NAC over-committed the funds that were allocated to artists - Nathi Mthethwa

Minister says fiscus does not permit the disbursement of additional funds at this point to cover shortfall

Minister Nathi Mthethwa: Presidential Employment Stimulus Package

29 March 2021

Good afternoon Ladies and gentlemen,
Acting Director-General of DSAC, VusithembaNdima,
Deputy Director General, Dr Cynthia Khumalo
Arts and Culture Practitioners,
Members of the Media,

This media briefing has been convened to give an update on the Presidential Employment Stimulus Programme (PESP) budget allocation.

The PESP was designed to act as an aggressive injection of income into the creative economy and to assist practitioners and their projects as well as companies that incurred losses during the COVID-19 lockdown period. The Department entrusted the administration of the PESP to the National Arts Council (NAC).

The Department of Sport, Arts and Culture (DSAC) received allocation of R665m from National Treasury through a letter dated 23 September 2020 and commenced with processing in October 2020 after the announcement of the PESP by the President on 15 October 2020.

Budget allocation was such that R300m went to NAC, R140m to NFVF and R60m to Sports Trust, whose objective was to create and retain jobs. This was according to Annexure A of the budget allocation letter from National Treasury.

A balance of R165m went towards the Sport Compliance Project, Heritage PESP projects and Arts and Culture PESP projects implemented mostly with Provinces.

DSAC issued Grant letters and signed MOAs with all the above Implementing Agencies; and agreed on conceptual framework and process maps to be utilised in implementing the PESP. The MOA with NAC was signed on 2 November 2020. NAC commenced with an open call on 30 October to November 2020, immediately upon receipt of the grant letter.

Subsequent to this process, a group of adjudicators complained about how the process was handled. And this then landed with the new Council for their further attention.

The new Council sought answers from the NAC on developments with the disbursement process. The Council did not receive a straight-forward response from the NAC Management. As a result of this, the Council took a decision to halt the disbursement process until further legal advice. Because the Council was not receiving assistance from the NAC Management, they then took a decision to suspend the CEO and the CFO on the 1 March 2021. Subsequently, they discovered that budget as allocated was mismanaged by the NAC, mainly by way of an over-commitment of the available funds that were allocated to creative sector organisations, by more than double the allocated amount in their possession.

For instance, the NAC over-committed the funds that were allocated to artists by over double the allocated amount in their possession. This is the crux of the issue that we are faced with today. We will ensure that those who are responsible for this gross negligence are brought to book.

In the past few weeks, we have been trying to see where we can get additional funds to cover the shortfall created by the mismanagement of funds. Unfortunately so far, the fiscus does not permit the disbursement of additional funds at this point.

To that extent, I have instructed the Department, working with the Council, to start a process of forensic investigation. We will continue to update the media and the sector accordingly.

As the Minister ultimately responsible for the successful rectification of this unacceptable dilemma, I firstly want to issue an unconditional apology for having being let down by an institution which I sincerely believed were up to the task. I entrusted the NAC to bring much-needed relief in such a desperate state of economic vulnerability, through the introduction of inevitable COVID-19 Lockdown.

Having done so, I hereby issue to you an absolute and uncompromising promise to ensure that those who are responsible for this gross negligence are brought to book.

Issued by Masechaba Khumalo, Department of Arts and Culture, 29 March 2021