Report of the Portfolio Committee on Finance on its Oversight hearing of Statistics South Africa (Statistics SA) Annual Report 2004/05, dated 8 November 2005:

The Portfolio Committee on Finance, having considered the annual report of Statistics SA for 2004/05 and the related presentations by the Statistician General and the senior management of the department reports as follows:

  1. Introduction
  2. The Portfolio Committee on Finance held a hearing on 10 October 2005 at which the Statistician-General and a team of senior managers presented the Statistics SA annual report for 2004/05. This was followed by a discussion of issues arising from the documents and presentations during which members of the Committee raised a number of issues. The Committee was impressed by the format of the annual report, which was a significant improvement on the previous year and which achieved greater clarity in the presentation of substantive issues. The Committee however raised its grave concern with respect to the management of Statistics SA which substantive issues are raised in the report.

    1.1 Strategic focus of annual report and linkage of performance to targets.

    Statistics SA presented an annual report that facilitated robust oversight as a result of compliance with National Treasury formatting and through clear linkages between the strategic themes raised in the strategic plan and performance. However the annual report could be further improved if it provided greater details in the Programme Performance section especially where targets set in the strategic plan are not achieved.

    2. Issues related to the General and Financial Management of the Department

    The Committee expresses concern at the persistence of numerous problems related to the management of the department. In the Committees opinion these require urgent attention and should not be allowed to remain unresolved for a further year.

    1. Weak management capacity
    2. During the engagement with the Committee, the Statistician General made frequent reference to lack of management capacity within Statistics SA. This challenge was frequently used to explain different aspects of the poor performance of the department during the period under review.

      In the Committeeís opinion this is the responsibility of the Statistician General, both in terms of the Public Service Act and in terms of PFMA, as well as in terms of the Statistician General letter of appointment, to ensure that the department has a management team with the necessary capacity to guide and manage the department. The Committee also noted that the lack of management capacity specifically, and the lack of capacity generally, impacted on every aspect of Statistics SAís performance during the period under review.

      The Committee notes that the other entities reporting to the Minister of Finance, namely the National Treasury, the South African Revenue Service and the Development Bank of Southern Africa, all faced legacy problems at the time of the transition to democracy in 1994. But since then, the respective heads of these entities have succeeded in developing very strong, competent management teams. The Committee appreciates that there may be circumstances outside its knowledge that hampered the Statistician Generalís efforts to resolve the capacity problems within Statistics SA.

    3. Under-spending
    4. In respect of financial management, the department acknowledged the continued trend of under-expenditure and agreed that there was a need to strengthen planning systems and that Census 2001 was still creating problems in the organization. The Committee notes that it is cause for great concern that current problems continue to be attributed to previous Census especially when the department has already started planning for the next Census.

    5. The large number of targets not reached
    6. The Committee notes the many instances in the annual report where targets identified in the strategic plan were not met. Statistics SA explained that a lack of capacity had necessitated that focus on achieving fewer targets. The departmentís failure to deliver on the performance targets it set for itself reflects poorly on the managementís capacity to plan properly (taking capacity constraints into account), and to execute these plans.

      The lack of management capacity is also reflected in the weak working relationship with SARS related to the collection of data from the business register.

    7. Failure to deal with suspensions
    8. It is a matter of concern that issues related to the suspensions of senior management have not yet been resolved, some of which have been outstanding for more than 12 months. The Statistician General could not give a satisfactory reason for the delay in resolving these issues.

      The Committee notes that the issues around these suspensions are impacting negatively on the performance of the department and therefore urges that they be resolved speedily.

    9. Supporting rural municipalities
    10. The Committee inquired as to how much support was given to rural municipalities in the use of statistics. The department admitted they were unable to reach most rural municipalities, but indicated that they did have officers in each province that provide installations and training and support around these installations.

      The department commented on the difficulty they have with publishing certain statistics collected at the municipal level and the fact that the Statistics Act prohibited the department from publishing certain statistics if the municipalities did not want them published. It was not clear whether the real problem was a legal problem or a management problem, or simply that certain government departments or municipalities did not want the data published because it would reflect badly on their performance.

    11. Evaluating Statistics SA web accessed information

The department indicated that it used surveys to measure user satisfaction but conceded that this had achieved limited success, as users are not comfortable answering the relevant questions. However the department did not provide any suggestions as to how they would address the issue.

In response to the issues of general and financial management raised by the Committee, more specifically those issues raised in the Auditor-Generalís report, the Statistician-General requested an opportunity to respond after engaging with the Auditor-General prior to responding to the Committee.

The Committee needs to make it clear that such a request for deferment is unacceptable and that in future the Statistician-General should be more prepared to deal with such matters in line with his responsibilities as set out in the PFMA.

3. Issues related to statistics

    1. Measuring and reporting on the quality of statistics

The Committee notes that despite the matter having been raised during the previous year, the department has made little progress on developing measures to evaluate and report on the quality of the statistics it publishes. However Statistics SA indicated that plans are being implemented and the results would be available soon although it had not yet finalized the timeframes. Reports had been released on the measures to improve the quality of statistics however it was conceded that this information should have been published in the annual report.

The department also elaborated on its intentions to integrate its data sets with those of other departments. The main objective of these plans is to improve the statistics produced by other departments so that these statistics could become official statistics. The World Bank supports these activities and consultants from the World Bank are providing assistance, however no timeframes or specific outputs were identified. The annual report showed many instances of targets for training members from other departments not being met and it is not clear how much these shortfalls impacted on the above plans of integration.

The department also indicated that it has a number of processes in place to harmonize and profile data sets, some of which are collected from the business register. This process has occupied the Stats SA for "some time". It would be important for it to identify the targets it will be able to achieve.

The Committee notes that reporting on the quality of statistics and supporting indicators is something the department has been working towards for some time now and it would have expected more concrete progress to have been made, or at least more specific targets to have been provided.

  1. The presentation and definition of unemployment information
  2. Stats SA confirmed that it had not abandoned any definitions of unemployment including that of "broad-based unemployment" but rather it had added new definitions to describe the unemployed and different categories of the unemployed e.g. those seeking and those who had given up seeking employment. The department conceded that the presentation of the data may have created confusion to the public, but it had learnt from this experience and intended presenting the information concerning different categories of the unemployed, e.g. those seeking and those who have given up seeking employment, in a more understandable manner going forward.

  3. Measurement of GDP
  4. The Committee noted that it is concerned about how the informal sector gets reported on in the GDP figures.

    The department indicated that it had a number of approaches to calculate the informal sectorís contribution to GDP that included regular surveys and "diary information". The development of new surveys to measure activity in the informal sector was also noted. Statistics SA agreed that it needed to develop stable sampling frames to provide accurate information and that this was difficult in the context of the informal sector. Statistics SA has many plans in place to improve these areas and address the many challenges, however these plans are not currently producing results.

  5. Progress with Community Surveys
  6. The department commented on the difficulties they were facing with community surveys and the lack of consistency in sampling frames and the lack of standards for spatial referencing. It was reported that progress was made, but did not provide any concrete measurements of this progress.

    1. Committee resolutions

Based on its deliberations the Committee took the following resolutions:

  1. The Minister of Finance must review the persistent lack of management capacity within Statistics SA, taking into consideration factors that may have hampered efforts to build a strong management team, and submit a report to the Committee setting out a plan of action to resolve the problem.
  2. Before 18 January 2006, the Statistician General must provide the Committee with a comprehensive management report that responds directly to issues raised by the Committee. In that report the Statistician General should detail specific steps that will be taken to:

The management report must give timelines and appropriate performance targets, so that the Committee will be able to monitor the implementation of the measures the Statistician-General proposes taking.

  1. The Committee requests that the Statistician-General furnish the Committee with a detailed report on all issues raised in the Auditor-Generalís report.
  2. The Committee requests Statistics SA to supply it with a written report on the obstacles it is encountering with regards to the publication of statistics obtained from municipalities.
  3. The Committee requests the Statistician General to supply it with a written timetable for resolving the issues around suspended senior managers, that indicates by when the issues are likely to be concluded. The Committee further urges that the matters should be dealt with as speedily as possible as they are impacting negatively on the performance of the department.
  4. The department must continue to work on ways to report on the quality of statistics reported and provide the Committee in writing with timeframes as to when applicable indicators will be developed and implemented.

The department must provide measurable targets and timeframes rather than describing their progress in general terms.