Empowerment Act No 53 of 2003;

• Employment Equity Act No 55 of 1998;

• Labour Relations Act No 66 of 1995 for managing labour relations at the work place;

• National Archive Act No 43 of 1996;

• Preferential Procurement Policy Framework Act No 5 of 2000;

• Promotion of Access to Information Act No 2 of 2000 regulates the management of access to information;

• Protection of Information Act No 84 of 1982 informs the management of organisational information; and

• Skills Development Act No 97 of 1998 to provide training to officials and build capacity.

POLICY MANDATES

• National Development Plan;

• National Growth Path;

• Industrial Development Policy Action Plan;

• Outcome 4 of the Government 12 Outcomes; and

• B-BBEE Codes of Good Practice, 2007.

PLANNED POLICY INITIATIVES

• Amendment of the North West Development Corporation; and

• Community, Private and Public Partnership Guide.


5. ORGANISATIONAL STRUCTURE

MEC FOR FINANCE, ECONOMY AND ENTERPRISE DEVELOPMENT

Honourable Wendy Nelson

BOARD OF DIRECTORS

CHIEF EXECUTIVE OFFICERMojalefa Nale

CHIEF OPERATIONS OFFICERVacant

CHIEF FINANCIAL OFFICERFrans Motshegwa

CORPORATE SERVICES Vacant

STRATEGIC AFFAIRSVacant

INTERNAL AUDIT (Outsourced)

Masengviljoen

MONITORING AND EVALUATIONNatasja Erasmus

COMPANY SECRETARYVacant

MANAGEMENT INFORMATION SECURITY SERVICES

Vacant

SMME Support

Trade and Industry Development

Property Management

Financial Accounting and Reporting

Supply Chain

Revenue and Expenditure

Risk Management

Asset Management

Human Resources

Legal Services

Information, Communication and

Technology (ICT)

Auxiliary

Research and Development

Marketing and Communications

Subsidiaries


T he Board of Directors of the North West Development Corporation is pleased to submit the Annual Report for the financial year 2014/2015.This annual report provides a perspective on the achievements and challenges experienced by the

corporation during the year under review.

The Board of Directors was appointed by the shareholder in November 2014 to, inter alia, provide impetus, direction and leadership to the organisation guided by the mandate set out by new administration following the May 2014 national elections.

The new administration under the stewardship of Premier Supra Mahumapelo brought with it a renewed focus on the critically important economic sectors of agriculture, culture and tourism. The role of the board was to drive the organisation to internalise these three areas in its strategy and operational plans.

This has taken place within the framework of the corporation’s overall mandate of promoting economic development in the province.

As a public corporation with a significant property portfolio positioned to generate income and profit for the entity, the year under review saw an increased focus on the importance of properties maintenance and upgrades. Although a long-

term undertaking with significant financial implications, some significant upgrades were completed. More extensive upgrade projects will have to be undertaken in the medium term to ensure that our properties remain competitive. This, in turn, will lead to higher occupancy rates being recorded.

Small business support, mentoring and growth remains at the heart of the corporation’s mandate, reflecting both provincial and national priorities. Challenges experienced with the disbursement of loans resulted in the loan financing be placed

CHAIRPERSON6. FOREWORD BY THE

BRIDGEMAN KHUMALOCHAIRPERSON OF THE BOARD OF DIRECTORS

“Small business support, mentoring and growth remains at the heart of the corporation’s mandate, reflecting

both provincial and national priorities.”


in abeyance. We are in the process of reviewing the SMME funding model. This review will incorporate the industry’s best practice and culminate in the creation of a rigorous and commercially sustainable proposition going forward. The new model will be implemented in the 2015/2016 fiscal.

Looking towards the future, the corporation will pursue, with even greater vigour, the province’s programme of Rebranding, Repositioning and Renewing of Villages, Townships and Small Dorpies (VTSD). Accordingly we will also implement projects in the key priority sectors of Agriculture, Culture and Tourism (ACT).

Good corporate governance and sound business practices, underpinned by a profitable and sustainable entity, remain a key priority for the board and management.

On behalf of the board, I would like to thank the shareholder, the management team and staff, as well as our tenants, stakeholders as well as partners for working together to drive the economic development of the North West Province.

Bridgeman KhumaloChairperson

“As a public corporation with a significant property portfolio positioned to generate income and profit

for the entity, the year under review saw an increased focus on the importance of property

maintenance and upgrades.”

CHAIRPERSON


BOARD OF DIRECTORSNORTH WEST DEVELOPMENT CORPORATION

Bridgeman KhumaloChairperson

Lemogang MoletsaneActing Chief Executive Officer

Jeanne-Marie BrownDirector

David McGluwaDirector


Adv. Hennie KeyterDirector

Arthur FraserDirector

Nela MojanagaDirector

Mpho NdabaDirector

Absent: Adv. Tiny Seboko (Director) and Ntombi Koloti (Director)


As we pause to reflect on the 2014/2015 financial year through this report, we realise that impressive progress has been made in building the NWDC that is synonymous with service excellence. We have earned the support of our Shareholder, the Board, our workforce, our clients as well as all our strategic partners. We remain unceasing in our pursuit to continue building on that trust, delivering transparency, integrity, competency and innovation.

This entity continues to effect positive change through far-reaching interventions by aligning with the key priorities of the North West Provincial Government such as targeting our villages, towns and small dorpies in our drive to place this Province in the pedestal of economic growth.

Our property portfolio which is the key income generator for the corporation raked in R109,115m for the 2014/2015 financial year. The corporation dispensed R16,782m to assist SMMEs across all districts of the North West Province. The Achilles’ heel in the case of the SMME portfolio remains the issue of collections and this has resulted in the corporation to revise its financing model to ensure that more SMMEs benefit from this facility.

From a business perspective we have made great strides in establishing the future positioning of NWDC through various commercial transactions, including the acquisition of the Hotel and Game Farm in Christiana which has accorded the company a monumental potential. Transactions such as these

will strengthen our balance sheet; continue to broaden our horizons; bolster our investments thereby effectively setting the NWDC for future growth.

Our growth strategy involves amongst others our range of products and services as well as growing geographically. On this note, the organisation has identified the establishment of Enterprise Development Centres to act as one-stop shops designed to cater for the needs of small business entrepreneurs. We do so to enforce our renewed commitment to place communities at the heart of our business approach.

The last quarter of the financial year saw the planning of special projects gain momentum, with full implementation scheduled for the 2015/2016 fiscal. Planned projects include, amongst others, the revitalisation of the township economy through tuck-shops and life markets; establishment of bakeries in villages; establishment of fresh produce markets to stimulate the agricultural economy; and establishing Special Economic Development Zones.

The NWDC holds its most important asset, its employees, close to its heart. The job evaluation exercise is work in progress, coupled with the necessary benchmarking and all its attendant matters with a view to rectify the disparities that had beleaguered this corporation for more than seven years.

As we do this, we would be mindful of attracting, developing and retaining the right individuals and teams that can enhance our culture and bring the required capability for the sustainable success of the corporation.

ACTING CHIEF EXECUTIVE OFFICER

7. OVERVIEW BY THE

LEMOGANG MOLETSANEACTING CHIEF EXECUTIVE OFFICER


As we move forward, a focus on the future would be to engage in projects that would have tangible impact in the lives of our communities. We intend working with our members and communities to identify the issues they want us to champion on their behalf. A case in point is the Itsoseng Shopping Complex development, which we have started to work on and is inextricably linked to our corporate strategy. This development, together with the long outstanding refurbishment of the Development House, a domicile of our Shareholder, would be completed in the succeeding fiscal year.

Our focus remains firm as we start the journey of putting our purpose into action and realising our goal of truly being a purpose-led business. The corporation is pondering at changing its logo in the next financial year. The dynamism and vibrancy of the envisaged logo would be designed as an endorsement of our pristine values of excellence as well as reflect the spirit of a renewed NWDC.

In the next financial year, we intend to champion the creation of decent work. The economic inclusion and empowerment of young people, women and people with disabilities as sectors that are significantly marginalised from mainstream economic activities, will form the cornerstone of our development trajectory.

Building a profitable yet sustainable organisation is one of the greatest challenges facing any forward-looking business. This has been a period of significant achievement and I would like to thank our people for their tireless work and enthusiasm, which

is making our business more sustainable year-on-year.

Lastly, I would like to thank the Shareholder for its outstanding guidance during the year under review. I wish to also salute our Board for its continued dedication, support, total commitment and expert inputs to the work and life of this organisation. This support made us even more focused and well sharpened for the challenges ahead. A word of gratitude goes to all our clients and tenants for their continued support. Our management and exceptional employees remain our most valuable asset and therefore deserve a particular note of thanks for their dedication and hard work through the difficult merger period and its related uncertainties. We have achieved all these strides through your diligence and commitment.

Whilst we humbly embrace our achievements during the year under review, we also realise the truth embedded in Nelson Mandela’s words: “I have discovered the secret that after climbing a great hill, one only finds that there are many more hills to climb.” We are ready as ever to climb the many hills that lie ahead of us.

Lemogang MoletsaneActing Chief Executive Officer

“I have discovered the secret that after climbing a great hill, one only finds that there

are many more hills to climb.”

ACTING CHIEF EXECUTIVE OFFICER


PART B


PERFORMANCE INFORMATION


The Chief Executive Officer is responsible for the preparation of the Public Entity’s performance information and for the judgements made in this information.

The Chief Executive Officer is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of performance information.

In my opinion, the performance information fairly reflects the actual achievements against planned objectives, indicators and

targets as per the strategic and annual performance plan of the Public Entity for the financial year ended 31 March 2015.

The North West Development Corporation (SOC) Ltd performance information for the year ended 31 March 2015 has been examined by the external auditors and their report is presented on page 63.

The performance information of the Entity set out on page 14 to 32 were approved by the Board of Directors.

1. STATEMENT OF RESPONSIBILITY

STATEMENT OF RESPONSIBILITY FOR PERFORMANCE INFORMATION

2. AUDITOR’S REPORT: PREDETERMINED OBJECTIVES

The Auditor-General South Africa (AGSA) currently performed the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on performance against predetermined objectives is included in the Report to Management, under the

Predetermined Objectives heading in the Report on other legal and regulatory requirements’ section of the Auditor’s Report.

Refer to page 63 of the Auditors Report, published as Part E: Financial Information.


3. OVERVIEW OF PERFORMANCE

The Corporation’s Performance Information provides results in terms of priorities set in line with the strategic goals for the financial year 2014/2015. The report is a combination of Quarter 1, 2, 3 and 4 on achievements, progress made and challenges encountered.

The Corporation’s mandate as per outlined goals of the Strategic Plan is to ensure strategic implementation of the Department of Finance, Economy and Enterprise Development and to increase the developmental impact through the Property portfolio, SMME funding and Project Management by leveraging the private sector investment and thereby creating new job opportunities.

The strategic deliverables as outlined by the Board of Directors for the year under review have been streamlined to realise the most efficient and effective ways of maximising delivery and profitability. The performance of the Corporation was consistently monitored through performance reports, considered by Management and respective Board of Director’s Committees on a quarterly basis.

3.1 SERVICE DELIVERY ENVIRONMENT

TRADE AND INDUSTRY DEVELOPMENT

The South African economic growth continued to slow down in 2014, recording only 1.5%, the weakest performance since the global financial crisis. The economy was affected by its most protracted industrial action since the end of apartheid and significantly weak demand from trading partners. Weaker commodity prices also meant the value of exports was adversely affected.

Various infrastructure gaps, notably inadequate energy supply, weak domestic demand, and anemic investment rates also acted as a drag on growth. At provincial level, it is imperative that infrastructure developments as well as energy supply be improved significantly if the North West is to realise its plans of growing the economy by at least 6%.

The Province is largely rural and lacks adequate resources to attract major Foreign Direct Investments. According to Ernst and Young’s Africa Attractiveness Survey, South Africa, the SADC region’s anchor economy netted 121 FDI projects (down 17.7%) although the country was the FDI champion in the region (16.5% of all FDI into Africa) and most of the FDI goes to large metropolitan areas due to ease of access to markets and infrastructure.

SMME SUPPORT

The key output for the Small Business Support unit includes the number of companies that have been assisted in terms of accessing funds, the total amount of money disbursed to small businesses and the number of companies accepted into the incubation programme.

The unit assisted small enterprises to access funds in a form of a loan, both long term loans and bridging finance loans. However, collection proved to be a challenge in some instances. This will in the future be corrected by way of introducing non-financial services to ensure that the small enterprises are empowered with the knowledge to better understand how to competitively run their businesses, which in turn will ensure that they are in a position to repay the loans granted to them.

The unit will in the next financial year focus on non-financial services which will include amongst others the Business Advisory Services, Aftercare and Mentorship programmes. It is the view of the NWDC that the small businesses don’t only need finance to survive but a holistic development which will include education and skills transfer.

PROPERTY MANAGEMENT

The main objective of the Property Management and Maintenance Unit is to provide local and international investors with industrial, commercial and retail properties. These properties are situated in Ngaka Modiri Molema, Bojanala, Dr Ruth Segomotsi Mompati and to lesser extent Dr Kenneth Kaunda District Municipalities. The Unit did not achieve four out of five of its performance indicators due to inadequate personnel because of ill health and attainment of pensionable age of staff.

3.2 ORGANISATIONAL ENVIRONMENT

The organisational environment for the financial year 2014/2015 was challenging and change was a constant factor during this year. A new structure was approved whereby employees were placed and vacancies became a challenge. The NWDC embarked on an exercise to design a new structure and as a result, the filling of Senior Management positions was placed on hold. A comprehensive process of compiling revised job descriptions, job evaluations and job designs was also undertaken.

The current administration adopted a new strategic direction and the NWDC had to align their strategy and vision in line with the provincial priorities and shareholders mandate.


After several strategic sessions with the Accounting Authority, the Board of Directors and Management it was proposed that the structure be re-aligned to the new mandate and focus areas. To minimise disruption, the filling of vacancies is placed in abeyance until the process of redesigning the structure has been completed.

An additional challenge in the organisational environment incorporates the dilapidated state of our buildings and long outstanding debts on our debt book. NWDC has embarked on the process of assessing all properties to determine their state, current value and investment value. NWDC has also embarked on the process of outsourcing the debt book in terms of the long outstanding debts to strengthen our balance sheet.

3.3 KEY POLICY DEVELOPMENTS AND LEGISLATIVE CHANGES

The North West Development Corporation has since January 1999 been incorporated as a company in terms of the Companies Act.

From 1 April 2000 the Public Finance Management Act 1 of 1999 (PFMA) took effect. At all times since the enactment of the PFMA, the NWDC has been listed in Part D of Schedule 3 of the PFMA as a Provincial Government Business Enterprise.

When the new Companies Act 71 of 2008 was enacted, Section 11 changed the (Pty) into (SOC) (State Owned Company).

The NWDC performs its functions in terms of the above-mentioned legislation.

During the period under review, no major changes were made to legislation that had any effect on the operations of the NWDC.

3.4 STRATEGIC OUTCOME-ORIENTATED GOALS

The strategic goals of the North West Development Corporation, as encapsulated in the mission statement, are pursued alongside upholding the Organisation’s values. The table that follows contains the North West Development Corporation’s strategic goals. Details pertaining to the attainment of these goals alongside unit-specific performance indicators are reflected below.

STRATEGIC GOALS STRATEGIC OBJECTIVES PERFORMANCE INDICATORS

To industrialise the economy to stimulate export performance thus making the North West Province the trade and investment destination of choice

To facilitate investment, promote exports and to stimulate economic growth and job creation

Percentage of enquiries attended to

Percentage of enquiries converted into leads

Percentage of leads facilitated and developed into projects

Number of inward and outbound trade and investment missions facilitated

Develop, implement and review Marketing and Communication Strategy

Compile quarterly Economic Data Reports

Number of investment marketing initiatives

Number of communication and branding of the NWDC activities

To implement industrialisation development projects

Number of industrial development projects implemented

Compilation of bi-annual industry mapping and value-chain analyses report

To develop and support the SMME sector in the Province

Total amount in loans disbursed to SMMEs (approved applications)

Develop and implement an Incubation Strategy

Number of enterprises entering Incubation Programme

Generate revenue for the North West Province

Increase market share of the Corporation in the real estate industry and creating revenue towards self-sustenance of the organisation as well as increasing provincial revenue

Percentage of current rentals collected monthly

Percentage collection of current arrear rentals

Percentage of increase in occupancy rate

Percentage of customers retained

Percentage of maintenance cost spend from total revenue received

Good Corporate Governance

To provide effective strategic leadership to ensure sustainable economic, social and environmental performance

Percentage in performance achieved by the NWDC


STRATEGIC GOALS STRATEGIC OBJECTIVES PERFORMANCE INDICATORS

Good Corporate Governance (continued)

To ensure efficient and effective financial management

Number of Board meetings held

Compile and submit an Annual Report

Annual submission of the Strategic Plan

Annual submission of the Annual Performance Plan

Annual submission of the Shareholders Compact

Quarterly performance review sessions

Compile and submit Quarterly Reports

Develop, implement and review Performance Monitoring and Evaluation Framework

Quarterly Performance Reports

Ensure compliance with the PFMA and Treasury regulations

Percentage increase in revenue

Percentage of project funding recovered

To ensure efficient and effective human resource management

Quarterly Occupational Health and Safety compliance review reports

Conduct bi-annual Staff Performance Appraisals

Ensure percentage of Staff Skills Development implemented as identified on training and development plan

Annual review of Human Resource Policies

Percentage of recovery of long outstanding debts (bad debts)

Turnaround time in responding, processing and communicating litigations received

To ensure efficient and effective information technology management

Develop, implement and review ICT Strategy


PROGRAMME 1: ADMINISTRATION AND SUPPORT

SUB-PROGRAMME 1.1: OFFICE OF THE CEO

Purpose of the Programme: To provide effective overall leadership of the Organisation and its programmes

STRATEGIC OBJECTIVE

PERFORMANCE INDICATOR

ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015

DEVIATION FROM PLANNED

TARGET TO ACTUAL

ACHIEVEMENT 2014/2015

COMMENTS ON DEVIATIONS

To provide effective strategic leadership to ensure sustainable economic, social and environmental performance

Percentage in performance achieved by the Organisation

80% 85% 67% 18% Underperformance can largely be contributed due to Programme 2.2: Project Development and Support and Programme 3: SMME Support being placed in abeyance to redesign the funding model

Number of Board and Sub-Committee Meetings held

20 11 33 22 Target exceededAfter the amalgamation of the three entities, serious challenges were experienced with staff, salary disparities, change management and other operational matters. This resulted in additional Board and committee meetings being held to address these challenges

Compile and submit an Annual Report

1 1 1 0 Target achievedThe printed Annual Report was delivered to FEED on 4 September 2014

Annual submission of the Strategic Plan

0 1 0 1 The Strategic Plan 2015-2020 was approved by the Board on 2 April 2015 and submitted to FEED on 7 April 2015

Annual submission of the Annual Performance Plan

1 1 0 1 The Annual Performance Plan for 2015/2016 was:

• Approved by the Board on 2 April 2015;

• Submitted to FEED on 7 April 2015; and

• Tabled at the Provincial Legislature on 5 May 2015

Annual submission of the Shareholders Compact

1 1 0 1 The Shareholder Compact will be reviewed and signed in Q1 of 2015/2016

Quarterly Performance Review Sessions

0 4 1 3 The Organisation was going through a restructuring exercise.

Performance Review Reports were compiled although the Review Sessions did not take place due to time constraints in meeting deadlines

Compile and submit Quarterly Reports

4 4 4 0 Target achieved

Develop, implement and review Performance Monitoring and Evaluation Framework


Quarterly Performance Reports

0 4 3 1 This organisation was going through a restructuring exercise.

4. PERFORMANCE INFORMATION BY PROGRAMME


NARRATIVE

The year 2014/2015 brought about successes and challenges. Underperformance can largely be contributed due to:

• Programme 2.2: Project Development and Support whereby the funding to execute the industrial projects was not received due to changing priority focus; and

• Programme 3: SMME Support due to the distribution of loan funding being placed in abeyance to redesign the funding model

The Strategic Plan was finalised and approved by the Board on 2 April 2015. The Annual Performance Plan for 2015/2016 was successfully tabled at the Legislature on 5 May 2015.

Shortage of staff and skills remains a challenge and a process of redesigning the organisational structure was initiated. Debt collection remains a challenge especially on long outstanding debt. The process of appointing a debt collector is in progress and will be implemented in 2015/2016.

STRATEGY TO OVERCOME AREAS OF UNDERPERFORMANCE

• To finalise and implement the new organisational structure;

• To partner and get involved with joint ventures to ensure a larger impact is possible; and

• To strengthen the legal department to ensure debt collection is aggressively addressed.

LINKING PERFORMANCE WITH BUDGETS

The overspending is mainly due to audit fees as the current scope included interim audit. The financial information as presented in the table below outline the Office of the CEO’s expenditure:

SUB-PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R

(OVER)/UNDER EXPENDITURE

RBUDGET

R

ACTUAL EXPENDITURE

R


R

Office of the CEO 7 279 000 9 271 775 (1 992 775) 7 696 002 5 301 422 2 394 580

TOTAL 7 279 000 9 271 775 (1 992 775) 7 696 002 5 301 422 2 394 580

SUB-PROGRAMME 1.2: FINANCE

Purpose of the Programme: To ensure efficient and effective financial management

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To ensure effective and efficient financial management

Ensure 100% compliance with the PFMA and Treasury Regulations

42% 100% 82% 18% • The three year internal audit strategic plan was only developed in the third quarter of the financial year

• The final strategic document was not submitted within the regulated timeframe

Percentage increase in revenue

1.45% 5% 8% 3% Target exceeded because of the following: • There was an increase in occupancy

of the investment property• Sale of MIDZ inventory • Recoveries from Insurance claims

Percentage of project funding recovered by NWDC

N/A 100% 100% 0% Target achieved because NWDC managed to recover all the funds spent on the SEZ projects


NARRATIVE

Viability

The financial health of the Organisation and goal towards self-sustenance has over the years been mainly obstructed by the long outstanding debt of over R100m owed to the Development Bank of Southern Africa (DBSA).

The other challenge within the Organisation is to improve its debt collection and this also has an impact on the Organisation’s long term viability.

These two are the major challenges facing the Organisation.

The Finance sub-programme has already started in the year under review to give these challenges attention. Operationally, the Organisation will embark on Business Process re-engineering on the Finance, Legal and Property divisions, thus ensuring consistent processes and maximum revenue collection for the Organisation.

Over-expenditure

The reason for overspending in the Finance sub-programme resulted from the approved debtors write-off amounting to R16,812m. Excluding the write-off the sub-programme underspent by R7,9m.


The Finance sub-programme consists of four sub-sub-programmes namely, Financial Accounting and Reporting, Supply Chain Management, Revenue and Expenditure Management and Asset Management. The Risk Management will in future be located under the leadership of the Office of the CEO sub-programme.

If the Finance division is fully capacitated as per the approved organogram, it will deliver all the financial services needed by the Organisation, including services at regional and/or branch level. However, an intense skills upgrading programme will also need to be initiated to update the skills of the current workforce in the division.


The financial information as presented in the table below outline the Finance Unit’s expenditure:

SUB-PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

Finance 24 019 000 32 901 037 (8 882 037) 27 338 008 19 753 691 7 584 318

TOTAL 24 019 000 32 901 037 (8 882 037) 27 338 008 19 753 691 7 584 318


SUB-PROGRAMME 1.3: CORPORATE SERVICES

Purpose of the Programme: To ensure efficient and effective human resource and information technology management

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To ensure efficient and effective Human Resource and Information Technology Management

Quarterly Occupational Health and Safety compliance review reports

0 4 1 3 Occupational Health and Safety is a new portfolio within the organisation and the process of appointing Safety representatives and starting a committee was challenging due to the requirements and processes that needed to be followed. Training of representatives and the committee needed to take place prior to starting implementation and this process delayed the proper reporting of inspections and resulted in the under-achievement. Safety Representatives are now appointed, a committee is appointed and training was conducted.

Conduct bi-annual Staff Performance Appraisals

0 2 0 2 Challenges remained with completing performance agreements and assessments due to the job descriptions not being finalised. In the following financial year the performance agreements will be implemented in line with the new organisational structure and new job descriptions.

Ensure percentage of Staff Skills Development implemented as identified on training and development plan

3% 25% 34% 9% Even though the performance appraisals were not finalised, there was a tremendous need for training in Monitoring and Evaluation and NICOR systems. Only in-house training was done on both Monitoring and Evaluation and NICOR system in quarter 3.

The training in line with performance management will be done during the next financial year 2015/2016.

100% Human Resource Policy reviews

0% 100% 50% 50% The first phase which was the review of the 8 policies was done in quarter 4. This process was outsourced to PwC.

The second phase, which involves the consolidation of HR policies to be in line with the new amalgamated entity, will be finalised in the financial year 2015/2016.

Develop, implement and review ICT Strategy

0 1 0 1 A ICT Strategy was drafted and only needs consultation and approval.

Percentage of recovery of long outstanding debts

8.47% 10% 8% 2% The debt book remains a challenge and the planned recovery was lower due to the increase of the debt book. Methods to address this matter is being considered such as putting a cap on interest after a certain period and outsourcing the debt book on long-outstanding debt.


STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



Turnaround time in responding, processing and communicating litigations received

N/A 7 days 6.1 days 0.9 days This is a positive deviation and indicates that the team is focused. The deviation is well within the normal expectation and does not need serious re-alignment. It could be considered as a achieved instead of over-achievement.

Corporate Services (continued)

NARRATIVE

Corporate Services has experienced challenges during this financial year in terms of achieving their set targets due to shortage of staff and circumstances surrounding change management. Targets are realistic and can be achieved under normal circumstances. There are challenges overflowing to the new financial year such as a shortage of staff, skills shortages and a challenging debt book in lthe egal department. The NWDC is positive that these challenges can be remedied in the new financial year.


A comprehensive process of re-aligning the structure has been embarked on and this will be accompanied by competency assessments to align the right people with the right positions. This will ensure better results. In addition, the NWDC are exploring ways to improve debt collection and credit control to reduce our debt book.


The under-expenditure is due to the vacant positions not filled although budgeted for. The financial information as presented in the table below outline the Corporate Services Unit’s expenditure:

SUB-PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

Corporate Services 99 016 000 59 325 849 39 690 151 63 035 022 26 353 753 36 681 269

TOTAL 99 016 000 59 325 849 39 690 151 63 035 022 26 353 753 36 681 269

SUB-PROGRAMME 1.4: STRATEGIC AFFAIRS

Purpose of the Programme: To facilitate research and development, as well as marketing and communications

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To facilitate Research and Development, Marketing and Communications and the establishment of subsidiaries

Develop, implement and review Marketing and Communication Strategy


Compile Quarterly Economic Data Reports



STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To facilitate Research and Development, Marketing and Communications and the establishment of subsidiaries

Number of website "hits" generated through web-based marketing initiatives

12 561 3 300 5 497 2 197 Target achieved

Number of investment marketing initiatives

N/A 24 17 7 The target for investment marketing initiatives was not met primarily due to two existing vacancies in the Unit.

Number of communication and branding of the NWDC activities

N/A 24 28 4 Target achievedThe Unit over-achieved on the KPA in question as they participated in a number of provincial-led events which were arranged outside of the planned activity plan of the Unit.

Strategic Affairs (continued)

NARRATIVE

Achievements: Research and Development

Quarterly Economic Data Reports were compiled and published on the NWDC webpage. The reports included information on the global economy, developed and emerging economies, South Africa and the North West province; South Africa’s global competitiveness; foreign direct investment (FDI); trade; summaries of the State of the Nation Address (SONA) by the Hon. President of South Africa, Jacob Zuma and the National Budget for 2015; focus areas of the North West Province as indicated in the State of the Province Address (SOPA) by Premier, Hon. Supra Ramoeletsi Mahumapelo; and the Budget Speech of the MEC of Finance, Economy and Enterprise Development (FEED), Hon. Wendy Nelson.

Sector information was supplied on the future of manufacturing in South Africa, an overview of the future of mining and the platinum industry in the North West province including issues of automation, investments in mining and various fuel cell initiatives, the Energy Profile of Africa and renewable energy, agriculture (Mega Food Parks in India), property development and SMMEs. Recommendations were also made.

NWDC Research and Development also participated in the Task Team with FEED and NWU to develop a Strategy “Towards an Integrated Manufacturing Strategy for the North West Province – Innovation through Diversity” that was completed in February 2015. A condensed overview of the strategy was also published on the NWDC website.

A total of 95 desktop studies and intelligence items were sourced and distributed throughout the 2014/2015 financial year.

Country profiles were assembled for Malaysia, Vietnam, Russia and Japan as well as a list of agreements between South Africa and these countries were also sourced.

An Outbound Mission Framework and Policy was compiled as well as a Situational Analysis for the NWDC Strategic Plan 2015/2016 and the generic NWDC slides were updated with the most recent information.

In terms of engagement with the economic development community the following engagements were participated in or arranged:

• Unit members have attended a training session on the South African Statistical Quality Assessment Framework (SASQAF) compiled by the National Statistical System (NSS) and Census 2011 Supercross.

• NWDC Research and Development unit is a member of the Inter-Departmental Policy and Research Forum (IDPRF) convened by the North West Planning Commission in the Office of the Premier.

• Conferences were attended on:

- The Africa Economic Outlook Conference of IHS Global Insight

- The North West IHS Global Insight Rex Road Show that focusses on the North West Province

- Frontier Advisory Forum “Future of Manufacturing”

- The North West Provincial Government and NWU Research Showcase as well as chaired a session on Trade and Investment

- The Innovation Bridge Conference of DST and recommendations were made for NWDC to consider.


- The Dti Black Industrialists Indaba

- The Electricity Grid Infrastructure Strategic Environmental Assessment Workshop (EGI SEA) Workshop and submitted the Platinum SEZ documentation to be recorded in the Electricity Grid.

- The Launch of the World Trade Organisation (WTO) Chair at the North West University (NWU). The Trade Unit of the NWU is one of seven institutions in the world that was selected.

- Meeting with British Companies at JCCI

▫ The NWDC Research and Development Unit arranged and assisted with:

- An Innovation Workshop between NWDC, NWU and the Technology and Innovation Agency (TIA), to discuss the regional innovation body.

- A meeting with the EU Ambassador as well as with the EU Economic Councillors on cooperation with NWDC.

- The Presentation of the Exporters Round Table and the Monetary Policy Forum of the South African Reserve Bank in Rustenburg.

Marketing and Communications

The year under review saw a continuation of the comprehensive brand roll-out of the NWDC brand identity. The amalgamation of NWDC and Invest North West necessitated the development of a new company logo in the previous financial year, of which the roll-out of various brand elements continue during the 2014/2015 fiscal. Highlights of brand roll-out activities include a new-look website going live and visible signage being erected at various NWDC branch offices.

The Marketing and Communication unit sustained brand awareness and visibility among NWDC’s various stakeholder audiences through a number of activities. These included extensive community outreach as part of the 67 Minutes for Mandela campaign, hosting the NWDC Leopard Park Open Golf Day and participating in numerous community outreach projects of both the FEED and the Premier’s Office such the

Setsokotsane events, Bokone Bophirima Entrepreneurship Summit and FEED’s Women Symposium.

During the third quarter, the NWDC was awarded three prestigious PMR (Professional Market Research) Awards, an achievement that was extensively published through the PMR Magazine, the NWDC’s website, e-newsletter and in the Noordwester and Mafikeng Mail community newspapers. Lauded for their contributions, NWDC received awards in the following categories:

• Diamond Arrow Award for Companies/Institutions held in high esteem as good corporate citizens based on their corporate responsibility initiatives and investments over the past 12 months

• Diamond Arrow Award for Companies/Institutions doing most in their sectors over the past 12 months to stimulate the economic growth and development of the North West Province

• Golden Arrow Award for Companies/Institutions doing most to enhance and promote sustainable development


Research and Development

• Implementing the Knowledge Management function by appointing a Knowledge Management Specialist.

• Contribute to an innovation support body in the North West Province through the development of a partnership between the Office of the Premier, NWDC, the North West University (NWU) and the Technology and Innovation Agency (TIA) to support innovation in the Province.


The unit did not spend all of its allocated budget as a number of external exhibitions that had been budgeted for had not been approved for participation due to other operational and provincial priorities. The financial information as presented in the table below outline the Strategic Affairs Unit’s expenditure:

SUB-PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

Strategic Affairs 5 804 000 1 024 077 4 779 923 - - -

TOTAL 5 804 000 1 024 077 4 779 923 - - -


PROGRAMME 2: TRADE AND INDUSTRY DEVELOPMENT

SUB-PROGRAMME 2.1: INVESTMENT FACILITATION AND PROMOTIONS

Purpose of the Programme: To facilitate and coordinate the activities of the NWDC in implementing industrial development projects; marketing the products from the North West to increase exports and market the North West Province as an investment destination of choice

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To facilitate investment, promote exports and to stimulate economic growth and job creation

Percentage of enquiries attended to

N/A 85% 74% 11% Even though all enquiries were attended to, the quality of enquiries received did not lead to bankable projects.

Percentage of enquiries converted into leads

22.63% 30% 38% 8% Target achieved

Percentage of leads facilitated and developed into projects

0% 15% 0% 15% One cooperative was assisted in accessing grant funding for R8m. Increasing leads can be enhanced through resourcing the project support unit.

Number of inward and outbound trade and investment missions facilitated

N/A 6 0 6 Missions were planned but not approved as this was a transitional period.

NARRATIVE

During the reporting period strategic relationships were established with the District Municipalities and some Local Municipalities where synergies in taking forward key projects were identified. As an extention to creating strategic partnerships, the Unit managed to establish a working relationship with the African Development Bank with a view to access both grants and loans for provincial mega projects like the Mahikeng Airport Precinct and the International Convention Centre.

A major important shift that the Unit wants to suggest in order to accommodate emerging entrepreneurs and small operators in all sectors, is the introduction of a well-resourced project preparation unit within the Corporation so that leads can be converted faster and in numbers into bankable projects. This will be in line with international practice where SMME’s are expected to deliver on jobs and economic growth.

One cooperative was assisted in accessing grant funding to the value of R8m and implemented projects in tourism and agriculture.

Despite having been unable to physically carry out its plan of undertaking 6 outbound missions due to transitional challenges, the Unit’s regular presentations to ambassador designates will go a long way in establishing a footprint of the Province as an investment destination in their respective countries of operation.

The effort of reaching markets and foreign investors was consolidated through the Trade and Industry Unit’s presentation of provincial opportunities to 42 officials of DIRCO who are due to take their new assignments in South Africa’s foreign offices across the globe.

Recognising the need to also heighten the level of awareness of local potential investors and internal staff of the Corporation in different work stations, the Unit hosted an Incentives Workshop jointly with the Department of Trade and Industry. The objective of the workshop was to ensure that key building blocks that lead to actual investment are strengthened through cascading of information as broadly as possible because information is empowerment.



• To overcome some of the challenges the Unit assisted in the development of a new strategy to be aligned to the new provincial priorities.

• Facilitate exporter training for new exporters so as to develop exports.

• Give advice to project promoters to further develop their offering in line with funding requirements.

• Request permission in advance for qualified companies for trade and investment missions.

• Promote and develop provincially based incentives together with local municipalities.

• There is need to canvas across the Province for seed and project funding that can assist in project development.


The Unit could not get approval of their major budget item which is outbound missions and therefore the under-expenditure. The financial information as presented in the table below outlines the Trade and Industry Development Unit’s expenditure:

SUB-PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

Trade and Industry Development

19 026 000 2 101 514 16 924 486 8 976 152 4 919 765 4 056 387

TOTAL 19 026 000 2 101 514 16 924 486 8 976 152 4 919 765 4 056 387

SUB-PROGRAMME 2.2: INDUSTRIAL PROJECT DEVELOPMENT AND SUPPORT

Purpose of the Programme: To implement high-value high-impact industry development projects and support industries across sectors

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To implement industrialisation development projects

Number of industrial development projects implemented

N/A 4 0 4 The requested funding to execute industrial projects was not received due to changing priority focus. Efforts are under way to implement the SEZ project and a project office is already in place

Compilation of Bi-Annual Industry mapping and value-chain analyses report

N/A 2 0 2 Funding was not allocated for this purpose. The National Agricultural Marketing Council were approached for value chain analysis but funding was also not secured

NARRATIVE

The development of the SEZ follows a path and phases that were determined by the dti. The performance targets were as such formulated with the assumptions that the project will pass the application and approval for designation milestone. At the end of the financial year, the application milestone was not reached; the Department of Economy and Enterprise Development was undertaking a strategic review engagement with the dti on behalf of the North West Provincial Government.


There is significant progress to implement the SEZ in the Bojanala District. The project is currently in the application for designation phase. Once the Department of Trade and Industry has approved the application, the project will be able to unlock funding for infrastructure in the zone. In terms of the project plan, the following activities will be implemented in the next financial year: the site clearance, the fencing of the zone, layout design and the construction of the bulk infrastructure including roads, water and the ICT.


NARRATIVE

The target and performance indicators were amended during the course of the year to fit with the new strategic objectives of the NWDC. The Unit has assisted a total number of 160 SMME with funding to the total amount of R16,782m.


The Unit has not achieved its targets due to the loan funding that was placed on hold until such time that the Unit finalised the review of the SMME Funding Model.


The financial information as presented in the table below outline the SMME Support Unit’s expenditure:

SUB-PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

SMME Support 6 866 000 259 282 6 606 718 14 652 004 4 795 271 9 856 732

TOTAL 6 866 000 259 282 6 606 718 14 652 004 4 795 271 9 856 732

PROGRAMME 3: SMME SUPPORT

SUB-PROGRAMME 3.1: BUSINESS FINANCE

Purpose of the Programme: To develop and support the small, medium and micro enterprises in the Province

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL




Total amount of loans disbursed to SMME's with approved applications

N/A R20m R16,782 million

R3,218 million

The loan funding was placed on hold until such time that the Unit finalised the reviewing of the SMME Support Model


SUB-PROGRAMME 3.2: ENTERPRISE ADVISORY AND AFTERCARE SERVICES

Purpose of the Programme: To develop and support the small, medium and micro enterprises in the Province

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL




Develop and implement an Incubation Strategy

0 1 0 1 The realignment of the organisational Annual Performance Plans has contributed to the Incubation Strategy not being completed on time. This also lead to the target to incubate 30 SMME's not reached.

Number of enterprises entering the Incubation Programme

0 30 0 30

NARRATIVE

The realignment of the organisational Annual Performance Plans has contributed to the Incubation Strategy not being completed on time. This also lead to the target to incubate 30 SMMEs not reached.


The NWDC will work with relevant stakeholders and utilise the 12 planned Enterprise Development Centres around the province of which 4 will be utilised as incubation centres.


PROGRAMME 4: PROPERTY MANAGEMENT

SUB-PROGRAMME 4.1: PROPERTY INVESTMENT AND MANAGEMENT

Purpose of the Programme: To increase market share of the Corporation in the real estate industry and creating revenue towards self-sustenance of the Organisation as well as increasing provincial revenue

STRATEGIC OBJECTIVE


ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To increase market share of the Corporation in the real estate industry and creating revenue towards self-sustenance of the Organisation as well as increasing provincial revenue

Percentage of current rentals collected monthly

90.6% 85% 88% 3% Target exceededThis target was achieved due to the following:

• Additional effort to collect 100% current rental by Tenant Coordinators;

• The Unit introduced the stop order (naedo) facility for monthly rental payments (particularly new leases and renewals) with tenant; and

• In addition to the above, the Corporation introduced constant reminders via sms to tenants to pay their accounts.

Percentage collection of current arrear rentals

11.03% 30% 4% 26% There has been an increase in the number of defaulters. Even though there has been written arrangements by defaulting tenants to repay their debt, they continued to default on the payments.

Percentage of increase in occupancy rate

4.87% 5% 3% 2% Amongst others, the following are reasons for not attaining this target:

• High level of burglaries, robberies and vandalism in and around our properties create fear with potential investors.

Customers retained

97.03% 95% 91% 4% • Some of the tenants were closed due to legal action taken against them;

• Some tenants businesses did not perform and they closed voluntarily;

• Tenants took occupation into smaller properties due to their budget constraints and/or economic conditions

NARRATIVE

The Programme has underperformed on three of the four of its performance indicators, and this is attributable to the following:

Percentage Collection of Arrears: Major debtors/tenants such as AM24 Tannery in Mogwase, Focus Wood in Babelegi and Kariba Furnishers in Babelegi have been liquidated and as such we could not recover expected payments from Liquidators/Business Rescue. In addition to the above, the legal process to recover outstanding debt is cumbersome and long.

Percentage Increase in Occupancy Rate: Most properties are approximately 45 years old and have deteriorated to a point where they cannot be let out without spending substantial

amounts of money in refurbishing them. In some instances, we could not guarantee supply of electricity (due to challenges experienced by Eskom) to potential tenants. As a result of the above, the Unit could not attain the target.

Customer Retention: Most of our properties are located in areas, that are some distance from major markets. Therefore the acquisition of raw material and delivery of finished goods are fairly expensive compared to similar businesses which are closer to major markets. This means that rental amounts required from our tennants end up being not being competitive. The criminal activity in and around our industrial parks also contribute to our inability to retain customers, particularly in the Garankuwa and Babelegi Industrial Parks.



The Property Investment and Management

Percentage Collection of Arrears: The Corporation has identified the need to intensify and strength our collection methods and a dedicated sub-unit to follow-up on outstanding debt will be established in the 2015/2016 financial year. This will go a long way in addressing arrears and taking legal action timeously.

Percentage Increase in Occupancy Rate: The Corporation will investigate possibilities of introducing alternative energy technology to our industrial parks in order to have uninterrupted power supply.

Customer Retention: In order to retain our customers, there is a need to reduce criminal activities within our industrial parks. The Corporation is currently negotiating with the Department of Trade and Industry (the Dti) to subsidise the construction of a screen/perimeter wall around our industrial parks with access control.


The under-expenditure can be attributed to under-staffing of the Unit. The approved structure requires 174 positions and 90 of these positions are vacant. This represents 51,7% vacancy rate. The unfilled positions are a result of on-going amalgamation and repositioning of the Entity.

SUB-PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

Property Management 75 729 000 44 425 077 31 303 923 72 943 005 63 559 786 9 383 219

TOTAL 75 729 000 44 425 077 31 303 923 72 943 005 63 559 786 9 383 219

SUB-PROGRAMME 4.2: PROPERTY MAINTENANCE

Purpose of the Programme: To increase market share of the Corporation in the real estate industry and creating revenue towards self-sustenance of the Organisation as well as increasing provincial revenue

STRATEGIC OBJECTIVE PERFORMANCE INDICATOR

ACTUAL ACHIEVEMENT

2013/2014

PLANNED TARGET

2014/2015

ACTUAL ACHIEVEMENT

2014/2015


TARGET TO ACTUAL



To increase market share of the Corporation in the real estate industry and creating revenue towards self-sustenance of the Organisation as well as increasing provincial revenue

Percentage of maintenance cost spent from total revenue received

4.79% 6% 3% 3% The NWDC should implement a Preventative Maintenance Plan to enable the Corporation to budget accordingly and to prioritise those buildings that needs to be refurbished and/or renovated

NARRATIVE

Due to the high level of vandalism to our properties, a decision to repair/renovate properties only as and when we have a tenant was adopted, seeing that renovating vacant premises result in them being vandalised time and time again. All the incidents are reported to the South African Policy Service and every Tenant Coordinator have numbers of the nearest police station where the NWDC own properties.


In order to improve occupancy, a decision to renovate at least ten properties per annum, to make them ready for occupancy, has been adopted. There is also a need to separate maintenance from other property related expenses e.g. rates and taxes, water and lights etc. The separation will be done during mid-term budget adjustment season.


5.1 REVENUE COLLECTION

SOURCES OF REVENUE

2014/2015 2013/2014

ESTIMATE R

ACTUAL AMOUNT COLLECTED

R

(OVER)/UNDER COLLECTION

RBUDGET

R

ACTUAL EXPENDITURE

R


R

Revenue 181 635 000 109 155 000 72 420 000 145 978 000 103 285 000 (42 693 000)

Grants 40 937 000 35 269 000 5 668 000 46 444 000 33 149 000 (13 295 000)

Investment and Other Income 989 000 8 119 000 (7 130 000) 918 000 4 894 000 3 976 000

Other Gains and Losses 19 641 000 60 314 000 (40 673 000) 19 628 000 21 941 000 2 313 000

TOTAL 243 202 000 212 857 000 30 345 000 212 628 000 163 269 000 (49 699 000)

5.2 PROGRAMME EXPENDITURE

PROGRAMME NAME

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

Office of the CEO 7 279 000 9 271 775 (1 992 775) 7 696 002 5 301 422 2 394 580

Finance 24 019 000 32 901 037 (8 882 037) 27 338 008 19 753 691 7 584 318

Corporate Services 99 016 000 59 325 849 39 690 151 63 035 022 26 353 753 36 681 269

Strategic Affairs 5 804 000 1 024 077 4 779 923 - - -

Trade and Industry Development 19 026 000 2 101 514 16 924 486 8 976 152 4 919 765 4 056 387

SMME Support 6 866 000 259 282 6 606 718 14 652 004 4 795 271 9 856 732

Property Management 75 729 000 44 425 077 31 303 923 72 943 005 63 559 786 9 383 219

TOTAL 237 739 000 149 308 611 88 430 389 194 640 193 124 683 688 69 956 505

5.3 CAPITAL INVESTMENT, MAINTENANCE AND ASSET MANAGEMENT PLAN

INFRASTRUCTURE PROJECTS

2014/2015 2013/2014

BUDGET R

ACTUAL EXPENDITURE

R


RBUDGET

R

ACTUAL EXPENDITURE

R


R

Property 3 830 000 - 3 830 000 611 507 5 725 055 5 113 548

IT 1 788 000 458 000 1 330 000 950 000 385 000 (565 000)

Finance 1 546 000 706 000 840 000 275 000 350 000 75 000

TOTAL 7 164 000 1 164 000 6 000 000 1 836 507 6 460 055 4 623 548

4. SUMMARY OF FINANCIAL INFORMATION

GOVERNANCEPART C



1. INTRODUCTION

Corporate Governance embodies processes and systems by which the North West Development Corporation are directed, controlled and held to account. In addition to legislative requirements based on the North West Development Corporation’s enabling legislation, and the Companies Act, corporate governance with regard to the North West Development Corporation is applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King III Report on Corporate Governance.

These key principles are given prominence:

• Good governance is essentially about effective leadership. Leaders need to define strategy, provide direction and establish the ethics and values that will influence and guide practices and behaviour with regard to sustainability performance.

• Sustainability is now the primary moral and economic imperative and it is one of the most important sources of both opportunities and risks for businesses. Nature, society, and business are interconnected in complex ways that need to be understood by decision makers. Incremental changes towards sustainability are not sufficient – we need a fundamental shift in the way companies and directors act and organise themselves.

• Innovation, fairness and collaboration are key aspects of any transition to sustainability – innovation provides new ways of doing things, including profitable responses to sustainability. Fairness is vital because social injustice is unsustainable and collaboration is often a prerequisite for large-scale change.

• Social transformation and redress is important and needs to be integrated within the broader transition to sustainability. Integrating sustainability and social transformation in a strategic and coherent manner will give rise to greater opportunities, efficiencies, and benefits, for both the company and society.

• King III required companies to implement sustainability reporting as a core aspect of corporate governance. Since 2002, sustainability reporting has become a widely accepted practice and South Africa is an emerging market leader in the field. However, sustainability reporting is in need of renewal in order to respond to:

- The lingering trust deficit among civil society of the intentions and practices of big business

- Concerns among business decision makers that sustainability reporting is not fulfilling their expectations in a cost-effective manner.

2. EXECUTIVE AUTHORITY

The Board recognises its duty to ensure that its Shareholder is informed of all major developments affecting the Corporation’s state of affairs. Information is communicated to the Shareholder and the public through:

• The Annual Report which is distributed annually after the Audit;

• The Annual General Meeting and other Shareholder meetings called to obtain approval for Board action as appropriate and as required; and

• The quarterly performance and financial reports.

The Board encouraged participation by the Shareholder or representative at the strategic planning session to ensure a high level of accountability and to ensure that the Shareholder remains informed about the Corporation’s performance and goals.

It is also the Corporation’s policy that the Internal Auditor attends the strategic planning sessions and is available to report on the conduct to the audit, the preparation and content of the Auditor’s Report.

3. ACCOUNTING AUTHORITY/BOARD

INTRODUCTION

The Board of Directors of the North West Development Corporation (SOC) Ltd is responsible for the Corporate Governance of the Corporation. The Board guides and monitors the business and affairs of the Corporation on behalf of the Shareholder, by whom they are elected and to whom they are accountable.

The role of the Board is as follows:

The Board

a) Acts on behalf of, and is accountable to, the Shareholder;

b) Seeks to identify the expectations of the Shareholder as well as other regulatory and ethical expectations and obligations;


c) Is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks;

d) Guides, monitors and fulfils its responsibility to protect Shareholders interest and enhance Shareholder value by:

• Approving and periodically reviewing the business and financial objectives, strategies and plans of the Corporation;

• Monitoring the financial performance of the Corporation, including approval of the financial statements;

• Ensuring that adequate internal control systems and procedures exist and that compliance with these systems and procedures are maintained;

• Identifying areas of significant business or financial risk to the Company and ensure management takes appropriate action to manage those risks;

• Reviewing the performance and remuneration of Management and Staff;

• Monitoring the operations of the Entity and performance of Management; and

• Report to the Shareholder as required.

It is the Board’s responsibility to ensure that an effective internal control framework exists within the Entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information.

The Board delegates to the Chief Executive Officer and the executive team the responsibility for the operations and administration of the Corporation.

Board Charter

The Board of Directors of the North West Development Corporation annually enter into and sign the Shareholders Compact with the MEC for Finance, Economy and Enterprise Development. The Board undertook the following:

To commit itself to exercising strategic leadership, enterprise and integrity in directing the NWDC to fulfil its mandate as outlined in the North West Development Corporation Act and to ensure that the NWDC is financially sustainable. It undertakes to ensure that it sets the tone at the top in respect of good corporate governance principles at the NWDC such that it flows to the rest of the Organisation.

a) That it shall endeavour to ensure that the NWDC is financially viable and properly managed, so as to protect and enhance the interests of the NWDC in the fulfilment of its mandate and to ensure that the Corporation is ready for merger into North West Development Agency.

b) To use its best endeavours to respond to any request from the Shareholder for information or any circumstance requiring a decision, within 14 (fourteen) days of receipt of such written request.

c) To ensure that members of the Board have sufficient information, knowledge and access to expertise to ensure that they are able to fulfil their fiduciary responsibilities to the NWDC and shall furthermore ensure that Board members are inducted on appointment and trained in accordance with King III as well as all relevant legislation pertaining to the NWDC.

d) To ensure the development and implementation of appropriate and effective performance management policies and systems to regularly review the performance of members of management and this may include review, reports and remedial measures.

e) Undertakes in line with the PFMA, related Treasury Regulations and best practice, to comprehensively evaluate the core risks facing the NWDC

f) Undertakes in line with the PFMA, related Treasury Regulations and best practice, to develop and implement a Fraud Prevention Plan and to report to the Shareholder on implementation of such Plan.

g) Undertakes to at least on a quarterly basis, assess the assumption that the NWDC is a going concern and to develop procedures and mechanisms to fulfil this responsibility so as to enable it to identify issues which it considers have the potential to provoke a need to re-examine the going concern assumption. The Board of Directors further undertakes to promptly notify the Shareholder of any conclusions it reaches in this regard and/or of any events, activities or circumstances which might negatively affect this assumption.

h) Undertakes to formally require the Audit and Risk Committee of the Board to, on an ongoing basis, assess the assumption that the Corporation is a going concern and to report on such to the Board. Any such reports from the Audit and Risk Committee shall be furnished to the Shareholder if they indicate that any events, activities or circumstances might negatively affect the assumption of the NWDC as a going concern.

i) In fulfilling its responsibilities outlined above undertakes to include in its quarterly reports to the Shareholder as well as


in any other extraordinary reports relating to the NWDC’s status as a going concern and liquidity risk disclosures.

The Shareholder undertook the following:

j) The Shareholder shall use its best endeavours to respond to any request from the Board of Directors for information or to any situation that requires any decision within 30 (thirty) days of receipt of such written request.

k) The Shareholder undertakes for the duration of this Agreement:

• To consult with the Board of Directors with regard to new or additional requirements to the approved Annual Performance Plan;

• To give the Board of Directors sufficient notice of the proposed new or additional requirements to the Annual Performance Plan or otherwise.

l) The Shareholder shall co-operate fully with the Board of Directors to facilitate effective management and evaluation of the performance of the NWDC’s Directors, including the establishment of procedures relating to corrective action in the event of underperformance by any of the Directors.

Board Composition

The key elements of the Board composition include:

a) Ensuring, where practicable to do so, that a majority of the Board are independent Non-Executive Directors;

b) During the financial year the Board comprised of independent Non-Executive Directors and one Ex-Officio Official from the Department of Finance, Economy and Enterprise Development;

c) Non-Executive Directors bring a fresh perspective to the Board’s consideration of strategic, risk and performance matters and are best placed to exercise independent judgment, review and constructively challenge the performance of Management;

d) The Corporation is to maintain a mix of Directors of the Board from different backgrounds with complementary skills and expertise;

e) The Board seeks to ensure that at any point in time, its members represents an appropriate balance between Directors with experience and knowledge of the Corporation and Directors with an external perspective;

f) The size of the Board is conducive for effective discussion and efficient decision making.


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Documents

ANNUAL REPORT 2014/2015 - Provincial Government · 2016. 6. 22. · Annual Report for the financial year 2014/2015. This annual report provides a perspective on the achievements and