No lotto funds lying idle: minister

2011-06-20 13:56

The National Lotteries Distribution Trust Fund is not sitting on billions of rands of unspent money that could be used for good causes, Trade and Industry Minister Rob Davies said today.

“I can assure you there is no R6 billion sitting idle,” he told a trust fund consultative indaba in Midrand.

There was R1.5 billion available in the this financial year, he said, and another R3.2 billion had already been approved and allocated.

Vevek Ram, chief executive of the National Lottery Board, which administers the trust fund, said that between April 1 2000 and March 31 this year, the total revenue for the lottery was R15.9-billion.

Of this, some R11-billion had been paid out to beneficiaries.

He said that 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 that the board and the National Development Agency, 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 finds both the the board and the agency, but particularly the the agency, “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 the agency’s current use of more than 50% of its yearly 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.

At the beginning of that year, 11% of funding was paid out within three months of adjudication.

“The board has made significant progress. and there have been major improvements in the time between adjudication and payment,” Davies said.

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 reforms.

These made it necessary to amend the Lotteries Act, and he expected the Lotteries Amendment Bill to come before Parliament before the end of 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.

The board’s 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,” Du Preez said.

The two-day indaba at Gallagher Convention Centre in Midrand will review the current funding model, and make proposals for a new model to best suit South Africa’s developmental 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.

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