Massive staff costs at state agency that is supposed to fund media

The Media Diversity and Development Agency, marred by squabbles at the top, spends over 35% of its income on staff and administration

By Daniel Steyn

14 June 2022

The Media Diversity and Development Agency is responsible for developing media projects in South Africa. Photo courtesy AIP

The MDDA is the statutory body responsible for developing media projects in South Africa. There appear to be serious governance problems with the agency.

Last week we reported that the Association of Independent Publishers has threatened legal action over how the R38-million Economic Development Fund is administered by the MDDA, but the problems go much deeper than this.

Funded by government grants and the Universal Service and Access Agency (USAF) levies paid by broadcasters, the MDDA’s revenue was R104-million according to its annual report for the 2020/2021 financial year. Broadcast funders provided R61-million of the revenue and government grants and subsidies R40-million.

The MDDA was established in 2003 in terms of the MDDA Act, with the mandate to promote and develop “media diversity” in the country. It is meant to provide grant funding and training to various media projects, specifically in historically disadvantaged communities by supporting community radio stations and print media.

According to the MDDA Act and regulations, the agency must spend a maximum of 25% of its budget on employee costs, and 75% on grants and related expenses.

This is generous. An experienced person in the South African donor industry informed GroundUp that typically a charitable-like institution is expected to spend about 8 to 10% of its funds on running costs. At most, and in rare circumstances, this may go as high as 15%.

But in 2020/21, the MDDA spent over 30% of its total expenditure on employee and board costs alone, far exceeding the prescribed 25% limit of the Act. With a further R8 million on administration it spent over 37% of its revenue on running the organisation. It reported R65-million in grant expenditure.

For 2021/22, the MDDA originally budgeted R47-million in grant expenditure and almost as much (R46-million) in employee, board, and administration costs.

Later an “adjusted budget” for 2021/2022 was presented to Parliament in April: R89.5-million disbursed as grants, with employee and administration costs at R47-million. Employee and administration costs again exceeded the regulated maximum.

The projected budget for 2022/2023 puts employee, board, and administration costs at 47.5% of the budget, exceeding even the allowance of 35% made by the Act to establish the MDDA in its first year before it was fully functional for distributing grants.

And yet despite the high employee costs the MDDA still does not always manage to disburse all the revenue it receives for grants. In 2019/20 it ran a surplus of R21-million, disbursing almost R40 million less in grants than it had budgeted.

In 2020/2021, nine community print publications collectively received R3.3 million and 22 broadcast radio and TV stations received R43.9 million in grants. In a SABC Interview in March, the CEO Zukiswa Potye said that they had received 80 applications from community broadcasters, of which they could only fund 20, and 170 applications from print publications, of which they could fund fewer than ten.

The MDDA declined to disclose or explain its revenue and expenditure for 2021/2022, saying the figures have not yet been audited.

High salaries

The CEO had a salary of R2-million and the CFO R1.7-million in 2020/21. The office of the CEO had six employees who collectively cost the MDDA R10.5-million. The CEO also got a bonus of about R105,000 and allowances of almost R400,000, earning more than a provincial premier’s gazetted remuneration.

In comparison, the National Arts Council (NAC) CEO earns R1.85-million, and the NAC disburses more than R400-million in funding a year, yet spends less on salaries than the MDDA.

Suspended CEO

There are also concerns about the leadership of the MDDA. Its Chief Executive Officer (CEO) Zukiswa Potye was suspended by the board in April in a controversy over Chief Financial Officer (CFO) Yaseen Asmal’s contract. Potye then accused the board chairperson of victimisation and harassment, City Press reported.

DA MP and member of the Parliamentary Portfolio Committee on Communications Tsholofelo Motshidi-Bodlani told GroundUp she is “concerned with what seems to be personality clashes between the CEO and CFO, leaving the entity in limbo”.

The portfolio committee was briefed in April on the MDDA’s 2022/23 Annual Performance Plan. Governance issues were not discussed because the MDDA did not submit a report. The committee asked for a report to be compiled and submitted.

Motshidi-Bodlani wants the portfolio committee to conduct oversight visits rather than rely on officials presenting information. “The DA believes a visit to the entity will produce better results as we will have first-hand information on all the issues raised,” she told GroundUp.

In February, City Press reported that former Chief Operating Officer (COO) Lindinkosi Ndibongo and former CEO Thembelihle Sibeko had both lodged grievances with the Commission for Conciliation, Mediation and Arbitration (CCMA).

Sibeko is still employed by the MDDA as the monitoring and evaluation manager and alleges she was overlooked for a post. Ndibongo is alleging that since 2018 he had been victimised by Potye in an effort to oust him from his post.

According to the City Press report, leadership squabbles at the MDDA go back to 2013, with a 2014 forensic report finding irregularities in the MDDA’s management. For example, in 2017 acting CEO Donald Liphoko told News24 that he had been intimidated after addressing mismanagement at the MDDA. Liphoko had been appointed by Communications Minister Ayanda Dloldo after a long leadership void at the MDDA. The board of the MDDA was also inquorate at the time. The MDDA went through six acting CEOs in 2017.

In 2017, DA MP Veronica van Dyk raised concerns in Parliament that MDDA board chairperson Phelisa Nkomo paid herself R80,000 for acting as CEO, despite having denied doing so to the portfolio committee on communications.

According to the 2021/2022 Annual Report, the MDDA was also seeking condonation from the National Treasury on two matters of irregular expenditure dating back to 2017. These include R10-million irregularly spent on procurement non-compliance with Supply Chain Management legislation, and R39-million spent on broadcast equipment, a tender process that also contravened the legislation.

The MDDA told GroundUp that it is regulated by the Public Finance Management Act and the National Treasury, and that its employee costs are within National Treasury norms.

After we sent follow-up questions, acting MDDA CEO Mzu Kashe told GroundUp there will be no comment as the Association of Independent Publishers is taking legal action against the MDDA. “Everything we say, you will write, and it will be taken against us,” he told GroundUp.

Disclosure: GroundUp has previously applied unsuccessfully for an MDDA grant.