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New CEO touts brighter future for state media development agency despite sizable audit challenges

New CEO touts brighter future for state media development agency despite sizable audit challenges
The Media Diversity and Development Agency is responsible for developing media projects in South Africa. (Photo: Association of Independent Publishers)

But the MDDA’s last clean audit was in 2020/21 and the board chair, flagged by the Nugent Commission, is still in office.

After years of management issues and dismal financial performance, the Media Development and Diversity Agency (MDDA) has a new CEO who says she is committed to steering the agency in the right direction.

The MDDA is a government agency under the Government Communication and Information systems department, founded under the MDDA Act with the goal of funding and developing community media organisations.

In 2022/23, the agency received 46% of its budget from the government and the remainder from large broadcasters which pay mandatory levies and, in some cases, provide additional financial support.

The MDDA spent R151-million in 2022/23, disbursing R88-million in grants to 23 radio and TV stations and 10 community newspapers. Print projects received R400,000 to R750,000 each, while broadcasting projects each received R657,000 to R2.6-million. It also hosts workshops, training and capacity-building sessions for the community media sector.

A new CEO, Shoeshoe Qhu, took the reins in January. Qhu is a journalist, academic, and former executive at Primedia Broadcasting. Qhu told GroundUp in an interview that she applied for the position at the MDDA because she has a deep passion for the community media sector.

“I would consider myself as someone who has grown up in the community media sector and I have always wanted to see growth in the sector,” Qhu told GroundUp.

But Qhu faces the tough task of turning the agency around. The MDDA’s last clean audit was in 2020/21. It received a qualified audit opinion from the Auditor-General for 2022/23, who found that there was insufficient supporting evidence for administrative expenses incurred by the agency and that internal control systems were insufficient. Qhu only came into office at the end of the 2023/24 financial year.

The Auditor-General found significant mistakes in the financial statements for 2022/23, including that grant receipts were understated by R16-million, supplier payments overstated by R9-million, and that supplier payments were not calculated correctly. The Auditor-General also took issue with inadequate procurement processes and internal control deficiencies.

The MDDA had submitted its payroll figures to SARS late, resulting in about R30,000 worth of penalties, and incurred irregular expenditure of R7-million because the Chief Financial Officer was working without a signed employment contract. He later resigned in September 2022.

Conflict between the former CEO Zuki Potye, and MDDA board chairperson Prof Hlengani Mathebula has cast a shadow over the MDDA’s operations. Potye was suspended in April 2021 and accused Mathebula of victimisation and harassment. Potye was dismissed in 2023.

Read more in Daily Maverick: Management and governance issues at the Media Development & Diversity Agency raise alarm

Corruption Watch wrote an open letter to President Cyril Ramaphosa in February 2023, calling for Mathebula’s suspension. Mathebula had taken up the position at the MDDA after being suspended and later resigning from SARS after being implicated by the Nugent Commission of Inquiry into SARS. Corruption Watch cited the MDDA Act, which stipulates that no person can be appointed to the board who has been “removed from an office of trust” as a result of improper conduct.

Corruption Watch defended Potye for being a whistleblower and called for her protection.

Despite the outcry, Mathebula is still the MDDA’s chair. The Minister of Communications and Digital Technologies, Mondli Gungubele, who appoints the MDDA’s board members, did not respond to our questions.

Forensic audits and legal fees continue to plague the MDDA’s finances. The MDDA spent R7-million on legal fees in 2022/23 in addition to two in-house legal officers who cost the agency just under R2-million a year.

In 2022, GroundUp reported that the agency had spent more than 30% of its budget on salaries in 2021/22, which exceeded the 25% limit imposed by the MDDA Act and regulations. The CEO earned R2.5-million a year, more than a provisional premier’s gazetted remuneration.

In 2022/23, the MDDA spent R38-million on employee and board costs (25% of its budget) and R17-million on administration costs (although the Auditor-General said it could not find sufficient evidence to support this calculation).

In comparison, the National Arts Council disbursed R271-million in grants to artists, organisations and companies in 2022/23 — almost three times the MDDA’s spending on grants and workshops — but spent less than the MDDA on salaries and operating expenses.

Turning a new leaf?

But Qhu says she is confident that under her management, the MDDA will rise above the challenges of the past. An audit action plan is being implemented and internal controls are being strengthened, she says.

Qhu says that coming into the MDDA, she was aware of its challenges and says she has accepted the task of “rebuilding the relationships” with private-sector partners and “building trust in the brand”.

Meanwhile, Qhu defines media diversity as redressing the imbalances of the past, ensuring there is a plurality of voices in the media and that communities have ownership of and access to media.

The MDDA Act of 2002 focuses on broadcast television and radio and print media. But the media landscape has changed significantly since the act was passed. “We weren’t discussing podcasts and massive digital content platforms [back then], such as Google as an aggregator of news,” says Qhu. “There is a need for us to expand what we are doing.”

The changing landscape has also challenged the MDDA’s funding model. Both broadcasters and large print media outlets were expected to pay levies that would fund the MDDA’s grants to community publications. But print media has faced setbacks, its business model crushed by the loss of advertising revenue and rise of social media, and outlets have not been able to pay levies to the MDDA.

So, the agency is left with a small budget for community newspapers and a much larger budget for broadcast projects.

But even with its larger budget for broadcasting, it still does not have enough to fund the entire sector. There are over 270 community radio stations in the country, Qhu says, but less than 30 receive grant funding from the MDDA.

Qhu says the MDDA does not have the money to support the whole sector but maintains it can facilitate negotiations that will help community broadcasters survive. Cash-strapped broadcasters often cannot afford licensing fees and struggle to access signal distribution towers. They also struggle to access media buying platforms.

Qhu accepts that print media has not been prioritised by the MDDA.

Kate Skinner, executive director of the Association of Independent Publishers (AIP), says the MDDA’s performance “has been dismal for print and online media. We’re a distant afterthought. Over time fewer and fewer publishers have been supported”.

Skinner says the MDDA can still play a role by helping raise funds, possibly internationally, and support industry-wide initiatives such as sustainability research and pilots and collective advertising projects. “We need to see political will and a genuine commitment and focus on our sector,” says Skinner.

Qhu says the MDDA is focusing on training and research to help the print sector. The MDDA and AIP met earlier this year to discuss the way forward.

Despite all the MDDA’s challenges, “there is still an opportunity for us to grow”, she says. DM

First published by GroundUp.

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