Commissioner’s overview
Resilience is not a characteristic that is bred in a crisis. Instead, it is an aspect of character that is exposed when the going gets tough, and progress seems impossible. The 2021 financial year most certainly put the organisation to the test. However, it also served as a platform to demonstrate our resilience in the face of seemingly insurmountable challenges and to take the opportunity to integrate lessons learnt along the way.
Operating in a challenging context
The NLC’s regulatory mandate continues to be a primary priority, focusing on monitoring the compliance and performance of the National Lottery operator and sports pools against the Amended Lotteries Act and licence agreement. These regulatory activities enable the NLC to generate revenue for distribution to good causes by awarding grants – our secondary mandate.
Before the onset of the Covid-19 pandemic, which had a profound effect on revenue due to lockdown restrictions on the sale of lottery tickets at retail outlets, growth remained stagnant in the context of escalating beneficiary needs. However, in our current context characterised by a significantly deteriorating macroeconomic environment and growing unemployment, we have faced heightened challenges in meeting the escalating demand on the NLDTF.
Within this context, and despite the difficulties faced as a result of the pandemic, we sought to fulfil our mandates and respond swiftly to the intensified needs of our stakeholders over this time. The agility of our response can be largely attributed to our robust risk management processes, which enabled the organisation to navigate the uncertainty and respond proactively, making informed decisions amidst the noise and volatility.
Demonstrating resilience in enabling catalytic change
It goes without saying that the regulatory activities of the NLC are the foundation for our secondary mandate of funding, and our regulatory approach is aimed at creating an enabling environment for existing and prospective lotteries and sport pools operators to grow the sector and maximise revenue generation for good causes.
During the year, we conducted 654 retailer verifications against a target of 600 inspections. This overachievement can be attributed to the adaptive deployment of physical and virtual processes to verify the existence and operations of retailers who sell lottery tickets. Likewise, despite the challenges presented by social distancing measures and lockdown regulations, investigations were conducted on 100% of identified and reported lottery schemes and 1 460 monitoring and evaluation reports were produced for the year.
In response to the escalating societal need within the pandemic context, the NLC was able to direct R50 million in proactive funding toward relief from the effects of the Covid-19 pandemic through the Solidarity Fund as initiated by the Executive Authority. Proactive funding is the vehicle through which the NLC can provide relief in emergencies and disasters. In addition, the NLC released a further R10 million toward the provision of food and hygiene product hampers nationwide through 54 NGOs.
Robust risk
management
processes enabled business resilience.
Certified as a
Top Employer
during the year.
R210 million
Covid-19 relief made
available through proactive funding.
Sadly, Covid-19 has had a negative impact on the organisations that work selflessly to serve vulnerable members of society. The NLC recognises the barriers the pandemic has created in the delivery of services and management of operations. For this reason, the Board decided to release R150 million as a further relief measure to NGOs/NPOs and NPCs struggling to stay afloat during this time.The distribution and use of this relief funding has been and will continue to be monitored in line with NLC policies to ensure that beneficiaries in desperate need of assistance receive it timeously.
(For more information, please click here to view our Covid-19 response case study.
Moreover, the NLC responded to the challenges that the pandemic presented by adjusting the funding model to allow for the submission of applications for relief funds electronically and enhancing the assessment template to support our stakeholders over this difficult time.
Living our values
The NLC aims to grow and preserve the trust relationship with its stakeholders to fulfil our purpose of catalysing social upliftment. This ambition remains at the forefront of our collective minds as we pursue the everyday efforts that culminate in large-scale change. Therefore, ethical conduct is entrenched in our culture and forms a cornerstone of our business through our values of integrity, service excellence, social consciousness, performance excellence, innovation, and agility.
The Board is committed to clean governance as it provides strategic direction to and accountability over the running of the NLC, in line with the King IV Report on Corporate Governance. Members of the Board are professionals from diverse backgrounds, aligned with the values of the NLC, and dedicate time to steering the organisation toward maximum positive impact for the benefit of the hundreds of thousands of South Africans whose lives are changed for the better through our regulatory and funding activities.
Taking our learnings deeper
At our core, the NLC is a learning organisation. We seek out best practices, proactively find ways to engage and learn from one another and take internal and external feedback to heart – earnestly desiring to develop our organisational capabilities over time.
The NLC takes cognisance of all issues raised by our stakeholders, objectively and critically analysing the matters and proactively managing and implementing required controls to ensure our dual mandates are delivered effectively and efficiently. In recent years, the NLC has been the subject of serious allegations of maladministration and conflicts of interest relating to the grant-making process. These stakeholder concerns are taken seriously, and the Board has instituted several investigations to establish the veracity and truthfulness of the allegations. Where allegations have been made against officials of the NLC, internal organisational processes are immediately initiated to determine if there has been any wrongdoing. As an additional measure, an independent investigation was commissioned early in 2020. The process is anticipated to conclude soon, and the outcomes will be communicated publicly.
We continue to urge those who detect suspicious activities to report such to the NLC’s antifraud hotline 0800 212 129, where callers may remain anonymous, or to send an email to investigations@nlcsa.org.za.
Our controls are continually enhanced to mitigate against potential and perceived corruption through various ground- breaking initiatives, to not only drive the ethical message home, but to ensure our valued employees and external stakeholders engage in ethical practices.
(Please click here to see our case study – Accountability at the heart of trust.)
Furthermore, a national perception survey was independently conducted to evaluate and enhance the different functions facilitated by the NLC. The study aimed to determine and provide clarification on the views and opinions held by participants from various internal and external stakeholder groups regarding regulatory matters, the grant-making role, and communication. The recommendations put forward provide a renewed emphasis on rethinking and, in some cases, re-engineering current strategies to optimise effectiveness and overall organisational efficiency. These findings will be implemented in the new financial year.
Putting our people first
The NLC continues to inculcate a culture which seeks to foster full compliance with laws and regulations. We therefore take a zero- tolerance approach to incurring irregular, fruitless and wasteful expenditure. This culture is encouraged during continuous education and awareness sessions held with all divisions of the organisation.
Notwithstanding the controls in place and no changes in National Treasury regulations and related practice notes, the AGSA has reported irregular expenditure of R23 million rand in the audit report as a result of what the AGSA found to be procurement in contravention Treasury Regulation 16A6.1, 16A6.4 and paragraph 3.3.1 and 3.4.1 of Practice Note 2007/8. These findings have resulted in the Auditor issuing a qualified opinion on the Annual Financial Statements for the 2021 financial year. The impact of this qualification is that the AGSA has satisfied itself that the Annual Financial statements of the NLC are a fair presentation in all material respect with the exception of the impact of non- compliance findings relating to procurement.
The audit opinion on the NLDTF was unqualified.
Whilst the NLC has taken recommendations of the AGSA and implementing action plans to improve future audit outcomes, we continue to seek clarity of the respective practice notes and rationale of the change in interpretation of related practice notes.
Outlook and appreciation
As we navigate the continued challenges presented by the pandemic, our commitment to the goals of the NDP remain, continuing in the pursuit of the mandate to protect lottery players and ensure a fair, transparent and safe environment for lotteries and sports pools to operate.
I wish to extend my heartfelt gratitude to the staff of the NLC who have worked tirelessly to achieve our purpose. To the Board and Exco, thank you for your insight, commitment and fearless leadership during these challenging times. Your input and direction have been invaluable. And finally, to our shareholder and other stakeholders, thank you for your continued support.
Mrs TCC Mampane
Commissioner
National Lotteries Commission
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