Update on National School Nutrition Programme in KwaZulu-Natal

1. PRESENTATION TO NATIONAL EDUCATION PORTFOLIO COMMITTEE ON THE UPDATED STATUS OF NATIONAL SCHOOL NUTRITION PROGRAMME IN THE PROVINCE OF KWAZULU-NATAL PREPARED BY: NSNP DIRECTORATE 31 OCTOBER 2023 •1

2. TABLE OF CONTENTS • PURPOSE • INTRODUCTION • NSNP PARTICIPATION IN KZN • RATIONALE FOR THE INTRODUCTION OF A NEW HYBRID MODEL • CHALLENGES OF NON-DELIVERY OF FOOD ITEMS MITIGATED FROM APRIL 2023 • CURRENT SITUATION WITH SERVICE PROVIDERS • CURRENT SITUATION WITH PACINA • PROVINCIAL SUPPORT BY OTP AND OTHER DEPARTMENTS • VERIFICATION OF FOOD ITEMS RECEIVED FROM PACINA IN APRIL • PROGRESS ON THE ROLLOUT OF THE CHICKEN LIVERS PROJECT • PROGRESS ON THE ROLLOUT OF BREAKFAST • RESPONSES TO MATERIAL IRREGULARITY • RESPONSE BY DEPARTMENT ON AUDIT OUTCOMES ON SECTOR PROCEDURES • OCTOBER EXPENDITURE REPORT FOR NSNP GRANT • CONCLUSION 2 GROWING KWAZULU-NATAL TOGETHER

3. PURPOSE • To make a presentation providing an updated status report to the National Education Portfolio implementation of the National School Nutrition Programme in KwaZulu - Natal Committee in respect of the 3 GROWING KWAZULU-NATAL TOGETHER

4. INTRODUCTION • The National School Nutrition Programme covers over 2,4 million learners in 5436 participating schools in the 12 education districts within the province of KwaZulu-Natal approximately R2,09 billion inclusive of feeding, compensation of employees and nutrition education activities. at a rand value of 4 GROWING KWAZULU-NATAL TOGETHER

5. NSNP PARTICIPATION IN THE PROVINCE 5 GROWING KWAZULU-NATAL TOGETHER

6. RATIONALE FOR THE INTRODUCTION OF A NEW HYBRID MODEL • The Department of Basic Education’s Food Specification Guidelines and the province’s Quality Plan provide for very high quality food items for the programme. • The escalation of high quality food items is more than the inflation rate and when food prices increase, the recommended NSNP food items become unaffordable and service providers end up procuring poor quality food items or providing insufficient quantities or shortages in order to make do with the annual flat rate. • Poor quality food items hit at the core of the programme as well as deliberate shortages especially the provision of fruit weekly. • The province started experiencing a shrinking budget in 2021/22 to a point where there was force balancing resulting in funded enrolment. • Shrinking budget prevented the Department from affording breakfast for all learners • Central monitoring of quality and economies of scale provides a solution and mitigate experienced challenges to ensure economic, efficient and effective use of resources 6 GROWING KWAZULU-NATAL TOGETHER

7. CHALLENGES OF NON-DELIVERY OF FOOD ITEMS MITIGATED FROM APRIL 2023 CHALLENGES MITIGATION STRATEGY PROGRESS TO DATE Non – delivery of food items in all schools on 12 April 2023 The Department convened meetings with various stakeholders to mitigate the challenges Deliveries to schools normalised after various interventions by the Department Supply of non – compliant food items such as Soya Mince The main service provider was notified to replace the product Complaint Soya Mince was delivered to all schools Long distances travelled by service providers to collection points. The Department set up its own delivery points using schools, district offices and other areas closer to the schools New delivery points were established Supply of gas to schools A circular was issued by the Department to the 1765 service providers to supply gas Gas was supplied to all schools 7 GROWING KWAZULU-NATAL TOGETHER

8. CURRENT SITUATION WITH SERVICE PROVIDERS • After After receiving receiving legal structures, structures, the pending pendingthe the finalisation • On On 28 28 April April 2023 providers providers to to ensure Department Department invoked label label programme programme defaults the the Department Department shall of of using using the the successful from from any any cash cash and schools schoolsupon uponreceipt • The The situation situation normalised department department has the the programme programme. . legal opinion, opinion, and the Department Department elected finalisationof of legal 2023, , KZN KZN NSNP NSNP Circular ensure that that feeding invoked clause clause 8 8. .2 2. .6 6 of of the defaults or or experiences shall revert revert to to the successful service service providers and carry/ carry/ retailer/ receiptof of a a purchase purchaseorder normalised and and the has also also emphases emphases on and also elected to to give legal processes processes. . Circular N No o. . 60 feeding was also extensive extensive consultations give the the current current 1765 consultations with 1765 service with KZN service providers providers a a 3 3 year KZN Treasury, Treasury, DBE DBE and year contract contract and other other 60 of of 2023 not compromised compromised for the NSNP NSNP Policy Policy as as amended, experiences challenges challenges of of non the old old method method of of supply providers for for each each cluster retailer/ warehouse/ warehouse/ distribution order note notefrom fromthe the programme programme started on timeous timeous payments payments to to service was issued issued providing for the the duration amended, which non- -compliance compliance which supply and and delivery delivery of of food cluster to to supply supply and distribution centre centre etc the school school. .” ” started running running smoothly smoothly from service providers 2023 was providing full duration of of the which states states; ; “Where which cause food items and deliver deliver food etc. . to to their their relevant full expansion expansion to to service the contract contract. . The “Where the cause non non- -feeding items to to schools schools; ; that food items items procured relevant cluster service The private feeding; ; that procured cluster of of was not the private from the prevent the the end end of of April the collapse collapse of of April. . The The providers to to prevent 8 GROWING KWAZULU-NATAL TOGETHER

9. CURRENT SITUATION WITH PACINA •Pacina Retail (Pty) Ltd “opted out”; which according to the Oxford English Dictionary is defined as “an instance of choosing not to participate in something”; in their letter dated 26 April 2023 emailed to the Head of Department. •On receiving the letter from Pacina Retail (Pty) Ltd, the Head of Department accepted the ‘opting out’ (of the NSNP contract) by Pacina Retail (Pty) Ltd in a letter dated the same date (26 April 2023). 9 GROWING KWAZULU-NATAL TOGETHER

10. PROVINCIAL SUPPORT BY OTP AND OTHER DEPARTMENTS • OTP guided that the Department had advised in their oversight reports of 11 May 2023 to National Treasury and other oversight structures, that the programme had normalised with all schools provided with nutritious meals and as such, the purpose for which the inter-provincial workstreams on NSNP were established was achieved, and it became necessary to bring a halt to their operations. • These are the following inter-departmental work streams which were established and later stayed. • Logistics • Blitz monitoring of the delivery of food items and feeding started on 02 May 2023 • A provincial report is being prepared by OTP 10 GROWING KWAZULU-NATAL TOGETHER

11. PROVINCIAL SUPPORT BY OTP AND OTHER DEPARTMENTS Legal • Perusal of SLAs and Bid documents to mitigate litigation exposure • Provisional Budget Allocation Letters and approval letters issued SCM and Finance • Guidance on compliance procurement and generally acceptable accounting principles & procedures • Consultations for legal opinion underway Communication • OTP to communicate ICT and M&E • To consolidate and prepare monitoring report 11 GROWING KWAZULU-NATAL TOGETHER

12. Verification of food items received from Pacina in April • The Department has revisited the delivery of food items for the month of April 2023 by Pacina Retail. • The department did a reconciliation of all delivery notes produced by Pacina Retail, looking at the specifications, quantities and quality of food. This process was conducted by NSNP Head office in consultation with all districts. • A capture tool was developed to ensure proper calculations of quantities received. • After the internal reconciliation processes was completed, it was then submitted to Treasury for verification. • At first Treasury conducted a sampled verification of two districts and advised that the whole population had to be revisited to eliminate duplications and correct formulae in oRder to get correct calculations. • The duplicates were removed and formulae corrected in the capture tool. • Documents were resubmitted for further verification and Treasury finalised the verification of 10 districts and issued a report with recommendations for payment. 12 GROWING KWAZULU-NATAL TOGETHER

13. Verification of food items received from Pacina in April • The verification of the two remaining districts was also finalised and the report is expected to be received from Treasury by the end of October 2023. • Pacina Retail (Pty) Ltd submitted an invoice amounting to R124 066 557,62 million. However, after the verification of the ten (10) districts was finalised, KZN Treasury recommended that a partial payment of R70 965 283,28 be paid to Pacina Retail (Pty) Ltd for goods delivered and received in accordance with specification during the month of April 2023. • The Partial payment was effected on the 12thof October 2023, with the last two districts still outstanding amounting ton approximately R6 million. • At this point the Department has considered all evidence submitted by Pacina Retail (Pty) Ltd and found that approximately R48 million cannot be verified and as such cannot recommend payments thereof. 13 GROWING KWAZULU-NATAL TOGETHER

14. UPDATE ON THE INTRODUCTION OF PROCESSED CHICKEN LIVERS • The province has not started implementing the Chicken Liver Project in the identified district (uMgungundlovu). However, a lot of ground work has been done to prepare for a successful commencement of the project. • At planning stage, there were three approved processors, however one processors (Phashash) was struck off the list of approved processors leaving us with only two options. • The department invited all three processors for a presentation with an aim to gain more knowledge on the actual Product (and its specification) Price, Delivery Model, Accessibility and sustainable / consistent supply. • Thereafter, there were two consultative sessions with principals of the schools and service providers within Mgungundlovu district. The district later sent survey forms to schools for written confirmations of the preferred product. So-Tasty proved to be the preferred product for their price, delivery model, accessibility and consistent supply with with both schools and service providers. 14 GROWING KWAZULU-NATAL TOGETHER

15. UPDATE ON THE INTRODUCTION OF PROCESSED CHICKEN LIVERS • So-Tasty is strict on ensuring correct handling, storage and preparation of their product since it comes in pouches; as a result they requested that they are provided with an opportunity to train food handlers. On 14-16 August 2023 So- Tasty conducted and successfully completed training of all Volunteer and Chief Food Handlers. • The initial SLA signed between the district and service providers does not make reference to the provision of chicken livers as a result the department (through Legal Services) has an addendum to the SLA which has already been sent to the district for onward forwarding to service providers. • It is envisaged that the project will commence in November 2023 • The total number of schools that will be implementing the project is 455, with 187 163 learners. • The total number of Primary, Combined & LSEN learners is 112 657 and 74 506 of the population will be from secondary schools. • The company has indicated that it will phase in refrigerators for all participating schools. 15 GROWING KWAZULU-NATAL TOGETHER

16. RESPONDING TO MEDIA QUESTIONS IN RESPECT OF THE CHICKEN LIVERS 1. Why is the department forcing them to source them from a single supplier? Is there any reason for that? The introduction of chicken livers is a national directive to enhance the meal plate for learners across the country. The Department of Education did not force service providers to source a single supplier and there would be no reason for that approach. 2. Is the department not afraid that this may result in another Pacina scandal? The preferred processor of chicken livers is providing chicken livers in the following provinces: Gauteng - 1300 schools Free State - 820 schools North West - 100 schools Mpumalanga - 152 schools Limpopo - 25 schools In KwaZulu-Natal there are 455 schools where chicken livers are rolled out and there are no reasons to be worried that the rollout may result in another Pacina scandal considering that the processor is successfully implementing the same project in more schools in other provinces. Furthermore, where there are challenges of inconsistent supply, the option of using sugar beans in the menu is still available. 16 GROWING KWAZULU-NATAL TOGETHER

17. UPDATE ON THE INTRODUCTION OF BREAKFAST • The province has started implementing the breakfast programme in the second school term in all Primary, Combined and Special Schools in the form of an Instant Maize Porridge. Available instant porridge products in the market are My Life, Inyala, Ace, Four Distributors, various House Brands and others, with My Life being widely used because of its packaging in 5kg bags The instant porridge used in the province is in line with DBE Food specifications in terms of high protein, less sugar and fat and rich in vitamin A, vitamin B, minerals (calcium, iron, magnesium) The breakfast is consumed before school starts and the main NSNP meal completed by 11h30 in line with the NSNP monitoring tool. During the inter-district meeting held at the beginning of July 2023, districts reported a positive response to the inclusion of breakfast in our programme in all primary schools, combined schools and special schools. • • • • 17 GROWING KWAZULU-NATAL TOGETHER

18. RESPONSE BY THE DEPARTMENT ON THE MATERIAL IRREGULARITY • The Department received a letter from AG advising of a material irregularity to which the Department disagrees and has raised valid objections based on the following procedural errors by Auditor-General: • 1. Auditor-General has deviated from the national standards of reporting a non-compliance in the manner in which they approach their report. The purported Material Irregularity which according to AG caused substantial harm, is based on a purported non-feeding of two thousand (2000) learners. As reflected above that the province provides nutritious meals to more than 2,4 million learners during all school days, 2000 accounts for 0,08%. The acceptable national and international audit reporting standards approach any report in an unbiased manner from the positive. In this case, the report would have read, 99,92% of learners were provided with nutritious meals. • The Department is of the view that there is no plausible explanation on the acceptable audit steps taken by AG to resolve contradictory audit evidence. However, AG’s approach is viewed as based on a subjective approach which is not transparent on the processes undertaken to reach the audit outcome. 18 GROWING KWAZULU-NATAL TOGETHER

19. RESPONSE BY THE DEPARTMENT ON THE MATERIAL IRREGULARITY • The Department is of the view that in some areas AG made a finding based on the misinterpretation of law and in some areas AG made findings based on the misunderstanding of the bid document t since AG did not request for a walkthrough process as they normally do in order to understand the content of the subject matter to be audited. • For ease of reference, the attached letter to AG requesting an engagement is provided for ease of reference in relation to this unfinished matter. • It is the view of the Department that it was premature for AG to report the Material Irregularity in various oversight structures before finalising with the audited department. • The department is filing for an urgent review by an independent public body so that the outcome can give comfort to the Accounting Officer to mete consequence management and also press criminal charges where necessary and avoid placing the department under litigation for malicious litigation in the likely event the charged officials challenge the charges against them. 19 GROWING KWAZULU-NATAL TOGETHER

20. RESPONSE BY THE DEPARTMENT ON AUDIT OUTCOMES ON SECTOR PROCEDURES • The audit for the sector procedures was conducted for the 2022/23 financial year in uMkhanyakude using a sample size of 2 schools comprising 0,3% and Zululand Districts using a sample size of 5 schools comprising 0,9%. • The Department received Communication of Audit Findings 108 of 2022/23 dated 17 July 2023. To which management responded to on the 20th of July 2023. • The findings identified deficiencies on the following: Appointment of NSNP Coordinator and Committee Storage of NSNP stock Safeguarding of NSNP resources Monitoring and reporting of NSNP • Management disagreed with the findings with reasons and provided audit evidence to backup the reasons for disagreeing with the findings. The findings were resolved. 20 GROWING KWAZULU-NATAL TOGETHER

21. OCTOBER EXPENDITURE REPORT FOR NSNP GRANT • Expenditure as at 19 October 2023 is as follows: • National School Nutrition Programme Grant Budget Performance – Original Total budget :R 1 967 842 000 – Additional budget :R 120 917 000 – 2023/24 Total budget :R 2 088 759 000 – Rollover to be approved :R 141 863 000 – 2023/24 Total budget to be adjusted. :R2 230 622 000 – Actual Spent as at 19 October 2023 :R1 269 315 000 (56%) – Sum of available Budget : R 961 307 000 (44%) The expenditure is at 56% with available budget amounting to R961 307 000 with considerations of rollover taken into account as at 19 October 2023. It must be taken into consideration that this expenditure reflects budget spent for the two quarters as the total expenditure is from April to September. The expenditure trend reflects a 56% spend for two quarters which is 6% above the expenditure projection for the quarters. This means service providers are paid on time and the report on the queries made confirm the position of the expenditure. GROWING KWAZULU-NATAL TOGETHER

22. CONCLUSION • It is recommended that the Education Portfolio Committee considers and discusses the updated status report in respect of the implementation of the National School Nutrition Programme in KwaZulu-Natal 22 GROWING KWAZULU-NATAL TOGETHER

23. THANK YOU 23