Long Term Sustainability Project Portfolio Committee 7 June 2011

1. Long Term Sustainability Project Portfolio Committee 7 June 2011

2. Contents Our journey thus far What have we been doing? IDT’s impact and footprint Where have we invested the monies? Who are we? • Development Gap in SA • Service Gap • New IDT Board Vision 201/30 • New IDT decentralised development • New IDT – short term vs long term transition • Sustainability – Financial review • Governance – Legal and legislative options Whywe need to Transform • How long will it take • Project progress • What resources are required to transform • Next steps What is needed to Transform

3. Our Journey: What have we been doing? IDT has played a key role in supporting the development of our people through integrated service delivery on behalf of government as the only national government programme implementation support agency in South Africa • The IDT was established as Civil society Based Development Agency in the form of a Trust in 1990. • Cabinet decision, March 1997, IDT Mandate: • "The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organisation, an independent agency or a funding agency.” • Amended Deed of Trust (2001): Primary Goal of the Trust • “ . . . is to use its resources, together with strategic partners, in ways which in the opinion of the Trustees will best serve to enable poor communities in the RSA to access resources and recognise and unlock their potential to continuously improve the quality of their lives.” • IDT categorisation: Schedule 2 - a major public entity providing government programme development support • The IDT has managed client funded service delivery programmes to the value of R10.4b in the period 2002-2011 when it moved from grant making towards being a development implementing agent. The IDT together with government has changed the lives of millions of South Africans in communities facing extreme poverty

4. Our journey: The IDT’s walk with South Africa The IDT’s history closely parallels the development trajectory of South Africa. The IDT is now taking the next step towards being a world class community development agency VISION: To be the Leading Knowledge-based community development agency IDT’s Development Journey Grant making civil society 1990 - 1999 Govt Program support agency “Infrastructure focus” 2000-2010 Community Development 2011 onwards 2010/30 IDT Strategic Vision 2011-13 IDT Corporate Plan Eradication of chronic intergenerational poverty 2009-14 Govt Strategic Priorities Established as an independent vehicle to spearhead Socio-economic upliftment of Previously disadvantaged communities Medium-Term Strategic Framework (2009 – 2014) IDT STRATEGY 2010/30

5. “The defining feature of this administration will be that it knows where people live, understands their needs, and responds faster” President Zuma 2010 The IDT’s Footprint IDT continues to support government by strengthening delivery capacity and actively being on the ground where communities live Community Development (Social & Cultural capital) Enterprise Development Basic/Core Services Building vibrant communities (Economic & Financial capital) (Human capital e.g. health, education) Social & Natural Infrastructure Institutional Capacity (Physical & Environmental capital) (Institutional & Political capital) A map of IDT programmes against municipal areas of greatest poverty reveals IDT is strengthening service delivery in areas of very high poverty where delivery is needed most

6. Where have we invested the monies? The IDT was established in 1990 with a grant of R 2 billion. The Table below reflects the revenue and expenditure over the period 1990 to March 2011, together with the value of client-funded programmes delivered

7. What impact have we made? Review of 2010/11 financial year

8. Sustainability Challenge: Financial Review (1990-2011) The IDT’s funds under investment have decreased from the grant of R2.05bn allocated in 1990 to R415m in 2011 (over 21 years) and as a result investment income has dropped to R42m at present. Client funded programme expenditure has grown substantially to R2.26bn currently for which IDT charged an average management fee of 3.6% (R81.3m) in 2010/11 Since 2002, the IDT has programme managed cumulative expenditure of R10.414bn (2002-2011) R2.05bn R,000’s R415m The IDT invested R2.8b in development grants between 1990 and 2000 and supported non funded government priority programmes like ASGISA, JIPSAto the value of approximately R250m including mud schools programme initiation between 2005 and 2010

9. Contents Our journey thus far What have we been doing? IDT’s impact and footprint Where have we invested the monies? Who are we? • Development Gap in SA • Service Gap • New IDT Organisation Vision 2010/30 • New IDT decentralised development • New IDT – short term vs long term transition • Sustainability – Financial review • Governance – Legal and legislative options Why we need to Transform • How long will it take • Project progress • What resources are required to transform • Next steps What is needed to Transform

10. Bridging the Development Gap in SA While the is a vast array of services provided by government and other agencies, delivery remains uncoordinated and often misaligned. The SERVICE GAP is that there is NO coordinated and integrated delivery at community level In 2007, NT commissioned a review of all 310 listed public entities and public sector funded agencies delivering services or funding at national, provincial and local level. entities were identified. Detailed analysis of entities that focused on funding of development related activities (DFIs) and development providers (Development Agencies) highlighted the development gap in South Africa IDT’s value proposition – niche offering

11. Completing the Development Value Chain Even though the development gap in South Africa is substantially with significant investment in service delivery, regrettably - has not yielded expected development returns1 at community level “Since we are building a developmental and not a welfare state, the social grants will be linked to economic activity and community development, to enable short-term beneficiaries to become self-supporting in the long run” President Zuma, SONA: 2011 Policy & Legislation Development Funding & Financing Capacity Building & Training Institutional Building Service Delivery Community Development • NGO sector • National Government • Treasury • Provinces • DBSA • IDC • NDA • Youth Fund • CSI • NEF • SETA’s • Higher education • Service providers • Service providers • Public Sector Institutions • All 3 tiers government • A Gap exists for single nation wide agency to coordinate and implement an integrated approach to community development, focused on improving capacity of people and their institutions to access services • IDT is only major development Agency in SA with national footprint • Has strong local relationships with communities in all provinces • Has a track record of development delivery management and community empowerment 1South Africa ranks 110th in the UN Human Development Index, just below Krygystan. SA’s Gini coefficient (gap between rich and poor) of 0.68 is the highest in the world, overtaking Brazil

12. Business case for Long Term Sustainability The New IDT long term business case is in line with IDT Vision 2010/30 and provides a key opportunity for Treasury to invest in the development of communities in South Africa FUTURE service split Build Competencies to provide policy and planning support to institutions CURRENT service split Secure long term self funding work by Strengthening programme mgt capacity and improving development impact

13. The New IDT: Strengthening community development The IDT is transforming into “a leading knowledge-based community development agency” in South Africa. This is a bold and innovative vision drawing from the IDT’s rich history, core competencies and international best practices to support the realities of South Africa’s development trajectory. The Board of Trustees has taken the opportunity and responsibility to prepare the IDT for the next generation of development in South Africa What does the New IDT do? Strategic Scenarios New IDT High Road: Quantum Leap “Butterfly” Transformation Scenario Middle IDT Current IDT “Bandage” Temporary Scenario Low Road “Business as Usual” Termination Scenario

14. Decentralized Development The Board has approved a decentralised model consisting of a number of empowered IDT sites located at key nodes in all of the provinces of South Africa; spearheading the fight against poverty and becoming government’s arrowhead in the regions to build vibrant communities EC FS GP New IDT KZN • Strategy: Shift towards community development • Services: Developing communities, supporting institutions and delivering programmes • Structure: Regions facilitate local development, coordinated by HO HO LIM MPU NC NW WC

15. “Imagineering” the New IDT Bold innovation to imagine, explore and design a new IDT; incorporating the best thinking and practice in community development and working together with our people and partners to build vibrant communitiesacross South Africathat are empowered, cohesive and sustainable Concept Example Team Leader: Community Development Hub (Western Cape) • IDT could expand its reach into rural communities. SA has 52 districts/262 municipalities: • e.g. 9 Development Action Labs with +/- 5 highly motivated community development teams (with avg 6 cadres in each team) • if each team works with identified communities in 5 municipalities per year, • IDT would have active presence in (9x5x5) = +/- 225 municipalities with a field staff of (9x5x6) = +/- 270 • Team members not always IDT employees, e.g. CDW’s seconded from municipalities, interns from universities, or local CBO/NPO staff trained by the IDT in best practices • Methodologies include asset based/ community driven development, e.g. utilising cooperatives to generate sustainable livelihoods • Program funding sourced from local, provincial or national government departments, corporations or international agencies

16. Contents History of IDT IDT’s current make-up IDT’s impact and footprint Historical Review • Development Gap in SA • New IDT Board Vision 2010/30 • New IDT decentralised development • New IDT – short term vs long term transition • Sustainability – Financial review • Governance – Legal and legislative options Why we need to Transform • How long will it take • Project progress • What resources are required to transform • Next steps What is needed to Transform

17. Long-Term Sustainability Project Milestones

18. Long-Term Sustainability Project Milestones

19. Journey map July 2011 Oct 2011 Business Case Dev Week Strategy (95%) Functional Structure (95%) Services (95%) Designing & Piloting the “new IDT” Monitoring the pilot Due diligence (100%) Comparative assessment (Legal & legislative) (50%) SCM Re-design Iterative updates Building the Financial model (30%) Organisation structure (HO & Regions) (10%) Assessment of current systems to deliver on the new business model (0%) Transformation journey map (5%) Processing the approved Business case Corporate branding Preparing for the launch of the new IDT Re-constitute the “legal entity for the “new IDT” Initiate legislative process 5% Change mgt and Industrial Relations Project mgt

20. Legal Framework CD CD PD IS PD IS KM RM KM RM What is? • A trust governed by the property trust control Act • Schedule 2 Where to? • We envisage that the “New IDT” to have its own Enabling legislation Mandate? Clearly define the Mandate (niche) Test the mandate Purify and finalise the Mandate to determine if sole or shared mandate Other org’s Constitution Schedule 2&3 … • NDA • HDA • DBSA • Etc.. • N • P • LG • M Map against schedule 2 & 3 Entities … … … Strategy Mandate Legal identity (select option) Business case approval by Cabinet Legislative Decision (Select option) Process must be done within thelifespan on one Minister– preferably by end 2012/13

21. Resources required to get there: Short term funding Shortfall of R557m

22. What do we expect from the Portfolio Committee? Portfolio committee to provide input on the proposed direction of the IDT as reported Portfolio Committee to note the progress on the transformation business case which the IDT will be presenting to the Portfolio Committee once concluded Portfolio committee to support the IDT’s long term sustainability transformation initiative Agreement to review this initiative in a workshop format