Massive staff costs at state Media Diversity and Development Agency stifle media funding

The MDDA is the statutory body responsible for developing media projects in South Africa. There appear to be serious governance problems with the agency.

Last week we reported that the Association of Independent Publishers has threatened legal action over how the R38-million Economic Development Fund is administered by the MDDA, but the problems go much deeper than this.

Funded by government grants and the Universal Service and Access Agency (Usaf) levies paid by broadcasters, the MDDA’s revenue was R104-million according to its annual report for the 2020/2021 financial year. Broadcast funders provided R61-million of the revenue and government grants and subsidies R40-million.

The MDDA was established in 2003 in terms of the MDDA Act, with the mandate to promote and develop “media diversity” in the country. It is meant to provide grant funding and training to various media projects, specifically in historically disadvantaged communities by supporting community radio stations and print media.

According to the MDDA Act and regulations, the agency must spend a maximum of 25% of its budget on employee costs, and 75% on grants and related expenses.

This is generous. An experienced person in the South African donor industry informed GroundUp that typically a charitable-like institution is expected to spend about 8 to 10% of its funds on running costs. At most, and in rare circumstances, this may go as high as 15%.

But in 2020/21, the MDDA spent over 30% of its total expenditure on employee and board costs alone, far exceeding the prescribed 25% limit of the Act. With a further R8-million on administration, it spent over 37% of its revenue on running the organisation. It reported R65-million in grant expenditure.

For 2021/22, the MDDA originally budgeted R47-million in grant expenditure and almost as much (R46-million) in employee, board, and administration costs.

Later an “adjusted budget” for 2021/2022 was presented to Parliament in April: R89.5-million disbursed as grants, with employee and administration costs at R47-million. Employee and administration costs again exceeded the regulated maximum.

The projected budget for 2022/2023 puts employee, board, and administration costs at 47.5% of the budget, exceeding even the allowance of 35% made by the Act to establish the MDDA in its first year before it was fully functional for distributing grants.

And yet despite the high employee costs the MDDA still does not always manage to disburse all the revenue it receives for grants. In 2019/20 it ran a surplus of R21-million, disbursing almost R40-million less in grants than it had budgeted.

In 2020/2021, nine community print publications collectively received R3.3-million and 22 broadcast radio and TV stations received R43.9-million in grants. In an SABC Interview in March, the CEO Zukiswa Potye said that they had received 80 applications from community broadcasters, of which they could only fund 20, and 170 applications from print publications, of which they could fund fewer than ten.

The MDDA declined to disclose or explain its revenue and expenditure for 2021/2022, saying the figures have not yet been audited.

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