Trough runneth over for spendthrift Setas

The pot is empty for varsity subsidies, but millions are being squandered in the vocational sector

Just as the government says its pockets are not deep enough to satisfy demand by university students for adequate funding, the controversial sector education and training authorities (Setas) spent millions of rands in dubious transactions over the past financial year.

The 26 entities — including the 21 Setas — that fall under the higher education and training department incurred R351-million in irregular expenditure during 2014-2015. Of this total, R321-million was spent by 10 of the Setas.

Two of the Setas spent close to R250-million in irregular expenditure between them: they are the safety and security Seta (Sasseta) and the culture, arts, tourism, hospitality and sports Seta (Cathsseta).

Cathsseta irregularly spent R124-million, and Sasseta spent R126-million. Higher Education and Training Minister Blade Nzimande placed both Setas under administration this year.

The 21 Setas are meant to help reverse the country’s skills crisis and thereby address the plight of the 3.4-million 18-to-24-year-olds who are not in employment, education or training.

The Setas are funded through a 1% skills levy deducted from employees’ salaries each month. They were allocated R11-billion for the 2014-2015 financial year.

Tailored to facilitate training for industry needs, they are meant to enable young people to participate in learnerships and apprenticeships, and provide career guidance. The Setas also issue bursaries to university students.

Since their launch in 2000 under the labour ministry, the Setas have been criticised for failing to deliver and wasting billions of rands. Nzimande vowed to knock the troubled bodies into shape when he assumed office in 2009.

Irregular spending patterns among the Setas vary. Some — including the banking Seta; the education, training and development practices Seta; the manufacturing, engineering and related services Seta; and the fibre processing and manufacturing Seta — did not incur any expenditure in contravention of government legislation.

These are the findings of auditor general Kimi Makwetu’s audit on the department and its entities over the past year. The department itself registered over R1.2-million in irregular expenditure after not following “correct procurement procedures with regards to tender processes”.

Makwetu also raised the alarm over the department’s critical shortage of staff to run the entities effectively. “The department is unable to perform all the required verification and monitoring functions over its entities due to funding and human resources capacity constraints,” said his audit report. “As a result, the reliability of reported achievements of its entities and institutions that are consolidated into the achievements reported by the department is not adequately verified.”

The vice-chancellors’ body Higher Education South Africa, renamed Universities South Africa, has been advocating for the redirection of millions of rands currently in the coffers of the Setas to the National Student Financial Aid Scheme (NSFAS).

“The considerable amount of funding held by Setas through the National Skills Fund could be used very effectively in addressing our country’s skills shortages, if a portion of this funding could be channelled to NSFAS or, at least, set aside for administration by NSFAS,” says the organisation’s position paper.

When it emerged earlier this year that the Setas had left about R2-billion unspent in 2014, Democratic Alliance MP Yusuf Cassim called for this money to be diverted to poor students whose fees had not been settled by NSFAS owing to its lack of funds.

“The money could go a long way to support these students, who have already qualified for NSFAS funding, to finish their studies,” he said.

Higher education spokesperson Khaye Nkwanyana said the department is concerned about the levels of irregular spending in the Setas. The department is implementing plans to turn things around in the bodies, he added. Sasseta and Cathsseta have been allocated administrators as part of this drive.

“The irregular expenditure is quite a worry, but we’re engaging with them so that there’s improvement in financial management,” he said. “Because they are public institutions, they’ve got to manage their finances in line with the Public Finance Management Act. Their spending patterns must be within the limits of the Act.

“There’s a lot of turnaround in various Setas that we’re engaging [with] so that they perfect their books in a manner that is expected of any public institution. We can’t celebrate irregular expenditure.”