9th Floor, Regis House, Adderley Street, Cape Town 8000

7 March 2003


(Vote 27)

Responsible Minister: Dr I. Matsepe-Casaburri.

Accounting Officer: Mr Andile Ngcaba, Director-General – DoC.

The table below illustrates the medium-term expenditure estimates of the DoC and the amounts allocated to the department’s 5 Programmes. The figures in bold print and square brackets are the allocations for the previous financial year.










  1. Administration

83 607

[63 708]

90 912

[72 749]

94 918

[77 161]

  • Telecommunications Policy
  • 135 900

    [117 190]

    134 649

    [111 697]

    142 670

    [116 913]

  • Postal Services
  • 353 082

    [344 502]

    356 490

    [350 157]

    372 199

    [353 173]

  • Multi-media Services Policy
  • 263 244

    [292 959]

    277 668

    [250 428]

    289 904

    [256 458]

  • Auxiliary and Associated Services
  • 6 682

    [5 092]

    7 124

    [6 212]

    7 438

    [6 590]


    842 515

    [823 45]

    866 843

    [791 243]

    907 129

    [819 295]


    The previous financial year

    The DoC committed itself to create a communications sector that will make a difference in the lives of the majority of South Africans, and to use the advantages brought about by technological innovations to enhance economic growth and development. The achievements of the DoC in the previous review period contextualises the challenges facing the department. The department reported the following activities:

    The current financial year

    In its financial year under review, the DoC reported that the overall economic performance of the communications sector has been slow and that a number of larger role-players in the sector experienced cuts in profit margins. South Africa did not escape these trends because of the country’s integration into the world economy.

    The department identified the following 4 key policy objectives.

    The liberalisation of the telecommunications sector: The DoC is in the process of liberalising the telecommunications sector and reported that it has created an environment in which a new telecommunications player will enter the market, to compete with Telkom. The Second National Operator, the SNO, will be constituted, consisting of national and international investors once the Independent Communications Authority of South Africa (ICASA) has completed the adjudication process.

    The licensing of Sentech contributed towards the liberalisation process. This will provide international access as a carrier of carriers and multi-media services. The new policy makes provision for operator licensing in under-serviced areas with a teledensity of less than 5%.

    Electronic Communications and Transactions: National Parliament finalised the creation of a legal environment for those engaging in electronic communications and transactions. This will open opportunities to South Africans to engage in business transactions internationally. It is envisaged that once the process is concluded, South Africa will be given the opportunity to make use of e-commerce opportunities that are in line with international standards.

    The broadcasting system: The DoC reported that it started a policy and legislative process that will address the shortcomings of the current broadcasting system in South Africa. The broadcasting system will be expanded to provide a diverse service to all sectors of the population and to separate the South African Broadcasting Corporation (SABC) into commercial and public broadcasting units.

    The postal sector: The department is tasked with repositioning the South African Post Office (SAPO) to enable it to live up to new challenges that e-commerce offers. A framework for a national address system is being developed which will ultimately provide all South African households with physical addresses. The department strives towards eliminating poverty and ignorance and to empower historically disadvantaged communities. In order to give effect to this, projects are under way to provide more public internet terminals, post offices, multi-purpose community centres and community radio stations.

    International outreach: The department is active in the field of promoting the utilisation of ICTs for the socio-economic development of Africa. The Presidential International Advisory Council (PIAC) and the Presidential National Commission (PNC) give impetus to this initiative. The participation of the department in international information technology organisations and activities enabled South Africa to place the African continent on the agenda of such organisations. According to the department, the NEPAD ICT programme has given it a mandate for the development of the ICT sector. The utilisation of ICT technology worldwide will play a pivotal role in the social emancipation of Africa. In terms of the medium-term expenditure proposals, the Minister of Finance, in his 2003 budget speech, announced that allocationof R1,3 billion to support a growing international role, peace-keeping missions and NEPAD.

    An overview of DoC expenditure trends

    There has been significant variations in expenditure on the Post Office subsidy in the year under review. The subsidy was removed in 2000/01. This resulted in a significant drop in expenditure. In 2001/02 the subsidy was re-introduced. The subsidy initially amounted to R600 million (to cover two years’ losses) and in 2002/03 an amount of R300 million was offered. Telecommunications Policy expenditure increased significantly between 1999/00 and 2002/03. Expenditure in this sector increased at an annual rate of 32,1%. An amount of R20 million was allocated over the medium term for emergency call centres. The following additional amounts have been allocated "for various ICT initiatives and to enhance ICASA’s capability": R35 million, R29 million and R19 million.

    The expenditure trends of the department’s 5 Programmes are tabled below, together with an outline of the activities under each programme:


    ► continued on page 7


    Programme 1



    Programme 2

    Telecommunications Policy


    Programme 3

    Postal Services


    Programme 4

    Multi-media Services Policy


    Programme 5

    Auxiliary and Associated Services

    Administration is responsible for policy formulation by management, financial control and internal audit, management of human resources and other support services. The programme established a knowledge management unit during 2000/01, and it interacts with national, provincial and local governments to promote knowledge management within Government.


    Expenditure on this programme will increase by 10,3% annually between 2002/03 and 2005/06 (in comparison to 9,5% between 1999/00 and 2002/03.)






    The Telecommunications Policy Programme formulates telecommunications policy, manages Government’s shareholding interest in Telkom SA Ltd and control transfers to the Universal Service Agency (USA) and the Universal Service Fund.


    This programme showed a significant increase over a period of 3 years. This can be ascribed to the implementation of the Telecommunications Act, Act 103 of 1996, which focuses on the regulation of telecommunications activities. The increase in expenditure was 32,1% on average between 1999/00 and 2002/03, partly as a result of an appropriated amount of 20 million and the rolling out of R20 million for emergency communication call centres. An additional R20 million was allocated for 2003/04 for the continuation of the initial project. It is envisaged that programme expenditure will increase annually at 2,1% between 2002/03 and 2005/06.

    Postal Services develop and refine the policy framework for the postal sector, manage the shareholding in the SAPO Ltd and oversees the Postal Regulator. Its activities are subdivided in:

    Postal Service Policy (for the effective delivery of postal services).

    The Postal Regulator (for the expansion of postal services and promoting the interests of postal service users, issuing of postal licences and monitoring compliance by operators.

    The Post Office Subsidy transfers money for the Post Office Subsidy.


    There was a large increase in expenditure in 2001/02, ascribed to the re-introduction of the Post Office Subsidy. Over the medium term, this subsidy accounts for an annual average of 83,2%. An amount of R300 million was allocated for each year of the medium-term period. Expenditure on the rest of Programme 3 has increased from R22,6 million in 1999/00 to R45,5 million in 2002/03. Medium-term expenditure is likely to grow by 2,5% per year. Expenditure on the Postal Regulator subprogramme will increase from R21,4 million in 2002/03 to R36,6 million in 2005/06.

    Multi-media Services Policy formulates broadcasting policy and manages the shareholding in the SABC. In addition, it controls and monitors transfers to the SABC, the National Electronic Media Institute of South Africa (Nemisa), Sentech and ICASA.


    Expenditure on this programme was variable. This is ascribed to policy changes and once-off expenditures. Funding to the former TBVC broadcasters was terminated. This resulted in a decline in spending between 1999/00 and 2001/02. In 2002/03 an amount of R54 million was transferred to Sentech "to settle an outstanding loan with the SABC". Expenditure on this programme nevertheless dropped by 1,7% annually between 1999/00 and 2002/03. It is predicted that expenditure will decrease in 2003/04, but over the remainder of the medium term, there will be a 4,9% increase between 2003/04 and 2005/06.

    Auxiliary and Associated Services provide research and support services to promote the DoC’s aim, with the measurable objective to facilitate, leverage and conduct high quality research to monitor and evaluate the activities of the communications sector.


    Programme 5 represents a small part of the overall Communications Vote. It increased by an average of 27,8% per year between 2000/01. It is predicted that it will increase further by 11,4% per year between 2002/03 and 2005/06.

    Recent outputs, objectives and challenges

    The DoC envisages that a lot of energy will be spent in the next 3 to 5 years on increasing access to the postal network and to make the Post Office an economically viable enterprise. The Post Office Subsidy will remain on the DoC’s budget for the next 3 years, in order to cover operational losses and to assist the Post Office to meet its social obligations. In addition, an important challenge to the Post Office is, amongst others, to deliver financial services to the unbanked and to increase public confidence. A particular challenge to the postal business unit is the corporatisation of the Postbank. This requires that the Postal Services Act be amended. The Postbank should be placed in the best position to specialise in the mobilisation of savings and extending financial services to under-serviced communities.

    The main challenge facing the broadcasting sector is to increase access to television and radio services. The Broadcasting Amendment Act, Act 4 of 1999, should go some way in expediting this process. Media diversity remains a challenge. The 2002 Broadcasting Amendment Bill makes provision for the establishment of 2 regional television licences. The first licence will be allocated to the northern region and will focus on the Sotho, Tsonga, Venda and Sepedi languages, while the second, for the southern region, will cater for Nguni languages.

    The ICT sector as well as the Information Technology (IT) sector pose particular challenges to the DoC. The importance of the ICT sector in the deliberations of the DoC is reflected in a speech by the Minister of Communications on the occasion of the ICT Sector Summit, which was held on 3 June 2002, when she said:

    ‘The current economic revolution has, in part, been made possible by advances in Information and Communications Technology (ICT) which have reduced the cost and increased the speed of communications across the globe, abolishing pre-existing barriers of time and space, and in consequence affecting all areas of social and economic life. It has been made possible by the integration of national systems of production and finance, and is reflected in incredible growth in the scale of cross-border flows of goods, services and capital,’ so declared African Leaders. Informed by this wisdom NEPAD identified ICT as one of its priority sectors to enable the continent to capitalise on ICT as a tool in enhancing livelihoods and creating new business opportunities. This unstoppable revolution is at the heart of the African Renaissance as championed by President Mbeki. Solidarity of Africans across nationality and class has never been so important. We can only ignore or undermine this at our own peril much to the detriment of hundreds of millions of our people in Africa. The days of hand-outs and economic dependency are giving way to an era of Africans becoming masters of their own destiny as defined and understood by themselves. The spirit of Letsema/ Vuku'zenzele should be turned into a living reality in our workplaces and residential areas in order to lend a hand in pushing back frontiers of poverty.

    Against this background, the summit was expected to deliberate on and address the following issues:

    The e-commerce sector is closely linked to the aforementioned ICT and IT sectors. The DoC aims to develop an e-commerce policy to govern electronic and mobile commerce. The main activity in this regard is the establishment of a domain name, and enabling this authority to resolve disputes arising from so-called cyber squatting. The DoC plans to introduce an e-rate to stimulate and facilitate internet usage by public schools, offering such schools a 50% discount on calls to access the Internet, as well as Internet access charges.

    The restructuring of the Universal Service Agency is a particular challenge to the DoC. A board consisting of 7 members will oversee the increasing of the Universal Service Fund. Its mandate is the promotion of telecentres, Internet in public schools and public Internet terminals.

    Multi-media outputs include the following: The repositioning of Channel Africa as a multi-media service. The key objective of this project is to seek commercial partnership and to establish a new corporate governance structure. The restructuring of the SABC aims to reposition the corporation and to enhance corporate governance. This includes, amongst others, the drafting of policies for disability, children, digital migration and local production, the privatisation of Ciskei and Capital Radio to cover the whole of the Eastern Cape province and a community radio infrastructure support project. As far as local content is concerned, the South African Production Advisory Board will advise the Minister on supporting development, production and display of local content on television and radio and how to redress imbalances in the production industry.

    Knowledge Management (KM) has become a prominent feature of the Support Services offered by the DoC. Knowledge-sharing among individuals or groups within an organisation is one of the most important human interaction processes. KM, therefore, seeks to facilitate the flow of knowledge within in the workplace. The KM implementation strategy process began at the Institute for Software and Satellite Applications (ISSA). This was followed by the second phase, which resulted in 18 seminars being held throughout Government departments on national, provincial and local levels.


    DoC adjustments to 2002 estimates of expenditure

    Unspent allocations

    An amount of R20 million was allocated in 2001/02 as part of the DoC’s R80 million allocation for infrastructure. This allocation would mainly be used for acquiring infrastructure for emergency call centres. The allocation was, however, not spent due to delays in acquiring suitable premises to house the emergency call centre. The funds have since been committed after a tender was awarded for the configuration, delivery and installation of emergency call centre equipment in early 2002.

    Unforeseen and unavoidable expenditure

    Following a VAT inspection by the SA Revenue Service, it was determined that the transfer payments received from the DoC by the South African Telecommunications Regulations Authority (Satra), and the grants which the Independent Broadcasting Authority (IBA) had received from 1998 until 2002, are taxable at the standard rate.


    An amount of R5 million was saved for the payment for a technology licence to the University of Stellenbosch (the DoC and the University of Stellenbosch concluded a partnership for the construction of a satellite.) An amount of R4 million of this saving was utilised under Programme 1, Administration, for the following projects:

    The remainder - R1 million - will be transferred to the SABC "for the development of Internet content associated with programming for the youth."

    Salary and inflation adjustment

    The DoC received R7,657 million for "higher than expected salary increases and the effect of the increase in general inflation." This can partly be ascribed to the CPIX (the inflation rate which defines Government’s inflation target) increased to 11,8% in the year to September (as opposed to 5,8% in September 2001). Further increase in CPIX inflation could be expected during 2003. CPIX inflation is expected to reach a turning point of more than 11% by October/November before decreasing. Inflation is likely to fall sharply during the course of 2003 and should be within the inflation target by the final quarter of 2003.

    For consideration

    The AU, Nepad and the Pan-African Parliament (PAP)

    On the occasion of the Third African Union Seminar, which was held on 5 and 6 February 2003 in National Parliament, South African Members of Parliament indicated that it was critically important for South Africans to develop a common understanding of the political direction of the AU, for South Africa. In so doing, members will convey consistent messages to their constituents with regard to the AU. It was also resolved that all political parties and social movements should be encouraged to develop coalitions to promote the AU and NEPAD, and that diplomatic ways be found to articulate subjective problems in Africa, thereby demonstrating the seriousness of the AU and fostering popular support. Although it is conceded that this necessitates an intersectoral approach involving all of South Africa’s Government departments, the DoC is in a decidedly stronger position to sell the AU, Nepad and the PAP.


    The DoC seems to have made progress in this field. The department conducted a gender audit of all state institutions (this activity falling under the Ministry), which informed and highlighted some of the gender-related obligations and responsibilities which each organisation had to undertake. The findings of the audit was used as a guideline regarding sector gender equality guidelines. The department’s own gender analysis was done by an external organisation.The analysis focused on the gender desk’s effectiveness in assisting the department in its gender mainstreaming programme, and the actual progress made by the department in gender mainstreaming. The DoC reported that the "findings clearly outline areas still needing attention and areas where the department has done well."

    The Public Finance Management Act (PFMA), Act 29 of 1999

    The PFMA is one of the key instruments for the modernisation of South Africa’s system of financial management, to ensure the timely provision of quality information and to eliminate waste and corruption in the use of public assets. In terms of sections 47 and 48 of the PMFA, all public entities must be listed in the different schedules of the Act. The DoC reported that it finalised the listing of all its portfolio organisations.


    The impact of technology on economies and human development cannot be overemphasised. The United Nations Development Programme (UNDP) has developed an index, the Technology Assessment Index (TAI) in order to assist nations in developing their technological potential to the fullest. The role of the DoC in technological progress and innovation becomes starkly clear when South Africa was listed in the 39th position out of 72 countries on the TAI list. Equally disconcerting, 6 of the bottom 9 countries on the TAI list are African. Capital should be made available to improve South Africa’s (and the continent’s) ability to make technological progress. Some scholars are of the opinion that one such obstacle to technological development is inappropriate government policies and that policymakers must therefore balance market needs with societal needs. This could assist in the effective and economic deployment and operation of technologies. The DoC’s role in this process is of paramount importance in placing South Africa and the continent on the information highway.



    Department of Communications Annual Report, 2001-2002.

    The Estimates of National Expenditure, 2003.

    Adjusted Estimates of National Expenditure, 2002.

    The Medium-term Budget Policy Statement, 2002.

    "Charting a New Course: Globalisation, African Recovery and the New Africa Initiative", published by the South African Institute of International Affairs, 2002.


    [Budget overview dept of communications vote 27]