Independent Development Trust 2013/14 – 2017/18 Strategic Plan & 2013/14 Annual Performance Plan

1. Independent Development Trust 2013/14 – 2017/18 Strategic Plan & 2013/14 Annual Performance Plan

2. Content • Compliance Statement • Presentation of Strategic Plan • Recommendations

3. Compliance Statement • In terms of Section 55 (2) (b) and Section 56 of the Constitution, the National Assembly must provide mechanisms to maintain oversight of any organ of state and may summon/require any institution to report to it. • The IDT, a Schedule 2 Public Entity, is thus: • Presenting its 2013/14-2017/18 Strategic Plan and 2013/14 Annual Performance Plan (APP) to enable the Portfolio Committee to exercise oversight and to recommend the same to Parliament • Reporting that the Strategic Plan and APP was: • Lodged with the Executive Authority and National Treasury on 27 February 2013; • Approved by the Minister on 8 March 2013 as evidenced by the Foreword, Official Sign-off and Shareholder Compact • Tabled in Parliament on 13 March 2013

4. 2013/14- 2017/18 Strategic Plan

5. Strategic Plan: Table of Contents (1) • Foreword: Executive Authority • Official Sign-off • Statement: Board Chairperson • Part A: • Vision • Mission • Our Approach • Values & Operating Principles • Legislative and other mandates • Legislative mandates • Policy mandates • Situational analysis • Performance Environment • Organisational Environment • Key Issues relevant to the IDT • Description of the Strategic Planning Process

6. Strategic Plan: Table of Contents (2) • PART B: STRATEGY • Strategic Goals • Strategic Vision Implementation • Key Performance measures & Indicators • Governance Structures • PART C: LINK TO OTHER PLANS • Financial Plan • Risk Management Plan • Fraud Prevention Plan • Materiality and Significance framework • Environmental Plan • Communications Plan • Information Technology Management Plan • Knowledge Management Plan

7. Strategic Plan: Table of Contents (3) • APPENDICES • 2013/14-2015/16 Budget Framework • 2013.13-2017/16 Corporate Business Plan • 2013/14 Annual Performance Plan • Shareholder Compact • High Level Organogram

8. Foreword: Executive Authority • Highlights the need for alignment to 2009-14 Medium-Term Strategic Framework (MTSF), Programme of Action and National Development Plan • Recognises the IDT’s reach and effectiveness as a public sector programme management and development agency; and, its distinctive developmental approach to social infrastructure delivery • 2013/14 is the Year of Delivery thus there is an expectation that the IDT will accelerate delivery • Mindful of and committed to (together with the IDT Board) find a lasting solution to IDT’s financial sustainability and going concern challenges. The latter will include the transformation of the IDT with a revised legislative mandate, corporate form and business model to enhance its efficiency and effectiveness

9. Official Sign-Off • Certifies that the 2013/14- 2017/18 Strategic Plan and 2013/14 Annual Performance Plan • Was developed by the management of the Independent Development Trust (IDT) and approved by the Board of Trustees under the guidance of the Minister of Public Works; • Takes into account all the relevant policies, legislation and other mandates for which the IDT is responsible; • Takes cognisance of the resources available to the IDT; and • Accurately reflects the strategic outcome oriented goals and objectives which the IDT will endeavour to achieve during the 2013/14 financial year.

10. Statement: Board Chairperson • The Board assumed office on 1 July 2012. Comprises a competent team of professionals with a diverse range of expertise and knowledge, who fully understands the development landscape as well as the Board’s fiduciary duties as the Accounting Authority • Appreciate that IDT is a national asset which has served the country for 23-years • Assumed Office at a difficult time: IDT was in the throes of a Transformation process when its financial sustainability and going concern status was in jeopardy • Having been assured of Government’s support for the continued existence of the IDT, the Board aims to bring stability and remove the uncertainty. • Finalising the mandate and financial sustainability of the IDT, together with the Minister, is thus a critical deliverable for the Board. • Concerned that IDT was only allocated R50m for 2013/14, and the same value for each of the outer years, an amount well below what the IDT needs to remain a going concern, deliver on its mandate and to meet the growing demand for its services

11. Part A: Strategic Overview

12. Vision, Mission & Approach • Vision • A leading public sector programme management agency • Mission • The IDT manages and delivers integrated social infrastructure programmes on behalf of government. • Our Approach • The IDT’s approach to social infrastructure development entails all the necessary measures, facilities and networks required to prepare communities to receive, own, manage and sustain their own development

13. Values & Operating Principles

14. Legislative and other mandates (1) • The 1997 Cabinet mandate is still in place: “The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments.” • Integrated into the public service delivery system in 1999 with the promulgation of the PFMA and listed as a Schedule 2 Major Public Entity • Reports to Parliament through the Minister of Public Works, the Shareholder Representative and Executive Authority. Thus the IDT seeks to contribute towards the mandate, vision and strategic objectives of Department of Public Works (DPW) • The IDT further seeks to advance • National Development Plan • National Infrastructure Plan

15. Legislative and other mandates (2) Policy Mandates • Shareholder Compact • Relevant Programmes of DPW • Programme 1: Administration • Programme 3: Expanded Public Works Programme (EPWP) • National Strategic Outcomes • Outcome 1: Improved Quality of Basic Education • Outcome 2: A long and healthy life for all South Africans • Outcome 4: Decent employment through inclusive economic growth • Outcome 5:A skilled and capable workforce to support an inclusive growth path • Outcome 7: Vibrant, Equitable and Sustainable Rural Communities and Food Security for all • Outcome 8: Sustainable human settlements and improved quality of household life • Outcome 12: An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship • In advancing these outcome areas the IDT directly supports DPW in its Medium-Term Strategic Framework (MTSF) priorities for job creation, sector skills development and the green buildings initiatives.

16. Situational Analysis: Performance Environment • Brief reflection on the IDT’s track record over two decades as a national development implementing agency, supporting all spheres of government • Between 2006-2011 delivered programmes in excess of R 14.4bn of which between 85-95% was directed at social infrastructure development • Also implements programmes directed at community development by integrating social infrastructure outputs with long-term impact and sustainable development goals • IDT uniquely bridges the development gap between national socio-economic policy and funding objectives with the hopes and aspirations of communities

17. Situational Analysis: Organisational Environment

18. Situational Analysis: Key Issues • The environmental scan highlighted the following areas as pertinent to the IDT and it thus informed the corporate strategy • Development Gap • Social Infrastructure • Job Creation & Economic Development • Sustainable Development • Eradication of poverty and Inequality • Social Cohesion, Community Development & Social Compacts • Local Government & Service Delivery • Land Reform & Social Security • Aid & International Development • Knowledge Management and Capacity Building

19. Situational Analysis: Strategic Planning Process • Strategic Planning, and performance monitoring and reporting, is an institutionalised business process. • It is a iterative annual process • May: The Board is presented with the framework for the strategic planning process for approval • June: Consolidate research • July-August: Develop and present strategy proposals to the Board for approval • June- July: MTEF Submission • August-October: Develop draft Strategic Plan, Unit Business Plans and Sub-Unit Work Plans • August-October: MTEF meetings & presentations • November-December: Draft Strategic Plan, APP & Budget recommended to the Board • January-February: Finalise, approve and submit Unit Business Plans & Budgets; and the Strategic Plan, APP & corporate Budget

20. Part A: Strategy

21. Strategic Choices • Having noted pertinent issues from the situational analysis, the Board decided that the IDT’s 2013/14-2017/18 Corporate Strategy should reflect the following: • Problem Statement: Deepening poverty and inequality; social infrastructure needs; the need for social compact and a long-term financial suitability model for the organisation. • IDT’s differentiator: The IDT’s distinctive, value adding and differentiating offering will be the integration of social infrastructure delivery and social facilitation focussing on poverty eradication, employment creation and inequality. • Core Business Areas: Programme management, institutional capacity and community mobilisation. • Clarification of Mandate: The IDT’s 1997 Mandate is still in place. The IDT is an agency of state which reports to Parliament through DPW. Given the changes in the policy environment, IDT should/could propose a revised mandate. However, the organisation recognises that the confirmation of its mandate is a Cabinet decision which will also inform the legislative process, scheduling and corporate form of a future IDT.

22. Strategic Goals • The Strategic Goals articulates the IDT’s responsibility to promote sustainable development in poor and marginalized areas through delivery of integrated social infrastructure. The institution aims to achieve these Strategic Goals by using resources in a prudent and efficient manner.

23. Strategic Vision Implementation • IDT is a major public entity and development agency which has to: • Create value in the lives of the people of South Africa. • Ensure that it delivers high quality service and sustainable development in a cost effective way. • Remain relevant in the South African development landscape, • Find innovative and sustainable solutions to the development challenges facing the country as identified in the National Development Plan and other key policy studies commissioned by government. • The strength of the IDT lies in strategic partnerships. The results of the scan suggest that through the transformed IDT, more effective linkages can be made between government priorities and the IDT’s strategic goals of delivering social infrastructure and other programmes, developing communities, supporting institutions, sharing knowledge and building strategic partnerships

24. IDT’s Response to the Development Gap • Head Office • Coordinates adaptive strategy; by facilitating regular best practice sharing and dissemination of learning • Fosters supportive cooperationbetween regions; by providing benchmarking, M&E, Impact Management and Knowledge Management, leading to innovative policy recommendations that ensure consistently improving delivery • Secures national/international support, resources and cooperation What we do Mobilise Communities… • Sustainable livelihoods • Asset based approaches Key Focus Areas Support Institutions… GP FS • Policy/planning support • Technical expertise EC Delivers Programmes… KZN • Strategy: Shift to community development • Services: Develop communities, support institutions and deliver programmes • Structure: Decentralised regions set strategy, implement local development, coordinated by HO • Programme planning • Delivery management “Butterfly” Transformation Scenario HO LIM Shares Knowledge… MPU • Action research • Learning & innovation Centres of Excellence Build Partnerships… NC NW WC • Stakeholder management • Resource mobilization

25. The IDT’s Transformation Drivers: Why the IDT must change Systems Sustainability Strategy Services Structure Customised to Regions but coordinated at centre; ensures integration while allowing flexibility Institutional integrity, relevant mandate supported by financially viable business model focussed on sustainable business growth Generated by Regions and coordinated by centre; responsive to local contexts Decentralise, with higher proportion of resources in Regions at community level • Focus on community development for greatest gains in long term impact

26. What will happen in Communities Community development must focus on creating sustainable livelihoods, cohesive communities, vibrant markets and active economies in an integrated manner Enterprise Development Community Development (Social & Cultural capital) (Economic & Financial capital) The New IDT will reflect an integrated an decentralised structure that matches community structures Basic/Core Services Building vibrant communities (Human capital e.g. health, education) Institutional Capacity Infrastructure Support (Physical & environmental capital) (Institutional & Political capital) A vibrant community is one that is cohesive, empowered and sustainable

27. Key Performance Measures & Indicators (1) • Captured in Appendix 2 & 3, the Corporate Business Plan and in the 2013/14 APP. However, the IDT’s delivery of these pre-determined strategic objectives, indicators and targets hinges on a number of assumptions and dependencies: • Value and delivery of Business Portfolio: The IDT is required to generate its own business portfolio. However, the speed at which agreements are concluded as well as the frequency and values of funds transferred is not entirely within the control of the organisation and delays impact on delivery. Hence associated indicators and targets assume that agreements are concluded before the start of and or early in the financial year and that clients will transfer funds as stipulated in the agreements. • Management Fee: Is negotiated with clients and stipulated in agreements. In order to remain a going concern, the minimum average management fee which the IDT can consider is 4.0% and any amount lower than 4% will jeopardise the organisation’s going concern status. In addition, if clients do not make the funds available for the IDT to deliver, the organisation will not be able to collect its management fees.

28. Key Performance Measures & Indicators (2) • Going concern: It assumes that the operation will be able to continue trading for a minimum of 12-months. Unforeseen cash flow challenges may jeopardise this assumption. • Certainty of mandate and long-term sustainability: The Shareholder has undertaken to formally consider and provide certainty on the organisation’s mandate and long-term sustainability. The uncertainty, which had prevailed for a number of years, negatively impacts client confidence, organisational culture and staff morale, which in turn is reflected in business generation, productivity and delivery capacity. While the projected business portfolio indicates growing client confidence, managing this variable remains a challenge. • Attract and Retain Right Skills: The on-going uncertainly has increased the risk of flight of skills resulting in a high vacancy rate of between 18-20% in 2012/13. It further impacts the organisation’s ability to recruit and retain the right skills. At the same time client confidence is enhanced by the organisation’s ability to deploy appropriate competencies to manage programmes

29. Governance Structures • Shareholder Compact: Between the Executive Authority and Accounting Authority • Board of trustees and its Committees: • Strategic Planning and Programmes Committee • Human Resources and Corporate ServicesCommittee • Audit and Risk Committee • Finance Committee • Remuneration Committee (Board Exco) • Executive Management: Comprising Executive Heads of four Business Units reporting to the Chief Executive Officer (CEO) • Development Programme Services (Renamed Development Services Unit) • Corporate Services • Financial Management Services • Office of the CEO

30. Part C: Links to Other Plans

31. Financial Plan

32. Budget 2013/14 & Forecast for Outer Years

33. Budget 2013/14 and Forecast for Outer Years – Analysis of Expenditure

34. Income • The IDT has two sources of income: • Management fees: • Management fees charged to client departments constitutes the major source of its income. The level of fees averaged slightly more than 3 % during the 2012/13 financial year and management has implemented a process to increase the average level of fees to 4% over the budget year. The level of fees will be further increased over the outer years. • Investment income: • Earned from the investment fund. • The fund is being depleted to fund the IDT’s operational costs; and, • The reduction in the level of interest rates together with the decrease in the capital invested has resulted in the investment income being reduced significantly over the past few years. • Investment income for 2011/12 was R 27 million and the income for the nine months ended 31 December 2012 was R 15,0 million.

35. Investment Fund Balances

36. Programme Portfolio Expenditure Trends • The value of the programme delivery over the period 2009/10 to 2015/16 is as follows: • The above table reflects the actual and projected growth in the IDT’s delivery capacity and the importance of enabling the organisation to sustain and expand its delivery capacity

37. Financial Challenges and Risks • The greatest challenge facing the IDT is the uncertainty surrounding the financial sustainability of the organisation. • Treasury has allocated R50m per year for the 2013/14 to 2015/16 financial years. The funds have been allocated on condition that “the Independent Development Trust will develop and submit a restructuring plan to the National Treasury by 30 June 2013”. • The Business Case (the plan referred to by Treasury) is being prepared in conjunction with the Department of Public Works. The plan will address, inter alia, the issues of: • The structure, form and resourcing required for the organisation in order for it to become self-sustainable over the MTEF period; • The clearly identified target market for the organisation; • The management fees structure required to provide for the funding of the organisation

38. Financial Challenges and Risks • It is crucial that the Shareholder address the issue of the financial sustainability of the IDT in order to ensure that it continues to play a meaningful role in the delivery of infrastructure and community development. • The value of programme implementation agency agreements (PIA) or memoranda of agreements (MOA) signed for future implementation is currently in excess of R 20 billion (as reflected in a previous slide). These programmes are to be implemented over the next three years. This would represent a significant risk to the relevant departments and service delivery to communities should the IDT not be able to implement their programmes.

39. Links to other Plans • Risk Management Plan • Audit and Risk Committee (ARC): Overall responsibility to ensure that the organisation has identified the key risks and that a strategy to manage those risks is implemented. • Risk Management Committee: Chaired by the CEO and reports to the ARC. Responsible for reviewing the Risk Management Strategy • Compliance and Risk Office responsible for constant monitoring and reporting, as well as testing compliance with legislation • Fraud Prevention Plan • Due to the nature of the IDT’s business, where volumes and financial value of projects continue to rise, fraud risk is considered to be very critical and as such it is separated from all other risks • The Plan comprises a fraud prevention strategy and policy, which is reviewed annually to incorporate emerging best practice and trend analysis such as profiling, for identifying areas where fraud and corruption are most likely to occur, and effecting appropriate control measures • IDT operates an externally managed hotline for the reporting of fraud and corruption, and also makes use of forensic expertise for the investigation of reported cases when such intervention is required.

40. Links to other Plans • Materiality And Significance Framework • For purposes of material [sections 50(1), 55(2) and 66(1) of the PFMA] and significant [section 54(2) of the Act], the Accounting Authority must develop and agree a framework of acceptable levels of materiality and significance with the relevant Executive Authority in consultation with the Auditor General. • After consultation with the AG, the Materiality and Significance Framework was approved to the Accounting Authority and presented to the Executive Authority • Materiality and Significance Framework Slides.pptx • Human Resources Plan • Aims to facilitate effective resourcing of the organisation through efficient people planning, people management and people development strategies; and, to ensure that the IDT can at all times attract, retain and develop the best available skills such that it is able to deliver on its mandate. • The approved staff establishment for 2013/2014 is 440. In terms of the HR Plan a full occupancy rate is expected for the year. However, due to the financial constraints, this target will have to be scaled down

41. Links to other Plans • Environmental Plan • Environmental management is a cross-cutting issue, with internal and external focus • Internal perspective: Concerned with the extent to which the organisation behaves in an environmentally friendly manner, e.g. light bulbs used, sorting of waste, paper recycling and energy savings, etc. • External perspective: Concerned with the extent to which programme management and project implementation are environmentally friendly. Includes building processes, practices and materials used in the construction as well as promoting environmental awareness in the communities we operate in. • Communications Plan • To ensure constant and consistent messaging and engagement with the IDT stakeholders and staff • Aims to integrate all branding and marketing related functions such as Stakeholder Engagement, Client Relations, Public Relations, and Corporate Communications in support of the overall sustainability of the IDT.

42. Links to other Plans • IT Management Plan • IT Plan will focus on migrating the IDT to Cloud computing which will create a more secure, reliable, portable and scalable IT architecture. • The objectives of the ITM Framework are as follows: • Provide the IDT with an adequate IM& T Platform; • Increase the efficiency, seamlessness and integration of internal processes (e.g., HR; Finance; Performance Information Management; Knowledge management; and, monitoring and evaluation); • Provide an effective, efficient and reliable internal and external electronic communications, through the use of the IDT’s network infrastructure; • Provide support to address all client needs to ensure client satisfaction. • Knowledge Management Plan • Corporate Knowledge Management Strategy (CKS): Promote knowledge-driven development practice and innovation; maximize the impact of development interventions in support of the national strategic priorities and the realization of the organisation’s corporate goals. • Through the CKS, the IDT is building systems to promote a vibrant culture of documenting, sharing, learning and mainstreaming of knowledge-driven development practice and innovation to support operations.

43. Appendices

44. Appendices • Budget Framework: ..\..\CEO OFFICE\EXEC HEAD CEO\2013\PARLIAMENT\2014-18 STRATEGIC PLAN • 2013/14-17/18 Corporate Business Plan: ..\..\CEO OFFICE\EXEC HEAD CEO\2013\PARLIAMENT\2014-18 STRATEGIC PLAN\APPENDIX 2 CORPORATE BUSINESS PLAN.pdf • 2013/14 Annual Performance Plan: ..\..\CEO OFFICE\EXEC HEAD CEO\2013\PARLIAMENT\2014-18 STRATEGIC PLAN\APPENDIX 3 2013-14 APP.pdf • Shareholder Compact

45. Appendix 5: High Level Organogram

46. Recommendations

47. Recommendations • That the Portfolio Committee on Public Works • Recommends the IDT’s 2013/14-2017/18 Strategic Plan to Parliament • Sustains its support for the long-term sustainability of the IDT such that the organisation can maintain and accelerate its distinctive role in delivering social infrastructure in the most marginalised communities on behalf of government