Maverick Citizen

Maverick Citizen Op-Ed

How to fix the mismanagement, nepotism and corruption festering at the National Lotteries Commission

Photo by sakeliga.co.za / Wikipedia

The regulations governing the non-profit and civil society sector were devised in the post-apartheid heyday by well-meaning legislators, but have long been due for an overhaul.

Healthy and stable democracies are characterised by free and independent civil society sectors, bolstered by enlightened and enabling legislation. While South Africa’s regulatory framework pays lip service to this model, in practice the situation is shamefully different. 

The latest “irregularities” at the National Lotteries Commission (NLC) are yet another demonstration of the ever-widening gap between enlightened legislation, public pronouncements of politicians and the real experience of organisations of civil society. 

Were it not for the determined work of courageous investigative journalists, this alleged corruption would probably have been allowed to continue unabated. 

At the same time, along with unspeakable hardships, the Covid-19 pandemic is also providing many lessons, for example on the value of multi-sectoral cooperation, and about the exceptional contributions of civil society organisations

At this crossroads, when introspection about “doing things differently is the order of the day, it is time for all role players to think differently together. A good place to begin would be to acknowledge that the structure established post-1994 to enable the work of civil society organisations is dysfunctional.

The ongoing debacles at the NLC have been neglected by the responsible ministers and relevant government departments for much longer than the five-year-old report referenced in the most recent set of revelations from amaBhungane. 

Activist coalitions of civil society have engaged in research and presented reports and constructive recommendations to the government for nearly 20 years. All of this has been largely discounted by politicians and relevant leadership within the departments of trade and industry (DTI) and social development (DSD). 

Very recently trade, industry and competition minister Ebrahim Patel, now backed by President Cyril Ramaphosa, has authorised investigations into misappropriation of millions of rands of NLC funds.

The obvious question remains: What took them so very long? 

What does the yawning gap between what is said on public platforms regarding the “capable, ethical and developmental state” agenda, purportedly enabled by cooperation between government and civil society, mean in the context of decades of neglect of the institutions established to enable this vital sector?

The most recent confusion regarding the appointment of a new chairperson of the NLC is another indication that insufficient care is taken on matters vital to the well-being of civil society.

There is long-standing inconsistency in the government’s attitude to the sector. 

Likewise, civil society organisations seem no longer to be mobilising collectively to challenge these matters. As the new Social Justice Sector Review notes, “there appears to be growing policy engagement fatigue”, a situation exacerbated by the pressures of the pandemic.

While much is avowed by the government in policy documents and at election time, the reality is little follow-through, patent uninterest and even adversarial attitudes from some politicians and government representatives. 

The increasingly challenging funding environment has resulted in unprecedented stresses for civil society organisations. Many have been forced to close. However, the social justice sector, with progressive media, continues to hold government accountable and provide evidence to inform remedial action.

A little bit of history

Background context is important here. When the democratic government was elected, a cluster of new legislation to recognise and support civil society’s role in the rebuilding of society was passed. 

Key among these was the Nonprofit Organisations Act (NPO Act) of 1997, which undertakes to create an environment in which nonprofit organisations can flourish”. 

The act also states: Within the limits prescribed by law, every organ of state must determine and co-ordinate the implementation of its policies and measures in a manner designed to promote, support and enhance the capacity of nonprofit organisations to perform their functions.”

It provides for a dedicated NPO office, intended as the institutional foundation of government’s architecture to support and enhance the functioning of civil society organisations. 

However, the NPO office has a history of poor management, veering into authoritarianism at times. 

Anecdotal evidence from within the Gauteng Community Action Networks (CANS) indicates that this has been demonstrably so since the Covid-19 lockdowns. The website records that there are 4,050 outstanding applications for NPO registration (turnaround time in terms of the act is two months or 60 days, while the site admits that registration takes 98 days).

This is while organisations are in urgent need of NPO status to substantiate funding applications, including those to the NLC. In this context minister of social development, Lindiwe Zulu, has mounted (yet another) campaign to “deregister” organisations deemed “non-compliant”.

The national lottery operations, including the aspect related to funding for civil society organisations, are legislated by the Lotteries Act, 1997 (as amended), which sets out in detail the establishment and purpose of the grant-making element of the lottery, i.e. “to provide a sustainable source of funding for non-profit organisations… [to] help secure a better life for all citizens”.

Since at least 2002, civil society organisations have raised red flags in research reports and the media regarding perennial problems within the national lottery. 

For example, in 2002 a report was commissioned by the Non-Profit Partnership via the Centre for Civil Society at the University of KwaZulu-Natal. Titled “Smoke and Mirrors”, it detailed multiple problems with the governance and accountability of the (then) National Lotteries Board and the National Lottery Distribution Trust Fund. 

Although presented to the board and the relevant parliamentary portfolio committee, its recommendations were discounted. 

Problems continued through the years. 

In 2007 a scandal arose due to the inability of DTI to appoint a new lottery operator. The impact of this for civil society organisations contracted to receive funding was alarming. For six months grants were suspended, in spite of acknowledgement that more than sufficient reserves were available for distribution.

The litany of mismanagement, nepotism and corruption has continued unabated. 

Between 2010 and 2012 two civil society coalitions, one in Johannesburg and the other in Cape Town, conducted in-depth research into the functioning of the lotteries. 

Reports that included best-practice recommendations and offers of support from experienced grant-makers were again seemingly disregarded, in spite of face-to-face meetings with a reluctant Rob Davies, then the minister of trade and industry.

During the process to amend the act in 2013, the above-mentioned coalitions again made submissions to Davies. Although these were acknowledged, the amended act does not include any of the practical recommendations made by civil society. 

Building Better Together

In May the NLC announced its Covid-19 relief fund of R150-million.

However, this funding was only accessible to organisations which had received funding via the NLC “over the past two years, or funding for “infrastructure projects

Given the myriad revelations of alleged corruption exposed by GroundUp, amaBhungane and the Limpopo Mirror, it is impossible not to feel cynical about the rationale in this requirement.

What should be done? 

Understanding the history and making reference to legislation is important to learn from past failures. Experience shows that so far civil society activism has not substantially influenced government intransigence regarding the poor record of these institutions.

The seeds of more effective approaches may lie within learning gleaned from analysis emerging from the solidarity activities of the hundreds of civil society organisations, formal and informal, working in communities during the crises of Covid-19. 

In the face of the hunger crisis resulting from Covid-19 restrictions, the Western Cape Economic Development Partnership (known as EDP), convened a food relief forum under the banner “Connect, Communicate, Cooperate”. Multiple role players from all sectors of society, including sub-national government, were involved. 

The forum amended the slogan Build Back Better to Building Better Together”. 

The success of this forum, and the ongoing food relief efforts of the multiplicity of community-based members, rests on a new conception of multi-sectoral cooperation, especially in regard to the working relationships between institutions of government and civil society organisations.

EDP stresses that this model means moving away from the government’s traditional “community engagement” approach, to real “partnering” founded on co-planning and co-implementation.

How does this example relate to the problems within the lottery, and the entire creaking non-profit/civil society sector regulatory architecture? Devised in post-apartheid heydays by well-meaning legislators, this has long been due for a holistic overhaul. One of the many problems with these acts is that they do not speak to one another. 

Organisations are forced to interact with several different government entities that apparently do not communicate with one another: DSD for NPO registration; the Companies and Intellectual Properties Commission for non-profit company registration; the SA Revenue Service for public benefit organisation status; the NLC and the National Development Agency for funding and related support. 

Collective systems thinking rather than piecemeal tinkering is what is required. 

An important element of this approach is ensuring that all role players are included for shared understanding and practical solutions to emerge. The problems within the system are not confined to alleged corruption, but include governance, management, grant-making expertise and administrative deficiencies. 

These have been allowed to fester over decades due to lack of political will.

Once the current corruption investigations are concluded, a multi-sectoral cooperative forum, coordinated by a neutral intermediary, and directly accountable to the minister, could be established. This would be the opposite of a talk shop and would signal a new era of cooperation. 

Running on principles of collective learning and partnership, the forum would work in accordance with specific terms of reference and a strict time frame, collecting and collating recommendations from civil society initiatives and commissioning new thinking and legislative amendments where necessary. 

Perhaps this is a pipe dream – or might we actually cast aside the accumulated mistrust, the mistaken authoritarianism and resultant cynicism to move together into a more hopeful era? 

This remains to be seen. DM/MC

Colleen du Toit provides advisory support to organisations of civil society, most recently to Makers Valley Partnership. She honed her advocacy skills while leading two NGOs (SAGA and then CAF Southern Africa) dedicated to increasing funding for civil society and promoting more equitable relationships between donors and their NGO partners.

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