PRESENTATION CHIETA PARTNERSHIP CONFERENCE OF 26 NOVEMBER 2015

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PRESENTATION CHIETA PARTNERSHIP CONFERENCE OF 26 NOVEMBER 2015: GOVERNANCE, ORGANISATIONAL AND FINANCIAL PERFORMANCE 1

PRESENTATION CHIETA PARTNERSHIP CONFERENCE OF 26 NOVEMBER 2015: GOVERNANCE, ORGANISATIONAL AND FINANCIAL PERFORMANCE 1

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CONTENT OF PRESENTATION •

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CONTENT OF PRESENTATION • • Governance defined Corporate Governance in CHIETA Organisational performance Financial performance 2

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE DEFINED •

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE DEFINED • Corporate Governance is ultimately about leadership • The importance of corporate governance lies in its contribution to businessstakeholder prosperity and accountability • Corporate Governance is concerned with holding a balance between economic and social goals between individual and communal goals, with the aim to align as nearly as possible the interest of individuals, corporations and society- World Bank • If management is about running the business, governance is about seeing to it that it is run properly 3

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE DEFINED CONTINUED

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE DEFINED CONTINUED • Shareholder- own the ships and define its purpose • Governing Board- steers the ship and appoint key crew, set the direction, monitor and ensure corrective and pro-active action is taken where needed • Management – we row 4

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE IN CHIETA:

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE IN CHIETA: FOCAL AREAS OF THE CHIETA GOVERNING BOARD • • Exercise leadership, integrity and sound judgement Determine our purpose and values Set strategy and structure to achieve this purpose Define strategic risks, determine acceptable levels of risks, indentify mitigating controls and primary and delegated accountability levels within an integrated combined assurance framework Oversee research and skills planning, organisational performance management, funding alignment and sound financial oversight Ensure the establishment of a system of internal control to protect assets and CHIETAs reputation Ensure CHIETA complies with all relevant laws and regulation in the execution of its mandate Appoint CEO and executive management within a delegated performance driven delivery framework and monitoring processes 5

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE IN CHIETA:

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE IN CHIETA: VALUE ADD TO ALL STAKEHOLDERS • • • • Conducting our core mandate with efficiency, honesty and integrity CHIETA running on a solid ethical foundation Sustained Stakeholder confidence Low reputational risks for stakeholders Empowerment of all CHIETA stakeholders- how diverse that base might be Increased organisational and partnership value Forced checks and balances Improved and sustained operational performance and delivery Improved decision making and sound judgement Common overarching goals for sustainable development of the Chemical Industry and South Africa Continiously changing attitudes Meeting our financial, legal and statutory obligations Strongly vested monitoring and oversight function High performance and maturity levels of governance structures 6

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE IN CHIETA:

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CORPORATE GOVERNANCE IN CHIETA: GOVERNANCE STRUCTURES • • • CHIETA is designed to be a stakeholder driven organisation for the benefit of the Chemical Industry and to contribute to National Imperatives Governing Board and Board Committees compromise of Business and Labour representatives nominated from Industry, ministerial appointments and government representatives Five Board Committees with focused terms of reference to cover all critical organisational areas in an integrated manner Research and Skills Planning structures in the form of CHIETA Chambers organised against the nine economic sectors of the Chemical Industry and supported by a CHIETA Research and Skills planning committee guide and define skills development prioirties for the Industry Organisational supportive structures such as Technical and fuctional Artisan Committee(TFAC) for providerworkplace accreditation and Mini task team to focus on TVETIndustry partnerships and integrated workplace learning 7

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ACCOUNTING AUTHORITY (GOVERNING

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ACCOUNTING AUTHORITY (GOVERNING BOARD) EXCO Audit Committee Finance and Remuneration Committee Governance and Strategy Committee Grants Committee Skills Planning and Research Committee Base Chemicals & Petroleum Speciality Chemicals & Surface Coatings Explosives & Fertilizers Pharmaceuticals & Chemically Related Consumer Goods Glass 8

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA MANAGEMENT STRUCTURES AND

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA MANAGEMENT STRUCTURES AND PROCESSES • • CHIETA management structures aligned to core business processes in the organisation Research and Skills Planning unit in support of CHIETA Chambers and Industry led Sector Skills Planning process(SSP) Governance and Risk unit responsible for strategic planning, risk management and organisational performance monitoring of focal areas defined in the CHIETA Sector Skills Plan Grants and Strategic unit responsible for mandatory and discretionary grant management in support of SSP and organisational targets Learning Programme Development Unit responsible for artisan training, qualifications development and quality assurance of CHIETA training interventions Finance unit to ensure delivery within an accountable financial framework CEO office for overall oversight and management 9

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ORGANISATIONAL PERFORMANCE •

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ORGANISATIONAL PERFORMANCE • • • CHIETA performance is measured against pre-determined organisational targets approved by the CHIETA Governing Board as part of the annual strategic planning processes of the organisations Performance targets is in direct support of skills development priorities determined by the stakeholder driven Governance structures of Industry and National Policy framework and imperatives CHIETA has a sustained track record of meeting and achieving predetermined organisational performance targets on an annual basis Annual clean audit reports from the AGSA provides independent assurance of sustained accurate and reliable performance reporting and numbers Performance deliverables linked to each business unit and staff member to ensure delivery and organisational performance driven management culture Strong monitoring and reporting frameworks within management and governance structures 10

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ORGANISATIONAL PERFORMANCE CONTINUED

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ORGANISATIONAL PERFORMANCE CONTINUED • • CHIETA performance footprint since commencement 20067 to 201415: (learnerships, bursaries, skills programmes, artisans, internships and ABET) A total of 50 154 learners were supported A total of 24 576 employed learners and 25 578 unemployed learners were supported(4951 ratio) 24 993 learners was certified (50 % success rate) IN ADDITION Skills development interventions covered 5334 local municipalities of which 2202 were rural nodal districts 598 small business was supported 346 co-operatives and NGO’s supported Career guidance provided to 7353 learners 11

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ORGANISATIONAL PERFORMANCE CONTINUED

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability CHIETA ORGANISATIONAL PERFORMANCE CONTINUED SKILLS INTERVENTION Skills programmes Bursaries Learnerships Artisans Internships NSDS II CERTIFIED 20067 – 201011 413 66 9443 921 44 NSDS III CERTIFIED 201112 to 201415 5278 591 9455 1740 382 12

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Financial Performance and Trends

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Financial Performance and Trends in SDL Income • Fifteen Unqualified audit opinions from AGSA - All unqualified audit opinions sinception – confirms integrity of financial management practices • One of few SETA’s who received an award from AGSA for a unqualified, clean audit in previous financial year(201415) • CHIETA experienced a Staggering increase in SDL Income of over 963% from inception in 2000 to 31 March 2015 • Effective annual equivalent increase in SDL levies of over 22% per annum for each of the 15 years of existence • Over R 3. 4 billion received in SDL sinception – fully accounted for • Above average rate of increase in SDL income is a highly pervasive indicator in confirming the impact of the CHIETA in fostering the expansion of the employer and employee base of the chemical sector • This increase in SDL income substantially exceeds both annual average salary increment and inflation • Increase in overall employment rates and the number of registered and levy paying member companies shows a direct correlation to the CHIETA SSP and WSP / ATR source data over the period of existence

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Skills development levy income

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Skills development levy income 450, 000 400, 000 350, 000 300, 000 R'000 250, 000 200, 000 150, 000 100, 000 50, 000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR 14

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability • Increase in overall

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability • Increase in overall employment rates and the number of registered and levy paying member companies shows a direct correlation to the CHIETA SSP and WSP / ATR source data over the period of existence • Material increase in number of registered companies from 2978 in 2000 to 6421 registered companies in 2015 • Since the implementation of the R 500 000 levy threshold in 2006 for skills levy payment levy paying companies increased from 1571 in 2006 to 1984 in 2014 - 26. 3% increase in number of levy paying companies

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Registered Organisations 7, 000

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Registered Organisations 7, 000 6, 421 6, 000 5, 156 5, 000 5, 267 5, 360 5, 419 5, 582 5, 705 5, 809 5, 964 6, 123 4, 608 4, 193 3, 810 4, 000 3, 406 3, 000 Registered Companies 2, 978 2, 000 1, 000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Levy Paying Organisations 3,

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Levy Paying Organisations 3, 000 2, 766 2, 797 2, 659 2, 520 2, 500 2, 389 2, 196 1, 920 2, 000 1, 720 1, 571 1, 566 1, 572 1, 763 1, 984 1, 798 1, 615 1, 500 Levy Paying 1, 000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Grant and Projects Disbursement

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Grant and Projects Disbursement and Financial Performance • NSDS targets for grant disbursement exceeded in each year sinception • Total amount of R 2, 967 billion was received for the purpose of employer grants and projects and an amount of R 2, 953 billion was disbursed from 1 April 2000 to 31 March 2015 • Overall average disbursement rate of over 99. 5% for the entire NSDS period sinception of the CHIETA

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability SDL Income VS Employer

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability SDL Income VS Employer Grants and Project Expenses 500, 000 450, 000 400, 000 350, 000 R'000 300, 000 250, 000 200, 000 150, 000 100, 000 50, 000 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SDL for Grants (70%) 26, 295 2001 90, 082 2002 104, 647 2003 113, 025 2004 126, 043 2005 135, 943 2006 153, 846 2007 165, 389 2008 208, 587 2009 235, 076 2010 260, 105 2011 288, 497 2012 333, 402 2013 355, 343 2014 370, 736 2015 Employer Grant and Project Expenses 23, 159 70, 253 76, 627 116, 390 91, 844 196, 204 141, 560 122, 125 152, 742 242, 921 239, 443 262, 584 356, 883 463, 369 397, 875 88% 73% 103% 73% 144% 92% 74% 73% 103% 92% 91% 107% 130% 107% Grants and Projects exp % YEAR 19

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Administration income vs Expenditure

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Administration income vs Expenditure 60, 000 50, 000 40, 000 R'000 30, 000 20, 000 10, 000 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 YEAR 2010 2011 2012 2013 2014 2015 20

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Financial Viability and Sustainability

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Financial Viability and Sustainability • CHIETA has sustained its level of operations within the 10. 5% regulated administration provision for the every year sinception • Annual average equivalent savings of approximately 14% of annual administration income sinception • Actual savings in administration expenditure of over R 51. 5 million transferred to the discretionary reserve for sector skills priorities during the 15 year period • Savings attributable to effective and efficient cost containment principles and continuous development of expenditure control and procurement practices • Administration savings have not compromised achievement of SLA targets which have consistently been exceeded during the NSDS period • CHIETA ratio of current assets to current liabilities including commitments has typically been in the region of 1: 1 at each financial year end – confirming the achievement of CHIETA contractual commitment levels of approximately 100% at the end of each financial year

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Partnerships – The key

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Partnerships – The key to a successful PSET (Post School Education and Training) system • Upfront commitments of all stakeholders in skills development initiatives • Commitment to work integrated learning and workplace experience provision prior to commencement of training • Skills development and training in SA has multi faceted issues which cannot be looked at in isolation or only from a funding perspective, e. g. sustainable partnerships, youth development, rural development, infrastructure and capacity development, trust and quality of the education system to be the preferred supplier of skills, Entrepreneurship and SMME development • Proportional industry “Ownership” of existing capital of colleges / HET’s / UOT’s needs to be considered and vested with key stakeholders - Industry should have a “critical” shareholding in the system • Council / boards of public educational institutions should be representative of key stakeholders including Industry, Government, SETA’s, QCTO • This will foster and promote trust, quality, shared responsibility and fit for purpose skills development • Preferred centres of excellence and best practice can be capitilised as industry shareholding to jointly owned educational institutions thus reducing overall cost of training

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability DG Program – Sector

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability DG Program – Sector Skills / NSDS Priority Expenditure No. of 2013/14 Beneficiaries (R’ 000) Average Cost % of Total DG per Learner expenditure Work Integrated 35 481 Learning 1 116 R 31, 793 14. 9% TVET / GETC Learnerships 89 922 6 278 R 14, 323 37. 8% Artisans / Apprenticeship s 55 724 2 636 R 21, 140 23. 4% Bursaries 13 150 572 R 22, 990 5. 5% Skills Programs 9 068 8 178 R 1, 109 3. 8% ABET 3 569 807 R 4, 424 1. 5% SMME’s/NGO/ Co-ops/ NVC/ NLP’s 2 188 R 11, 641 0. 9% Carreer Guidance 1 352 1 950 R 694 0. 6%

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability DG Program – Sector

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability DG Program – Sector Skills / NSDS Priority Expenditure 2014/15 (R’ 000) No. of Beneficiaries Average Cost % of Total DG per Learner expenditure Work Integrated 49 463 Learning 1766 R 28, 008 20% TVET / GETC Learnerships 87 786 7 297 R 12, 030 35. 5% Artisans / 45 211 Apprenticeships 2 294 R 19, 708 18. 3% Bursaries 25 669 948 R 27, 076 10. 4% Skills Programs 21 649 8 559 R 2, 529 8. 8% ABET 2 655 795 R 3, 340 1. 1% SMME’s/NGO/ Co-ops/ NVC/ NLP’s 384 164 R 2, 341 0. 2% Carreer Guidance 573 4291 R 574 0. 2%

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Thank You 25

CHIETA, The Catalyst for Enhanced Skills, Economic Growth and Employability Thank You 25