Auditor-General Tsakani Maluleke Flags Irregular SETA Board Appointments Amid R30 Billion Skills Fund Governance Crisis

PRETORIA, Gauteng — Auditor-General Tsakani Maluleke has flagged severe irregularities in board appointments across 15 Sector Education and Training Authorities (SETAs), revealing that key governance rules were flouted in the management of South Africa’s R30 billion skills development fund. The findings point to a systemic administrative failure where mandatory vetting processes, qualification verifications, and criminal record checks were routinely bypassed, raising urgent questions about the future of job creation and skills training in the country.

The Auditor-General’s report highlights that several board members were appointed without undergoing mandatory vetting. In other instances, candidates lacked verified qualifications or had outstanding criminal record checks. Notably, nine SETAs reportedly have board members who fail to meet the minimum National Qualifications Framework (NQF) level 7 requirement, while chairpersons are expected to hold at least an NQF level 8 qualification, such as a postgraduate diploma.

Prof. Linda Meyer, Managing Director at Rosebank International and visiting professor at Nelson Mandela University, emphasized the critical role these institutions are meant to play. Established across 21 respective sectors, SETAs are designed to drive targeted skills development. They are funded directly by employers with a payroll exceeding R500,000, who are required to contribute an additional 1% skills levy on top of the standard 27% corporate tax. A portion of this revenue also supports the National Skills Authority.

With approximately R30 billion at stake, these funds are explicitly intended to finance learnerships, internships, and sector-specific job creation. However, Prof. Meyer noted a troubling trajectory, stating that SETAs are currently performing more poorly than they did a decade ago. They are producing fewer skills, costing South African taxpayers more money, and failing to generate meaningful employment.

A standard SETA board comprises 15 individuals, including 12 representatives from organized labor, organized business, professional bodies, and government entities. The minister retains the authority to appoint four additional individuals and an independent, non-voting chairperson who holds a casting vote. Prof. Meyer stressed that all appointees must be formally signed off by the minister and Department of Higher Education and Training officials to ensure they are “fit and proper” to drive sector development and provide necessary fiduciary oversight.

The practical implications of this weak governance are dire for everyday South Africans. Prof. Meyer highlighted that the country suffers from the second-highest youth unemployment rate globally, with the official rate hovering around 43% and the expanded definition reaching 60% for needy students. Conversely, unemployment for degree holders remains stable and significantly lower, between 10% and 12%.

Highlighting the inefficiency of the current system, Prof. Meyer pointed out that only 56% of individuals enrolled in SETA learnerships and internships successfully complete their courses. Strikingly, research indicates it costs twice as much per person to place someone in a SETA learnership or internship compared to funding a university degree, which yields demonstrably better employment outcomes. Compounding these issues are ongoing challenges with the Quality Council for Trades and Occupations (QCTO), inter-SETA infighting, and delays in reregistering qualifications.

Despite strong legislative frameworks, such as Section 12H of the Income Tax Act, which incentivizes employers to create jobs through learnerships, excessive SETA bureaucracy is driving employers away from these programs.

Prof. Meyer called for a complete overhaul of the system, urging that future success be measured strictly by the number of jobs created per rand spent, rather than mere administrative compliance. She concluded that the minister must be held directly accountable for these governance failures, the billions of rands currently being wasted, and the real young South Africans who remain locked out of education and employment opportunities.