In our view

'Are we heading for a state-run lottery? You can have your say' - Cape Times, 26 July 2013

This opinion piece by Inyathelo Executive Director Shelagh Gastrow was published in the Cape Times on Friday 26 July 2013.

We have been given until next Friday (2 August 2013) to submit written comments on the proposed amendments to the Lotteries Act. The very tight turn-around on the call for comments – just ten days – will do little to calm fears over the future funding of the more than 100 000 non-profits who between them deliver more than half of the welfare services government is obliged to provide.

I have numerous concerns over the proposed amendments but chief among them is the fact that the changes open the door for a state-run lottery rather than one run by an independent entity with an independent board. Although it is not clear what the ramifications of this would be, it is the potential thin end of the wedge which could eventually evolve into a fully-fledged income generating exercise for government, where billions of rands of funds will go into government coffers to be distributed only to welfare and service delivery organisations that are aligned with government’s national objectives. 


Over the last few years, there has been substantial criticism of the Lotteries in respect of the disbursement of funds, including a lack of accountability and transparency, random decision-making, poor management and inefficient administration. This has had a devastating impact on the work of many non-profit organisations (NPOs) in our country with some even forced to close their doors as a result. And although the proposed amendments address some of the key concerns such as the accountability of the Distribution Agencies, conflicts of interest and the role of the Minister of Trade and Industry, it provides for the possible licensing of an “Organ of State” to conduct the National Lottery.

While providing a veneer for a more streamlined and efficient process for grantmaking to organisations, the guts of the new Lotteries Amendment Bill is not essentially about the effective distribution of funds, but more about how the lotteries will be run and where control will take place. The Bill doesn’t provide reasons for the potential of a state-run Lottery other than to say that such a decision can be made if the Minister believes that national government plans or priorities could not be achieved by the appointment of a third party.

It must be remembered that it is not the role of civil society to implement government policy, plans and priorities, but to respond to the needs of communities and the country. Civil society organisations are uniquely placed to respond to these needs and many of them, especially community based organisations, work at the coal face. In some cases their objectives might differ from that of government which is why government should not be responsible for making the decisions over how this money is spent. Government has the fiscus and other sources of money to undertake its programmes and drive its priorities.

Besides the potential for a state-controlled Lottery, another key issue is the fact that the three Distribution Agencies have not been accountable to the National Lotteries Board, but to the Minister of Trade and Industry. In the Amendment Bill, it is proposed that there should be one permanent Distribution Agency that will make grants to all the categories of potential beneficiaries. This new Distribution Agency would only account to the Board on administrative issues and not its adjudication function. We can only assume then that this Agency will continue to report to the Minister, take direction from him, and make decisions according to his and the government’s priorities and preferences.

The public has still not had any response from the Minister regarding the outrageous grant of R52 million made to Makhaya, an organisation based in Serbia that apparently promotes tourism to South Africa and which was not yet even registered as an NPO in South Africa at the time that it received its first grant.  If the Distribution Agency reports to the Minister, are we going to continue to see such bizarre and questionable decision-making?  Is it not time for an independent entity to oversee the grantmaking role of the Lotteries?

Any changes to the Lotteries Act are likely to impact on thousands of non-profit projects into the future, so we need to participate in the comment and submission process – and make ourselves heard around how best to fund our social welfare services and social justice work in South Africa – and the role that a national lottery should have in ensuring a source of independent funding for such work.

Organisations or individuals have until Friday 2 August 2013 to send their written submissions to the Portfolio Committee on Trade and Industry. Oral submissions will be heard at the public hearings schedule for 13-16 August 2013. 

Shelagh Gastrow is the Executive Director of Inyathelo: The South African Institute for Advancement and a member of the Funding Practice Alliance.