Government departments owe the Independent Development Trust (IDT) — the state-owned agency that manages and implements the govenment’s social infrastructure programmes — R537m for work contracted on a range of projects.
The amount of management fees outstanding on the debt is R54m, adding to the financial distress of the organisation, which falls under the department of public works & infrastructure.
The biggest debt, R175m, is owed by the KwaZulu-Natal department of education, followed by R91m by the department of justice, R83m by the department of public works and R55m by the department of correctional services.
The IDT is not the only institution affected by outstanding debt, even though National Treasury instructions mandate the payment of valid invoices within 30 days. Finance minister Enoch Godongwana revealed in August that organs of state owed municipalities R18.6bn in rates and taxes.
IDT CEO Tebogo Malaka said in a briefing to parliament’s public works and infrastructure committee on Wednesday that the agency had had to spend large sums on litigation defending claims by service providers for money owed because departments had not paid what was due.
The IDT has been in the news recently over a R800m contract it and the department of health awarded to three companies for oxygen plants at 55 hospitals. According to media reports, the cost of the project, funded by The Global Fund, escalated from R216m.
Two of the companies were not registered with the SA Health Products Regulatory Authority and the credentials of one was dubious. Minister of public works & infrastructure Dean Macpherson has appointed PwC to conduct a forensic investigation into the contract.
Malaka said that by the end of the 2023/24 financial year the IDT had a portfolio of R9bn, up from R2bn in 2021 and the highest since 2015/16.
In 2023/24, the organisation spent R2.8bn on infrastructure projects, R1bn on social programmes, completed 127 facilities, spent R2bn on BBBEE and created 4515 work opportunities in IDT programmes and 77 223 work opportunities in expanded public works programmes.
The Government Technical Advisory Centre — a government agency within the Treasury — has concluded the IDT will still require grant funding from the government until it breaks even outside the 2024/25 medium-term expenditure framework — even if it should succeed with an aggressive drive to generate business.
But Malaka said grant funding from the government had fallen short of requirements. In 2021/22 R162m was requested and R93m received, in 2022/23 R107m and R70.3m respectively, in 2023/24 R81.8m was requested and granted and in 2024/25 R64m was requested and nothing was received.
Part of the turnaround achieved since included filling critical vacancies, the appointment of registered built environment professionals and the procurement of a project management system to track the progress of projects, she said.
One of the challenges facing the organisation — and one which generated a lot of ire among MPs — is that its board of trustees has not been quorate since November 1 when one of its trustees resigned, leaving seven, when a quorum requires the presence of eight members. As a result, the board has not been able to conduct any meetings. The board is supposed to comprise 12 trustees, including two ministerial appointees.
In terms of the IDT’s trust deed the board has to recommend nominees to the minister for appointment in the event of a vacancy. This has not happened. There is also a dispute whether two board members are ministerial appointees. The department claims they are but the members say they are permanent members.
Adam Mthombeni, the deputy director-general of public works, stressed that the department regarded the IDT as a key entity to deliver social infrastructure.
The department had made a proposal to the cabinet to establish the IDT as a state-owned company but this was not finalised by the Presidential State-owned Enterprises Council. No money had been allocated by the Treasury for the IDT, but the department had allocated grant funding from savings from its own budget. However, this had not been possible in the current financial year.
Mthombeni said a factor to consider in terms of the composition of the board was that the term of office of the current board, which was appointed in 2021, would terminate in July. It took a few months to finalise a board appointment.
The 2023/24 annual report of the IDT had not been finalised because of a disagreement with the auditor-general, which Malaka said had now been resolved.
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