No lotto funds lying idle - minister
Johannesburg - The National Lotteries Distribution Trust Fund (NLDTF) is not sitting on billions of unspent rands that could be used for good causes, Trade and Industry Minister Rob Davies said on Monday.
"I can assure you there is no R6bn sitting idle," he told a NLDTF consultative indaba in Midrand.
There was R1.5bn available in the current financial year, he said, and another R3.2bn had already been approved and allocated.
Vevek Ram, CEO of the National Lottery Board (NLB), which administers the NLDTF, said between April 1 2000 and March 31 this year, total revenue for the lottery was R15.9bn.
Of this, some R11bn had been paid out to beneficiaries. He said contrary to a recent report, only 2.4% of revenue had been spent on administration.
Ram was referring to a report, released in March, titled "Meeting their Mandates?", which found the NLB and the National Development Agency (NDA), two statutory bodies tasked with distributing funds to poverty-relief organisations and charities, had failed in their mandates.
Compiled by the Funding Practice Alliance, a grouping of four civil society organisations, the report found both the NLB and NDA, but particularly the NDA, "spend heavily on administrative costs".
It says there are no measures in place to determine a reasonable proportion of allocated funding for each agency to cover operational overheads.
"The NDA's current use of more than 50% of its annual allocation to cover operational costs demonstrates that urgent steps need to be taken towards improving the flow of funds to worthy projects, enhancing cost effectiveness, and encouraging public accountability," the report says.
Ram said this was "absolutely absurd".
Davies said there were three major problems with the lottery funding: it took too long to process applications; compliance requirements were too complicated; and there were conflicts of interests between those granting the funding and those requesting money.
He said that on taking office in 2009, he had received "a barrage of complaints" about unspent lottery funds, the time taken to decide on and distribute to successful applicants, and regulations that excluded smaller community-based organisations that could reach poor and needy people.
At the beginning of that year, only 11% of funding was adjudicated and paid out within three months.
After talks between the former board, the distribution agencies and the DTI, this had improved. Now, 90% of applications were paid out within three months of adjudication.
Davies said his department had identified a series of necessary reforms, including administrative actions and regulatory changes.
"We have accordingly launched a review of the Lotteries Policy Framework and we hope this will lead to the introduction of a lotteries amendment bill later this year."
Ram said the Lotteries Act had been more-or-less copied from one used by the United Kingdom, but conditions had since changed in South Africa, leading to the need for a more flexible model.
The South African funding model is application-based, so the board can only distribute funds to those who ask, but cannot intervene where it sees a need.
NLB chief of operations Jeffrey du Preez said research suggested a mixed model might work better. This was "an applications-based approach, with the pro-active targeting of projects with high impacts".
"A substantive voice said maybe we should consider a more mixed model, rather than the purely applications-based one we're currently using," he said.
The two-day indaba - at Gallagher Estate - will review the current funding model, and make proposals for a new model to best suit South Africa's development needs.
Delegates at the indaba will also consider whether the mix of recipients of lotto funding need to be changed, as well as the rural-urban split and how to make distribution more equitable between provinces.
At the moment, funding favours Gauteng and urban areas.
This was a culmination of a series of workshops held around the country since 2010 to improve the lottery and make it "a highly transparent, fully accountable and readily accessible agent of change", NLB chairperson Professor Nevhutanda Alfred said.