The table and chart below represent the financial trends over the last 3 financial years.

























Actual Expenditure










Spending as a % of total










* 2006/07 relates to transfer and spending at 31 December 2006






1.                   Motivation


We herewith request continuing of and future increases in School Nutrition Programme Funding for the Eastern Cape Province, a Province with high levels of rural poverty where SNP is extremely important to the development and learning of children.


The problems experienced in the previous SNP management within the Eastern Cape are well reported, including the issues of mismanagement, fraud and underperformance.  These caused repeated budget under- expenditure at the expense of the children who rely on this supplementary feeding.


However, the Premier and Cabinet intervened and have prioritised SNP for radical and effective redesign.  This intervention is now well underway with extremely tight deadlines being set and so far attained by the new SNP Manager in collaboration with the Interim Task Team, the Provincial Task Team and also the Finance section of the Eastern Cape Department of Education.


In fact, the SNP Programme is to be expanded to feed all Grades from Grade R to Grade 7 (whereas previously only Grades R to 4 were fed) and also to feed in all quintile 1 to 3 schools.  This will put pressure on the requested budget and any consideration of reduction or reduced increase will prove problematic and detrimental to the interests of the children targeted.


The steps taken to ensure that the Eastern Cape SNP delivers effectively and spends the full budget in the 2007 / 2008 year include the following important milestones:


a.      “Changing the Guard”


Following the intervention of the Premier and Cabinet and a forensic investigation, the decision was taken to replace the entire SNP Management and take other steps to renew the programme:


·         The SNP Management was suspended at the end of 2006

·         Contracts with suppliers were terminated

·         A new Manager was appointed at the end of January 2007

·         New short term tenders were advertised, adjudicated and awarded (by end January 2007 through special expedited approved procedure)

·         Feeding resumed early in the new calendar year (2007) and by 1 February the programme was back in operation


b.      Fundamental Redesign of the Claims Processing, Verification and Supply Chain Management System


Fundamental to the redesign of the entire SNP was a restructuring of all the procedures around claims processing, documentation, verification and the subsequent payment of suppliers for food delivered to some 5000 schools.  These steps which have been taken in a very short space of time, include the following:


·         The bulk of the suppliers have engaged the services of two professional accounts management service providers at their own cost to ensure that

                                                                                       i.      There is uniform proof of delivery documentation

                                                                                     ii.      There is uniform detail capturing and calculation and content of particulars on invoices

                                                                                    iii.      That there is timeous processing and requisition for payment

                                                                                    iv.      That there is proper management of deliveries to schools exactly per the tender awards.  This process is managed through the automated generation of delivery documents which reflect not only the address but also the date and the quantities to be delivered against which the delivery record is subsequently compared and signed for by each school.

·         In addition, Eastern Cape SNP will benefit from detailed automated analysis reports from these “Accounting Administration Centres” with exception reports being generated at our request as a free service to SNP / ECDOE.

·         Document archiving facilities have been arranged to ensure the safekeeping of all the supporting documentation and also facilitate the orderly rapid retrieval of documents whenever needed;

·         Supplier payments will be expedited through a smooth liaison between the SNP and Finance Section of DOE and by their collaboration with the Accounts Administration Centres in order to synchronise the process and complete it within deadline. 


c.       Capacity Building of SNP Personnel


Arrangements have been made for the deployment of unemployed graduates as “interns” at the Accounts Administration Centres.  Around five unemployed graduates will be so deployed and usefully engaged where they will acquire the skills and knowledge of the accounting systems in use and also develop IT and practical computer skills under supervision and in an environment where they are held to a strict work ethic.  Similarly, the SNP and Finance Section Staff who do final verification of the prepared documentation will also benefit from the new professional environment. 


d.      Improved Communication Systems


For a programme such as SNP feeding 5000 schools (900 000 pupils) efficient communication systems are not negotiable.  In the past, ineffective communication has caused immense difficulties.  Steps are already in place to redesign the communication systems with the use of effective modern technology to transmit e-mails and fax reports even from rural locations at low cost.  This will greatly enhance not only the reporting, but also the ongoing monitoring of performance at individual schools and within districts.  It will facilitate rapid response to problems and effective trouble shooting. 


e.      Staff Morale


The rebuilding staff morale and enthusiasm around the SNP Programme is a priority and Management has already begun to attend to this aspect but obviously this will take longer.


f.        Internal Controls


All possibility of significant abuse or fraud will be mitigated by a totally revised comprehensive system of the internal controls.  This will be built on two pillars:


·         Reliance on an analysis of accurate and comprehensive financial data and analysis reports; and

·         The independent reporting from Principals through the District Offices (SNP District Co-ordinators and their respective staff components) through to Cluster Chief Directors, DDG and the Programme Manager and finally the Superintendent General and MEC for Education.  These operational reports will be independent and used to confirm the analysis of financial data and supplier performance. 


g.      Conclusion


The package of remedial steps outlined above will not only create an efficient environment but through that also rekindle the enthusiasm of all involved in SNP in the Eastern Cape.  The Premier, Cabinet, Department of Education, SNP Management are all fully committed to ensuring the success of the redesigned SNP Programme and are confident that within 12 months this programme will rank among the most efficient SNP Programmes in South Africa.








Forensic Investigation

A forensic investigation initiated by the Office of the Premier commenced in August 2006. The outcome of this investigation was released on 20 December 2006. The report revealed that:

There were flaws in the procurement processes

·         Feeding was not properly taking place in the identified schools and as such  claims are not coming forward

·         It is alleged that payments were effected to service providers without necessarily rendering/providing the services to the schools

·         Conflicts of interest from officials within the department and other government departments were identified

·         Internal control weaknesses within the administrative processes of the Department more especially within the SNP.

Recommendations from the investigation included the:

·         Immediate cancellation of all  SMME contracts and Secondary Cooperatives; and

·         Suspension of all management and officials involved in the SNP programme.

This above has resulted in delays, due to contracts of service providers being terminated. A new tender was awarded on 28 January 2007 and feeding has once again commenced 1 February 2007.


Factors contributing to R 86,381 under–expenditure as at 31 December 2006

Budget for the 4th quarter which would have resulted in 53 days of feeding is estimated at R60,7 million. Therefore there is a real under-expenditure of R25,6 million as at 31 December 2006. This as a result of non-payment of service providers for the month of November 2006. All payments to service providers were stopped when the forensic report was released. Prior to any backlog payments being made a full reconciliation of suppliers accounts is being performed. Outstanding payments for the month of November 2006 is R25,2 million.



Spending is monitored weekly by the newly appointed project manager and on a monthly basis by the Financial Committee of the Department and Executing Authority.


Routine conditional grant monitoring and reporting

Monthly Report to be submitted by the Receiving Provincial Department of Education to transferring National Department of Education to Provincial Treasury according to the format provided by the national Department of Education:



Evaluation is conducted annually in every district. The process includes an explicit appraisal of whether the programme has met its stated objectives (for example: ‘Has it contributed to the alleviation of the pupils’ temporary hunger on a day to day basis?’ ‘Has nutrition knowledge among the children’s teachers and parents been changed for the better?’ Reasons for any unintended effects on stakeholders are clearly analyzed. The evaluation process itself will be conducted using participant observations, by external experts so as to get objective reports.



Capacity within the unit was adequate for the first three quarters. The Department however are intending to improve the systems in place to receive and reconcile invoices for payments, in this area there is room for improved internal controls. Subsequent to the forensic report, all management of the programme has been suspended and until the reconciliation process is complete the existing staff is temporarily being seconded to other areas of the Department. This has resulted in a significant slow down in payments towards the end of December 2006. This will further impact on spending to the extent that feeding in the last quarter only commence on 1 February 2007. An interim management team have been appointed to run the program.



Corrective mechanisms

Challenges currently being faced have been addressed by changing the management of the project, and outsourcing reconciliations to ensure payments being made are for services delivered and due and putting in place a more effective system to management payments. Immediate priority will be given to the following:

·         Gaining the committed active involvement of school governing bodies (SGB's), School principals  and staff and linking them to the creation of a more efficient and reliable independent reporting chain to inform the SNP on:

- How many meals are actually served

- Meal content and general standard

This information chain must be sufficiently accurate to facilitate reconciliation within acceptable risk limits to the food supplier records and SNP payments for services.

·         Ensure timeous accurate reporting and invoicing by suppliers and improved internal controls to verify quantities delivered and quality standards.

·         To ensure timeous processing of invoices and supply payments in order to safeguard the financial security and sustainability of suppliers.

·         Facilitate the payment of services delivered up to November 2006.