Minister Stella Ndabeni-Abrahams: SABC funding allocation

4 October 2019

Good Morning.   

I thank you for availing yourselves to this important briefing which seeks to provide an update on the South African Broadcasting Corporation (SABC) funding allocation.

The Department of Communications (DoC) has assisted SABC to obtain the requisite funding allocation through submitting required motivations to National Treasury and enlisting the services of the Government Technical Advisory Centre to help bolster its turnaround plan.

The above interventions resulted in the Minister of Finance’s announcement in his February 2019 Budget Speech that SABC will be considered for funding through contingency reserves.  However, National Treasury attached preconditions to the funding allocation. Following a consultative process, SABC submitted updated responses to the set preconditions on 30 August 2019. These have been jointly assessed by National Treasury and DoC; revealing that of the eight preconditions, SABC has fully met five, partially met two, whilst one has not been met.

The preconditions that are fully met are as follows:

Determine immediate cash requirements supported by detailed cash flow projections for the next 12 to 18 months;

Submit a list of identified initiatives for revenue enhancement and costs-cutting initiatives;

Conduct a thorough investigation into what caused the financial collapse of the SABC and why previous turnaround plans have failed to be successfully implemented;

Provide an update of how the entity is dealing with the people implicated in the investigation report; and

Develop a turnaround plan incorporating measures to prevent the reoccurrence of the identified factors. This must also take into account various reports including those of the Special Investigating Unit, Public Protector, Auditor General and Parliament.

The preconditions that are partially met are as follows:

Produce separate financial reporting for public and commercial broadcasting services; and

Identify non-core assets for disposal to assist with reducing the recapitalisation requirement from government.

Lastly, SABC has not met the condition to develop a comprehensive Private Sector Participation (PSP) strategy, clearly highlighting initiatives to be implemented and the net value to be derived from these partnerships. However, willingness to work on this condition has been expressly provided and this is welcomed by the two departments.

Based on the above joint assessments, the two departments have worked together to facilitate the initial tranche of the R3, 2 billion allocation to be transferred to the SABC. As such R2, 1 billion will be transferred to the public broadcaster on Monday, 07 October 2019. The remaining balance of R1, 1 billion will be transferred once the public broadcaster fully meets the remaining three outstanding conditions or firmly demonstrates evidence to fully comply. 

Further, DoC has communicated the SABC funding allocation to the Auditor General to assist in addressing the going concern matter and conclusion of the 2018/2019 Annual Financial Statements. As a result, SABC obtained a qualified audit opinion instead of a disclaimer

It should also be noted that the National Treasury attached three conditions to the DoC which do not impact on the release of funding to SABC. These conditions have been addressed as follows:

On Policy and Legislative review: The department has submitted the legislative review schedule to address the National Treasury’s conditions as required.

Appointment of the Chief Reorganisation Officer: The department has received the draft Terms of Reference from National Treasury and is providing the required input. Upon finalisation and agreement with the Minister of Finance, the appointment process for the CRO will be expedited.

Lastly, the new Board has been appointed.

Colleagues,

It is noted that the SABC turnaround requires more than the R3,2 billion short-term funding. However, the public broadcaster was required to submit a fit-for-purpose turnaround plan which would respond to short-, medium- and long-term requirements; and the changing broadcasting landscape.

SABC has since submitted a board-approved Turnaround Plan which is currently being reviewed by both departments. DoC will further continue engaging with National Treasury to source funding through the normal Medium-Term Expenditure Framework processes. Going forward, and to ensure compliance with the funding conditions, SABC is expected to present its monthly financial status to DoC.

The SABC plays an integral role to inform, educate and entertain the public. As a department, we remain committed to ensuring a public broadcaster that is able to effectively discharge its mandate, whilst being a commercially viable organisation. 

In conclusion, I appreciate the support provided by the Minister of Finance and his team; as well as Deputy Minister Pinky Kekana for the collective leadership. 

I thank you.

Issued by Department of Communications, 4 October 2019