Sentech management roasted

Johannesburg, 21 Feb 2008

Sentech's annual budget allocation was slashed by 44% because the government agency lacks accountability, says a National Treasury official.

The official, who cannot be named, says National Treasury is working closely with the Department of Communications (DOC) and Sentech to bring the state-owned entity back on track.

Unless confidence in the corporate governance, financial management and strategic focus can be restored, Sentech is unlikely to receive anything more than minimal funding, he says.

"The budget slash is there to raise alarm bells in the organisation about its management. At this stage, we do not have the confidence that large sums of taxpayer money would be appropriately used," he says.

Dwindling funding

The 2008 national expenditure report released yesterday by National Treasury shows the organisation will only receive R350 million in 2008/9 for its infrastructure projects. This is a drastic cut from the R625 million it received in 2007/8.

In the 2009/10 financial year, Sentech is expected to receive R250 million, while in 2010/11 the organisation is expected to receive only R150 million in funding from the DOC.

The funding over the next three financial years has been allocated to broadcast digitisation (R450 million) and the 2010 FIFA World Cup (R300 million).

Sentech will have to use the R500 million received last week to complete its national wholesale broadband network, while the East Africa Submarine Cable System has received no allocation.

However, the National Treasury official says "a couple more million" could be allocated to Sentech's priority projects if the agency shows progress in its turnaround strategy.

"But if you look at 2010, Sentech is not really that critical. It is just providing backup satellite facilities," he adds.

Under construction

Although Sentech refused to comment on its budget allocation or plan of action, the official says a full-scale engagement between National Treasury, the DOC and Sentech will start as soon as officials return from Parliament.

"We have already proposed several initiatives such as exiting the multimedia space - where private sector companies like Vodacom and MTN have already shown extraordinary success - and re-strategising the MyWireless business. As long as these initiatives don't produce a better return, Sentech should look for an exit strategy," he says.

The point of this engagement is to help Sentech establish viable business plans and processes, improve accountability and introduce a new management system.

"One request we've had is to re-certify Sentech so that it can access funding from outside government. We will consider this, but first we need to know that this entity is capable.'

The DOC was unable to comment by the time of publication, as DG Lyndall Shope-Mafole was leading an internal workshop.