Annual Report Presentation 2005/6 Parliament Committee on Communications 24 October 2006

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Annual Report Presentation 2005/6Annual Report Presentation 2005/6Parliament Committee on CommunicationsParliament Committee on Communications

24 October 200624 October 2006

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The MDDA TeamThe MDDA Team

Kanyi Mkonza (Chairperson)Kanyi Mkonza (Chairperson) Mazibuko Jara (Board Member)Mazibuko Jara (Board Member) Chris Moerdyk (Board Member)Chris Moerdyk (Board Member) Lumko Mtimde (CEO)Lumko Mtimde (CEO) Jayshree Pather (Projects Director)Jayshree Pather (Projects Director) Harry Letsebe (Program Manager) Harry Letsebe (Program Manager) Annand Chaytoo (former CFO)Annand Chaytoo (former CFO) Mbuyiseni Jafta (new CFO)Mbuyiseni Jafta (new CFO)

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VisionVision

Each and every South African citizen Each and every South African citizen should have access to a choice of a should have access to a choice of a diverse range of mediadiverse range of media

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MissionMission

The MDDA is a development agency The MDDA is a development agency that will assist in building an that will assist in building an environment where a diverse, environment where a diverse, vibrant and creative media vibrant and creative media flourishes and reflects the needs of flourishes and reflects the needs of all South Africansall South Africans

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Background, Context Background, Context and Legislative basisand Legislative basis Section 16 and 32 of the Section 16 and 32 of the

Constitution Act No. 108 of 1996 Constitution Act No. 108 of 1996 provides for the freedom of provides for the freedom of expression and access to expression and access to information. information.

MDDA Act MDDA Act No. 14 of 2002No. 14 of 2002 establishes a establishes a statutory body statutory body called the MDDA.called the MDDA.

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Background, Context Background, Context and Legislative basisand Legislative basis The MDDA is entrusted with the The MDDA is entrusted with the

responsibility of promoting media responsibility of promoting media development and diversity in S.A. development and diversity in S.A. by providing financial and other by providing financial and other support to community (non-profit) support to community (non-profit) and small commercial media and small commercial media projects.projects.

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Background, Context Background, Context and Legislative basisand Legislative basis The MDDA Act defines media as all The MDDA Act defines media as all

forms of mass communication, forms of mass communication, including printed publications, radio, including printed publications, radio, television and new electronic platforms television and new electronic platforms for delivering content.for delivering content.

It also defines media development as It also defines media development as the development of the media the development of the media environment and infrastructure, so environment and infrastructure, so that historically disadvantaged that historically disadvantaged communities and persons have access communities and persons have access to the media as owners, managers, to the media as owners, managers, producers and consumers of media.producers and consumers of media.

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Background, Context Background, Context and Legislative basisand Legislative basis

“…“…Create an enabling Create an enabling environment for media environment for media development and diversity that is development and diversity that is conducive to public discourse and conducive to public discourse and which reflects the needs and which reflects the needs and aspirations of all South Africans;aspirations of all South Africans;

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“ “ Redress exclusion and Redress exclusion and marginalisation of disadvantaged marginalisation of disadvantaged communities and persons from communities and persons from access to the media and the access to the media and the media industry;media industry;

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““Promote media development Promote media development and diversity by providing support and diversity by providing support primarily to community and small primarily to community and small commercial media projects…”.commercial media projects…”.

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Background, Context Background, Context and Legislative basisand Legislative basis ECA provides more opportunities for ECA provides more opportunities for

electronic platforms for delivery of electronic platforms for delivery of content by community and small content by community and small commercial groups.commercial groups.

More than 82 community radio More than 82 community radio stations are on air;stations are on air;

ICASA has recently licensed another 13 ICASA has recently licensed another 13 community radio stations in rural and community radio stations in rural and urban development areas;urban development areas;

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Background, Context Background, Context and Legislative basisand Legislative basis Community TV may be licensed in Community TV may be licensed in

2006/7;2006/7; Close to 400 grassroots Close to 400 grassroots

publications across South Africa;publications across South Africa;

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Mandate Mandate “in the nutshell”“in the nutshell”

Help create an enabling Help create an enabling environment for media environment for media development and diversity that is development and diversity that is conducive to public discourse and conducive to public discourse and which reflects the needs and which reflects the needs and aspirations of South Africans.aspirations of South Africans.

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Objects of the MDDA Objects of the MDDA Act – Section 3Act – Section 3 Encourage ownership and control of, Encourage ownership and control of,

and access to, media by HDC as well as and access to, media by HDC as well as by historically diminished indigenous by historically diminished indigenous language and cultural groups;language and cultural groups;

Encourage the development of human Encourage the development of human resources and training, and capacity resources and training, and capacity building, within the media industry, building, within the media industry, especially amongst HDG’s;especially amongst HDG’s;

Encourage the channelling of resources Encourage the channelling of resources to the community media and small to the community media and small commercial media sector;commercial media sector;

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Objects of the MDDA Objects of the MDDA Act – Section 3Act – Section 3 Raise public awareness with regard to Raise public awareness with regard to

media development and diversity media development and diversity issues;issues;

Support initiatives which promote Support initiatives which promote literacy and a culture of reading;literacy and a culture of reading;

Encourage research regarding media Encourage research regarding media development and diversity; anddevelopment and diversity; and

Liaise with other statutory bodies such Liaise with other statutory bodies such as ICASA and USA (now USAASA).as ICASA and USA (now USAASA).

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Corporate Corporate GovernanceGovernance

The MDDA is governed by a Board of The MDDA is governed by a Board of Directors, appointed in terms of the Directors, appointed in terms of the MDDA Act. It operates asMDDA Act. It operates as an an independent body, expected through independent body, expected through the MDDA Act to be impartial and to the MDDA Act to be impartial and to exercise its powers, perform its duties exercise its powers, perform its duties without fear, favor or prejudice, and without fear, favor or prejudice, and without any political or commercial without any political or commercial interference. interference. (Section 4, MDDA Act).(Section 4, MDDA Act).

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Funding of the Funding of the AgencyAgency

Money appropriated by ParliamentMoney appropriated by Parliament Money received in terms of Money received in terms of

agreements with any organization agreements with any organization for furtherance of the objectives of for furtherance of the objectives of the MDDA Actthe MDDA Act

Domestic and foreign grantsDomestic and foreign grants Interest derived from any of its Interest derived from any of its

investments,investments,

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Funding of the Funding of the AgencyAgency

Contributions from Broadcasting Contributions from Broadcasting Service Licensees not exceeding 1% Service Licensees not exceeding 1% of their annual turnover in terms of of their annual turnover in terms of the Electronics Communications Act the Electronics Communications Act of 2005 (Section 89), or (as a new of 2005 (Section 89), or (as a new funding stream)funding stream)

Money lawfully accruing from any Money lawfully accruing from any source.source.

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Highlights of the Highlights of the past financial yearpast financial year The Board, since 2003/4 has The Board, since 2003/4 has

approved support, amounting approved support, amounting approx. R20m, for:approx. R20m, for:– Just under 100 different media Just under 100 different media

projectsprojects– support for the newly licensed support for the newly licensed

community radio stations in the community radio stations in the nodal areas earmarkednodal areas earmarked

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Highlights of the Highlights of the past financial yearpast financial year Has provided following capacity building Has provided following capacity building

support:support:– Resource mobilisation workshops in all 9 Resource mobilisation workshops in all 9

provincesprovinces– Workshops held together with AMASA/AMF Workshops held together with AMASA/AMF

on advertising and marketing in 4 provinces)on advertising and marketing in 4 provinces)– Provided 35 different media managers with Provided 35 different media managers with

bursariesbursaries– Provided mentoring support for a number of Provided mentoring support for a number of

projectsprojects– Have enabled the establishment of 38 new Have enabled the establishment of 38 new

projects (i.e. did not exist before)projects (i.e. did not exist before)

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Highlights of Highlights of past year cont…past year cont… Have funded the following research projects:Have funded the following research projects:

– Research into challenges in distribution Research into challenges in distribution and high printing costs and high printing costs

– Impact of competition on diversityImpact of competition on diversity– Development of a database of grassroots Development of a database of grassroots

publicationspublications– Indigenous language newspapers – Indigenous language newspapers –

challengeschallenges– Representation of women, children, people Representation of women, children, people

with disabilities, the elderly in mediawith disabilities, the elderly in media– Representation of gay and lesbian issues Representation of gay and lesbian issues

in the mediain the media

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Analysis of Analysis of applications 2005/6applications 2005/6 Applicants applied for about R105m in grants Applicants applied for about R105m in grants

since Jan 2004since Jan 2004 MDDA income since inception is about MDDA income since inception is about

R30.6mR30.6m Some refused because not licensed or Some refused because not licensed or

incomplete applications (i.e. no business incomplete applications (i.e. no business plan) plan)

Those without proper business plans are Those without proper business plans are given mentoring support to assist them with given mentoring support to assist them with proper planning.proper planning.

Those refused are given opportunity to Those refused are given opportunity to correct applications and apply again.correct applications and apply again.

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Since Jan-04, the MDDA has given Since Jan-04, the MDDA has given R20,3m support to small media, from R20,3m support to small media, from public/private sector fundingpublic/private sector funding

Broadening access to information

MDDA is working with MPCCs and others in provinces with least media to identify potential projects for support

Projects Projects by by CategoryCategory

97 projects (National projects located byhead office)

ECEC FSFS GAGA LILI MPMP NWNW KZKZ WCWC NCNC

1818 66 2323 88 88 66 1212 99 77

PrintPrint Radio and TVRadio and TV

CommunitCommunityy

CommerciCommercialal

CommuniCommunityty

CommerciCommercialal

TraininTrainingg

ResearcResearchh

2424 2626 3636 -- 55 88

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New projects New projects

0

5

10

15

20

25

Number ofprojects intotal

New

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MDDA operationsMDDA operations2005/62005/6 9 staff employed9 staff employed Process of appointing a new CEO Process of appointing a new CEO

was near completion by the end was near completion by the end of period under review and was of period under review and was completed in this financial year. completed in this financial year. Mr. Lumko Mtimde was appointed Mr. Lumko Mtimde was appointed in April 2006, commencing his in April 2006, commencing his employ in July 2006.employ in July 2006.

Procedures and systemsProcedures and systems in place.in place.

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Organogram 2005/6Organogram 2005/6

CEO

CFO VacantVacant

VacantVacantProject Manager

CommunityProject manger

Small CommercialProject ManagerResearch & Dev

Exec Sec

Finance Assistant Projects Admin

Receptionist

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Finances 2005/6Finances 2005/6(For financial year 01 April 2005 to 31 (For financial year 01 April 2005 to 31 March 2006 )March 2006 )

IncomeIncome GovernmentGovernment R 7mR 7m Print PartnersPrint Partners R4.8mR4.8m Broadcast PartnersBroadcast Partners R5.3mR5.3m Foreign GrantsForeign Grants R 38,000.00 R 38,000.00 VAT refundVAT refund R 15,000.00R 15,000.00 InterestInterest R1.8mR1.8m Total IncomeTotal Income RR18,942, 000.0018,942, 000.00

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Print PartnersPrint Partners– Independent Newspapers (Pty) LtdIndependent Newspapers (Pty) Ltd– Johnnic Publishing LtdJohnnic Publishing Ltd– Media 24 LtdMedia 24 Ltd– CTP/CAXTONCTP/CAXTON

Broadcast PartnersCTP LtdBroadcast PartnersCTP Ltd– Midi TV Pty Ltd (e-tv) Midi TV Pty Ltd (e-tv) – Kagiso Broadcasting (Pty) Ltd Kagiso Broadcasting (Pty) Ltd – Electronic Media Network Ltd (M-Net)Electronic Media Network Ltd (M-Net)– Primedia Broadcasting (Pty) Ltd Primedia Broadcasting (Pty) Ltd – South African Broadcasting Corporation Ltd South African Broadcasting Corporation Ltd

(SABC)(SABC)

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ExpenditureExpenditure– Grant costsGrant costs R9 591 000R9 591 000– PersonnelPersonnel R2 538 000R2 538 000– AdministrativeAdministrative R2 053 000R2 053 000– DepreciationDepreciation R 222 000R 222 000

Total ExpenditureTotal Expenditure R14 404 R14 404 000000

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Total Administration costs (incl. depreciation)Total Administration costs (incl. depreciation)R 4,813 R 4,813

Total Administration costs (excl. depreciation)Total Administration costs (excl. depreciation)R 4,591 R 4,591

Personnel ExpPersonnel Exp R 1,621 (excluding the R 1,621 (excluding the other other expenses, in expenses, in terms of total terms of total costs to company approach)costs to company approach)

Training ExpTraining ExpR 115 R 115

Administration cost as a % of total income Administration cost as a % of total income ( includes personnel costs) ( includes personnel costs)

24% 24% Personnel cost as a % of total income Personnel cost as a % of total income 9% 9% Training cost as a % of total income Training cost as a % of total income 1%1%

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Community PrintCommunity Print R 3,599,996.00 R 3,599,996.00 (38%)(38%)

Community RadioCommunity RadioR 2,719,724.00 R 2,719,724.00 (29%)(29%)

Small Commercial R 2,438,506.00 Small Commercial R 2,438,506.00 (26%)(26%)

ResearchResearch R 681,000.00 R 681,000.00 (7%) (7%)

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Total RevenueTotal Revenue R18. 942mR18. 942m Total ExpensesTotal Expenses R14. 404mR14. 404m Surplus for the yearSurplus for the year R 4. 538mR 4. 538m

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2006 and beyond2006 and beyond(a few highlights)(a few highlights)

Analysis of the ECA implications to the Agency Analysis of the ECA implications to the Agency operations – work in this respect is in progress,operations – work in this respect is in progress,

Review of Regulations, Policies, Procedures, Review of Regulations, Policies, Procedures, Systems and process in order to adequately Systems and process in order to adequately respond to the ECA envisaged growth respond to the ECA envisaged growth

EEvaluations are planned on range of projects valuations are planned on range of projects previously supported previously supported

Continue conducting research, in particular on Continue conducting research, in particular on the historically diminished indigenous languages the historically diminished indigenous languages and cultural groups, and challenges thereof and cultural groups, and challenges thereof

Develop sustainable solutions, in pursuit of media Develop sustainable solutions, in pursuit of media development and diversity.development and diversity.

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• Continue to providing grants in Continue to providing grants in response to applications for media response to applications for media development and diversitydevelopment and diversity

• Develop strategies with sector, to Develop strategies with sector, to build stronger provincial media build stronger provincial media networks and/or hubsnetworks and/or hubs

• Continue to build credibility of Continue to build credibility of grassroots mediagrassroots media

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Together with the sector, will plan to Together with the sector, will plan to resolve challenges regarding access to resolve challenges regarding access to advertising revenue for community and advertising revenue for community and small commercial mediasmall commercial media

Together with the sector, will develop Together with the sector, will develop strategies to resolve printing and strategies to resolve printing and distribution challenges facing the distribution challenges facing the community and small commercial print community and small commercial print mediamedia

Will develop approaches for supporting Will develop approaches for supporting community television.community television.

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Funding Funding 2006/20072006/2007

Income: R21.8m Income: R21.8m

R9m GovernmentR9m Government

R5.3m Broadcasting partnersR5.3m Broadcasting partners

R4.8m Print partnersR4.8m Print partners

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Budget HighlightsBudget Highlights2006/72006/7 Government has increased its contribution Government has increased its contribution

for 2006/2007 to the MDDA by R2.2m. for 2006/2007 to the MDDA by R2.2m. Predict that will keep to regulatory cap Predict that will keep to regulatory cap

of 25% on administration in 2006/2007.of 25% on administration in 2006/2007. Could exceed this cap in following years, Could exceed this cap in following years,

unless the contributions increase as unless the contributions increase as envisaged in terms of the ECA.envisaged in terms of the ECA.

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Budget ChallengesBudget Challenges2006/72006/7 Funding Agreements with print Funding Agreements with print

and broadcast partners do not and broadcast partners do not include any inflation linked include any inflation linked increase – costs go up but MDDA increase – costs go up but MDDA budget remains the samebudget remains the same

Solution: Treasury has Solution: Treasury has provided an increase to MDDA provided an increase to MDDA in recognition of this in recognition of this

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Budget Challenges Budget Challenges 2006/7 (cont)2006/7 (cont) MDDA has to meet regulatory and MDDA has to meet regulatory and

funding agreements requirementsfunding agreements requirements– Regulations divide funds between small Regulations divide funds between small

commercial, community and researchcommercial, community and research– Funding agreements divide between Funding agreements divide between

print and broadcastprint and broadcast– Funding agreements specify no more Funding agreements specify no more

than 10% to administration and than 10% to administration and researchresearch

– Funding is on different cyclesFunding is on different cycles

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Challenges aheadChallenges ahead

Capacity of sector to absorb Capacity of sector to absorb funds – most projects need funds – most projects need training initially, then support. training initially, then support. Hence, our mentorship Hence, our mentorship approach.approach.

Reaching media neglected Reaching media neglected communities, in particular the communities, in particular the rural areas.rural areas.

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Challenges ahead for Challenges ahead for new medianew media Further challenges faced by this Further challenges faced by this

sector would range from (amongst sector would range from (amongst others) :others) :– Projects loosing skills, given the Projects loosing skills, given the

ongoing movement of skilled activists ongoing movement of skilled activists of the sector, of the sector,

– irrelevant programming and irrelevant programming and – the lack of sustainability strategies in the lack of sustainability strategies in

some projects. some projects.

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Challenges ahead for Challenges ahead for new medianew media• Accordingly this, therefore requires that Accordingly this, therefore requires that

community media projects :community media projects :(i)(i) develop ongoing on-site / station based capacity develop ongoing on-site / station based capacity

building and training strategies and plans; building and training strategies and plans; (ii)(ii) encourage and ensure ongoing community encourage and ensure ongoing community

participation in the projects, participation in the projects, (iii)(iii) constantly engage with community organisations constantly engage with community organisations

and follow through community developments, in and follow through community developments, in order to remain relevant, order to remain relevant,

(iv)(iv) develop community based sustainable strategies develop community based sustainable strategies and programmes.and programmes.

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Challenges ahead for Challenges ahead for new medianew media• Community television also faces specific Community television also faces specific

challenges, like :challenges, like :• Frequency spectrum scarcityFrequency spectrum scarcity• Development of a best model of Community TV Development of a best model of Community TV

for S.A.for S.A.• Sustainability strategies.Sustainability strategies.

• Other challenges for print media, would Other challenges for print media, would also include :also include :

• Advertising and marketingAdvertising and marketing• Printing resourcesPrinting resources• DistributionDistribution• Etc.Etc.

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Our Milestone Our Milestone AchievementsAchievements 5 year partnership agreements 5 year partnership agreements

reached with Broadcast Media reached with Broadcast Media and Print Mediaand Print Media

2006 marked the end of first 2006 marked the end of first three-year funding cyclethree-year funding cycle

Three years of clean, unqualified Three years of clean, unqualified Audited Financial StatementsAudited Financial Statements

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Our Milestone Our Milestone Achievements – as ofAchievements – as ofOctober 2006October 2006

118 projects supported, with over R20 118 projects supported, with over R20 million approved for disbursementmillion approved for disbursement

Media projects supported are located Media projects supported are located in every province in S.A.in every province in S.A.

Of the supported projects, 38 are new, Of the supported projects, 38 are new, did not exist prior to MDDA did not exist prior to MDDA interventionintervention

Community radio listenership has Community radio listenership has increased significantly increased significantly

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The Agency going The Agency going forwardforward Continued compliance with relevant Continued compliance with relevant

legislations, regulations and funding legislations, regulations and funding agreementsagreements

Further inroads into underserved Further inroads into underserved communities, in order to decrease the communities, in order to decrease the information gap between communities information gap between communities where there is still no access to media where there is still no access to media

Creation of an environment of Creation of an environment of language diversity and access to language diversity and access to different forms of media by alldifferent forms of media by all

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The Agency going The Agency going forwardforward Support for the provincial hubs to Support for the provincial hubs to

support print media’s challenges support print media’s challenges regarding distribution and printingregarding distribution and printing

Develop an approach for Develop an approach for supporting the to-be licensed supporting the to-be licensed Community Television servicesCommunity Television services

Providing more support to Providing more support to community and small commercial community and small commercial media projectsmedia projects

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The Agency going The Agency going forwardforward We hope -We hope -

– to ensure diversity of media in each and to ensure diversity of media in each and every municipal district of our country. every municipal district of our country.

– to ensure increased media in different to ensure increased media in different indigenous languages, reflecting unity in indigenous languages, reflecting unity in diversity, diversity,

– to ensure rural communities are to ensure rural communities are empowered, jobs are created, poverty is empowered, jobs are created, poverty is alleviated and we have an informed alleviated and we have an informed society.society.

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ConclusionConclusion

Thank youThank you

Documents

Annual Report Presentation 2005/6 Parliament Committee on Communications 24 October 2006