Lotto Policy Review - For Once a Breath of Fresh Air

The Lotteries Board has succumbed to public criticism of its operations and produced a Lotteries Policy Review a Discussion Document for public comment.  Whilst belated, the document must be welcomed by all stakeholders as a coherent approach to on-going re-assessment and refinement of the operation of the Lotteries Board. The vexed operations of the Distribution Agencies associated with the allocation of funds, also comes under scrutiny in the Review.

The discussion document is not a defensive document.  It appears to have taken to heart the many legitimate complaints, the finding of two major research reports, various advocacy activities, in and out of Parliament, as well as the scathing criticism by the courts.  It is an honest appraisal which requires engagement and debate.  It also requires vigilant advocacy through the legislative process to ensure that the original aims of establishing a national lottery remain intact.  As this Review attempts to resolve some of the structural faults, it should not be frustrated by bureaucrats or government legal advisors, though well meaning, which may negatively impact on this reform process.

The discussion document presents 14 key recommendations for consideration, most if not all, should be a welcome breath of fresh air to boards and management of civil society organisations engaged with the Lotteries Boards.

1.    The Distributing Agencies (DA) must be professionalised and appointed on a full-time basis

The frustrating experience of various civil society organisations has been that DAs have taken too long to make decisions. This has often threatened the very existence of organisations applying for funds and so jeopardising their operations and infrastructure.

This proposal must be enforced by the Board through a search process which will ensure that the most sensitive, experienced and professional appointments are made to serve the interests of the millions of beneficiaries of the lotto funding.

These appointees should have no conflicting interests and should resign any conflicting positions they perceive might prejudice their decisions or open them to criticism.  This is key to restoring faith in the Lotto system and to build confidence amongst South Africans, that this is a worthwhile form of giving in our country.

2.    The DA should continue being appointed by the Minister

This proposal will no doubt require consultation and debate and further legislation refinement.  The appointments should be made by the Minister but on the recommendation of the Lotto Board.  The Board has to retain structural operational authority as well as governance powers over the DA.   If this concern is not resolved, the Lotto will once again experience two centres of power, in its operations, without resolving a key fault line in its present operations.

Governance and sound governance requires a clear line of authority and responsibility.  Any other approach will only lead to mischief and manipulation, fraud and corruption, which the sector does not need.

3.    An Internal Review Mechanism should be introduced to deal with aggrieved applicants

This recommendation is long overdue.  It will assist in fast-tracking the appeals and resolve grievances and avoid costly legal actions.  It will also assist in resolving disputes in a conciliatory manner with every side being able to acknowledge errors without subjecting itself to public embarrassment.  The Internal Review Mechanism can be constituted through a volunteer tripartite body composed of government officials, corporate donors as well as senior civil society representatives.  It should be able to meet at least ten times a year and deal with any disputes referred to it.  It may also meet electronically through using Skype and other evolving technologies, in well organised and structured meetings.  It should be managed by a senior staff member reporting directly to the CEO of the Lotto.  The person may also be empowered in the amendments envisaged to the Act, to be provided with a direct independent reporting function to the Board, similar to that of an ombudsperson.

4.    The Process of receiving funds in the NLB must be simplified to improve service delivery

Whilst this proposal of a three tiered funding hierarchy of small, medium and large grants is to be welcomed, some caution needs to be expressed.  It is not the express aim of the NLB to improve service delivery.  The notion of service delivery as applied currently in South Africa is to provide local authority services to the public.  The Lotto Act envisages distribution of funds to deserving causes.  The 2010 Regulations envisages distribution in three specific priority areas: the Charitable Sector, the Arts, Culture and National Heritage, and Sports and Recreation. 

The intention of the new regulations was to:

Get the processes of the NLB to reinforce government efforts to relieve poverty, to develop our least developed areas, and to build a more equal society. []

5.    The distribution of funds involves steps from application to final payment with adjudication being part of the process

The intention to set turnaround times for each stage of the application is a sound one which will find support in civil society. An electronic tracking system could be easily put in place to facilitate the grant making process. It will assist in measuring the performance of the Distribution Agencies and the Board.  But grant management process should not be the only aim.  The review of the NLB should also have an inbuilt monitoring and evaluation process. This process should on a random basis evaluate projects funded and impact achieved.  This is intrinsic to the work of the civil society and development, ethics throughout the world.  

Whilst considering these aspects, the policy review should also spend some critical time on debating and resolving longer term grants for vulnerable sectors of South African society such as children, the youth and the aged.  Such groups should be able to access budget set asides from the NLB for on-going funding and essential welfare work.

NLB funding is public funding.  Yet civil society organisations are often coy and sensitive about acknowledging the funds they receive from the Lotto.  This is despite the fact that their annual financial statements reflect such funding anyhow.  For increased transparency and accountability, the NLB should seriously consider placing on their website details of the funding support provided to any organisation immediately payment is authorised to such an organisation.

6.    Size of the Board

This recommendation seeks to increase the size of the Board to 11 members and should be supported as long as it reflects the diversity of our nation.

7.    Differentiate clearly between the NLB and the Board of the NLB

This may require a name change and can be easily factored into an amendment of the Act.

8.    Distinguish between the functions of the Minister and those of the Board

Whilst some poor judgement has entered into the process in the past which the courts have had to remedy the granting of a licence to an organisation to operate the lottery should be a transparent tender process and not mired in controversy or ambiguity.  Any persons or corporate organisations should forestall any such possibility, but if found guilty, be excluded from the bidding process.  The Minister should be empowered to act without fear or favour in such instances.

9.    The Act should provide for both applications based funding and proactive funding

There are advantages to this proposal as well as disadvantages.  Both the National Planning Commission as well as the notion of a developmental state adopted by government require that certain activities which require funding should be supported.  However, by and large, these should be set provisions within departmental budgets and the NLB should not be perceived as a new public sector funding opportunity.  Critical checks and balances should be put in place to ensure that funding reaches the intended beneficiaries within government and departmental budgets. Alternate sources of funds already exist for disaster mitigation and management, and local or provincial authorities should not look to the Lotto to fund such remedial work.

The changes envisaged should be properly regulated and processes followed in a satisfactory manner such that charges of impropriety or squandering funds (e.g. on youth congresses) are not levelled against the NLB.

10.    The Act should clarify the process and the terms under which conduits can be funded

Here too caution is advised.  There are several examples, both local and international, where unscrupulous individuals and organisations have pursued their parochial interests rather than the public good.  Should entities registered in foreign countries be funded by South African funds?  This issue requires both a public and civil society debate with officials in the DTI.

11.    Align accounting requirements to the new Companies Act

The intention of this proposal will be welcomed by civil society organisations.  However, present confusion and varied interpretations within the Department of Social Development and its NPO Directorate must be quickly aligned so that a common acceptable practice is developed.

12.    Education and Awareness can be included as functions of the NLB

It is accepted wisdom that each new generation has to understand and apply the laws of our country.  However, there is much duplication and wastage of resources in our country which is ill-advised.

Several provincial workshops held in addressing reform of the Lotto operations advised that various government departments funding civil society, establish regional one-stop hub offices where registration, reporting, funding and inquiries be handled simultaneously.  Agreements between DTI, DSD, DOH and other affected services such as SARS should immediately seriously consider bringing their respective operations under a single roof to provide an effective and efficient advisory service to the hundreds of civil society organisations which require such assistance.

13.    Harmonization of legislation

The intention to harmonize the Act with other legislation is appreciated.

14.    Technical Amendments

Technical amendments required should be undertaken as a matter of urgency.  Appropriate time lines should be developed for comments, debate and lobbying by the general public and fast tracked through the 2013 legislative programme.  Similarly the NPO Act should also be amended without the presently suggested draconian inspection provisions.

South African civil society is poised to do better with less, but requires fundamentally the support of officials and legislators to act in concert rather than in intractable adversarial positions.  To this end, a compact between government and civil society may not be out of place to serve the interests of the poor, the vulnerable and marginalised groups in our country.

Prepared by Phiroshaw Camay, Director, Co-operative for Research and Education

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